July 16, 2020

Religious Institutions Update: July 2020

Lex Est Sanctio Sancta
Holland & Knight Alert
Nathan A. Adams IV | Shannon Britton Hartsfield | Nathaniel Bernstein

Key Cases

Courts Reach Mixed Conclusions on Challenges to COVID-19 Assembly Restrictions

Nathan A. Adams IV

Several recent cases concern challenges to executive orders relating to COVID-19 limiting the ability of churches to assemble and imposing other limitations. Beginning with appellate decisions, these cases are summarized in two groups: one group where courts enjoined the executive orders and another group where they did not.

Granting Injunction

In Roberts v. Neace, 958 F. 3d 409 (6th Cir. 2020), the court ruled that congregants of Maryville Baptist Church who wanted to attend in-person worship services were likely to succeed on the merits of their free exercise claim against Kentucky Gov. Andy Beshear and others due to two executive orders that 1) prohibit faith-based mass gatherings and 2) require the closing of organizations that are not "life-sustaining." Likewise, in Maryville Baptist Church, Inc. v. Beshear, 957 F. 3d 610 (6th Cir 2020), the same court ruled that Maryville Baptist Church was likely to succeed on the merits of its action alleging that the same executive orders violated the First Amendment and Kentucky's Religious Freedom Restoration Act (RFRA) as applied to drive-in church services with social distancing. As background, Maryville Baptist Church held an Easter service that the plaintiffs attended while observing social distancing and hygiene requirements. During the service, state police placed "attendance-is-criminal" notices on their car and took down the license plate numbers of attendees. The suit followed. The district court denied the plaintiffs relief. The appellate court reversed, granting them an injunction pending appeal against enforcing the orders if the church, ministers and congregants adhere to public health requirements mandated for life-sustaining entities. The court determined that at some point an exception-ridden prohibition takes on the appearance and reality of a system of individualized exemptions, which is the antithesis of a neutral and generally applicable policy. The orders contained four pages of exceptions for comparable secular activities, implicating strict scrutiny and burdened sincere faith practices, and were not the least restrictive manner of furthering the commonwealth's goals of lessening the spread of the virus and protecting citizens. The court considered it important that the church and its congregants "just want to be treated equally" and were not asking "to insulate themselves from the commonwealth's general public health guidelines." It made little sense to the court that the same accountants, lawyers and laundromat workers could go to work and social distance but not go to worship services and do likewise.

In On Fire Christian Ctr., Inc. v. Fischer, No. 3:20-cv-264-JRW, 2020 WL 1820249 (W.D. Ky. April 11, 2020), the court granted a temporary restraining order (TRO) to prevent the City of Louisville from enforcing a prohibition against drive-in Easter services despite the city's compelling interest in preventing the spread of coronavirus, because the church showed a strong likelihood of successes on the merits of its federal and state free exercise claims and its claims under Kentucky's RFRA. The city allowed other non-religious and no-more-essential parking and drive-throughs, including at liquor stores and ice cream shops.

In First Baptist Church v. Kelly, No. 20-1102-JWB, 2020 WL 1910021 (D. Kan. April 18, 2020), the court ruled that an executive order that singled out churches and religious activities among essential functions for stricter treatment than similar secular activities and religious gatherings did not appear to pose unique risks that could not be mitigated with safety protocols.

In Berean Baptist Church v. Cooper, No. 4:20-CV-81-D, 2020 WL 2514313 (E.D. N.C. May 16, 2020), the court forbade law enforcement from taking any enforcement action against the plaintiffs or any other worshipers pursuant to North Carolina Gov. Roy Cooper's executive order requiring that all worship services involving more than 10 people be held "outdoors unless impossible" pending final hearing. According to the governor, law enforcement would decide whether it is impossible. Guidance from the governor stated, "In situations where it is not possible to conduct worship services outdoors or through other accommodations – such as through, for example a series of indoor services of ten or fewer attendees or through on-line services – the ten-person attendance limit on indoor worship services does not apply. For example, there may be situations where particular religious beliefs dictate that some or all of a religious service must be held indoors and that more than ten persons must be in attendance." According to the court, law enforcement would also decide whether a religious group correctly determined that its religious beliefs dictated the need to have more than 10 people inside to worship. Opining about what "impossibility" meant for non-religious entities, the governor's counsel said it would be impossible to enforce the 10-person limit on grocery stores, airports, medical facilities and home improvement stores but not so for the church. The counsel also conceded there was not a public health rationale for allowing 50 people to gather inside at a funeral but no more than 10 for indoor worship. The court ruled that none of this comports with the free exercise clause.

In First Pentecostal Church of Holly Springs v. City of Holly Springs Mississippi, No. 3:20V119 M-P, 2020 WL 1978381 (N.D. Miss. April 24, 2020), the court granted a TRO to a church, allowing drive-in church services with windows closed or only slightly cracked open as a reasonable accommodation under the free exercise clause.

Denying Injunction

In South Bay United Pentecostal Church v. Newsom, 959 F. 3d 938 (9th Cir. 2020), a split court affirmed the trial court and ruled that California's South Bay United Pentecostal Church and its bishop were not likely to succeed on the merits of their challenge on free exercise grounds to the state's and county's stay-at-home orders as applied to in-person religious services. The U.S. Supreme Court denied 5-4 an injunction pending appeal in South Bay United Pentecostal Church v. Newsom, 140 S.Ct. 1613 (2020). As background, the underlying order generally required all individuals to stay home except as needed to maintain continuity of operations of the "federal critical infrastructure sectors." Churches were excluded. The state public health officer subsequently designated a comprehensive set of "Essential Critical Infrastructure Workforce," including clergy, but only if they held services "through streaming or other technologies that support physical distancing and state public health guidelines." On April 28, 2020, the California governor announced a four-stage reopening plan that put churches at Stage 3, whereas schools, child care, restaurants, museums, shopping malls and swap meets were included in Stage 2. "Where state action does not 'infringe upon or restrict practices because of their religious motivation' and does not 'in a selective manner impose burdens only on conduct motivated by religious belief,' it does not violate the First Amendment." Dissenting, Judge Daniel Collins rejected the state's argument that the constitutional standards that normally govern review of a free exercise claim should not apply during the pandemic. He argued that by assigning all in-person religious services to Phase 3, the reopening plan is facially discriminatory and, in any event, not neutral or of general applicability. Concurring in the denial of injunctive relief as the swing vote, Chief Justice John Roberts said the restrictions on places of worship were comparable to those on secular gatherings, including lectures, concerts, movie showings, spectator sports and theatrical performances, and the order exempts or treats more leniently only dissimilar activities in which people neither congregate in large groups nor remain in close proximity for extended periods. Injunctive relief against Gov. Gavin Newsom's orders was denied for similar reasons in Cross-Culture Christian Ctr. v. Newsom, No. 2:20-cv-00832-JAM-CKD, 2020 WL 2121111 (E.D. Cal. May 5, 2020) and due to mootness in Ministries v. Newsom, No. 20-cv-683-BAS-AHG, 2020 WL 2991467 (S.D. Cal. June 4, 2020).

In Elim Romanian Pentecostal Church v. Pritzker, 962 F. 3d 341 (7th Cir. 2020), the court affirmed the district court's ruling that Illinois Gov. J.B. Pritzker's executive order limiting the size of indoor public assemblies to 10 persons, including religious services deemed "essential," does not violate the free exercise clause. Denying injunctive relief to the plaintiffs, the court determined that the order was neutral with respect to religion and supported by the compelling need to safeguard the public health during a pandemic. Places of public amusement also fall within the cap. Exempt from the cap were "[b]usinesses and religious and secular nonprofit organizations, including food banks, when providing food, shelter and social services, and other necessities of life for economically disadvantaged or otherwise needy individuals…." Persuaded by Chief Justice Roberts' reasoning in South Bay, the court was not convinced that the order discriminated against religious activities. "Worship services do not seem comparable to secular activities permitted under the executive order, such as shopping, in which people do not congregate or remain for extended periods." The court considered movies and concerts a better comparison group, which were altogether forbidden. Before argument, the governor replaced the executive order under review with one making the 10-person cap a recommendation rather than requirement, but the court declined to moot the case due to the risk that the governor could as easily restore the prior order. The court reached a similar result in Cassell v. Snyders, No. 20 C 50153, 2020 WL 2112374 (N.D. Ill. May 3, 2020).

In Calvary Chapel Lone Mountain v. Sisolak, No. 2:20-cv-00907-RFB-VCF, 2020 WL 3108716 (D. Nev. June 11, 2020), the court denied injunctive relief to a church that challenged Nevada Gov. Steve Sisolak's revised emergency order allowing communities of worship and faith-based organizations to conduct in-person services capped at 50 people while allowing secular businesses, including casinos, to open subject to an occupancy cap of up to 50 percent of their building capacity. This court also relied heavily on Chief Justice Roberts' reasoning in South Bay. Although the court agreed that church services may in some respects be similar to casinos, the court determined that casinos are subject to substantial additional restrictions by the Nevada Gaming Control Board. The court stated, "Given that there are some secular activities comparable to in-person church services that are subject to more lenient restrictions, and yet other activities arguably comparable to in-person church services that are subject to more stringent restrictions, the court cannot find that the Emergency Directive is an implicit or explicit attempt to specifically target places of worship."

In Calvary Chapel of Bangor v. Mills, No. 1:20-cv-00156-NT, 2020 WL 2310913 (D. Me. May 9, 2020), the court denied the plaintiff a temporary injunction against an executive order limiting the size of gatherings to 10 people. According to the court, exempt entities did not foster the same type of assembly as comparable entities subject to the orders' restrictions.

In Legacy Church, Inc. v. Kunkel, No. IV 20-0327 JB / SCY, 2020 Wl 1905586 (D. N.M. April 17, 2020), the court denied injunctive relief to a church that sued the State of New Mexico and secretary of New Mexico Department of Health after she removed an exemption for places of worship from an order prohibiting mass gatherings of five or more people without social distancing. The state had Eleventh Amendment immunity.

In Lighthouse Fellowship Church v. Northam, No. 2:20cv204, 2020 WL 2110416 (E.D. Va. May 1, 2020), the court denied relief to a church pastor who challenged Virginia Gov. Ralph Northam's executive order prohibiting all gatherings of more than 10 individuals. The court determined that the order did not single out religious practice but prohibited all social gatherings of more than 10 individuals.

In Bullock v. Carney, No. 20-674-CFC, 2020 WL 2813316 (D. Del. May 29, 2020), the court denied a TRO to a church pastor who challenged an executive order that restricted in-person services and required him to wear a mask while preaching. The court determined that the status quo that the plaintiff sought was more restrictive than the Delaware governor's most recent amended order restricting in-person church services to 30 percent of a church's fire code occupancy limit. There was no record of evidence to show that the requirement that a pastor wear a mask, the requirement that a pastor not hold a person during baptism, and certain requirements pertaining to the preparation or distribution of communion would cause irreparable harm.

Eighth Circuit Considers ERISA Church Plan Exemption

Shannon B. Hartsfield

In Sanzone v. Mercy Health, 954 F. 3d 1031 (8th Cir. 2020), the court considered claims related to a retirement plan for employees of an affiliate of Mercy Health (Mercy). Mercy is a nonprofit corporation founded by a religious order established by the Catholic Church. At the time the appellant filed the complaint, Mercy and its subsidiaries possessed $6.4 billion in assets and operated hospitals in four states. Sponsorship of Mercy was transferred to Mercy Health Ministry, a public juridic person recognized by the Catholic Church and governed by a board of directors. A committee provided fiduciary oversight of the plan. The plaintiff, a registered nurse at Mercy for more than 25 years, claimed that Mercy violated federal and state laws and that its management disregarded the requirements of the Employee Retirement Income Security Act (ERISA).

Mercy argued that its retirement plan falls under ERISA's church-plan exemption, so it does not have to comply with ERISA's requirements. The church plan exemption also includes plans that are maintained by principal-purpose organizations, which are controlled by or associated with a church and have the primary function or purpose of administering or funding a plan for church employees. The plaintiff argued that Mercy's retirement plan was not a church plan. In the alternative, the plaintiff argued that the church-plan exemption is unconstitutional because it violates the Establishment Clause.

The district court held that it lacked jurisdiction over the lawsuit because the plan was a church plan, and the plaintiff lacked standing to bring a suit under the Establishment Clause. Affirming in part, the court of appeal held that "whether a plan is an ERISA plan is an element of the plaintiff's case and not a jurisdictional inquiry." The court observed that a church plan includes one "maintained" by a principal purpose "organization." The opinion discusses at length the definitions of "maintained" and "organization," and held that the Mercy plan is a church plan.

The district court determined that the plaintiff lacked standing to challenge the plan because the mere possibility that a lack of ERISA protections would result in an underfunded plan was not sufficient to grant standing. The appellate court agreed to this extent but the plaintiff pleaded other specific injuries resulting from the deprivation of ERISA protections, such as ERISA's notice, insurance and funding requirements. Because the lower court did not consider whether these deprivations of specific ERISA protections constituted sufficient injury to confer standing, the court remanded the case for consideration "whether the deprivation of ERISA protections confers Article III standing, and if so, whether the church-plan exemption violates the Establishment Clause."

Islamic Mahr Enforceable in Maryland

Nathaniel Bernstein

In Nouri v. Dadgar, 345 Md.App. 324 (2020), 226 A.3d 797 (2020), a Maryland appeals court for the first time considered the enforceability of a mahr, a contractual obligation for a groom to provide payment of significant value to a bride as part of a marriage ceremony under Islamic law. In practice, brides often choose to defer these payments until death or, in this case, divorce. Here, in a consolidated case considering two divorces, husbands argued that they were not obligated to pay mahr because Muslim marriage contracts were unenforceable, while wives argued that Muslim marriage contracts were enforceable and as such, payment of their mahrs was due on demand. In one case, a trial judge ordered payment of the mahr on the grounds that it was a contractual obligation entered before civil marriage (during a Muslim marriage ceremony), and as such was enforceable under neutral principles of law. The same trial judge reached a similar conclusion in the companion case, wherein the Muslim marriage ceremony took place after the civil marriage ceremony but the mahr had been negotiated beforehand.

On appeal, the court considered the parties' arguments as to whether enforcing a mahr violated the Free Exercise Clause and/or Establishment Clause. The court was persuaded that enforcement was not in violation because the negotiations that resulted in the mahrs considered terms that a court could understand from a purely secular lens, without need to consider religious doctrine, and that other states had reached similar conclusions as to the enforceability of a mahr where its secular terms satisfied the requirements for valid contracts by parties in a confidential relationship. Here, the court was satisfied that the mahrs under their secular terms were to be construed as agreements about the allocation of certain property made by parties engaged to be married, and for which marriage served as consideration. While the court ruled that mahrs could be enforceable, the court vacated the judgement of the court below and remanded for reconsideration of the mahrs not as standard contracts between parties operating at arm's length but as contracts entered into by parties in confidential relationships.

Church States Claim Against Mandatory Insurance Coverage Rule

Nathan A. Adams IV

In Skyline Wesleyan Church v. Cal. Dep't of Managed Health Care, 959 F. 3d 341 (9th Cir. 2020), the court ruled that a church stated a free exercise claim against the California Department of Managed Health Care's requirement that group health insurance plans must provide coverage for all legal abortions. The employer had coverage that complied with its religious beliefs before the requirement was imposed, but it lost that coverage once the insurer amended its plan to comply with the directive. The court vacated the district court's ruling that it lacked jurisdiction over the matter and remanded the case for further proceedings.

Minor States Claim Against Church for Minister's Prohibited Sexual Conduct

Nathan A. Adams IV

In Doe v. Apostolic Assembly of the Faith in Christ Jesus, No. EP-19-CV-240-KC, 2020 WL 1684227 (W.D. Tex. April 6, 2020), the court ruled that a parishioner and her parents stated a claim for vicarious liability; negligent hiring, supervision and retention; exemplary damages based on gross negligence; and prima facie tort after a youth minister allegedly engaged in prohibited sexual conduct with the parishioner when she was a minor. The ecclesiastical abstention doctrine barred the court from considering a claim that the church breached its fiduciary duties.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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