Huntsman and the Church Autonomy Doctrine

By Frank DeVito

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Huntsman and the Church Autonomy Doctrine

In January, the 9^th Circuit released an en banc decision in a case called Huntsman v. Corporation of the President. While the facts of the case, which involve the Mormon practice of tithing and the way in which the church uses those tithed funds, are themselves very interesting, the case also raises an important question about the First Amendment principle called the Church Autonomy doctrine.  

Huntsman v. Corporation of the President: The Facts

In this case, the plaintiff, James Huntsman, sued the Church of Jesus Christ of Latter-day Saints. The church has a religious teaching requiring its members to tithe by giving 10% of their income to the church. Huntsman, who had given large sums of money to the church over many years, claimed that the tithes were inappropriately used by the church to fund business endeavors. In particular, Huntsman objected to tithing funds being used for a project called City Creek, a development located near the church’s Salt Lake City temple. Huntsman pointed to several statements from church leadership allegedly promising that tithing dollars were not being used on the City Creek Project.

A whistleblower at Ensign Peak Advisors, a separate entity the church used to invest its reserve funds in certain business endeavors, including City Creek, came forward to the IRS and reported that the church was allegedly misusing tithing funds to engage in commercial ventures such as City Creek.

Huntsman demanded his lifetime tithing funds back (over $1 million in cash, plus donations of stock). The church refused and litigation ensued.

Huntsman v. Corporation of the President: Two Very Different Legal Theories

Huntsman filed a lawsuit alleging fraud. Huntsman argued that the church “committed fraud by stating that tithing funds were not used for the Church’s commercial endeavors when in fact they were.”

At the trial court, the church made two alternative arguments, which are important for our purposes because they decide the case on very different grounds. First, the church argued that there were no misrepresentations. The church claims that the City Creek development project was not funded with direct tithing contributions. Some revenue from tithing funds (interest or dividends earned by investing tithing funds) were apparently used, but not funds from the principal of tithes. So, the church argues that all of the representations it made about not using tithing funds for this project were true.

Second, the church also argued at the summary judgment stage that the church should prevail due to the First Amendment doctrine known as the Church Autonomy doctrine, which forbids courts to decide questions of religious teaching.

The trial court held that the “First Amendment did not prevent it from reaching the merits of Huntsman’s fraud claims.” It then accepted the church’s argument that no reasonable juror could have found that the church made any kind of misrepresentation, which means there could be no claim of fraud.

A three-judge panel of the 9^th Circuit heard the appeal and reversed the ruling on the City Creek project, but then the court agreed to an en banc re-hearing by the entire 9^th Circuit. After weighing the evidence, the majority opinion issued by the 9^th Circuit essentially agreed with the reasoning of the trial court and ruled that “no reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project.” Without a misrepresentation, there is no valid fraud claim.

Several judges signed a concurring opinion, agreeing with the outcome in favor of the church but citing a very different reason. The concurring opinion agrees that there was no fraudulent misrepresentation made by the church, but also points to a fundamental issue with the majority opinion: “it would have done well for the en banc court to recognize the obvious: there is no way in which the plaintiff here could prevail without running headlong into basic First Amendment prohibitions on courts resolving ecclesiastical disputes.”  

The concurring opinion warns that “we should not indulge in the illusion that this is merely a secular lawsuit about civil fraud. Under the First Amendment, the plaintiff’s challenge to the Church’s understanding of tithing is not susceptible to resolution in a court of law . . .” Tithing is a religious practice, a matter of doctrine for the Mormon church. It is a religious teaching that members of the church are to tithe, to give 10% of their income to the church.

The warning given by the concurring opinion is an important reminder of the Church Autonomy doctrine. The opinion quotes longstanding Supreme Court precedent, which makes clear that  

“[t]he First Amendment protects the right of religious institutions ‘to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.’” Our Lady of Guadalupe Sch., 591 U.S. at 736 (quoting Kedroff, 344 U.S. at 116). The corollary to this is that courts must respect religious organizations’ “independence in matters of faith and doctrine and in closely linked matters of internal government.” Id. at 747.

The problem with the way the majority decided the Huntsman case is not the end result, but that the court examined and evaluated a claim that was essentially about the church’s teaching on tithing and how the church ought to spend its funds to fulfill its religious purposes. Whether the church should spend revenue from tithing funds to develop an area near the church’s property is a question of the internal operations of a church; courts have no authority to decide such questions of religious doctrine and internal governance.

At first, this might seem exaggerated. Isn’t this a case about whether the church misused funds, not about religious teaching? The concurring opinion takes issue with this claim and specifies two particular problems with the court’s interference in this case.  

First, to resolve the case, the court needed to weigh in on the definition of “tithing funds,” determining whether investment income derived from tithing funds that were invested, also counts as part of the tithing funds. The court notes that this question involves determining what the duty to tithe includes and what tithing actually means. Can tithes be invested? Are the interest payments and dividends received from invested tithing funds part of the tithe or are they distinct funds? This is a question for the church, not the courts, to decide. The opinion notes that dressing up a question of religious doctrine as a secular fraud claim does not avoid the First Amendment problem (just as dressing up a dispute over the employment of a minister as a secular employment law issue would not avoid the Ministerial Exception). US courts simply do not have authority to address religious questions.

Second, the opinion makes an interesting observation about reasonable reliance. To prove fraud, Huntsman would have to prove that his reliance on the church leader’s statements about where tithing funds were being spent was reasonable and that his reliance was the reason he was tithing. But the opinion notes that this too devolves “into questions about religious doctrine.” The church teaches that tithing is a requirement for membership in the church, a core practice of the religion. If that is the case, it is unlikely that a member of the church would decide not to tithe because of a statement about how tithing funds may be spent. Analyzing whether this reliance was reasonable and whether Huntsman would be reasonable to decide not to tithe in the face of such a statement “would leave courts and juries making determinations about why a reasonable member of the Church of Jesus Christ of Latter-day Saints would or should tithe. These are inherently religious questions.”

The Takeaway

This case serves as an important reminder of the powerful implications of the First Amendment. The First Amendment is not merely a defensive tool, where churches or religious organizations can respond to legal challenges by invoking their right to free exercise of religion. In some cases, the First Amendment is meant to prevent courts from deciding religious questions in the first place. While the majority in Huntsman ultimately decided not to invoke the Church Autonomy doctrine, the concurring opinion serves as an important reminder that religious organizations should be proactive in claiming Church Autonomy anytime courts attempt, even indirectly, to decide matters of religious teaching.

To learn more about the Church Autonomy doctrine, check out this essay by Carl H. Esbeck for a comprehensive overview of the Church Autonomy doctrine and how it is applied in various circumstances.