Lessons on Religious Liberty and Corporate Governance in FACS v. Blair

By Frank DeVito

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How much power do courts have to address questions about the internal affairs of religious organizations? Where do the legitimate powers of courts to interpret secular principles of law end and First Amendment religious protections begin?

An appellate court in Connecticut recently had to decide precisely these questions in Foundation for the Advancement of Catholic Schools v. Blair. The facts of the case reveal that the question of whether a court is deciding an issue based on secular, neutral principles of law or religious principles is by no means obvious.

In Blair, the organization was a nonstock corporation incorporated to promote Catholic education. The board consisted of both lay members and several ex officio clergymen, including the archbishop of Hartford, Connecticut. The dispute in the case revolved around the selection of board members and the interpretation of the organization’s bylaws: “Prior to 2005, the appointment of [the] members [of the board] was the sole prerogative of the archbishop. . . . In 2005, [FACS’] bylaws were amended to add a Governance Committee [(committee)] [that was] tasked with nominating a slate of candidates for open and vacant trustee positions. This slate of candidates would then be given to the archbishop to make appointments to the board.”

The dispute arose when the governance committee presented a slate of candidates as potential board members to the archbishop. The archbishop did not choose new board members from the slate but instead chose other candidates who were not part of the slate. Additionally, the archbishop notified two board members that the new board members he appointed had replaced them.  

The plaintiffs (the organization itself plus five members of the board) filed suit, asking the court to declare that the organization’s bylaws required the archbishop to choose board members only from a slate chosen by the governance committee. The trial court sided with the archbishop, “determining that exercising jurisdiction over the action would have violated the free exercise and establishment clauses of the first amendment to the United States constitution because adjudicating the dispute would have resulted in the excessive entanglement of government and religion.”  

The appellate court reversed the trial court’s decision, holding that “there was no first amendment barrier prohibiting the court from applying neutral principles of state law governing corporations to the secular language of the corporation’s bylaws for the purpose of declaring the process to be followed in appointing board members and determining the validity of certain appointments to the board.” The appellate court rejected the argument that the archbishop was exercising his “religious discretion” in appointing board members, denying that “an examination of the religious reasoning of an ecclesiastical authority is off-limits for a secular court, regardless of whether the underlying dispute could ordinarily be decided by . . . neutral principles of contract or corporate law.”

A dilemma between secular law and religious freedom

This case represents a common dilemma: does a court have jurisdiction to decide cases involving the internal governance and operations of a religious organization? Or are religious organizations insulated from such scrutiny by the First Amendment, which prevents government involvement in answering religious questions?  

The answer depends on the facts and circumstances of each case. It is true that the government does not have jurisdiction to decide religious disputes within a religious organization. But it is also true that courts may decide matters of secular law involving religious organizations – a court is free to interpret the plain language of a contract or an organization’s bylaws, even if one of the parties is a religious organization.

The Blair case is not an easy one, but the outcome does present a religious liberty problem. The archbishop was the head of the Catholic Church within the diocese where this religious organization operates, and the archbishop had the authority to appoint directors. Clearly, his reasons for selecting board members may very well have involved religious decisions about the faith and beliefs of the individuals he selected.  

The tension comes from the fact that it seems the organization freely chose to create a governance committee that chooses slates of potential directors, which potentially limits the archbishop’s freedom in the selection process.  

While the line between secular legal principles and religious questions is not always a clear one, the reality is that if religious organizations make use of the secular legal system, they should make sure their documents are as clear as possible to avoid these types of legal conflicts. If the religious organization intends to give a religious leader (in this case, the archbishop) sole authority to choose directors as he sees fit, the bylaws should be clear that the archbishop does not have to choose from the governance committee’s list.  

Unfortunately, it seems that the bylaws in this case were not clear: it was not apparent from the record whether the archbishop is required to choose board members from the slates recommended by the governance committee or whether he is free to choose directors other than those recommended on a slate.

If a religious organization intends to delegate sole authority to a religious leader to make certain decisions, it is crucial that the organization has bylaws that clearly state this decision. That way, ambiguities that could involve courts in deciding such sensitive questions can be avoided.  

If your organization has not recently evaluated its bylaws to ensure that the religious decisions of the organization are reflected clearly in the bylaws, it is time to consult Napa Legal’s Bylaws Project (and maybe speak to an attorney) to conduct a thorough review of the organization’s governing documents.

Two serious religious liberty concerns

While the practical takeaway from this case is that religious organizations need to have clear bylaws to protect their religious liberty, the outcome of this case highlights a couple tensions that deserve further examination.  

The court states that it has jurisdiction to “render any appointments [the archbishop] made to the board in his entirely secular capacity as a corporate officer for FACS to be of ‘no force or effect’ if they were unauthorized by the bylaws or state law.” There are two things to note here.

First, it is by no means clear that the archbishop’s authority to appoint board members is “in his entirely secular capacity as a corporate officer.” It is not common that a nonprofit organization would grant sole authority to appoint directors to a single board member or officer. The most likely reason that the archbishop has this unique appointment power is because he is the archbishop, a religious authority. Therefore, readers should be skeptical when the court rejects the argument that the archbishop is exercising his religious discretion and not merely acting as a purely secular corporate officer.  

Second, the court states that it has jurisdiction to invalidate the archbishop’s appointments “if they were unauthorized by the bylaws or state law.” (emphasis added). There are two very different claims being made here. If the archbishop’s actions were indeed unauthorized by the organization’s own bylaws, then it is more likely that he did not have the discretion to take those actions. That would be a free choice made by the religious organization itself about its internal governance by limiting the archbishop’s authority.  

If, however, the bylaws did grant unilateral decision-making authority to the archbishop but there was a state law preventing such unilateral action, then we would have a clear First Amendment issue. A state law requiring a governance committee to limit a religious leader’s authority in making appointments is very different from a religious organization making that choice itself.

Conclusion

Many laws, including the First Amendment, allow religious organizations to operate according to their religious beliefs. But when religious organizations choose to make use of secular laws – to incorporate, adopt bylaws, etc. - it is important that the use of those legal devices accurately reflects the religious nature and decisions of the organization.  

Religious organizations are free to choose to be more ecclesiastical (allowing a religious authority such as a bishop to have unique powers) or to be more independent from a religious hierarchy. Both decisions can make sense in certain situations. Whether your organization intends to delegate certain authority to a religious leader or not, make sure that the decision is clearly reflected in your organization’s governing documents. Clear bylaws and policies can prevent unfortunate circumstances where disputes concerning religious authority and teaching are unnecessarily and inappropriately brought before a court of law.

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