DEFAMATION AND INTERFERENCE WITH CONTRACTUAL RELATIONS

The search for theories of recovery that evade the scope of the Ministerial Exception and the Ecclesiastical Abstention Doctrine is ongoing.  The theories that seem to offer some hope to aggrieved plaintiffs and to survive motions to dismiss, occasionally, are defamation and interference with contractual relations.  However, projecting forward into the future, defamation will almost never yield an economically viable plaintiff’s claim (enough to carry litigation expenses and counsel fees while producing a recovery sufficient to make the risk worthwhile).  Also, again projecting, few pastors and only a few denominational leaders will have outside contracts sufficient or provable upon which to base a claim.  Nevertheless, as will be noted below, such theories may only survive premised on a faulty appreciation of what constitutes a “church.”

In McRaney v North American Mission Board of the Southern Baptist Convention, Inc., Slip Op., (ND Miss., 2018), the former Executive Director of the non-party General Mission Board of the Baptist Convention for Maryland was terminated.  The Plaintiff claimed the termination resulted from defamation by the American Mission Board of the Southern Baptist Convention.  The Court held that they were “separate and autonomous” because both were self-governing, i.e., had their own governing boards.  However, the former was a “state convention” of the Southern Baptist Convention and the latter’s board was selected at annual meetings of the Southern Baptist Convention.  Indeed, these two “separate and autonomous” entities had eight jointly funded staff positions which Plaintiff supervised.  The joint employees were engaged through a “partnership agreement” between the entities.  When the partnership agreement came up for renewal, the Plaintiff declined it.  That position either caused or resulted from a rift which eventually also led to the termination of Plaintiff.  Plaintiff alleged the termination resulted from a threat of the “autonomous” American Mission Board to pull funding if Plaintiff was not terminated.  The Plaintiff also claimed that the American Mission Board tried to cancel Plaintiff’s speaking engagements with a “mission symposium” and the Florida Baptist Convention Pastor’s Conference.  The Plaintiff claimed that the American Mission Board posted his photograph in the reception area and labeled it in a disparaging manner causing emotional distress.  The Court overruled a motion to dismiss, which means the case will proceed into discovery and possibly other dispositive motions, or even trial, before resolution.  The Court held the defamation, interference with the speaking engagements and the inducement of termination, which the Court had to assume were true for purposes of the motion, could be decided without interference with ecclesiastical decision-making and that the American Mission Board was not the actual employer so the Ministerial Exception did not apply.

Like all interlocutory decisions, the eventual final decision could result in the opposite result.  But, the premise of this decision, that a denomination can be carved up like a holiday turkey in a tort lawsuit, would seem to invite error.  While evangelical denominations are often not strictly hierarchical, the components are not fully “autonomous” but rather “connectional.”  The Court did not review the governing documents (and may not have been presented the governing documents at this early stage) in the opinion but even so noted that the board of the American Mission Board was interlocked with the Southern Baptist Convention and that the Plaintiff’s former employer was a “state convention.”  Thus, none of the alleged defamation was allegedly “published,” i.e., sent outside the confines of the church.  The contracts allegedly interrupted were all intra-church relationships.  The Court appears to have decided to engage in resolving an intra-church employment dispute brought by an employee the Court held was probably covered by the Ministerial Exception.  Nevertheless, the case is moving forward on a defamation theory and a contractual interference theory and if one court will agree to hear more, others might also.

THE COST OF TAKING THE MONEY – REPRISE

Para-church organizations, like a school owned by a church, that take federal funds may not be permitted as a condition of receiving the federal funds to post religious materials, offer religious education, or directly associate with clergy and church staff.  We have posted about such cases before.  Another disadvantage to taking federal money is that such a school will likely have employees that are considered secular and not religious (their personal beliefs or memberships notwithstanding).  As a result, there might be no First Amendment shield for employment claims.

In Mosaic United Methodist Church v Maureen Hammond, et al., Slip Op. (Ky. App., 2018), the director of the school for twenty years did not recover from the passing of her husband allegedly resulting in absences and other signs of depression.  Eventually, after a student was injured, she was terminated.  Her termination was allegedly because of dereliction leading to safety concerns.  The Plaintiff, however, claimed the reason for termination was pretextual and brought an employment disability discrimination suit.  Her supervisor was the pastor of the church.  A jury entered a verdict in her favor and the court entered a judgment for attorney fees, too.  The school was operated under a separate policy and procedure manual.  The alleged absences and other failures were not documented and did not result in disciplinary review prior to termination.  The church tried to raise an ecclesiastical abstention doctrine defense but it initially did so in a one sentence motion and did not raise the issue again until two and a half years of discovery was completed.

Churches that found para-church organizations like schools that evolve into federal funding dependents should be transferred to another non-profit corporation or separately incorporated.  Another possibility might be to form a trust to own the school and merely allow the church or its leadership to serve as trustee.  An out right sale of the school to another entity on marginally favorable terms might be advisable.  At the least, the pastor should not be supervisor; pastors are spiritual leaders and not secular employers by training or inclination.  The church board might fill the role, but the other alternatives are better.  Otherwise, the church will have the exposure of a secular non-church employer and possibly an invitee of children, but will have the income stream of a church, which is not usually enough to cover such exposures.  Insurance when it is available will be necessary.  However, although a capacity crunch is only a distant memory, affordable insurance is not always available.  If a para-church organization must be operated as a separate “secular” entity, maybe it should be one.

MINISTERIAL NON-COMPETE CLAUSES

It must be admitted that the last thing I thought I would ever post would be a case summary involving a non-compete provision between a member of the clergy and a church or denominational organization.  While non-compete provisions might have a place among sales people that make sales based on employer created resources in some circumstances or sale of a business, it is hard to visualize a non-compete against an evangelist, a minister or a pastor.  The needs met and the skills brought by these people are supposed to be outside the pale of government intervention, influence, interference or regulation.  The First Amendment, the Ecclesiastical Exception Doctrine and the Ministerial Exception Doctrine are intended to protect from government some of the most valuable and fragile treasures in a free society.  Of course, so also enshrined in the Constitution is the sanctity of contracts.

In Steiner v American Friends of Lubavitch (Chabad), Slip Op., (DC App., 2018), the Plaintiff was a rabbi employed to operate a campus ministry.  He was employed under a written employment contract that contained a non-compete provision.  The non-compete provision also contained elements that might be recognizable as a non-solicit clause.  The Defendant sought a preliminary injunction.  The trial court determined the non-compete provision was greater in breadth than necessary to protect the Defendants’ reasonable interest and modified the non-compete provision and then granted a preliminary injunction.  The preliminary injunction precluded the Plaintiff from conducting ministry within one mile of the college campus (geographic limitation), precluded it for two years (temporal limitation), and Plaintiff could not be hired by another campus ministry on the same campus that supported orthodox Jewish belief or practice.  The Plaintiff continued to use the former employer’s name and some of its property.  The appellate court affirmed.  However, the trial court’s injunction of the Plaintiff’s personal, i.e., non-employment ministry to the college students was reversed.  The appellate court also questioned whether the injunction could also prohibit the Plaintiff’s wife conduct in any respect and remanded for a hearing on that subject.  As an unemployed rabbi, the Plaintiff could continue to host Friday night Shabbos dinners, classes, social events for students, and annual trips to Israel for the students.  But, the Plaintiff could not do these things for a paycheck from another employer religious organization on that college campus for two years.

It is clear that this court, and maybe others, will determine that a written employment contract does not require interference in ecclesiastical issues or structures in order to enforce it.  However, practitioners that want to adopt employment contracts containing non-compete or non-solicit clauses between churches or para-church organizations and ministers will generally find that east of the Mississippi River it works better than west of the Mississippi River.  Also, hierarchical church and para-church organizations will find them easier to use than congregational or connectional church organizations.  It is likely that the church name and property will be subject to protection by injunction just like trade dress and trade secrets.  In the Steiner case, the parties engaged in an ecclesiastical hearing as well as multiple court hearings, followed by appellate review, and had not reached finality.  That might indicate that great expense will accompany an effort to enforce a ministerial non-compete.

INTERNAL CHURCH REORGANIZATION DEFENSE

A well known teacher of church development and advanced training for pastors once told me that pastors, regardless of denomination, in the 21st century are required to be more than knowledgeable about the Scriptures or counseling but also must be adroit in finance, accounting, management, real estate, and technology.  The observation seemed to reflect the seeming truth that the 20th century level of complexity may have allowed reliance on other church leaders that were not clergy, such as church boards or a diaconate, but that is rarely adequate now.  Thus, church staff now include many people with a broad range of skill sets.  The question becomes whether those types of positions are ecclesiastical, or “sufficiently” so, to qualify for the “immunity” conferred by the Ecclesiastical Abstention Doctrine.

In Kelly v St. Luke Community United Methodist, Slip Op. (Tex. Civ. App. 5th, 2018), the “Director of Operations” was terminated and escorted from the church property by the pastor and a police officer engaged for that purpose.  The Director lodged employment claims and a defamation claim.  The defamation claim was that the personnel action of the church was communicated to non-member third parties, such as the police officer, and non-members that may have attended meetings of the membership in which the personnel action was announced.  The termination was alleged by the church not to have been performance based but rather the result of an internal reorganization of the church.  The Director’s $82,000 annual position was allegedly scrapped and a new Director’s position redesigned in the reorganization was offered at $50,000.  The Court recited claims from both sides that indicated that the relationship between the new senior pastor and the Director was possibly problematic and that the senior pastor might have considered the Director’s compensation too high for the position.  The Court held the reorganization was an internal church management decision cloaked in the Ecclesiastical Abstention Doctrine and that it did not matter whether the Director’s position was “ministerial.”  The defamation claim was found not to be based on a scintilla of evidence of publication, i.e., there was no proof of defamation at any meeting the public could attend and the engagement of the police officer did not rise to the level of publication.  Thus, the appellate court generally affirmed the trial court decision (for this summary Texas law specifics have been omitted but would matter to a Texas practitioner).

Employment decisions that arise from actual internal reorganizations by the church will likely be viewed as ecclesiastical.  Employment positions redesigned by changes in duties and compensation will likewise most likely be viewed as ecclesiastical decisions.  Documentation of the decisions by minutes of meetings conducted consistently with the church governing documents that approve or implement either will likely be respected by a Court.

100th Post: ELECTION OF OFFICERS – A NEUTRAL PRINCIPLES ISSUE

Local churches governed by the congregation, even if they are also a member of a denomination, are generally either associations or corporations.  If they are associations, the only governance question is whether there was a vote of the eligible voting members and the result.  Neutral Principles generally allow courts to referee those elections.  Also, incorporated churches typically have bylaws or statutory corporate governance rules to follow.  Neutral Principles generally allow courts to referee those elections.  Once the eligible voting membership casts ballots and a decision is reached, the courts typically fell comfortable enforcing those decision.

In Pule v Macomber, Slip Op. (D. Ha., 2018), the church split spilled into the street and at least one side allegedly enlisted the local police department.  The Plaintiffs alleged they were locked out and threatened with charges of trespassing.  The Plaintiffs allegedly tried to amend the bylaws to extend their two year terms as officers of the church until the litigation was concluded.  A court could probably decide the validity of the amendment under Neutral Principles.  The Plaintiffs alleged that the private citizen defendants conspired with the non-party local police to violate their civil rights.  The claims survived a Motion to Dismiss and the conspiracy claim, even though the police and police agency were not named defendants, was sufficient for federal question jurisdiction in federal court.  How the case may ultimately conclude may still be years in the future.

Generally, if a court will decide which side was elected to office, which can be a messy business as has been seen in other cases reported herein, the prevailing faction’s decisions are implicitly validated.  That decision will turn on the language of the bylaws, the documentation of elections compliant with the bylaws, and the documentation of congregational voting.  One of the decisions generally validated is the hiring or termination of clergy.  Clergy employment decisions are typically out of reach as required by the Ministerial Exception Doctrine.  But, once the officers have been confirmed in office and identity, the employment issue is usually rendered moot.

2018 Begins: UNENFORCEABILITY OF EMPLOYMENT CONTRACTS UNDER THE ECCLESIASTICAL ABSTENTION DOCTRINE

The New Year commenced with a step along the path of the development of the law known as the Ecclesiastical Abstention Doctrine.  Indeed, this development may be an outlier or even a step too far.  Because the development is in an unpublished court opinion, it may be cited only for persuasive effect and is not precedential (aka stare decisis).  Nevertheless, the opinion is from a United States Court of Appeals and those are always significant, especially in the federal district courts that report to that circuit.

In Myhre v Seventh Day Adventist, Slip Op. (11th Cir. 2018), a retired clergyman (assumed so because he was “defrocked”) retired in 2009 and began collecting retirement benefits.  In 2013, an unspecified “theological disagreement” arose.  The opportunity for a retiree to initiate a “theological disagreement” would seem non-existent but to a denominational insider this might seem quite normal.  In addition to being “defrocked” the Plaintiff was excommunicated.  In 2013 the denomination cut off the Plaintiff’s retirement benefits.  The retirement plan document stated eligibility continued only so long as the beneficiary remained a “member of good standing.”  The Plaintiff was no longer such a member after excommunication.  The 11th Circuit affirmed the trial court’s decision that the trial court lacked jurisdiction to hear the breach of contract claim because the case would require an inquiry into the meaning of “member of good standing” and the underlying evidence on that subject.  Such an inquiry, the trial court reasoned, would be blocked by the Ecclesiastical Abstention Doctrine.  The 11th Circuit characterized the dispute as “disciplinary procedure” not appropriate for judicial review.

The argument did not seem to be whether the membership clause was a condition to starting benefits.  There did not seem to be a dispute about whether the membership clause requirement was by its own language perpetually applicable after initial eligibility had been determined.  It would seem that a court could under the Neutral Principles Doctrine determine if the membership clause was an ongoing condition precedent to continuing to receive benefits.  If it was (and it may have been but the opinion was a bit terse), application of the Ecclesiastical Abstention Doctrine would make sense.

REVERSION PROVISION MANUVERS

Typically, denominational authorities include in their denominational control documents, or even in the titles of the local churches, reversion provisions that prevent local churches from going rogue or otherwise fleeing with the real property.  These provisions are generally intended to protect the generations of members that contributed to the equity owned by the local church by preventing the current generation of members, or some vocal part, from “strip mining” the local church real estate asset.  Sometimes these provisions provide leverage to the denomination to enforce unpopular ecclesiastical positions.  Rightly or wrongly, the reversion provisions are enforced by secular courts and courts will rarely if ever look to the underlying dispute to deny enforcement.

In Saint James Mission Church v African Methodist Episcopal Church, Slip Op. (La. App. 2017), some of the local church members tried to use an eviction docket to evict the denomination after they were locked out.  The split with the denomination raged through the eviction proceeding, a federal trial court proceeding, a federal appellate court proceeding, and finally the state appellate court proceeding.  It took at least six years.  The legal expense was likely significant.  But, in the end, the federal courts ended up on the side line, the state trial court dismissed the eviction proceeding, and the state appellate court affirmed.  The state appellate court held that the eviction docket had a dedicated purpose and the enabling statutes did not allow the proceeding to be expanded into an “ordinary proceeding.”  Thus, dismissal was appropriate.

The attempt to expand the eviction docket was clever but ultimately, if this is the final round in this war, an expensive failure.  It was a stretch to characterize the denomination as a “lessee.”  Limited purpose court dockets are rigid because otherwise they could not serve the limited purpose that birthed them so the rebelling local church members probably knew this was a long shot.  Knowing that, they funded the effort.  Litigating about litigating is always expensive and never reaches the merits of the dispute.