Category: Uncategorized

THE LEAK IN THE DIKE

This review of church law has now been ongoing long enough to occasionally note developments in individual cases. In the post titled The Finger in the Dike, July 6, 2017, the Supreme Court of Michigan’s opinion in Winkler v Marist Fathers of Detroit, Inc., Slip Op. (Mich. 2017), was summarized. In that case, the student applicant to the church high school asserted she was denied admission due to dyslexia. The defendant church school claimed the admission was denied because the student’s academic record did not meet the admissions requirements and that the disability was unknown to the church school at the time the admission decision was made.

The Supreme Court revised its own prior pronouncements that the Ecclesiastical Abstention Doctrine was jurisdictional and indicated it was not jurisdictional. If a dispute could be decided on neutral principles that did not require an inquiry into ecclesiastical decisions, then the dispute could be resolved by a Michigan court according to the Michigan high court. As we noted when we summarized the decision, the smaller and weaker the Ecclesiastical Abstention Doctrine is defined the more likely it becomes that a court, even a well meaning one, will simply ignore ecclesiastical sensibilities. Another risk is that churches will be required to comply with laws intended to govern for-profit businesses and local governmental subdivisions, even though churches have a more fragile financial base. Thus, the Michigan Supreme Court reversed the intermediate appellate court decision and ordered it to consider the arguments it had not reached. The applicability of the Ecclesiastical Abstention Doctrine was left for the trial court to determine.

In Winkler v Marist Fathers of Detroit, Inc., Slip. Op. (Mich. App., September 21, 2017), the Court of Appeals ruled that Michigan laws requiring schools not to discriminate on the basis of disability applied to church schools, too. The law allowed church schools to discriminate on religious grounds, i.e., exclude a student that was not an adherent to the beliefs of the church school but not based on disability. Thus, the case was remanded to the trial court to determine whether there was any ecclesiastical issue barring consideration of the dispute and whether the school based its admission decision on the alleged disability of the Plaintiff.

Another implication that might arise is the financial burden on the church school. If the trial court decides there is no ecclesiastical issue it could also decide the only issue is whether the admission decision was discriminatorily based on disability. To avoid such an issue in the future, or because it is enjoined or otherwise prohibited from making admission decisions based on academic performance for fear that lurking within is an undisclosed disability, the church school might also be forced to admit an academically challenged student and then might be forced to allocate accommodation resources (e.g., lower performance expectations, tutors, learning disability professionals). The taxpayers have been unwilling in most places to fund these accommodations in public schools and public budgets have only been able to pay lip service to these needs. As a result, public school systems struggle to meet these requirements and usually fail. Church schools might get the opportunity to fail as well because donated money may be no more plentiful than public money.

CHURCH ETHICS CODES

United States courts will not entangle themselves in the ecclesiastical affairs of a church or denomination. Some churches and denominations include in their governing documents ethics codes. Sometimes the codes are specific and other times they are simply referenced. Sometimes when the codes are specific, certain behaviors are included within the scope of the ethics code that might be included in non-church contexts.

In Dermody v Presbyterian Church (USA), 2017 WL 3495911 (Ky. App. 2017), the Plaintiff claimed he was defamed by the church’s classification of his behavior as an ethics violation and the transmission of that information to various other sectors in the church. The court dismissed the case and it was affirmed by the appellate court. The behavior classified as “unethical” was failure to detect that subordinates had incorporated and transferred some funds to the entity without obtaining advance approval of the incorporation from the denominational governing body. Involuntary termination resulted.

The Concurring Opinion suggested the failure to know the subordinates had improperly incorporated the entity was poor management but not “unethical” as the term “unethical” would be generally understood. However, the denominational control document expressly defined improper incorporation as an ethics violation. As a result, all of the judges ruled that pursuant to the Ecclesiastical Abstention Doctrine and Ministerial Exception the denomination could set the scope of its ethics code in any manner and impose it on their employees. The courts would not interfere. The defamation claim was dismissed.

FIRINGS FOR CAUSE

Several federal courts have held that the principal of a church school is sufficiently ministerial such that federal employment claims cannot be enforced. The Ministerial Exception, a subset or cousin to the Ecclesiastical Abstention Doctrine, may not even allow enforcement of a written employment contract in some circumstances. An involuntary employment termination, a firing, cannot be reviewed by any court if the Ministerial Exception is found to be applicable. Application of the Ministerial Exception must be on a case by case basis so a church would be well served by counsel to prepare to prove its applicability even if the firing was for cause.

In Nolen v Diocese of Birmingham, Slip Op. (ND Ala ND 2017), the principal of the Catholic “grammar school” was hired on a one year written employment contract that specified firing for cause. The principal made a novice’s mistake and ignored obvious potential for conflict by hiring a new secretary that was married to a parish financial advisory board member. Meanwhile, the school enrollment was declining and as a result school finances were declining. To solve the problem, the principal marketed the school to Hispanic students and found scholarship sources for as many as possible. The principal claimed the new secretary spoke disparagingly about these students and the secretary was required to resign. Predictably, the financial advisory board became hostile to the principal. The principal was “required” to sign a letter of resignation by the priest in charge, however, because of inflated mileage travel claims, checks payable to the principal for reimbursement signed by the principal after instruction not to issue checks in that manner, and because she failed the state certification examination and did not retake the test. It was unclear whether the principal was known to be uncertified at the time of hiring. The principal claimed she was fired because she tried to prevent hostility to Hispanic students and scholarship students. The Court granted summary judgment and dismissed the case but never reached the firing for cause arguments or evidence nor the issue of resignation versus adverse employment action.

Indeed, in reality, the Court never got beyond the Diocesan School Mission Statement and the procedure manual for Catholic Schools, both made applicable by the written one year employment contract. Because this decision was at the Summary Judgment stage rather than the pleading stage, the evidentiary record was probably fully developed by discovery or at least the opportunity for discovery. Counsel wisely fought for the soul of the Court by launching all of the evidence that supported the employment action and reducing or depriving the Plaintiff of sympathy.

Numerous lessons are in this opinion. The lack of state certification may not have mattered in a private school, it would not in some states, but if it did, timely certification probably should have been an added term in the employment contract. The Court did not indicate whether any written policy prohibited someone with check signing authority to self pay. Indeed, the Court did not explain how the principal had check signing authority or whether the checks required two signatures. The church office and the priest in charge were probably nearby and check signing authority should have been limited or non-existent. Hiring the family of a board member should probably be prohibited as nepotism. Only in tiny and very small churches would it be unavoidable. In a Roman Catholic church no one typically has any actual authority except the priest in charge but that does not make nepotism a good idea.

COMPLEX BYLAWS

While a congregational church that does not have bylaws that can identify members, identify officers, identify employees, especially pastors, and provide for succession will regret it if disputes arise, equally problematic is the church that has overly complex bylaws that require many steps to accomplish such normal operational requirements. Overly complex bylaws contain too many procedural steps or empower multiple boards with conflicting or overlapping spheres of authority. Overly complex bylaws provide for complex verification procedures or worse, subjective verification of office holding credentials. Overly complex bylaws create too many opportunities for the volunteers on the board to miss a step altogether or even if it was fulfilled fail to document it so that after the passage of time it cannot be determined it was fulfilled.

In Oriental Mission Church v Park, 2017 WL 3262257 (Cal. App. 2017), factional disputes led to a decade of litigation including several prior trial court judgments and one prior appeal. The church had a set of bylaws which were translated into English and stipulated into evidence. The bylaws required election to leadership by a 2/3^rdscongregational vote. The leadership was limited to nine years of service or three successive terms. The leadership had a mandatory retirement age of 65. If someone in leadership resigned voluntarily, the leader could be reinstated in leadership by petitioning for reinstatement, submitting letters of recommendation from 1/3 of the serving members of the board, followed by a vote of the board at which 2/3rds must vote for reinstatement. The board members resigned en masse, with a couple of exceptions, in 2006 and this opinion ruled upon reinstatement. The trial court held that the resignations were valid and reinstatement had not been proven to have occurred.

The trial court also found that one board member did not mean his signed resignation to be an actual resignation. The trial court on that basis held that board member had not resigned. The appellate court affirmed all of the trial court rulings except this one, finding the testimony of the board member about his intent was inexplicable in light of the signed resignation. A written resignation was held to remain enforceable over self-serving contrary testimony.