TERMINATION DEFAMATION CLAIMS

In the private secular sector, employers are typically very careful about revealing the reason for termination of an employee except upon service of a subpoena or regulatory order compelling production of the information.  But, there is no Ecclesiastical Abstention Doctrine or Ministerial Exception in the private secular sector so leaked defamatory statements, typically in email, texts, or other digital documents could form the basis for a defamation claim under the right facts.

In Maize v Friendship Community Church, Inc., Slip Op. (Tenn. App., 2020), the pastor was terminated and a group of communications leaked that indicated it was because of an allegedly improper relationship between the pastor and the sound booth operator.  The pastor tried to retain control of the church and the sanctuary building but was ultimately locked out.  Because a wrongful termination claim was not available, the pastor sued claiming that the leaked information regarding the grounds for termination was untrue and defamatory.  The trial court dismissed the case because the termination of a pastor by a church is outside the jurisdiction of the court due to the First Amendment imperatives.  The trial court held also that the allegedly leaked reasons for termination were likewise barred from judicial review by the Ecclesiastical Abstention Doctrine.  The appellate court affirmed.

Defamation claims are sufficiently problematic that only the wealthy can sustain them to any conclusion, but they are rarely won.  In the information drenched society defamatory information may have fifteen minutes of fame and then be forever lost.  Most defamatory information in the information age only migrates from one place to another if someone goes looking for it.  Nevertheless, churches and parachurch organizations should be circumspect regarding termination communications.  Defined precautions as to release of information may also provide a defense in some jurisdictions.  Of course, if the defamatory statement is true, there can be no claim, which may explain why there are so few successful defamation cases.

CHURCH SCHOOL HANDBOOK LITIGATION PRECLUSION CLAUSES

Unlike public schools, private schools in general and church schools specifically, can adopt student handbook clauses that limit the right of students to remain enrolled or re-enroll if their parents or guardians decide to engage in litigation with the school or church.  The reason private schools and church schools can include such a provision is that they are not state actors and no constitutional rights of the student or parent are implicated.  The rights of the private schools and students are contractual at best and the handbook can be part of the contract terms.

In Phillips v Archdiocese of Newark, Slip Op. Unpublished (NJ App., 2020), the parents wanted alleged bullying addressed, demanded one child be named 8th grade class valedictorian, and refused to allow a daughter to play on the boys’ basketball team when insufficient girls volunteered to play preventing team formation.  When their demands were not met, they sued the church and school.  Initially, the children were expelled because of violation of the school handbook litigation preclusion clause but the church and school allowed the students to return.  The trial judge entered an order requiring the school to allow the female student to play on the boys’ basketball team for the remainder of the school year when insufficient players emerged to form a female squad.  A month after the students were allowed back and the judge ordered the student to be allowed to be a player, the parents sought to name eighty members of the school and church as defendants.  The church and school refused to re-enroll the students for the next school year.  It should be noted the church school was a K – 8th grade school.  The trial court refused to order re-enrollment and awarded discovery sanctions against the parents of $16,516 for refusing to answer questions at depositions.

School handbook litigation preclusion clauses are enforceable in many states.  Some courts may attempt to preserve the status quo during the pendency of a case by holding them in abeyance temporarily.  Most will recognize that the litigation has sufficiently disrupted the status quo that preservation is not likely.  Like any regulatory handbook measure, history seems to teach that hesitancy in enforcement merely prolongs the dispute.  Thus, such a clause should be enforced, if it is to be used at all, without delay, second chances or second guessing.

BANKRUPTCY IS NOT ECCLESIASTICAL

In recent years, judgments against churches or denominational level organizations, generally in sexual abuse cases, caused churches and denominations, as well as their insurers, to consider previously unthinkable asset exposure.  When assets cannot be marshalled sufficiently to pay the judgments and preserve the church or denomination as a going concern, other avenues are considered.  One that has been used is bankruptcy.  Unfortunately, bankruptcy is not always a panacea.

In re Roman Catholic Church of the Archdiocese of Santa Fe, Opinion [and Recommendation] (Bkr. D. NM, 2020), the United States Magistrate recommended to the District Judge that the Unsecured Creditors’ Committee be authorized to submit avoidance claims that the Archdiocese, as Debtor in Possession, did not file.  The creditors’ committee alleged that fraudulent transfers were made to a real estate trust, to or among a financial assets trust, or to avoid the parish churches’ claimed interests in property titled in the name of the Archdiocese.  Several years before the bankruptcy petition, the Archdiocese restructured by transferring real estate held in its name to a real estate trust.  Also, much of the real estate was held for the parish churches and actually purchased by the parish churches in prior decades before the parish churches were established as entities such as non-profit corporations.  The federal magistrate noted that some or all of the transactions alleged to be fraudulent might have been made so long ago that the statute of limitations might prohibit further action.  The Archdiocese argued that many of the transfers, especially those involving parish churches, were the result of internal church governance.  The Archdiocese argued the Ecclesiastical Abstention Doctrine would preclude unwinding of those transfers.  The Magistrate recommended the argument be rejected by the District Judge of New Mexico because the bankruptcy code was a Neutral Principle of Law.  The Magistrate recommended that the underlying abuse claims be settled by the Archdiocese and the claimants rather than “millions” of dollars spent resolving fraudulent transfer claims.  The transfers alleged to be fraudulent according to the Magistrate represented $150,000,000 in assets.

The Archdiocese failed to reorganize in the 20th century and the efforts to do so in the 21st century may be judged too late or too suspicious.  The parish churches should have been incorporated, their property should have been titled in the name of the parish church, and warranty deed reservation clauses to the Archdiocese would have probably protected the Archdiocese from defections.  Other church and parachurch organizations should have been formed to fulfill the same function.  In other words, the body should have had many parts by the end of the 20th century.  The lesson should not be lost on other denominations not to repeat the mistake.  The other possible lesson is that bankruptcy protection may sometimes help the claimant more than the respondent, because it forces the respondent to put all of its assets on display.

WHEN BLESSING THE WATER IS NOT ENOUGH

Most churches are in urban or suburban areas and use municipal water systems much like everyone else.  Thus, the few churches left in rural or undeveloped areas that use well water are so few that the lesson of the case reported below would at first blush seem to be of no interest to most.  However, the case reported below points out there are other risks that should be considered.

In State of Ohio v Church of Troy, 2020 Ohio 4695 (Ohio App. 2020), the trial court held that the pastor was the “operator” of the church water system in an enforcement action by the Attorney General of Ohio.  The church used well water at its building, typically Wednesday evening and Sunday services, which may have included bathrooms, kitchen and drinking fountains.  The church membership was about 100 and the church used the building more than sixty days a year.  The church was an unincorporated association.  The church was required to submit total coliform samples every quarter and a nitrate sample annually to a laboratory for analysis and report the results to the state regulatory authority (“Ohio EPA”).  The church submitted test results for years.  The Ohio EPA regulated the church water system since 1986.  Unfortunately, church water samples tested positive for total coliform and E. coli.  The church claimed it posted notices and provided bottled water but did not give notice of its actions to Ohio EPA so they sent an inspector out to check.  The pastor told the inspector that a legal consultant in another state, not one licensed in Ohio, was going to report back as to whether Ohio EPA had jurisdiction over the church and refused permission to inspect the church water system.  Ohio EPA obtained a search warrant and inspected the church water supply.  Their testing found positive coliform and a high level of nitrate.  Based on the pastor’s past interaction with the Ohio EPA and the refusal of the pastor to authorize the inspection, the trial court concluded the pastor had apparent authority to operate the church water system.  As the operator of a non-compliant water system, the pastor was fined $54,000 and judgment entered.  The pastor represented himself.  Four years separated the hearings in the trial court from the final judgment which the appellate court affirmed in the sixth year after the hearings in the trial court. There are several harsh lessons:  (1)  The pastor did not have a lawyer.  (2)  Even an unincorporated association can have minutes, agendas and minutes of votes that might prove the extent of the pastor’s actual authority in general and over the water system specifically.  (3)  The dispute with the regulatory authority went on for most of a decade because the church, or its pastor, did not take it sufficiently seriously and end it, one way or another.  Four years passed between the evidentiary hearings and the final judgment.  In that time, if not before, the church could have developed a record of compliance.  The church could have cut off the well water supply to the interior of the building and used the water only for lawn maintenance controlled by locked faucets, or not at all.  (4)  The church did not consult a lawyer in their state able to deal with the regulators on their behalf, but rather consulted a legal ministry, which the church likely did not pay for its assistance, which could do no more than make some suggestions based on anecdotal consultations.