In a post-dated September 7, 2017, we reviewed a Pennsylvania federal court decision holding the federal court could not enforce an arbitration award reversed by a state appellate court because of a lack of diversity and subject matter jurisdiction. Patterson v Shelton, 2017 WL 3446885 (ED Penn 2017). The church split that led to the arbitration award in 2006 and finally to the federal court in 2017 started in 1991.
The story, and the litigation, are not concluded. In Patterson v Shelton, Slip Op. (PA App, 2017), and apparently in several other proceedings, the Plaintiff challenged the jurisdiction of the courts to reverse the arbitration award. Finally, the Commonwealth Court of Pennsylvania, an intermediate appellate court, somehow realized the state courts did not have jurisdiction to reverse the arbitration award. The arbitration contract specifically recited the arbitration would be binding and non-appealable. Thus, every trial court and appellate ruling after the arbitration award was wiped out and the arbitration award stood as the final decision. The arbitration award could be reduced to judgment in court and enforced in court. The opinion does not clearly explain how the prior appellate decision to reverse the arbitration award turned out to be wrong, but recognition of the lack of jurisdiction to reverse the arbitration award was probably the right call. See, United States Arbitration Act, 9 USC §1, et seq. Also, Pennsylvania adopted the Uniform Arbitration Act which would require the same result.
Arbitration is a tool like any other in that its best use is in those situations in which a business dispute must be resolved. In such a dispute it can be very cost effective and very effective. But, arbitration is typically far more expensive than a court proceeding if the arbitral forum or the arbitrators do not control the proceedings as well as require only modest compensation for their time. Also, given the high emotions in a church split, like those that fueled more than two decades of litigation in the decision reported above, arbitrators may or may not have sufficient judicial power to govern the proceedings. Cost-effective arbitration depends on the cooperation of the parties in the discovery process and in emotionally charged cases, like church splits, that cooperation may be in short supply.
It is rare to get any look inside ecclesiastical arbitration forums because, like nearly all arbitration forums, they are private and not public. Some church forums have clearly defined rules of procedure and others are a bit more spontaneous. The arbitrators may or may not have any training in the rules of the forum or arbitration in general. About the only safeguard for the rights of the parties in most church arbitration forums is that arbitrators almost invariably try to do the right thing.
In Garcia v Church of Scientology, Order, (USDC, MD Fla., Tampa Div. 2017), the Plaintiff sought certain safeguards. The Plaintiff wanted a disclosure by the arbitrators that there were no ex parte contacts with the church about the case. The Court held that the Plaintiffs provided no authority indicating the Court had jurisdiction to order such a disclosure. The Plaintiff wanted the hearing transcribed by a court reporter and a ruling from the Court that certain rules of evidence would not apply. The Court also held no authority was submitted indicating the Court had the power to order such attributes. The Plaintiff also argued the church waived the arbitration agreement between the parties but the Court swept it aside in one sentence because the Court held there was no evidence of waiver submitted. The Court also concluded that the Free Exercise Clause blocked the Court from “resolving internal disputes” regarding religious doctrine.
The Order was very brief and not a full opinion thus commentary is necessarily limited. Nevertheless, the arbitration clause was in an agreement the Plaintiff signed when they joined the church according to the Court and may also have been mandated by the controlling denominational documents. The United States Arbitration Act, 9 USC §1, et. seq., apparently could be invoked to enforce the church membership contract containing the arbitration agreement. While reporting that seeming holding, one has to wonder if the Ecclesiastical Abstention Doctrine would allow a court to enforce an arbitration clause. But, an arbitration clause is a creature of contract and neutral principles would probably accommodate enforcement, even if the arbitration was intended to rule upon a religious dispute. While the Court did not describe the procedural rules of the arbitral forum, it remains to be ruled upon whether substantive and procedural due process challenges could be made if the dispute was economic rather than ecclesiastical.