Tag: para-church organizations


In June 2017 we reported the decision of the trial court to grant summary judgment in Grussgott v Milwaukee Jewish Day School, Inc., Order, (ED Wisc. 2017).  The United States Court of Appeals for the 7th Circuit has affirmed.  In Grussgott v Milwaukee Jewish Day School, Inc., Slip Op. (7th Cir. 2018), the appellate court held as have others that there is no precise “formula” or set of elements that determine whether an employee is sufficiently “ministerial” to trigger the Ministerial Exception.  The Plaintiff was an elementary school teacher whose job was not to teach reading, writing and arithmetic, but rather Hebrew.  The Plaintiff taught Hebrew from an integrated curriculum which included religious instruction as a part of the language instruction (or language as part of the religious instruction).  Also, the Plaintiff admitted teaching about Jewish Holidays, weekly Torah Readings, and participated even if she did not teach other religious rites.  It was not dispositive that Plaintiff claimed she only taught historical and cultural facts and not religion.  The school documented that it was intended that Plaintiff’s role contribute to the “school’s Jewish mission.”

Rather than adopt a formulaic test or set of elements, the 7th Circuit adopted what it called the “totality of circumstances” test.  Of course, the totality would include many elements.  Thus, in this case, Plaintiff’s role as a teacher of the faith to the next generation “outweighed” other considerations.

The lesson for church schools and para-church organizations generally is to link the job with the religious mission.  This should be done in employee handbooks, policy manuals, and governing documents.  It would not hurt if the new employee signed an acknowledgment of the religious mission of the new employer and also acknowledged the employee’s important role in that mission.  It might not be especially specific but it would make ignorance of the mission and the expectation of participation in the mission an untenable claim.


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.


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.


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.


The Employment Retirement Income Security Act of 1980 was a logical attempt to structure and organize employee retirement plans to take pressure off social security, improve employee confidence sufficiently to encourage savings, and to regulate the tax sheltered nature of retirement savings.  Like all federal mandates that are also entangled with the federal income tax it is complicated and regulations it spawned were more so.

From inception ERISA exempted churches.  Church employers could create less regulated employment retirement plans.  The question then became whether para-church organizations could do so.  In Medina v Catholic Health Initiatives, Slip Op. (10th Cir. 2017), the United States Court of Appeals for the Tenth Circuit affirmed a Colorado trial court.  The question was whether Catholic Health Initiatives (“CHI”), a para-church organization of the Roman Catholic Church was a “principal-purpose organization” that would be exempt from ERISA.  CHI operated 92 hospitals, had 90,000 employees in its retirement plan, and the plan had $3 billion in assets.  While the historic connection between churches and hospitals is becoming lost in the mists of time, it remains, and many hospitals in existence would not have existed in the author’s life time had no church stepped up to found them.  But, in the post-modern era, the church hospitals, those that have not been bought or replaced by secular ownership, have grown to proportions that obscure the roots.  Because of the size of these institutions, they must be managed by modern methods and that tends to make them look less like para-church organizations.  Nevertheless, the 10th Circuit upheld the ruling that CHI was a para-church organization, i.e., a principal-purpose organization, and therefore, exempt from ERISA.

The opinion omits a discussion of why the Plaintiff was aggrieved by an employee retirement plan that was not subject to ERISA.  The Plaintiff sought class action status so the compliant had to be the same for many participants to meet the numericity requirement.


It seems accepted that churches are shielded by the Ecclesiastical Abstention Doctrine and most cases against them will simply be dismissed.  The outer edge of the doctrine is still uncertain at times.  The para-church organization must be proven to be religious in purpose and operation to be shielded by the Doctrine.

In the opinion styled In Re Episcopal the Episcopal School of Dallas, Inc., Slip Op. (Tex. App. 5th, 2017), the Plaintiff was a student.  The Plaintiff allegedly left campus during lunch without permission, parked in front of a residence and smoked Marijuana, denied it even though the other student involved confessed, refused to allow a search of his car, substituted another student’s sample for his urine for a drug test, and failed a drug test once the right urine was tested.  The student was dismissed from the school.  The trial court refused to dismiss the case.  The Plaintiff argued to the trial court that the school was not owned or operated by a church and that the dispute was governed by the admissions contract between the school and the student thus making the Ecclesiastical Abstention Doctrine inapplicable.  The Court of Appeals, however, examined the school’s articles of incorporation, composition of its governing board, worship service schedule, faculty, and determined there was “only one reasonable conclusion.”

The Court of Appeals held that the school was a “religious school” or a “faith based institution.”  The school had on the faculty Episcopal priests that led the student body in daily worship.  The Bishop of the Diocese sometimes officiated.  There was mandatory religious instruction.  The student’s claims derived “solely from the calculus of the school’s internal policies and management of its internal affairs.”  The school’s lack of a formal affiliation with a church or denomination did not make inapplicable the Ecclesiastical Abstention Doctrine.  The “secular contract approach” urged by the student “did not apply when the claimed breach of contract arises from an enrollment agreement at a faith based institution.”  That the dispute was not in all respects about religious doctrine was not the test.  Enough of the dispute was entangled in religious considerations to require application of the Doctrine.


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.