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Ninth Circuit Judges in Disagreement Over Why Fraud Suit Against Mormon Church Fails
Majority of En Banc Court Says Former Member of Church of Jesus Christ of Latter-day Saints Failed to Show Any False Statement; Bress, Bumatay Pen Concurring Opinions Citing First Amendment Bar
By Kimber Cooley, associate editor
An en banc panel of the Ninth U.S. Circuit Court of Appeals held Friday that summary judgment was properly granted to The Church of Jesus Christ of Latter-day Saints in a lawsuit filed by a former prominent member—now a vocal critic—alleging that the institution committed fraud by using investment returns on tithes to finance the redevelopment of a shopping mall near its flagship temple after promising that financing would not come from tithing.
All 11 judges on the panel agreed that summary judgment weas properly granted in favor of the church by District Court Judge Stephen V. Wilson of the Central District of California, but failed to reach a consensus as to why.
In an opinion authored by Circuit Judge Michelle T. Friedland, and joined in by Chief Judge Mary H. Murguia and Circuit Judges John B. Owens, Jennifer Sung, Gabriel P. Sanchez, and Ana de Alba, the court found that the claims asserted by plaintiff James Huntsman failed because no reasonable juror could find that the church had made any misrepresentations of how it would finance the project, declining to address any First Amendment concerns.
Circuit Judges Daniel Aaron Bress and Patrick J. Bumatay penned separate concurring opinions, each arguing that the First Amendment doctrine of church autonomy prevented Huntsman from prevailing. Circuit Judges Milan D. Smith Jr. and Jaqueline H. Nguyen joined in the Bress opinion, as did Circuit Judge Lawrence VanDyke who concurred except for the conclusions reached in two footnotes.
Allegations in the Complaint
Huntsman, the son of a billionaire philanthropist and brother of a former Utah governor, filed the complaint in March 2021 based on allegations that the church used portions of money collected as tithes—or contributions from churchgoers equaling 10% of their annual income which are required by religious doctrine—on commercial endeavors.
The plaintiff contends that he was persuaded to make contributions based on public statements by former-church President Gordon B. Hinckley, assertions that Huntsman claims amounted to promises not to spend the tithes on commercial enterprises such as the redevelopment of the City Creek shopping center and a bail-out of a church-owned insurance company.
Between 2003 and 2015, Huntsman tithed over $1 million in cash before becoming “disillusioned with the Church’s doctrines (including its support of polygamy and its open disdain for members of the LGBTQ community)” and resigning his membership.
In the complaint, he alleges:
“For decades, in a fraudulent effort to elicit the donation of tithing funds from Mr. Huntsman and other devout Church members, the LDS Corporation repeatedly and publicly lied about the intended use of those funds, promising that they would be used for purely non-commercial purposes consistent with the Church’s stated priorities—namely, to fund missionary work, member indoctrination, temple work, and other educational and charitable activities. Behind the scenes, however,…the LDS Corporation secretly lined its own pockets by using the funds to develop a multi-billion dollar commercial real estate and insurance empire that had nothing to do with charity.”
Summary Judgment Motion
Wilson, in granting the church’s motion for summary judgment, found that “the instant case presents a purely secular dispute” and that Hinckley made no misrepresentations.
He wrote that “Hinckley did not just state that tithing funds would not be used” but “also explained that earning from invested reserve tithing funds would be used,” and that “Defendant did exactly what Hinckley said Defendant would do.”
A three-judge panel of the Ninth Circuit, in a 2-1 decision, on Aug, 7, 2023. reversed. In an opinion authored by Senior Circuit Judge William A. Fletcher, the court found that “a reasonable juror could conclude that President Hinckley intended his audience to understand, when he said that no ‘tithing funds’ would be used to fund the City Creek Mall project, that neither tithing funds principal nor earnings on tithing principal would be used.”
The Ninth Circuit on March 1 granted rehearing en banc and vacated the three-judge panel decision.
Friedland’s View
Friedland wrote:
“No reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project. Although the Church stated that no tithing funds would be used to fund City Creek, it also clarified that earnings on invested reserve funds would be used. The Church had long explained that the sources of the reserve funds include tithing funds. Huntsman has not presented evidence that the Church did anything other than what it said it would do.”
As to the $600 million that was purportedly transferred to Beneficial Life Insurance Company, a church-owned entity, she remarked that “Huntsman does not identify any specific statements made by the Church about the source of funds for Beneficial Life.”
Turning to the possible First Amendment implications, she concluded:
“[T]he church autonomy doctrine has no bearing here. That doctrine protects First Amendment values by prohibiting courts from resolving ‘controversies over religious doctrine and practice.’….Because nothing in our analysis of Huntsman’s fraud claims delves into matters of Church doctrine or policy, our decision in this case does not run afoul of the…doctrine.”
Bress’ View
Bress wrote:
“The majority is correct that there was no fraudulent misrepresentation even on the terms of plaintiff’s own allegations. But it would have done well for the en banc court to recognize the obvious: there is no way in which the plaintiff here could prevail without running headlong into basic First Amendment prohibitions on courts resolving ecclesiastical disputes.”
He continued:
“Although plaintiff’s claims can be rejected even as he styles them, which is the approach the majority takes, we should not indulge in the illusion that this is merely a secular lawsuit about civil fraud. Under the First Amendment, the plaintiff’s challenge to the Church’s understanding of tithing is not susceptible to resolution in a court of law, lest the judiciary wrest control from religious authorities over matters of theological concern. It would have been straightforward and preferable for the court to recognize that plaintiff’s unprecedented theory encounters overwhelming First Amendment impediments. While every judge on this panel agrees that the plaintiff’s claims fail, I write separately to explain why a suit like this could never succeed under the First Amendment’s church autonomy doctrine.”
The jurist pointed out that “Huntsman has…used his lawsuit to criticize the Church in the media” and said:
“A prominent disaffected member of the Church of Jesus Christ of Latter-day Saints is suing the Church seeking a refund of religiously commanded tithes because the Church’s leader made purported fraudulent misrepresentations during a religious address to the Church. This lawsuit is extraordinary and patently inappropriate, a not-so thinly concealed effort to challenge the Church’s belief system under the guise of litigation.”
Bumatay’s View
Bumatay concurred only in the judgment, arguing that Bress’ opinion did not take the First Amendment principles far enough, saying:
“My colleagues believe we have a choice on how to resolve this case. According to the majority and main concurrence, we can either decide the case on the merits—we can take the Church of Jesus Christ of Latter-day Saints President’s word on the meaning of ‘tithing’ and conclude that the Church did not misrepresent its actions. Or we can decide this case based on the church autonomy doctrine, which precludes courts from reaching religious questions, and deny the fraud claims.”
He continued:
“The Constitution gives us no such choice. In deciding religious matters, the Constitution strictly limits our authority. Simply put, the church autonomy doctrine bars federal courts from resolving matters of faith, doctrine, and church governance. So we can’t just sidestep the doctrine and jump straight to the merits. Nor can the doctrine be assumed away, considered an afterthought, or serve as a convenient alternative ruling. Rather, it’s a threshold structural bar that must be reckoned with. Otherwise, we violate the restraints the Constitution places on our power.”
After a lengthy historical analysis of the history of the First Amendment, he said:
“Constitutional text, history and tradition, and precedent all confirm that the doctrine has structural roots. It operates as a strict bar to federal courts deciding matters of faith, doctrine, and church governance. While it may not be ‘jurisdictional’ in the technical sense, it ‘still has a uniquely structural character.’….Thus, it’s no mere affirmative defense—to be decided in the order of the court’s choosing. Instead, when raised, it must be treated as jurisdictional, like other constitutional doctrines limiting federal power.”
The judge declared:
“Our authority is limited. Temporal. With no say over what is eternal. Given that the Constitution demands that we not enter the sphere of religious faith, the majority vastly oversteps our authority by reaching the merits.”
The case is Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-day Saints, 21-56056.
Huntsman first made headlines in 1987 after he was kidnapped, at age 16, as he left his Salt Lake City home. Two masked men with a knife ambushed the then-teenager, taking him to a motel and chaining him to a bathroom sink.
The kidnappers turned out to be two of Huntsman’s classmates who wanted a share of the family’s wealth.
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