United States: Religious Institutions Update: June 2018

Mr. Nathan A Adams IV is a partner in Holland & Knight's Chicago office

Mr. Peter M Friedman is a practice group leader in Holland & Knight's Chicago office

Timely Topics

Since 1990, the U.S. Supreme Court has expressly construed a neutral law of general applicability as consistent with the free exercise clause. Deeming Colorado's public accommodations law just such a law, the Colorado Court of Appeals upheld the law's application in 2015 to a bakery and its owner who would not create a wedding cake for a same-sex wedding because, as a Christian, the owner believed he would displease God. The Colorado court affirmed a cease and desist order requiring the bakery to take remedial measures, but the bakery appealed. Before 1990, the U.S. Supreme Court applied the so-called compelling interest test to infringements upon the sincere religious exercise of individuals. In those cases, it did not matter how neutral or generally applicable was the infringing law; the state had to have a compelling interest pursued in the least restrictive manner to justify the infringement. This week's ruling by the U.S. Supreme Court in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Comm'n, Case No. 16-111, 2018 WL 2465172 (2017), did nothing to change this.

Reversing the Colorado Court of Appeals, the U.S. Supreme Court expanded its recent focus on governmental hostility to religious exercise as a core basis for protecting sincere religious beliefs. The court identified evidence of "clear and impermissible hostility" toward the defendants by the Colorado Civil Rights Commission in its application of the public accommodations law. Commissioners endorsed the view that religious beliefs cannot legitimately be carried into the public sphere or commercial domain. A commissioner described the baker's faith as despicable, merely rhetorical, or insubstantial and insincere, and compared his beliefs to defenses of slavery and the Holocaust. Perhaps most telling, the commission treated his case and the cases of other bakers who objected to a requested cake disparately and criticized the Colorado Court of Appeals for relegating this issue to a footnote based on its own assessment of offensiveness. By a margin of 7-2, the court reiterated that it will not tolerate hostility to religion and restated that "government has no role in deciding or even suggesting whether the religious ground for [] conscience-based objection is legitimate or illegitimate."

Consensus is harder to find in the hypothetical event of "neutral and respectful" application of the public accommodations law to the baker and others like him. At least four justices (Elena Kagan, Stephen Breyer, Sonia Sotomayor and Ruth Bader Ginsburg) signaled that they would not have considered this a constitutional violation compared with three justices who signaled the opposite (Neil Gorsuch, Samuel Alito and Clarence Thomas). The entire bench agreed that "Colorado law can protect gay persons" and that the baker was subject to this public accommodations law. The majority agreed that religious and philosophical objections ordinarily "do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law." Therefore, if a baker refused to sell any goods or any cakes for gay weddings, "the State would have a strong case." It could also make a difference whether the baker refused to sell any cake at all versus a special cake with words, symbols or images celebrating the marriage. Some justices (Anthony Kennedy, John Roberts, Breyer and Kagan) considered it significant that when the commission decided its case, the state did not recognize gay marriage. Just two (Thomas and Gorsuch) concurred that expressive speech was at issue.

The bottom line is that this week's opinion reiterates that hostility to religious exercise is unlawful. It strongly endorses tolerance and respect for sincere religious beliefs at the same time as it calls for according equal treatment and dignity to gay persons. The opinion leaves the application of public accommodations laws on neutral facts for "further elaboration in the courts." Church-state counsel may be able to assist with negotiating these shoals.

Key Cases

Preservation Grant for Church's Stained-Glass Window Stricken Under Blaine Amendment

In Caplan v. Town of Acton, 479 Mass. 69, 92 N.E. 3d 691 (2018), the Supreme Judicial Court of Massachusetts ruled that, although the Massachusetts Blaine Amendment does not categorically ban the grant of public funds to a church, taxpayers were likely to succeed on the merits of their claim that the town's grant of funds to a church under the Community Preservation Act for refurbishing a stain glass window depicting Jesus violated the amendment. The court remanded the case for a determination whether a second grant under the act for a master plan for historic preservation violated the amendment. The town imposed conditions on the grants, including conveyance to the town of a perpetual historic preservation restriction in the buildings. The Massachusetts Blaine Amendment, Article 46 of the Massachusetts Constitution, prohibits the "grant, appropriation or use of public money ... for the purpose of founding, maintaining or aiding any church, religious denomination or society." The court applied a three-factor test to identify a violation: a judge must consider (1) whether a motivating purpose of each grant is to aid the church, (2) whether the grant will have the effect of substantially aiding the church, and (3) whether the grant avoids the risks of the political and economic abuses that prompted the passage of the amendment. The court remanded the case for discovery into whether the stated purpose of the committee in awarding the grants to the church was merely for historic preservation or to aid the church. The court concluded that the grants have the effect of substantially aiding the church by "underwrit[ing]" an essential function of a house of worship and pose a significant risk of infringing on taxpayers' liberty of conscience, excessive government entanglement with religion and threatening civic harmony. Dissenting, Justice Elspeth Cypher was concerned by the majority's unequal treatment of religious institutions both in light of the Massachusetts Blaine Amendment and First Amendment, and its failure to appreciate the importance of preserving the commonwealth's rich past, including as rooted in churches.

Historically Religious Hospital May Assert Ministerial Exception Doctrine as to Chaplain

In Penn v. N.Y. Methodist Hospital, 884 F. 3d 416 (2d Cir. 2018), the court of appeals affirmed dismissal of an African American former hospital chaplain's Section 1981 race and religious discrimination and retaliation lawsuit against the hospital based on the ministerial exemption doctrine. The court called it a "close question," but decided that the doctrine applies because of the hospital's Methodist history and continuing purpose, through its Department of Pastoral Care and because the plaintiff's role within the Department was exclusively to provide religious care to the hospital's patients. The plaintiff argued that the hospital is not a religious institution any longer and, in fact, there was evidence that the hospital had taken many steps to distance itself from its religious heritage such as removing reference to its "Church related character" and "relationship with The United Methodist Church" from its certificate of incorporation and dropping the requirement that the bishop of the New York area United Methodist Church and the president of the Guild of the Methodist Hospital be "trustees ex-officio." Nevertheless, the bylaws still require "significant representation from the ... United Methodist Church" on its board of trustees. Most important to the court, the Department of Pastoral Care "retained a critical aspect of that religious identity in order to provide religious services to its patients. These services, while not limited to those who are Methodist, are indisputably religious." To hear the plaintiff's case, a jury would have to evaluate several religious reasons why he was not elevated relating to how a minister should conduct religious services or provide spiritual support, the importance of a patient's last rites, a chaplain's selection of a particular hymn and a Catholic's access to communion. These decisions would involve church policy, administration and governance.

Court Enjoins Presidential Proclamation Under Establishment Clause

In International Refugee Assist. Project v. Trump, 883 F. 3d 233 (4th Cir. 2018), sitting en banc, the court of appeals affirmed partial grant of a nationwide preliminary injunction against a presidential proclamation indefinitely barring entry by nationals from certain countries (i.e., Iran, Libya, Syria, Yemen, Somalia, Chad, North Korea and Venezuela) as in violation of the Establishment Clause. Examining President Donald Trump's statements (and choosing to rely on only his post-election statements) and the history of the proclamation, the court ruled that the proclamation's proffered national security rationale was not bona fide, lacked a primarily secular purpose and was tainted with animus toward Islam. The court concluded that the "months-long" "multi-agency review" ordered by the proclamation could not save it because it was not released, and the criteria used in the review to identify problematic countries lie at odds with the list of countries actually included in the proclamation. The court did not extend the injunction to North Korea or Venezuela "because there is no alleged Establishment Clause violation as to either" nor to the president himself. For standing, the court ruled that it was sufficient that they had suffered feelings of marginalization and were facing prolonged separation from family members deemed categorically ineligible to enter the country. For justiciability, the court ruled that it was not necessary for the plaintiffs' family members to be denied visas prior to judicial review. Dissenting, Judges Paul Niemeyer, Dennis Shedd, William Traxler and G. Steven Agee argued that the court should not second-guess U.S. foreign policy and the president's discretionary decisions on immigration, implicating national security. They added that the court made the following three serious errors in its Establishment Clause analysis: (1) it misapplied the standard for looking behind the text of the proclamation's purpose by not starting with determining whether its reasons were facially legitimate, (2) in looking behind the text, it created and applied a new and unprecedented rule embracing a scope of relevant evidence such as comments to the media that is dangerous and unworkable, and (3) its Establishment Clause analysis stretched the Supreme Court's holdings beyond their intended scope.

Church Campus Restaurant Open to Public Did Not Violate FLSA by Using Unpaid Labor

In Acosta v. Cathedral Buffet, Inc., 887 F. 3d 761 (6th Cir. 2018), the court of appeals reversed a district court's ruling that a restaurant on the campus of Grace Cathedral Church called Cathedral Buffet that is open to the public violated the minimum wage requirements of the Fair Labor Standards Act (FLSA) by using unpaid church members. The court of appeals determined that to be considered an "employee" within the meaning of FLSA, a worker must first expect to receive compensation, whereas it was undisputed that the volunteers who worked at Cathedral Buffet had no such expectation. The plaintiffs argued that they felt coerced into providing labor because of the church pastor's suggestion that church members who repeatedly refused to volunteer were at risk of "blaspheming against the Holy Ghost," which was an unforgivable sin. Nevertheless, the court ruled that spiritual coercion is not a substitute for economic coercion and could not satisfy the expectation-of-remuneration requirement for finding "employee" status under the FLSA.

Priest Subject to Writ of Prohibition Based on Ecclesiastical Abstention Doctrine

In Diocese of Palm Bch., Inc. v. Gallagher, No. 4D17-2579, 2018 WL 2138474 (Fla. 4th DCA May 9, 2018), the court of appeal granted a writ of prohibition on a former priest's defamation complaint and called for dismissal of the priest's complaint based on the ecclesiastical abstention doctrine. The priest went to Irish media with what he claimed was an effort to cover up sexual abuse in the diocese. In response, diocesan officials published statements calling him a liar, unfit to be a priest and in need of professional help. The priest sued. The court ruled that deciding his claim for actual damages would require the courts "to delve into why [he] was not promoted to pastor, and was reassigned to another parish. This would require the court to question the diocese's employment decision to hire, retain or discipline [him] ... and the reasoning behind its decision." The court added that the priest's demand for front and backpay and compensatory and punitive damages "would be a penalty for the diocese exercising its right to determine which priests to promote and assign to its parishes." Furthermore, the court ruled that "[r]eviewing the falsity of whether [the priest] needed professional help will excessively entangle the courts in determining whether the diocese correctly imposed this disciplinary step on [the priest], and whether the diocese followed its disciplinary practices and procedures."

National Episcopal Church Prevails in Property Dispute

In The Episcopal Church v. Salazar, No. 02-15-00220-CV, 2018 WL 1631395 (Tex.App.-Ft. Worth April 5, 2018), the court of appeals applied a neutral principles of law approach confined to formal title, corporate bylaws and other non-religious documents to conclude that, in a property dispute between the national Episcopal Church and a local diocese, courts are required (in the absence of allegations of fraud or threat to public health and safety) to defer to the national church's ecclesiastical decision identifying the "true" church loyal to the national church. Courts are not required to defer to the national ecclesiastical decision about property ownership or on secular legal questions such as the validity of the parish members' vote to amend the bylaws and articles of incorporation. The canon of the national hierarchical church purporting to impose a trust for the church and its diocese on parish, mission and congregation real and personal property was not enforceable under Texas trust law, where the national church did not have legal title to the property. But because the national church was the same "Protestant Episcopal Church" identified in the deed setting forth trust, and by rejecting the larger church, the diocese rejected any claim to items and property affiliated with the national church. Furthermore, where the bylaws of the nonprofit corporation provided for appointment of directors by the "body now known as" the local diocese affiliated with the national church, it was the national church's prerogative to determine, following the local diocese's decision to disaffiliate from the larger body, whether the board members of the diocese formerly associated with the national church had become disqualified. The appellee's actions, as a corporate trustee, were invalid under Texas law after disaffiliation. But claims that the local diocese violated its oaths and fiduciary duties had First Amendment implications rendering the remedy of a constructive or resulting trust unavailable.

Sex Stereotyping Claim Against Funeral Home May Proceed

In Equal Employment Opportunity Comm'n v. R.G. & G.R. Harris Funeral Homes, Inc., 884 F. 3d 560 (6th Cir. 2018), the court of appeals ruled that the U.S. Equal Employment Opportunity Commission (EEOC) was entitled to bring a Title VII sex discrimination and discriminatory clothing allowance claim against a closely held, for-profit funeral home for discriminating against an employee on the basis of her transgender and transitioning status. The funeral home admitted that the employee was not fired for performance-related reasons, but because the employee was "no longer going to represent himself as a man" and "wanted to dress as a woman." The court rejected the defendant's defenses on the basis of the ministerial exception doctrine and the Religious Freedom Restoration Act (RFRA). The court determined that the funeral home was not a religious institution capable of asserting the ministerial exception doctrine. Although its mission statement declared that "its highest priority is to honor God," it allegedly did not purport or seek to establish and advance any Christian values, it was not affiliated with any church, its articles of incorporation did not avow any religious purpose, its employees were not required to hold any religious views, and it employed and served individuals of all religions. Furthermore, the court decided that a "funeral director" is not a ministerial employee. With respect to RFRA, the court decided that requiring the funeral home to comply with Title VII did not substantially burden the religious practice of the defendant, the EEOC had a compelling interest in eliminating workplace discrimination and requiring the defendant to comply with Title VII was the least restrictive way to further the EEOC's interests.

Teacher in Jewish Day School's ADA Claim Barred by Ministerial Exception Doctrine

In Grussgott v. Milwaukee Jewish Day Sch., Inc., 882 F. 3d 655 (7th Cir. 2018), the court of appeals affirmed summary judgment under the ministerial exception doctrine for a Jewish day school against a teacher who claimed that she was terminated in violation of the Americans with Disabilities Act (ADA) because of cognitive issues resulting from her brain tumor. The plaintiff called herself a "grade school teacher," whereas the school referred to her as a "Hebrew teacher." There was no evidence that the plaintiff "ever held herself out to the community as an ambassador of the Jewish faith, nor that she understood that her role would be perceived as a religious leader." Instead, she described her teaching as historical, cultural and secular, rather than religious. The plaintiff was "not required to complete rigorous religious requirements" either. Nevertheless, "Hebrew teachers at Milwaukee Jewish Day School were expected to follow the unified Tal Am curriculum, meaning that the school expected its Hebrew teachers to integrate religious teachings into their lessons." Also, the court found that the plaintiff "undisputedly taught her students about Jewish holidays, prayer and the weekly Torah readings; moreover, she practiced the religion alongside her students by praying with them and performing certain rituals...." The court determined that the school's nondiscrimination policy did not constitute a waiver of the ministerial exception protections.

Religious Institutions in the News

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