Unanimous 9th Circuit panel dismisses Huntsman tithing lawsuit

(ksl.com 1-31-25)

A panel of 11 judges in the 9th Circuit issued a unanimous ruling Friday dismissing James Huntsman's lawsuit seeking the return of $5 million he donated to The Church of Jesus Christ of Latter-day Saints.

It is the second time the lawsuit has been dismissed in four years.

Huntsman, a former church member, alleged the church committed fraud by using tithing funds to finance commercial endeavors despite stating it had not and would not do so. A U.S. district court granted summary judgment to the church in September 2021.

The 9th Circuit panel, known as an en banc panel, stated in its 63-page set of rulings Friday that it agreed with the district court ruling.

The church's victory in the 9th Circuit, which covers the nine westernmost U.S. states, could have a powerful influence over two other tithing-related cases now in the 10th Circuit, which includes Utah, said Jeremy Rosen, managing partner for the San Francisco office of Horvitz & Levy, which filed an amicus brief on behalf of charitable organizations that supported the church.

"Ninth Circuit opinions are not binding in the 10th Circuit, but I would think that they would have, especially from an en banc panel, a persuasive effect," Rosen said. He added, "I think if the 10th Circuit were to do anything other than rule in favor of the church, especially in light now of this 9th Circuit opinion, there would be a bullet train to the Supreme Court and then a reversal."

Huntsman's lead attorney, David Jonelis, did not immediately respond Friday to a message seeking comment about the case or whether Huntsman would appeal.

-What the court ruling said-

The 11 judges all agreed to toss out the case, but they formed two main groups with different reasons for dismissing the lawsuit.

The six-judge majority ruling threw out the case on the merits of Huntsman's arguments, finding them lacking.

"No reasonable juror could conclude that the church misrepresented the source of funds for the City Creek project," six judges said in Friday's majority ruling. "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."

Four other judges concurred with that reasoning but also found that the case should have been sidelined by the church autonomy doctrine, which holds that the First Amendment bars the government, and therefore courts, from interfering in church matters.

"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," the four judges 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.

That group also wrote, colorfully, that "The plaintiff in this case is free to criticize his former church and advocate for church reforms. But he cannot ask the judiciary to intrude on the church's own authority over core matters of faith and doctrine. That is the lesson of this lawsuit. We as courts are not here to emcee religious disputes, much less decide them. The First Amendment restricts our role as it protects religious organizations from lawsuits such as this."

The final judge agreed so strongly on the church autonomy doctrine that he wrote a lengthy solo opinion saying that should have been the only consideration in the case.

"Resolving (Huntsman's) claims requires swimming in a current of religious affairs," Judge Patrick Bumatay wrote. "What is a 'tithe?' Who can speak for the church on the meaning of 'tithes?' What are church members' obligations to offer 'tithes?' These are questions that only ecclesiastical authorities — not federal courts — can decide."

-How the case got here-

Huntsman filed his lawsuit in March 2021. He said that between 2003 and 2015, he tithed over $1 million in cash, over 20,000 shares of Huntsman Corporation stock and over 1,800 shares of Sigma Designs stock to the church, according to Friday's ruling.

When he resigned his membership in the church, Huntsman filed the lawsuit claiming the church had committed fraud because after saying it does not use tithing funds for commercial use a purported whistleblower alleged that it did.

David Nielsen, a former employees of Ensign Peak Advisors, alleged in an IRS complaint that the church spent tithing funds for two commercial uses — $1.4 billion to build the City Creek shopping center in downtown Salt Lake and $600 million to bail out Beneficial Life, an insurance company the church owns through a holding company

Church leaders have maintained that tithing funds are used for religious purposes. The church repeated its position that it used reserve funds for City Creek and Beneficial Life.

The church told the court that it had made no misrepresentations and swiftly made a motion for summary judgment, asking the original U.S. District Court judge in California to dismiss the case before it ever got to trial. The original judge agreed, granting summary judgment in September 2021.

Huntsman appealed, and a 9th Circuit panel reinstated the lawsuit by a 2-1 vote in August 2023.

The church asked for and was granted an en banc appeal of that reinstatement. The en banc panel of 11 judges of the 9th Circuit heard oral arguments in September 2024, when the judges unleashed a barrage of questions at Huntsman's attorneys.

The panel then said it would issue a written ruling in coming months.

That ruling came Friday, and included a repudiations of Nielsen's logic and the usefulness of his information.

-Why the court said Huntsman's and Nielsen's allegations fail-

To explain the funding of the City Creek project, the Church submitted two declarations.

In Friday's ruling, the court said it relied on a declaration submitted by the church from a director in its Finance and Records Department. In the declaration, Paul Rytting stated that all the funds allocated to the City Creek project came from earnings on the church's reserve funds invested by Ensign Peak, "meaning that no principal reserve funds (i.e., funds taken directly from church members' tithing contributions) were used," the judges wrote.

Rytting testified that Ensign Peak allocated $1.2 billion into an internal account earmarked for City Creek on Jan. 1, 2004. Those funds were invested and reached nearly $1.7 billion before appropriations were made for City Creek.

The panel of judges found that the church's statements created a clear distinction between principal tithing funds that come directly from church members and earnings on the funds the church sets aside from its annual income, which includes tithing.

The judges also found that the $1.4 billion the church appropriated to City Creek was consistent with the church's statements that it would be funded by earnings on invested reserve funds.

"Because each relevant Ensign Peak account held enough earnings on invested funds to cover the funds appropriated for City Creek, any commingling of principal tithing funds and earnings on invested tithing funds cannot support Huntsman's fraud claim," Friday's majority opinion stated.

The judges rejected Nielsen's reasoning that the church was using tithing funds because Ensign Peak employees allegedly referred to all the money in its accounts as "tithing."

"Even accepting the facts asserted in Nielsen's declaration as true, they do not show that principal tithing funds were used for the City Creek project," the judges ruled.

The panel rejected the allegations about Beneficial Life outright, saying that neither Huntsman nor Nielsen provided any representations by the church about the funds used to bolster Beneficial Financial Group during the 2008 financial crisis.

https://www.ksl.com/article/51242565/unanimous-9th-circuit-panel-dismisses-huntsman-tithing-lawsuit

What the judge did in Friday's federal court hearing about Latter-day Saint tithing

(ksl.com 1-18-25)

A federal judge blitzed lawyers on both sides with questions Friday during a three-hour hearing in a lawsuit brought by 13 people asking for the return of tithing they donated to The Church of Jesus Christ of Latter-day Saints.

But U.S. District Court Judge Robert J. Shelby repeatedly challenged the attorneys for the plaintiffs about the arguments in the suit they filed, lobbing one pointed question at a lawyer before he made it from his chair to the podium in a downtown Salt Lake City courtroom.

Meanwhile, the lawyer for the Church of Jesus Christ and another representing evangelicals and Seventh-day Adventists called the lawsuit a "broadscale attack" that if successful would set dangerous precedents for the futures of churches and charities.

They also said the plaintiffs had failed to raise issues that would pierce a longstanding American legal precedent called the religious autonomy doctrine or church autonomy doctrine.

"In my own 40 years practicing law in this area and a decade teaching the law, I have never seen a more brazen and dangerous assault on a church's religious authority," said Gene Schaerr, who represented the National Association of Evangelicals and the General Conference of the Seventh-Day Adventists.

Schaerr said piercing the church autonomy doctrine the way the plaintiffs want would "wreak Constitutional chaos for all religious organizations."

The plaintiffs' cases were joined together in April. Shelby did not issue any rulings at the end of the hearing.

"I will take the matter under advisement and I will issue a written decision," he said.

-What the lawsuit alleges and asks the court to do-

The lawsuit alleges that the church defrauded its members by not informing them that leaders were placing some tithing funds into reserve accounts and investing that money. It also alleges the church hid those investments and defrauded members by saying it would not use tithing for the construction of the City Creek development in Salt Lake City while allegedly doing so.

The church has maintained that it used funds that came from "commercial entities owned by the church" and the "earnings of invested reserve funds" to build City Creek, a mixed-use commercial development across the street from church headquarters that was part of efforts to protect the area around Temple Square.

The lawsuit also asks the court to institute a class action that would make it possible for members or former members of the church to seek reimbursement of tithing they donated to the church. It also asks the court to require an annual public accounting about the church's use of tithing and investment funds and to appoint a special master to monitor the collection and use of tithing and investment funds.

Such rulings could create a court-authorized schism in the church, said the lead attorney for the Latter-day Saints, former U.S. Solicitor General Paul Clement.

He said any lawsuit that could successfully pierce the church autonomy doctrine would have to be more of a rifle shot, a very specific case about a particular incident that showed actual harm to a person, not "a blunderbuss attack" on how the church handled tithing for decades and including thousands of people with differing experiences.

-How the lawsuit got to this point-

The 13 people in the lawsuit initially filed a number of separate cases. In April, a panel of judges in Washington, D.C., bundled five lawsuits around the country — Illinois, Tennessee, Utah, Washington and California — into a single case. They assigned the case to Shelby.

The plaintiffs filed a unified complaint in July. The church filed three motions, and Friday's hearing was for arguments on those motions. The first was a motion to strike the creation of a class-action suit, and the other two were motions to dismiss the case.

Clement went first on Friday. He said the plaintiffs' claim faced three fatal problems:

The church autonomy doctrine.

What he alleged was a failure by the lawsuit to establish what statements the plaintiffs relied on and how they were damaged.

The church's belief that the lawsuit missed a three-year window set by the statute of limitations.

Clement also argued for the church in September at a 9th Circuit Court of Appeals en banc hearing in a similar tithing case brought by James Huntsman. Clement is well-known as one of the nation's top appellate litigators.

-The church autonomy doctrine-

The U.S. Supreme Court has strengthened the church autonomy doctrine in several rulings over the past 25 years. The plaintiffs said Friday that it does not apply to their lawsuit, while Clement said it did.

"This case can't get over the First Amendment hump," Clement said.

The church autonomy doctrine says that the government and courts cannot infringe on the way church's govern themselves, especially with regard to religious questions. Clement said the ancient doctrine of tithing, which plaintiffs' attorneys agreed is practiced by most faiths, is a religious doctrine that places Latter-day Saints under scriptural command to give 10% of their income back to God through the church.

Shelby repeatedly asked Clement to consider hypotheticals in which a church, or a fraudster posing as a church, might be liable for fraudulently collecting and misusing tithing. Clement said his reading of court rulings on the religious autonomy doctrine was that there are only two exceptions to protecting church's from charges of fraud — embezzlement or self-dealing and raising funds for very specific purposes and then using them for different purposes.

Christopher Seeger, who represented the plaintiffs, argued that the church's statements that it would not use tithing funds for City Creek or anything but charitable purposes was a specific misrepresentation because a whistleblower alleged that the church used $1.4 billion in tithing funds for City Creek and $600 million to "bail out" Beneficial Life, allegations the church denies.

Seeger also alleged that the church intentionally concealed its investment fund, citing an SEC complaint and subsequent fine paid by the church without admitting wrongdoing.

Shelby sat in front of 13 attorneys, six for the plaintiffs, six for the church and Schaerr representing evangelicals and Seventh-day Adventists.

The judge questioned Seeger and Scott George, who also appeared for the plaintiffs, with questions about whether their complaint established an actual fraud under Utah law. He repeatedly said he could not see how they showed what church statements the plaintiffs relied on when they made donations and how those donations may have been misused and how they suffered a loss.

George said the complaint established a theme. Shelby questioned whether pleading general themes met the standard for establishing fraud in the U.S. 10th Circuit. At one point, Shelby said he wanted to clarify what appeared to be a disconnect to him between what he and plaintiffs' attorneys felt was the law he should follow. That discussion lasted about 45 minutes.

-What's next-

One of the issues Shelby will consider is whether the statute of limitations bars the lawsuit altogether. Clement argued that news reports about the alleged whistleblower's account started the clock on the three-year statute in December 2019. The plaintiffs didn't file suit until 2023.

The judge noted that there were 26 national and local media accounts of the alleged whistleblower's account between December 2019 and February 2020 and that Huntsman filed his suit in 2021 and the plaintiffs in another lawsuit filed theirs in 2020. Clement said the plaintiffs seeking a class action in Friday's hearing didn't file until after the SEC settlement.

"Why is that analysis wrong?" Shelby asked George.

George said the SEC settlement provided more clarity and should be when the clock started.

The potential class-action case is one of three pending lawsuits about the church's tithing.

Shelby previously judged one of those cases, which is now before the 10th Circuit Court of Appeals. The other, the Huntsman case, is before the 9th Circuit Court of Appeals. It's possible those courts could issue their rulings on September hearings before Shelby issues his.

In September, the 9th Circuit Court of Appeals in San Francisco heard arguments about whether to reinstate a lawsuit filed by Huntsman seeking a refund of $5 million he tithed to the church.

He alleges the church used tithing funds for part of the construction of the City Creek development in downtown Salt Lake City and that he wouldn't have donated the money if he knew tithing was being used for that alleged purpose.

A judge threw out the suit in 2021 but a three-judge appeals panel reinstated it in 2023 and the church appealed. The case also focuses on the church autonomy doctrine.

In a separate case, three former church members accused the church of propounding false beliefs and misrepresenting its history and practices to defraud members of donations.

Shelby also heard the case. He dismissed most of the case, but the defendants, including Laura Gaddy, appealed to the 10th Circuit Court. A panel of three 10th Circuit judges heard oral arguments in September. They have yet to issue a decision, but they indicated they saw barriers to the suit in church-autonomy precedent.

Can You Think Of Any Other Benefits That I Should Mention?

(by Dan Peterson sic et non blog)

Not infrequently, I read comments from purportedly liberated ex-Latter-day Saints about the glories of churchless Sundays.  Instead of attending mind-numbingly dull and repetitious meetings, they claim to spend most of their Sundays skiing, golfing, biking, reading classic books, listening to superb music, perfecting their highly toned bodies through exercise, enjoying the beach, and sipping fine imported wines.

And perhaps they do.

Would I gain by skipping out on Sunday meetings and spending the day as if God didn’t exist?  Yes.  In some ways, quite undeniably so.  I’m not a big fan of meetings myself.  I love forests and oceans.  And quietly reading.

But I think that my life would also be seriously impoverished.

Bracketing the truth-claims of my faith, I simply want to jot down, in no particular order, some of the things that I would be missing if I were to drop out of participation in my ward on Sundays.

I would lose a great deal of social contact, and other types of socializing probably wouldn’t fully (or even significantly) compensate me for that loss.  I think of people who lack the kind of close society that the Church provides — and not merely of young people who need to cruise singles bars in the hopes of picking somebody up with whom they can have a long-term (or even short-term) relationship.  I’ve often noticed boastful entries on a couple of message boards where apostates want to know what everybody else on their board is doing that Sunday morning instead of attending Latter-dy Saint services; the obvious answer, at least at the time people are writing there, is that they’re sitting alone in front of their computers, typing comments into cyberspace directed to strangers, to people whom, overwhelmingly, they’ve never met and probably won’t ever meet.

Virtual community isn’t entirely the same thing as real community.  It’s a well-publicized fact that study after study has demonstrated significant health benefits for religious believers.  Some opponents have dismissed those benefits as coming not from religious belief itself, but from being participants in a strongly supportive community.  Fine.  I’m not sure that that’s all it is, but let’s grant that claim for purposes of the argument.  The fact remains that religious believers have pretty easy and regular access to such supportive communities; the irreligious, on the whole, suffer by comparison.

Just one example:  When my wife is out of town, members of our ward have frequently invited me over to dinner.

On other, quite different, occasions, funerals are well-attended and grieving families are lovingly supported.  (I’ve been to some funerals, outside of the Church of Jesus Christ of Latter-day Saints, where the non-family mourners could easily be counted on one hand.)  Mine is a community of people who “are willing to bear one another’s burdens, that they may be light; yea, and are willing to mourn with those that mourn; yea, and comfort those that stand in need of comfort” (Mosiah 18:8-9).  “Thou shalt live together in love, insomuch that thou shalt weep for the loss of them that die” (Doctrine and Covenants 42:45).

Weddings and wedding receptions draw large, supportive crowds.  Wedding and baby showers attract eager helpers and enthusiastic participation.  The community rallies around its members at the crucial pivot-points of their lives.  We aren’t social atoms.  By contrast, my parents spent their last three decades in an upscale California neighborhood where there was seldom any contact of any kind with the people who lived on either side of them or across the street.  They were all past the age when they had kids in school and ran into each other at PTA meetings, so they had virtually nothing in common, nothing to bring them together.  They sometimes waved at each other across the street, but that was essentially the extent of their interactions.  When my parents died, nobody from their neighborhood attended the funeral services.  I doubt that any of the neighbors even knew that they had died.  Members of their ward knew, though, and they stepped forward.

Some years ago, Hilary Clinton made an African proverb famous: “It takes a village to raise a child.”  Latter-day Saint wards supply such “villages.”  They supplement the efforts of parents and extended families, providing teachers, youth leaders and activities, scouting programs, youth service projects, and the like.  Parents aren’t left on their own for the moral and social formation of their children.

I’m put in mind of Robert Putnam’s famous 2000 book Bowling Alone: The Collapse and Revival of American Community.  The book surveys the decline of “social capital” in the United States since 1950, describing what Putnam holds to be a marked reduction in all the forms of in-person social intercourse upon which Americans once founded and enriched the fabric of their social lives.  A distinguished political scientist, he believes that this trend undermines the active civil engagement on which a strong democracy depends.  If the earlier Harvard sociologist David Riesman hadn’t already used the phrase in rather a different sense as the title of a famous book of his own, Putnam could easily have described America as, more and more, a “lonely crowd.”  And I doubt very much that Putnam regards internet message boards as an adequate replacement for genuine community.

There are many other values to be found in participation in Latter-day Saint Sunday meetings, or, anyway, in something very like them.  They may not be as hedonistically satisfying as snowboarding or mountain biking on the Sabbath, but they’re probably more important, and perhaps even more satisfying, in the long term.

Take singing, for example.  Some have noticed that, once Americans are out of high school and into their mid-twenties, most never sing much any more.  A small thing, you might think, but not completely unimportant.  Church, however, offers not only congregational singing, but the chance to participate in a choir.  And, for some, the opportunity to play the piano and the organ on a regular basis.  Good things.  They keep music alive among ordinary people who aren’t professionals at it.  We who participate in church have other sources of music beyond iPods.  We’re not just passive consumers of it.

For Latter-day Saints, Sunday worship offers a weekly opportunity to renew covenants.  Even if critics recognize no transcendent significance in the sacrament service, surely they might be able to see that taking weekly stock of where one stands, and forming weekly resolutions to improve, can have real value.

Sunday services provide a chance for reflection on the biggest of big issues, an opportunity to pause and take stock of oneself and one’s life.  And not just during the administration of the sacrament.  Otherwise, the pressures to careen thoughtlessly through life — “distracted from distraction by distraction,” as T. S. Eliot puts it in the first of his Four Quartets — are intense.

At church, we think about the meaning of life.  We become part of a community of Saints that reaches back not only into the early nineteenth century but beyond, into biblical times.  And, even beyond that, into an eternity before that extends into an eternity ahead.  Especially for Americans, who tend to live in an ahistorical Now, this provides a deeply rich ground for our daily lives and decisions and pursuits.  We’re part of a communion of Saints, of those who’ve gone before and those who will follow after us.  And I haven’t even mentioned family history research, so much encouraged and supported by the Church.)  On an even grander scale, too, the Plan of Salvation, the Great Plan of Happiness, endows every day with potentially cosmic meaning.

For perhaps most of my adult life, I served as a Gospel Doctrine teacher in Sunday school.  It’s my favorite Church calling, bar none.  From one perspective, church is a kind of continuing adult education seminar.  It’s fabulous, as even those who deny their divine inspiration should be able to see, to be able to come together each week in order to discuss some of the greatest and most influential texts in human history.  For those of us who believe that, in doing so, we’re hearing the word of God, it’s an inestimable treasure.

There are even benefits to be gained from simply dressing up.  I’m not someone who loves suits and ties; I prefer, indeed, not to wear shoes.  But I feel sorry for those whose days and weeks are casual all the time, without variation, without certain times and places being demarcated as special, as worthy of somewhat greater formality.  This adds richness to life.

Participating in a community of discipleship offers enormous scope for service — which, as many studies have shown, is a major source of human happiness.  It’s not only the children and the youth who benefit from programs for young people.  The adults who’re involved in them also benefit.  And this extends beyond youth programs.  Teaching, heading up activities, participating in organized efforts to fix up widows’ homes and to shovel snow for the elderly, serving at welfare canneries, volunteering at Church employment centers, and a host of other, similar, efforts, can provide deep satisfaction.  I think, in this context, particularly of my service as a bishop, which exposed me to people and situations and experiences I would never otherwise have had.  They tested me, and sometimes they worked me to the bone, and I didn’t always handle them as effectively and competently as I wished, but I grew from them in a manner that few other assignments could have matched.

I appreciate a community in which elderly people can still contribute, and in which they’re valued.  Not merely within a family, but publicly.  And not merely for their monetary value, or their productivity as employees, which largely ends when  they retire.  In my ward, older men and women serve in multiple capacities, including the temple and various leadership roles.  They aren’t marginalized into irrelevancy.

It’s true that the preaching in our congregations isn’t done by polished professionals.  It can be uneven.  Sometimes it can be a bit pedestrian. But it’s often quite personal and heartfelt, and, through it, we learn to know about, and to know, our neighbors in remarkable ways.

Our monthly day for fasting and for expressing testimonies in sacrament meeting, when I approach it in the proper spirit, can be remarkable.  And not merely the comments made in the meeting by members of our ward.  The opportunity to abstain from food for two meals, and then to donate at least the amount of money saved thereby for assistance to the (mostly local) poor, is a wonderful one.  The money doesn’t go to fundraising campaigns, or to expensive overhead, but directly to people who need it.

These are just a few hasty thoughts.  If I were to forego gathering with the Saints on Sundays, I would miss out on all or most of what I’ve mentioned above, and probably on much else besides.  Would there be some gains?  Yes.  I might get more writing done.  I could, very conceivably, spend more time in the mountains.  I would have more time for television and, even better, for reading.  And so forth.  But, in the long term, even (for now) bracketing the eternal benefits that I foresee, my life would, in several important respects, be measurably less than it now is.

Do you have anything to add?  (Confession:  I’m more interested in comments from believing Latter-day Saints here than I am in hearing from sneering and alienated former believers.  I already know pretty much what they think.  That’s what led me to write this.)

https://www.patheos.com/blogs/danpeterson/2025/01/can-you-think-of-any-other-benefits-that-i-should-mention.html?fbclid=IwY2xjawIMgoJleHRuA2FlbQIxMQABHUYGnJTvk5bGhQJNTzF8nHG-yNTQTMM17M2aZjJTtLgw0DpYT9bA6zJC9Q_aem_39SD3-KiqqIRPFN969iE5w