James Huntsman made annual tithing donations to the Church of Jesus Christ of Latter-Day Saints. In contributing what ultimately added up to millions of dollars in tithes, Huntsman relied on the Church’s representations that tithing funds would not be used to fund for-profit enterprises. But despite those repeated assurances, the Church was in fact using tithing money to finance projects like the development of a shopping mall in Salt Lake City. A whistleblower who had worked for the Church’s investment arm revealed in a complaint to the IRS that the Church spent $1.4 billion in tithing funds on the mall and purposefully concealed the source of those funds from the public.
Huntsman learned of the whistleblower’s complaint in 2019 and realized that the Church had deceived him about where his donations had gone. He sought to resolve the issue privately with the Church, but the Church refused. So Huntsman sued for fraud.
The First Amendment guarantees that a church generally can spend its money how it wants. And the First Amendment gives churches the unfettered right to control religious doctrine and define religious terms. What the First Amendment does not do, however, is give carte blanche to churches to fraudulently induce members to donate under false pretenses.
Just three months after Huntsman filed his complaint, the district court allowed the Church to forgo the typical discovery process and file an expedited summary-judgment motion. The district court granted summary judgment in favor of the Church and dismissed the case.
Huntsman appealed. On August 7, 2023, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit reversed the district-court decision. The panel found that there was ample evidence that the Church had fraudulently misrepresented the use of tithing funds.
On September 20, the Church petitioned the entire Ninth Circuit to rehear the case with a larger panel. The Church contended that the entire suit was blocked by a legal principle known as the church-autonomy doctrine. We filed our opposition to the request for rehearing on November 13. Our opposition explained that while the church-autonomy doctrine prevents courts from resolving questions about religious beliefs or teachings, it does not give churches a free pass to defraud their members. Unfortunately, the court granted the Church’s request over our opposition. Oral arguments before an eleven-judge Ninth Circuit panel will be held in September 2024.
