Oregon Case Provides a Powerful Reminder to Churches

Editor's Note: On March 5, 2010, this post was corrected to show the trial court originally ruled in favor of the pastor, and this ruling was recently affirmed on appeal. The correct version appears in full below:

Last week, an Oregon appeals court issued an important ruling involving a pastor's efforts to sue his denomination and two denominational officials for defamation. Church leaders should take note because appellate decisions become reference points for future cases heard around the country.

The court found that the First Amendment guaranty of religious freedom did not prevent a dismissed pastor from suing church officials for defamation as a result of statements they shared with the congregation (read more about the ruling in The Oregonian).

First, some background. The pastor was asked by denominational officials to accept a call at a small church. After expressing concern that the church would not be able to adequately compensate him, the officials agreed to supplement his salary and sent the church a check in the amount of $3,000 for this purpose. The officials made clear that the supplemental payment was a gift, and did not have to be repaid by the pastor.

A short time later the pastor asked the church board to authorize a check to him in the amount of $3,000 from the church's bank account. He explained that these funds had been deposited by denominational officials for his benefit, and did not have to be repaid. The church board accepted this explanation, and issued the pastor a check for $3,000. A few months later, denominational officials informed the pastor that he was being charged with misappropriation of funds for the $3,000 withdrawal. This was based on their understanding that their $3,000 payment to the church was to assist the church in meeting its salary commitment to the pastor, and was not intended to be over and above the compensation that the pastor received from the church.

The pastor voluntarily resigned his position at the church. Soon after he left, denominational officials drafted a letter that was read to the church congregation. The letter stated that "there had been a financial misappropriation by the former pastor." In a subsequent email, a denominational official stated that the pastor had demonstrated a willingness to "lie and steal."

The pastor, upon learning of these communications, sued the denominational officials who made them, and his national church, for defamation. A jury ruled in favor of the pastor, and awarded him monetary damages. The defendants appealed. The appeals court agreed that the civil courts cannot resolve lawsuits involving matters of discipline, faith, internal organization, or ecclesiastical rule. But, it insisted that the First Amendment did not bar all claims against churches.

The court applied a three-part test in deciding if the courts can resolve a defamation claim against a church. First, if the organization is religious in nature; second, if the allegedly defamatory statements relate to the organization's religious beliefs; and third, if the statements can only be regarded as religious and were not made for a secular purpose, then the statements are purely religious as a matter of law and the First Amendment bars a defamation claim.

On the other hand, if the allegedly defamatory statements, although made by a religious organization, do not concern the religious beliefs and practices of the religious organization, or are made for a nonreligious purpose, then the First Amendment does not necessarily prevent resolution of the defamation claim. The court concluded that the statements by the denominational officials accusing the pastor of theft and lying were not unequivocally religious in nature and therefore the pastor's defamation claim was not barred by the First Amendment.

Let me make four very important observations about this ruling.

First, the court acknowledged that statements pertaining to matters of church discipline, faith, polity, or ecclesiastical rule can never be reviewed by the civil courts. So, for example, no civil court could resolve a defamation claim based on statements accusing a pastor of doctrinal heresy.

Second, the court acknowledged that truth is an absolute defense to defamation. Church officials who make statements about a former pastor that are true generally cannot be liable on the basis of defamation.

Third, the court acknowledged that the statements made by the denominational officials may be protected by a qualified privilege if made to church members about a matter of mutual concern. The court conceded that employers have a legitimate interest in free communications on work-related matters, especially when reporting actual or suspected wrongdoing. It cited a previous case in which communications between church officials about charges that led to the dismissal of a former missionary concerned a subject of common concern and were subject to a qualified privilege. However, a qualified privilege will be lost if it is abused. This can occur if the person making an allegedly defamatory statement did not believe the statement was true, or lacked reasonable grounds for believing it was true, or if the statement was made for a purpose outside the scope of the privilege.

Fourth, it should be noted that the pastor in this case had voluntarily resigned from the church prior to the statements about him being made. So, the alleged defamation did not take place in the context of a pastoral termination. The court acknowledged that the First Amendment generally prohibits pastors from suing a church for defamation as a result of statements made in the context of their termination or dismissal.

This case suggests that church leaders should be careful about making statements to the congregation concerning a former employee, especially if those statements could be viewed as defamatory. It would be advisable to enlist the assistance of an attorney in drafting a statement, and ensure that the statement is only communicated to church members.

Because of this case's potentially far-reaching implications, I'll be following it in the weeks ahead. Watch for an in-depth report in an upcoming issue of Church Law & Tax Report.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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