Churches and Revoking Pension

Church Law and Tax Report Churches and Revoking Pension Key point 2-04.1. Most courts have

Church Law and Tax Report

Churches and Revoking Pension

Key point 2-04.1. Most courts have concluded that they are barred by the First Amendment guarantees of religious freedom and nonestablishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

A federal bankruptcy court in Delaware ruled that it was barred by the “ministerial exception” from resolving a dismissed priest’s claim that his diocese acted unlawfully in revoking his pension benefits based on his sexual abuse of minors. A Catholic diocese filed for bankruptcy protection under Chapter 11 of the bankruptcy code. The diocese had been named as a defendant in 131 child molestation claims involving several priests. The diocese entered into a settlement with the abuse victims in the bankruptcy proceedings. The settlement contained a provision stating that eight priests who had been dismissed by the diocese for abusing minors would be ineligible for benefits of any kind arising on or after the date of the bankruptcy petition, including benefits under the diocese “clergy pension plan.” One of the priests objected to the revocation of his benefits, claiming that this amounted to a breach of contract that could be adjudicated by the court without delving into religious doctrine.

In rejecting the priest’s claim, the court relied on the so-called “ministerial exemption” which generally bars the civil courts from resolving employment disputes between churches and clergy. The court quoted from a 2012 United States Supreme Court ruling that recognized and affirmed the ministerial exemption:

The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions. Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012).

The Supreme Court concluded that an award of any relief, such as frontpay, backpay, compensatory and punitive damages, or attorney’s fees, would “operate as a penalty on the church for terminating an unwanted minister,” and was prohibited by the First Amendment.

The diocese argued that under the Hosanna-Tabor ruling, the bankruptcy court was barred from granting the priest any relief on account of his removal from ministry. The court agreed.

Hosanna-Tabor has made it clear that the Establishment Clause and the Free Exercise Clause bar the government from interfering with the decision of a religious group to fire one of its ministers. In the same vein, the Court is unable to require a church to “accept or retain an unwanted minister, or punish … a church for failing to do so.” Awarding any relief that would “operate as a penalty on the church for terminating an unwanted minister” is equally prohibited by the First Amendment, seeing as the award of such relief would depend on a determination that the church was wrong to have relieved the minister in question … .

Much like how awarding [the plaintiff] in Hosanna-Tabor with any relief (of frontpay, backpay, compensatory and punitive damages, or attorney’s fees) would operate as a penalty on the church for terminating an unwanted minister, awarding [the priest in this case] with relief for his claim of pension and sustenance would likewise effectively create a penalty or punishment upon the diocese for the removal of the priest from ministerial duties … . The court is barred, by the ministerial exception, from forcing the dismissed priest’s reinstatement into ministry, or awarding any form of relief that would come at the diocese’s expense on account of his removal … .

The ministerial exception exists in order to ensure that “the authority to select and control who will minister to the faithful … is the church’s alone.” The diocese (through the Bishop) chose to remove eight priests from ministry, and that decision remains the diocese’s alone. The granting of any claims for pensions, sustenance, or other forms of relief against the diocese would create a determination that the diocese was wrong to have relieved the ministers of their positions—a decision that the Supreme Court has already declared “strictly ecclesiastical,” and off-limits for the courts.

What This Means For Churches:

This case illustrates how some courts have construed the ministerial exception broadly to apply not only to cases involving termination of clergy, but also to collateral issues. As the Supreme Court noted in the Hosanna-Tabor case, the ministerial exception bars civil courts from awarding damages to dismissed clergy if doing so would have the effect of punishing a church for its decision to terminate a minister. In re Catholic Diocese, 513 B.R. 639 (D. Del. 2014).

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