9th Circuit judges pepper attorneys with questions on both sides of James Huntsman’s tithing lawsuit

A panel of 11 judges should dismiss James Huntsman’s lawsuit seeking the return of $5 million in tithing he donated to The Church of Jesus Christ of Latter-day Saints for two reasons, the church’s attorney said Wednesday before the 9th Circuit Court of Appeals in San Francisco.

First, the church did not misrepresent how it paid for the City Creek Center project in downtown Salt Lake City and second, courts should not be involved in religious doctrine decisions such as how tithing is used, said Paul Clement, who served as Solicitor General of the United States during the George W. Bush administration.

The judges peppered Clement and David Jonelis, the attorney representing Huntsman, with questions during the one-hour hearing.

“It was a very well-prepared and very engaged court for this argument,” 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.

“I think most all of the questions evidenced a deep concern that the court had in having courts interfere with the autonomy of churches to control their doctrine and their faith, which is fundamental to the First Amendment and to the ability of churches to function,” Rosen said.

The judges adjourned to conference about the case. Their decision could take weeks or months. The losing party could appeal to the U.S. Supreme Court, Rosen said.

What Huntsman argued

Jonelis asked the court to reinstate Huntsman’s lawsuit seeking a refund of his tithing.

Huntsman’s argument is that church leaders misrepresented how they paid for City Creek. He believes they used tithing funds, based on a three-page declaration by David Nielsen, a disaffected former church member who worked at Ensign Peak after the City Creek project began, according to one of the judges.

“This is a fraud case, a simple fraud case for which the First Amendment provides no sanctuary,” said Jonelis of the Los Angeles firm Lavely & Singer.

The church called Huntsman’s claim baseless when it was filed in March 2021, and a U.S. District Court judge granted the church summary judgment when he tossed out Huntsman’s lawsuit in September 2021. Jonelis argued Wednesday that the 11-judge panel should send the case back to the district court and allow Huntsman’s legal team access to church records.

A three-judge panel of the 9th Circuit reinstated part of Huntsman’s claim in August 2023 by a 2-1 vote. The church appealed, asking for Wednesday’s en banc hearing. The appeal was granted in March.

Jonelis began his argument by repeating lyrics from the Beatles’ song, “Let It Be”: “When I find myself in times of trouble, Mother Mary comes to me speaking words of wisdom. Let it be.”

“In most contexts, the name Mother Mary has religious connotations, but here, it’s just Sir Paul McCartney singing about his mother, Mary McCartney. It’s secular,” Jonelis said. “And the same is true of the word tithing. In many cases, that word would invoke religion. But here, in this narrow case, the implications are no more robust than the song, ‘Let It Be.’”

Is tithing inherently religious, or can a court consider it secular?

Judge Milan Smith swiftly interrupted Jonelis. “Tithing is a quintessential religious issue,” he said. “In fact, I don’t know of any use of the term tithing that is not religious in context. What am I missing?”

Jonelis said the case was about accounting and fully secular, but several of the judges questioned how they could consider tithing anything but religious.

“How can a church have a secular definition of a religious obligation?” Judge Daniel Bress asked.

Jonelis repeated Huntsman’s arguments that the late church prophet, President Gordon B. Hinckley, said during a 2003 general conference talk that no tithing would be used for City Creek but that Nielsen said he heard people say tithing funds were used.

“Isn’t there a concern,” Judge Gabriel Sanchez asked, “if you’re asking courts to start parsing these speeches, whether it’s going to chill something within religious doctrine or internal church governance that a church leader might have to run a speech by legal before he can deliver a sermon?”

Jonelis said the 9th Circuit panel should refrain from what he said would be “cloaking civil torts in immunity” because of religious protection.

The judges asked both attorneys about whether Huntsman needed to rely on President Hinckley’s statement.

“It goes to the question of what motivates someone to tithe,” said Rosen, who observed the hearing in the courtroom. “I think that goes to the religious purpose of tithing. Generally, you tithe because it’s a religious command to give 10% of your income, not because of a particular use of the funds. You don’t tithe because the money is going to be used for ‘x’ project or ‘y’ thing.”

What the church’s attorney argued

Clement told the 11-judge panel that the church did what President Hinckley said and has careful records of the project.

“What the record here reflects in an irrefutable way is that the funds for this project — that started out with $1.2 billion on Jan. 1, 2004, and then were segregated from all other funds — that $1.2 billion came from earnings on investment returns exclusively,” Clement said. “That is the unrefuted testimony of Mr. (Paul) Rytting, and that’s in his declaration.”

Rytting is a director in the church’s Finance and Records Department. In his declaration to the court, Rytting stated that additional funds transferred from Ensign Peak Advisors, the affiliated investment management company for the church, also came exclusively from earnings in the church’s reserve fund.

Rytting also declared that additional funds for the project “came from the church’s earnings on its general reserve funds from Ensign Peak’s main investment account.”

Judge Smith questioned Clement about why the church’s first argument was that there was no misrepresentation. The judge asked whether appealing first to the church autonomy doctrine would have resulted in the case being tossed even before summary judgment.

What is church autonomy doctrine?

Church autonomy doctrine, which is rooted in the First Amendment, both protects religious organizations from state control of their beliefs and internal affairs and ensures that the state does not establish a religion, according to Lael Weinberger , a Constitutional lawyer and non-resident fellow at Stanford Law School.

Clement said the church should win either way.

“At a certain point, money is fungible,” he said. “If the church hadn’t been as careful in its accounting, I think I would still be up here saying, what are we talking about? In year 2003 alone, the church had earnings on reserve funds that are well in advance on anything they spent on this project, and so there’s just no issue that they had to go into current year’s tithing.”

Judge Smith noted that no party has asserted the church engaged in a Ponzi scheme or that anyone in the church enriched themselves.

Clement told the judges tithing refund claims should be presumptively rejected under the church autonomy doctrine subject to two exceptions. First, he said, a church should not be protected if embezzlement takes place, and second, a church should not be protected if it holds a fundraiser for a specific purpose and then diverts the money to something else.

Neither happened in the case of City Creek, he said.

Rosen found the discussions interesting because of the constitutional avoidance doctrine, which states that courts should resolve cases without delving into constitutional questions if possible.

“As an appellate lawyer,” Rosen said, “I would always start with the non-constitutional question first. That doesn’t mean I wouldn’t get to the constitutional question or that it’s not important, it’s just typical to start with the non-constitutional question.

“Many of the judges seemed to want to talk about the constitutional issue of the church autonomy doctrine.”

A curveball about Huntsman’s residence

Judge Jacqueline Nguyen asked both attorneys for their opinions on whether Huntsman had standing to bring the lawsuit in California based on when he moved from Utah to California. Jonelis said Huntsman moved to California in October 2020, five months before he filed the lawsuit, but Nguyen said Huntsman’s company filed a form with the state of California using his Utah address.

Neither party raised the issue with the district court.

Clement said the church did not think it had a good faith basis to question Huntsman’s claim of a California residence.