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 that 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.”
The church welcomed the ruling.
“Tithing donations are considered sacred by The Church of Jesus Christ of Latter-day Saints and are dedicated to advancing the church’s global religious mission,” church spokesman Doug Andersen said. “Today’s unanimous decision by the 11-judge panel of the 9th Circuit Court of Appeals rejected the claims against the church and Ensign Peak.”
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. He said that after the church, chiefly through late President Gordon B. Hinckley, said it does not use tithing funds for commercial use, a purported whistleblower alleged that it did.
David Nielsen, a former employee of Ensign Peak Advisors, had alleged in an IRS complaint that the church spent tithing funds for two commercial uses — the City Creek shopping center in downtown Salt Lake and in support of 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.
“We welcome this decision inasmuch as the church has consistently affirmed that funds used for the City Creek project came from the earnings of invested reserve funds and not from donations,” said Andersen, the church spokesman, on Friday. “Today’s decision vindicates what President Gordon B. Hinckley declared during general conference 20 years ago and is a confirmation of constitutional rights afforded to religions in the United States of America.”
The church told the original court that it had made no misrepresentations and swiftly made a motion for summary judgment in 2021, 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.