Faith groups team up, argue Huntsman’s tithing case against the LDS Church endangers religious freedoms

Eleven organizations ask the 9th U.S. Circuit Court of Appeals to reject allegations that Latter-day Saint leaders misled members over spending of donations.

(Illustration by Christopher Cherrington | The Salt Lake Tribune)

Top U.S. religious groups say a lawsuit alleging fraud by leaders of The Church of Jesus Christ of Latter-day Saints is a danger to all faiths and violates the U.S. Constitution.

In new legal briefs, lawyers for the Washington, D.C.-based nonprofit Becket Fund for Religious Liberty and those representing 11 major faith groups filed briefs urging a federal appeals court to reject James Huntsman’s legal accusations that the Utah-based church misused tithing.

Huntsman’s high-profile case is now set for September oral arguments before the full 9th U.S. Circuit Court of Appeals as part of an “en banc” rehearing granted earlier this month.

The high-profile case “is infused with religious significance,” opponents to Huntsman’s lawsuit argue in their latest pleadings, stating that the First Amendment’s protections of religious freedom and church autonomy bar legal review and should derail his challenge.

“Fundamentally religious issues, in which secular courts may not become entangled, underlie every aspect of Huntsman’s claims,” Becket contends in its brief filed Friday.

“Just because there may be secular aspects to a religious dispute, that does not open the door to turning the dispute into a secular one for courts or juries to resolve,” echo attorneys arguing on behalf of an array of faith groups, including a variety of Christian and Jewish faith organizations.

The U.S. Supreme Court, they contend, “has consistently refused to allow courts to hide theological elephants in secular mouse holes.”

Parties behind the filing include the Christian and Missionary Alliance; the General Conference of Seventh-day Adventists; the Jewish Coalition for Religious Liberty; Church of Scientology International; the General Council on Finance and Administration of The United Methodist Church; and others.

Huntsman is seeking $5 million-plus

Huntsman, who heads a film distribution company based in California, resigned his church membership in 2020 and sued the faith in March 2021, asserting that Latter-day Saint leaders misled members about how tithing was being used by saying it went only to charitable purposes while spending on commercial ventures.

A brother of former Utah Gov. Jon Huntsman Jr., James Huntsman is seeking to recover $5 million of his own donations plus interest and penalties.

His attorneys have successfully argued so far that the fraud case is a secular matter not precluded by the First Amendment and that pursuing it does not require the courts to rely on or interpret religious questions.

A U.S. District Court tossed out the case in late 2021, but a 2-1 decision by a panel of the 9th Circuit reinstated it last August.

Two of the three appellate judges found that a “reasonable juror” could conclude that Latter-day Saint leaders — particularly then-President Gordon B. Hinckley — misrepresented how $1.4 billion in church dollars was used to build the City Creek Center shopping mall in downtown Salt Lake City.

That ruling was vacated March 1 when the full 9th Circuit agreed to review the case.

Legal analysis in Huntsman’s lawsuit has come to center on comments made by Hinckley, who told attendees at April 2003 General Conference that tithing funds “have not and will not be used” for City Creek Center. Hinckley said the money instead came from “commercial entities owned by the church” and the “earnings of invested reserve funds.” Much may hinge on what exactly the Latter-day Saint prophet-president meant by those and other terms.

Opening questions of faith to legal review?

Deciding even basic questions as to what Hinckley meant, and how Huntsman interpreted those statements, according to the latest two briefs, would require an impermissible review of basic ecclesiastical questions by the courts. Opponents say letting Huntsman’s case proceed also endangers faith groups by opening religious practices to being second-guessed by aggrieved members and illegally putting courts in charge of deciding internal faith questions.

“Any time a religious organization, via one of its leaders or an official publication, says something about the religious status and use of donated funds that can be contradicted by an allegation from a disgruntled former employee or member,” one of the latest filings contends, “a jury or judge (under the panel’s reasoning) will now get to decide which party has the better theological understanding.”

They also point to a series of nearly identical lawsuits filed since Huntsman’s case was revived last summer, each of them alleging fraud and seeking the return of tithing funds. The 2-1 ruling that reinstated his case, faith groups say in their new brief, “has spawned copycat litigation throughout the nation — posing an additional risk to all organizations of faith.”

Five recent suits — in Utah, Illinois, Tennessee, Washington and California — have since popped up. They seek class-action status over allegations that tithing was spent contrary to how Latter-day Saint leaders said the money was being used.

In nearly identical language, plaintiffs argue that their allegations don’t implicate religious beliefs, doctrines or how the church is organized or governed, but rather the faith’s financial practices.

Huntsman’s case — which is not seeking class-action status — and these other suits cite sworn testimony from whistleblower David Nielsen, a former portfolio manager with the church’s investment arm, Ensign Peak Advisors, that leaders knowingly misled members on the faith’s spending.

The cases also all note a February 2023 settlement between the church and the Securities and Exchange Commission, which found top church officials had approved the creation of 13 shell companies partly to evade public reporting laws and obscure the size and scope of the faith’s investment portfolio.