Update on Huntsman Lawsuit: Ninth Circuit Reverses Trial Court

[Tacenda]

56 minutes ago, smac97 said:

Huntsman weighs in (again) : James Huntsman takes aim at LDS Church’s legal moves against his tithing case

Uh-huh.

It's a reasonable concern.

He must say this, as anything other than a "'purely secular' dispute" would get tossed out of court on its ear.

I think Kathleen Flake, for the most part, correctly characterized things back in 2019, in response to the "whistleblower" story:

The part Flake did not note was the punitive, vengeful, "pound of flesh" motives that I think are fairly apparent in these matters (Nielsen, Gaddy, Huntsman, Chappell).

Back to the original article:

I am curious as to what interest Americans United for Separation of Church and State has in a purportedly "about fraud, not religion" case.

Alas, this case fails in a fraud context, too.  It may just take a bit longer.

I think this may be what pulls the Ninth Circuit short.  Good luck having a jury trial that does not delve into matters of church autonomy.

Yep.

Good points, these.

Yep.  Huntsman has invited scrutiny of his own religious beliefs, which my eventually end up killing his case.

That so many other religious groups are filing amicus briefs rather strongly suggests that nobody is buying Huntsman's "it's about fraud, not religion" assertion.

I think Huntsman's 

We'll see what happens.

Boy, wouldn't it be ironic if someone filed a lawsuit against the "nonprofit" Salt Lake Tribune in order to challenge how it spends donations?

Thanks,

-Smac

You might have a point if the Tribune says donate or else no celestial kingdom. Totally different kind of nonprofit IMO.

[smac97]

7 minutes ago, Tacenda said:

You might have a point if the Tribune says donate or else no celestial kingdom.

Huntsman is emphatically declaring that his lawsuit is not about a religious dispute.  You seem to be suggesting otherwise.

7 minutes ago, Tacenda said:

Totally different kind of nonprofit IMO.

And yet still a nonprofit.  Still soliciting funds.  Still potentially susceptible to claims similar to those alleged by Huntsman against the Church (regarding disputes regarding how the Tribune spends donations).

Thanks,

-Smac

Edited November 15, 2023 by smac97

[JustAnAustralian]

Text of Huntsman's response https://storage.courtlistener.com/recap/gov.uscourts.ca9.334430/gov.uscourts.ca9.334430.94.0_2.pdf

[smac97]

From the Tribune: 

James Huntsman’s tithing suit against the LDS Church could devastate nonprofit fundraising, charities warn
If the case succeeds, nonprofits warn, it could devastate fundraising for all sorts of causes.

Quote

Four Utah-based nonprofits, including a charity that provides free dental care and another aimed at reducing child hunger, warn that James Huntsman’s federal lawsuit accusing The Church of Jesus Christ of Latter-day Saints of defrauding tithe payers could, if successful, have devastating consequences for nonreligious organizations like them when it comes to fundraising.

Together, in a joint amicus brief, AYUDA Humanitarian, Charity Vision, Five.12 Foundation and Thanksgiving Point argue that if the courts side with Huntsman, then nearly all nonprofits, from universities to hospitals, may be guilty of inadvertently misleading donors. Their reasoning: The church’s actions (such as investing donated funds) represent industry norms and best practices.

Huh.

It's almost as if Huntsman is so obsessed with sticking it to the Church that he (and his attorneys) have neglected to consider the broader ramifications of their legal argument.

Quote

And the language Latter-day Saint officials, including a past church president, used to allegedly mislead tithe payers? The brief says those individuals were simply using common industry lingo.

Given this, the groups paint a dire scenario if Huntsman prevails — one in which copycat lawsuits, or even the fear of legal action, could force nonprofits of all stripes to cease fundraising, and, therefore, functioning.

“Any nonprofit,” they write, “...could be sued on the theory adopted by the [appellate] panel — that the use of ‘opaque’ or merely imprecise language that might result in misunderstanding may be construed as intentional fraud.”

Yep.  Quite so.  Precisely.

Quote

A second amicus brief filed by a slate of private religious universities, including LDS Church-owned Brigham Young University-Idaho and BYU-Hawaii, echoed this concern, maintaining that the case “could destabilize higher-education fundraising by subjecting nonprofit institutions to unsupported fraud claims by dissatisfied donors.”

It would be interesting to see what sort of nonprofits Huntsman has donated to, then see if those nonprofits are susceptible to the same sorts of "lawfare" that Huntsman is waging against his former faith.

The Salt Lake Tribune is a nonprofit now...  

Quote

If Huntsman, a brother of former Utah Gov. Jon Huntsman Jr., wins, the schools warn, these lawsuits could occur “even without any objective misrepresentation by the institution” and “despite the institution following standard practices within the nonprofit industry.”

To prevent this existential threat, the charities’ brief concludes, nonprofit groups would almost certainly end up airing on the side of caution, disclosing as little information as possible in the process of seeking donations.

“The result,” it reads, “will be less transparency in fundraising, not more.”

"{E}xistantial threal."

"{N}onprofit groups would almost certainly end up airing on the side of caution, disclosing as little information as possible..."

"{L}ess transparency ... not more."

Golly!  Who saw that coming?

Quote

The church, which has asked a three-judge panel or the full 9th Circuit to reverse that August ruling and throw out the lawsuit, rejects this argument as do the organizations behind the amicus briefs.

“The panel’s decision here rests on the assumption that the accurate use of standard nonprofit terminology can be viewed as fraudulent,” the charities’ brief argues, “because phrases like ‘reserves’ and ‘earnings of reserved funds’ may be misconstrued by donors.”

But, it reads, such terminology is “standard’ in the nonprofit industry. As a result, “any nonprofit officer would unlikely define those terms any more explicitly than here when describing the nonprofit’s investment and expenditure programs.”

The question then is: What other nonprofit institutions could this case impact if the courts slap the label “misleading” to what, according to the brief’s authors, constitutes common industry jargon.

Their conclusion: all of them.

Yep.

Quote

“In misconstruing the nature” of the church’s statements “about its use of donated funds,” they write, “the panel decision invites litigation against every nonprofit who makes any fundraising promise containing terms that could be deemed imprecise, confusing, overly technical or insufficiently defined.”

Huntsman’s lawyers counter that the church “materially misrepresented the source of funding for City Creek.”

Huntsman's lawyers are only proving the point being made here.

Quote

Tax law professor and Latter-day Saint Sam Brunson sees an even more fundamental problem with the Huntsman case and a proposed class action suit filed Oct. 31 against the church — namely, the confusion between investing and spending donor money.

“This whole discourse,” Brunson said, “has been really naive over the fact that nonprofits are allowed to invest their money, probably should invest their money and, in fact, do invest their money. They are not separate from but driven by the world of finance.”

Investment, he said, is not the same as consumption, explaining that “if they’re investing in a mall or an insurance company, that’s different from spending [donors’] money.”

A second flaw Brunson sees in the suits brought against the church is the assertion that it is somehow legally bound to use donated money within a certain time frame.

He added: “If the church says we use 100% of the money for charity, it doesn’t say it does so in the year it was donated.”

Huh.  Interesting to see Brunson say this.

Quote

Nancy McLaughlin is a professor of charities law at the University of Utah’s law school. Speaking more generally about the role of courts in holding nonprofits accountable to donors, she acknowledged the need to consider a range of factors.

“You obviously don’t want charities to be able to make misrepresentations to donors,” she said. That’s why laws like the Charitable Solicitations Act, which prohibits the use of untrue statements in connection with fundraising, exist in the first place.  

“On the other hand,” she added, “there may be misunderstandings” that happen even when an organization is trying to be forthright.

She concluded: “It’s a balance.”

It’s one that Huntsman’s legal team says a jury should weigh.

The expenditures needed to take this question to a jury would often be financially ruinous to a nonprofit.

Huntsman, though, does not seem to care.

Thanks,

-Smac

[Stormin' Mormon]

7 minutes ago, smac97 said:

From the Tribune: 

James Huntsman’s tithing suit against the LDS Church could devastate nonprofit fundraising, charities warn
If the case succeeds, nonprofits warn, it could devastate fundraising for all sorts of causes.

Huh.

It's almost as if Huntsman is so obsessed with sticking it to the Church that he (and his attorneys) have neglected to consider the broader ramifications of their legal argument.

Yep.  Quite so.  Precisely.

It would be interesting to see what sort of nonprofits Huntsman has donated to, then see if those nonprofits are susceptible to the same sorts of "lawfare" that Huntsman is waging against his former faith.

The Salt Lake Tribune is a nonprofit now...  

"{E}xistantial threal."

"{N}onprofit groups would almost certainly end up airing on the side of caution, disclosing as little information as possible..."

"{L}ess transparency ... not more."

Golly!  Who saw that coming?

Yep.

Huntsman's lawyers are only proving the point being made here.

Huh.  Interesting to see Brunson say this.

The expenditures needed to take this question to a jury would often be financially ruinous to a nonprofit.

Huntsman, though, does not seem to care.

Thanks,

-Smac

"Investment is not the same as consumption." Huh. That's a point I've argued a couple of times in the last few months. 

"Airing on the side of caution?" Sigh. A journalist should know better. That part drove me batty.

[smac97]

.

Edited November 26, 2023 by smac97

[Calm]

39 minutes ago, Stormin' Mormon said:

"Airing on the side of caution?"

Speech to text?

It has been corrected.

Edited November 26, 2023 by Calm

[helix]

What's missing from the SL Trib article is that religion takes it one step further. Yes, *secular* non-profits are scared because this fraud lawsuit effectively makes non-profits guilty until proven innocent, and now non-profits would have to be far precise in their speech as ambiguity is considered fraud. As a result, secular non-profits would realize it's safer to not say anything and not release anything to avoid any ambiguity.

But *religious* non-profits are in even worse shape as the government would bestow upon themselves the authority to define religious terms like tithing over the objection of a religion's own beliefs. So now a religion would be more afraid to give a sermon about the meaning of tithing and how it is used within their church. If this lawsuit were successful, then a future church leader giving the equivalent of Gordon B. Hinckley's General Conference tithing talk would have church lawyers highly recommending the church leader shred the talk to mitigate future lawsuits.

[Stormin' Mormon]

1 hour ago, Calm said:

Speech to text?

It has been corrected.

I hope that wasn't Smac's mistyping I was mocking. I have no problem mocking a journalist, but I don't want to be mocking board members, even if they make the same mistakes I'd otherwise mock a journalist for. We good, @smac97?

[smac97]

11 minutes ago, Stormin' Mormon said:

I hope that wasn't Smac's mistyping I was mocking. I have no problem mocking a journalist, but I don't want to be mocking board members, even if they make the same mistakes I'd otherwise mock a journalist for. We good, @smac97?

The spelling error was in the text, I just copied/pasted it.

Thanks,

-Smac

[Calm]

12 minutes ago, Stormin' Mormon said:

I hope that wasn't Smac's mistyping I was mocking. I have no problem mocking a journalist, but I don't want to be mocking board members, even if they make the same mistakes I'd otherwise mock a journalist for. We good, @smac97?

I thought it was yours at first because I didn’t expand that quote box and instead read it at the website, where by that time they had corrected it.   

[Calm]

49 minutes ago, helix said:

What's missing from the SL Trib article is that religion takes it one step further. Yes, *secular* non-profits are scared because this fraud lawsuit effectively makes non-profits guilty until proven innocent, and now non-profits would have to be far precise in their speech as ambiguity is considered fraud. As a result, secular non-profits would realize it's safer to not say anything and not release anything to avoid any ambiguity.

But *religious* non-profits are in even worse shape as the government would bestow upon themselves the authority to define religious terms like tithing over the objection of a religion's own beliefs. So now a religion would be more afraid to give a sermon about the meaning of tithing and how it is used within their church. If this lawsuit were successful, then a future church leader giving the equivalent of Gordon B. Hinckley's General Conference tithing talk would have church lawyers highly recommending the church leader shred the talk to mitigate future lawsuits.

But the general consensus is that this attempt is going to fail, correct?

But do some people anticipate it will be kept at for either our church or other ones or other nonprofits until it eventually wins? 

[smac97]

2 minutes ago, Calm said:

But the general consensus is that this attempt is going to fail, correct?

Well, it's the Ninth Circuit.  Hard to say.

Thanks,

-Smac

[helix]

3 hours ago, Calm said:

But the general consensus is that this attempt is going to fail, correct?

I don't know a single person, including the most bitter critics of the church, who thinks this lawsuit stands a chance. Huntsman is milking it for as much negative press as he can, and he's got the usual organizations handing him a free open mic. 

My gripe is that this lawsuit should never be allowed to proceed due to the precedent it sets. The Ninth Circuit Court has basically said that a jury can define tithing for a religion. The prosecution will likely bring in many critics who will testify that they believe the church's definition of tithing includes investments of tithing. The defense will argue that church leaders and written statements define tithing. Now the jury gets to decide which definition of tithing they think is best for that religion. That so fundamentally violates the Establishment Clause that it's terrifying. So even though the lawsuit will fail, the Ninth Circuit will create a gaping hole in a church's ability to define itself via creeds relative to fraud lawsuits.

Edited November 27, 2023 by helix

[Tacenda]

29 minutes ago, helix said:

I don't know a single person, including the most bitter critics of the church, who thinks this lawsuit stands a chance. Huntsman is milking it for as much negative press as he can, and he's got the usual organizations handing him a free open mic. 

My gripe is that this lawsuit should never be allowed to proceed due to the precedent it sets. The 9th Circuit Court has basically said that a jury can decide and define a religion's definition of tithing. The prosecution will likely bring in many critics who will testify that they believe the church's definition of tithing includes investments of tithing. The defense will argue that church leaders and written statements define tithing. Now the jury gets to decide which definition of tithing they think is best for that religion. That so fundamentally violates the Establishment Clause that it's terrifying. So the though the lawsuit will fail, the Ninth Circuit will create a gaping hole in a church's ability to define itself via creeds relative to fraud lawsuits.

If it did win, how many would go after the church? I can imagine thousands exLDS or disgruntled. And would it open up a huge can of worms on other churches? But how many churches have for profit entities, maybe the biggest would be the Catholic? I don't know much of what I'm talking about probably.

[smac97]

15 hours ago, Tacenda said:

If it did win, how many would go after the church?

I think there is what could be called a de facto "gatekeeping" mechanism for keeping frivolous or vexatious lawsuits from overwhelming the U.S. courts.  I'm not saying such lawsuits are not filed, but they are - statistically speaking - not filed a lot.  The mechanism involves a few things, including A) ethical obligations imposed on lawyers (who risk their bar license if they keep filing frivolous lawsuits), as well as reputational risks, B) practical assessments by lawyers (few attorneys want to file a lawsuit which they know ahead of time they are almost certain to lose), and C) financial considerations (litigation is expensive, lawyers rarely work for free, and few people have the financial wherewithal to pursue litigation mostly/entirely on "principle"). 

So absent substantial wealth and/or strident ideological motives, almost-certain-to-lose lawsuits against the Church are, as a practical matter, fairly rare.  Consider, for example, the lawsuits we have discussed in this forum.  Huntsman has money to burn.  Gaddy has a rabidly anti-Mormon (and, it seems, embarrassingly inept) attorney.  

So what happens when almost-certain-to-lose lawsuits against the deep-pocketed Church become decidedly less certain-to-lose, and instead become more "colorable"?  Lots more lawsuits.  Lots and lots.

15 hours ago, Tacenda said:

I can imagine thousands exLDS or disgruntled. And would it open up a huge can of worms on other churches?

Yes.  And nonprofits, too.  And educational institutions.  This could be a tectonic shift in the United States' legal system.  The SL Tribune - owned and operated by James Hunstman's brother - has now published an article referencing James Huntsman's legal argument as an "existential threat" to these groups/organizations.  The Trib ain't whistling dixie.

It sure would be interesting to see the Salt Lake Tribune on the receiving end of a Huntsman-esque lawsuit.

15 hours ago, Tacenda said:

But how many churches have for profit entities, maybe the biggest would be the Catholic? I don't know much of what I'm talking about probably.

The issue is not whether a nonprofit owns for-profit ventures.  Instead, the issue is whether a donor can sue a nonprofit for "fraud" based on using less-than-hyper-precise terminology when describing financial expenditures, investments, etc.  That is what Huntsman wants to be able to do to the Church, with the attendant massive amounts of time, money and effort that go into such litigation.  But if Huntsman gets to do that to the Church, others will be able to do the same to other churches, nonprofits, educational institutions, etc.  Perhaps even including the Salt Lake Tribune, which is owned by Huntsman Family Investments, LLC, "a company controlled by Paul Huntsman," and James Huntsman's brother.  According to state records, the sole member of this LLC is Huntsman Financial Corporation.  I suspect James Huntsman either owns stock in this entity, or has family members who do.

Thanks,

-Smac

Edited November 27, 2023 by smac97

[smac97]

19 hours ago, Calm said:

But the general consensus is that this attempt is going to fail, correct?

I suppose the answer depends on what you mean by "this attempt."

A lawsuit that will get kicked out of court at the very beginning of it (via a "Motion to Dismiss") is "going to fail," and it will likely not be financially ruinous to the defendant.

Alternatively, a lawsuit that is "going to fail" at the very end of it (that is, at trial, or losing via a "Motion for Summary Judgment" after the discovery process), but meanwhile can survive a Motion to Dismiss, can force the defendant to spend substantial, perhaps even vast, amounts of time, money and effort in the lawsuit.  IOW, this sort of lawsuit, though also "going to fail" may well be financially ruinous to the defendant notwithstanding the defendant "winning" the case.

So while the consensus is that Huntsman's lawsuit "is going to fail," when it is going to fail (at the very beginning of litigation, or at the middle or end of it, and all the massive expenditures than can entail) is what is making other churches, nonprofits, etc. pretty nervous.

I am currently in a fraud lawsuit where I represent the plaintiff.  We are spending some tens of thousands of dollars doing so, as there is a lot of money at stake (more than $1.2M).  And that's just one fraud claim against one person.  Imagine how much time, money and effort would be spent in hundreds, or thousands, or tens/hundreds of thousands of lawsuits like Huntsman's that are targeting hundreds/thousands churches, nonprofits, educational institutions, etc.  Regardless of whether they are ultimately "going to fail," such a tidal wave of litigation would be financially ruinous to many of the groups so targeted.  All potentially thanks to James Huntsman and the shortsighted and boneheaded Ninth Circuit.

19 hours ago, Calm said:

But do some people anticipate it will be kept at for either our church or other ones or other nonprofits until it eventually wins? 

The more I think on it, the more I'm inclined to guess that if Huntsman's legal theory is upheld, it won't matter whether his lawsuit loses or not.  It will have upended the legal landscape for churches, nonprofits and educational institutions.  The amount of lawsuits filed will be legion, and the amount of time and money and effort expended fighting such suits will likewise be big.  Staggering, even.  Crippling.  

I suspect James Huntsman has not thought this stuff through.  His lawyers are financially disincentivized from walking him through the ramifications of their legal strategy, and he's likely too blinded by antipathy to be thinking clearly about this stuff anyway.  Meanwhile, the newspaper operated by Huntsman's own brother is publishing a story about how Huntsman's legal theory creates an "existential threat" to churches, nonprofits and educational institutions.

Thanks,

-Smac

Edited November 27, 2023 by smac97

[Tacenda]

45 minutes ago, smac97 said:

I think there is what could be called a de facto "gatekeeping" mechanism for keeping frivolous or vexatious lawsuits from overwhelming the U.S. courts.  I'm not saying such lawsuits are not filed, but they are - statistically speaking - not filed a lot.  The mechanism involves a few things, including A) ethical obligations imposed on lawyers (who risk their bar license if they keep filing frivolous lawsuits), as well as reputational risks, B) practical assessments by lawyers (few attorneys want to file a lawsuit which they know ahead of time they are almost certain to lose), and C) financial considerations (litigation is expensive, lawyers rarely work for free, and few people have the financial wherewithal to pursue litigation mostly/entirely on "principle"). 

So absent substantial wealth and/or strident ideological motives, almost-certain-to-lose lawsuits against the Church are, as a practical matter, fairly rare.  Consider, for example, the lawsuits we have discussed in this forum.  Huntsman has money to burn.  Gaddy has a rabidly anti-Mormon (and, it seems, embarrassingly inept) attorney.  

So what happens when almost-certain-to-lose lawsuits against the deep-pocketed Church become decidedly less certain-to-lose, and instead become more "colorable"?  Lots more lawsuits.  Lots and lots.

Yes.  And nonprofits, too.  And educational institutions.  This could be a tectonic shift in the United States' legal system.  The SL Tribune - owned and operated by James Hunstman's brother - has now published an article referencing James Huntsman's legal argument as an "existential threat" to these groups/organizations.  The Trib ain't whistling dixie.

It sure would be interesting to see the Salt Lake Tribune on the receiving end of a Huntsman-esque lawsuit.

The issue is not whether a nonprofit owns for-profit ventures.  Instead, the issue is whether a donor can sue a nonprofit for "fraud" based on using less-than-hyper-precise terminology when describing financial expenditures, investments, etc.  That is what Huntsman wants to be able to do to the Church, with the attendant massive amounts of time, money and effort that go into such litigation.  But if Huntsman gets to do that to the Church, others will be able to do the same to other churches, nonprofits, educational institutions, etc.  Perhaps even including the Salt Lake Tribune, which is owned by Huntsman Family Investments, LLC, "a company controlled by Paul Huntsman," and James Huntsman's brother.  According to state records, the sole member of this LLC is Huntsman Financial Corporation.  I suspect James Huntsman either owns stock in this entity, or has family members who do.

Thanks,

-Smac

You won't believe this, but I side with the church on this....now. Or maybe I'm so wishy washy I may change my mind. This is one big case in the scheme of it all. 

Edited November 27, 2023 by Tacenda

[Analytics]

On 11/27/2023 at 12:24 PM, smac97 said:

The more I think on it, the more I'm inclined to guess that if Huntsman's legal theory is upheld, it won't matter whether his lawsuit loses or not.  It will have upended the legal landscape for churches, nonprofits and educational institutions.  The amount of lawsuits filed will be legion, and the amount of time and money and effort expended fighting such suits will likewise be big.  Staggering, even.  Crippling.  

I don't buy it.

I acknowledge that in an amicus brief, four Utah-based non-profits claimed that the Church follows "best practices" when it comes to transparency and solicitations from donors. But they are up in the night--the Church does not follow best-practices regarding transparency. Not even close.

If Huntsman's legal theory were to hold up, the only charities that have to worry about "staggering" and "crippling" lawsuits are the ones who have received significant donations from individuals who now feel betrayed by how the money was used. That just doesn't happen very often, because very, very, few people donate significant dollars to a charity without first doing their due diligence and fully understanding how the charity deploys its resources. Creating and preserving that kind of trust is what transparency is about.

[smac97]

Just now, Analytics said:

Quote

The more I think on it, the more I'm inclined to guess that if Huntsman's legal theory is upheld, it won't matter whether his lawsuit loses or not.  It will have upended the legal landscape for churches, nonprofits and educational institutions.  The amount of lawsuits filed will be legion, and the amount of time and money and effort expended fighting such suits will likewise be big.  Staggering, even.  Crippling.  

I don't buy it.

Well, we'll see, I suppose.

Were I not a devoted Latter-day Saint, and were I instead an avaricious lawyer with no scruples against using litigation to enrich myself by subjecting churches, nonprofits, and educational institutions to litigation regarding vexatious-but-barely-colorable legal claims about "fraud," I would be salivating at the prospect of Huntsman winning.

From the article I quoted:

Quote

Four Utah-based nonprofits, including a charity that provides free dental care and another aimed at reducing child hunger, warn that James Huntsman’s federal lawsuit accusing The Church of Jesus Christ of Latter-day Saints of defrauding tithe payers could, if successful, have devastating consequences for nonreligious organizations like them when it comes to fundraising.

Together, in a joint amicus brief, AYUDA Humanitarian, Charity Vision, Five.12 Foundation and Thanksgiving Point argue that if the courts side with Huntsman, then nearly all nonprofits, from universities to hospitals, may be guilty of inadvertently misleading donors. Their reasoning: The church’s actions (such as investing donated funds) represent industry norms and best practices.

AYUDA Humanitarian, Charity Vision, Five.12 Foundation and Thanksgiving Point are all "nonreligious nonprofits."  Their concerns about possible/likely "devastating consequences" for "nearly all nonprofits, from universities to hospitals" were apparently sufficient to warrant spending the time, money and effort in preparing a submitting an amicus brief.

Just now, Analytics said:

I acknowledge that in an amicus brief, four Utah-based non-profits claimed that the Church follows "best practices" when it comes to transparency and solicitations from donors. But they are up in the night--the Church does not follow best-practices regarding transparency. Not even close.

That's not what the article says.

• "Their reasoning: The church’s actions (such as investing donated funds) represent industry norms and best practices."
• "And the language Latter-day Saint officials, including a past church president, used to allegedly mislead tithe payers? The brief says those individuals were simply using common industry lingo."
• "Given this, the groups paint a dire scenario if Huntsman prevails — one in which copycat lawsuits, or even the fear of legal action, could force nonprofits of all stripes to cease fundraising, and, therefore, functioning."
• “'Any nonprofit,' they write, '...could be sued on the theory adopted by the [appellate] panel — that the use of ‘opaque’ or merely imprecise language that might result in misunderstanding may be construed as intentional fraud.'"
• "To prevent this existential threat, the charities’ brief concludes, nonprofit groups would almost certainly end up airing on the side of caution, disclosing as little information as possible in the process of seeking donations.  'The result,' it reads, 'will be less transparency in fundraising, not more.'"

Huntsman's lawsuit is not about "transparency."  It's about fraud.   It centers on, as the amicus brief puts it, "the use of ‘opaque’ or merely imprecise language that might result in misunderstanding may be construed as intentional fraud."  

This theory, if successful, be readily and immediately applicable to all nonprofits.  And the practical results could very well be A) a tidal wave of "copycat lawsuits," B) the financial ruin of many nonprofits (including nonreligious ones), C) nonprofits resorting to less "transparency" in their fundraising and financial statements, or D) some combination of A-C.

Just now, Analytics said:

If Huntsman's legal theory were to hold up, the only charities that have to worry about "staggering" and "crippling" lawsuits are the ones who have received significant donations from individuals who now feel betrayed by how the money was used. 

I don't think you appreciate or understand the financial incentives for attorneys that will likely arise if Huntsman's legal theory is allowed to proceed.

Just now, Analytics said:

That just doesn't happen very often, because very, very, few people donate significant dollars to a charity without first doing their due diligence and fully understanding how the charity deploys its resources.

Having legal standing to file a Huntsman-style "fraud" lawsuit against a nonprofit would not require the plaintiff to have donated "significant dollars."  Any donation would likely be sufficient to confer legal standing to sue.

Just now, Analytics said:

Creating and preserving that kind of trust is what transparency is about.

Then it must be a somewhat difficult pill to swallow, facing the prospect that your advocacy for "transparency" looks to be at odds with Huntsman's lawsuit against the Church.  A clinically-minded advocate of "transparency" would, I think, acknowledge the risks to nonprofits, instead of making up ad hoc justifications for why those risks won't "happen very often."

thanks,

-Smac

[Analytics]

21 minutes ago, smac97 said:

Well, we'll see, I suppose.

Were I not a devoted Latter-day Saint, and were I instead an avaricious lawyer with no scruples against using litigation to enrich myself by subjecting churches, nonprofits, and educational institutions to litigation regarding vexatious-but-barely-colorable legal claims about "fraud," I would be salivating at the prospect of Huntsman winning.

I don't understand why. After all, you can't make a living as an avaricious lawyer with no scruples unless you can find plaintiffs to represent. You really think the world is full of people who made significant contributions to nonprofits that now want to sue said nonprofits? I just don't think there is a market demand for attorneys that specialize in this--in general, people who make significant contributions to nonprofits and people would want to sue those same nonprofits are mutually exclusive sets.

21 minutes ago, smac97 said:

From the article I quoted:

AYUDA Humanitarian, Charity Vision, Five.12 Foundation and Thanksgiving Point are all "nonreligious nonprofits."  Their concerns about possible/likely "devastating consequences" for "nearly all nonprofits, from universities to hospitals" were apparently sufficient to warrant spending the time, money and effort in preparing a submitting an amicus brief.

According to the amicus brief, "nearly 2 million nonprofit organizations operate in the United States." Of those, only five decided to sign this amicus brief. And those five are all from Utah. And while the attorney they hired to write this is from Los Angeles, he is a BYU graduate. 

Call my a cynic if you must, but I get the distinct impression that they are primarily motivated by a desire to defend their Church and not about concerns about the imagined "devastating consequences" this will have on "nearly all nonprofits." If this brief were correct about these alleged "devastating consequences", how come the Red Cross, the United Way, Catholic Charities, etc. aren't all signing on?

In any case, I find their arguments extremely unpersuasive.

21 minutes ago, smac97 said:

Huntsman's lawsuit is not about "transparency."  It's about fraud.   It centers on, as the amicus brief puts it, "the use of ‘opaque’ or merely imprecise language that might result in misunderstanding may be construed as intentional fraud."  

It is absolutely related to transparency--if the Church would have followed anything like best practices of transparency, there wouldn't have been any fraud alleged.

21 minutes ago, smac97 said:

This theory, if successful, be readily and immediately applicable to all nonprofits.

That doesn't mean there are donors lined up who want to sue the nonprofits they gave significant donations to.

21 minutes ago, smac97 said:

And the practical results could very well be A) a tidal wave of "copycat lawsuits," B) the financial ruin of many nonprofits (including nonreligious ones), C) nonprofits resorting to less "transparency" in their fundraising and financial statements, or D) some combination of A-C.

Hypothetically, anything could very well happen.

I think:

1. You can't have a copycat lawsuit without a plaintiff.
2. It is extraordinarily rare for somebody to donate significant dollars to a non-profit and then decide to sue
3. Such lawsuits could be prevented by the good-will that comes from being more transparent
4. Nonprofits won't be ruined by hypothetical lawsuits--only real ones.

In short, their argument isn't persuasive; nonprofits, especially the small ones the amicus brief claims to be so concerned about, have good relationships with their donors. They should, at least. And if they do, they don't need to worry too much about crippling lawsuits from those donors. 

21 minutes ago, smac97 said:

I don't think you appreciate or understand the financial incentives for attorneys that will likely arise if Huntsman's legal theory is allowed to proceed.

I understand both greed and financial incentives. But like I said above, lawyers can't sue organizations without plaintiffs. And in this case, the only people who are eligible to be plaintiffs are people who gave significant money to organizations and now feel betrayed to the point where they want their money back and/or want to destroy the organizations they once supported. How are lawyers going to find people like that? Very few people give sizable donations to charities. And of those very few that do, approximately zero want to put the beneficiaries of their philanthropy out of business.

21 minutes ago, smac97 said:

Having legal standing to file a Huntsman-style "fraud" lawsuit against a nonprofit would not require the plaintiff to have donated "significant dollars."  Any donation would likely be sufficient to confer legal standing to sue.

Maybe I don't understand the legal incentives. If I donated $25 to an organization and then decided I wanted my money back, why would attorneys, in your words, "salivate" at the opportunity to represent me? How could that possibly be worth their time? Surely you aren't going to argue that this has the makings of a successful class action lawsuit?

21 minutes ago, smac97 said:

Then it must be a somewhat difficult pill to swallow, facing the prospect that your advocacy for "transparency" looks to be at odds with Huntsman's lawsuit against the Church.  A clinically-minded advocate of "transparency" would, I think, acknowledge the risks to nonprofits, instead of making up ad hoc justifications for why those risks won't "happen very often."

If, hypothetically, Huntsman were to win, there are two broad strategies nonprofits could take to prevent themselves from being sued by disgruntled donors:

1. Be more transparent
2. Be less transparent

Being more transparent is a proven to increase trust among donors. Hypothetically, some nonprofits might decide that being transparent will somehow increase their likelihood of being sued. Sure. But if a nonprofit thinks helping donors understand what they do with money will increase their chances of being sued, I wonder whether than organization should actually exist in the first place.

[smac97]

https://bnnbreaking.com/world/us/federal-appeals-court-reconsiders-tithing-fraud-case-against-lds-church-and-james-huntsman

 

Federal Appeals Court Reconsiders Tithing Fraud Case Against LDS Church and James Huntsman

In a pivotal legal development, the 9th U.S. Circuit Court will rehear the tithing fraud case involving the LDS Church, spotlighting financial transparency.

In a significant legal development, the 9th U.S. Circuit Court of Appeals has agreed to rehear the tithing fraud lawsuit involving The Church of Jesus Christ of Latter-day Saints and former member James Huntsman. This decision vacates a prior ruling that had revived Huntsman's case, setting the stage for a comprehensive en banc review with oral arguments slated for June in Seattle.

...

The decision for an en banc review underscores the complex intersection of religious freedom, financial transparency, and the autonomy of religious organizations. Church attorneys have argued that the case threatens to undermine constitutional protections for all religious entities by inviting unwarranted legal scrutiny into their financial practices. This rehearing may also influence the outcome of similar "copycat" lawsuits, which like Huntsman's, do not target religious doctrines but rather the financial operations of the church.

[Calm]

1 hour ago, smac97 said:

This decision vacates a prior ruling that had revived Huntsman's case,

Why/How would rehearing a case vacate a ruling that revived that case?

[bsjkki]

29 minutes ago, Calm said:

Why/How would rehearing a case vacate a ruling that revived that case?

The first was a 3 panel review and this goes to the en blanc review of the full circuit which is another step in the appeals process. 
https://www.federalrulesofappellateprocedure.org/title-vii/rule-35/

[smac97]

6 minutes ago, Calm said:

Quote

This decision vacates a prior ruling that had revived Huntsman's case,

Why/How would rehearing a case vacate a ruling that revived that case?

Here's how I understand it:

1. In September 2021, the trial court granted summary judgment in favor of the Church.  See, e.g., this thread.  See also here.  The trial judge's reasoning was

• A) the fraud claim as to City Creek fails because "no reasonable juror" could find that the Church made a "misrepresentation" (which is the sine qua non of a fraud claim);
• B) because the fraud claim (as to City Creek) failed on its face, the court "need not" reach the First Amendment / Ecclesiastical Abstention issue; and
• C) Huntsman's fraud claim as to Beneficial Life failed because
• -C1) Huntsman did not allege that the Church made a "misrepresentation" about it, and
• -C2) Huntsman frame this claim as being based on "Sunday school manuals" and/or "the Church's teachings," which meant that this claim is barred by the First Amendment (IOW, the Ecclesiastical Abstention Doctrine).

As the lawsuit was filed in federal court in California, Huntsman filed an appeal to the Ninth Circuit Court of Appeals.

2. In August 2023, the Ninth Circuit (specifically, a three-judge panel from the Circuit) reversed the trial court's decision.  From the very first post in this thread:

Quote

The {three-judge} panel {of the Ninth Circuit Court of Appeals} reversed the district court’s grant of summary judgment in favor of the Corporation of the President of the Church of Jesus Christ of Latter-Day Saints in a diversity action brought by James Huntsman, a former member of the Church, alleging fraud under California state law. 
...
The panel rejected the Church’s argument that Huntsman’s fraud claims are barred by the First Amendment.  The panel held that the ecclesiastical abstention doctrine did not apply because the questions regarding the fraud claims were secular and did not implicate religious beliefs about tithing itself.  Nor was the panel required to examine Huntsman’s religious beliefs about the appropriate use of church money. 

The panel held that there was a genuine dispute of material fact as to whether the Church fraudulently misrepresented the source of money used to finance the shopping mall development.  Based on the evidence in the record, including statements by church officials and in church publications, a reasonable juror could conclude that the Church knowingly misrepresented that no tithing funds were being or would be used to finance the shopping mall development and that Huntsman reasonably relied on the Church’s misrepresentations.   

3. A week or so later, also in August 2023, the Church's attorneys requested a rehearing of the appeal by the entire ("en banc") Ninth Circuit.  See here and here.

4. On March 1, 2024, the Ninth Circuit granted the Church's request and scheduled the matter for oral arguments in June in Seattle.  Here is a link to the order.

The Church's request was, basically, that the three-judge panel's decision be set aside ("vacated"), and that the appeal be heard again, this time before the "entire" Ninth Circuit.  I say "entire" because that's not technically accurate.  Because the Ninth Circuit is so large in jurisdictional terms (nine states, nearly 62 million people, or nearly 18% of all Americans), it has a large number of appellate court judges, 29 to be exact.  In other circuits, an en banc rehearing would typically take place before all active appellate court judges, per this article, the Ninth Circuit's en banc hearings are heard by 11 appellate judges (the chief appellate judge and ten others).

The en banc decision will, therefore, replace the vacated one made by the three-judge panel last August.

5. I came across an interesting 2020 article suggesting that the Ninth Circuit's en banc procedures are being "gamed."  See here:

Quote

Welcome back to Ninth Circuit Review-Reviewed, your monthly recap of arguably “the second most important court in the land.” 
...

A major purpose of en banc proceedings is to bring uniformity to appellate law. It is somewhat ironic, therefore, that the Ninth Circuit’s en banc procedures have become a driver of dysfunction and disharmony. 

Before I get to my point, here’s a quick refresher on CA9’s en banc process. In the Ninth Circuit, the full court (29 active judgeships) votes whether to grant a party’s petition (or a judge’s request) for an en banc rehearing. If a majority (of the full court) grants the petition/request, then the rehearing is performed by a subset panel of 11 judges, comprised of the Chief Judge and 10 additional judges drawn by lot. Those are the rules of the game. 

Yet recent media reports suggest these rules are being gamed. Earlier this year, based on interviews  with anonymous CA9 judges, the LA Times reported that “Democratic appointees are likely to be more reluctant to ask for 11-judge panels to review conservative decisions because the larger en banc panels, chosen randomly, might be dominated by Republicans.” 

Got that? According to the LA Times, members of the court’s Democratic majority (16 of 29 active judges) would deny a rehearing rather than risk the ~30% chance that an 11-judge en banc bench would draw a majority of Republican appointees. 
...
The bottom line is that the court’s actions are bearing out the LA Times’s reporting about the influence of political gamesmanship on en banc procedures.

Thanks,

-Smac