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 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 Sunday at 09:31 PM by smac97

[Calm]

39 minutes ago, Stormin' Mormon said:

"Airing on the side of caution?"

Speech to text?

It has been corrected.

Edited Sunday at 10:04 PM 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 yesterday at 03:08 AM 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 yesterday at 06:42 PM 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 23 hours ago 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 yesterday at 06:57 PM by Tacenda