Update on Huntsman Lawsuit: Ninth Circuit Reverses Trial Court

[JVW]

I'm in the camp that I don't care what the church does with its money, but I do want tithing to be spent on tithing stuff. Probably a pretty standard Latter-day Saint opinion on the matter. But what I just thought about was new, so I'm typing it here.

I don't think that tithing money should be invested in anything other than church growth. I don't think tithing should be put into the S&P or crypto, for example, in order to get a % return. Unless money is invested into the stock market from the heart (into companies someone really cares about and believes in) it is basically playing a game and kind of like gambling. I know these people that do trading for a living are buying and selling shares of the same company multiple times a day (EPA is probably no exception), trying to play the system and eek out profits. Tithing money shouldn't be used like that, that's what I believe. If tithing money is used like that, and interest is gained on it, I think that the tithing interest should be regarded as tithing money and used to do tithing stuff. It's like the abortion argument that if the fertilized egg is removed then the person will never exist. Or if the cake batter is removed from the oven then the cake will never exist. If the tithing money was never invested then the interest wouldn't exist, therefore it is still tithing money. (of course, I can see the counter arguments here, I'm just expressing my views on it.)

Regardless, if they are investing tithing money, and then using the interest to build malls, it doesn't bother me. I'm not going to send any hate mail or anything to EPA or the brethren for doing that, but I think it's pretty dumb if they do it that way.

[Analytics]

14 hours ago, smac97 said:

Also, I have never heard any allegation that monies donated to Philanthropies ended up with Ensign Peak Advisors.  

According to the “Fund Flows/Grants Among Church Entities” flow chart on page 24 of the lawsuit (which was taken from the IRS whistleblower report, which came from the Church’s “March 2013, New Staff Orientation Deck”), money is transferred all over the place in a complex web. For example, money flows in the following path: Donations-->LDS Philanthropies-->Deseret Trust Company-->Ensign Peak Advisors. Another path is Donations-->LDS Philanthropies-->COP-->Ensign Peak Advisors. There might be other paths that connect LDS Philanthropies to Ensign Peak Advisors. The Church’s finances are quite intermingled. 

14 hours ago, smac97 said:

Oi.  This has been litigated a lot.  The only way this legal theory works is if the Courts re-define "tithing" to include monies earned from invested funds.

I would love to hear a qualified expert witness who takes your point of view be deposed on this. In my world, using tithing to generate interest, which is then used to build a mall, is still using tithing to build a mall; i.e. using A to do B, which allows you to use B to do C, is using A to do C. No redefinition of A required. 

As another example of how I think of this, in my world the National Association of Insurance Commissioners (NAIC) creates model regulations that it recommends state insurance departments implement. One of those regulations contains the following language:

"[Insurers shall provide to the commissioner a certification that contains] A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated..."

When actuaries certify that the premiums are sufficient, what they mean is that premium plus accumulated interest on premium is sufficient.

14 hours ago, smac97 said:

I think Huntsman's lawyers see the writing on the wall as to their legal theory, which is that the theory really does constitute a threat to constitutional rights.

The assertion that churches have a constitutional right to lie to their donors about how donations will be deployed is really weird to me.

 

[Analytics]

1 hour ago, smac97 said:

So I don't think it works to speak of "financial transparency" being present or absent.  That's too facile.  Rather, the question is much more nebulous: Is there enough or sufficient "financial transparency."  And therein lies the problem for our critics, because apart from the requirements of secular law (which the Church inarguably strives to follow), the level of "transparency" the Church provides is going to be a judgment call.  We get annual reports from the Audit Committee, and other assurances and indicia that the Church's finances are in good order.  Some will find these insufficient, and that's okay.  But their dissatisfaction is not authoritative or definitive.

Yes, there is a gray area between whether transparency is present of absent. But the Church is nowhere near the gray area. I’d love to see a qualified expert witness argue I’m wrong about this.

[smac97]

6 minutes ago, Analytics said:

Yes, there is a gray area between whether transparency is present of absent. But the Church is nowhere near the gray area. I’d love to see a qualified expert witness argue I’m wrong about this.

Absent a legal duty to disclose, the level of transparency a private entity chooses to deploy is discretionary.  It's a judgment call.  I’d love to see a qualified expert witness argue I’m wrong about this.

Thanks,

-Smac

[smac97]

56 minutes ago, Analytics said:

Quote

Also, I have never heard any allegation that monies donated to Philanthropies ended up with Ensign Peak Advisors.  

According to the “Fund Flows/Grants Among Church Entities” flow chart on page 24 of the lawsuit (which was taken from the IRS whistleblower report, which came from the Church’s “March 2013, New Staff Orientation Deck”), money is transferred all over the place in a complex web.

My question, though, is whether monies donated to Philanthropies ended up with Ensign Peak Advisors.  

56 minutes ago, Analytics said:

For example, money flows in the following path: Donations-->LDS Philanthropies-->Deseret Trust Company-->Ensign Peak Advisors. Another path is Donations-->LDS Philanthropies-->COP-->Ensign Peak Advisors. There might be other paths that connect LDS Philanthropies to Ensign Peak Advisors. The Church’s finances are quite intermingled. 

Here is the chart:

In any event, I don't think any of the plaintiffs donated to "LDS Philanthropies."

56 minutes ago, Analytics said:

Quote

Oi.  This has been litigated a lot.  The only way this legal theory works is if the Courts re-define "tithing" to include monies earned from invested funds.

I would love to hear a qualified expert witness who takes your point of view be deposed on this.

I'm not sure this issue would be a matter of expert testimony.  

56 minutes ago, Analytics said:

In my world, using tithing to generate interest, which is then used to build a mall, is still using tithing to build a mall; i.e. using A to do B, which allows you to use B to do C, is using A to do C.

Respectfully, I disagree.  I don't think that happens in your "world" or any other.

If tithing (X) is invested and earns income (Y), and then Y is invested in other ventures, then X has not been used, and it will not do to claim that "X was used to build a mall."

56 minutes ago, Analytics said:

No redefinition of A required. 

That is exactly what you are doing.  "Tithing" is a voluntary charitable donation, typically one tenths of a person's income.  If it is thereafter used to generate further income to the donee, that further income is not "tithing" because it is not a voluntary charitable donation.

56 minutes ago, Analytics said:

The assertion that churches have a constitutional right to lie to their donors about how donations will be deployed is really weird to me.

Right.  That assertion is in view.  Someone here has asserted that "churches have a constitutional right to lie to their donors."

Yet another instance of Roger misrepresenting the Church and its members.  Casting us in the worst possible light.  Must be a day ending in "y."

Thanks,

-Smac

Edited July 23, 2024 by smac97

[JAHS]

3 hours ago, smac97 said:

Quote

And for a whole lot of members, it does hurt — maybe not if you’re paying a million bucks, which implies that you rolled in $10 million over that yearly span. But if you’re paying $3,000 on $30,000 of income, that stack of cash can pinch you, pinch you hard.

It can also be quite manageable, depending on the individual.

This sort of argument does not really resonate with me.  In terms of voluntary usage of one's income, outsiders looking in are hardly in a position to grouse.  I have a wife and six children.  Providing for them "can pinch ... hard," but I am happy to do it.  I think such expenditures are quite worthwhile.

I am likewise happy to donate to the Church.  Protestations about "transparency" notwithstanding, I feel pretty good in reposing trust in the Brethren as far as their stewardship of sacred funds.  I think they are doing a very good job.  All evidence points that way.  To the extent some folks disagree, I think such disagreement arises principally as a matter of subjective opinion and preference (such as those expressed by Gordon Monson).  In other words, the dispute is about judgment calls.

Another point to make on this is when needed I and other members I know have always been able to draw from fast offering funds to help financially when needed.

[Analytics]

1 hour ago, smac97 said:

My question, though, is whether monies donated to Philanthropies ended up with Ensign Peak Advisors.  

 

Here is the chart:

According to that chart, money from LDS Philanthropies does end up in Ensign Peak Advisors. I suppose in theory the Church could have specific mechanisms in place to ensure that the specific dollars that, for example, go from COP to Ensign Peak Advisors are not specific dollars that came to COP from LDS Philanthropies, but tracking it that way would require non-standard accounting practices.

1 hour ago, smac97 said:

Respectfully, I disagree.  I don't think that happens in your "world" or any other.

Here's the thing. I am a qualified expert witness in my world, and this particular issue is related to things I do in fact testify about. In my world, “premium” means the specific dollar amounts  that policyholders pay to obtain and maintain insurance coverage. However, when an actuary certifies that “premiums” are sufficient to pay for future claims, it is clearly understood by all parties involved that he means premiums plus interest is sufficient to pay claims. I know you don’t see it that way, but in this context, there is no ambiguity, and it doesn’t require redefining “premium.” Rather, it recognizes that a good investment strategy leverages the premiums to maximize their value.

1 hour ago, smac97 said:

That is exactly what you are doing.  "Tithing" is a voluntary charitable donation, typically one tenths of a person's income.  If it is thereafter used to generate further income to the donee, that further income is not "tithing" because it is not a voluntary charitable donation.

I'm not redefining tithing. I’m talking about what it means to use tithing, and I’m using a standard definition of use. 

1 hour ago, smac97 said:

Right.  That assertion is in view.  Someone here has asserted that "churches have a constitutional right to lie to their donors."

I deployed a bit of rhetoric here to make my point clear. Many members who donated do feel lied to, and a few of them are suing.

Any possibility of donors feeling lied to about how the church deploys its resources could be avoided by following best practices in transparency. But suggestions that the Church be required to do that are framed as attacks on religious liberty.

1 hour ago, smac97 said:

Yet another instance of Roger misrepresenting the Church and its members.

...as if 100% of members agree with the Church’s attorneys on the legal arguments I’m criticizing. 

[smac97]

24 minutes ago, Analytics said:

According to that chart, money from LDS Philanthropies does end up in Ensign Peak Advisors.

Or not.  

24 minutes ago, Analytics said:

I'm not redefining tithing.

Yes, you are. 

When leaders of the Church speak of tithing (X), they are speaking of voluntary donations by members  of the Church, typically 1/10th of the person's income.

When you speak of tithing (Y), you are adding to and modifying the foregoing definition so as to include funds generated through invested monies.  

You want to impose Definition Y onto the statements of leaders of the Church, who were using Definition X.  

24 minutes ago, Analytics said:

I’m talking about what it means to use tithing, and I’m using a standard definition of use. 

Now you're just equivocating.  

You a few hours ago: "In my world, using tithing to generate interest, which is then used to build a mall, is still using tithing to build a mall."

You cannot speak of how "tithing" is "used" without first defining tithing.              

24 minutes ago, Analytics said:

Quote

Right.  That assertion is in view.  Someone here has asserted that "churches have a constitutional right to lie to their donors."

I deployed a bit of rhetoric here to make my point clear.

I have said: "You regularly presume to speak for us and tell us what we believe, think, teach, etc., often in ways that are distorted, caricaturish, unfair, etc.  You often do so by casting us in the worst possible light."  Here you did so yet again.  You attributed to the Latter-day Saints and/or their leaders the "assertion" that "churches have a constitutional right to lie to their donors."  If that isn't casting us in the worst possible light, I don't know what is.

You defamed the Latter-day Saints, and you lack the decency to even admit it, let alone retract it.

24 minutes ago, Analytics said:

Many members who donated do feel lied to,

Just a few days ago you took exception to me noting your tendency to presumptuous speaking on behalf of the Latter-day Saints.  And here you are, doing it.  Again.

24 minutes ago, Analytics said:

and a few of them are suing.

So "few" that they can be counted on your fingers.  Out of 17 million Latter-day Saints.

You regularly presume to speak for us and tell us what we believe, think, teach, etc., often in ways that are distorted, caricaturish, unfair, etc.

Thanks,

-Smac

[Analytics]

I read most of the complaint. A couple of thoughts.

This new class action case has the support of at least one major law firm that has won several multi-billion dollar class action lawsuits. And the founding, named partner of that firm has signed on to this case. These guys have deep resources to fight this, and I seriously doubt their interest is driven by getting somebody like James Huntsman to pay their hourly legal bills. 

The allegation of "Common Law Breach of Fiduciary Duty” (paragraphs 146 to 156) on page 43 is really interesting. They are claiming:

Quote

147. The Utah Charitable Solicitations Act states: “Every person soliciting, collecting,
or expending contributions for charitable purposes, and every officer, director, trustee, or
employee of any person concerned with the solicitation, collection, or expenditure of those
contributions, shall be considered to be a fiduciary and acting in a fiduciary capacity.” Utah
Code § 13-22-23...

150. At all relevant times, LDS was a fiduciary or acting in a fiduciary capacity in
connection with its promotion, solicitation, expenditure, and handling of all charitable
contributions by Class members. It accordingly owed the members of the Class all applicable
fiduciary duties, including the duty to fully disclose to them all material facts and information in
connection with its disposition of the donations.

Do the leaders of the Church really have a fiduciary duty to the tithe-paying members? Does that include a duty to "fully disclose to them all material facts and information in
connection with its disposition of the donations?"

I know in the insurance and investing worlds, having a fiduciary duty is a big deal.

[Analytics]

10 minutes ago, smac97 said:

Or not.  

Yes, you are. 

When leaders of the Church speak of tithing (X), they are speaking of voluntary donations by members  of the Church, typically 1/10th of the person's income.

That is exactly the definition I’m using.

10 minutes ago, smac97 said:

When you speak of tithing (Y), you are adding to and modifying the foregoing definition so as to include funds generated through invested monies.  

No I’m not. 

10 minutes ago, smac97 said:

You want to impose Definition Y onto the statements of leaders of the Church, who were using Definition X.  

No I don’t.

10 minutes ago, smac97 said:

Now you're just equivocating.  

You a few hours ago: "In my world, using tithing to generate interest, which is then used to build a mall, is still using tithing to build a mall."

You cannot speak of how "tithing" is "used" without first defining tithing.

And I’m using the agreed-upon definition. 

10 minutes ago, smac97 said:

You regularly presume to speak for us and tell us what we believe, think, teach, etc., often in ways that are distorted, caricaturish, unfair, etc.

In this thread I'm not talking about anybody’s religious beliefs. I’m talking about the arguments made in a lawsuit. 

But your desperation to project your behavior onto me is noted.

[smac97]

9 minutes ago, Analytics said:

That is exactly the definition I’m using.

It is not.  You persist in re-defining "tithing" to include income derived from invested funds. 

9 minutes ago, Analytics said:

No I’m not. 

No I don’t.

You are.  You do.

9 minutes ago, Analytics said:

Quote

Now you're just equivocating.  

You a few hours ago: "In my world, using tithing to generate interest, which is then used to build a mall, is still using tithing to build a mall."

You cannot speak of how "tithing" is "used" without first defining tithing.

And I’m using the agreed-upon definition. 

And the equivocation continues.

You continue to re-define "tithing" to include funds which are not tithing, and then assert that the Church used "tithing" to "build a mall."

Thanks,

-Smac

[Analytics]

Just now, smac97 said:

It is not. 

Yes it is. 

But if you don’t want to understand my point of view that is your prerogative. But just so you know, it is unbecoming to argue with me about what I believe.

[smac97]

13 minutes ago, Analytics said:

But if you don’t want to understand my point of view that is your prerogative. 

You are re-defining tithing in an arbitrary, ad hoc way.  It does not work.  

Thanks,

-Smac

[Analytics]

30 minutes ago, smac97 said:

You are re-defining tithing in an arbitrary, ad hoc way.  It does not work.  

No I am not. There is nothing arbitrary or ad hoc about the definition I’m using. I am using exactly the same definition you are.

You are obstinately refusing to understand my point of view.

If you’d like to understand my point of view let me know and I’ll try to explain it to you. It’s clear you don’t want to understand but if I’m wrong about that, let me know.

[smac97]

10 minutes ago, Analytics said:

Quote

You are re-defining tithing in an arbitrary, ad hoc way.  It does not work.  

No I am not.

You continue to re-define "tithing" to include funds which are not tithing, and then assert that the Church used these funds (which you call "tithing") to "build a mall."

10 minutes ago, Analytics said:

There is nothing arbitrary or ad hoc about the definition I’m using. I am using exactly the same definition you are.

You are not.  You are claiming that "tithing" includes funds generated from invested reserves rather than voluntary donations from members.

10 minutes ago, Analytics said:

You are obstinately refusing to understand my point of view.

Your "point of view" involves re-defining "tithing" to include funds which are not tithing, and then assert that the Church used "tithing" to "build a mall."

10 minutes ago, Analytics said:

If you’d like to understand my point of view let me know and I’ll try to explain it to you. It’s clear you don’t want to understand but if I’m wrong about that, let me know.

You are re-defining tithing so that the term applies to funds that are not voluntary donations from members of the Church.  This is arbitrary and ad hoc.  It is the only way the lawsuit filed by your ideological compatriot, James Huntsman, can withstand legal scrutiny.  It doesn't work.

Thanks,

-Smac

Edited July 23, 2024 by smac97

[Analytics]

8 minutes ago, smac97 said:

You continue to re-define "tithing" to include funds which are not tithing...

No, I am not doing that now, and I have never done that in the past.

8 minutes ago, smac97 said:

You are claiming that "tithing" includes funds generated from invested reserves rather than voluntary donations from members.

No, I am not claiming that.

8 minutes ago, smac97 said:

Your "point of view" involves re-defining "tithing" to include funds which are not tithing, and then assert that the Church used "tithing" to "build a mall."

My point of view does not involve that.

8 minutes ago, smac97 said:

You are re-defining tithing so that the term applies to funds that are not voluntary donations from members of the Church. 

No, I am not doing that.

But keep on presuming to speak for me and tell me what I believe and think. Keep doing it in a way that is distorted, caricaturish, and unfair.

And keep on projecting your behavior onto me.

Edited July 23, 2024 by Analytics

[Analytics]

1 hour ago, Analytics said:

I read most of the complaint. A couple of thoughts.

This new class action case has the support of at least one major law firm that has won several multi-billion dollar class action lawsuits. And the founding, named partner of that firm has signed on to this case. These guys have deep resources to fight this, and I seriously doubt their interest is driven by getting somebody like James Huntsman to pay their hourly legal bills. 

The allegation of "Common Law Breach of Fiduciary Duty” (paragraphs 146 to 156) on page 43 is really interesting. They are claiming:

Do the leaders of the Church really have a fiduciary duty to the tithe-paying members? Does that include a duty to "fully disclose to them all material facts and information in
connection with its disposition of the donations?"

I know in the insurance and investing worlds, having a fiduciary duty is a big deal.

@smac97,

I’d be really interested in your thoughts in the above post. Does the class action lawsuit have attorneys of a higher caliber than the ones James Huntsman hired?

And do the leaders of the Church have a fiduciary duty to tithe-paying members? If so, what does that involve?

Your thoughts on these topics would be a lot more interesting than your thoughts on what you think I believe about the definition of tithing.

Edited July 23, 2024 by Analytics

[smac97]

2 minutes ago, Analytics said:

No, I am not doing that now, and I have never done that in the past.

No, I am not claiming that.

My point of view does not involve that.

No, I am not doing that.

But keep on presuming to speak for me and tell me what I believe and think. Keep doing it in a way that is distorted, caricaturish, and unfair.

And keep on projecting this behavior onto me.

One example among many:

Quote

In answering that question, Craig Paxton said, "It is disingenuous for the church to claim that no tithing funds were used to fund the City Creek Mall. Member Pays Tithing --> Tithing in Excess of Current Needs is Invested --> Investments Earn Return --> $$$ From This Return on Investments is Reinvested in the City Creek Mall."

Craig Paxton was exactly right. 

Craig Paxton could only have been "exactly right" if he - like you so regularly have done - re-defined "tithing" to include funds which are not voluntary donations by members of the Church.

If I take out a loan for $1,000, and thereafter invest it and generate a profit of $200, the loan amount remains $1,000, not $1,200.  The $200 was not part of the loan, and it would be contrived and absurd to suggest otherwise.

I think the vast majority of conversant and observant Latter-day Saints will find Analytics re-definition to be flawed, to be ad hoc, contrived, and nonsensical.  

Thanks,

-Smac

 

[Analytics]

14 minutes ago, smac97 said:

One example among many:

Craig Paxton could only have been "exactly right" if he - like you so regularly have done - re-defined "tithing" to include funds which are not voluntary donations by members of the Church.

Craig said that:

1- Members pay tithing

2- Tithing in excess of current needs is invested

3- Investments earn a return

4- Money from these investment returns were reinvested into the mall.

Where, exactly, did he redefine tithing as anything other than the donations that members donated as tithing?

And what, exactly, do you think he is wrong about?

14 minutes ago, smac97 said:

I think the vast majority of conversant and observant Latter-day Saints will find Analytics re-definition to be flawed, to be ad hoc, contrived, and nonsensical.  

I'd be much more interested in the opinion of a disinterested CPA.

[smac97]

3 hours ago, Analytics said:

I read most of the complaint. A couple of thoughts.

This new class action case has the support of at least one major law firm that has won several multi-billion dollar class action lawsuits.

I would be curious how many they have lost or settled.

3 hours ago, Analytics said:

And the founding, named partner of that firm has signed on to this case.

He's a well-known mass tort litigator.  That his firm is involved does not really mean much to me.  I am more interested in the substance of the Complaint, which I find to be fairly poor.  And surprisingly so.

3 hours ago, Analytics said:

These guys have deep resources to fight this, and I seriously doubt their interest is driven by getting somebody like James Huntsman to pay their hourly legal bills. 

I suspect their interest is driven by the prospect of generating notoriety for their firm, and dipping into the Church's deep pockets (including via settlement).

3 hours ago, Analytics said:

The allegation of "Common Law Breach of Fiduciary Duty” (paragraphs 146 to 156) on page 43 is really interesting. They are claiming:

Do the leaders of the Church really have a fiduciary duty to the tithe-paying members?

I believe so, but I think an actional claim for a breach of this duty would be quite difficult in most circumstances involving religious organizations, and really hard in the context of the Church.  I previously touched on this here.  The money quote:

Quote

• "Discipline of church members, particularly based on a scriptural concept such as tithing, are uniquely ecclesiastical."
• "'The issue of tithing is at its core a purely ecclesiastical matter.'"
• "{T}ithing is at the root of ecclesiastical doctrine. If these complaints are in any way related to discipline on such, they would fall outside of the Court's jurisdiction."
• "At best, this raises an internal governance issue for which the courts should abstain."

Quote

The other claims--fraud and breach of fiduciary duty, equally implicate facts that are inextricably intertwined with internal church governance, the role of the pastor in church affairs, membership in the congregation, and statements of the pastor from the pulpit. The breach of fiduciary allegations itself claims Hector Ferrero "has misused the pulpit to gain the control of the purse and the power over the congregation for his sole benefit." The fraud allegation also refers to representations made to the congregation and misleading the congregation about internal church governance. We likewise conclude the trial court also lacked the jurisdiction to hear those claims under ecclesiastical abstention.

"{Fraud claims} equally implicate facts that are inextricably intertwined with internal church governance, the role of the pastor in church affairs, membership in the congregation, and statements of the pastor from the pulpit."

"The fraud allegation also refers to representations made to the congregation and misleading the congregation about internal church governance. We likewise conclude the trial court also lacked the jurisdiction to hear those claims under ecclesiastical abstention."

And here:

Quote

What the Complaint (Maybe) Gets Wrong (Breach of Fiduciary Duty): As noted above, the first cause of action is "Breach of Fiduciary Duty."  This claim is based on a state statute: Utah Code Ann. § 13-22-23:

Quote

Every person soliciting, collecting, or expending contributions for charitable purposes, and every officer, director, trustee, or employee of any person concerned with the solicitation, collection, or expenditure of those contributions, shall be considered to be a fiduciary and acting in a fiduciary capacity.

A "fiduciary duty" is a pretty big deal.  See, e.g., here:

Quote

What Is a Fiduciary Relationship?

A fiduciary relationship imparts a position of peculiar confidence placed by one individual in another. First Sec. Bank of Utah N.A. v. Banberry Dev. Corp., 786 P.2d 1326, 1333 (Utah 1990) (citation omitted). A fiduciary is a person with a duty to act primarily for the benefit of another and is in a position to have and exercise and does have and exercise influence over another. Id. In short, a fiduciary relationship implies a condition of superiority of one of the parties over the other. Id. Generally, in a fiduciary relationship, the property, interest or authority of the other is placed in the charge of the fiduciary. Id.

Now look at how the Complaint frames the issue ("COP" is the Church) (emphases added) :

Quote

96. At all relevant times, COP was a fiduciary or acting in a fiduciary capacity in connection with its promotion, solicitation, expenditure, and handling of all charitable contributions by Class members. It accordingly owed the members of the Class all applicable fiduciary duties, including the duty to fully disclose to them all material facts and information in connection with its disposition of the donations.

97. At all relevant times, Ensign was a fiduciary or acting in a fiduciary capacity in connection with its promotion, solicitation, expenditure, and handling of all charitable contributions by Class members. Among other things, it acted as a fiduciary in its capacity as the entity that held such funds, would make expenditure of donated funds, and purportedly used such funds for charitable purposes. It accordingly owed the members of the Class all applicable fiduciary duties, including the duty to fully disclose to them all material facts and information in connection with its disposition of the donations.

This is, I think, a pretty novel legal theory.  According to the plaintiffs, if I donate $5 to the American Red Cross, that organization now owes me a "fiduciary duty" which includes "the duty to fully disclose to {me} all (!) material facts and information in connection with its disposition of the donations."  And if the Red Cross does not voluntarily provide me with "all material facts and information," I can file a lawsuit against it and use the coercive power of the courts to A) compel disclosure of that information to me, B) punish the Red Cross for not voluntarily providing it to me, or C) both A and B.

I have not researched this point of law, but it doesn't quite ring true.  Again, a fiduciary duty is a big deal.  The claim that one arises every time a donor donates any donation to a charitable organization, and that the latter thereafter has the legal duty to "fully disclose" (!) to the donor "all (!) material facts and information in connection with its disposition of the donations" is . . . pretty iffy.

I think there can be circumstances where a fiduciary duty might arise as to a donor's restricted gift.  See, e.g., here:

Quote

Regardless of the form of the donation, the permissible uses of charitable gifts by a nonprofit depend on whether the donations are restricted gifts or unrestricted gifts. Restricted gifts to charities are funds that are set aside for a particular purpose by a donor. Charities are limited to using those funds only for that purpose. Per a donor’s wishes, restricted gifts could be for a specific purpose, such as designating funds for a special project, or for use within a certain period of time. Restrictions on gifts to charities can also be permanent or temporary, depending on the donor’s instructions.

However, this 2005 bar journal article seems to indicate that even donors of restricted gifts are not owed "fiduciary" duties:

Quote

Finally, neither is the point here to argue that donors-even those of restricted gifts-should have standing to enforce a host of fiduciary duties, effectively making these donors into private attorneys general with all the supervisory and regulatory authority that inheres in that office. The topic at hand is the right of a donor to enforce a restriction imposed on the use of her own gift and to hold the charity accountable with respect to those fiduciary duties implicated by her restriction.

I have not read the whole article, but the author (an associate professor of law at University of Tennessee College of Law) is repudiating the idea of donors having "standing to enforce a host of fiduciary duties, effectively making these donors into private attorneys general with all the supervisory and regulatory authority that inheres in that office."  She is saying that donors to charitable organizations do not have such standing, and cannot act as de facto "private attorneys general" to investigate charitable organizations.  That is an apt characterization, because in this case that is what the plaintiffs are trying to do.  They are saying that the Church owes them (and, for that matter, every other of the many millions of people who have made donations to it) a very significant "fiduciary duty," one that requires the Church to, as the plaintiffs put it, "fully disclose to them all material facts and information in connection with its disposition of the donations."

If this theory holds for the Church, it holds for all organizations that receive charitable donations, and for all donors to such organizations.  The likelihood of that being the current state of the law is, in my view, pretty low (I am, of course, open to correction).  The plaintiffs do not cite to any legal authority to support their theory (except the Utah statute, addressed below), which I think is a significant omission.  If such a proposition (that charitable orgs owe expansive "fiduciary duties" to all of their donors) is an established point of law, the attorneys would likely have cited to an authority for that proposition (particularly in this case, where they are obligated to plead with "particularity").  So the omission of any such reference is, to me, an indicator that no such reference exists.

Consequently, my off-the-cuff assessment of the Complaint is that it is presenting a new and untested legal theory.  That is, that charitable organizations should owe expansive fiduciary duties to their donors.  If that is what they are doing, then I'm pretty sure they are going to lose.  I don't think a federal judge would find that it has authority to craft what looks like a new "common law" principle, particularly in an area that is already regulated by state and federal statutes.  I think a federal judge would decline to recognize that such a fiduciary duty exists, and would also decline to create one (leaving such matters to, I think, state and/or federal legislatures, which is likely where they belong).

Getting back to the statute cited by plaintiffs (Utah Code Ann. § 13-22-23), it clearly creates a fiduciary status owed by particular persons ("{e}very person soliciting, collecting, or expending contributions for charitable purposes, and every officer, director, trustee, or employee of any person concerned with the solicitation, collection, or expenditure of those contributions"), but the statute is silent as to whom that duty is owed.  I could not find any case law interpreting this statute.  Like, ever.  However, I suspect that further research would indicate that the statute creates a fiduciary relationship between A) the persons referenced in the statute (basically, people "soliciting, collecting, or expending" donations to a charitable organization), and B) the charitable organization (not, as plaintiffs are suggesting, the donors to the charitable organization).  If this is the case (I haven't researched it), then the plaintiffs' "breach of fiduciary duty" claim is dead as a doornail.

The Fiduciary Duty claim in the current iteration of the Complaint is based on the same Utah statute as is cited above (Utah Code Ann. § 13-22-23).  As noted above, the statute is silent as to whom a charitable organization owes this duty.  My sense is that the duty is owed by its principals (the flesh and blood people who run it) to the organization, not to the donors.  If that were the case, every donor to every charity would have legal standing to sue it, allege a violation of the duty, conduct ruinously expensive discovery, etc. so as to extract a hefty settlement (or judgment), etc.  I just don't see donors - such as the plaintiffs in the MDL lawsuit - having standing to assert such a claim.

Fiduciary duty claims also suffer from the same fundamental weakness as the fraud-based claims: they are pretty much guaranteed to be barred by the Ecclesiastical Abstention Doctrine.  Under one or both of these assessments, I continue to think that this claim is dead as a doornail.

3 hours ago, Analytics said:

Does that include a duty to "fully disclose to them all material facts and information in connection with its disposition of the donations?"

I doubt it.  When you donate to the Red Cross, does that organization "fully disclose to {you} all material facts and information in connection with its disposition of the donations?" 

Nope. 

Does any charitable group do this? 

Nope.

So will the plaintiffs in the present lawsuit be able to articulate a legal basis for foisting this legal "duty of care" onto the Church of Jesus Christ when no other similarly-situated organizations are similarly obligated to adhere to such a duty?

I suspect . . . not.

This makes sense if you think about it.  I think no charitable group could ever either A) satisfy all its doners as to every financial decision it makes, or B) "fully disclose to them all material facts and information in connection with its disposition of the donations."

3 hours ago, Analytics said:

I know in the insurance and investing worlds, having a fiduciary duty is a big deal.

Yes.  But it's only a big deal for those to whom the duty is owed.  I don't think donors to charitable groups are owed such a duty.  And even if such a duty exists, I think the plaintiffs will have a very hard time showing that it was breached and caused injury to them.  And that's assuming the plaintiffs can overcome the threshold obstacle that is the Ecclesiastical Abstention Doctrine.  I don't see them getting past it.

Thanks,

-Smac

Edited July 24, 2024 by smac97

[Analytics]

17 minutes ago, smac97 said:

When you donate to the Red Cross, does that organization "fully disclose to {you} all material facts and information in connection with its disposition of the donations?" 

Nope.

That isn’t obvious to me. I googled, “Do charities have an obligation to be transparent?” The first result was from the National Council of Nonprofits which says,

Earning trust through financial transparency and accountability goes beyond what the law requires, but let’s start there: nonprofits are required to disclose certain financial information to the public upon request, and board members must have access to financial information in order to fulfill their fiduciary duty to the nonprofit.

Furthermore, the Red Cross is transparent.

17 minutes ago, smac97 said:

Does any charitable group do this? 

Nope.

If we define "fully disclose to {you} all material facts and information in connection with its disposition of the donations” as a good-faith effort to comply with best practices in financial transparency, I’m not aware of a major, reputable charity that doesn’t.

17 minutes ago, smac97 said:

Yes.  But it's only a big deal for those to whom the duty is owed. 

What's interesting then is that since the apostles aren’t privy to see all of the Church’s finances, they could sue, correct?

 

17 minutes ago, smac97 said:

I don't think donors to charitable groups are owed such a duty.  And even if such a duty exists, I think the plaintiffs will have a very hard time showing that it was breached and caused injury to them. 

I might be wrong about this, but I don’t think anybody donates to the Red Cross or the United Way and then sues to get their money back. Why? Because those groups are transparent and people know how the money is being deployed. The Church doesn’t come anywhere near that standard.

17 minutes ago, smac97 said:

And that's assuming the plaintiffs can overcome the threshold obstacle that is the Ecclesiastical Abstention Doctrine. 

If there is a fiduciary duty to the donors (and I have no idea if there is or not), and if that duty includes the generally agreed-upon best practices of financial transparency that groups like the Red Cross and United Way meet, then how does the Ecclesiastical Abstention Doctrine mean that churches are exempt from their statutory fiduciary duty to donors?

Edited July 23, 2024 by Analytics

[smac97]

1 hour ago, Analytics said:

Craig said that:

1- Members pay tithing
2- Tithing in excess of current needs is invested
3- Investments earn a return
4- Money from these investment returns were reinvested into the mall.

Where, exactly, did he redefine tithing as anything other than the donations that members donated as tithing?

Here: "It is disingenuous for the church to claim that no tithing funds were used to fund the City Creek Mall."

He then presents the foregoing list, apparently to demonstrate that tithing funds were used to fund the City Creek Mall.

He, like you, re-defines "tithing" to include monies which are not voluntary donations from members of the Church, and are instead generated by the investment of reserve funds.

The Church's definition of tithing is X.

Your (re)definition of tithing is X plus some other stuff.  It is this emandation / alteration / addition that does not work.

1 hour ago, Analytics said:

And what, exactly, do you think he is wrong about?

He is wrong in claiming that "tithing" can or ought to be defined so as to includes monies that are not tithed.

1 hour ago, Analytics said:

I'd be much more interested in the opinion of a disinterested CPA.

So would I.

If I donate $1,000 in tithing to the Church, and if the Church thereafter invests that $1,000 and realizes a profit of $200, would "a disinterested CPA" say that my tithe was $1,000 or $1,200?

Thanks,

-Smac

Edited July 24, 2024 by smac97

[carbon dioxide]

1 hour ago, smac97 said:

If I donate $1,000 in tithing to the Church, and if the Church thereafter invests that $1,000 and realizes a profit of $200, would "a disinterested CPA" say that my tithe was $1,000 or $1,200?

Thanks,

-Smac

If I pay 1000 in tithing to the church, why on earth would I think all of it goes into an investment fund? There is no evidence it does.   It goes into a bigger pool with the church uses for expenses and to grow the church.   Tithing is paid to build up the kingdom of God and that can involve many different things.   Lets say there is a surplus.  The Church invests perhaps 50 or 100 bucks of my 1000 dollar tithing that remains.  It is logical for the church to do that as there is always the potential of a big economic downturn which would greatly reduce tithing receipts.    The church needs a big slush fund to draw from so that it runs as it should.   Now lets say the church was to do something "evil" like use a little of the slush fund to invest in a mall.   How much of my tithing was used for that mall.  Maybe 1 or 2 bucks if that.  The whole issue is blown out of proportion. 

[smac97]

51 minutes ago, carbon dioxide said:

If I pay 1000 in tithing to the church, why on earth would I think all of it goes into an investment fund? There is no evidence it does.

There have been some indications that about 1/7th of tithes goes to EPA.  Not sure how accurate that is.

51 minutes ago, carbon dioxide said:

It goes into a bigger pool with the church uses for expenses and to grow the church.   Tithing is paid to build up the kingdom of God and that can involve many different things.   Lets say there is a surplus.  The Church invests perhaps 50 or 100 bucks of my 1000 dollar tithing that remains.  It is logical for the church to do that as there is always the potential of a big economic downturn which would greatly reduce tithing receipts.    The church needs a big slush fund to draw from so that it runs as it should.  

I agree with most of this, except that "slush fund" generally means "a reserve of money used for illicit purposes, especially political bribery."

I think the Church needs a substantial reserve fund, tho.  

51 minutes ago, carbon dioxide said:

Now lets say the church was to do something "evil" like use a little of the slush fund to invest in a mall.

Such a use would, I think, not be "evil" unless deceit was involved.  Otherwise, the Parable of the Talents is in play.

51 minutes ago, carbon dioxide said:

How much of my tithing was used for that mall.  Maybe 1 or 2 bucks if that.  The whole issue is blown out of proportion. 

I find most of this issue to be pretextual.

Thanks,

-Smac

Edited July 24, 2024 by smac97

[webbles]

2 hours ago, Analytics said:

If there is a fiduciary duty to the donors (and I have no idea if there is or not), and if that duty includes the generally agreed-upon best practices of financial transparency that groups like the Red Cross and United Way meet, then how does the Ecclesiastical Abstention Doctrine mean that churches are exempt from their statutory fiduciary duty to donors?

How would we find out if the fiduciary duty include the "best practices of financial transparency"?  Would that be in a law somewhere?  And what if that law had an exemption for religious organizations, because I've noticed that a lot of reporting laws have such exemptions (for instance the 990T form has such exemption).