LDS Church appeals, says James Huntsman’s tithing lawsuit poses ‘profound threat’ to religious liberty

Lawyers for The Church of Jesus Christ of Latter-day Saints say judges violated the First Amendment’s protections of religion when they resurrected a lawsuit brought by James Huntsman accusing the faith’s top leaders of fraud.

In a petition filed late Wednesday seeking a rehearing before the 9th U.S. Circuit Court of Appeals, church attorneys say the legal dispute over tithing and spending on the City Creek Center shopping mall in downtown Salt Lake City has “created a profound threat to religious liberty” — one potentially affecting all churches.

“Virtually any person who has fallen away from their faith may view their donations to the church during their faithful years as a waste,” they wrote, “but that cannot mean each of them has a fraud claim that allows them to try to convince a secular jury that they were swindled.”

[Read the church’s latest court filing in the James Huntsman case.]

Allowing the case to proceed to a jury trial, the attorneys contend, would violate long-standing church-autonomy doctrines enshrined by the U.S. Supreme Court, barring courts from intruding on internal religious affairs and matters of faith.

“The threat to churches and to the civil courts from such suits,” they say in their 24-page brief, “is obvious.”

The petition urges either a three-judge panel or the full 9th Circuit to take up and reject the case — latter is known as en banc review — in hopes of preventing it from going back to U.S. District Court for a jury trial.

It is unclear when the full appeals court might decide.

Huntsman, son of the late Utah industrialist-philanthropist Jon Huntsman Sr. and brother to former Utah Gov. Jon Huntsman Jr., is seeking the return of at least $5 million in tithing along with interest and penalties.

James Huntsman sued the church in March 2021 in a Los Angeles federal court, alleging that then-church President Gordon B. Hinckley and other senior Latter-day Saint authorities had misrepresented how regular donations from members were spent.

In faith’s April 2003 General Conference, Hinckley insisted that tithing funds “have not and will not be used” for City Creek Center, stating that the money came from “commercial entities owned by the church” and the “earnings of invested reserve funds.”

A district court judge summarily dismissed Huntsman’s lawsuit in September 2021, saying no reasonable juror would agree with his contention that Hinckley and other church leaders lied about the spending.

But a three-judge panel of the 9th Circuit ruled 2-1 to reverse that decision in August, saying such a juror might believe Huntsman’s assertions that church leaders misrepresented where $1.4 billion spent on the luxury mall came from.

Huntsman, who resigned his church membership in 2020, has said his case was prompted by assertions from IRS whistleblower David Nielsen, a former portfolio manager for the church’s investment arm. Nielsen brought the commercial expenditures to light in December 2019.

In a short statement late Wednesday, Huntsman noted that all the judges who had reviewed the case thus far — both in U.S. District Court and the three-judge appellate panel — had rejected the idea that it was barred by religious protections.

“We feel very confident in our case, particularly around the First Amendment issue,” Huntsman said. “It’s the only point on which all four judges have so far agreed: that this is not a First Amendment issue.”

While the three-judge panel split on other aspects of reviving Huntsman’s case, it was unanimous that the First Amendment and its constitutional protections of religion did not preclude Huntsman’s case.

Those did not apply, the panel decided, “because the questions regarding the fraud claims were secular and did not implicate religious beliefs about tithing itself.” The lower court judge also ruled the case was secular and did not run afoul of the First Amendment.

But the lead church attorney on its latest petition — former U.S. Solicitor General Paul D. Clement, based in Alexandria, Va. — contends in Wednesday’s brief that Huntsman’s case is “all about a difference of opinion between a church and its former member about the definition of ‘tithing funds.’”

“Huntsman’s City Creek claim is premised on the theory that the church made ‘false’ statements by saying it would not use ‘tithing funds’ to finance the project, and then using earnings on invested tithing funds to finance that project,” it says. “That is not a dispute for secular courts but ‘precisely the type of ecclesiastical inquiry courts are forbidden to make.’”

Editor’s note • James Huntsman is a brother of Paul Huntsman, chair of the nonprofit Salt Lake Tribune’s board of directors.