Litigation Update: Roman Catholic Archdiocese of San Juan, Puerto Rico v. Feliciano

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The issue at hand in the case of Roman Catholic Archdiocese of San Juan Puerto Rico v. Feliciano is whether courts in Puerto Rico can confiscate assets of Catholic entities to fulfill pension obligations to current and former Catholic school employees. The petition for certiorari lists the question as: “Whether the First Amendment empowers courts to override the chosen legal structure of a religious organization and declare all of its constituent parts a single legal entity subject to joint and several liability.” Erin Murphy joins us to discuss the important implications of this case.

Featuring: 

Erin E. Murphy, Partner, Kirkland & Ellis

 

 

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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast, hosted by The Federalist Society's Religious Liberties Practice Group, was recorded on Tuesday, July 30, 2019, during a live teleforum conference call held exclusively for Federalist Society members.       

 

Wesley Hodges:  Welcome to The Federalist Society's teleforum conference call. This afternoon's topic is "Litigation Update on the Roman Catholic Archdiocese of San Juan, Puerto Rico v. Feliciano." My name is Wesley Hodges, and I am the Associate Director of Practice Groups at The Federalist Society.

 

      As always, please note that all expressions of opinion are those of the expert on today's call.

 

      Today we are very fortunate to have with us Erin E. Murphy, who is Partner at Kirkland & Ellis and Counsel to the petitioners. After our speaker gives her opening remarks, we will have an audience Q&A, so please keep in mind what questions you have for this case or for our speaker. Thank you very much for sharing with us today. Erin, the floor is yours.

 

Erin E. Murphy:  Thank you so much, and thanks for joining today to learn a bit more about this case. Some of you may know the Supreme Court recently called for the views of the Solicitor General on the pending petition in this case. And this really is a truly extraordinary case. I know that's a term that gets thrown around quite a bit when it comes to petitions for certiorari but here, both as a practical matter and as a legal matter, this case really, really is, I think, truly an extraordinary one.

 

      The petition arises out of what began as essentially just a basic pension dispute. The plaintiffs in the underlying litigation are employees at three Catholic schools on the island of Puerto Rico. And three years ago, the pension fund that runs the pensions for employees at those schools ran out of money and was unable to continue paying out pension payments and unable to fund future payments to these employees. And they brought suit against the schools seeking to compel payment, both in the long-term and through a preliminary injunction while the litigation was pending.

 

Where it gets interesting is that the plaintiffs insisted on suing not just the schools but also the Archdiocese of Puerto Rico which is not their employer. And then on top of that, they insisted on suing an entity that they declared to be the Church itself for all purposes in Puerto Rico. What they first did is sued an entity that they had called the Holy Catholic Apostolic Church on the Island of Puerto Rico, Inc., which they declared was the overarching entity responsible for all Catholic entities on the island of Puerto Rico. In fact, that is an Orthodox Christian church that has no relationship to the Roman Catholic Church.

 

And when they figured that out, they tried again and this time declared that their intended defendant was an entity that they called the Roman Catholic and Apostolic Church in Puerto Rico which they claimed had essentially legal authority and supervisory authority over every Catholic entity in Puerto Rico whether it be a diocese, the archdiocese, a school, a parish, what have you. There actually is no such entity whether by that name or otherwise, and the archdiocese and other Catholic entities informed the Puerto Rico courts that's not how the Catholic Church works in Puerto Rico or elsewhere. There is not one entity that has supervisory authority for legal, for doctrinal, for any purposes when it comes to all of the Catholic entities in Puerto Rico. Instead, there are many Catholic entities each with their own distinct legal personhood. And there's not one that's the overarching parent for all of them.

 

But the trial court in Puerto Rico disagreed. It concluded that this was in fact an entity that is responsible and that operates on behalf of every single Puerto Rico Catholic entity in Puerto Rico. And it entered an order, and a rather really extraordinary order, that I want to quote to you. They said that they "empowered the sheriff to break down doors, break locks, and enter churches day or night to see artwork, furniture, and anything else, really, of value as necessary to come up with the money to fund these pension obligations."

 

Now, the archdiocese appealed to the Court of Appeals in Puerto Rico, and the Court of Appeals reversed and said this is not how we treat religious entities in Puerto Rico or elsewise. A long line of Supreme Court doctrine makes clear that when a religious entity explains that a matter of its faith is structured in a particular way, the obligation, of course, is to respect that, not to impose on a religious entity what the Court believes is the appropriate structure for that religious organization. And it was very clear, the Court of Appeals concluded, both as a matter of First Amendment principles the Supreme Court has established, that the courts should not be getting into this inquiry and as a matter of canon law, that all of these positions that the trial court had taken here are just incorrect because it's very well settled that the Church has many different entities that all have distinct legal personhood and can be treated as having distinct legal personhood in a manner that's entirely consistent with state law, with Puerto Rico law, with federal law, and, ultimately, with First Amendment principles.

 

The plaintiff at that point decided to appeal to the Puerto Rico Supreme Court, which they did even though at that point the actual defendants in the case had consented to an order under which they would fund the pension obligations of the plaintiffs for the duration of the litigation. The plaintiffs weren't content with that. They wanted an order from the Puerto Rico Supreme Court declaring that all of the Catholic entities in Puerto Rico really are legally one in the same, and that's ultimately what they got.

 

The Puerto Rico Supreme Court reversed and said that as a matter of Puerto Rico law, the Catholic Church is one and only one entity, its schools, its parishes, its dioceses, what have you, all throughout the island really are essentially jointly and severally liable for everything that each other does. And they concluded that this was so, really, as a matter both the Puerto Rico law and in their view, they thought that the Establishment Clause compelled this result because they said to defer to the Church on its own views as to what canon law requires, what is consistent with the faith, and how the church wants to be structured to best propagate its faith would violate the Establishment Clause by essentially treating the Catholic Church as somehow the established faith of Puerto Rico.

 

So at this point, what we have in this case is an order from the Puerto Rico Supreme Court that has resulted in the trial court reinstating an order that would allow the plaintiffs to use the Puerto Rico sheriff to literally break down doors, break locks, enter any church or religious Catholic organization throughout Puerto Rico, day or night, to seize whatever they would like to seize to get to the $4.7 million that they have requested to fund their pension obligations. We have filed a petition for certiorari on behalf of the diocese -- the archdiocese and the other dioceses that have been declared to be, really, just all one in the same. And in our petition, we argue that this really is just flatly contrary to a long line of the Supreme Court's doctrine establishing the doctrine that goes by a number of different names but essentially, the doctrine that says that courts should generally defer to religious organizations when it comes to their structure. Generally, you probably know that as the Religious Autonomy Doctrine, you may have heard of it with a few different formulations.

 

This doctrine really dates back to the Seminole Watson case that has been reiterated for more than a century with Court repeatedly saying that it's not for courts to resolve, really, ecclesiastical disputes about the nature of the faith in the sense of saying, well, we think that a particular religious faith is, in our view, organized a particular way or here, as the Puerto Rico courts have taken it even further, saying it must be incorporated. It must be structured in a particular way that state law or Puerto Rico law here demands that the Catholic Church structure itself in a particular way as one and only one entity and essentially forbids the Catholic Church from organizing itself in a manner where different parts of the church are distinct and have distinct legal personhood.

 

And lest there be any doubt about what actually the lower courts have held here, the plaintiffs have invoked this decision in other litigation that's been going on in the wake of this to tell other courts that they could not treat other entities within the Catholic Church as distinct and that they all had to be treated as one in the same. Most notably, after this order was entered, the archdiocese had no choice but to seek bankruptcy protection. And it went to the bankruptcy courts to try to at least protect his assets while we were trying to litigate this case and get the Supreme Court to look at it and hopefully get federal courts to oversee what's going on here. And the plaintiffs showed up in bankruptcy court and convinced the bankruptcy court that the archdiocese couldn't apply for bankruptcy and seek the protection of bankruptcy unless it could ensure that all of the other dioceses in Puerto Rico would participate in the bankruptcy proceedings because, in their view, they're all one in the same.

 

The archdiocese explained to the bankruptcy court that it doesn't have the power to do that because they are actually in fact distinct entities with distinct legal personhood and a distinct hierarchy in the church. The archdiocese doesn't control the actions of all the dioceses but the bankruptcy court essentially considered itself bound by the Puerto Rico Supreme Court's decision to reject that interpretation -- that principle and treat the archdiocese and dioceses as one in the same and, therefore, wouldn't allow the archdiocese to seek bankruptcy. There's also been subsequent proceedings in which dioceses have tried to separately incorporate and the Puerto Rico courts have said no, you can't do that because we've concluded through the highest Puerto Rico court, the Supreme Court here, that the Church not only is but must be one and only one church.

 

So it's ultimately a case that has extraordinary practical implications for the Church which is now facing a $4.7 million obligation that has to be funded by any and all Catholic entities throughout Puerto Rico. And it's an extraordinary decision for purposes of doctrine because it's just so profoundly out of step with the Supreme Court's jurisprudence in this area. Far from compelling courts to override the way that a religious organization wants to structure itself, the Court generally requires courts to defer to all of that. Now, that's not to say that there can't be general principles of you should comply with incorporation doctrine and comply with certain requirements of state law where they apply, but there really are no such principles here that nobody is suggesting that the Church adamantly refused to comply with certain principles or that the dioceses are really trying to be clear in what they are telling the courts about their structure. The Court has just concluded that they cannot be structured the way that they would like to be structured and that Puerto Rico can instead decide for itself what a religious organization should look like.

 

So it’s not surprising to us that the Supreme Court has taken note of this case and has -- after considering it at several conferences last year, decided to call for the views of the Solicitor General. We've had some great amicus support in the case from other religious organizations explaining what the consequences of principles like these would be for the ability of religious organizations to structure themselves the way they prefer, whether they be hierarchical, large organizations like the Catholic Church, or smaller organizations that really have very little structure. All of that is supposed to be the kind of decision-making that the courts should respect and defer to, particularly in a case like this one where nobody has ever disputed that the Catholic Church has put forth a very good faith understanding that its Catholic doctrine, canon law, is what this has compelled this church to be structured in the manner that it is.

 

So the Court will consider this case again in the fall at some point after the Solicitor General files a brief, and we certainly hope that at that point the Court will decide that this case is worthy of its attention on the merits.

 

Wesley Hodges:  Well, very good. Thank you so much, Erin. And while we wait for any questions from the audience, Erin, I do want to just double back and ask why do you think the Court has thought on this case for so long?

 

Erin E. Murphy:  Yeah, it's an interesting question. Just to give folks a little more context, the Court relisted this case, I believe, 11 times which is bordering on a record. It basically was 11 times over the course of three months and then it was on where the last orders list of the conference from -- or at least from the orders list from the last conference of the term, that the Court ultimately called for the views of the Solicitor General. It's anybody's guess as to exactly what the Court has been struggling with in deciding what the best way to deal with this case is. But I think one thing is crystal clear, given that history, and that is that at least some number of justices are extremely interested in this case. And I would venture to guess they're interested because they're very troubled with what happened here in the lower courts.

 

Wesley Hodges:  Thank you, Erin, for that context. But here comes our first caller of the day.

 

Ed Chase (sp):  Hi, this is Ed Chase in California. I was wondering whether this is something unique to what the court in Puerto Rico did and whether this would have any implications nationwide?

 

Erin E. Murphy:  Sure, and I think that the answer is there are certainly aspects of this that are, perhaps, product of some peculiarities of Puerto Rico, but there's nothing about the reasoning that was applied here that couldn't apply with full force by any court that adopted it. There is a particular dynamic here of -- the Puerto Rico Supreme Court noted that it believed that it was compel by a hundred-year-old U.S. Supreme Court case to treat the Catholic Church as one and only one entity all throughout Puerto Rico. In fact, that hundred-year-old case really simply was rejecting the proposition that the Catholic Church lacked legal personhood entirely which was the position that certain aspects of the Puerto Rico government were taking back at the turn of the last century. They had said that the Catholic Church just couldn't incorporate and couldn't have legal personhood and wouldn't be treated as having legal personhood if it wasn't incorporated. And the Supreme Court said no. The Catholic Church and religious organizations have long been treated as having legal personhood.

 

Somehow, from that decision of the U.S. Supreme Court, the Puerto Rico Supreme Court seemed to think it was compelled to arrive at this proposition that not only is it legal personhood but conversely, it's only one legal person which is just completely backward, if you look at the context of that. So I do think that's a particular aspect of this that is very troubling because they viewed themselves as bound by U.S. Supreme Court precedent to do something so out of step with so much U.S. Supreme Court precedent. But I do think that the ultimate reasoning they employed in the sense of saying that from their perspective, it is for courts to apply neutral principles and essentially ignore doctrine from the faith itself in deciding how a religious organization is structured is an extremely troubling principle.

 

And, unfortunately, that is something that we've seen other lower courts suggest from time to time. And it's a mistake that the Supreme Court has had to step in and correct in the past when lower courts have really stepped too far and said that these so-called neutral principles of law should really override any religious doctrine that religious entities may invoke in trying to explain to courts why they not only are indeed structured a particular way but are structured that particular way because that is how they best believe that they can advance and share their faith and their mission.

 

Wesley Hodges:  Thank you caller, we do appreciate your question. Here comes our second caller of the day.

 

Caller 2:  Thank you for the talk. Can you explain what the interest of the United States government would be in this case that would warrant receiving the input from the Solicitor General?

 

Erin E. Murphy:  Well, that's an excellent question. It's not the most obvious case I would submit for the United States used to be called for. Often, when the Supreme Court calls for their views, it's in cases that involve the interpretation of a federal statute or something that the United States, qua United States, has an interest in. And that's admittedly not quite as obvious here as it is in other cases, but I think ultimately, there's a couple of respects in which the United States ought to have a strong interest here.

 

Ultimately, this is a matter of constitutional interpretation. It's a matter of First Amendment rights, and I think you'd be pretty hard pressed to find that many cases out there in the First Amendment context where the United States has not participated in the Supreme Court when the Supreme Court is deciding those cases. And the United States often does so not just because those cases implicate particular statutes that the federal government has an interest in or anything like that, but just because of the nature and import of the questions presented.

 

There's also aspects of this that involved a treaty that was the organizing treaty back in the day of Puerto Rico, and there are certain aspects of this being out of Puerto Rico rather than out-of-state that could lead the United States to have a little bit different interest than it might in another context. But, certainly, these kinds of religious autonomy issues arise in both state law contexts and in federal law contexts. And one would hope that the federal government would have a strong interest in ensuring the protection of religious organizations all throughout the country.

 

Wesley Hodges:  Next caller, you are up.

 

Caller 3:  Thank you. Is there any indicia in the record of animus? We have the wedding case and the Supreme Court recently looking at the motivation of the president signing the executive on the census issue. I'm just wondering whether animus would get you very far. Puerto Rico I'm pretty familiar with. I've spent a lot of time in litigation down there. It's become pretty much a secular society and the government; it's all become very secular. I wouldn't say it's hostile to Catholicism but indifferent at least. And any evidence of that -- of motivation that might boost the case along?

 

Erin E. Murphy:  Yeah, there's certainly been some extraordinary statements by the plaintiffs throughout this litigation that really seem to be quite unfoundedly calling into question the sincerity and good faith of the Church itself, of the Church, of the dioceses, of the archdiocese, and there's certainly -- there seems to be a bit of a strain of all of that in the opinions. But there's also, in my mind, a bit of a notion of that the Puerto Rico Supreme Court and the trial court seem to view this a little bit as we know the Church in Puerto Rico as well as anyone else does and we're just as capable as the Church itself of explaining what its structure is and what its hierarchy is and what it should be.

 

And I also do think this, as we all know, there's been quite a bit, not even just -- even setting aside the most recent turmoil, Puerto Rico's an area that's been struggling for the past few years, and there's certainly some strains in the opinions of a notion of well somebody just needs to pay and we don't really -- it's not as important to the courts that we ensure that we're getting it from the right entity so long as we're sure we're imposing the order on somebody who we think has the money to pay it. But to me, it's really just quite extraordinary to see a court order that says I'm empowering the sheriff to break locks and knock down doors and enter churches day or night to seize their artwork and furniture and their religious paraphernalia. That's a pretty extraordinary order for any court to enter.

 

Caller 3:  Henry VIII did something very similar.

 

Erin E. Murphy:  That is -- it's been awhile since we've seen something quite like it.

 

Wesley Hodges:  Let's go to our next audience caller.

 

Jack Park:  Thank you, Erin. This is Jack Park. On the somebody must pay, does the federal pension benefit guarantee fund have any jurisdiction over the plaintiff's clients?

 

Erin E. Murphy:  So there's actually some underlying issues in the true litigation that began all of this about the pension obligations as to what they're dealing with here is a church plan and whether they're really actually is any jurisdiction as to these plans at all. So there's plenty of difficult questions that need to be sorted through in the first instance wholly apart from the final conclusion of assuming that there is liability of who needs to pay it here. And all of that is complicated by the fact that really this is the particular Catholic pension fund that has been structured as a church plan, that church plans have different distinctions when it comes to the payment of obligations. But, really, most of that hasn't quite been sorted out at this point because the litigation has really gone up and focused on this really wholly distinct and collateral question of deciding preemptively who it is that would be liable if somebody is liable here.

 

Wesley Hodges:  Thank you, Jack. Let's go to our next caller.

 

Brian (sp)+:  Hi, thank you so much. This is Brian in Cheyenne, Wyoming. I think you've answered my first question which was to the extraordinary nature of the remedy allowing the sheriff to go in, apparently not uncommon to these types of cases. And the other really second part was that in other cases of this similar type, what is the normal process that could be compared to this that they, for some reason, didn't seem to go to?

 

Erin E. Murphy:  Yeah, so what led to this particularly extraordinary order and measures is the really unfounded view of the trial court that the defendants, or the overarching church, that it had established were being uncooperative. In fact, what happened was it started with just an order to fund, and there was an attempt to execute but because this entity that the plaintiffs have tried to sue doesn't actually exist as a legal matter—it's not just a matter of the entity doesn’t have overarching power; they just named an entity that doesn't exist—that frustrated the ability to immediately execute the order. It was unclear who they would serve it on, and they initially tried to go to the wrong entity and demand money from an entity that I think was not even Catholic. And then they went back and said well, you haven't paid within 24 hours, and really it had been 24 hours, and the trial court basically said well, then you're being incalcitrant and we're going to impose this order that the sheriff can essentially come and seize everything from you.

 

      So I think in that respect, there really is a -- it really was barely any time for anyone to figure out in the ordinary process what to do in terms of whether -- how there would be compliance if there would, no effort to give meaningful time for an appeal before the trial court resorted to these extraordinary measures. Normally, in a context like this, you would have an order and you would operate on the assumption that, as here, there's no reason to think otherwise, that the fund is going to act in good faith and particularly with the kind of money involved you would allow a process if there's rights to seek immediate appeal and such as there was the ability to do here. So let all of that play out and really it was just this extraordinary view that it had to happen, not just that this had to happen but that it had to happen immediately and that the Catholic entities on the island couldn't be trusted, really, to comply absent this extraordinary compulsion by the lower courts that resulted in a rather out of the ordinary way of the courts proceeding here instead of just having a judgment or an order that you expect that there would be compliance with in due course.

 

Wesley Hodges:  Next caller, you are up.

 

Hiram Sasser:  Hey Erin, this is Hiram Sasser. Don't you think that this case or would you characterize this case as more of a dispute over church leadership or church property?

 

Erin E. Murphy:  You know, it's an interesting question. I guess I would say it has a flavor of both because in my mind, while ultimately what the Court wants to get at is property, it's reasoning for getting at the property of everybody comes from its restructuring of leadership and its view that not even the archdiocese but this made-up overarching entity is in charge of every other entity on the island. And it's because the Court has declared them to all be under one overarching set of leadership that it has been declared all of their property should be one in the same. So I think it's in a sense a dispute about whose assets are whom and that's the bottom line dispute. But the reasoning and the ultimate legal dispute is more about the Church reorganizing the leadership and structure.

 

And to me, you particularly can see that when you look at the post-decision bankruptcy proceedings when you have the bankruptcy court saying you have to control all of these dioceses and ensure not only that their assets are part of the pool of assets that are before the bankruptcy court for purposes of determining how to sort through the rest but also, that you have to make them cooperate. You have to make them participate and be part of these proceedings. So in essence, you have to restructure yourself in such a way that you have the power and the leadership over the dioceses that as a matter of canon law, and until now is a matter of all law, and the archdiocese has not had.

 

So I do think at the end of the day, it's not just a matter of -- this isn't like a case where the Court is really saying well, this property belongs to multiple people so the property is something we can get at. It's a case where what the Court is ultimately saying is we just don't think you can be organized in a way where you aren't all ultimately subject to a single set of leadership and if we can't take this all the way to the Pope, because even Puerto Rico seems to acknowledge that its courts don't have jurisdiction over the Vatican, they're happy enough to at least go as high as they think they can go for purposes of restructuring the Church in Puerto Rico.

 

Wesley Hodges:  Thank you very much. I'm seeing no immediate questions from the audience. Erin, I'd like to turn the mic back to you. Do you have any additional thoughts or thoughts you'd like to share before we close today?

 

Erin E. Murphy:  Nothing more than just thank everybody for joining us. And I encourage you to follow this case and see what we see next out of the United States and the Court. This is certainly a very interesting and an extremely important one.

 

Wesley Hodges:  Absolutely. Well, on behalf of The Federalist Society, I would like to thank you, for the benefit of your very valuable time and expertise today. We welcome all listener feedback by email at info@fedsoc.org. Thank you all for joining us for the call today. We are now adjourned.

 

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