Gaddy v. Corp. of President of Church of Jesus Christ of Latter-Day Saints

665 F.Supp.3d 1263

Laura A. GADDY, Lyle D. Small, and Leanne R. Harris, individually and on behalf of all others similarly situated, Plaintiffs, v. CORPORATION OF the PRESIDENT OF the CHURCH OF JESUS CHRIST OF LATTER-DAY SAINTS, a Utah corporation sole, and Does 1-50, Defendant.

Case No. 2:19-cv-00554-RJS-DBP

United States District Court, D. Utah

Signed March 28, 2023

Kay Burningham, Kay Burningham Attorney at Law, Salt Lake City, UT, for Plaintiffs.

David J. Jordan, Wesley F. Harward, Foley & Lardner LLP, Salt Lake City, UT, for Defendant Corporation of the President of the Church of Jesus Christ of Latter-Day Saints.

MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS AND DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND

ROBERT J. SHELBY, United States Chief District Judge

This case stems from the history, founding, and teachings of the Church of Jesus Christ of Latter-Day Saints, commonly known as the Mormon Church. Plaintiffs Laura Gaddy, Lyle D. Small, and Leanne R. Harris were members of that religion for most of their lives. They bring this putative class action lawsuit against the Church's religious corporation, Defendant Corporation of the President of the Church of Jesus Christ of Latter-day Saints (the Church). Asserting numerous fraud-related claims, Plaintiffs generally allege the Church has intentionally misrepresented its founding to induce the faith of its members, even as its leaders hold no sincere religious belief in the versions of events they promote.

In two prior Orders, the court dismissed all or part of the first two complaints brought by Gaddy. Specifically, in the first prior Order (First Order), the court dismissed Gaddy's original Complaint primarily because litigating her claims would have required a legally impermissible inquiry into the truth of the Church's religious teachings and doctrines.¹ In the subsequent Order (Second Order), the court granted in part and denied in part the Church's Motion to Dismiss Gaddy's Amended Complaint.² Again, the court found that litigating most of Gaddy's claims would require an impermissible inquiry into the truth of the Church's doctrine.³ However, the court did not dismiss Gaddy's revised civil Racketeer Influenced and Corrupt Organizations Act (RICO) claim to the extent it was based on the Church's statements concerning the use of tithing funds to construct a mall in downtown Salt Lake City.⁴

Rather than proceed to discovery on the surviving claim, Gaddy, along with new Plaintiffs Small and Harris, filed a Second Amended Complaint asserting seven claims against the Church, many of which were asserted and previously dismissed in the court's two prior Orders.⁵ Now before the court is the Church's Motion to Dismiss Plaintiffs' Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).⁶ For the reasons explained below, the Church's Motion is GRANTED.

BACKGROUND AND PROCEDURAL HISTORY⁷

The court first provides a brief factual background concerning the named Plaintiffs before turning to the lengthy procedural history of this case.⁸

I. Plaintiffs

Laura Gaddy was raised in the Church and remained a member for most of her adult life.⁹ In early 2018, she found online material concerning the Church's founding, history, and doctrine that she believed conflicted with the Church's own teachings.¹⁰ Unable to reconcile what she discovered with her continued participation in the Church, Gaddy ultimately relinquished her membership.¹¹ Gaddy is now in counseling to help manage the emotional distress she experiences from her lost faith in the Church.¹²

Lyle Small was also a dedicated member of the Mormon Church for most of his life. He completed a two-year mission to Finland and paid tithing from age eight until his early fifties.¹³ In 2019, he resigned from the Church after reading independent sources concerning Church history.¹⁴

Leanne Harris was also a lifelong member of the Church.¹⁵ Personal tragedies in her life, including the untimely deaths of her son and oldest sister, led her to "double down" on her commitment to the Church.¹⁶ Harris also discovered alleged misrepresentations concerning Church history, doctrine, and tithing payments in 2019, revelations she pleads "almost destroyed her."¹⁷ She alleges she would not have donated tithing or dedicated herself to the Church had she been aware of the misrepresentations she discovered.¹⁸

II. Gaddy's Original Complaint

On August 5, 2019, Gaddy—then proceeding as the sole-named Plaintiff—filed this putative class action lawsuit against the Church.¹⁹ Her original Complaint centered on the theory that the Church intentionally misrepresents its history and founding to induce membership.²⁰ Gaddy compared the Church's "false official narrative" of several foundational events with what she alleged are the "historically accurate" accounts.²¹ Gaddy primarily focused on three of the Church's core teachings, alleging each was deliberately misrepresented: (1) a spiritual event when the founding prophet Joseph Smith saw God and Jesus Christ (known as the First Vision); (2) the origins of one of the Church's foundational books of scripture, the Book of Mormon; and (3) the translation of another canonical text known as the Book of Abraham.²²

Based on these alleged misrepresentations, Gaddy brought six causes of action on behalf of herself and others similarly situated: (1) common law fraud, (2) fraudulent inducement, (3) fraudulent concealment, (4) civil RICO (18 U.S.C. § 1962(c)), (5) intentional infliction of emotional distress, and (6) breach of fiduciary duty.²³ Gaddy's original civil RICO claim rested on her theory that the Church had engaged in both mail and wire fraud by communicating these false teachings.²⁴ Gaddy's intentional infliction of emotional distress claim was also based on the Church's alleged doctrinal misrepresentations. To support this claim, Gaddy alleged the Church's pattern of "knowingly and repeatedly misrepresenting foundational facts of its organization" was outrageous and intolerable.²⁵ Finally, Gaddy brought a claim for breach of fiduciary duty. She alleged a fiduciary relationship arose between Church leaders and its members for "all matters spiritual," because of the "extraordinary influence" the Church exercised over its members.²⁶ Gaddy maintained the Church breached that duty by failing to "fully disclose the truth" concerning the Church's historical foundation.²⁷

III. The Church's Motion to Dismiss Gaddy's Original Complaint

On August 27, 2019, the Church moved to dismiss Gaddy's original Complaint.²⁸ The Church argued the Free Exercise and Establishment Clauses of the First Amendment (the Religion Clauses) barred Gaddy's claims because each necessarily implicated the Church's fundamental religious doctrines and teachings.²⁹ The Church argued Gaddy's three fraud-based claims—common law fraud, fraudulent inducement, and fraudulent concealment—should be dismissed because adjudicating the claims would require the court to make an impermissible inquiry into the truth or falsity of the Church's religious beliefs.³⁰

Because Gaddy's remaining claims for civil RICO, intentional infliction of emotional distress, and breach of fiduciary duty were also dependent on an inquiry into the truth or falsity of the Church's teachings, the Church argued those claims should similarly be dismissed.³¹

Gaddy opposed the motion, arguing the Religion Clauses did not apply to the claims in her Complaint.³² Gaddy contended her fraud-based claims survived the motion for three reasons. First, she disagreed that her claims challenged the Church's religious beliefs.³³ Instead, she insisted her claims challenged only the facts underlying the Church's beliefs about its founding, not the religious beliefs themselves.³⁴ Gaddy asked the court to distinguish between facts and beliefs, arguing, "[f]acts are susceptible to proof. Beliefs are not; if proven, beliefs become facts."³⁵ Second, Gaddy argued her fraud-based claims survived because the Church's proselytizing constituted conduct rather than belief.³⁶ Third, Gaddy cursorily argued that even if the court could not determine the truth or falsity of the Church's beliefs, it may nevertheless assess whether those beliefs are sincerely held.³⁷

IV. First Order Granting the Church's First Motion to Dismiss

On March 31, 2020, in the First Order, the court granted the Church's motion and dismissed Gaddy's original Complaint without prejudice, concluding the Religion Clauses barred each of Gaddy's claims.³⁸ The Religion Clauses provide in part, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof[.]"³⁹ The court acknowledged "[t]he free exercise of religion means, first and foremost, the right to believe and profess whatever religious doctrine one desires."⁴⁰ To effectuate these rights, "courts have long held that the truth or falsity of religious beliefs are beyond the scope of judicial review."⁴¹ The court's ruling relied upon "the fundamental right of churches to 'decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.'"⁴² This is known as the church autonomy doctrine.

But the court also recognized in the First Order that the church autonomy doctrine "is not without limits."⁴³ Churches may not invoke the doctrine to shield purely secular decisions.⁴⁴ To determine whether the church autonomy doctrine applies in any given instance, courts must decide whether the dispute presented "is an ecclesiastical one about discipline, faith, internal organization, or ecclesiastical rule, custom or law, or whether it is a case in which we should hold religious organizations liable in civil courts for purely secular disputes between third parties and a particular defendant, albeit a religiously affiliated organization."⁴⁵

Applying these principles to Gaddy's original Complaint, the court concluded the Religion Clauses barred each...