Labor & Employment Law Daily Ministerial exception bars fired pastor’s breach of contract claim
Friday, September 7, 2018

Ministerial exception bars fired pastor’s breach of contract claim

By Kathleen Kapusta, J.D.

In a dispute between a church and its former pastor over whether he was properly terminated pursuant to his employment contract, the Third Circuit found that assessing his role, if any, in causing a decrease in giving and membership required a determination of what constitutes adequate spiritual leadership and how that translates into donations and attendance, questions that would impermissibly entangle it in religious governance and doctrine prohibited by the Establishment Clause. Granting summary judgment to the church on the pastor’s breach of contract claim, the court further explained that parsing the precise reasons for his termination “is akin to determining whether a church’s religious-based reason for discharging a church leader is mere pretext, an inquiry the Supreme Court has explicitly forbidden by the First Amendment’s ministerial exception” (Lee v. Sixth Mount Zion Baptist Church of Pittsburgh dba Sixth Mount Zion Missionary Baptist Church, September 5, 2018, Shwartz, P.).

Employment agreement. Three months after the church voted unanimously to accept the reverend as its pastor, the parties executed an employment contract providing that he would serve in that role for 20 years, subject to for-cause early termination for a serious moral or criminal offense. The agreement also allowed either party to terminate upon a “material breach” and specified that the enumerated rights of termination existed in addition to “any other rights of termination allowed . . . by law.” Further, the pastor agreed to “abide by the employment policies and procedures existing or established by the Church from time to time.” This provision, which was a “material term” of the agreement, incorporated the church’s constitution and bylaws. Finally, the agreement required the pastor to “lead the pastoral ministries of the Church and . . . work with the Deacons and Church staff in achieving the Church’s mission of proclaiming the Gospel to believers and unbelievers.”

Terminated. During a meeting at which the congregation approved the agreement, the pastor acknowledged that his failure to perform his job would constitute cause for termination. Less than two years later, the congregation voted to terminate his employment based on his failures in financial and spiritual stewardship and his refusal to respond to church leaders. Specifically, church leaders reported that under his leadership, there was a 39 percent decline in tithes and offerings, a 32 percent drop in Sunday morning worship attendance, a 61 percent decrease in registered members, a doubling of church expenditures, and a decline in the quality of the church’s community outreach.

Lower court proceedings. The pastor then sued the church and its deacons for breach of contract, seeking over $2 million in damages but the district court dismissed his claims against the individual deacons, who were not parties to the agreement. Although the pastor moved for summary judgment, the court, finding that the matter could not proceed due to the ministerial exception, which restricts government involvement in religious affairs, denied his motion and entered judgment in favor of the church.

Procedurally sound. On appeal, the Third Circuit first noted that the district court granted summary judgment to the church, a non-moving party, after giving notice to the parties that it was considering the applicability of the ministerial exception and receiving supplemental briefing regarding “whether and to what extent the . . . exception . . . affects further adjudication of this matter.” Observing that the lower court also specifically referenced Rule 56(f), which allows courts to grant judgment to a non-moving party or grant judgment on grounds not raised by a party, the appeals court found that the pastor received adequate notice and opportunity to present all relevant arguments and evidence concerning the ministerial exception and thus the district court’s order granting summary judgment to the church was procedurally sound.

Ministerial exception. Turning to the pastor’s assertion that the ministerial exception did not apply to his breach of contract claim, the appeals court noted that in Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, the Supreme Court recognized, based on the First Amendment’s Establishment and Free Exercise Clauses, a “ministerial exception” that “bar[s] the government from interfering with the decision of a religious group to fire one of its ministers.” Hosanna-Tabor, however, involved a statutorily based employment discrimination suit, observed the Third Circuit, noting that the Supreme Court explicitly declined to state whether the exception “bars other types of suits, including actions by employees alleging breach of contract . . . by their religious employers.”

Material breach. The parties here disputed whether the pastor was properly terminated under the employment agreement, which provided for termination by either party upon a material breach. The pastor materially breached the agreement, the church contended, by failing to provide adequate spiritual leadership, as reflected in decreased church contributions and attendance during his tenure. According to the pastor, however, the issue was whether the attendance and financial problems were his fault. While the amount of church contributions and members was a matter of arithmetic, assessing his role in the decreased giving and membership required determining what constitutes adequate spiritual leadership and how that translates into donation and attendance, which said the court would impermissibly entangle it in religious governance and doctrine prohibited by the Establishment Clause. Further, an inquiry into whether the church’s proffered reason for discharging him was pretextual would intrude on internal church governance, require consideration of church doctrine, constitute entanglement prohibited under the ministerial exception, and violate the Establishment Clause.

Not only has its sister circuits repeatedly dismissed breach of contract claims asserted by terminated religious leaders against their religious institution employers based on the ministerial exception, the court observed that it was unaware of any court that has ruled on the merits (i.e., not applied the ministerial exception) of a breach of contract claim alleging wrongful termination of a religious leader by a religious institution. Instead, said the court, there have only been cases allowing a discharged plaintiff the opportunity to proceed beyond the pleading stage and attempt to show with discovery that resolution of his or her claim would not entangle courts in internal religious doctrine and governance. Here, however, discovery was complete, the parties did not dispute the existence of a contract, and the record showed that further inquiry into the church’s reasons for terminating the pastor would inappropriately intrude on internal church doctrine and governance concerning a pastor’s fulfillment of his duties, said the court, affirming the judgment of the court below.

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