A rapid-fire dissection by 11 federal judges appeared to raise new doubts and challenges for James Huntsman’s fraud lawsuit against The Church of Jesus Christ of Latter-day Saints over its use of tithing.
Members of the 9th U.S. Circuit Court of Appeals in San Francisco repeatedly interrupted lawyers on both sides during an hourlong hearing Wednesday, pointing out multiple hurdles to any legal examination of the prominent Utahn’s assertions that church leaders lied over spending on City Creek Center and misled him into donating.
Church lawyer Paul Clement, a former U.S. solicitor general, argued that top leaders of the Utah-based faith never misrepresented how they paid $1.4 billion toward the luxury mall in downtown Salt Lake City and that the legal doctrine of church autonomy puts most of the contested issues in the case off-limits to court review.
Indeed, going from statements by several judges who spoke up Wednesday, Huntsman’s bid to have his case resuscitated and referred for a trial faces major obstacles.
Even parsing basic terminology in the lawsuit such as the word “tithing” or reviewing what might have been meant in reassuring statements from the pulpit by former church President Gordon B. Hinckley, all seemed likely, the judges said, to run smack-dab into the U.S. Constitution.
Some of the appellate judges also raised new questions about whether Huntsman — a son of the late philanthropist and influential church patron Jon Huntsman Sr. — was legally domiciled in California when he filed his initial suit there.
It’s unclear when the judges might rule on James Huntsman’s bid to revive his 2021 lawsuit to recover millions of dollars in donations and send it back to U.S. District Court in Los Angeles for a jury trial. But the legal road ahead for the case — and others taking legal issue with Latter-day Saint tithing — looks a lot bumpier now than before Wednesday’s hearing.
‘Secular’ vs. religious
In an emblematic set of exchanges, Huntsman’s lawyer, David Jonelis, could barely get his initial legal points out before judges drilled down. He began arguments in favor of a trial by quoting lyrics from the Beatles song “Let It Be” — noting that while the words “Mother Mary comes to me” have religious connotations, Sir Paul McCartney wrote them about his own mom.
“It’s secular,” Jonelis said of the lyrics. “And the same is true of the word ‘tithing,’ your honors. In many cases, that word would invoke religion. But here, in this narrow case, the implications are no more religious than the song.”
Judge Milan D. Smith Jr. cut off Jonelis there, followed by a barrage of similar moves from other judges.
“How can you say that?” Smith demanded, before citing a list of contradictory rulings. “To my understanding, tithing — unlike your Mother Mary example — is a quintessential religious issue. In fact, I don’t know of any use of the term tithing that is not religious in context. What am I missing?”
Jonelis countered with case law supporting that “it doesn’t matter that the concept of donation may be cloaked in religion. That’s not a way to get away from fraud.”
The Los Angeles attorney then called Huntsman’s suit to recover up to $5 million of his tithing plus interest and penalties “a simple fraud case for which the First Amendment provides no sanctuary.”
“And, frankly,” Jonelis said, “that’s why every single judge that’s looked at this case so far has reached the same conclusion with respect to the First Amendment, even where they may have staunchly disagreed on other issues.”
Huntsman, who resigned his church membership in 2020, saw his initial complaint get thrown out in September 2021 by U.S. District Court Judge Stephen Wilson. A split decision by a three-judge panel of the 9th Circuit later reinstated it. That ruling, in turn, remains vacated by the full 9th Circuit after it granted a review and convened Wednesday’s oral arguments.
‘Deeply entwined’ in faith
Appellate Judge Daniel Bress also abruptly paused Jonelis’ arguments at another point Wednesday, noting that faithful church members pay tithes as a required religious commandment. “How can a church have a secular definition of a religious obligation?” Bress asked. “I don’t understand how that could be.”
“It’s not about the reasons for giving tithing in general,” Jonelis replied. “It’s the reasons for giving the tithing in this particular instance.”
Judge Jacqueline Nguyen interjected that she was “really struggling to understand how this case would be tried without really delving into not only the church’s view of what its doctrines dictate, but Mr. Huntsman’s own understanding of tithing and how tithing donations would be utilized.”
“I just don’t see,” she said, “how this case could be tried as narrowly as you’re contemplating.”
Again, as Jonelis sought to explain a secular path for the case, Judge Gabriel Sanchez, interrupted with concerns over a critical statement at issue from Hinckley — that no tithing was to be used for City Creek Center — issued in the religious setting of the faith’s 2003 General Conference.
The church leader assured members that tithing funds “have not and will not be used” for the project, stating that the money came from “commercial entities owned by the church” and “earnings of invested reserve funds.”
“Isn’t there a concern,” Sanchez probed, “if you’re asking courts to start parsing these speeches, whether it’s going to chill something within religious doctrine or internal church governance, that a church leader might have to run a speech by legal before he can deliver a sermon?”
Judge Patrick J. Bumatay challenged how a court could even decide who was fully authorized to speak on behalf of the worldwide faith of 17.2 million members.
“How is that not deeply entwined with religious matters?” Bumatay asked.
Tithing ‘refund claim’
(Chris Samuels | The Salt Lake Tribune) James Huntsman, shown in 2023, is accusing Latter-day Saint leaders of misrepresenting how tithing funds were spent.
Clement, lead attorney for the church, used the analogy of buckets several times in explaining statements by Latter-day Saint leaders assuring members that how tithing would not be used for the shopping center.
“There’s no misrepresentation,” he told the 9th Circuit panel. “The leader of the church explained that financing for a particular project would come from two buckets of church money, and not from a third — and that is exactly what happens.”
He sought to contradict affidavits from an IRS whistleblower that tithing and investment earnings were commingled at the church’s investment firm, Ensign Peak Advisors, saying that instead “there was very careful record-keeping. They were not commingled for accounting purposes.”
“What the record here reflects, in an irrefutable way, is that the funds for this project that started out with $1.2 billion on January 1, 2004, then were segregated from all other funds,” Clement said. “That $1.2 billion came from earnings on investment concerns exclusively.”
Huntsman’s “refund claim” on his tithing, Clement added, is also barred from judicial review under church autonomy enshrined in the First Amendment.
“This case ultimately boils down to the question,” he said, “of what a church leader meant and what a church member understood when the former talked about tithing funds, in contradistinction to earnings on invested reserve funds.”
Later, Nguyen and other judges challenged Clement on why the faith had argued its side of the case at the district court level “first and foremost” on questions of financial facts, as opposed to invoking the shield of church autonomy from the get-go.
In that light — and taking at face value statements by whistleblower David Nielsen, a former investment manager with Ensign Peak, that tithing was commingled with other church money — Nguyen asked “why doesn’t that create a triable issue of fact for the jury?”
Clement responded that the church took that approach in rebutting what it saw as empty claims because it “essentially wanted to clear its name.”
“It’s a challenge for a church,” Clement said, “when they feel they are falsely accused of fraud in the context of the church leader speaking to the flock.”
Jonelis later called the church’s sequence of legal strategies in the case “strange.”
“The First Amendment,” he said, “is really the fallback argument here.”
“The church went ahead and put its financials on the table and characterized them a certain way,” Jonelis added about early stages of the case. When Huntsman sought to contradict those financial assertions — saying tithing was used for City Creek — “all of a sudden the church said, ‘Oh, this is a constitutional First Amendment issue, upfront and center.’”
Ultimately getting to the bottom of those financial disputes, Jonelis said, argues strongly in favor of returning the case for a trial and further discovery of evidence.
“It’s simple math,” he said. “Let’s count up what’s in this pile. Let’s count up what in that pile — and let’s see if that’s consistent with what we submit was a secular statement by President Hinckley about what pile was used.”
California vs. Utah
On top of these fractious issues, Huntsman’s case faces a new and last-minute dispute over whether the 9th Circuit, which encompasses California but not Utah, is the correct place for his appeal to be heard.
Although the question had not been raised by lawyers on either side until Wednesday, Judge Nguyen noted at one point that Huntsman’s California business — a film distribution company called Blue Fox Entertainment — listed his personal address in Utah.
“He obviously has the ability to have homes in a lot of different places,” Nguyen said, but she questioned why the issue hadn’t been triggered earlier in the case. “We would have benefited from findings by the district court, but neither party really raised this issue below.”
Jonelis said Huntsman moved his family to California in October 2020 to be closer to his business, whose offices are located in the Golden State — and that there was no indication at the time he “had any intention to be anywhere else.”
Huntsman, who has since relocated to Utah, stated that he “wanted to be closer to the ocean, his lawyer said.
Attorneys consulted by Huntsman before he filed the case have confirmed that they advised him California courts might be more receptive to his tithing lawsuit.
Nguyen said case law argued in favor of presuming his “established domicile” was in Utah. That question, in turn, spurs the prospect that the case should have been sent to a Utah court instead of Los Angeles, where it was originally filed.
Clement, the church’s lawyer, acknowledged that his side had also never brought up the issue of Huntsman’s residence before in legal proceedings. “We did not think we had a good-faith basis to question it,” he said.
“I would say maybe that’s another reason why the church autonomy doctrine should apply,” Clement added. “You know, it puts a church in a weird position where it has to call its former member a liar.”
