Civil Action No. 3:00-CV-2547-D
February 15, 2002
FINDINGS AND RECOMMENDATION
By Order of Reference dated January 28, 2002, the United States District Court referred Defendants' Donald George Kenneth Ming and the Council of Bishops' Motion to Dismiss, filed January 16, 2002, to the undersigned Magistrate Judge.
Factual and Procedural Background
Plaintiff Reverend Albert Dunn, an ordained Itinerant Elder of the African Methodist Episcopal Church ("AME Church"), filed this action against The Board of Incorporators of the AME Chruch; Bishop Donald George Kenneth Ming, Chairman; The Council of Bishops and Bishop John Richard Bryant. The plaintiff alleges civil RICO violations, as well as a state law diversity jurisdiction claim for breach of contract.
This lawsuit arises from an alleged scheme to fraudulently collect funds from church members, perpetrated by certain of the bishops of the AME Church, called the "pre-offering." This program was implemented by Defendant Bishop Bryant at AME Churches in the Tenth Episcopal District (the plaintiffs home district) for ten years. The plaintiff alleges that the funds collected by the pre-offering were diverted to maintain a lavish lifestyle for Defendant Bishop Bryant. The plaintiff further alleges that Bishop Ming and the Council of Bishops have knowingly allowed this fraudulent activity to continue in the AME Church.
For RICO purposes, the plaintiff alleges that the AME Church constitutes an enterprise affecting interstate commerce through activities associated with the Defendant's National Publishing House, which circulates books and literary materials for sale throughout the country and abroad. The plaintiff alleges that the enterprise has committed mail fraud, wire fraud, and money laundering.
The plaintiff has not been assigned a Church appointment in the five years since he has filed suit, which he believes is due to his disapproval of and opposition to the pre-offering program.
In stating his state law claim for breach of contract, the plaintiff argues that the failure of the AME Church (with Bishop Ming and the Council of Bishops acting together with Bishop Bryant and the Board of Incorporators to effect such failure) to assign the plaintiff to a church is in retaliation for having filed suit, and that such behavior directly violates Church law and the "Minister's Bill of Rights," which guarantees an Itinerant Minister's salary, a parsonage, notice of chance, privacy, acknowledgment by Bishops of Certificates of Transfer, and a retirement and pension plan.
The District Court previously adopted the United States Magistrate Judge's recommendation that Plaintiff's claims against the Board of Incorporators of the African Methodist Episcopal Church be dismissed for lack of standing as to the Civil RICO claims alleged, and that Plaintiff's breach of contract claims be dismissed in light of existing First Amendment protections precluding investigation of church policies and practices.
Standard of Review
A motion to dismiss for failure to state a claim under FED. R. Civ. P. 12(b)(6) is viewed with disfavor and is rarely granted. Lowrey v. Texas AM Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). A district court cannot dismiss a complaint, or any part of it, for failure to state a claim upon which relief can be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of her claim which would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the face of the pleadings. Baker, 75 F.3d at 196; Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000). The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid cause of action when it is viewed in the light most favorable to the plaintiff and with every doubt resolved in favor of the plaintiff. Lowrey, 117 F.3d at 247. A plaintiff, however, must plead specific facts, not mere conclusory allegations, to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992).
Dismissal is warranted if a plaintiff has (1) been given the opportunity to plead his best case, (2) made specific and detailed allegations constituting his best case, and (3) still fails to state a claim. See Jacquez v. Procunier, 801 F.2d 789, 792-93 (5th Cir. 1986) (recognizing that dismissal is required if a plaintiff has had fair opportunity to make her case, but has failed); Morrison v. City of Baton Rouge, 761 F.2d 242, 246 (5th Cir. 1985) (assuming that the specific allegations of the amended complaint constitute the plaintiffs best case).
I. The Civil RICO Claim
To state a valid civil RICO claim under 18 U.S.C. § 1962, a plaintiff must allege: (1) the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Elliot v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989). As a preliminary matter, however, a plaintiff must establish that he has standing to sue. "The standing provision of civil RICO provides that `[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor . . . and shall recover threefold the damages he sustains.'" In re Taxable Mun. Bond Sec. Litig. v. Kutak, 51 F.3d 518, 521 (5th Cir. 1995) (quoting 18 U.S.C. § 1964 (c)). Thus, a RICO plaintiff must satisfy two elements; (1) injury and (2) causation. Price v. Pinnacle Brands, 138 F.3d 602, 606 (5th Cir. 1998). The provisions in the statute limiting standing to a person "injured in his business or property" has a "restrictive significance," Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 2331, 60 L.Ed.2d 931 (1979), which helps to assure that RICO is not expanded to provide "a federal cause of action and treble damages to every tort plaintiff." Steele v. Hospital Corp. of Am., 36 F.3d 69, 70 (9th Cir. 1994) (quoting Oscar v. University Students Co-op Ass'n, 965 F.2d 783, 786 (9th Cir.) ( en banc), cert. denied, 506 U.S. 1020, 113 S.Ct. 655, 121 L.Ed.2d 581 (1992)). For RICO standing, plaintiffs must prove a "concrete financial loss," an actual loss "of their own money," and "not mere `injury to a valuable intangible property interest.'" In re Taxable Mun. Bond Sec. Litig., 51 F.3d at 523 (quoting Steele v. Hospital Corp. of Am., 36 F.3d 69, 70 (9th Cir. 1994)). Lost opportunity by itself does not constitute an injury that confers standing to bring a RICO cause of action. In re Taxable Mun. Bond Sec. Litig., 51 F.3d at 523. Moreover, the only compensable injury is that which is proximately caused by the predicate acts committed by the enterprise. Sedima S.P.R.L. v. Imrex Co., et al., 473 U.S. 479, 496, 105 S.Ct.3275, 87 L.Ed.2d 346 (1985). Therefore, so-called "whistle-blowers," or those who suffer an adverse employment action after reporting alleged RICO violations do not have standing to sue under RICO for the injury caused by their firing or constructive discharge, since the causal nexus between the predicate acts and the employer's decision to take action against the whistle-blowing employee is too tenuous. See Cullom v. Hibernia National Bank, 859 F.2d 1211, 1214-16 (5th Cir. 1988) (citing Pujol v. Shearson/Am. Express, Inc., 829 F.2d 1201 (1St Cir. 1987); Nodine v. Textron, Inc., 819 F.2d 347 (1St Cir. 1987); Morast v. Lance, 807 F.2d 926 (11th Cir. 1987)).
It is well-settled law in the Fifth Circuit that individuals who are fired or have suffered a constructive discharge as a result of reporting RICO violations do not have standing to sue their employers under RICO. Cullom v. Hibernia National Bank, 859 F.2d at 1214-15. Therefore, it follows that individuals alleging injuries relevant to their employment situation that are less egregious than a firing or constructive discharge, as is true of the plaintiff in this case, also lack standing to sue under RICO.
In the instant case, the plaintiff alleges inter alia that his "pastoral career has been destroyed as a result of Defendant's actions," that he has "lost Pastoral income past, present, and future as a result of Defendant's actions," and that he has suffered mental anguish and damage to his reputation. Plaintiff's Third Amended Complaint, p. 10. The plaintiffs allegations that the Defendant Bishop Ming and the Council of Bishops have failed to promote him, appoint him to a specific church, or provide him with housing and other similar employment-related guarantees and privileges listed in the "Minister's Bill of Rights" and/or the "AME Discipline" do not entitle him to RICO standing, as these allegations fall within the scope of the restrictions placed on RICO standing in the context of adverse employment actions as articulated in Cullom, 859 F.2d at 1214-16.
In Cullom, the Fifth Circuit Court of Appeals cited with approval several cases arising out of other circuits that are closely analogous to the facts present here. One analogous case is Pujol v. Shearson/Am. Express, Inc., 829 F.2d 1201 (1St Cir. 1987). In that case, the plaintiff-appellant, Mr. Pujol, alleged that his employer had committed several illegal predicate acts in violation of the RICO statute. However, the First Circuit concluded that the plaintiffs allegations that he was fired, slandered, and otherwise injured because of the actions he took to report and stop the illegal schemes were not proximately caused by the predicate acts allegedly committed by his employer, which included securities fraud, mail fraud, and wire fraud. Id. at 1205.
Similarly, in Nodine v. Textron, Inc., 819 F.2d 347, the First Circuit concluded that the plaintiff did not have standing to sue under RICO. In that case, the plaintiff reported and voiced his disapproval of alleged illegal predicate acts that were being committed by his employer. The Court opined that Nodine's "injury resulted from Textron's decision to fire him after he reported the customs scheme to his superiors," and was not proximately caused by the alleged predicate acts. Id. at 349.
Thus, the focus of the inquiry as to whether the plaintiff has standing to sue under RICO centers around whether the predicate acts allegedly committed by the defendant are the proximate cause of the plaintiff's tangible loss, which does not appear to include employers' decisionmaking processes.
As to the instant case, the plaintiff is alleging that the adverse employment actions he suffered were a direct result of his whistle-blowing activities, just as the plaintiffs in Nodine and Pujol. The plaintiffs RICO claims based on his employment status simply cannot stand. The causal nexus between the alleged predicate acts and an employer's decisionmaking process is too tenuous to warrant standing in instances such as this. Cullom v. Hibernia National Bank, 859 F.2d at 12 14-16; Pujol v. Shearson/Am. Express, Inc., 829 F.2d 1201; Nodine v. Textron, Inc., 819 F.2d 347; Morast v. Lance, 807 F.2d 926; see also Sedima S.P.R.L. v. Imrex Co., et al., 473 U.S. at 496. It may in fact be true, as alleged, that Reverend Dunn has suffered in his career due to the improper motivations of the defendants. He does not, however, have standing to sue for losses related to his employment under RICO, and any such claims must be brought in accordance with other relevant state or federal laws.
Next, the plaintiff alleges that as an individual member of the AME Church, he has suffered damages to the extent that the alleged diverted funds acquired as a result of the "pre-offering" program could have been used to fund the various ministries, programs, colleges, or other goals and functions of the AME Church.
As mentioned supra, in order to qualify for RICO standing, the plaintiff is required to demonstrate that he has suffered a "loss to his business or property." In re Taxable Mun. Bond Sec. Litig., 51 F.3d at 521. That loss must be an actual "concrete financial loss of the plaintiffs own money." Id. at 523. The loss cited cannot be a mere "injury to a valuable intangible property interest," such as the one cited here. Id.
The plaintiff has not alleged that he has suffered concrete, tangible financial losses, such as those in the form of donations that he personally made to pre-offering program instituted by the AME Church. Instead, he merely alleges indirect, intangible injury in his abstract suggestion that the diverted funds could have been used in a more beneficial manner. Reverend Dunn has had ample opportunity to illustrate any concrete personal financial losses in the submissions of his First, Second, and Third Amended Complaints. With the exception of the above-mentioned allegations regarding adverse employment decisions made by the AME Church and its officials, which is a matter that must be pursued in other areas of the law, Mr. Dunn has failed to provide this Court with any valid indication of tangible financial loss.
II. The Breach of Contract Claim
The Free Exercise Clause of the First Amendment prohibits civil court inquiries into decisions made by religious organizations concerning the employment status of ministers. See McClure v. Salvation Army, 460 F.2d 553, 560-561 (5th Cir. 1972). The "ministerial exception" to Title VII applies to all employees of a religious institution, whether ordained or not, whose primary functions serve its spiritual and pastoral mission. Starkman v. Evans, 198 F.3d 173, 175 (5th Cir. 1999). In determining who qualifies as a minister, the Court considers several factors. Id. First, the Court must consider whether employment decisions regarding the position at issue are made "largely on religious criteria." Id. The second consideration is whether the plaintiff was qualified and authorized to perform the ceremonies of the Church. Id. Third, and probably most important, is whether the individual "engaged in activities traditionally considered ecclesiastical or religious." Id. A similar analysis has been employed in cases in which the individual asserts breach of contract claims against the church. United States Methodist Church v. White, 571 A.2d 790, 796 (D.C. Cir. 1990). A civil court's inquiry into a breach of contract claim is forbidden if that claim would require "more than simply the secular questions of whether such promises were made by [the church]." Id.
Here, the plaintiff qualifies as a "minister" in accordance with the definition cited in Starkman, 198 F.3d at 175. By his own admission, he has been an ordained Itinerant Elder since 1958, and has cited damage to his "pastoral career" as one of the grounds for suit. Plaintiff's Third Amended Complaint, p. 5. Moreover, the plaintiff references the Minister's Bill of Rights, the alleged guarantees of which include an Itinerant Minister's salary and a parsonage, two benefits that are generally conferred upon those whose activities are considered ecclesiastical or religious. Id at 6. Therefore, Reverend Dunn can be considered a "minister" for purposes of this lawsuit.
Much like the White case, a determination as to breach of a contract affecting Reverend Dunn's employment benefits would involve more than secular questions of whether certain promises were made to Reverend Dunn. United States Methodist Church v. White, 571 A.2d at 796. Reverend Dunn's complaint links the circumstances of his contractual rights and alleged breach to the circumstances surrounding his ecclesiastical status and/or endorsement by the Church, as well as the policies and practices of the AME Church. In investigating Reverend Dunn's breach of contract claim, the Court would have to inquire as to the Church's motivations (be they secular or religious) for failing to provide the plaintiff with the benefits conferred by the Minister's Bill of Rights, an instrument of AME Church law. Such an inquiry would involve delving into church policy and perhaps religious doctrine or practices; areas in which courts have traditionally refused to tread. See Combs v. Central Texas Annual Conference of United Methodist Church, 173 F.3d 343, 346 (5th Cir. 1999); McClure v. Salvation Army, 460 F.2d at 558-559 (matters such as a minister's salary, his place of assignment and his duty are matters of church administration and government, and are beyond the purview of civil authorities).
Reverend Dunn's claim inherently involves matters of church governance, and is not a purely secular matter. See, e.g., Hafner v. Lutheran Church-Missouri Synod, 616 F. Supp. 735, 739 (N.D.Ind. 1985); McClure v. Salvation army, 460 F.2d at 559; Dowd v. Society of St. Columbans, 861 F.2d 761, 764 (1st Cir. 1988). Therefore, in the absence of church invocation of the civil courts, resolution of such disputes is properly left to church officials. White, 571 A.2d at 796.
Even when viewed in the light most favorable to the plaintiff, Reverend Dunn's complaint does not appear to state a valid cause of action. Lowrey, 117 F.3d at 247. As to the civil RICO claim, the plaintiff has failed to plead specific facts, and has instead supplied the Court with mere conclusory allegations as to the injuries he has sustained as a result of the defendant's alleged fraudulent behavior. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992). The First Amendment prevents this Court from conducting an inquiry into the policies and practices of the AME Church based on the facts of this case and issues relating to Reverend Dunn's employment and/or ecclesiastical status with the AME Church. Therefore, this Court recommends that the defendants' Motion to Dismiss be GRANTED.