Cardinal Timothy Dolan allegedly transferred
church funds into a separate trust in order to protect them from clergy abuse
lawsuits
A federal judge in
Wisconsin handed down an opinion yesterday granting the Catholic Church — and
indeed, potentially all religious institutions — such sweeping immunity from
federal bankruptcy law that it is not clear that it would permit
any plaintiff to successfully sue any church in any court. While the
ostensible issue in this case is whether over $50 million in church funds are
shielded from a bankruptcy proceeding triggered largely by a flood of clerical
sex abuse claims against the Archdiocese of Milwaukee, Judge Rudolph Randa
reads the church’s constitutional and legal right to religious liberty so
broadly as to render religious institutions immune from much of the law.
The case involves
approximately $57 million that former Milwaukee Archbishop Timothy Dolan
transferred from the archdiocese’s general accounts to into a separate trust
set up to maintain the church’s cemeteries. Although Dolan, who is now a cardinal, the Archbishop of New
York and the President of the United States Conference of Catholic Bishops,
has denied that the purpose of this transfer was to shield the funds from
lawsuits, Dolan penned a letter to the Vatican in 2007 where he explained that
transferring the funds into the trust would lead to “an improved protection of these
funds from any legal claim and liability.”
The issue facing the court
is, essentially, whether the funds that Dolan split off into a separate trust
can now be reabsorbed into the archdiocese’s assets in order to enable sex
abuse victims and other creditors to be paid out of these assets. In holding
that these funds cannot be so absorbed, Randa relies on a law that limits the
federal government’s ability to “substantially burden a person’s
exercise of religion,” Randa cites to the current Archbishop of
Milwaukee’s statement that “the care and maintenance of Catholic cemeteries,
cemetery property, and the remains of those interred is a fundamental exercise
of the Catholic faith,” and concludes that this statement alone is enough to
shield the church’s funds. As Randa explains, “if the Trust’s funds are
converted into the bankruptcy estate, there will be no funds or, at best,
insufficient funds for the perpetual care of the Milwaukee Catholic Cemeteries.”
And Randa does not stop
there. He goes on to argue that senior church officials get to unilaterally
decide what constitutes a “substantial burden” on their faith for purposes of
federal law — “Archbishop Listecki’s declaration stands unopposed, and on the
issue of religious doctrine, it is unassailable. Moreover, the issue of
substantial burden is essentially coterminous with religious doctrine.” In this
case, an archbishop declared cemetery funds to be untouchable in a bankruptcy
proceeding, but Randa’s reasoning could extend much farther. Nothing in his
opinion would prevent a church’s officials from declaring that every single
line in every single ledger kept by the church is mandated by the sacred word
of God — and therefore every single dollar owned by the church is untouchable
so long as the church engages in the kind of accounting gymnastics Dolan
allegedly performed.
The same federal law that
protects religious liberty also permits substantial burdens on religion when
such a burden is “in furtherance of a compelling governmental interest and is
the least restrictive means of furthering that interest.” Randa largely glosses
over this exception, however, holding that the “interests advanced by the
bankruptcy system are not compelling.” That very well be true, but there is
another, overriding interest in this case — whether an employer whose employees
stand accused of widespread sexual abuse can evade accountability by engaging
in accounting tricks. At least 45 Milwaukee priests face sex
abuse accusations. One priest in particular was accused of
personally molesting close to 200 deaf
boys. Yet Randa does not even consider whether America has a
compelling interest in deterring the church from allowing future such incidents
to occur.
If Randa had stopped there,
his opinion would still award the church — and, indeed, potentially all
religious institutions — a breathtaking degree of legal immunity. Taken to its
logical conclusion, Randa’s framework would allow a church to run up whatever
debts it chooses, then effectively protect the entirety of its assets from its
creditors through a combination of creative accounting and a bankruptcy filing.
Yet Randa does not even stop there. After reaching this sweeping interpretation
of federal religious liberty law, he then turns to the First Amendment of the
Constitution. With little analysis, and in an almost certain conflict with a
binding Supreme Court precedent, Randa concludes that the church has
a constitutional right to shield its funds. By raising his opinion to
constitutional status, Randa effectively strips Congress of its ability to
correct his sweeping interpretation of the law.
Judge Randa, a George H.W.
Bush appointee, has a history of being reversed by higher courts in cases involving hot button social issues, so there is a good
chance that his opinion will ultimately be reversed on appeal. In the meantime,
however, Randa effectively places the church above the law — and leaves what
could be hundreds of sexual abuse victims in the cold.
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