Northwest Business Litigation

The Northwest Business Litigation blog is a resource for in-house counsel, business executives, human resource managers and others who monitor litigation and legal issues affecting Northwest businesses. The litigation group of Ater Wynne LLP hosts the blog.  Go to Ater Wynne LLP's Website.

This site is provided for informational purposes only and does not constitute legal advice, nor does it form the basis for an attorney-client relationship.

Oregon Court of Appeals tackles defamation claim against a clergy member

Last week, the Oregon Court of Appeals addressed a First Amendment issue that had been untouched by both the United States Supreme Court and the Oregon courts. In Tubra v. The International Church of the Foursquare Gospel, the Oregon Court of Appeals determined that the First Amendment did not divest a lower court of jurisdiction to consider a defamation claim against a church pastor.

Plaintiff was the interim pastor of Vernonia Foursquare Church.  He was appointed by Pastors Cooke and Swor, the district superintendent and supervisor.  After a permanent pastor was hired for Vernonia and plaintiff was released, Cooke and Swor drafted a letter that Swor read aloud to the Vernonia congregation regarding the circumstances surrounding plaintiff's departure. The letter accused plaintiff of misappropriation of church funds and dishonesty during his tenure as interim pastor.  Plaintiff sued Cooke, Swor and the International Church of the Foursquare Gospel for, among other things, defamation based on the letter.

After a trial on the merits, during which the jury found for plaintiff, the defendants moved for a judgment notwithstanding the verdict, arguing that the First Amendment operated to deprive the court of jurisdiction over the defamation claim.  After a hearing, the trial court agreed and overturned the jury's verdict.

The Court of Appeals reversed, concluding that church pastors are not per se exempt from defamation claims.  The court announced that the same test guiding courts in fraud cases against religious institutions should guide courts dealing with defamation claims against church pastors. Jurisdiction hinges on whether the representation at the heart of the fraud or defamation case is "purely religious as a matter of law."  If so, the First Amendment deprives the court of jurisdiction; if not, the court may hear the case. 

Determining whether a representation is purely religious involves three inquires.  First, is the defendant organization of a religious nature?  Second, does the representation itself relate to the religious beliefs and practices of the organization?  If the answers to these first two inquires are "yes," the First Amendment deprives the court of jurisdiction unless the statements were made for a "wholly secular" purpose.  Some ideas, such as "the nature of a supreme being" and "the value of prayer and worship" must always and in every context be purely religious as a matter of law.  Other ideas, however, can be religious only because the one espousing them is doing so for a religious purpose.

Here, the Court of Appeals determined that the alleged defamatory statements --that plaintiff had misappropriated money and demonstrated a willingness to lie -- did not relate to the religious beliefs and practices of the International Church of the Foursquare Gospel, and as such, were not purely religious as a matter of law. 

It's time to update your leave policies...again

In 2009, there were a myriad of changes to both federal and Oregon laws applicable to leaves of absence.  Employers that haven't done so already should be updating their leave policies to incorporate changes that are now in effect, including:

• Changes to FMLA that provide protected leave for a qualifying exigency or serious ilness or injury incurred or aggravated in the line of duty
• Changes in FMLA forms
• Changes to Oregon's Domestic Violence Leave that require employers to provide "safety accommodations"
• Oregon's enactment of a Military Family Leave law

In addition, BOLI's proposed regulations pertaining to OFLA, Military Family Leave and Domestic Violence Leave are expected to become final in the near future.

We have prepared updated policies and forms that comply with all of the new laws.  Please contact one of our employment lawyers for more information.

Washington domestic partnership law may complicate employee benefits

Washington's domestic partnership law, which went into effect on December 3, 2009, provides that for all purposes, registered domestic partners must be treated the same as married spouses, unless doing so would conflict with state law.  "Registered domestic partners" include same-sex domestic partners, and also opposite-sex domestic partners, provided one of them is at least 62 years old.

For employers, this means that employment-related benefits must be extended to the registered domestic partners of employees on the same basis as spouses -- that is, unless the benefit is governed exclusively by federal law.  FMLA is one such law; ERISA is another.  This means that employers subject to FMLA and the corresponding state leave laws (the Washington Family Leave Act,  state pregnancy disability laws, and state military leave laws) cannot count against an employee's annual FMLA entitlement any leave that is covered by state law but not FMLA.  One such example is leave taken to care for a registered domestic partner or his/her family member with a serious health condition.  A complication resulting from that difference is that employers covered by the FLSA (federal wage and hour law) cannot make deductions for partial-day absences for leave that qualifies under state law but not under FMLA.   

Another area of conflict between state and federal law exists with respect to group health plans.  To the extent group health plans are regulated under state insurance law, which is the case when the plan is funded by insurance, the benefits must be made available to the registered domestic partners of employees on the same terms as they are made available to employees' spouses.  However, self-funded plans are governed exclusively by ERISA, under which there is no requirement to provide benefits to registered domestic partners.

In practice, administering benefits in light of these differences can be complicated.  Questions should be reviewed with employment counsel.

U.S. Supreme Court blocks Ninth Circuit plan to broadcast trials

The "Proposition 8" gay marriage trial in San Francisco won't be broadcast after all, and neither will any other federal trial within the Ninth Circuit, at least for now. 

The U.S. Supreme Court extended its stay of an order allowing the broadcast on the ground that the Ninth Circuit Judicial Council hadn't followed established procedures in adopting a pilot program to allow cameras in federal courtrooms.  In a 5-4 decision, the majority concluded that the pilot program amounted to a change in the local rules without adequate opportunity for public notice and comment, in contravention of federal law.

See our earlier coverage here and here, and other law blog coverage here and here.

Lender beware: Court voids trust indenture with Tribal Corp.

While the economy was humming in January 2008, the economic development agency of the Lac du Flambeau Band of Lake Superior Chippewa Indians sought to build a river boat hotel and casino.  To fund the project, a Tribal corporation issued bonds and entered into a Trust Indenture with Wells Fargo.  Unfortunately, the project has never gotten off the ground and the Tribal corporation now owes principal and interest on the $46,615,000 bond amount.  With the Tribal corporation unable to pay any additional principal and interest, Wells Fargo sued to enforce the Trust Indenture to allow the Court to appoint a receiver upon default.

Yesterday, the U.S. District Court in Wisconsin issued a decision and order in Wells Fargo Bank v. Lake of the Torches Economic Development Corporation, dismissing Wells Fargo's claims and stating the Trust Indenture is void ab initio (from the beginning) because the receivership amounts to a management contract under the Federal Indian Gaming Regulatory Act that should have been, but was not, approved by the National Indian Gaming Commission.  Because the Trust Indenture is void, the waiver of the Tribal corporation's immunity from suit contained within the agreement was also void.

This case could have a chilling effect on financing practices within Indian Country, despite the Tribe's stated intention to negotiate a solution.  At first blush, the Court's decision leaves banks and bondholders at the mercy of tribal businesses when projects fail to thrive economically.  But, upon closer inspection, the error here occurred in 2008 when Wells Fargo entered into the Trust Indenture for the Casino project without considering its implications under Federal Indian gaming laws.  Tribes and lenders must take care when structuring business arrangements to ensure that the agreed remedy upon default will not violate some other applicable Federal law. 

Broadcasting of federal court trials hits a snag

The Ninth Circuit's plan to allow broadcasting of non-jury civil trials was curtailed today when the U.S. Supreme Court temporarily blocked an order to stream video of the California gay marriage trial both live to courthouses across the country, and on a delayed basis on You Tube.  Shortly before the start of trial in San Francisco on the constitutionality of the state's gay marriage ban, the Supreme Court ordered that the broadcast must be limited to rooms within the court house, and barred posting on You Tube.

The Supreme Court's order is in effect until Wednesday and is subject to "further consideration" by the Court.

See further coverage of the order here and here.  See our earlier post on the Ninth Circuit's experimental program to broadcast trials here.