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LSU-3 Case Moves Forward in Riverside Court

Riverside County Superior Court Judge Ronald L. Taylor presided over preliminary hearings involving three La Sierra University employees who have filed suit for wrongful termination. The plantiffs, Dr. James Beach, Dr. Gary Bradley, and Dr. Jeffry Kaatz appeared in the Riverside County Superior Court in Downtown Riverside Monday, December 5, and again on Friday, December 9, with their counsel, Richard McCune of the McCuneWright law firm. Michael W. Connally of the firm Lewis Brisbois Bisgaard & Smith represented defendants La Sierra University, Pacific Union Conference Corporation of Seventh-day Adventists, North American Division of Seventh-day Adventists and the Church of Seventh-day Adventists, and John Daggett of Hiroshima Jacobs Roth & Lewis represented defendant Ricardo Graham, the president of the Pacific Union Conference.

The hearings would determine whether there were sufficient causes of action for the case, Kaatz vs. Graham et al., to proceed. Judge Taylor heard several demurrers to the plaintiffs’ complaints and several motions to strike. For a full breakdown of the demurrers, motions and responses thus far, see A Primer on the LSU-3 Lawsuit.

Hearings began Monday morning in Department 6 of the Riverside County Superior Courthouse. (Click here for the court transcript of Monday’s hearing) With several other smaller hearings on the judge’s docket Monday, the comparatively lengthy Kaatz vs. Graham hearing was pushed to the last slot of the morning. Taylor began by taking up La Sierra’s demurrers and motion to strike, offering his indicated (preliminary, non-binding) sentence.

Taylor addressed the issue of the “ministerial exception,” a rule grounded in the First Amendment that has developed over the last 40 years exempting religious organizations from complying with neutral, generally applicable laws in some circumstances. The judge noted that when employees serve a secular function, the ministerial exception does not apply. Furthermore, he stated that in the plaintiffs’ complaint, there was nothing to suggest that the plaintiffs’ criticism of La Sierra in the complaint would burden the defendants’ beliefs for pleading purposes, and on that basis, he indicated that the court would overrule the demurrer arguing violation of freedom of association under the First Amendment.

To the judge’s suggestion that the ministerial exception does not apply in this instance, Connally agreed, calling the ministerial exception a “red herring.” Connally noted that in their demurrer, the defendants did not claim ministerial exception. Rather, the plaintiffs’ allegation of interference (in the case of Ricardo Graham stepping in to dismiss the three LSU employees) would require the court to become entangled in religious governance issues, which the First Amendment prevents the court from doing, Connally said.

Asked to respond to Connally, McCune argued that La Sierra University does in fact constitute a separate legal entity from the Church, and the fact that it has an affiliation with the Church does not change the fact.

Daggett, when invited to speak, reiterated that because the causes of action involve both the university and church entities, the court cannot determine whether or not the firing was proper without entangling itself in religious governance issues, based on the way the case is pled.

As to the plaintiffs’ first cause of action, which allege that Lenny Darnell’s recording of the private conversation used as a basis for the dismissals, Judge Taylor stated his belief that the recording was not illegal on the grounds that the plaintiffs had not established intent on Darnell’s part. (The recording was made inadvertently when Darnell accidentally left an iPhone recorder running as the four men talked in Darnell’s home.) McCune later requested leave to amend the cause of action, which the judge granted. McCune will have thirty days from Friday to restate the cause of action concerning the recording and its role in the dismissals.

Because of time constraints, the judge announced that the court would adopt its tentative ruling regarding La Sierra’s demurrers, and trail the balance of the hearing to Friday morning. Of the demurrers and motions filed on La Sierra’s behalf, Judge Taylor sustained the demurrer concerning the legality of the recording and those demurrers pertaining to causes of action related to the recording, but allowed the plaintiff to amend the cause of action.

Reconvening Friday Morning
When the parties reconvened Friday morning for a second day of hearings, the court took up the Pacific Union Conference’s demurrers and motion to strike. For the second time, the majority of the hearing consisted of back-and-forth between Mr. Connally and Judge Ronald Taylor. After the judge gave his indicated ruling, the exchange between the two became increasingly testy, with Mr. Connally pushing his case at every step.

Connally contended that PUC and NAD, which are religious corporations, are being accused of a tort (a civil wrong that involves a breach of duty resulting in injury or harm, which constitutes the basis for a claim by the injured party) for having spoken to La Sierra University, a religious organization. Whereas the La Sierra issue is primarily a contractual one, Connally argued, the issue with PUC and NAD is a governance issue, and he reiterated that the court cannot entangle itself in this issue under the First Amendment.

Judge Taylor interjected: “Now, Mr. Connally, when they spoke with each other, what do you suppose they spoke about?”

Connally responded that they spoke about their religious goals and about the plaintiffs’ communications about those religious organizations.

“We can see where plaintiffs would sue their employer,” Connally said, “but for the court to permit the plaintiffs to also drag in these two separate religious corporations because they communicated with  La Sierra, another religious corporation, about governance issues–they’re not alleging that there was a breach of contract. They can’t because there was no contract with PUC and NAD,” Connally said.

Based on the narrative in the complaint that Larry Blackmer received Darnell’s recording, had it transcribed and forwarded it to Dan Jackson, who sent it to Ricardo Graham, who in turn used it to dismiss the LSU employees, the judge stated his view that there were sufficient allegations to allege interference. Connally replied that he would agree if these were two (secular) businesses and a third business, but the plaintiffs admitted, he said, that these are religious organizations. Taylor interjected that the fact was not contested.

“Well, there’s a thing called the First Amendment,” Connally retorted.

Taylor then asked Mr. McCune to respond. McCune, speaking for the plaintiffs, pointed out that the complaint said nothing about religious governance issues, but rather named La Sierra University as a separate entity and alleged breach of contract against La Sierra University and of fiduciary duty against Ricardo Graham. The complaint alleges that there was a meeting among the defendants to discuss the employment of the plaintiffs, McCune clarified.

Taylor finally cut off discussion of PUC and NAD by acknowledging Connally’s position, stating that the court disagreed with it, and declaring their demurrer overruled. Connally raised the question of emotional damage, noting that conduct must be legally deemed “outrageous” in order to constitute emotional damage. McCune responded that the plaintiffs had alleged more than enough fact to establish outrageous conduct, and the court agreed, overruling that demurrer as well.

The judge then moved to the demurrer and motion to strike by Ricardo Graham.

Citing Reno vs. Baird, Taylor pointed out that only an employing organization (not an individual) could be held liable for tort of wrongful discharge of an employee, and sustained the demurrer to the first cause of action against Graham.

Several more demurrers to causes of action accusing Graham of breach of contract were also sustained on the basis that the Ricardo Graham was not party to the plaintiffs’ contract. However, concerning the cause of action alleging that Graham used the recording to inflict emotional distress by forcing plaintiffs to resign or to embarrass them, the judge found sufficient grounds for outrageous conduct.

Mr. Daggett, representing Ricardo Graham, argued that for the court to determine whether Graham violated his fiduciary duty would be “excessive entanglement if I ever saw it.” McCune responded that the allegation was that Graham was acting in the interest of the PUC and the NAD when he should have been acting in the interest of La Sierra University. Daggett replied that the court would have to determine whether the two religious entities (the Church and LSU) have an internal conflict of interest, again suggesting entanglement.

The judge then ruled that the court sustained demurrers to the first through fifth causes of action against Graham, overruled demurrers to the ninth and eleventh causes of action against Graham, and denied Ricardo Graham’s motion to strike.
 

In the final analysis, Judge Taylor sided with the defendants’ claim that the plaintiffs did not sufficiently demonstrate the recording to be illegal (but allowed the plaintiffs to amend and replead the complaint), and sided against the defendants on the First Amendment-based demurrers. The judge sided with the defendant Ricardo Graham that he could not be held personally liable for the plaintiffs’ dismissal, but sided against Graham by finding sufficient facts to allege emotional distress. The judge denied all motions to strike, meaning that the case will proceed.

What Happens Next
At the conclusion of the hearings, Judge Taylor scheduled a case management conference for January 31st. For most civil cases, case management conferences are mandatory meetings between the judge and the parties involved to settle issues in dispute before going to trial. In them, judges will often attempt to narrow the issues involved in the case, provide deadlines for filing and conducting discovery, and so forth. The judge may also recommend arbitration to settle disputes in some cases. For the sake of pleading during preliminary hearings, a court assumes the plaintiffs’ facts and allegations as pled, and rules on their legal merits (not their veracity).

In comments to Spectrum after Friday’s hearing adjourned, John Daggett was quick to point out that there is still a long way to go before this case goes to trial, if it does go at all. He indicated that there will likely be a motion for summary judgment (a determination made by the court without trial when the facts of the case are not in dispute), though Mr. McCune has signalled his intent to push for a jury trial.

Another option that might preclude a trial would be an out-of-court settlement.

Asked to respond to the judge’s decision, Michael Connally stressed that this was a preliminary ruling. “We prefer to continue handling it in the courts,” he told Spectrum. “This is not anything binding, it’s just based on accepting the facts of the plaintiff as pled.”

“These issues might be fleshed out later. This is very preliminary,” Daggett agreed.

Concerning what will come next, Connally suggested that the ball is in the plaintiffs’ court. “They have to prepare an amended complaint because the court–very important ruling–the court ruled that they had not sufficiently pled facts to show their key underlying premise, which was that this was an illegal recording. The court ruled in our favor on the causes of action where the illegal recording is an element.”

Both Connally and Daggett declined to comment on how they felt the case has proceeded thus far, stating that it is still too early to make any such assessments. The plaintiffs likewise declined to comment on the proceedings.

As this correspondent finished conversing with the counsel for the defendants, Mr. Connally jokingly suggested making sure the recording device was turned off.

Duly noted, Mr. Connally!

 

[Headline Image L-R: Richard McCune, Ronald L. Taylor, Michael W. Connally, John Daggett, Jeffry Kaatz. Monday, December 5, 2011]

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