Directors of religious nonprofit secure appellate victory on issues of religious autonomy and corporate governance
Clients Moon, Hyun Jin
Jones Day secured an appellate victory when the D.C. Court of Appeals reversed a $530 million judgment against four directors of a religious nonprofit corporation. In a decision with important implications for issues of religious autonomy and corporate governance, the Court of Appeals concluded that the First Amendment barred the trial court from picking winners and losers in a dispute over church doctrine and leadership.
This appeal arose out of a schism that developed within the Unification Church movement, a religion founded by the late Rev. Sun Myung Moon. The plaintiffs, representing one side of the schism, filed a lawsuit in D.C. Superior Court seeking to wrest control of UCI, a religious non-profit, from its chairman, Jones Day client Dr. Hyun Jin Moon, and other members of the board of directors. The Superior Court ultimately sided with the plaintiffs, ordering removal of Dr. Moon and other directors from UCI's board and imposing hundreds of millions of dollars in personal liability. According to the court, the directors violated their fiduciary duties by straying from the plaintiffs' view of the non-profit's religious mission by "fundamentally alter[ing]" the articles of incorporation and making certain charitable donations.
The Court of Appeals reversed, agreeing with Jones Day's long-advanced position that such pronouncements lay well beyond the competence of any secular court. Determining whether the amended articles "fundamentally altered" UCI's mission, for example, would require the court to interpret theological terms within those texts. Likewise, to deem certain donations ultra vires, the court would have "to pass judgment on whose vision of the Unification Church, or Unification movement, is more faithful to the purposes UCI was established to advance." Because the First Amendment precludes courts "from providing th[e] answers" to these "religious questions," the Court of Appeals vacated the award of summary judgment and subsequent remedial order, and remanded for further proceedings consistent with its opinion.
Moon v. Family Federation for World Peace & Unification International, No. 20-CV-0714, 2022 WL 3652744 (D.C. Aug. 25, 2022)