U.S. Supreme Court Nixes Payments to Puerto Rico Catholic School Pension Trust

By Mark Walsh — February 24, 2020 4 min read
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The U.S. Supreme Court on Monday threw out rulings of the Puerto Rico courts that required the Roman Catholic Archdiocese of San Juan to pay nearly $5 million into a pension trust for employees of Catholic schools on the island.

After privately mulling an appeal by the archdiocese for nearly a year, the justices issued an unsigned ruling with no dissents that said a Puerto Rico trial court lacked jurisdiction when it ordered the pension payments based on a 2016 suit brought by active and retired employees of three Catholic academies in Puerto Rico.

The court’s decision was a technical one, but it acknowledged some larger issues in the complex case, such as whether there was a single Catholic Church legal entity on the island responsible for the pension payments and whether the government had the authority to hold one religious entity responsible for the debts of other religious entities.

“Beyond this lurk more difficult questions,” Justice Samuel A. Alito Jr. wrote in a concurrence, including “the degree to which the First Amendment permits civil authorities to question a religious body’s own understanding of its structure and the relationship between associated entities” and whether “the First Amendment places limits on rules on civil liability that seriously threaten the right of Americans to the free exercise of religion as members of a religious body.”

Justice Clarence Thomas joined Alito’s concurrence in Roman Catholic Archdiocese of San Juan v. Feliciano (Case No. 18-921).

The case involves the Catholic Schools Employees Pension Trust, which was established in 1979 for teachers and other school employees in the San Juan Archdiocese, but was later expanded to Catholic school employees in some of the island’s other Catholic dioceses as well as some Catholic schools that exist as their own legal entities.

With declining school enrollment, the number of schools and other Catholic entities participating in the plan fell from 83 to 43 over time, and the trust decided to terminate the plan. Some 183 teachers of three schools sued to enforce their pension rights.

They named the “Roman Catholic and Apostolic Church of Puerto Rico” as defendant, claiming it was an entity with legal authority over all Catholic institutions in the state. A state trial court found support for that in the Treaty of Paris of 1898, through which Spain ceded Puerto Rico to the United States, as well as a 1908 U.S. Supreme Court decision. The island court ordered the Catholic Church on the island to contribute $4.7 million to the pension trust.

An appellate court on the island held that there was no single legal Catholic Church entity, but that the Archdiocese of San Juan and one of the schools involved could be ordered to make pension payments. But the Puerto Rico Supreme Court reinstated the trial court’s broad order, holding that separate entities “are merely indivisible fragments of the legal personality that the Catholic Church has.”

The San Juan Archdiocese appealed to the U.S. Supreme Court, arguing that the island courts “failed to defer to the church’s understanding of its own hierarchy and doctrine.”

Last June, the justices asked the U.S. solicitor general to weigh in on the case. Solicitor General Noel J. Francisco said in a brief that the Puerto Rico high court wrongly presumed that all Catholic entities on Puerto Rico were fragments of the same church, which violated the church’s First Amendment free-exercise-of-religion right.

In its Feb. 24 per curiam decision, the U.S. Supreme Court declined to reach some of the broader arguments about the church’s rights because it concluded that the Puerto Rico trial court had lacked jurisdiction to issue various payment and property-seizure orders. The San Juan archdiocese had removed the case to federal court in Puerto Rico after the pension trust filed for bankruptcy in 2018.

A federal bankruptcy court soon dismissed the trust’s bankruptcy proceeding, but the related case was under federal jurisdiction at the time and the Puerto Rico trial court should have held off on any orders, the U.S. Supreme Court said.

“We think the preferable course at this point is to remand the case to the Puerto Rico courts to consider how to proceed in light of the jurisdictional defect we have identified,” the per curiam ruling said.

Alito, in his concurrence, said the case raises a number of important issues that may eventually merit high court review.

“The assets that may be reached by civil plaintiffs based on claims regarding conduct by entities and individuals affiliated in some way with the Catholic Church (or any other religious body) is a difficult and important issue,” he wrote. “The Free Exercise Clause of the First Amendment at a minimum demands that all jurisdictions use neutral rules in determining whether particular entities that are associated in some way with a religious body may be held responsible for debts incurred by other associated entities.”

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A version of this news article first appeared in The School Law Blog.