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Religion and the Law

Scientology Arbitration and the First Amendment: Some Questions About Bixler v. Superior Court

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Last week, the California Court of Appeal (Bixler v. Superior Court) refused to apply a broad Scientology arbitration agreement to a lawsuit brought by ex-members who claimed they were mistreated in various ways after they left the Church:

Individuals have a First Amendment right to leave a religion. We hold that once petitioners had terminated their affiliation with the Church, they were not bound to its dispute resolution procedures to resolve the claims at issue here, which are based on alleged tortious conduct occurring after their separation from the Church and do not implicate resolution of ecclesiastical issues….

I asked Prof. Michael Helfand (Pepperdine) about this, since I know he's written extensively on religious arbitration, and he kindly passed along this reaction, which strikes me as very interesting and useful:

Last week, a California Court of Appeals issued a surprising decision, declining to enforce religious arbitration agreements between a number of plaintiffs and the Church of Scientology. While a decision refusing to compel arbitration was not, itself, surprising, the basis for the court's decision was: that compelling arbitration would violate the First Amendment right of the plaintiffs to change their religious beliefs. Such a holding is the first of its kind when it comes to religious arbitration agreements.

It is also a bit thin on some of its arguments, and leaves some significant questions both as to how it is consistent with prevailing doctrine and as to how it might apply in other circumstances. I'll do my best to identify some of these issues in the post below.

Background

As I laid out in a previous post here, the underlying allegations of Bixler v. Church of Scientology International are certainly disturbing. According to the complaint, plaintiffs allege they were sexually assaulted by Daniel Masterson, himself a member of the Church of Scientology, and that the Church of Scientology sought not only to cover up these incidents, but also repeatedly threatened and harassed the plaintiffs once they reported the incidents. In response to the complaint, the Church of Scientology filed a motion to compel arbitration, arguing that the plaintiff's claims must all be submitted for binding arbitration pursuant to an arbitration agreement executed between the plaintiffs and the church when the plaintiffs joined the church. The plaintiffs, however, argued have argued that the agreements were invalid because the arbitral process was not neutral and because enforcing the arbitration agreements would violate their free exercise rights under the First Amendment.

There seemed to be good reason to assume that, if the California Court of Appeal was going to invalidate the underlying arbitration agreement, it would do so because of neutrality problems with the contractually specified arbitral process. Under the arbitration agreement, representatives of the Church of Scientology appears to play a role in, for example, the presentation of evidence and procedural decision-making; in addition, the arbitrator qualification provision required all the arbitrators to be in "good standing" with the "Mother Church," raising questions as to whether they could adjudicate the dispute neutrally (for more on some of those issues, see my previous post). Indeed, the California Court of Appeal, when requesting additional briefing from the parties, seemed to indicate that was the route it was going. The letter requested "additional briefing on the following issue: Whether the compelled arbitration is sufficiently neutral to constitute an enforceable arbitration" and then went on to cite some of the case law, and Scientology-related precedent, on the issue.

Instead, the court chose to invalidate the arbitration agreements on constitutional grounds. According to the court, "An individual possesses an 'inalienable First Amendment right to the free exercise of religion, which includes her right to change her religious beliefs ….' (In re Marriage of Weiss (1996) 42 Cal.App.4th 106, 118.)" As a result, "We hold that once petitioners had terminated their affiliation with the Church, they were not bound to its dispute resolution procedures to resolve the claims at issue here, which are based on alleged tortious conduct occurring after their separation from the Church and do not implicate resolution of ecclesiastical issues." Thus, even though the disputes were within the scope of the arbitration agreement, and therefore ought to have been resolved pursuant to the terms of the arbitration agreement, the court concluded the constitutional rights of the plaintiffs prohibited compelling arbitration.

This decision is certainly novel. But it stands in tension with prevailing case law and generates some serious doctrinal problems going forward:

[1.] Choice of precedent

One of the chief curiosities of the decision is its choice of precedent. While there has been recent academic criticism of religious arbitration, see Michael A. Helfand, "The Peculiar Genius of Private Law Systems": Making Room for Religious Commerce, 97 Wash U. L. Rev. 1787 (2020) (parts III and IV collect this literature and critique it), courts have uniformly enforced religious arbitration agreements and awards over and above constitutional challenges. Accordingly, in reaching it holding, Bixler does not cite to cases involving religious arbitration agreements. Instead, in establishing a right to change faiths, it looks to case law regarding the enforceability of religious upbringing provisions in agreements addressing child custody.

The puzzle here is that child custody agreements are not entitled to a presumption of enforceability because questions of custody, ultimately must be based on a judicial assessment of the best interests of the child. To be sure, the doctrine here is complex and can vary significantly by jurisdiction. But, by contrast, courts are required to enforce arbitration agreements, absent contract law defenses, as a matter of federal law. See 9 U.S.C. §2. The court's choice to rely nearly exclusively on custody cases—without addressing the significant doctrinal differences between child custody and arbitration—is, at best, curious.

[2.] State Action Doctrine

Another curious move is the court's dismissal of the state action requirement. A prerequisite of a constitutional claim is the existence of state action. Generally, judicial enforcement of arbitration is not viewed as state action. See Christopher Drahozal, Commercial Arbitration: Cases and Problems 18 (3d ed. 2013) (noting that "[a]ll of the federal courts that have addressed the issue have held that commercial arbitration is not 'state action' to which constitutional protections apply"). The reason why, in the words of then-Judge Posner, is because "Arbitration is a private self-help remedy. The American Arbitration Association is a private organization selling a private service to private parties who are under no legal obligation to agree to arbitrate their disputes or, if they decide to use arbitration to resolve disputes, to use the services of the Association, which is not the only provider of such services…. When arbitrators issue awards, they do so pursuant to the disputants' contract—in fact the award is a supplemental contract obligating the losing party to pay the winner. The fact that the courts enforce these contracts, just as they enforce other contracts, does not convert the contracts into state or federal action and so bring the equal protection clause into play." Smith v. Am. Arbitration Ass'n, 233 F.3d 502, 507 (7th Cir. 2000).

There is an avalanche of commentators disagreeing, but the consensus among courts is what it is. See Sarah Rudolph Cole, Arbitration and State Action, 2005 BYU L. Rev. 1, 3-4 (noting this consensus among courts and also collecting much of the significant scholarly criticism).

The California Court of Appeal dismissed this concern in a footnote with the following: "We believe cases such as In re Marriage of Weiss, which specifically hold that a party cannot bargain away her constitutional right to change religions, are the appropriate precedent. In contrast to Scientology's theory that enforcing agreements which limit the right to change religions would not constitute state action, those authorities recognize that court enforcement of such an agreement would encroach on a person's fundamental constitutional right."

It is not clear what the court has in mind here. Maybe the fact that compelling arbitration is a form of specific performance, and the remedy of specific performance itself—participating in a Church of Scientology arbitration—constituted a violation of the plaintiffs' free exercise rights, explains why this decision differs from the general doctrinal consensus. Such an argument, however, is complicated by the court's own statement that "Whether Scientology arbitration is a ritual is immaterial to our analysis." It is possible that some version of this argument is still available. But the court's analysis certainly leaves the reader wondering. Given the overwhelming judicial consensus on the other side of the issue, one would have expected more than a footnote from the court.

[3.] Discriminating against religious arbitration

Given the court's primary holding, the decision also tackles the question of whether refusing to enforce religious arbitration agreements constitutes "hostility to religion." The court concludes that it does not because there is "no authority upholding an arbitration agreement ad infinitum." This argument seems to contend that the Scientology agreement—which covers all future disputes, including those sounding in both contract and tort, between the plaintiffs and the Church of Scientology—would not have been enforced even if it did not involve religious arbitration. The opinion then goes on to distinguish California case law compelling arbitration of ongoing tort claims because, in those cases, the contractual scope of the arbitration agreement covered tort claims "'stem[med] from the contractual relationship between the parties,' and were therefore within the scope of the arbitration agreement. Here, petitioners' claims against Scientology do not stem from the contractual relationship."

It is hard to understand what the court is getting at here. If the court's point is that Bixler is different because the disputes are not within the scope of the arbitration agreement, then there is no need for the First Amendment argument; the court shouldn't compel arbitration because the disputes are not within the scope of the agreement (I raised a similar possibility here).

But if the court does think that disputes are within the scope of the agreement, then it is treating religious arbitration agreements worse off than other forms of arbitration. The court makes this move to protect what it views as the constitutional right of the plaintiffs. However, in so doing, it does also raise the possibility—which the court appears to acknowledge—of a claim that its decision constitutes a form of religious discrimination pursuant to cases such as Church of Lukumi Babalu Aye v. City of Hialeah and Trinity Lutheran v. Comer.

[4.] Application of Bixler

The big question stemming from the court's decision in Bixler is where it might apply. Taken to its logical conclusion, it could be read to stand for the proposition that courts must invalidate agreements for religious goods and religious services whenever one of the parties changes relevant religious beliefs or affiliation. Such impact would be far reaching. As Barak Richman and I outline in The Challenge of Co-Religionist Commerce, 64 Duke L.J. 769 (2015), there is quite an active religious commercial industry in the United States that employs a range of religious commercial instruments. This sort of holding would raise significant uncertainty regarding such contracts given the possibility that one of the parties might, in the future, argue against enforcement on the ground that they might change their religious beliefs or affiliations. Prior to Bixler, one might have thought such claims would be subsumed more generally under the impracticability or frustration of purpose contract doctrines. Now, such claims would sound in the First Amendment.

By way of an example, consider the case of a synagogue that has in its membership application and agreement (which all prospective members must sign) a clause which states that any and all disputes shall be brought before a Beit Din (rabbinical court) whose judgment shall be final and binding. And imagine that a member leaves the synagogue either to join another synagogue or to join another religion without paying prior dues owed to the synagogue. Prior to Bixler, assuming that a court determined that the arbitral process was neutral and the disputes fell within the scope of the arbitration agreement, a court would presumably have compelled arbitration.

After Bixler, one can imagine the former member might argue that his or her leaving the synagogue constituted a change in religious affiliation and that compelling arbitration before the third-party neutral rabbinical court for adjudication would violate his or her "inalienable First Amendment right to the free exercise of religion, which includes her right to change her religious beliefs." The former member might make this argument whether they completely left the faith or simply changed synagogue affiliation as either could potentially justify an argument along the ones sketched in Bixler.

The court says precious little on this front—although addressing future applications of the doctrine is not necessarily something one would have expected. That being said, it is worth noting that some of the language in the court's opinion noted above—that the claims implicated in Bixler did not stem from a contractual relationship—might be used to limit the decision's application to cases where parties sought arbitration of future tort claims that were not related to an underlying contractual relationship. In this way, maybe the synagogue due case would be treated differently than the Church of Scientology arbitration in Bixler.

But given the paucity of analysis in Bixler, it is extremely hard to tell. Like much of the decision, it is all a bit quick given the kind of far-reaching—and unanticipated—consequences that the decision may have.

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  1. Interesting thoughts on religious arbitration.

    It was my understanding that the alleged activities took place after the plaintiffs left the church and were therefore not within the scope of the agreement.

  2. The agreement was very broad, by its terms broad enough to include disputes arising out of such post-departure activities. That's why the court cited the First Amendment as a constraint on arbitration, rather than just relying on the limitations within the agreement itself.

    1. I think the court (especially since it is California) would have been on firmer ground simply holding that an arbitration agreement between a voluntary association and a member is not enforceable against that member to the extent it purports to cover claims that completely post-date the termination of the parties' relationship. I would analogize to employment relationships and, even moreso, consumer relationships.

      Things like agreements to arbitrate divorces through the religion's processes would not be covered, because the marriage would have pre-dated the parties' separation from the religion.

      1. I don't agree with you. There's no principle that says that one can't agree to arbitrate claims that arise after one's membership has ended. (Obviously, it would depend on the specific phrasing of the arbitration agreement as to the scope of arbitrable topics.)

        The court would have been on firmer ground holding that there's no way the arbitration could possibly have been with an unbiased arbitrator, given the nature of the agreement as to who would arbitrate. If they had agreed to arbitrate their claims before AAA instead of before a church arbitrator, there's no reason that shouldn't have been enforceable (again, depending on the actual language of the agreement describing its scope).

        1. I do not think a doctrine that "no arbitration agreement can be perpetual and irrevocable" would be unreasonable.

          1. All arbitration agreements are limited in scope to claims that arise out of the underlying contract. The cult's agreement is invalid.

        2. If an agreement to arbitration of disputes that arise after the severing of a relationship is OK... why not an agreement to use a non-neutral arbitrator?

          How are you deciding which bad ideas someone can and can not agree to? (I am assuming we both agree that it is a bad idea to agree both to post-relationship arbitration and to non-neutral arbitration)

        3. @DMN

          I suspect one reason there is no such principle is that the issue is very unlikely to arise. Have you ever come across a case where a party was compelled to arbitrate under an open-ended arbitration clause where the dispute was completely unconnected to the circumstances of the original agreement/association? I don't think I ever have (although I have not researched that specific point).

          I do agree that the unbiased arbitrator point is another argument in favor of non-enforcement. It is one thing to say that disputes between A and B will be resolved by C, and quite another to say that disputes between A and C will be resolved by C.

          Here is another wrinkle. Could C demand the right to arbitrate all claims between A and B even if both A and B are no longer members of C, the dispute post-dates such termination, and neither A nor B desire such arbitration? It seems absurd, but if there is a general principle that arbitration agreements can be enforced in perpetuity, I am not so sure. C may have a perfectly valid reason for taking this position, e.g. that it wants to collect those sweet, sweet arbitration fees.

          1. No; C could not demand such a right. If A sues B and B doesn't move to compel arbitration, what, you think C could move to intervene?

            1. If A, B and C are all party to the arbitration agreement, why not?

  3. I was surprised by the decision not to publish this opinion, which I think contributes to some of the issues Prof. Helfand notes in its reasoning. On the one hand, it certainly seems to me that an opinion such as this merits publication given the breadth of the rule announced and the novelty of the question presented. But on the other, it has some hallmarks of the sometimes-less-careful analysis seen in straightforward unpublished dispositions, and those holes are noted in the post above.

    1. I didn’t tealize this was an unpublished opinion. Perhaps there will be one law for the Church of Scientology, and another law for everyone else.

      Ordinarily, a requirement that members of a religious arbitration panel must be members of the church wouldn’t, by itself, implicate neutrality. After all, it’s pretty much understood that members of a rabbinical court are going to be rabbis.

      I think there are many ways of reaching a limiting principal in the case of a group like Scientology without creating such a broad and far-reaching rule.

      For one thing, there is Yoder. A religious community gets to go its own way as a group if it is generally law abiding and self-supporting. This creates the possibility that a group’s leadership could be found to have engaged in enough shennanigans to have lost that right.

    2. I mean, the system gives a lot of freedom, but it also provides for some limits that tend to give some protection from out-and-out abuse. Religious freedom is designed to help people who are mostly law-abiding and functional, not to shelter crooks. At some point, it might be time to ask if those limits have been teached.

  4. I said before that I thought that the neutrality of the arbitrators should be enough to invalidate the agreement without reaching any constitutional arguments.

    As a hypothetical say you had a private employment arbitration agreement in perpetuity between a farm worker and the farm (and let's say it's "employee owned") he worked on, and say the arbitration agreement specified only employees in good standing with the company could be arbitrators. Now let's say the employee was retaliated against by other farmworkers for complaining about rapes and physical abuse on the farm, and the company is trying to quash his suit for the retaliation and compel arbitration with it's employees as arbitrators.

    Does anyone think that arbitration agreement would be upheld?

    1. How can the federal court constitutionally adjudicate a dispute against the United States. They have to be members of the federal government. And in good standing, too - “during their good behavior”

      Why doesn’t that constitutionally invalidate their neutrality?

      It seems to me that if you want to make this sort of argument, you have to make a factual argument. Scientology is behaving badly and differently from others. You can’t make a categorical argument applicable to everyone. It’s in the nature of religious arbitrators that they are foing ro be a member of the religion involved.

      Perhaps it could be argued that a rabbinical court is neutral since each synagogue is a separate corporation. Protestants would be simolar. But why should hiearchical religions like Catholicism be especially disabled?

      A rule that very by religious doctrine and structure seems very Establishment-like.

      It seems to me that if you throw this out, you either have to come up with a general rule that’s also applicable to secular arbitrators, or you have to make an argument specific to Scientology based on facts about its behavior.

  5. The part about the First Amendment is plain wrong.

    The First Amendment is a constraint on the government not a private entity like Scientology and Sci-tol is in no way restricting the ex-members' ability to be idiots under any other religion.

    This sounds more like a contractual issue and whether a Non-disclosure agreement or (as noted), arbitration agreement is enforceable.

    1. I think the 1A argument comes in because if government upholds this arbitration agreement, it effectively removes the ability of people to leave Scientology. But I think the biased-arbitrator and unreasonability arguments are a stronger basis for the decision, though, specifically the combination of "perpetual and irrevocable" that MatthewSlyfield pointed out above.

  6. "But, by contrast, courts are required to enforce arbitration agreements, absent contract law defenses, as a matter of federal law. See 9 U.S.C. §2."

    Genuine question: Is a religious arbitration agreement commercial? That statute specifies "a transaction made in commerce" (or maritime transactions).

    1. It is not the agreement that has to be commercial. The underlying contract has to be with a party that is engaged in commerce. The trial court asked that question but never bothered to make a finding on it. The definition of commerce is extremely broad.

  7. I think the absence of state action here is fatal to the court's direct application of the First Amendment (which of course can only be applied through the Fourteenth, which requires state action), but the constitutional right can sneak in indirectly as a factor underlying a standard (though seldom used) contractual determination of voidness as against public policy. Of the considerations under ordinary contract law that could apply here, only the non-neutrality one is specific to arbitration law (and note that it's the California, not Federal, arbitration law that applies since there's no interstate commerce alleged). The California Arbitration Act specifically says that any arbitrator affiliated with one of the parties cannot be considered neutral, and since under the arbitration agreement any arbitrator had to be a member of the church, that might be enough to demonstrate affiliation. Granted, this might raise questions about other religions, e.g. RC and Jewish, that have religious courts, so you might get different results depending on whether the "defendant" claims to have left the religion entirely or just left the congregation.

    Also, the California law has special provisions on arbitration of agreements with "consumers," and the definition of consumer ("'Consumer' means an individual who seeks, uses, or acquires, by purchase or lease, any goods or services for personal, family, or household purposes") might include the kind of church arbitration at issue here.

    There are also other general contract law principles that could be used to defeat arbitration, one of which is the general common law principle that an agreement cannot extend for an unreasonable time beyond the purposes of the contract or relationship for which it was intended, with those purposes being the regulation of church members' relations for as long as they are church members. This sort of blends into the public policy argument, though it's a formal rather than a substantive way of putting the point.

    In short, I think the Bixler result is supportable, though not for the reasons the court gave.

    1. The trial court had the parties brief the commerce question but never made a finding. Nor did it bother to state whether federal or state law controlled.

  8. As others have said, this was the right result for the wrong reason. The only way the Court of Appeal could issue the writ was by accepting the incorrect argument that was made in the petition. Since the decision below was wrong for any one of about a dozen good reasons, the Court of Appeals deployed the smoke and mirrors.

  9. A valid arbitration agreement is limited in scope to controversies that arise out of the underlying contract. See 9 U.S. Code § 2.

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