BY: STEPHEN W. PARRISH and JOHN H. DOUGLAS
Mr. Parrish is a partner and Mr. Douglas is senior counsel in the San Francisco
office of Foley & Lardner. They represented the defendant in the lawsuit
described in their article.
A Catholic Health Care Organization Wins a Suit Filed by
an Unhappy Former Employee
Editor's note: The following article concerns a lawsuit against a Catholic
health care organization in California, filed by a former employee of that
organization on the grounds that he had been unlawfully terminated from his
job. The suit was eventually decided in the employer's favor by the state's
Supreme Court. Although the case may not seem immediately relevant to other
Catholic organizations in other states, we believe that its central issue—the
right of a religious employer to claim special latitude in choosing its employees—should
be of interest to them, especially since the California Supreme Court's final
decision was based on the First Amendment to the U.S. Constitution.
The Catholic Church in the United States is currently under intense scrutiny
as it strives to balance, on one hand, its inherent prerogative as a faith-based
institution to define and control its religious mission with, on the other hand,
the demands of secular authorities for conformity to laws of general applicability.
The church's core values, such as belief, compassion, and confidentiality, and
its rituals as well, are increasingly subject to the scrutiny and the often
conflicting demands and values of secular authorities—such as, for example,
transparency or retribution. This is an age-old problem, and one that will never
be resolved so long as religious entities continue to play a significant role
in society independent of civil authority.
To make matters more complicated, legislatures, particularly in California,
are constantly busy making new laws that affect the employer community generally
and require interpretation by civil judges. Only occasionally, however, are
judges called upon to decide cases of truly unique significance to Catholic
employers that clearly display the tension inherent in accommodating both religious
and secular values. The 10-year case of Silo v. CHW Medical Foundation,
recently definitively decided (for a second time) by the California Supreme
Court, was one such case.
The Case's Background
CHW Medical Foundation (CHWMF) is a not-for-profit public benefit corporation
affiliated with Mercy Healthcare Sacramento, a constituent organization of Catholic
Healthcare West. The foundation was formed by three sponsoring congregations:
the Sisters of Mercy of Burlingame, CA; the Sisters of Mercy of Auburn, CA;
and the Sisters of St. Dominic of the Most Holy Rosary of Adrian, MI. CHWMF's
purpose is to provide operational and management support services to the Medical
Clinic of Sacramento, a professional corporation of physicians that staffs the
hospitals operated by Mercy Healthcare Sacramento. CHWMF's articles of incorporation
specifically require it to conduct its activities in a manner consistent with
and supportive of the philosophy of its sponsoring congregations and in conformance
with the Ethical and Religious Directives for Catholic Health Care Services.
Although the foundation provides medical services to people of all faiths and
does not require its employees to be Catholic, it does require its employees
to comport themselves in a manner consistent with the philosophy of its sponsoring
congregations and the Ethical and Religious Directives.
In July 1991, Terence Silo, a recent immigrant to the United States from the
Philippines, began working for CHWMF in Sacramento as a medical records clerk.
Before coming to this country, Silo had studied to become a minister at an evangelical
Christian seminary. After working for CHWMF for about 16 months, Silo, in November
1992, underwent a religious conversion and was "born again." As a result, during
a period in which he would later describe himself as having been "on fire,"
he began "sharing" his religious experience while at work with some co-workers
and at least one of CHWMF's patients. In particular, Silo began greeting his
co-workers and patients by saying, "Jesus loves you" (or words to that effect)
and began having discussions with his co-workers, some of whom were Catholic,
in which he challenged their religious faith or practices (or lack thereof).
Some of Silo's co-workers were disturbed by these discussions, and they complained
to his supervisors. Around the same time, Silo's supervisors noticed that his
timeliness in delivering patient charts had begun suffering. In early 1993,
his supervisors met with and counseled him both about his declining productivity
and about complaints that they had received from certain of his co-workers about
his religious "sharing." Silo was instructed to limit his discussions about
religion, if any, to his break time, and to stop having any such discussions
with patients or co-workers who were put off by his behavior or comments.
However, his performance did not improve and his supervisors received additional
complaints from his co-workers about unwelcome "sharing" at work. Believing
that their explicit directions had been ignored, Silo's supervisors decided
to terminate his employment in April 1993.
Silo Files a Lawsuit
Silo found a new job soon thereafter. A year later, however, in April 1994,
he filed a lawsuit in Sacramento Superior Court, alleging causes of action against
CHWMF and his two former supervisors for religious discrimination in violation
of the California Fair Employment and Housing Act (FEHA), as well as wrongful
termination in violation of "public policy" (see Box). In particular,
Silo alleged that his "sincerely held religious beliefs and practices" had caused
him to engage in "discussions with other persons concerning religious topics"
in the workplace and that CHWMF had discriminated against him because of his
religious beliefs or practices when it terminated him.
During depositions that followed the filing of Silo's suit, he testified that,
among other things, he did not believe Catholics could go to heaven and he likened
their need for salvation to that of alcoholics and drug addicts. He steadfastly
maintained, however, that he had observed his supervisors' instructions to engage
in "sharing" only while "off the clock."
Upon the conclusion of the discovery phase of the litigation—the pretrial
disclosure of pertinent facts or documents—CHWMF's attorneys brought a motion
to dismiss Silo's case. In support of that motion, they made two main points:
- First, relying on the explicit exemption for "religious associations or
corporations not organized for private profit" FEHA, the only statute Silo
was suing under, CHWMF argued that Silo's claims had to be dismissed. (Silo's
attorneys had failed to file a claim under Title VII of the federal Civil
Rights Act of 1964, which contains a narrower exemption for religious employers
and actually did cover CHWMF.)
- Second, CHWMF argued that Silo could not maintain a claim of wrongful termination
in violation of "public policy" (which carried with it the potential for an
award of punitive damages and damages for emotional distress) against it because
there was no sufficiently "clear" or "fundamental" "public policy," as required
for such claims under California law, that forbade a religious employer from
taking into account an employee's religious practices when deciding whether
to create or sever an employment relationship (see Box).
In September 1995, a judge rejected both these arguments and decided to let
the case go to trial, which took place the following month. Silo did not dispute
that his supervisors had received several complaints from employees and at least
one patient regarding his "sharing." He testified, however, that all his "sharing"
had occurred while he was on break and thus not actually working, and that he
had not violated his supervisor's instructions. After hearing the evidence,
the jury on November 2, 1995, returned a verdict in Silo's favor, finding that
CHWMF had unreasonably failed to accommodate his religious practices in violation
of the FEHA and that he had been wrongfully terminated as a result. Curiously,
however, although the jury awarded Silo all the "contractual" damages he requested—$6,305—it
awarded him only $1 in damages for emotional distress. (The trial judge had
already ruled at the close of Silo's case that punitive damages were not appropriate.)
The First Appeal
CHWMF filed an appeal of this verdict in January 1996. As in their original
pretrial motion, the foundation's lawyers argued that there were no disputed
facts underlying the two main issues on appeal and that, since there weren't,
the Court of Appeal could have decided them based solely on its interpretation
of the law.
- Was CHWMF exempt from California's FEHA? If it was exempt, the verdict
in Silo's favor under that statute could not stand.
- Assuming that Silo's statutory FEHA claim was insupportable, did California
still have any sufficiently clear "public policy" that would preclude a religious
entity such as CHWMF from terminating him for proselytizing, so that his wrongful
termination tort claim would still be viable?
The exemption in the California FEHA for "religious" corporations "not organized
for private profit" has a history extending back to the advent of the civil
rights movement. In fact, at the time the statute preceding the state's FEHA
(the California Fair Employment Practices Act) was passed in 1959, the legislature
had seen fit to exempt a wide variety of nonprofit "associations" and "corporations"
from its ambit, including those that were "fraternal, charitable, educational
or religious," as well as "social" clubs. The rationale was that because not-for-profit
organizations are formed for a variety of noncommercial reasons, their founders
and members have a reasonable claim that their constitutional right to associate
freely with individuals of their own choosing will be abridged if they are required
to hire, for example, without regard to race, sex, or religion.
Over the years, the force of this rationale has been gradually weakened as
an increasingly strong societal consensus in favor of equal opportunity in all
employment relationships has reduced the need for lawmakers favoring equality
to make exemptions as a political compromise to pass (or preserve) such legislation.
During the same period, numerous courts have rendered decisions weakening the
force of the "free association" objection to civil rights legislation. Indeed,
by 1977 the California legislature was ready to delete references to social,
fraternal, charitable, and educational entities entirely from the statute's
exemption. The blanket exemption for religious associations or corporations,
in contrast, remained intact because it potentially implicated an entirely different
constitutional right, the "free exercise" right of religious adherents.
The "free exercise" clause of the First Amendment to the U.S. Constitution
(see Box, below) had long been interpreted as preventing
civil authorities from meddling in the internal governance of churches. In the
employment arena, moreover, this principle had long prevented civil courts from
entertaining common law claims, such as for breach of employment contract, as
well as statutory claims, such as for sex or race discrimination, brought by
members of the clergy against religious employers. With respect to people performing
other than strictly religious duties, in contrast, not all such claims have
been constitutionally precluded. Thus, for example, a janitor working for a
church might be able to bring a claim of race discrimination or harassment against
the employer. In general, however, a claim of religious discrimination against
a religious entity has been deemed precluded as a constitutional matter, since
adjudicating such a claim would inevitably require civil courts to become overly
entangled in what was essentially a religious dispute. (See, for example, Corporation
of Presiding Bishop v. Amos  483 U.S. 327.)
In 1980 California undertook a major revision of its not-for-profit corporation
laws, in the process creating, for the first time, three separate kinds of not-for-profit
corporations, each with slightly different statutory prerogatives and limitations
on their corporate purposes. These were termed "public benefit," "mutual benefit,"
and "religious" not-for-profit corporations. Religiously affiliated hospitals
already in existence and incorporated at that time, as well as those formed
thereafter, were required to choose one of these three forms of incorporation.
CHWMF elected to incorporate as a "public benefit" corporation, as had many
religiously affiliated organizations with religious, charitable, educational,
and health care missions, or with mixtures thereof. Silo's attorneys argued
that, given CHWMF's decision to incorporate as a "public benefit" not-for-profit
corporation as opposed to a "religious" nonprofit corporation, it could not
thereafter invoke the exemption in the FEHA for "religious associations or corporations."
In response, CHWMF argued that since a religiously affiliated entity did not
even have to be incorporated to be covered by the FEHA exemption (which also
applied to "associations"), the legislature had intended no relationship between
the language of the FEHA exemption and that of the not-for-profit corporations
law—and that a religiously sponsored "public benefit" corporation could remain
a "religious association or corporation" exempt from the FEHA.
The Court of Appeals disagreed with CHWMF. In November 1997 it affirmed the
trial court's judgment against CHWMF on Silo's FEHA cause of action, finding
that the FEHA exemption was limited to religiously affiliated corporations organized
under the "religious" nonprofit corporation law. (Although the appellate court
also affirmed the judgment for wrongful termination based on the "public policy"
embodied in the FEHA, it expressly declined to decide at the time whether the
trial verdict could be supported by the prohibition on discrimination based
on "creed" [see Box, below] set forth in Article
I, Section 8 of the California Constitution.)
On January 5, 1998, CHWMF successfully petitioned the California Supreme Court
a first time to determine whether the appellate court's interpretation of the
religious employer exemption in the FEHA was limited to corporations organized
under the "religious" not-for-profit corporation law. As it happened, the Supreme
Court had already decided to take up the identical issue in another case involving
CHWMF's parent organization, Mercy Healthcare Sacramento, McKeon v. Mercy
Healthcare Sacramento. In February 1998, the state Supreme Court granted
CHWMF's petition pending its decision in the McKeon case.
Nine months later, that court found in McKeon that the FEHA exemption for religious employers had not been limited by virtue of the amendments to not-for-profit corporation laws those entities incorporated as "religious" not-for-profit corporations. In September 2000, state Supreme Court transferred the Silo
case back to the Court of Appeal with directions to vacate its decision and
to reconsider the case in light of its decision in McKeon.
The Second Appeal
With the Silo case back before the appellate court, Silo's attorneys
argued that even if CHWMF's exemption from the California FEHA logically necessitated
that there was no sufficiently clear "public policy" expressed in that statute
supporting the wrongful termination verdict, the prohibition on discrimination
based on religious "creed" contained in the California Constitution nevertheless
did embody an alternative, sufficiently clear "public policy" against
terminating their client. In response, CHWMF's lawyers argued that even if California's
constitutional prohibition on discrimination based on religious "creed" might
support a wrongful termination claim against a nonreligious employer engaging
in religious "discrimination," the state had—given CHWMF's countervailing constitutional
right as a religious entity to define its own religious message (as well as
its legitimate concern to prevent other employees from being harassed based
on their religious beliefs or lack thereof)—no sufficiently "clear" or "fundamental"
"public policy" that prevented the foundation from taking into account an employee's
religious practices in making employment decisions.
In January 2001, the Court of Appeal announced its second decision. Although
the court concluded that, following McKeon, CHWMF was no doubt covered
by the FEHA exemption, it determined that the prohibition on discrimination
based on religious "creed" in the California constitution was sufficiently "clear"
and "fundamental" to independently support the jury's wrongful termination verdict
against CHWMF. In March 2001 CHWMF filed a second petition for review with the
California Supreme Court, which the court granted later that spring.
The Final Supreme Court Decision
In this second appeal to the state Supreme Court, CHWMF's attorneys argued
that, given its status as an entity founded to carry out the healing ministry
of the Catholic Church, it could have, consistent with interpretations of the
"free exercise" clause, chosen to hire only Catholics; but it had not done so.
Instead, CHWMF had decided to employ people without regard to their religion—but
only so long as they agreed to comply with the mission and philosophy of CHWMF's
religious sponsors and with the Ethical and Religious Directives. As
a result, CHWMF's lawyers maintained, the foundation retained a constitutional
right to determine what religious message, if any, would be disseminated within
its premises. Given this countervailing right of CHWMF, there was no sufficiently
"clear" or "fundamental" "public policy" requiring a religious employer to accommodate
an employee's religious practice of proselytizing on its premises—or one that
would prevent a religious employer from terminating an employee who insisted
on acting as if there were such a right.
In May 2002, in a 9-0 decision, the state Supreme Court announced that it
agreed with CHWMF. The court's rationale was relatively straightforward. In
cases involving a non-religious employer, the court said, the "public policy"
embodied in the state's constitutional prohibition on religious "creed" discrimination
would be a sufficiently "clear" and "fundamental" mandate to underpin a claim
of wrongful termination based on a failure to accommodate a religious practice.
However, given CHWMF's constitutional right under the "free exercise" clause
to control and define the religious message disseminated on its premises, and
the fact that Silo was attempting to engage in religious proselytizing, declaring
that a "clear" and "fundamental" "public policy" prevented Silo's termination
would excessively (and impermissibly) entangle a civil court in an essentially
religious dispute in violation of the "establishment clause" of the First Amendment.
The judgment in Silo's favor on his wrongful termination claim thus had to be
In December 2002, the appellate court, following the state Supreme Court's
decision, vacated its second decision and remanded the case to the trial court
with instructions to enter a judgment in favor of CHWMF. In February 2003, just
a few months short of the 10-year anniversary of Silo's firing, the Sacramento
Superior Court entered that judgment, finally putting an end to the Silo
Perhaps the clearest lesson of the Silo case is found in its tortuous
history. Over a 10-year period, a trial judge and three judges of the Court
of Appeal, on the one hand, and nine judges of the California Supreme Court,
on the other, reached diametrically opposite conclusions on more than one occasion
as to the proper location of the line dividing civil and religious authority
over a single course of behavior. The ultimate result of the litigation—CHWMF's
vindication—is consistent with, and reaffirms, constitutional jurisprudence
that carves out a sphere of autonomy for religious employers when it comes to
essentially religious issues and controversies.
For religious employers, however, the greater difficulty—and one that will
persist after Silo—will be in determining when an employment controversy
is sufficiently "religious" in nature that invocation of these potent constitutional
rights will be important.
What Is the "Free Exercise Clause"?
Several terms used in this article have special legal meaning and may, as
employed here, be unfamiliar to readers who are not attorneys.
- A "tort" is a wrongful act (other than a breach of contract) for which
the injured party may receive damages.
- The "free exercise clause" of the First Amendment to the Constitution states
that: "Congress shall make no law respecting an establishment of religion,
or prohibiting the free exercise thereof . . ." [italics added]
- "Public policy," a concept that the California Supreme Court has observed
is "notoriously resistant to precise definition," refers to the moral and/or
economic rationales embodied in all laws, whether constitutional, statutory,
or regulatory. A contract to perform an illegal act will not be enforced by
a court since it offends "public policy." In California, in order for the
termination of an employee who might otherwise be dismissed "at will" to constitute
a tort, that termination must violate a "clear" and "fundamental" "public
policy." This means, the California Supreme Court has held, that the "public
policy" in question must be "carefully tethered" to a federal or state constitutional,
statutory, or regulatory provision. Thus, for example, a hospital employee
cannot be terminated at will for having alerted governmental authorities about
the employer's violation of a law or regulation, since such a termination
would violate the "public policy" embodied in the law or regulation.
- "Creed" in California law is synonymous with religion.
Copyright © 2003 by the Catholic Health Association of the United States
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