AUSTIN – Texas Attorney General Ken Paxton has filed an amicus brief on behalf of six states in the case of Portico Benefit Services v. Bacon, a case Paxton's office called "an important religious liberty case" in a release.
In the petition, which is filed on behalf of Texas, Arkansas, Louisiana, Oklahoma, Utah and Kentucky, Paxton asks that the U.S. Supreme Court grant the petition and explain how to apply the First Amendment to religious organizations' financial pictures.
According to the Minnesota Court of Appeals opinion, which was filed July 25, Evangelical Lutheran pastors David Bacon and Timothy Hepner, as well as Ruth Dold and Sharon Hvam, brought a class-action lawsuit against the board of pensions of the Evangelical Lutheran Church in America, which is operating as Portico Benefit Services, citing the Uniform Prudent Investor Act. They allege that Portico mismanaged and incorrectly administered retirement plans. Bacon, Hepner, Dold and Hvam alleged breach of fiduciary duty, breach of trust, as well as fraud and concealment against Portico.
According to the Minnesota Court of Appeals opinion, Bacon, Hepner, Dold and Hvam alleged that Portico breached its fiduciary duties by not managing the assets of their retirement plans with reasonable care, skill, or diligence. Along with that, according to the opinion, Bacon, Hepner, Dold and Hvam alleged that their exclusive interests were not acted upon when plan investment options were picked and kept.
Additionally, as explained in the Minnesota Court of Appeals opinion, the plaintiffs alleged that Portico breached trust in five ways that related to Portico offering retirement services that benefited the company unreasonably, to the company not considering other lower-cost options, and to the company mismanaging expenses relating to the plans. They alleged that Portico defrauded them by purposely misrepresenting the nature of the fees related to the plans.
As explained in the Minnesota Court of Appeals opinion, Bacon and Hepner have Evangelical Lutheran Church in America retirement plans, while Dold and Hvam have the Retirement Plan for the Evangelical Lutheran Good Samaritan Society.
According to the Minnesota Court of Appeals opinion, Portico called for dismissal of the lawsuit in district court, saying that Bacon, Hepner, Dold and Hvam could not bring the suit forward on their claims under the Establishment and Free Exercise Clauses of the First Amendment to United States Constitution, as well as the Freedom of Conscience Clause in the Minnesota Constitution. As explained in the opinion, the district court granted Portico's motion and dismissed the quartet's claims with prejudice. However, the Minnesota Court of Appeals reversed and remanded the court's decision.
In the amicus brief, Paxton and the other parties involved argue that before the Minnesota Court of Appeals' ruling, no state used the Uniform Prudent Investor Act to rule on an intra-church dispute over how pastors are paid. The parties filing the amicus brief argue that the First Amendment prohibits courts from deciding on intra-church disputes like Portico Benefit Services v. Bacon.
Along with that, the parties filing this brief argue that the Minnesota Court of Appeals decision to allow the case to go to trial under the Minnesota Uniform Prudent Investor Act results in the possibility of other civil courts nationwide may have to decide whether the way a church invests fits its theology, which is activity that the First Amendment prohibits.