Lessons on Suing the Church from Commodity Traders

November 28, 2005 | 26 comments
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People often get upset with members who sue the Church. Why? As you might expect, I think that the answer lies in contract disputes between commodity traders. In particular, in a University of Pennsylvania Law Review article by Lisa Bernstein (Law — University of Chicago) entitled “Merchant Law in a Merchant Court.”

Here is the background to the insight: There is a long-running debate in contract law about how one ought to interpret contracts. In particular, should judges who interpret contracts try to understand norms and practices within the business or should they simply read contracts according to their plain meaning. At issue here is the extent to which one should think of contracts as governing long-term reciprocal relationships or as self-contained, one-shot events. The Uniform Commercial Code, which is the law of every state in the Union, governs a lot of commercial contracts (hence the name), and under certain circumstances it requires judges to look at business norms and practices in interpreting contracts. No one really knows if this is a good idea.

This is where Bernstein’s article comes in. It turns out that lots of merchants operate what are in effect their own court systems, using trade associations and the like to resolve — among other things — contract disputes. Bernstein looked at one of these private legal systems — the one operated by certain agricultural commodity traders — and found, somewhat surprisingly, that these merchant courts don’t seem to give a fig about business norms or practices in the trade. They don’t seem to care about contracts as long term reciprocal relationship. Instead, they adopt what is — by legal standards — a hyper-formalist reading of contracts. In essence, they say, “To hell with your implicit understandings, good faith in business dealings, and usage in the trade. You have to do what you said you would do when you signed on the bottom line. The other guy gets his pound of flesh and if you don’t like it tough.” Or words to that effect. What is really interesting, however, is that Bernstein found that commodity traders don’t ordinarily view their relationships with other traders in these terms. In other words, outside of the confines of their private court system, commodity traders do care about business norms, long-term reciprocal relationships, good faith dealing, and the like.

Bernstein explained this apparent puzzle by identifying what she saw as two sets of norms. One set of norms are what she called relationship-maintaining norms. The idea here is that people tend to be charitable and flexible in order to maintain long-term relationships. The other set of norms are what she called end-game norms. The idea here is that when things go south and people are no longer in long-term relationships they want to be governed by a different set of norms, those dominated by notions of formal rights, duties, and obligations. According to Bernstein, the commodity traders have neatly divided these norms into different institutional contexts. The world of the market is largely a world of relationship-maintaining norms, while the world of litigation is largely one of end-game norms.

Now back to Church: Active members of the Church regard themselves as being in a long-term relationship with the Church. As a result, they tend to conceptualize proper interaction with the Church in terms of relationship-maintaining norms. At some implicit level, people instinctively recognize that litigation involves a different set of norms, namely end-game norms. The perception is that by moving into the world of litigation — the world of formal rights and wrongs — the plaintiff has abandoned relationship-maintaining norms in favor of the rules that are supposed to govern the just terms of exit from a relationship. And hence, the plaintiff, for better or for worse, finds themselves cast in the role of outsider, forced — if they desire to maintain insider status — to fight rhetorically against the force of the end-game norms that they have invoked.

26 Responses to Lessons on Suing the Church from Commodity Traders

  1. Frank McIntyre on November 28, 2005 at 4:43 pm

    nice.

  2. Clark on November 28, 2005 at 4:56 pm

    I think that one issue beyond what you say is the pereption that people are out to get us. This runs into trouble when we actually have issues that need to be resolved legally. There isn’t a clear understanding of what to do.

    That is, we still have remnants of the seige mentality that we held through most of the 20th century. I saw that in myself when the lawyer quoted over at BCC used the phrase TBM (true blue Mormon) with the implication that I was a reactionary unquestioning Mormon defender. I don’t know if that was intended. But suddently, there until I noticed it, the disussion turned into an “us vs. them” mentality. It’s unfortunate.

    But I think that sometimes we are unwilling to acknowledge our own flaws because of that mindset. . And sometimes, others facilitate it.

  3. John Mansfield on November 28, 2005 at 5:18 pm

    Has anyone sued the Church while maintaining a normal, participating member relationship with it? Have lawsuits by members always been preceeded by a withdrawal from activity in the Church?

  4. Nate Oman on November 28, 2005 at 5:22 pm

    John: It seems to me that the answer to your question is no. For example, my wife worked extensively with a woman in Cambridge who, at her baptism, slipped and fell in the font, breaking something or another. She subsequently sued the Church. When we were in Cambridge she was an active member.

  5. CS Eric on November 28, 2005 at 6:05 pm

    Nate (#4),

    That example shows one difference between the training Church leaders have and employees at sites that more regularly are sued. I read an article in the ABA Journal years ago that workers at Disneyland are trained that the first question they ask someone who is injured on their rides is “What did you do to get hurt?” implying that the injured person was at fault. A well-trained person at the baptism would have asked “Didn’t you look where you were going when you stepped down into the font?”

  6. manaen on November 28, 2005 at 6:17 pm

    3.
    John, I knew a family that maintained “a normal, participating member relationship with” the Church years after winning their lawsuit against it. In their case, a basketball backboard was misassembled by having the bolts holding the basket heads-out instead of heads facing the playing floor. This left the shanks of the bolts protruding under the basket. The father’s wedding ring caught on one of these bolts, causing him medical damage. They still were active and serving in callings years later.

  7. jeraldo on November 28, 2005 at 6:38 pm

    I think it comes back to how we view the church, most of us I think would say ‘we’ are the church, the church is a collection of people and by suing the church you are indirectly suing me. You are opportunistically taking the money I have donated for the building up of the kingdom, relief of the needy etc. and are using it for your personal gain.

    We identify with the church on a very personal basis. The commercial world tries to evoke the same attachment by profit sharing schemes and alike but ultimately, certainly in large corporations we do not feel we are being sued, it is the shareholders or others that are losing.

    The business writer Peter Kay also talks about businesses getting away from spot or one off contract mentalities and developing a relational contract mentality, e.g. O.K. you can get one over a customer according to the legal contract, but you will have lost that persons repeat business and loyalty, but treat a customer well above and beyond the legal requirements and you will develop a relationship which will be financially profitable.

    I also think poor leaders have a legal contract relationship with employers , e.g. take employees for granted and tell them what they are obligated to do. Whereas effective leaders develop relational contracts showing interest in and consideration for each person. Anyway I’m probably getting off the subject a little here, but as you can probably tell it’s something I get quite passionate about.

  8. A Nonny Mouse on November 28, 2005 at 6:58 pm

    John: “Has anyone sued the Church while maintaining a normal, participating member relationship with it? Have lawsuits by members always been preceeded by a withdrawal from activity in the Church?”

    I think this question contains a tacit assumption that I find is fairly common: If you sue someone you must not like them very much.

    Generally, I think that is the case… Generally, I think if you make it to a court of law to settle a dispute, you have issues. But I don’t think that is always the case.

    I know of few cases where family members have sued other family members, while still maintaining good, loving relationships with them. In one case, an uncle’s dog bit a nephew’s face at a family party. In order to obtain recompense for medical expenses, the nephew’s family had to sue the uncle. The uncle’s home-owners insurance then stepped in to pay for the expenses.

    Insert here the usual disclaimer, IANAL, and other folks here clearly are, and can explain this kind of litigation more clearly, but it seems that sometimes, you have to sue folks in order to get proper recompense.

  9. slam smith on November 28, 2005 at 7:47 pm

    I broke my arm playing volleyball at the church as a teenager, it never occurred to my family to sue the church for this. Quite frankly it wasn’t the fault of the church. I also injured both my ankles at the MTC, and again never occured to me to sue over this. It was an accident, mostly my fault. I just don’t see the reason to involve the lawyers and courts.

  10. Mathew on November 28, 2005 at 8:07 pm

    Sam,

    If the church is at fault, then you can have a debate about whether or not they ought to bear the costs of that fault. Not suing a party whom you do not believe to be at fault doesn’t say much about anything except you are not a blatant opportunist. It seems to me (and I could be misreading you) that implicit in your statement are two things: 1) the church could never be at fault and/or 2) a person who sues the church is necessarily an opportunist. Both of these are demonstrably wrong.

  11. Jared on November 28, 2005 at 8:12 pm

    This reminds me of Bushman’s discussion of Oliver Cowdrey’s exit from the Church and republican language snapping into place in RSR. All of the sudden God’s representative becomes a tyrant.

  12. Clark on November 28, 2005 at 8:53 pm

    I’d second Matthew. If the church as an organization is at fault, then it seems there is corporate responsibility. As best I can tell the church acknowledges this. So I don’t see the problem. However clearly there is far more opportunity for misunderstanding in the church context than there is with a regular organization.

    Jeraldo, I agree that in a sense suing the Church is suing “us.” However if there is collective responsibility, is that a bad thing? Once again it gets to the issue of responsibility.

    The example I gave was from a history of the church legal system I recall listening to on KUER. Hopefully Nate can fill in the details. I gave this at BCC. As I recall, there was a janitor for the Church back in the 1950’s who fell and hurt his back very badly. He didn’t want to sue the Church over it for all the obvious reasons. Somehow he met the Prophet at the time who told him that he ought to sue, that this was the way things had to be done now due to the changes in our culture. Perhaps in an ideal world things would have been different, but with lawyers, accountants, insurance policies and the like, that’s how he’d best recoup his damanges.

    Anyone know the source for the above?

  13. Zamboola River on November 28, 2005 at 11:29 pm

    I think 2 questions would be:

    Are you suing to get gain, or are you suing for reimbursement of costs incurred?

    Was the result your fault, on the Church’s?

    In the case of falling in the baptismal font, I would lean towards not suing.

    In the case of the basketball backboard being installed incorrectly, I would lean towards suing.

    I am generally against suing, because in many cases, it seems they are suing in order to gain financially, beyond the damage incurred to them.

    Those 2 questions would generally be heavy in my mind in any cicumstance where I would have the option to sue.

  14. Clark on November 29, 2005 at 1:24 am

    Zamboola, it seems that is a false dichotomy. One can also sue so as to help bring about change.

    One problem I think the Church faces today that it didn’t in earlier decades is its size. With a population of more than 10 million it is simply to big to have the hands on attention that was possible in say the 19th century. That means there is associated bureaucracy, paperwork and corporate momentum that is hard to change – even for the Prophets. Heavens, I suspect that in many ways Pres. Hinkley’s job is harder than Moses’.

    Given that corporate momentum in the bureaucracy that resists change, sometimes lawsuits can do good. Now if the Prophet asked me not to do a lawsuit, I’d certainly wouldn’t. But I’m not sure that entails that we should only sue for reimbursement.

  15. Bookslinger on November 29, 2005 at 1:33 am

    I would think failing to install a non-slip surface on the baptismal font steps (and the area from the changing room to the font) is just as negligent as installing the bolts backwards on the basketball backboard.

    The issue of suing to determine liability and compensation is not about opportunism or personal gain, it is about being made whole.

  16. annegb on November 29, 2005 at 11:53 am

    When people incur debt as a result of a problem in church facilities, it’s not unreasonable to ask the church to pay.

    This girl who sued the church has a legitimate beef, in my opinion. Nobody’s perfect, and I believe our leaders try very hard to be careful, but sometimes excrement happens. I think our church should at the very least pay this girl, and her sister, something to help them regroup. It’s got nothing to do with salvation. This is temporal and it’s fair.

    I understand the practicality of trying to limit the amount in the judgement, but I wish our leaders, in this case, would settle and offer these girls a public apology. I think they deserve it.

  17. Visorstuff on November 29, 2005 at 12:24 pm

    Setting aside personal gain and focusing on dipsute resoution – according to my reading of the History of the Church and my reading of the D&C, there is a system in place for this. Specifically, the purpose of High Councils: if there are disputes, isn’t it their job to mediate it? According to revelation and policy, this is their job, isn’t it?

    When there were disputes in the early church, the parties were encouraged to work it out between themselves, and then with the bishop and later stake president. If no resolution could be made, it was brought before the various church councils, and appealed to the First Presidency if needed. However, I’m unaware of more than a quarter-dozen cases of this type in the past ten years, and only a dozen or so in the past 50.

    Should a TBM pursue this channel first before legal means? Or is this now discouraged because it could lead to a huge legal liability?

  18. Clark on November 29, 2005 at 12:45 pm

    I think Anne, that there are bigger issues. I think Nate brought some up in his other thread the other day. Now as to whether the Church should be listening to attorneys to the degree they sometimes do, that’s a more difficult decision and I’m glad I’m not the one making it. I think that in the big picture one has to worry not just about any one case, but about how that case will be viewed by others.

    It would be nice if we lived in a culture that was far less litigious. The US really is horribly litigious – perhaps due to the poor safety net especially with respect to health care. Although I’m not sure even that can explain it all. Our culture has grown with the assumption that civil court can act as a kind of legislature to right wrongs. I think that sometimes, while I understand and sympathize with a lot of the thinking behind it, that I worry about how this affects our civil liberties. Especially when I sometimes, due to past business experience, have a distinct lack of faith in the juries. As they say, sometimes juries are made up of people unable to think of a way out of jury duty.

  19. Nate Oman on November 29, 2005 at 2:49 pm

    Visorstuff: For what it is worth, at the end of teh 19th century there were a number of statements by the first presidency and other leaders to the effect that members should no longer use church courts to resolve disputes that should be in secular courts. As I recall none of these statements was entirely clear on where this line should be drawn, but they did seem to take the position that not all disputes should be resolved withing Church councils. That said, I have copies of complaint forms printed up in the 1920s that were used to initiate suits in church courts.

  20. Nate Oman on November 29, 2005 at 2:58 pm

    I should also point out that the end-game norms flow in the other direction as well. Members of the Church are likely to feel betrayed in some sense if the Church calls its lawyers into interactions with the Church. They will see the Church as invoking a set of norms that are designed for the termination of a relationship and see it as being cut loose from the Church, etc. etc.

  21. Visorstuff on November 29, 2005 at 3:15 pm

    Nate: Thanks – the last major church council appeal case I am aware of dealt with who has ultimate authority in a ward – if a a high priest group leader has authority over a bishop, but I’m aware of some small complaints in local stakes in the past few years.

    Is the reason for this because of liability, or because of “clogging” up the church court system?

    Also, can you point me to the 19th century statements if you get a chance that refer to using the legal system rather than councils? Would be an interesting read. Sure appreciate it.

  22. Kingsley on November 29, 2005 at 5:05 pm

    If I die and find out that face cards, whiskers and Diet Coke with Lime weren’t really that big a deal, I’m suing for emotional damage.

  23. scott on November 30, 2005 at 12:14 am

    Certainly it is true in many kinds of relationships (husband/wife, landlord/tenant, small business employer/employee) that by things get bad enough that lawyers have to be called into the picture, both sides are ready for the relationship to end.

    But many kinds of institutional and personal relationships (e.g., church/mayor of Salt Lake City, Microsoft/Apple, United States/France, employer/union leader, employer/employee, etc.) involve parties who raise legal challenges against each other frequently without any expectation that the relationship will end (even if the parties sometimes wish it would…)

    Is the church/member relationship the sort that can survive a lawsuit or the sort that cannot? Empirically (anecdotally, anyway) it clearly can survive lawsuits, contractual disputes, and far more painful and serious moral or personal disputes. People don’t (always) stop considering themselves Mormon just because they believe the church owes them money. A contractor who has been wronged by someone on the business side of the church can certainly sue the church while continuing to pay tithing. Nothing “endgame” about that.

    Of course, Nate is not saying that all lawsuit-filing members consider their relationship with the church to be in the “endgame” or that the church always considers the relationship with the member to be in the endgame. He is making a far weaker statement, namely that some members may perceive the relationship to be in the endgame.

    And this is certainly true.

    But I suspect that the bulk of members — hearing about a dispute — would refrain from jumping to conclusions about a lawsuit-filing member’s desire to continue a relationship with the church. And even when they do, when the member wishes to remain in the church, it’s usually pretty clear, and so the assumption is easily reversed.

    Or am I giving “members” too much credit?

  24. norm on November 30, 2005 at 1:31 pm

    maybe this is out of place. but i had an extended discussion this week with a few friends. among us were law students and a litigator–and a few BYU alums. (we were discussing collusion, unconscionable contracts, and various other problems with the inbred world of BYU-approved housing, landlords, etc–but i think there are broader applications)

    is it possible to sue BYU while a student and not get kicked out? (i mean IS it, not should it be, or would it be illegal for them to boot you.) anecdotes abound. but if, as a student at the Y someone sued the Church or BYU, would it be possible to keep an ecclesiastical endorsement and not run afoul of the Honor Code?

    secondly, as believing members, how does the tension between a duty to the Church and a duty to end injustice perpetuated in the name of the church shake out?

  25. Stephen M (Ethesis) on November 30, 2005 at 10:12 pm

    Elder Oaks wrote a book that brushed on this and the role of insurance is an interesting one.

    Given the way the last post of this type on T&S faded away, I’m reluctant to spend much time posting on this one, lest it too suffer the same fate.

  26. Bob Wilde on December 3, 2005 at 4:12 pm

    Elder Oaks also had a chapter in one of his books explaining why Church courts are no longer the proper way to resolve civil conflicts among members. (Is that an oxymoron?) In the 19th century the civil justice system was controlled by enemies of the church and of church members so the likelihood of a fair resolution was slim. In theory that has changed so the civil courts now mete out actual justice. (Is that another oxymoron?)

    While serving as bishop I liened our new stake center for a construction rental client. I never felt any adverse impact.

    The “pay their loss” argument is completely subjective. If your hosptial bill is $1500.00 but you lost the use of your arm, does $1500 pay your costs?

    How clearly can you draw the line between the corporate aspects and other aspects of the Church?