In the wake of a federal appeals court's decision allowing a prominent wealthy former Mormon's lawsuit to continue against the Church of Jesus Christ of Latter Day Saints over its alleged use of "tithes" to develop a Salt Lake City shopping mall, a significantly less wealthy Mormon couple has hit the church with a class action lawsuit, demanding the church be ordered to potentially refund tithes paid by millions of LDS adherents for nearly 20 years.
On Jan. 29, attorneys David B. Jonelis, of the firm of Lavely & Singer, of Los Angeles, and Todd S. Eagan, of the Eagan Law Corporation, of Santa Monica, filed suit in Los Angeles federal court against the Corporation of the President of the Church of Jesus Christ of Latter Day Saints (LDS.)
The lawsuit also named as defendant the LDS' investment manager, Ensign Peak Advisors.
The lawsuit was filed on behalf of named plaintiffs Gene and Michelle Judson, of San Leandro, who have been tithes-paying members of the LDS church since 1967 and 1971, respectively, according to the complaint.
The lawsuit accuses the LDS church leadership of allegedly misleading church members about its use of funds paid to the church as "tithes," or at least 10% of church members' income.
According to the complaint, the Judsons have paid about $40,000 to the LDS church as tithes since 2003.
The lawsuit centers on specific claims that the LDS leadership misled members over the use of $1.4 billion in church funds paid from tithes to finance the purchase of the City Creek Center Mall in Salt Lake City.
According to court documents, the LDS church's use of the funds to develop the mall was first disclosed in a 2019 whistleblower complaint filed Ensign Peak Advisors senior portfolio manager David Nielsen.
According to the complaint, that revelation came despite nearly two decades of assurances from church leaders that the mall project was only being financed from the church's existing commercial holdings, and did not involve tithe funds.
Nielsen asserted this revelation should result in the government stripping the church of its tax exempt status, since it was using tithe funds for commercial profit.
In February 2023, the federal Securities and Exchange Commission announced the LDS church and Ensign Peak were paying a combined $5 million penalty to settle charges accusing them of allegedly creating 13 shell corporations to "intentionally conceal" the LDS investments, including the mall.
In response to those revelations, wealthy former Mormon James Huntsman became the first to file suit against the church, seeking the refund of millions of dollars in tithes he paid to the church before he renounced his membership in 2020.
Huntsman is the son of Jon Huntsman Sr., founder of the Huntsman Corporation, and brother of former Utah governor Jon Huntsman Jr.
The elder Huntsman had also served as a leader within the LDS church,
Huntsman's lawsuit was initially dismissed by a California federal judge. However, that dismissal was overturned by a panel of the U.S. Ninth Circuit Court of Appeals in August, when judges determined the lawsuit's claims did not actually involve the church's use of its funds. Rather, they agreed with Huntsman that the claims centered on the alleged fraud and conspiracy allegedly committed by church leadership in allegedly misrepresenting to church members how the funds were being spent, allegedly inducing them to continue giving their tithes.
The new lawsuit from the Judsons builds on those assertions, claiming their lawsuit also does not implicate the First Amendment and its guarantee of religious freedom in any way.
"In making their annual tithing payments to the LDS Church, Plaintiffs relied on their understanding (supported by the repeated representations by high-ranking LDS Church leaders) that tithing funds would only be used for the LDS Church's published purposes: to educate its members, conduct missionary work, build and maintain meetinghouses and temples, and perform charitable work including care for the poor and needy," the lawsuit states.
The lawsuit asserts the Judsons and other Mormon adherents would not have continued tithing if they had known the church was using tithe funds to finance the mall and "commercial, for-profit purposes."
The lawsuit asserts church members are "entitled to compensation for tithing funds paid as gifts ... because, as donors, their intent was induced by fraud."
The plaintiffs seek to expand the action to require the church to pay potentially massive damages, which could include damages for every Mormon who paid tithes to the LDS church in California and throughout the U.S. since 2003.
The lawsuit includes allegations against the LDS church and Ensign Peak for fraudulent misrepresentation; fraudulent concealment; violations of California consumer protection laws; and civil conspiracy, among other counts.
The lawsuit seeks damages including compensatory, actual and exemplary damages, plus punitive damages and attorney fees.