Supreme Court Hands Back Puerto Rico Catholic Pensions Case

The U.S. Supreme Court has decided that a court in Puerto Rico was wrong to order the seizure of property from Catholic entities in order to fulfill a court judgment to pay $4.7 million in pension benefits to both retired and active teachers.

Following a decline in enrollment in Catholic schools as residents left the territory because of a 12-year recession, and the exacerbation of the problem after Hurricane Maria, in 2016, the archdiocese notified several hundred teachers that their pension payments were being stopped because payouts exceeded contributions. The teachers filed a lawsuit and, in 2018, a judge ordered the archdiocese to pay $4.7 million to both retired and active teachers.

According to a petition for writ of certiorari with the U.S. Supreme Court filed by the Roman Catholic Archdiocese of San Juan, following the court decision, the Puerto Rico Supreme Court proceeded to declare every single Catholic entity in Puerto Rico—including the Roman Catholic Archdiocese of San Juan, five separate Roman Catholic dioceses, all 338 parishes and all other Catholic entities on the island—part of one monolithic (and, in both church doctrine and secular reality, nonexistent) entity dubbed the “Roman Catholic and Apostolic Church in Puerto Rico.” Most of these entities did not participate in the Church Pension Plan.

The archdiocese alleged that, based on a refusal to defer to the separate nature of the various Catholic entities on the island, a sheriff was ordered to “open doors, break locks or force entry … night or day” into Catholic churches throughout Puerto Rico and seize and sell off artwork, furniture and anything else of value unless and until the nonexistent “Roman Catholic and Apostolic Church in Puerto Rico” supplied $4.7 million to fund the pension obligations of three Catholic schools whose pension plan had run out of money.

The petition asked the U.S. Supreme Court to answer the question: “Whether the First Amendment empowers courts to override the chosen legal structure of a religious organization and declare all of its constituent parts a single legal entity subject to joint and several liability.”

According to the high court’s order, the archdiocese argued that the Free Exercise and Establishment Clauses of the First Amendment require courts to defer to “the church’s own views on how the church is structured.” Thus, in this case, the courts must follow the church’s lead in recognizing the separate legal personalities of each diocese and parish in Puerto Rico.

The U.S. Supreme Court called for the solicitor general’s views on the petition. The solicitor general contended that the Puerto Rico Supreme Court violated the fundamental tenet of the Free Exercise Clause that a government may not “single out an individual religious denomination or religious belief for discriminatory treatment.”

The high court did not address either the question in the petition or the solicitor general’s argument because it found that the lower court lacked jurisdiction to issue the payment and seizure orders. On February 6, 2018, after the Supreme Court of Puerto Rico remanded the case to the lower court to determine the appropriate parties to the preliminary injunction, the archdiocese removed the case to the U.S. District Court for the District of Puerto Rico. The U.S. Supreme Court noted that once a notice of removal is filed, “the state court shall proceed no further unless and until the case is remanded.” The state court “loses all jurisdiction over the case, and, being without jurisdiction, its subsequent proceedings and judgment [are] not … simply erroneous, but absolutely void.”

The lower court issued its payment and seizure orders after the proceeding was removed to federal district court, but before the federal court remanded the proceeding back to the Puerto Rico court.  The high court said, at that time, the lower court had no jurisdiction over the proceeding, so its orders are therefore void.

“We think the preferable course at this point is to remand the case to the Puerto Rico courts to consider how to proceed in light of the jurisdictional defect we have identified,” the U.S. Supreme Court concluded.