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Dermody files defamation lawsuit against PC(USA)

Editor’s note: During a June 1 news conference, Marilyn Gamm, chair of the Presbyterian Mission Agency Board, announced that none of the four employees involved in the 1001 New Worshipping Communities investigation is still employed by the Presbyterian Church (U.S.A.), “effective today.” Saying it was a “private personnel matter,” Gamm declined to say whether the employees resigned, were terminated, or some other arrangement was made, although she did say they were not given severance packages.

LOUISVILLE – Roger Dermody, deputy executive director for mission for the Presbyterian Church (U.S.A.), has filed a lawsuit alleging that PC(USA) officials defamed him by accusing him of “unethical” behavior for his role in the 1001 New Worshipping Communities ethics inquiry. The full text is the lawsuit is available here.

The lawsuit, filed by one of the top officials from the denomination’s national offices in Louisville, comes after more than six months of turmoil regarding the 1001 investigation. The lawsuit states that throughout the PC(USA)’s investigation of these events, “the PC(USA) repeatedly published false statements about Dermody’s alleged misconduct, and failed and refused to correct those statements after PC(USA) found no support for them, all of which caused Dermody great injury.”

In filing the lawsuit, Dermody claims that he was not aware in advance that other employees had set up unauthorized independent corporation in California in December 2013 or that $100,000 in PC(USA) funds had been sent to that corporation (the money has since been repaid). The lawsuit states that “Dermody did not know of those employees’ actions beforehand, had no part in the creation or incorporation of the non-profit corporation, and had no part in the funding of that non-profit corporation.”

The 1001 program is the PC(USA)’s evangelistic effort to create 1001 new worshipping communities from 2012 to 2022.

Dermody filed suit May 29 against the Presbyterian Church (U.S.A.) A Corporation (which is the denomination’s corporate identity) in Jefferson County Circuit Court in Louisville. The lawsuit alleges that PC(USA) statements that he and done something “unethical” were “false and defamatory, have caused Dermody substantial public embarrassment and shame, and have substantially compromised Dermody’s future employment and financial prospects.”

The lawsuit states that “Dermody has been informed and believes that his employment with PC(USA) will be terminated unless he resigns. Dermody has not resigned.”

The lawsuit states that Dermody is seeking a jury trial; a judgment against the PC(USA) for defamation; and “an award of compensatory damages in an amount, to be proven at trial, that will compensate him for public embarrassment and humiliation, compensate him for the adverse effects on his future employment prospects and career, and compensate him for the adverse effects on his future earnings and financial stability.”

The lawsuit also seeks “an award of punitive damages sufficient to punish PC(USA) and to deter it and others from engaging in similar conduct, for exposing Dermody to public hatred, ridicule, contempt or disgrace, or inducing an evil opinion of him in the minds of right-thinking people.”

He also is seeking recovery of his costs for litigating the case.

The Presbyterian Mission Agency Board met in a closed-session conference call on the morning of June 1 to discuss “personnel and property matters.”

The ethics investigation first made news in October 2014. On November 15, 2014, Dermody and three other PC(USA) employees were placed on paid administrative leave while the board hired outside attorneys to investigate what had happened. The four employees were:

  • Dermody, the former executive pastor of Bel Air Presbyterian Church in California and the PC(USA)’s deputy executive director for mission since June 2010. Dermody is one of two deputy directors who serve directly under Linda Valentine, the executive director of the Presbyterian Mission Agency, also known as PMA;
  • Eric Hoey, director of Evangelism and Church Growth;
  • Philip Lotspeich, then-coordinator for church growth, with responsibility for overseeing the 1001 initiative; and
  • Craig S. Williams, staff person for the western regional office of the Presbyterian Centers for New Church Development, based in California.

In April 2015, the Presbyterian Mission Agency Board spent more than 12 hours over two days discussing the issue in closed session and then voted to authorize one of the lawyers it has hired, John O. Sheller, to work with the board’s executive committee and with Valentine “to undertake appropriate steps to resolve employment issues” with the four staff members named in the ethics investigation. Sheller is a labor and employment lawyer from the Louisville firm of Stoll Keenon Ogden.

According to minutes of the meeting, the board’s executive committee voted in a closed door conference call meeting on April 10 to instruct Barry Creech, the Presbyterian Mission Agency’s director for policy, administration and board support, to “identify and remove from the public domain” documents related to the investigation, with the action to be taken by April 15, and “to create a list of those documents for inclusion in these minutes” of the April 10 meeting. The documents that were removed from the PC(USA) website included minutes of board and committee meetings and Presbyterian News Service articles related to the controversy.

The board has already spent more than $80,000 in legal fees in the investigation – but that’s just a start. Marilyn Gamm, the board’s chair, said in April that the Alston & Bird legal firm of Charlotte, which was hired to conduct the investigation, estimated its legal fees would be in the $500,000 to $750,000 range. The $80,000 already spent does not cover fees for Sheller’s firm.

The lawsuit contends that “all that reasonably can be said of Dermody’s alleged conduct is that he failed to perceive or comprehend (but reported to PC(USA) when he did so perceive or comprehend) that certain other PC(USA) employees had improperly created, incorporated and funded” the separate corporation.

The lawsuit states that Dermody learned of the existence of the California corporation in March 2014, when the Presbyterian Mission Agency’s internal control procedures revealed that funding had been sent to the unauthorized corporation, and that he “immediately joined with PC(USA)’s legal counsel and human resources staff to recover all transferred funds,” terminate the corporation “and block a second transfer of grant funds.”

It states that when the creation of the corporation was discovered, Dermody and the employees involved “acknowledged the employees’ procedural error in establishing a non-profit to perform the PC(USA)-authorized mission work. Thereafter, the entire transaction was unwound and all funds were properly accounted for. Despite this, the PC(USA) has spent or will have spent in excess of $500,000 investigating the matter even though PC(USA) does not claim that any person took or attempted to take or in any way misused PC(USA) funds (other than use them for legitimate PC(USA) purposes through an improper corporation and bank account). The PC(USA) lost none of the $100,000 deposited in the non-profit’s account; and all other aspects of the matter involved performance of PC(USA)-approved ministry work.”

The lawsuit states that in December 2013, “a California-based staff member, and one or more other PMA staff members, acting without notice to Dermody, created and incorporated a separate non-profit corporation, the Presbyterian Centers for New Church Innovation, Inc.” or PCNCI. The lawsuit states they did so “to facilitate and streamline payment or expenditures for the California-based aspects of the 1001 Movement” and that they did not “receive, take, divert to personal use or otherwise misuse any of the funds” transferred to the account for the California corporation.

In his job as deputy executive director, “Dermody received dozens and sometime hundreds of emails each day,” the lawsuit states. “Two January 2014 emails to Dermody from two evangelism and church growth staff members referred to the unauthorized corporation’s existence. However, neither email dealt specifically with that topic – that is, the creation of the nonprofit PCNCI. He did not read the January 2014 emails in their entirety, and therefore did not realize the significance of the particular phrases.”

The lawsuit states that Valentine has told the Presbyterian Mission Agency Board that “neither she nor Dermody” knew of the creation of the corporation in advance or approved the transfer of funds.

The lawsuit states that in December 2014, “Dermody asked that the PC(USA) cease and desist from making statements accusing him of ethics violations,” and asked the PC(USA) and the Presbyterian Mission Agency “to take steps to remedy the false impression of him which it had conveyed to the public. The PC(USA) and PMA failed and refused to take any action whatsoever until April 2015 when, following the completion of its investigation, PC(USA) directed that all references to Dermody’s alleged ethics violations be removed from PC(USA) publications. However, by that time the PC(USA)’s false statements regarding Dermody had been published for over six months.”

It also states that Dermody was ordained as a teaching elder in October 1997 and, in 25 years of work for the church – including as a minister and later as a PC(USA) executive – has “a completely unblemished record.”

Asked for comment regarding the lawsuit, PC(USA) director of communications Kathy Francis wrote in an email: “We’re unable to comment on pending litigation.”

Claims made in filing a lawsuit give only one side of the case.