FRANKFORT, Ky. – A three-judge Kentucky Court of Appeals panel heard oral arguments June 26 in Roger Dermody’s appeal of a state court ruling in the defamation lawsuit he filed in May 2015 against the Presbyterian Church (U.S.A.).
Dermody, the PC(USA)’s former deputy executive director for mission, was one of four men who lost their jobs with the denomination in 2015, following an ethics investigation involving the 1001 New Worshipping Communities program.
Dermody’s lawyer, Stephen Pence, argued before the Court of Appeals judges that while the PC(USA) claims that Dermody violated its ethics policy, he did nothing dishonest or deceitful – which is what “people in their common, everyday language” think of as unethical.
While the denomination might say that Dermody violated its ethics policy, it’s defamatory to say “he had actually engaged in any unethical conduct,” Pence said. “He did not. … There was no dishonesty. There was no deceit.”
Dermody and three other PC(USA) employees – Philip Lotspeich, Eric Hoey and Craig S. Williams – lost their jobs in 2015 following an investigation involving an unauthorized $100,000 grant sent to a nonprofit corporation set up in California. All of the money was repaid, and Linda Valentine, former executive director of the Presbyterian Mission Agency, has said none of the four acted for personal gain. The 1001 program is the denomination’s effort, endorsed by the 2012 General Assembly, to create 1001 new worshipping communities from 2012 to 2022.
Representing the PC(USA), lawyer John Sheller told the appeals court panel – presiding Judge Glenn Acree, along with judges Sara Walter Combs and Debra Hembree Lambert – that Dermody was not involved in setting up the corporation, but supervised those who did.
In September 2015, a state court judge in Louisville dismissed Dermody’s lawsuit, granting the PC(USA)’s request for a summary judgment in the case. In that ruling, Jefferson Circuit Judge Judith McDonald-Burkman wrote that for the court to determine whether Dermody had committed an ethics violation, as the PC(USA) determined he had done, would require the court to interpret church doctrine and policies. And that’s not allowed, she wrote, under what’s known as the “ecclesiastical abstention doctrine and ministerial exemption,” through which the courts decline to become involved with matters of internal church governance.
In appealing that ruling, Dermody is asking that the case be sent back to state court for a jury trial.
Sheller contended that the denomination’s ethics policies are in some ways similar to the professional code of professional responsibility for lawyers – a code that “sets a standard of conduct for our profession,” but doesn’t necessarily imply dishonesty.
Sheller said that the PC(USA) has “a unique standard” relative to the secular world. As the PC(USA) views it, “all the resources in the world come from God” through Presbyterians’ donations, he said. “There’s a heightened level of fiduciary responsibility of stewardship. … When it’s like manna from heaven, we’re going to have the strictest ethics.”
Acree said his understanding was that Dermody did not actually set up the nonprofit corporation in California, but he knew it existed.
“That is correct,” Sheller responded. Dermody did not set up the corporation, “but he was aware of it, and the church found he was responsible for what his subordinates had done.”
“Did the church call Mr. Dermody unethical?” Acree asked.
“It did not,” Sheller said.
He was, however, found to have violated the PC(USA)’s ethics policy, according to the court records filed in the defamation case. McDonald-Burkman wrote in her ruling that “Dermody was found to have violated PC(USA)’s ethics policies in October 2014 with written warning. Dermody objected to that finding, but signed the warning.”
Sheller also argued that Dermody, a PC(USA) teaching elder, was at the time part of “the Presbyterian Vatican,” as one of the highest-ranking officials at the denomination’s national offices in Louisville, and that his responsibilities included “growing the church, propagating the faith … an inherently religious function.”
The PC(USA) had argued in its response to the state court that the claims made in the defamation lawsuit involve “quintessential matter of faith and polity,” and that the judge should apply the ecclesiastical abstention doctrine and ministerial exemption, and dismiss the case, which McDonald-Burkman did.
Pence told the appeals court that “they can’t rely on the ecclesiastical doctrine,” that Dermody has no disagreement with the religious beliefs of the PC(USA), and that the question of whether he committed any ethical violations is something a jury should decide.
Acree told the lawyers the panel hopes to issue a ruling in the case in the next 30 to 45 days.
