No RICO for Disputes over Religious Truth; Reliance-Based Tithing Fraud Must Plead Proximate Cause: The Tenth Circuit’s Dual Holding in Gaddy v. COP of the LDS Church

Introduction

In a published opinion of significant doctrinal and pleading import, the Tenth Circuit in Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints (Aug. 26, 2025) affirmed dismissal of a sprawling civil RICO suit brought by former Latter-day Saint members. The panel resolved two distinct theories underpinning plaintiffs’ RICO claim: (1) fraud predicated on alleged misrepresentations about the Church’s history and foundational events; and (2) fraud predicated on alleged misstatements and omissions concerning the use of tithing funds for commercial purposes.

The court set out two clear rules. First, the church autonomy doctrine forecloses civil adjudication of RICO claims that require courts to decide the truth or falsity of religious teachings or to police the content of ecclesiastical communications. Second, where a civil RICO claim is predicated on mail and wire fraud and the plaintiff’s own causation theory depends on personal reliance, the complaint must plausibly allege reliance that directly ties particular misstatements or omissions to the plaintiff’s injury; threadbare assertions that one “would not have paid” without more do not clear Rule 8’s plausibility threshold.

The case arises from a putative class action filed by three former members—Laura A. Gaddy, Lyle D. Small, and Leanne R. Harris—against the Church’s religious corporation, challenging: (a) decades of teachings about the First Vision, the Book of Mormon translation, the Book of Abraham, church history and locations, and Joseph Smith’s personal history; and (b) multiple statements (and omissions) about how tithing is used, including references to City Creek Mall, Ensign Peak Advisors, and Beneficial Life Insurance Company.

Summary of the Judgment

Religious-history fraud theory: Affirmed dismissal. The church autonomy doctrine bars this RICO theory because adjudicating it would require secular courts and juries to resolve ecclesiastical questions—specifically, the truth or falsity of the Church’s religious narratives and teachings. The panel rejected arguments premised on a fact-versus-belief distinction, demands for proof of the Church’s “sincerity,” reliance on a purported “fraud” exception in Gonzalez v. Archbishop of Manila, and “informed consent” as a limit on autonomy.
Tithing-use fraud theory: Affirmed dismissal on causation grounds. Without deciding whether the church autonomy doctrine applies, the court held plaintiffs did not plausibly plead that the alleged misstatements/omissions about tithing use proximately caused their injury (continued payment of tithes). Because plaintiffs’ chosen causation theory hinges on their own reliance, they needed to allege concrete, non-conclusory facts linking specific statements/omissions to specific donations they would not otherwise have made. They did not.
Concurrence (Phillips, J.): Agrees with dismissal but would go further and hold that the church autonomy doctrine does not apply to the tithing-use theory, characterizing it as a purely secular dispute over money and representations. He references the Ninth Circuit’s en banc decision in Huntsman (2025), which resolved similar tithing statements on falsity grounds and stated church autonomy had “no bearing” there.

Background and Procedural Posture

Plaintiffs, former Latter-day Saints, alleged the Church induced and retained their membership and tithing through (i) misrepresentations about core religious history (e.g., how the Book of Mormon was produced, the First Vision), and (ii) deceptive statements and omissions about tithing use. The district court dismissed the initial complaint on First Amendment grounds, allowed a tithing-use RICO theory to proceed after the first amendment, and then dismissed the second amended complaint in full, concluding that the religious-history theory was barred by church autonomy and the tithing theory failed on RICO predicate pleading and reliance. It also denied leave to amend as futile. Plaintiffs appealed only the RICO rulings.

Key Holdings and Doctrinal Statements

Church autonomy doctrine bars RICO claims that ask courts to determine the truth or falsity of religious beliefs or to impose liability based on the content of ecclesiastical communications about doctrine, history, or faith (relying on Ballard, Bryce, Kedroff, Our Lady of Guadalupe, and Presbyterian Church v. Hull).
In civil RICO, proximate cause requires a direct link between the predicate acts and the injury (“by reason of” requirement). Bridge holds first-party reliance is not always required, but where a plaintiff’s causation theory depends on his or her own reliance, plausible reliance allegations are necessary. CGC Holding synthesizes this: reliance often functions as a proxy for causation and may be indispensable depending on the theory.
Conclusory allegations that plaintiffs “would not have paid tithing had they known” are insufficient under Rule 8 without factual matter tying particular statements or omissions to specific donations (Ray v. Spirit Airlines).
The “fraud, collusion, or arbitrariness” language in Gonzalez is dictum, limited by Serbian Eastern Orthodox Diocese v. Milivojevich; Ballard’s bar on adjudicating truth or falsity of religious beliefs remains controlling.
Employment Division v. Smith’s neutral, generally applicable-law framework does not displace church autonomy, which protects institutional self-governance in matters of faith and doctrine (Hosanna-Tabor; Bryce).

Detailed Analysis

Precedents Cited and Their Role

United States v. Ballard (1944): The court invoked Ballard’s core principle that secular courts may not adjudicate the truth or falsity of religious beliefs. That principle directly forecloses fraud-based RICO theories premised on declaring religious teachings “false,” no matter how they are framed.
Bryce v. Episcopal Church in the Diocese of Colorado (10th Cir. 2002): Reaffirmed in Gaddy as the circuit’s articulation of church autonomy. Bryce protects internal ecclesiastical communications and doctrinal discussions from civil liability.
Kedroff v. St. Nicholas Cathedral (1952); Our Lady of Guadalupe School v. Morrissey-Berru (2020); Hosanna-Tabor (2012): These authorities anchor the constitutional principle that religious institutions decide matters of faith, doctrine, and governance free from state interference; ministerial exception is a subset of this broader autonomy.
Presbyterian Church v. Hull (1969); Serbian Eastern Orthodox Diocese v. Milivojevich (1976): Confirm that adjudicating ecclesiastical matters is forbidden; Milivojevich narrows Gonzalez, indicating that “fraud/collusion/arbitrariness” is dictum and constitutionally problematic where it demands inquiry into religious questions.
Nayak v. MCA, Inc. (5th Cir. 1990): Illustrates why courts will not decide “correct” histories of religious figures; the Tenth Circuit uses similar logic to reject the fact-versus-belief framing.
Bridge v. Phoenix Bond (2008): Plaintiffs need not always prove first-party reliance for RICO mail/wire fraud predicates, but reliance (first- or third-party) often provides the causal bridge; case-specific analysis controls.
CGC Holding Co. v. Broad & Cassel (10th Cir. 2014): Key synthesis: reliance is not an element but often indispensable depending on the plaintiff’s chosen theory; the court explains when an inference of reliance may be appropriate and cautions it is unusual.
Anza v. Ideal Steel (2006); Hemi Group v. City of New York (2010); Holmes v. SIPC (1992): These decisions ground RICO’s “by reason of” requirement in traditional proximate cause and directness.
Ray v. Spirit Airlines (11th Cir. 2016): Persuasive authority that boilerplate reliance allegations, without facts showing how reliance actually manifested, do not plausibly allege causation.
Huntsman v. COP of the LDS Church (9th Cir. 2025) (en banc): The majority there resolved similar tithing statements on falsity, concluding none were knowingly false, and explicitly said church autonomy had no bearing; Judge Phillips’s concurrence leans on Huntsman to argue tithing-use statements present secular issues; the Gaddy majority, however, resolves on causation and does not reach falsity or autonomy for that theory.

Legal Reasoning

A. Religious-History Fraud Theory: Church Autonomy Bars the Claim

The court holds that the First Amendment’s church autonomy doctrine precludes RICO liability where adjudication would require civil courts to decide the truth or falsity of religious narratives and teachings. Plaintiffs’ allegations (e.g., about the mode of translation of the Book of Mormon, the First Vision, or the Book of Abraham) are inseparable from core issues of faith and doctrine. Adjudicating whether the Church’s teachings were “false,” or whether alternative accounts were “concealed,” would force a secular tribunal to enter Ballard’s “forbidden domain.”

The court rejects four attempts to avoid autonomy:

Fact-versus-belief dichotomy: Illusory in this context. Theological claims about historical events necessarily intertwine “facts” and “beliefs”; courts cannot disentangle them to make secular truth determinations.
Sincerity prerequisite: Not applicable here. Even if a speaker’s sincerity can sometimes be tested, a fraud claim based entirely on statements of religious doctrine still requires proving falsity—which Ballard forbids. Thus, sincerity is “of no moment” because falsity cannot be adjudicated either way.
Neutral law of fraud (Smith) argument: Smith governs burdens on individuals under neutral, generally applicable laws; church autonomy protects institutional self-governance. Neutral fraud laws do not overcome constitutional limits when they require courts to police the truth of religious doctrine.
Gonzalez “fraud” exception: It is dictum and unsupported by later cases. Milivojevich constrains it; in any event, Ballard’s bar on truth adjudication controls. The court declines to treat Gonzalez’s dictum as an operative carveout.

The court also addresses an “informed consent” theory, emphasizing that “implied consent” of voluntary affiliation has long sufficed for internal church governance (Watson v. Jones; Kedroff). Because the predicate dispute still asks the court to resolve religious truth, consent framing cannot avoid the autonomy bar.

B. Tithing-Use Fraud Theory: Pleading Failure on Proximate Cause

Plaintiffs advanced three sub-theories: (1) general representations that tithes would be used only for religious purposes; (2) omissions concerning use of tithes for commercial or investment activities (e.g., Ensign Peak, Beneficial Life); and (3) specific denials that tithes funded City Creek or other for-profit ventures (e.g., Ensign/Deseret statements; President Hinckley’s remarks; a “not one penny” statement).

The court assumes, arguendo, the statements and omissions occurred, but affirms dismissal because plaintiffs failed to plausibly allege causation. RICO requires injury “by reason of” a predicate pattern—i.e., both but-for and proximate cause. The complaint contains only generalized assertions that plaintiffs “would not have paid tithing had they known,” without alleging facts connecting any particular statement or omission to any specified tithing payment they otherwise would not have made.

Applying Bridge and CGC Holding:

First-party reliance is not always required to prove RICO causation—but where, as here, plaintiffs choose a causation theory that turns on their own reliance, plausible reliance allegations become integral to proximate cause.
Merely being “misled” is not enough; the complaint must tether concrete reliance to the payment decisions causing injury (Ray).
The court declines to infer reliance from omissions on these facts and notes that CGC Holding’s inference is narrowly limited to transactional contexts where rational actors pay money for a promised return benefit—an ill fit for tithing, which is not a bargained-for exchange conferring a personal return benefit in the CGC sense.

Two additional points undercut proximate cause:

Plaintiffs themselves pleaded independent religious reasons for paying full tithes (e.g., maintaining temple recommends or baptismal status), which suggests other causal pathways unrelated to the challenged statements (Anza’s “other factors” concern).
Plaintiffs’ new causal theory floated at oral argument—that knowledge about tithing uses would have led them to research more deeply and leave the Church—was undeveloped, raised too late, and speculative; in any event, the complaint lacked factual content to support that multi-step chain.

Because causation fails under Rule 8’s plausibility standard, the court found it unnecessary to decide whether the church autonomy doctrine also bars the tithing-use theory or whether Rule 9(b) applies to reliance pleading in this context.

Impact and Prospective Significance

1) Reinforcement and Clarification of Church Autonomy’s Boundary

Gaddy robustly reaffirms that secular courts cannot adjudicate the “truth or falsity” of religious doctrine or historical narratives taught as doctrine. It rejects efforts to repackage such claims as “historical facts,” as insincerity-based fraud, or as a “fraud exception” to autonomy. Institutions retain robust constitutional protection from civil liability predicated on the content of ecclesiastical teaching and internal doctrinal communications.

2) A Pleading Roadmap for RICO-Fraud Against Religious Entities on Secular Statements

The panel leaves theoretical room for civil RICO claims premised on purely secular misstatements by religious organizations, but it demands strict pleading fidelity to causation:

Where plaintiffs’ chosen causation theory is reliance-based, they must allege particularized facts (even if under Rule 8) that plausibly link specific statements or omissions to discrete payments they would not otherwise have made.
Reliance inferences are narrow (CGC Holding) and generally ill-suited to donations not made for a promised return benefit.
Alternative non-fraud reasons for donating—especially religious obligations—may break the proximate-cause chain unless addressed with plausible factual detail.

3) Interaction with Ninth Circuit Huntsman and Emerging Approach

Huntsman (9th Cir. en banc) resolved similar tithing statements on falsity (no knowingly false statements), stating church autonomy did not apply because no doctrinal inquiry was needed. Gaddy’s majority does not reach falsity or autonomy on the tithing theory, affirming solely on causation. Judge Phillips’s concurrence aligns with Huntsman in viewing tithing-use statements as secular. Together, these cases suggest: (a) secular misrepresentation theories against churches may be justiciable; (b) plaintiffs still must clear ordinary falsity and causation hurdles; and (c) the order-of-operations question—whether courts should resolve church autonomy first—remains open to debate.

4) Practical Guidance for Future Litigants

Do not plead theories requiring courts to decide the accuracy of religious belief or doctrine or to weigh ecclesiastical narratives; such claims are barred.
If alleging fraud about secular, financial representations (e.g., “not one penny of tithing was used for X”), plead:
- Who said what, when, and where (Rule 9(b) for the predicate acts), and
- How that statement or omission caused you to make a specific donation you would not have made—dates, amounts, and the decision-making link (Rule 8 proximate cause).
Consider alternative causation frameworks if available (e.g., third-party reliance within Bridge) when personal reliance is difficult to plead, but be mindful that donations may not fit transactional reliance inferences like those in CGC Holding.

Complex Concepts Simplified

Church autonomy doctrine: A First Amendment protection for religious institutions that bars civil courts from deciding matters of faith, doctrine, or internal governance, and from imposing liability because of ecclesiastical content or doctrinal discussions.
Ministerial exception: A subset of church autonomy that bars employment suits over ministerial positions; Gaddy invokes broader autonomy principles, not just employment-specific doctrines.
Civil RICO basics: To state a claim, a plaintiff must allege a RICO violation (conduct, of an enterprise, through a pattern, of racketeering activity) and injury “by reason of” that violation. Mail and wire fraud are common “predicate acts,” but plaintiffs must also plausibly allege causation.
Proximate cause in RICO: Requires a direct relationship between the predicate acts and the injury. Bridge permits causation without personal reliance in some settings, but reliance often serves as the practical bridge; where a plaintiff’s theory depends on his or her own reliance, plausible reliance allegations are necessary.
Rule 8 versus Rule 9(b): Rule 8 requires plausible factual allegations for all elements, including causation. Rule 9(b) requires particularity for fraud predicates (time, place, content, speaker, consequences). Gaddy resolves on Rule 8 causation; it does not decide whether Rule 9(b) also governs reliance pleading here.

What the Court Did Not Decide

Whether church autonomy would bar the tithing-use theory. The majority found dismissal warranted on causation grounds and expressly declined to resolve autonomy for that theory; Judge Phillips would hold autonomy does not apply.
Whether the specific tithing statements were false. The Ninth Circuit in Huntsman addressed falsity; the Tenth Circuit did not reach it here.
Whether Rule 9(b) applies to reliance allegations in civil RICO. The panel affirmed on Rule 8 plausibility instead.

Conclusion

Gaddy sets two durable guideposts in First Amendment and RICO jurisprudence. First, civil RICO cannot be used to litigate the “truth” of religious teachings or to impose liability based on the substance of ecclesiastical communications. That holding, grounded in Ballard and the church autonomy line, closes the door on RICO theories that attack religious narratives as fraudulent. Second, for secular misrepresentation theories—like alleged misstatements about tithing uses—plaintiffs must still satisfy ordinary RICO causation; where their theory hinges on personal reliance, they must plausibly plead it in concrete, non-conclusory terms that tether specific statements or omissions to particular donations they would not otherwise have made.

The concurrence signals a competing view that financial-use representations by churches are secular and justiciable—consistent with the Ninth Circuit’s Huntsman—yet Gaddy shows that even justiciable fraud theories will fail without a well-pleaded causal chain. The decision thus both narrows litigation that intrudes on religious doctrine and sharpens the pleading standard for reliance-based RICO claims in the charitable-giving context. For religious institutions, it affirms robust autonomy against doctrinal truth-testing; for plaintiffs, it underscores that viable fraud claims must be secular in content and meticulously linked, fact by fact, to the injury alleged.