WVa SCt immunizes religious schools and camps for false advertising about services

State ex rel. Morrisey v. Diocese of Wheeling-Charleston, 851 S.E.2d 755 (W.Va. 2020)

In response to a certified question, the West Virginia Supreme Court, over a dissent, held that the AG could not sue the Diocese and a former bishop for violating the deceptive practices provisions of the West Virginia Consumer Credit and Protection Act, reasoning that the law didn’t apply to educational and recreational services offered by a religious institution.

The allegations of deception related to the Diocese’s knowing employment, for decades, of people who admitted to sexually abusing others or who were credibly accused of sexual abuse at its schools and camps. The Diocese allegedly neither disclosed that material information to consumers nor warned them of the alleged dangers inherent to the educational and recreational services it provided, and also falsely represented that it conducted background checks (an allegation of affirmative misrepresentation that is buried in a footnote of the main opinion). The alleged deceptive practices were advertising services not delivered and failing to warn of dangerous services.

The relevant statute says: “Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” “ ‘Trade’ or ‘commerce’ ” is “the advertising, offering for sale, sale or distribution of any goods or services and shall include any trade or commerce, directly or indirectly, affecting the people of this state.” “ ‘Services’ include[ ] ... ‘privileges with respect to ... education[ and] recreation.’ ”

Nonetheless, West Virginia Code §§ 18-28-1 to 7 created a conflict by imposing requirements on “private, parochial or church schools or schools of a religious order” (church schools), such as observance of a 180-day instructional term, maintenance of attendance and immunization records, compliance with the West Virginia school bus safety regulations, administration of a nationally-normed standardized achievement test, and establishment of a school specific crisis response plan. If a church school meets those requirements, then the Legislature has directed that it “shall [not] be subject to any other provision of law relating to education except requirements of law respecting fire, safety, sanitation and immunization” (emphasis added). The majority held that, though church schools might not be exempted from the entire CCPA, this preemptive provision barred “the regulation of educational services offered by a church school under the deceptive practices provisions of the CCPA.” [Are living circumstances part of “educational services”?]

The deceptive practices provisions were “provisions of law relating to education” when the AG tried to apply them to educational services. “[W]hile the deceptive practices provisions may regulate the commercial relationship between a church school and consumers, its enforcement depends on the assessment of the qualities of the education actually supplied by the church school.” Finding a violation would require “passing judgment upon the substantive educational services actually provided.”

Because of this preemption and because of West Virginia’s public policy of freedom of religion in education, there was also implied preemption of any regulation of educational and recreational services by a religious institution, because it was silly to preempt regulation as to only school-related services, thus allowing the AG to regulate false statements made by a church about a trip it sponsored but not false statements by a church-affiliated school about the same trip. [I’m not sure that argument proves what the majority wants it to prove, and it’s also pretty odd as a theory: explicit preemption is usually limited to what it explicitly covers.] Thus, and despite the fact that the CCPA is a remedial statute intended to be liberally construed, “[i]t would also be absurd to conclude that the Legislature intended to exempt a church school’s representations about its educational services from regulation under the deceptive practices provisions of the CCPA, but not those same representations when made by the affiliated religious institution regarding its recreational services.”

The majority ended by commenting that the allegations were nonetheless “deeply troubling,” and might have allowed liability under other legal theories, such as a violation of mandatory reporting law, which definitely covers religious institutions and their schools and camps.

Justice Workman’s dissent was persuasive:

The majority opinion is transparently result-oriented which explains its logical incoherence and sins of omission. The issue before the Court is one of fairness and honesty in commercial communications to the public---potential purchasers of goods and services. The fundamental question involves matters of unfair or deceptive acts or practices in advertising or selling and in advertising based on false promises. That is all. Nothing else is at issue. This case has absolutely nothing to do with the free exercise or expression of religious thought and nothing to do with regulating religious institutions in the sense of excessive State entanglement. As brought and pled by the State, what is at issue is alleged false promises and deceptive advertising promoting a safe environment aimed at getting students and campers to attend for-fee-based schools and camps, when alleged facts indicated the contrary to be true.

As the dissent pointed out, the yearly fees ranged from $6,000 to $8,000. “The Diocese also provides partial scholarships, arranges financing through third parties, and uses in-house installment payment plans. Just as any other creditor may act, the Diocese has availed itself of the courts and legal system to enforce credit agreements.” The Diocese advertises to the public at large with no faith-based restrictions for either schools or camps. Starting in 2002, it advertised its “Safe Environment Program for the protection of minors from abuse by religious and lay employees of the Diocese and volunteers,” which plainly sought to “attract consumers away from competitors that did not advertise similar safety measures.” 

In the dissent’s view, truthful advertising and safety are purely secular concerns. The majority agreed that “services” encompassed the activities here, and that should have been enough.

Instead, the majority wrongly asserted that enforcing the deceptive practices provisions would require “assessing the qualities and substance of the education actually provided.” But the allegations here did not require anything of the sort. “Requiring fairness when selling advertising and selling educational and recreational services simply does not interfere with the services themselves. Rather, it is the marketing of the services that is at issue.” Given the CCPA’s specific coverage of educational services, this manufactured conflict was even more unjustified; the legislature has exempted other institutions from the CCPA, such as lawyers, accountants, stockbrokers, and licensed pawnbrokers, but not religious institutions.

The majority approach authorized religious schools to advertise one tuition but, halfway through the year and as a matter of policy, demand more or the student will be expelled. Religious schools could advertise ten-to-one student/teacher ratios and deliver forty-to-one. This freedom would provide them an unfair advantage over nonreligious schools.

I share the dissent’s view that “most incredible is the sophistry exhibited in the opinion’s bootstrapping into its unfounded conclusion the issue of recreational services.” As it pointed out, the supposedly preemptive code provisions simply do not cover recreational services or camps, but now religious institutions can advertise whitewater rafting or other dangerous activities, promise fully certified instructors, and deliver nothing of the sort. This results both in consumer danger and competitive disadvantage to regulated camps.

“[N]othing about religious freedom, thought, or instruction is infringed upon by virtue of enforcing an act mandating that entities offering services for-fee tell the truth about the services.” Fear of overly broad enforcement actions wasn’t a justification for disallowing these specific claims, even if remedies would have to be carefully crafted to avoid infringing on religious freedom.