Cardinal Timothy Dolan, shown here at World Youth Day 2013, committed accounting practices that were subject to a federal ruling today (Source: Roman Catholic Archdiocese of Boston, under a CC license)
The Archdiocese of Milwaukee, much like many other Roman Catholic dioceses in the United States, have been facing significant wrath over the Church's handling of pedophile priests. The Archdiocese has been accused of shielding several dozen priests who have molested children, including one who personally molested nearly 200 deaf boys, or practicing the standard church policy of transferring sexually abusive priests to different churches to avoid scandal, rather than reporting them to police. When victims of sex abuse sued the Archdiocese of Milwaukee, eventually their response was to file for Chapter 11 bankruptcy.
Now that the Archdiocese of Milwaukee is out of bankruptcy, a current issue at stake is the reabsorption of assets the church transferred in 2007 to a cemetery trust fund, created by then Archbishop Timothy Dolan (now a cardinal, Archbishop of New York, and de facto spokesperson for the Catholic Church in America) to protect some $57 million from further liabilities. If the assets were to be reabsorbed, it would present victims an opportunity for just compensation against their abuse. The bankruptcy court ruled that the assets must be reabsorbed. The Church appealed to the federal courts. Today, in a broadly sweeping ruling in Wisconsin, District Court Judge Rudolph T. Randa overruled the bankruptcy court, saying essentially that the Catholic Church's right to religious liberty renders it immune from civil law.
The ruling relies heavily on a specific law in the US Code that restricts the government's ability to burden a person's exercise of religion. The law allows exceptions for the government to burden the person if it furthers government interest. Randa, in an unprecedented ruling, grants the terms of the burden to be determined not by civil law, but religious doctrine (in this case, Catholic canon law) and religious leadership (the Archdiocese of Milwaukee), saying "Moreover, the
issue of substantial burden is essentially coterminous with religious doctrine." In doing so, one could argue that not only could the Church be completely exempt from civil bankruptcy proceedings, but can be interpreted to exempt religious institutions from parts of federal and state law that do not match with their beliefs. Further, Judge Randa states that the Archdiocese's refusal to transfer funds is protected by the First Amendment.
Despite the ruling, however, Judge Randa's rulings, especially on social matters, have previously been overturned. It is likely that, given the unfortunate precedent this would set, that the ruling will likely be repealed or remanded to a stricter interpretation of the law. Whether or not the Archdiocese of Milwaukee will ever pay its victims, or even bring the pedophile priests to civil justice, remains to be seen.