Hutterville Hutterian Brethren v. Jeffrey Sveen, 2015 U.S. App. LEXIS 523

Background

Hutterville Hutterian Brethren, Inc. is a South Dakota nonprofit corporation whose membership and corporate governance track an internal religious split in the Schmiedeleut conference of the Hutterite faith (Group 1 led by Kleinsasser/Waldner and Group 2 led by Wipf).
In 2008–2009 rival faction members held competing corporate meetings; Wipf faction claimed to have elected new directors/officers and conducted business in Hutterville’s name; Waldner faction claimed those corporate acts were sham and that Wipf members had been ecclesiastically excommunicated and thus ineligible to hold corporate office.
South Dakota state courts twice concluded they lacked constitutional jurisdiction to resolve which faction controlled Hutterville because doing so would require resolving ecclesiastical questions (Hutterville I and Hutterville II), and a receivership and related rulings were litigated and affirmed on other grounds (Hutterville III).
The Waldners then sued in federal court (RICO and state-law claims) against attorneys and a receiver, alleging those defendants conspired with the Wipf faction to manufacture the dispute, convert corporate assets, and facilitate a takeover.
The district court dismissed: official-capacity (corporate) claims without prejudice because resolving who could sue in the corporate name would require impermissible inquiry into religious matters; individual-capacity claims with prejudice for lack of individual property rights and on immunity grounds for the receiver.
The Eighth Circuit affirmed: plaintiffs have Article III standing at the pleading stage if their factual allegations are assumed true, but their claims necessarily require resolving which faction properly controls Hutterville — an inquiry barred by the First Amendment and precluded by the plaintiffs’ prior positions (judicial estoppel).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Article III standing for claims brought in Hutterville’s name	Waldners plead concrete corporate injuries (conversion of property, diverted funds) and thus have standing if allegations are assumed true	Defendants: establishing injury-in-fact requires knowing which faction controls Hutterville; that requires resolving religious questions	Court: At pleading stage, assuming allegations true, Waldners adequately pled Article III standing; standing not conflated with merits
Capacity to sue in corporate name / corporate governance	Waldners claim they are Hutterville’s rightful officers and can sue in corporation’s name	Defendants: whether Waldners may sue depends on which faction are the lawful directors — a question entangled with ecclesiastical membership and leadership	Court: Capacity to sue depends on state law and on who controls the corporation; the governance question is central to the merits and capacity
First Amendment entanglement (judicial inquiry into ecclesiastical matters)	Waldners: there is no live religious dispute because church hierarchy has already determined Wipf is not a member; or the religious dispute is a sham/fraud that they should be allowed to expose	Defendants: any inquiry into who controls Hutterville would require resolving church membership, excommunications, and ecclesiastical leadership — barred by First Amendment	Court: Resolving control would require forbidden resolution of ecclesiastical questions; therefore the court may not decide the governance question here
Judicial estoppel based on state-court positions	Waldners argue they should be allowed discovery/evidentiary hearing to prove the religious dispute is sham and that they are rightful officers	Defendants point to plaintiffs’ prior successful positions in state court arguing secular courts lack jurisdiction to decide governance	Held: Judicial estoppel bars Waldners from taking a contrary position now because they successfully persuaded state courts earlier that these questions are non-justiciable; plaintiffs cannot now seek relief that would require overturning that prior position

Key Cases Cited

Jones v. Wolf, 443 U.S. 595 (secular courts may resolve property disputes using neutral principles but must avoid resolving doctrinal/ecclesiastical questions)
Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (courts must defer to highest ecclesiastical tribunals on internal church governance decisions)
Kedroff v. St. Nicholas Cathedral, 344 U.S. 94 (civil courts cannot resolve certain disputes over church control when doctrinal or hierarchical questions are involved)
Watson v. Jones, 80 U.S. 679 (establishes prohibition on civil courts deciding ecclesiastical controversies)
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (RICO predicate-act requirement and standing to sue under RICO)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires concrete, particularized injury fairly traceable and redressable)
Warth v. Seldin, 422 U.S. 490 (standing inquiry must not be conflated with the merits)
Moore v. Matthew’s Book Co., 597 F.2d 645 (capacity to sue is governed by state law; multiple trustees example)
New Hampshire v. Maine, 532 U.S. 742 (judicial estoppel prevents parties from taking inconsistent positions in successive proceedings)
Church of God in Christ, Inc. v. Graham, 54 F.3d 522 (8th Cir.) (application of neutral-principles approach to church property/governance disputes)