Ministers or other religious officials may sue a religious college for employment discrimination if the institution’s reasons for taking the contested employment action are not grounded in "faith, doctrine, or internal regulation" of the church, a divided federal appeals court ruled Wednesday. The decision by the U.S. Court of Appeals for the Third Circuit, in a case involving a chaplain who accused Gannon University of discriminating against her because she's a woman, represents a major break with legal precedent governing the law of religious colleges and faith-based institutions generally.

Lynette M. Petruska sued Gannon, a Roman Catholic university in Erie, Pa., in 2004 for sex discrimination and retaliation, among other state claims, after she said she was essentially forced out of her job as the university’s chaplain because she was a woman and had challenged sexual harassment by college officials. Last year, a federal judge dismissed the discrimination and retaliation claims she had brought under Title VII of the Civil Rights Act of 1964, citing a  “ministerial exception” under the First Amendment by which federal courts have generally shielded religious organizations from employment claims brought by clergy. Seven of the 11 federal circuit courts have recognized this exception.

In its decision Wednesday, though, two of the three judges on the Third Circuit panel -- Richard L. Nygaard and the late Edward R. Becker, who wrote the opinion but died before it was released -- discarded the lower court’s ruling, arguing that the Title VII exception that courts have traditionally carved out for religious employees is overly broad. When a religious institution engages in otherwise illegal discrimination based on "religious belief, religious doctrine, or the internal regulations of a church," the Third Circuit said, "restricting a church's freedom to select its ministers would violate the Free Exercise Clause by inhibiting the church's ability to express its beliefs and put them into practice," as well as entangle the courts in "ecclesiastical matters," violating the Establishment Clause.

"But where a church discriminates for reasons unrelated to religion, we hold that the Constitution does not foreclose Title VII suits," the court's majority said. Employment discrimination by a religious institution that is not based on religious belief or doctrine is "simply the exercise of intolerance, not the free exercise of religion that the Constitution protects."

In concluding that Petruska has a right to sue Gannon, the Third Circuit bases its assumptions entirely on her version of events, as is customary in cases in which an accused party like Gannon seeks to have a case dismissed. As she tells it, the university hired her in 1997 as its director of social concerns, and in 1999, she became the first woman ever named permanent chaplain at Gannon, a cabinet-level job equivalent to a vice president.

Petruska's complaint suggests that her downfall began when she pushed for an aggressive review of the university's sexual harassment policies and helped bring to light alleged misbehavior by senior officials at the institution.

In July 2000, according to Petruska, several top university officials made a decision to restructure the administration to put the chaplain's office under the control of a male administrator -- an action, she said, that the acting president at the time told her was "being taken solely" because she was a woman. Several other administrative decisions in 2001 and 2002 -- including a reported plan to "clean house" by removing three high-ranking female administrators -- persuaded Petruska that "she was on the verge of being fired," the court wrote, and so she resigned in October 2002. Her lawsuit soon followed. (Gannon officials did not respond to a request for comment, but its officials have said at earlier stages of the lawsuit that the restructuring was designed to improve the management of the university and that the changes also affected one of Petruska's male colleagues.)

The court's extensive analysis that follows, after laying out the legislative history of the ministerial exception, notes that Title VII cannot be used to prevent a church from hiring ministers (or other employees directly involved in religious matters) in accordance with its own beliefs. Doing so, the court said, would inhibit the religious institution's "ability to put its doctrines into practice," violating the Free Exercise Clause, and "entangle courts in religious matters, in violation of the Establishment Clause."

"This case, however, is about something completely different. Petruska alleges that she was demoted because of animus against women that had nothing to do with religous beliefs, religious doctrine, or internal regulation," the Third Circuit said. "While several of our sister courts have opined that the employer's reasons are irrelevant to the ministerial exception ... we conclude that these reasons make all the difference. The Constitution protects religious exercise, and we decline to turn the Free Exercise Clause into a license for the free exercise of discrimination unmoored from religious principle."

In a opinion that dissents with most of the majority's view, Judge D. Brooks Smith wrote: "I disagree with the majority’s fundamental premise that a church’s choice regarding who performs particular spiritual functions is not necessarily a religious decision. Rather, in my view, such a decision is, by its very nature, a religious one.”

Challenging the majority's view that the Constitution protects only those employment actions undertaken as part of "religious exercise," Smith called for a broader reading of that term. In his view, he said, “the process of selecting a minister is per se a religious exercise. A minister is not merely an employee of the church; she is an embodiment of its message.”

He added: "In reaching its conclusion" that Title VII applies "equally to lay employees and ministers, the majority has effectively refused to adopt the ministerial exception recognized in our sister courts of appeals. Because I agree with those courts that interference with a church's selection of clergy violates the First Amendment, I cannot join my colleagues in the majority."

Legal experts said the Gannon case had major implications both for religion law and for higher education law. Eugene Volokh, a law professor at the University of California at Los Angeles and founder of the Volokh Conspiracy, noted that the case applies only to employees whose positions are in a "considerable measure religious," which, in addition to chaplains, could include religious counselors, and conceivably theology professors.

Volokh said the Third Circuit's decision, while in conflict with most of the other appeals courts, was consistent with how federal law tends to treat other actions and decisions related to religion, in that it seeks to require an institution to show that it has a religious motivation for the behavior, as opposed to applying a "more categorical immunity."

Unless one or both parties appeals the decision to the U.S. Supreme Court -- which might be inclined to hear the case because of the difference of opinion in the appeals courts -- Petruska's lawsuit would go back to the lower federal court for a trial to decide whether Gannon did indeed discriminate against her based on her sex.