Catholic school teacher fired by nun accused of embezzlement can file lawsuit, court says

Days after police launched an investigation into allegations that two nuns embezzled hundreds of thousands of dollars from St. James Catholic School in Torrance, the school is facing more legal trouble.

On Monday, a federal appeals court ruled that a former fifth-grade teacher who was fired from the K-8 school after she was diagnosed with breast cancer in 2014 and asked for time off can sue for discrimination, reversing a decision by a lower court.

The 2-1 ruling of the Ninth U.S. Circuit Court of Appeals comes five months after attorneys argued before the panel in Pasadena over whether the former teacher, Kristen Biel, is barred from suing the Catholic school under the constitution because of a “ministerial exception.”

Biel, 53, began working at St. James as a substitute first-grade teacher in March 2013 and was hired as a permanent fifth-grade teacher the following school year, according to court documents.

In April 2014, Biel was diagnosed with breast cancer and asked then-principal Sister Mary Margaret Kreuper for a leave of absence so she could undergo a double mastectomy, chemotherapy and radiation.

That summer, Kreuper told Biel she would not renew her contract, saying it was “not fair” for her students to have two teachers, according to court documents. Kreuper also claimed Biel wasn’t strict enough in her classroom, though she had given her a positive evaluation months earlier.

Biel filed a federal lawsuit in June 2015, alleging discrimination, retaliation and wrongful termination under the Americans with Disabilities Act.

In January 2017, U.S. District Judge Terry J. Hatter Jr. sided with the school, ruling that Biel was not protected under the ADA because her Catholic teaching duties, including 30-minute religion lessons four days a week, made her a “minister.”

But in Monday’s ruling, Circuit Judge Michelle T. Friedland wrote that Biel couldn’t be considered a minister because she wasn’t trained nor presented as one, and she was “limited to teaching religion from a book required by the school and incorporating religious themes into her other lessons.”

Circuit Judge D. Michael Fisher disagreed, concluding that “the substance underlying Biel’s title at St. James consists of the school’s expectation, to which Biel specifically consented in her employment contract, that she propagate and manifest the Catholic faith in all aspects of the role.”

The decision comes in the wake of an embezzlement scandal that has rocked the small, century-old school in recent weeks.

Kreuper and former teacher Sister Lana Chang, who both retired earlier this year, have been removed from ministry after they allegedly admitted to diverting as much as $500,000 in tuition checks into a “long forgotten” bank account that they used for personal expenses, perhaps spending the money on trips and at casinos, officials tied to the church have said.

Attorneys for St. James Catholic School could not immediately be reached, but Biel’s lawyer, Andrew Pletcher, said they have indicated they will request the appeals court rehear the case with a full panel of judges.

Pletcher said the ruling could have far-reaching implications for teachers and other church employees when it comes to workplace protections.

Biel is “delighted” with the decision, he said.

“She’s still fighting the cancer and is especially ready to be vindicated and be able to be heard in court and get her case in front of a jury,” Pletcher said.

As for the recent revelations about Kreuper, he said “it really just goes to show the questionable working environment that Kristen was working in.”