PORTLAND, Ore. (CN) - The leader of the Sikh Dharma faith's widow says she deserves a seat on the board of the company that makes Yogi Tea, but opposing lawyers told the Ninth Circuit on Thursday that control of the religion is what's really at stake.
Two companies started by Harbhajan Singh Khalsa Yogiji, better known as Yogi Bhajan, are at the center of a tangle of litigation between Bhajan's widow and kids and the companies started by Bhajan and his followers.
Bhajan helped bring Kundalini yoga to mainstream America in the 1970s and founded Unto Infinity and Siri Singh Sahib Corporation, which are the parent companies that both run various arms of the religious movement and control a natural foods empire including Yogi Tea and formerly Golden Temple Foods.
At its heart, the complicated legal dispute reaches back to Yogi Bhajan's death and the fight over whether his dying wishes were carried out.
And there's a lot of tea at stake. Yogi Tea logged $7.3 billion in U.S. retail sales in 2014, according to market research firm Mintel International.
When he died in October 2004, Yogi Bhajan left an envelope containing the name of his chosen successor and the board members who he wanted to assume control of Sikh Dharma and the movement's various nonprofit and corporate entities.
But when the envelope was opened, the instructions allegedly left Bhajan's widow, Bibiji Inderjit Kaur Puri and their kids out in the cold.
Bibiji sued in Multnomah County Circuit Court, claiming that her husband had wanted her to be a board member and accusing the board of Unto Infinity of inflating their salaries and executing a self-serving sale of the company's cereal division that cheated Sikh Dharma.
In December 2011, Judge Leslie Roberts ruled that the board of Golden Temple Management had breached its fiduciary duty by selling its organic cereal division to Hearthside Food Solutions for $71 million.
That board was removed and two of its members filed for Chapter 11 bankruptcy.
The parties agreed to settle in arbitration. But Bibiji moved the case to Federal Court, claiming the settlement was never ratified and was unfair because it required board members who had already been found to have breached their fiduciary duties to resign and appoint a new board.
There, U.S. District Judge Michael W. Mossman dismissed the case, finding that Bibiji lacked standing to sue on behalf of Unto Infinity and Siri Singh Sahib Corporation because she is not a board member. He also found that the First Amendment prohibited him from installing the leaders of a religious organization.
On Thursday, Bibiji's lawyer, Surjit Soni of Pasadena, California urged a panel of the Ninth Circuit to apply "neutral principles of law" rather than a First Amendment exception.
"The fact that some of these people may be ministers does not make it a religious issue," Soni told Circuit Judges Marsha Berzon and Raymond Fisher.
Judge Paul Watford was scheduled to be part of the panel but his seat was empty Thursday. President Barack Obama is reportedly considering Watford to replace U.S. Supreme Court Justice Antonin Scalia, who died in February.
"But for the actions of the defendants in this case, plaintiffs would have been appointed directors," Soni told the panel.
Paul Southwick with Davis Wright Tremaine, attorney for Unto Infinity and Siri Singh Sahib Corporation, told the court that made no difference in this case.
"Even if the court were to find that they were directors that had statutory standing, we're not talking about a disinterested director who is solely bringing a claim on behalf of a nonprofit. We're talking about plaintiffs who all have significant direct personal interests and personal claims in this very dispute," Southwick said.
Southwick pointed to the Supreme Court case Serbian Eastern Orthodox Diocese v. Millivojevich. Ostensibly a property dispute, Southwick said the court found that it was really a dispute over the defrocking of a bishop and, beyond that, over who controlled the religion.
The Supreme Court found that even if the church did not follow its own bylaws and procedures for deciding who would be the next bishop, the First Amendment barred it from applying neutral principals to the church's internal leadership dispute.
"What the court lacked was the power to essentially pick the winners and the losers in a battle for control over the religious hierarchy of the faith," Southwick said.
Like any religious nonprofit, the board of directors for Unto Infinity and Siri Singh Sahib Corporation makes some secular decisions, like agreeing on leases and approving financial statements. But the boards also have control over appointing the next Siri Sikh Dar Saba - the highest authority of the Sikh Dharma faith.
"So whoever is in charge of these boards, they get to pick the next leader of this faith," Southwick said.
And those boards decide who sits on the boards of two other important arms of the church: the religion's educational arm and its ecclesiastical arm, which decides when and where new churches should open.
"So we're not talking about the plaintiffs asking to be on the boards of for-profit operating companies," Southwick said. "They're not asking to get on the Yogi Tea board. That would be an entirely different question for the court. What they want? They want to be on the board that is at the very head of this religion and controls every single religious nonprofit and for-profit company in this family of companies. And that is something that the Constitution simply does not permit."
Soni said Bibiji is merely asking for a spot at the table, not control of the whole thing.
"What the plaintiffs are seeking is simply to enforce Yogi Bajan's directive, which was to appoint 15 members to the board of which the plaintiffs are only four," Soni said. "So that is simply not true."
Berzon questioned Southwick's version of events.
"If the dispute is just, you took a piece of paper that said I'm supposed to be on the board and you tore it up and you don't have any right to do that and I should be on the board because my husband said I should be on the board, why is that a religious dispute?" Berzon asked.
Southwick said the removal of the previous board and the settlement of the fiduciary duty claims left only the First Amendment issues at stake.
"If this court decides or allows to be decided that a new board needs to be in control of this religion, the court will essentially be giving the Sikh Dharma religion leaders that it does not want," Southwick said. "The bad guys are gone. The good guys are leading this religion and the community has moved on."
Berzon and Fisher did not indicate when they would rule.