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MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION
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BARRY VAN SICKLE - BAR NO. 98645
1079 Sunrise Avenue
Suite B-315
Roseville, CA 95661
Telephone: (916) 549-8784
E-Mail: [email protected]
Attorney for Plaintiff
MARC HEADLEY
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
MARC HEADLEY,
Plaintiff,
vs.
CHURCH OF SCIENTOLOGY
INTERNATIONAL, a corporate
entity, AND DOES 1 - 20
Defendants.
CASE NO. CV 09-03986 RSWL
(MANx)
MEMORANDUM IN SUPPORT OF
PLAINTIFF’S MOTION FOR
SUMMARY ADJUDICATION OF
FACTS AND CONCLUSIONS OF
LAW PURSUANT TO F.R.C.P
RULE 56(d) RE ISSUES OF:
1) EMPLOYMENT STATUS;
2) COVERAGE OF WAGE LAW;
3) LIABILITY FOR ADDITIONAL
COMPENSATION
DATE: August 11, 2009
TIME: 9:00 am
PLACE: Spring Street Courthouse,
Courtroom 21
ASSIGNED TO THE HONORABLE
JUDGE RONALD S.W. LEW
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MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION
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TABLE OF CONTENTS
I. SYNOPSIS ........................................................................................................1
II. POINTS AND AUTHORITIES: INTRODUCTION................................2
III. EMPLOYEE IS BROADLY DEFINED FOR PURPOSES OF THE
LABOR LAW...................................................................................................4
IV. PLAINTIFF WAS AN EMPLOYEE AS A MATTER OF ECONOMIC
REALITY .........................................................................................................5
V. THE PROTECTION OF THE LABOR LAWS IS NOT WAIVABLE .8
VI. LABOR LAWS CANNOT BE IGNORED IN THE NAME OF
RELIGION .....................................................................................................10
VII. CALIFORNIA LABOR LAWS ALSO APPLY TO PLAINTIFF.........14
VIII. THE DECLARATION OF MARC HEADLEY SATISFIES THE
ECONOMIC REALITY TEST...................................................................16
IX. CONCLUSION ..............................................................................................19
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TABLE OF AUTHORITIES
CASES
Anderson v. Mt Clemens Pottery Co.
328 U.S. 680 .....................................................................................................3
Barrentine v. Arkansas-Best Freight System, Inc.,
450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) ........................8, 9, 11
Bartels v. Birmingham,
332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947) ....................... 5, 6, 8, 13
Bonnette v. California Health and Welfare Agency
704 F.2d 1465, 1469 (9
th
Cir. 1982) ................................................................2
Brennan v. Partida,
492 F.2d 707, 710 (5th Cir. 1974) .............................................................3, 14
Broberg v. The Guardian Life Ins. Co. of America
171 Cal. App.4
th
912 (2009) ............................................................................4
Bureerong v. Uvawas
922 F.Supp. 1450, 1463 (C.D. Cal. 1996) ..................................... 4, 8, 14, 16
Cortez v. Purolator Air Filtration Products Co.
23 Cal.4th 163, 173-5 (2000).................................................................3, 4, 16
Dunlop v. Carriage Carpet Co.,
548 F.2d 139, 144 (6th Cir. 1977) ...................................................................6
Elvig v. Calvin Presbyterian Church
397 F.3d 790, 792 (9
th
Cir. 2005) ............................................................11, 12
Estrada v. FedEx Ground Package System, Inc.
154 Cal.App.4th 1, 10 (2007) ........................................................................15
Goldberg v. Whitaker House Cooperative,
366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961) (FLSA) ..................2, 7
Hale v. State of Arizona,
67 F.2d 1356, 1360 (9th Circuit 1992).................................................. passim
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Mednick v. Albert Enterprises,
508 F.2d 297, 299 (5th Cir. 1975) ...................................................................6
Mitchell v. Pilgrim Holiness Church Corp.
210 F2d 879 (1954) ........................................................................................12
Patel v. Quality Inn South
846 F.2d 700, 702-3 (11
th
Cir. 1988)...............................................................4
Randolph v. Budget Rent-A-Car,
97 F.3d 319, 325-6 (9
th
cir. 1996)..............................................................5, 15
Real v. Driscoll Strawberry Associates Inc.
603 F2d 748, 754 (9
th
Cir. 1979) .................................................... 6, 7, 12, 14
S. G. Borello & Sons, Inc. v. Department of Industrial Relations
48 Cal.3d 341, 349 (1989) .............................................................................15
Scott v. Harris
550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed. 2d 686, 694 (2007) ..............3
Tony and Susan Alamo Foundation v. Secretary of Labor
471 U.S. 290, 297, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985)................ passim
United States v. Silk,
331 U.S. 704, 712, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947) ..............................6
W.J. Usery v. Pilgrim Equipment Co.,
527 F.2d 1308, 1311 & 1315 (5th Cir. 1976) ....................................... passim
STATUTES
California Business & Professions Code §§17200 et. seq................................2, 3, 4
California Labor Code ..........................................................................................9, 10
F.R.C.P Rule 56(d)..................................................................................................2, 3
Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. .................................... 4, 6, 8, 9
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I. SYNOPSIS
Plaintiff Headley was employed by Defendant Church of Scientology
International (“CSI”) for approximately fifteen years (1989 – 2005). The
pertinent facts of employment are set forth in a supporting declaration and cross-
referenced in Section VIII below. Plaintiff worked primarily for a division of CSI
known as Golden Era Productions. Golden Era makes videos, advertisements and
promotional materials for the Scientology enterprise. Plaintiff Headley worked
on production of such materials and installation of display facilities. This was a
full-time job and Plaintiff’s only source of income and support. The mode,
manner and pay regarding Plaintiff’s work were controlled by Defendant CSI. As
addressed below, these factors make Plaintiff Headley a former employee of
Defendant CSI as a matter of law.
As an employee, Plaintiff was entitled to minimum wage and overtime pay.
Plaintiff was paid less than legal wages and seeks the difference in his First and
Second Causes of Action. Defendant CSI refuses to acknowledge that its workers
are or were “employees” subject to the wage and hour laws. Defendant is wrong.
Plaintiff Headley worked for and earned a meager livelihood as compensation for
his labors. Defendant controlled working conditions, hours and wages. (See
Plaintiff’s Declaration filed concurrently herewith.) These historical facts can
lead to only one reasonable legal conclusion, Plaintiff worked as an employee of
Defendant.
Defendant CSI has no valid excuse for failure to pay its employees,
including Plaintiff, minimum wage or overtime rates. There is no legal
justification for refusing to pay employees minimum wage and overtime pay. As
demonstrated by authorities cited herein, purported justifications of waiver,
disclaimer and “religion” are contrary to statute and controlling case law. The
law of the land trumps the musings of L. Ron Hubbard, Scientology’s founder, on
the treatment of employees.
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It follows from the circumstances of Plaintiff’s work for Defendant, as set
forth in his supporting declaration, that Plaintiff Headley is entitled to summary
adjudication pursuant to F.R.C.P Rule 56(d) on issues of employment and
entitlement to minimum wage and overtime pay. Violations of state and federal
labor laws, such as Defendant’s failure to pay proper wages, also constitute illegal
and/or unfair business practices actionable under state law as plead in Plaintiff’s
First Cause of Action. Plaintiff seeks restitution of unpaid wages under
California Business & Professions Code §§17200 et. seq.
II. POINTS AND AUTHORITIES: INTRODUCTION
In evaluating application of the federal labor laws to workers of a non-
profit religious entity, the U.S. Supreme Court recognized that the labor laws
applied to employees and that the test of employment was one of “economic
reality”. Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290,
301, 105 S.Ct. 1953, 85 L.Ed.2d 278, 289 (1985) (Citing Goldberg v. Whitaker
House Cooperative, 366 U.S. 28 at 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961).
The factors that may be considered in evaluating “economic reality” are
discussed below. The economic reality standard is well satisfied by the
underlying facts concerning Plaintiff’s day-to-day work for Defendant CSI.
Plaintiff Headley was employed by Defendant CSI as his sole occupation and
source of income. Working long hours under the control of Defendant CSI was
how Plaintiff earned his food, shelter and cash income. Under the historical facts
of Plaintiff’s working conditions and dependence on his job with Defendant CSI
for his livelihood, there is no genuine dispute of material fact on employment
status. The existence of this employer/employee relationship under the facts of
the working relationship, and for purposes of the labor laws, presents a question
of law for the court. Hale v. State of Arizona, 967 F.2d 1356, 1360 (9th Circuit
1992) and Bonnette v. California Health and Welfare Agency, 704 F.2d 1465,
1469 (9
th
Cir. 1982). There is no genuine disputes concerning a material fact on
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the issue of employment. Plaintiff was an employee as a matter of “economic
reality”. Once the fact of employment is properly recognized, entitlement to
minimum wage and liability for failure to pay necessarily follows by operation of
law. Accordingly, these issues are suitable for determination by summary
adjudication in favor of Plaintiff under the summary judgment standard approved
by the court in Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed. 2d
686, 694 (2007).
Rule 56(d) of the Federal Rules of Civil Procedure authorizes summary
adjudication on liability issues although there are potential questions of fact on
damages. Plaintiff requests such a finding on liability for additional
compensation. The amount of recoverable wages will require further
proceedings. Plaintiff’s burden of proof on unpaid compensation has been
enunciated by the Supreme Court in Anderson v. Mt Clemens Pottery Co., 328
U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). See also, Brennan v. Partida,
492 F.2d 707, 710 (5th Cir. 1974). Plaintiff’s burden on proving compensation
due is relatively light.
Plaintiff seeks restitution and recovery of unpaid wages under state and
federal labor laws. The First Cause of Action seeks restitution of unpaid wages as
an illegal and unfair business practice pursuant to California Business and
Professions Code (B&P) §§17200 et. seq. Seeking additional compensation due
under the labor laws as an unfair business practice in violation of California state
law, B&P §17200, et. seq. has been expressly approved by the California
Supreme Court. Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163,
173-5 (2000). As recognized in Cortez, the failure to pay an employee minimum
wage and overtime is a violation of labor laws and an illegal business practice
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under B&P §17200.
1
(This motion concerns liability not damages, however, it
seems appropriate to note that Defendant’s Rule 12 motions on file miss the mark
on statute of limitation issues by a wide margin.)
III. EMPLOYEE IS BROADLY DEFINED FOR PURPOSES OF THE
LABOR LAW
The Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. (“FLSA”) “…is to
be liberally construed to the furthest reaches consistent with Congressional
direction.” California labor laws are similarly broad and encompassing.
Bureerong v. Uvawas, 922 F.Supp. 1450, 1463 (C.D. Cal. 1996). Because the
FLSA is remedial, it should be construed to provide broad federal employment
protection. Bureerong, 922 F.Supp at 1468. Unless a laborer is specifically
exempted by the FLSA, he or she is covered by the federal labor laws. Hale v.
State of Arizona, supra, 967 F.2d 1362-3. See, also Patel v. Quality Inn South,
846 F.2d 700, 702-3 (11
th
Cir. 1988). Illustrative of the wide and encompassing
scope of the wage and hour laws is the fact that prison inmates working in a
prison shop have been found to be “employees” entitled to minimum wage. Hale
v. State of Arizona, 967 F.2d 1356, 1362-3 (9
th
Cir. 1992).
In Patel, supra, the Eleventh Circuit addressed the issue of FLSA coverage
to undocumented aliens. The court found in favor of FLSA coverage. The court
discussed legislative history and the Supreme Court’s expansive definition of the
term “employee”. Based upon its review of legislative history and Supreme
Court decisions, the court concluded that the FLSA covered all categories of
workers for hire not specifically excluded from the federal labor laws. Patel v.
Quality Inn South, 846 F.2d 700, 702-3 (11
th
Cir. 1988). The Ninth Circuit
reached essentially the same conclusion in Hale v. State of Arizona, 967 F.2d
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The B&P Code §17200 claim has the advantage of a 4-year statute of limitation and case law holding that the
limitations period is subject to the accrual upon discovery rule. Cortez, Supra, 23 Cal 4
th
163,179 and Broberg v.
The Guardian Life Ins. Co. of America, 171 Cal. App.4
th
912 (2009)
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1356, 1363 (9
th
Circuit 1992), citing Patel. For purposes of the labor laws,
“employee” is broadly defined. See also, Randolph v. Budget Rent-A-Car, 97
F.3d 319, 325-6 (9
th
cir. 1996).
IV. PLAINTIFF WAS AN EMPLOYEE AS A MATTER OF ECONOMIC
REALITY
The proper test of employment status is the “economic reality” test, Alamo
Id. This is not a new trap for unwary employers. It has been the law since well
prior to the 1985 Alamo decision. Also, as addressed in some detail below,
“economic reality” is the test to the exclusion of other factors such as waivers,
disclaimers and subjective beliefs. Defendant CSI has been ignoring the proper
legal standards and saving millions of dollars in unpaid wages for many years.
Apparently, Scientology believes it can avoid Alamo by forcing self-serving
documents upon employees.
Defendant CSI has had its legal team trying to draft and maneuver its way
out of paying legal wages for years; however, such efforts should be found
ineffective under a proper legal analysis. What counts, and the only thing that
counts, is the economic reality of the job. Under that test, Plaintiff was an
employee of Defendant and nothing Defendant can put on paper changes
“economic reality” as that concept has been developed and defined by the courts.
In W.J. Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1311 & 1315 (5th
Cir. 1976) the court explained its rulings in terms pertinent to this case. The court
stated:
“…the lesson taught by the Supreme Court's 1947 trilogy is
that any formalistic or simplistic approach to who receives the
protection of this type legislation must be rejected. In Bartels
v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947
(1947), the Court held that in the application of social
legislation employees are those who as a matter of economic
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reality are dependent upon the business to which they render
service.” Usery, 527 F.2d 1311
The Usery court further stated:
“Neither contractual recitations nor subjective intent can
mandate the outcome in these cases. Broader economic
realities are determinative.” Usery, 527 F.2d 1308, 1315.
(emphasis supplied)
The Ninth Circuit used the “economic reality” test described in the Usery
case with apparent approval in Real v. Driscoll Strawberry Associates Inc., 603
F2d 748, 754 (9
th
Cir. 1979). The court stated:
“Courts have adopted an expansive interpretation of the
definitions of "employer" and "employee" under the FLSA, in
order to effectuate the broad remedial purposes of the Act.
See, e. g., Dunlop v. Carriage Carpet Co., 548 F.2d 139, 144
(6th Cir. 1977); Usery v. Pilgrim Equipment Co., 527 F.2d
1308, 1311 n.6 (5th Cir.), Cert. denied, 429 U.S. 826, 97 S.Ct.
82, 50 L.Ed.2d 89 (1976). Cf. United States v. Silk, 331 U.S.
704, 712, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947) (Social
Security Act). The common law concepts of "employee" and
"independent contractor" are not conclusive determinants of
the FLSA's coverage. See W.J. Usery v. Pilgrim Equipment
Co., supra, 527 F.2d at 1311 n.6; Mednick v. Albert
Enterprises, 508 F.2d 297, 299 (5th Cir. 1975). Rather, in the
application of social legislation employees are those who As a
matter of economic reality are dependent upon the business to
which they render service. (Bartels v. Birmingham, 332 U.S.
126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947) (Social
Security Act) (emphasis added).) See Goldberg v. Whitaker
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House Cooperative, 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d
100 (1961) (FLSA).”
The Real decision provides additional controlling authority for the legal
prinicple that economic realities, not contractual labels or subjective intents,
determine employment status and entitlement to minimum wage and overtime.
Under the authorities cited herein, Defendant CSI’s efforts to “paper” past
employees, current employees, witnesses and claimants as being not covered by
the labor laws are ineffective as a matter of law. On subjective intent, the Real
court found that the parties’ subjective belief, as might be expressed in waivers or
disclaimers, would be ineffective. Logically, that would be the case in both
voluntary and “involuntary” waivers. As recognized by the court:
“Similarly, the subjective intent of the parties to a labor
contract cannot override the economic realities…” Real, Id at
755
The Ninth Circuit has also given guidance on application of the “economic
reality” test. In Hale v. State of Arizona, 967 F.2d 1356, 1360, 1362-3 (9
th
Circuit
1992), the court listed the following four guidelines that might be considered in
applying the “economic reality” test:
“This circuit, in deciding if an employer/employee
relationship exists, has applied an "economic reality" test
which looks to four factors: whether the alleged employer (1)
had the power to hire and fire employees, (2) supervised and
controlled employee work schedules or conditions of
employment, (3) determined the rate and method of payment,
and (4) maintained employment records.” Hale v. State of
Arizona, (967 F.2d 1356, 1364 (9
th
Circuit 1992).
The “economic reality” test has also been described in terms of “economic
dependency”. As stated by a Central District Court:
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“The touchstone of ‘economic reality’ in analyzing a possible
employee/employer relationship for purposes of the FLSA is
dependency of the employee upon the alleged employer”
(emphasis supplied/citation omitted) “Citing Bartels v.
Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549-50
(1947), 91 L.Ed 1947 (1947) The question is whether as a
matter of economic reality, the individuals are dependant upon
the business to which they render service” Bureerong v.
Uvawas, 922 F.Supp. 1450 (C.D. Cal. 1996) (Emphasis
supplied)
Plaintiff Headley worked for Defendant CSI to earn his livelihood. As a matter of
“economic reality”, Plaintiff was an employee as a matter of law under the above
stated principles set forth in Hale, supra.
V. THE PROTECTION OF THE LABOR LAWS IS NOT WAIVABLE
As indicated above, economic reality controls over contracts, labels and
subjective intent. Wage and hour rights simply cannot be waived or lost by the
worker. The right to minimum wage and overtime cannot be given away by the
employee or taken away by the employer. As often recognized by the courts, the
Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. (“FLSA”), was enacted to
protect workers such as Plaintiff Headley from the evils of “overwork” and
“underpay”. See e.g., Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.
728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981).
Accordingly, the U.S. Supreme Court has expressly found that FSLA
rights, e.g. minimum wage and overtime, cannot be abridged by contract or
otherwise waived.
“This Court's decisions interpreting the FLSA have frequently
emphasized the nonwaivable nature of an individual
employee's right to a minimum wage and to overtime pay
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under the Act. Thus, we have held that FLSA rights cannot be
abridged by contract or otherwise waived…” Barrentine v.
Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct.
1437, 67 L.Ed.2d 641 (1981).
Similarly, the rights to minimum wage and overtime under the California
Labor Code cannot be lost, waived, disclaimed or contracted away. Calif. Labor
Code §1194. As neither state nor federal wage and hour rights can be waived or
abridged by contract, the economic reality test applies and is determinative
irrespective of any efforts by Defendant CSI to deprive Plaintiff Headley (and
other employees), of legal rights under state and federal labor laws. There can be
no genuine material issue in this case concerning purported “waiver” by Plaintiff
Headley of his rights to minimum wage and overtime. Simply put, it cannot be
done.
Employee abuse is not a trivial matter. There is a strong public policy
behind the inalienable right to fair pay and humane hours. The Barrentine court
has addressed the purpose and importance of the labor laws in the following
terms:
“The principal congressional purpose in enacting the Fair
Labor Standards Act of 1938 was to protect all covered
workers from substandard wages and oppressive working
hours, ‘labor conditions [that are] detrimental to the
maintenance of the minimum standard of living necessary for
health, efficiency and general well-being of workers’
(citations omitted)… the FLSA was designed to give specific
minimum protections to individual workers and to ensure that
each employee covered by the Act would receive ‘[a] fair
day's pay for a fair day's work’ and would be protected from
“the evil of ‘overwork’ as well as ‘underpay.’” Barrentine v.
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Arkansas-Best Freight System, Inc., 450 U.S. 728, 737, 101
S.Ct. 1437, 67 L.Ed.2d 641, 653 (1981).
State law is essentially equivalent with respect to application of labor laws
and waiver prohibition by law. The California Labor Code §1194 expressly
provides that an employee may recover minimum wage and overtime even if
there is an agreement to the contrary. As applied to Plaintiff Headley, there is no
need for trial on any defense claim of possible waiver, or similar loss or absence
of rights, under the state and federal labor laws.
VI. LABOR LAWS CANNOT BE IGNORED IN THE NAME OF
RELIGION
Defendant CSI has a substantial work force but apparently claims to have
zero employees. Defendant’s workers are compensated and supported by
Scientology entities in return for their labor. These workers are “employees”, just
as Plaintiff Headley was an employee when he worked for Defendant CSI.
Putting the “religious” label on a worker changes nothing under the labor laws.
Accordingly, Defendant has a substantial labor problem. This may partly explain
why dubious defenses have been proclaimed with such righteous indignation.
Despite howls to the contrary, there is no blanket “religious” exemption that
could even theoretically cover 100% of Defendant’s workforce. There is simply
no “religion” defense applicable to Plaintiff Headley’s claims.
Defendant CSI’s “religious worker” and “volunteer” excuses for violating
labor law are desperate and frivolous attempts to escape responsibility for blatant,
long-standing and continuing violations of labor laws. These purported defenses
have been contrary to controlling law since at least 1985 and have not improved
with age. See, Tony and Susan Alamo Foundation v. Secretary of Labor, 471
U.S. 290, 297, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985). As simply put by the
Ninth Circuit Court, “[T]he First Amendment does not exempt religious
institutions from laws that regulate the minimum wage or the use of child
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labor…” Elvig v. Calvin Presbyterian Church, 397 F.3d 790, 792 (9
th
Cir. 2005).
(Plaintiff Headley also worked illegally as a minor, but that is not a subject of this
motion.)
In Alamo, supra, the court was presented with workers of a nonprofit
religious organization who received no cash wages but were paid with food,
clothing, shelter and other benefits. The workers in Alamo claimed to be
“volunteers” not employees. The workers ostensibly opposed being considered
employees entitled to minimum wage and overtime. The court found the
workers’ protests insignificant. The Alamo court also found that the alleged
nonprofit religious organization was an “enterprise” and the workers were
“employees” within the meaning and coverage of the minimum wage and
overtime laws. Alamo, 471 U.S. 295, 306.
In Alamo, the court explained it holding and rationale with several
comments applicable to this case against Defendant CSI, a purported non-profit
religious entity. The Court stated:
“The Act contains no express or implied exception for
commercial activities conducted by religious or other
nonprofit organizations…” Alamo, 471 U.S. 296.
“If an exception to the Act were carved out for employees
willing to testify that they performed work "voluntarily,"
employers might be able to use superior bargaining power to
coerce employees to make such assertions, or to waive their
protections under the Act.” Alamo, 471 U.S. 302 (citing
Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.
728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981).
“The associates who had testified at trial had vigorously
protested the payment of wages, asserting that they considered
themselves volunteers who were working only for religious
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and evangelical reasons. Nevertheless, the District Court
found that the associates were "entirely dependent upon the
Foundation for long periods." Although they did not expect
compensation in the form of ordinary wages, the District
Court found, they did expect the Foundation to provide them
"food, shelter, clothing, transportation and medical benefits.
These benefits were simply wages in another form, and under
the "economic reality" test of employment, (citation omitted),
the associates were employees.” Alamo, 471 U.S. 306.
As confirmed in Alamo, quoted above, the test of employment, under the
labor laws is expansive. There is no blanket “religious worker” or “religious
order” exception to the labor laws. “Employees” working for religions are still
“employees” with substantial legal rights. Employees are those who as a matter
of economic reality are dependant upon the business to which they render service.
The wage and hour laws are mandatory, not optional. That is so even if the
employer claims to be a non-profit religious enterprise. The wage laws cannot be
written or washed out of the employment equation, even in the name of religion.
See also, Real v. Driscoll Strawberry Associates Inc., 603 F2d 748, 754 (9
th
Cir.
1979).
The principles of law enunciated by the court in Alamo apply to Plaintiff
Headley and this case. The U.S. Supreme Court has found that minimum wage
law, FSLA, is applicable to workers of non-profit or religious organizations.
Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 105
S.Ct. 1953, 85 L.Ed.2d 278 (1985). In accord, Mitchell v. Pilgrim Holiness
Church Corp., 210 F2d 879 (1954). Further, as noted above, “The First
Amendment does not exempt religious institutions from laws that regulate the
minimum wage or the use of child labor…” Elvig v. Calvin Presbyterian Church,
397 F.3d 790, 792 (9
th
Cir. 2005). There is no “religion” defense in this case.
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Any “religious order” argument is spin without a proper factual or legal basis, and
simply irrelevant to the duty to pay employees proper wages. (In fact, most of
Defendant’s employees are pushing paper or brooms, not preaching the gospel of
L. Ron Hubbard. But that is irrelevant to this motion.)
In the Alamo case cited and quoted above, the court noted the broad
application of the labor laws and applied the test of “economic reality” to
employees who protested coverage. Plaintiff Headley is not protesting coverage
of the labor law; however, Plaintiff anticipates that Defendant may try to create
the appearance of a factual dispute by having current or past employees “protest”
coverage of the labor laws or offer what is in reality subjective beliefs, at best.
This should be rejected and ignored as irrelevant as employee “disclaimers” and
purported subjective beliefs regarding employment would not create a “genuine”
issue of material fact for a proper application of the economic reality test.
Further, what counts in this case is Plaintiff Headley’s “economic reality”, not a
contrived “economic reality” describe by current workers for Defendant. As
noted by the Alamo Court:
“…the purposes of the Act require that it be applied even to
those who would decline its protections. If an exception to the
Act were carved out for employees willing to testify that they
performed work ‘voluntarily’, employers might be able to use
superior bargaining power to coerce employees to make such
assertions, or to waive their protections under the Act.”
Alamo, 471 U.S. 302.
A review of case law shows that the weight of controlling authority
destroys Scientology’s self-granted immunity from the labor laws. In addition to
the Alamo excerpts set forth above, see e.g. W.J. Usery v. Pilgrim Equipment
Company, Inc., 527 F.2d 1308, 1310 (5th Cir. 1976). The Usery court noted as
follows with respect to workers’ rights to receive legal pay: “In Bartels v.
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Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947), the Court held
that 'in the application of social legislation employees are those who as a matter
of economic reality are dependent upon the business to which they render
service.” Usery, supra 527 F.2d 1311. That is the rule. There are not convenient
exceptions for the Scientology enterprise.
The Usery court also reiterated and confirmed the basic rule that “Neither
contractual recitations nor subjective intent can mandate the outcome in these
cases. Broader economic realities are determinative.” Usery, supra 1315. In
accord, Brennan v. Partida, 492 F.2d 707, 709 (5th Cir. 1974) and Real v.
Driscoll Strawberry Associates Inc., 603 F2d 748, 754-5 (9
th
Cir. 1979). The
economic reality test cannot be so easily avoided as Defendant CSI would hope.
VII. CALIFORNIA LABOR LAWS ALSO APPLY TO PLAINTIFF
A Central District Court has concluded that California courts would follow
the federal law’s broad definition of “employment” and likely focus on economic
realities. Bureerong v. Uvawas, 922 F.Supp. 1450, 1463 (C.D. Cal. 1996).
In Bureerong, supra 922 F.Supp. 1450, the Central District Court noted:
1) The broad application of the wage laws. Id at 1466-7.
2) The application of the economic reality test. Id at 1467.
3) That economic realities control over contracts and labels.
Id at 1467.
4) The importance of “dependency” in evaluating an
employment relationship. Id at 1468
5) That the Federal and California minimum wage and
overtime laws are “analogous”, “complementary” and
essentially equivalent in application. Id at 1470
In application, the California and federal labor laws are essentially
equivalent. Plaintiff would clearly be an employee under a state law test of
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“control”, which is a form of economic reality in the context of employment. The
Ninth Circuit has said:
“The California Labor Code defines an employee as one
engaged "to do something for the benefit of the employer or a
third person." … Where the purported employer has the right
to control the mode and manner of doing work, an employer-
employee relationship exists.” Randolph v. Budget Rent-A-
Car, 97 F.3d 319, 325 (9
th
cir. 1996).
California labor law looks to economic reality, and control of working
conditions and pay, in determining the existence of an employee/employer
relationship. Under both California and federal law, entitlement to minimum
wage and related benefits requires only a finding of “employment”. The parties’
labels and purported waivers or contracts do not negate a worker’s right to
minimum wage and overtime pay. Conduct and facts control over labels. Control
of the work and the workers is considered particularly important under California
State labor laws. Estrada v. FedEx Ground Package System, Inc., 154
Cal.App.4th 1, 10 (2007). (The court used the “must be a duck” analysis to
explain the obvious – if it has the attributes of employment - it is employment, no
matter what you call it.)
As stated by the California Supreme Court in rejecting another attempt to
avoid the cost of employees through the use of contracts and labels:
“The label placed by the parties on their relationship is not
dispositive, and subterfuges are not countenanced.” S. G.
Borello & Sons, Inc. v. Department of Industrial Relations, 48
Cal.3d 341, 349 (1989).
The efforts of the Scientology enterprise, including Defendant CSI, to
avoid wage and hour laws is just what the California Supreme Court condemned
– a subterfuge that should not be countenanced. Defendant CSI exercised control
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over mode and manner of doing work, wages, hours and working conditions of
Plaintiff Headley (and many others). Plaintiff was economically dependant upon
his compensation earned by his work for Defendant CSI. That makes Plaintiff
Headley an “employee” of CSI under California labor laws and the federal law,
FSLA. See also, Bureerong v. Uvawas, 922 F.Supp. 1450, 1470 (C.D. Cal.
1996).
As an employee, Plaintiff was legally entitled to receive the California
version of minimum wage. There is no legitimate dispute on the essential
underlying facts of the work environment. Further, the failure to pay Plaintiff
Headley properly under state and federal labor laws is actionable under California
law as an illegal business practice, which is alleged in the First Cause of Action.
Cortez, Supra, 23 Cal.4
th
163, 177-9 (2000).
VIII. THE DECLARATION OF MARC HEADLEY SATISFIES THE
ECONOMIC REALITY TEST
For fifteen years, Marc Headley worked full time and more for Defendant
CSI. That Plaintiff was Defendant’s employee seems somewhat of a “no-
brainer”, however, the Scientology enterprise operates by its own rules and
version of reality. Simply put, Plaintiff worked for Defendant CSI to earn a
living, such as it was. Defendant controlled tasks, pay, hours and working
conditions. Plaintiff was economically dependant upon his employment with
CSI. (See Plaintiff Marc Headley’s Declaration in Support of Motion (hereinafter
“Headley Declaration” and in particular #’s 7 - 39.) A trial is not necessary to
establish that Plaintiff was Defendant’s employee at times herein material.
All four of the conditions set forth in Hale, supra, 967 F.2d 1364 are
satisfied by essentially indisputable facts. CSI controls employment, pay and
working conditions. CSI generates and maintains records of its workers and even
gives pay stubs with the $50 a week pay showing deductions.
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Plaintiff March Headley’s Declaration in Support of Motion, filed
concurrently herewith, is submitted in its entirety as support for this motion. The
following paragraphs address selected key points and are offered for illustrative
purposes.
1) My name is Marc Headley. I was a staff member of the Church of
Scientology International from 1989 until January 2005. (Headley Declaration
#2)
2) As a staff member, I was required to follow the issued schedule of
the organization I worked for. This was issued to all staff members regularly and
included mandated hours to get up in the morning, get transported in to work on
buses, eat breakfast, get accounted for at roll call or muster (regular meetings
throughout the day to ensure all staff are present), work hours throughout the day,
lunch, dinner, etc. During my work hours I was first required to make an exact list
of what I was going to get done that day. Failure to do so resulted in disciplinary
action, as did failure to get those actions completed, follow the schedule, and do
what was required of me. (Headley Declaration #7)
3) I was required to work in order to be paid the small amount of
money I was paid. If I did not work, I would not be paid. Simple as that. The
small amount of money I did receive weekly was used to buy toilet paper, soap,
shampoo and deodorant etc and any other personal items I could afford with what
little was left over, such as snacks or cigarettes. (Headley Declaration #9)
4) I was required to do the work required of me, in the manner it was
required of me, to the quality standards required, and meet the production targets
that had been set and if I failed to do so in any way, I was punished for non
performance. (Headley Declaration #12)
5) Lack of performance of duties also resulted in threats of being
terminated by Golden Era and assigned elsewhere, all of which carried the threat
of being cut off completely from my wife and family. (Headley Declaration #13)
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6) Church of Scientology International controlled my work
environment, schedule, and all other aspects of my production and my life.
(Headley Declaration #15)
7) My production supervisor regularly inspected my work and
performance, set targets and was there to ensure I met those targets. My task list
would be inspected at least once daily and sometimes multiple times daily and
each day we were required to report and graph daily progress made on task lists.
Not graphing or marking completed tasks daily would result in disciplinary
actions. (Headley Declaration #16)
8) While working at Golden Era productions I worked on producing
CD’s and cassettes that were sold in organizations all around the world. (Headley
Declaration #18)
9) I worked on the production of videos and promotional materials that
were used to promote a fiction movie written by L Ron Hubbard. (Headley
Declaration #21)
10) I worked on the design and installation of complex audio visual
systems that Golden Era Productions (a DBA of CSI) would buy the equipment
for at wholesale price and then sell to organizations around the world and charge
for them for the equipment, design & installation. (Headley Declaration #23)
11) I personally designed and oversaw the fabrication, manufacturing
and production of over 300 “Registration Systems” for CSI. CSI charges $8,800
for each of these systems produced. That is $2,640,000 in income for CSI.
(Headley Declaration #24)
12) I designed over 30 individual audio visual systems for CSI to be
installed in organizations around the world. These would range from a film room
system to a display or presentation system. In any one organization they usually
have one or more of these systems. The average price to outfit a single
organization with the systems I designed would generate $275,000 of income to
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CSI. At over 300 organizations, the total net worth to CSI of the systems I
designed was well over $81,000,000. (Headley Declaration #26)
13) Church of Scientology International set the pay rate for all staff and
that is what I was paid, as long as I produced what was required of me, and as
long as there were funds to pay. (Headley Declaration #27)
14) Work performed was for the pay given. Failure to perform the work
required resulted in loss of pay. (Headley Declaration #28)
15) Pay was used to cover living costs – per diem expenses of food and
gas while I was off the property working on Golden Era projects – which was
frequent through the years, new uniform parts, shoes, laundry detergent, contact
lenses, etc. (Headley Declaration #29)
16) They kept a treasury file of my payroll records, taxes withheld, and
the weeks I was paid or not paid and whether the lack of pay was due to non
performance or no money available to cover staff payroll. (Headley Declaration
#34)
17) While working for CSI I could be called to work at any point during
the day or night and was so called on many occasions. Frequently, I was gotten
out of bed in the middle of the night, interrupted during a meal break, ordered to
come in early each day or stay many hours late at night. These were a normal
occurrence. If I refused for any reason, I would be subject to disciplinary
procedures and most definitely docked the little pay I was receiving weekly.
(Headley Declaration #36)
18) During my employment for CSI, I had no other source of income and
was dependant on what little money I was getting to afford basic living supplies.
I was dependent upon my work for CSI for a place to sleep and food to eat.
(Headley Declaration #37)
IX. CONCLUSION
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A major purpose of the wage and hour laws is to prevent the abuse of
employees by an employer tyrant such as Defendant CSI. Defendant CSI works
its employees 10 – 16 hours a day, seven days a week and truly treats them like
they have no legal rights. It hires the young (Plaintiff Headley started as a minor)
and drains them during their prime working years. Plaintiff Headley suffered
from long hours, sleep deprivation, poor nutrition and poverty.
In W.J. Usery v. Pilgrim, 527 F.2d 1308, 1315 (5th Cir. 1976), the court
explained the rationale of the “economic reality” test in poignant terms as
follows:
“In deciding whether these operators are employees for
the purposes of the Fair Labor Standards Act, (t)he ultimate
criteria are to be found in the purposes of the Act. . . . (T)he
Act is intended to protect those whose livelihood is dependent
upon finding employment in the business of others. It is
directed toward those who themselves are least able in good
times to make provisions for their needs when old age and
unemployment may cut off their earnings . . . to those who, as
a matter of economic reality, are dependent upon the business
to which they render service.” (Emphasis supplied)
This describes the worker bees of the Scientology enterprise. They work
hard but have no ability to seriously consider a plan for retirement,
unemployment or other employment with pay of $50 a week. Even this illegal
pay is arbitrarily and illegally “docked” by the “employer”. Unfortunately,
Scientology has abused its workers for so long, it seems to think it has destroyed
labor rights and acquire the right to abuse workers by a power analogous to
“adverse possession.” A start in addressing this social problem would be a proper
ruling of “employment” and entitlement to minimum wage in response to this
motion. That might get CSI’s attention and signal the danger of continued abuse
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of workers and ignoring labor laws. There are many past and present employees
of Scientology enterprises who are working, or have worked, under illegal
working conditions for far less than minimum wage. It is past time for such
practices to be recognized as illegal and for remedial measures to be
implemented. Also, a finding of “employment” will greatly simplify this
litigation, shorten or avoid trial and, hopefully, force the Scientology enterprise
into compliance with labor laws.
Scientology thrives on fear, secrecy and misinformation. It is an enterprise
that markets “copyrighted” advice and “trade secrets” at high prices and in the
name of religion. Plaintiff was employed by that enterprise. As an employee of
that enterprise, Plaintiff Headley had an unwaivable and unalterable right to
minimum wage and overtime pay. Defendant CSI owes Plaintiff additional
compensation. The only material question is how much.
July 7, 2009
BARRY VAN SICKLE
Attorney for Plaintiff
MARC HEADLEY