Motion for Summary Adjudication - Memorandum

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

mailto:[email protected]

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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.

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(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

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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.


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.


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.


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

Motion for Summary Adjudication - Memorandum

Documents

california labor laws

support of motion

summary adjudication

summary adjudication

support of plaintiffs

declaration of marc

central district of

california health