Motion For Summary Adjudication - Memorandum

1 2 3

BARRY VAN SICKLE - BAR NO. 98645 1079 Sunrise Avenue Suite B-315 Roseville, CA 95661 Telephone: (916) 549-8784 E-Mail: [email protected]

4 5

Attorney for Plaintiff MARC HEADLEY

6 7 UNITED STATES DISTRICT COURT 8 CENTRAL DISTRICT OF CALIFORNIA 9 10 11 MARC HEADLEY, CASE NO. CV 09-03986 RSWL (MANx) 12 Plaintiff, 13 vs. 14 15

CHURCH OF SCIENTOLOGY INTERNATIONAL, a corporate entity, AND DOES 1 - 20

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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:

17 Defendants. 18 19 20

1) EMPLOYMENT STATUS; 2) COVERAGE OF WAGE LAW; 3) LIABILITY FOR ADDITIONAL COMPENSATION

21 22 23

DATE: August 11, 2009 TIME: 9:00 am PLACE: Spring Street Courthouse, Courtroom 21

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ASSIGNED TO THE HONORABLE JUDGE RONALD S.W. LEW

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MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1 TABLE OF CONTENTS 2 3 I.

SYNOPSIS ........................................................................................................1

II.

POINTS AND AUTHORITIES: INTRODUCTION................................2

III.

EMPLOYEE IS BROADLY DEFINED FOR PURPOSES OF THE

4 5 6 LABOR LAW...................................................................................................4 7 IV.

PLAINTIFF WAS AN EMPLOYEE AS A MATTER OF ECONOMIC

8 REALITY .........................................................................................................5 9 V.

THE PROTECTION OF THE LABOR LAWS IS NOT WAIVABLE .8

VI.

LABOR LAWS CANNOT BE IGNORED IN THE NAME OF

10 11 RELIGION .....................................................................................................10 12

VII. CALIFORNIA LABOR LAWS ALSO APPLY TO PLAINTIFF.........14

13 VIII. THE DECLARATION OF MARC HEADLEY SATISFIES THE 14 ECONOMIC REALITY TEST...................................................................16 15 IX.

CONCLUSION ..............................................................................................19

16 17 18 19 20 21 22 23 24 25 26 27 28 i MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1 TABLE OF AUTHORITIES 2 CASES 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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 (9th 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.4th 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 (9th 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 ii MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

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 (11th Cir. 1988)...............................................................4 Randolph v. Budget Rent-A-Car, 97 F.3d 319, 325-6 (9th cir. 1996)..............................................................5, 15 Real v. Driscoll Strawberry Associates Inc. 603 F2d 748, 754 (9th 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

21 22 STATUTES 23

California Business & Professions Code §§17200 et. seq................................2, 3, 4

24

California Labor Code ..........................................................................................9, 10

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F.R.C.P Rule 56(d)..................................................................................................2, 3

26

Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. .................................... 4, 6, 8, 9

27 28 iii MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1 I. 2

SYNOPSIS Plaintiff Headley was employed by Defendant Church of Scientology

3

International (“CSI”) for approximately fifteen years (1989 – 2005). The

4

pertinent facts of employment are set forth in a supporting declaration and cross-

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referenced in Section VIII below. Plaintiff worked primarily for a division of CSI

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known as Golden Era Productions. Golden Era makes videos, advertisements and

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promotional materials for the Scientology enterprise. Plaintiff Headley worked

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on production of such materials and installation of display facilities. This was a

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full-time job and Plaintiff’s only source of income and support. The mode,

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manner and pay regarding Plaintiff’s work were controlled by Defendant CSI. As

11

addressed below, these factors make Plaintiff Headley a former employee of

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Defendant CSI as a matter of law.

13

As an employee, Plaintiff was entitled to minimum wage and overtime pay.

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Plaintiff was paid less than legal wages and seeks the difference in his First and

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Second Causes of Action. Defendant CSI refuses to acknowledge that its workers

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are or were “employees” subject to the wage and hour laws. Defendant is wrong.

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Plaintiff Headley worked for and earned a meager livelihood as compensation for

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his labors. Defendant controlled working conditions, hours and wages. (See

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Plaintiff’s Declaration filed concurrently herewith.) These historical facts can

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lead to only one reasonable legal conclusion, Plaintiff worked as an employee of

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Defendant.

22

Defendant CSI has no valid excuse for failure to pay its employees,

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including Plaintiff, minimum wage or overtime rates. There is no legal

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justification for refusing to pay employees minimum wage and overtime pay. As

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demonstrated by authorities cited herein, purported justifications of waiver,

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disclaimer and “religion” are contrary to statute and controlling case law. The

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law of the land trumps the musings of L. Ron Hubbard, Scientology’s founder, on

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the treatment of employees. 1 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

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It follows from the circumstances of Plaintiff’s work for Defendant, as set

2

forth in his supporting declaration, that Plaintiff Headley is entitled to summary

3

adjudication pursuant to F.R.C.P Rule 56(d) on issues of employment and

4

entitlement to minimum wage and overtime pay. Violations of state and federal

5

labor laws, such as Defendant’s failure to pay proper wages, also constitute illegal

6

and/or unfair business practices actionable under state law as plead in Plaintiff’s

7

First Cause of Action. Plaintiff seeks restitution of unpaid wages under

8

California Business & Professions Code §§17200 et. seq.

9 II.

POINTS AND AUTHORITIES: INTRODUCTION

10

In evaluating application of the federal labor laws to workers of a non-

11

profit religious entity, the U.S. Supreme Court recognized that the labor laws

12

applied to employees and that the test of employment was one of “economic

13

reality”. Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290,

14

301, 105 S.Ct. 1953, 85 L.Ed.2d 278, 289 (1985) (Citing Goldberg v. Whitaker

15

House Cooperative, 366 U.S. 28 at 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961).

16

The factors that may be considered in evaluating “economic reality” are

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discussed below. The economic reality standard is well satisfied by the

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underlying facts concerning Plaintiff’s day-to-day work for Defendant CSI.

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Plaintiff Headley was employed by Defendant CSI as his sole occupation and

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source of income. Working long hours under the control of Defendant CSI was

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how Plaintiff earned his food, shelter and cash income. Under the historical facts

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of Plaintiff’s working conditions and dependence on his job with Defendant CSI

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for his livelihood, there is no genuine dispute of material fact on employment

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status. The existence of this employer/employee relationship under the facts of

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the working relationship, and for purposes of the labor laws, presents a question

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of law for the court. Hale v. State of Arizona, 967 F.2d 1356, 1360 (9th Circuit

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1992) and Bonnette v. California Health and Welfare Agency, 704 F.2d 1465,

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1469 (9th Cir. 1982). There is no genuine disputes concerning a material fact on 2 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

the issue of employment. Plaintiff was an employee as a matter of “economic

2

reality”. Once the fact of employment is properly recognized, entitlement to

3

minimum wage and liability for failure to pay necessarily follows by operation of

4

law. Accordingly, these issues are suitable for determination by summary

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adjudication in favor of Plaintiff under the summary judgment standard approved

6

by the court in Scott v. Harris, 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed. 2d

7

686, 694 (2007).

8 9

Rule 56(d) of the Federal Rules of Civil Procedure authorizes summary adjudication on liability issues although there are potential questions of fact on

10

damages. Plaintiff requests such a finding on liability for additional

11

compensation. The amount of recoverable wages will require further

12

proceedings. Plaintiff’s burden of proof on unpaid compensation has been

13

enunciated by the Supreme Court in Anderson v. Mt Clemens Pottery Co., 328

14

U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). See also, Brennan v. Partida,

15

492 F.2d 707, 710 (5th Cir. 1974). Plaintiff’s burden on proving compensation

16

due is relatively light.

17

Plaintiff seeks restitution and recovery of unpaid wages under state and

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federal labor laws. The First Cause of Action seeks restitution of unpaid wages as

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an illegal and unfair business practice pursuant to California Business and

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Professions Code (B&P) §§17200 et. seq. Seeking additional compensation due

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under the labor laws as an unfair business practice in violation of California state

22

law, B&P §17200, et. seq. has been expressly approved by the California

23

Supreme Court. Cortez v. Purolator Air Filtration Products Co., 23 Cal.4th 163,

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173-5 (2000). As recognized in Cortez, the failure to pay an employee minimum

25

wage and overtime is a violation of labor laws and an illegal business practice

26 27 28 3 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

under B&P §17200. 1 (This motion concerns liability not damages, however, it

2

seems appropriate to note that Defendant’s Rule 12 motions on file miss the mark

3

on statute of limitation issues by a wide margin.)

4 III. EMPLOYEE IS BROADLY DEFINED FOR PURPOSES OF THE 5 LABOR LAW 6

The Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. (“FLSA”) “…is to

7

be liberally construed to the furthest reaches consistent with Congressional

8

direction.” California labor laws are similarly broad and encompassing.

9

Bureerong v. Uvawas, 922 F.Supp. 1450, 1463 (C.D. Cal. 1996). Because the

10

FLSA is remedial, it should be construed to provide broad federal employment

11

protection. Bureerong, 922 F.Supp at 1468. Unless a laborer is specifically

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exempted by the FLSA, he or she is covered by the federal labor laws. Hale v.

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State of Arizona, supra, 967 F.2d 1362-3. See, also Patel v. Quality Inn South,

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846 F.2d 700, 702-3 (11th Cir. 1988). Illustrative of the wide and encompassing

15

scope of the wage and hour laws is the fact that prison inmates working in a

16

prison shop have been found to be “employees” entitled to minimum wage. Hale

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v. State of Arizona, 967 F.2d 1356, 1362-3 (9th Cir. 1992).

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In Patel, supra, the Eleventh Circuit addressed the issue of FLSA coverage

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to undocumented aliens. The court found in favor of FLSA coverage. The court

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discussed legislative history and the Supreme Court’s expansive definition of the

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term “employee”. Based upon its review of legislative history and Supreme

22

Court decisions, the court concluded that the FLSA covered all categories of

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workers for hire not specifically excluded from the federal labor laws. Patel v.

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Quality Inn South, 846 F.2d 700, 702-3 (11th Cir. 1988). The Ninth Circuit

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reached essentially the same conclusion in Hale v. State of Arizona, 967 F.2d

26 27 1

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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 4th 163,179 and Broberg v. The Guardian Life Ins. Co. of America, 171 Cal. App.4th 912 (2009)

4 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

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1356, 1363 (9th Circuit 1992), citing Patel. For purposes of the labor laws,

2

“employee” is broadly defined. See also, Randolph v. Budget Rent-A-Car, 97

3

F.3d 319, 325-6 (9th cir. 1996).

4 IV. PLAINTIFF WAS AN EMPLOYEE AS A MATTER OF ECONOMIC 5 REALITY 6

The proper test of employment status is the “economic reality” test, Alamo

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Id. This is not a new trap for unwary employers. It has been the law since well

8

prior to the 1985 Alamo decision. Also, as addressed in some detail below,

9

“economic reality” is the test to the exclusion of other factors such as waivers,

10

disclaimers and subjective beliefs. Defendant CSI has been ignoring the proper

11

legal standards and saving millions of dollars in unpaid wages for many years.

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Apparently, Scientology believes it can avoid Alamo by forcing self-serving

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documents upon employees.

14

Defendant CSI has had its legal team trying to draft and maneuver its way

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out of paying legal wages for years; however, such efforts should be found

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ineffective under a proper legal analysis. What counts, and the only thing that

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counts, is the economic reality of the job. Under that test, Plaintiff was an

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employee of Defendant and nothing Defendant can put on paper changes

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“economic reality” as that concept has been developed and defined by the courts.

20

In W.J. Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1311 & 1315 (5th

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Cir. 1976) the court explained its rulings in terms pertinent to this case. The court

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stated:

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“…the lesson taught by the Supreme Court's 1947 trilogy is

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that any formalistic or simplistic approach to who receives the

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protection of this type legislation must be rejected. In Bartels

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v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947

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(1947), the Court held that in the application of social

28

legislation employees are those who as a matter of economic 5 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

reality are dependent upon the business to which they render

2

service.” Usery, 527 F.2d 1311

3

The Usery court further stated:

4

“Neither contractual recitations nor subjective intent can

5

mandate the outcome in these cases. Broader economic

6

realities are determinative.” Usery, 527 F.2d 1308, 1315.

7

(emphasis supplied)

8

The Ninth Circuit used the “economic reality” test described in the Usery

9

case with apparent approval in Real v. Driscoll Strawberry Associates Inc., 603

10

F2d 748, 754 (9th Cir. 1979). The court stated:

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“Courts have adopted an expansive interpretation of the

12

definitions of "employer" and "employee" under the FLSA, in

13

order to effectuate the broad remedial purposes of the Act.

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See, e. g., Dunlop v. Carriage Carpet Co., 548 F.2d 139, 144

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(6th Cir. 1977); Usery v. Pilgrim Equipment Co., 527 F.2d

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1308, 1311 n.6 (5th Cir.), Cert. denied, 429 U.S. 826, 97 S.Ct.

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82, 50 L.Ed.2d 89 (1976). Cf. United States v. Silk, 331 U.S.

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704, 712, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947) (Social

19

Security Act). The common law concepts of "employee" and

20

"independent contractor" are not conclusive determinants of

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the FLSA's coverage. See W.J. Usery v. Pilgrim Equipment

22

Co., supra, 527 F.2d at 1311 n.6; Mednick v. Albert

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Enterprises, 508 F.2d 297, 299 (5th Cir. 1975). Rather, in the

24

application of social legislation employees are those who As a

25

matter of economic reality are dependent upon the business to

26

which they render service. (Bartels v. Birmingham, 332 U.S.

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126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947) (Social

28

Security Act) (emphasis added).) See Goldberg v. Whitaker 6 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

House Cooperative, 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d

2

100 (1961) (FLSA).”

3

The Real decision provides additional controlling authority for the legal

4

prinicple that economic realities, not contractual labels or subjective intents,

5

determine employment status and entitlement to minimum wage and overtime.

6

Under the authorities cited herein, Defendant CSI’s efforts to “paper” past

7

employees, current employees, witnesses and claimants as being not covered by

8

the labor laws are ineffective as a matter of law. On subjective intent, the Real

9

court found that the parties’ subjective belief, as might be expressed in waivers or

10

disclaimers, would be ineffective. Logically, that would be the case in both

11

voluntary and “involuntary” waivers. As recognized by the court:

12

“Similarly, the subjective intent of the parties to a labor

13

contract cannot override the economic realities…” Real, Id at

14

755

15

The Ninth Circuit has also given guidance on application of the “economic

16

reality” test. In Hale v. State of Arizona, 967 F.2d 1356, 1360, 1362-3 (9th Circuit

17

1992), the court listed the following four guidelines that might be considered in

18

applying the “economic reality” test:

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“This circuit, in deciding if an employer/employee

20

relationship exists, has applied an "economic reality" test

21

which looks to four factors: whether the alleged employer (1)

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had the power to hire and fire employees, (2) supervised and

23

controlled employee work schedules or conditions of

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employment, (3) determined the rate and method of payment,

25

and (4) maintained employment records.” Hale v. State of

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Arizona, (967 F.2d 1356, 1364 (9th Circuit 1992).

27 28

The “economic reality” test has also been described in terms of “economic dependency”. As stated by a Central District Court: 7 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

“The touchstone of ‘economic reality’ in analyzing a possible

2

employee/employer relationship for purposes of the FLSA is

3

dependency of the employee upon the alleged employer”

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(emphasis supplied/citation omitted) “Citing Bartels v.

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Birmingham, 332 U.S. 126, 130, 67 S.Ct. 1547, 1549-50

6

(1947), 91 L.Ed 1947 (1947) The question is whether as a

7

matter of economic reality, the individuals are dependant upon

8

the business to which they render service” Bureerong v.

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Uvawas, 922 F.Supp. 1450 (C.D. Cal. 1996) (Emphasis

10

supplied)

11

Plaintiff Headley worked for Defendant CSI to earn his livelihood. As a matter of

12

“economic reality”, Plaintiff was an employee as a matter of law under the above

13

stated principles set forth in Hale, supra.

14 V. THE PROTECTION OF THE LABOR LAWS IS NOT WAIVABLE 15

As indicated above, economic reality controls over contracts, labels and

16

subjective intent. Wage and hour rights simply cannot be waived or lost by the

17

worker. The right to minimum wage and overtime cannot be given away by the

18

employee or taken away by the employer. As often recognized by the courts, the

19

Fair Labor Standards Act, 29 U.S.C. §§201 et. seq. (“FLSA”), was enacted to

20

protect workers such as Plaintiff Headley from the evils of “overwork” and

21

“underpay”. See e.g., Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.

22

728, 739, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981).

23

Accordingly, the U.S. Supreme Court has expressly found that FSLA

24

rights, e.g. minimum wage and overtime, cannot be abridged by contract or

25

otherwise waived.

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“This Court's decisions interpreting the FLSA have frequently

27

emphasized the nonwaivable nature of an individual

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employee's right to a minimum wage and to overtime pay 8 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

under the Act. Thus, we have held that FLSA rights cannot be

2

abridged by contract or otherwise waived…” Barrentine v.

3

Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct.

4

1437, 67 L.Ed.2d 641 (1981).

5

Similarly, the rights to minimum wage and overtime under the California

6

Labor Code cannot be lost, waived, disclaimed or contracted away. Calif. Labor

7

Code §1194. As neither state nor federal wage and hour rights can be waived or

8

abridged by contract, the economic reality test applies and is determinative

9

irrespective of any efforts by Defendant CSI to deprive Plaintiff Headley (and

10

other employees), of legal rights under state and federal labor laws. There can be

11

no genuine material issue in this case concerning purported “waiver” by Plaintiff

12

Headley of his rights to minimum wage and overtime. Simply put, it cannot be

13

done.

14

Employee abuse is not a trivial matter. There is a strong public policy

15

behind the inalienable right to fair pay and humane hours. The Barrentine court

16

has addressed the purpose and importance of the labor laws in the following

17

terms:

18

“The principal congressional purpose in enacting the Fair

19

Labor Standards Act of 1938 was to protect all covered

20

workers from substandard wages and oppressive working

21

hours, ‘labor conditions [that are] detrimental to the

22

maintenance of the minimum standard of living necessary for

23

health, efficiency and general well-being of workers’

24

(citations omitted)… the FLSA was designed to give specific

25

minimum protections to individual workers and to ensure that

26

each employee covered by the Act would receive ‘[a] fair

27

day's pay for a fair day's work’ and would be protected from

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“the evil of ‘overwork’ as well as ‘underpay.’” Barrentine v. 9 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

Arkansas-Best Freight System, Inc., 450 U.S. 728, 737, 101

2

S.Ct. 1437, 67 L.Ed.2d 641, 653 (1981).

3

State law is essentially equivalent with respect to application of labor laws

4

and waiver prohibition by law. The California Labor Code §1194 expressly

5

provides that an employee may recover minimum wage and overtime even if

6

there is an agreement to the contrary. As applied to Plaintiff Headley, there is no

7

need for trial on any defense claim of possible waiver, or similar loss or absence

8

of rights, under the state and federal labor laws.

9 VI. LABOR LAWS CANNOT BE IGNORED IN THE NAME OF 10 RELIGION 11

Defendant CSI has a substantial work force but apparently claims to have

12

zero employees. Defendant’s workers are compensated and supported by

13

Scientology entities in return for their labor. These workers are “employees”, just

14

as Plaintiff Headley was an employee when he worked for Defendant CSI.

15

Putting the “religious” label on a worker changes nothing under the labor laws.

16

Accordingly, Defendant has a substantial labor problem. This may partly explain

17

why dubious defenses have been proclaimed with such righteous indignation.

18

Despite howls to the contrary, there is no blanket “religious” exemption that

19

could even theoretically cover 100% of Defendant’s workforce. There is simply

20

no “religion” defense applicable to Plaintiff Headley’s claims.

21

Defendant CSI’s “religious worker” and “volunteer” excuses for violating

22

labor law are desperate and frivolous attempts to escape responsibility for blatant,

23

long-standing and continuing violations of labor laws. These purported defenses

24

have been contrary to controlling law since at least 1985 and have not improved

25

with age. See, Tony and Susan Alamo Foundation v. Secretary of Labor, 471

26

U.S. 290, 297, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985). As simply put by the

27

Ninth Circuit Court, “[T]he First Amendment does not exempt religious

28

institutions from laws that regulate the minimum wage or the use of child 10 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

labor…” Elvig v. Calvin Presbyterian Church, 397 F.3d 790, 792 (9th Cir. 2005).

2

(Plaintiff Headley also worked illegally as a minor, but that is not a subject of this

3

motion.)

4

In Alamo, supra, the court was presented with workers of a nonprofit

5

religious organization who received no cash wages but were paid with food,

6

clothing, shelter and other benefits. The workers in Alamo claimed to be

7

“volunteers” not employees. The workers ostensibly opposed being considered

8

employees entitled to minimum wage and overtime. The court found the

9

workers’ protests insignificant. The Alamo court also found that the alleged

10

nonprofit religious organization was an “enterprise” and the workers were

11

“employees” within the meaning and coverage of the minimum wage and

12

overtime laws. Alamo, 471 U.S. 295, 306.

13

In Alamo, the court explained it holding and rationale with several

14

comments applicable to this case against Defendant CSI, a purported non-profit

15

religious entity. The Court stated:

16

“The Act contains no express or implied exception for

17

commercial activities conducted by religious or other

18

nonprofit organizations…” Alamo, 471 U.S. 296.

19

“If an exception to the Act were carved out for employees

20

willing to testify that they performed work "voluntarily,"

21

employers might be able to use superior bargaining power to

22

coerce employees to make such assertions, or to waive their

23

protections under the Act.” Alamo, 471 U.S. 302 (citing

24

Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.

25

728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981).

26

“The associates who had testified at trial had vigorously

27

protested the payment of wages, asserting that they considered

28

themselves volunteers who were working only for religious 11 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

and evangelical reasons. Nevertheless, the District Court

2

found that the associates were "entirely dependent upon the

3

Foundation for long periods." Although they did not expect

4

compensation in the form of ordinary wages, the District

5

Court found, they did expect the Foundation to provide them

6

"food, shelter, clothing, transportation and medical benefits.

7

These benefits were simply wages in another form, and under

8

the "economic reality" test of employment, (citation omitted),

9

the associates were employees.” Alamo, 471 U.S. 306.

10

As confirmed in Alamo, quoted above, the test of employment, under the

11

labor laws is expansive. There is no blanket “religious worker” or “religious

12

order” exception to the labor laws. “Employees” working for religions are still

13

“employees” with substantial legal rights. Employees are those who as a matter

14

of economic reality are dependant upon the business to which they render service.

15

The wage and hour laws are mandatory, not optional. That is so even if the

16

employer claims to be a non-profit religious enterprise. The wage laws cannot be

17

written or washed out of the employment equation, even in the name of religion.

18

See also, Real v. Driscoll Strawberry Associates Inc., 603 F2d 748, 754 (9th Cir.

19

1979).

20

The principles of law enunciated by the court in Alamo apply to Plaintiff

21

Headley and this case. The U.S. Supreme Court has found that minimum wage

22

law, FSLA, is applicable to workers of non-profit or religious organizations.

23

Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 105

24

S.Ct. 1953, 85 L.Ed.2d 278 (1985). In accord, Mitchell v. Pilgrim Holiness

25

Church Corp., 210 F2d 879 (1954). Further, as noted above, “The First

26

Amendment does not exempt religious institutions from laws that regulate the

27

minimum wage or the use of child labor…” Elvig v. Calvin Presbyterian Church,

28

397 F.3d 790, 792 (9th Cir. 2005). There is no “religion” defense in this case. 12 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

Any “religious order” argument is spin without a proper factual or legal basis, and

2

simply irrelevant to the duty to pay employees proper wages. (In fact, most of

3

Defendant’s employees are pushing paper or brooms, not preaching the gospel of

4

L. Ron Hubbard. But that is irrelevant to this motion.)

5

In the Alamo case cited and quoted above, the court noted the broad

6

application of the labor laws and applied the test of “economic reality” to

7

employees who protested coverage. Plaintiff Headley is not protesting coverage

8

of the labor law; however, Plaintiff anticipates that Defendant may try to create

9

the appearance of a factual dispute by having current or past employees “protest”

10

coverage of the labor laws or offer what is in reality subjective beliefs, at best.

11

This should be rejected and ignored as irrelevant as employee “disclaimers” and

12

purported subjective beliefs regarding employment would not create a “genuine”

13

issue of material fact for a proper application of the economic reality test.

14

Further, what counts in this case is Plaintiff Headley’s “economic reality”, not a

15

contrived “economic reality” describe by current workers for Defendant. As

16

noted by the Alamo Court:

17

“…the purposes of the Act require that it be applied even to

18

those who would decline its protections. If an exception to the

19

Act were carved out for employees willing to testify that they

20

performed work ‘voluntarily’, employers might be able to use

21

superior bargaining power to coerce employees to make such

22

assertions, or to waive their protections under the Act.”

23

Alamo, 471 U.S. 302.

24

A review of case law shows that the weight of controlling authority

25

destroys Scientology’s self-granted immunity from the labor laws. In addition to

26

the Alamo excerpts set forth above, see e.g. W.J. Usery v. Pilgrim Equipment

27

Company, Inc., 527 F.2d 1308, 1310 (5th Cir. 1976). The Usery court noted as

28

follows with respect to workers’ rights to receive legal pay: “In Bartels v. 13 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947), the Court held

2

that 'in the application of social legislation employees are those who as a matter

3

of economic reality are dependent upon the business to which they render

4

service.” Usery, supra 527 F.2d 1311. That is the rule. There are not convenient

5

exceptions for the Scientology enterprise.

6

The Usery court also reiterated and confirmed the basic rule that “Neither

7

contractual recitations nor subjective intent can mandate the outcome in these

8

cases. Broader economic realities are determinative.” Usery, supra 1315. In

9

accord, Brennan v. Partida, 492 F.2d 707, 709 (5th Cir. 1974) and Real v.

10

Driscoll Strawberry Associates Inc., 603 F2d 748, 754-5 (9th Cir. 1979). The

11

economic reality test cannot be so easily avoided as Defendant CSI would hope.

12

VII. CALIFORNIA LABOR LAWS ALSO APPLY TO PLAINTIFF

13

A Central District Court has concluded that California courts would follow

14

the federal law’s broad definition of “employment” and likely focus on economic

15

realities. Bureerong v. Uvawas, 922 F.Supp. 1450, 1463 (C.D. Cal. 1996).

16

In Bureerong, supra 922 F.Supp. 1450, the Central District Court noted:

17

1) The broad application of the wage laws. Id at 1466-7.

18

2) The application of the economic reality test. Id at 1467.

19

3) That economic realities control over contracts and labels.

20 21 22 23

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

24

overtime laws are “analogous”, “complementary” and

25

essentially equivalent in application. Id at 1470

26 27

In application, the California and federal labor laws are essentially equivalent. Plaintiff would clearly be an employee under a state law test of

28 14 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

“control”, which is a form of economic reality in the context of employment. The

2

Ninth Circuit has said:

3

“The California Labor Code defines an employee as one

4

engaged "to do something for the benefit of the employer or a

5

third person." … Where the purported employer has the right

6

to control the mode and manner of doing work, an employer-

7

employee relationship exists.” Randolph v. Budget Rent-A-

8

Car, 97 F.3d 319, 325 (9th cir. 1996).

9

California labor law looks to economic reality, and control of working

10

conditions and pay, in determining the existence of an employee/employer

11

relationship. Under both California and federal law, entitlement to minimum

12

wage and related benefits requires only a finding of “employment”. The parties’

13

labels and purported waivers or contracts do not negate a worker’s right to

14

minimum wage and overtime pay. Conduct and facts control over labels. Control

15

of the work and the workers is considered particularly important under California

16

State labor laws. Estrada v. FedEx Ground Package System, Inc., 154

17

Cal.App.4th 1, 10 (2007). (The court used the “must be a duck” analysis to

18

explain the obvious – if it has the attributes of employment - it is employment, no

19

matter what you call it.)

20

As stated by the California Supreme Court in rejecting another attempt to

21

avoid the cost of employees through the use of contracts and labels:

22

“The label placed by the parties on their relationship is not

23

dispositive, and subterfuges are not countenanced.” S. G.

24

Borello & Sons, Inc. v. Department of Industrial Relations, 48

25

Cal.3d 341, 349 (1989).

26

The efforts of the Scientology enterprise, including Defendant CSI, to

27

avoid wage and hour laws is just what the California Supreme Court condemned

28

– a subterfuge that should not be countenanced. Defendant CSI exercised control 15 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

over mode and manner of doing work, wages, hours and working conditions of

2

Plaintiff Headley (and many others). Plaintiff was economically dependant upon

3

his compensation earned by his work for Defendant CSI. That makes Plaintiff

4

Headley an “employee” of CSI under California labor laws and the federal law,

5

FSLA. See also, Bureerong v. Uvawas, 922 F.Supp. 1450, 1470 (C.D. Cal.

6

1996).

7

As an employee, Plaintiff was legally entitled to receive the California

8

version of minimum wage. There is no legitimate dispute on the essential

9

underlying facts of the work environment. Further, the failure to pay Plaintiff

10

Headley properly under state and federal labor laws is actionable under California

11

law as an illegal business practice, which is alleged in the First Cause of Action.

12

Cortez, Supra, 23 Cal.4th 163, 177-9 (2000).

13 VIII. THE DECLARATION OF MARC HEADLEY SATISFIES THE 14 ECONOMIC REALITY TEST 15

For fifteen years, Marc Headley worked full time and more for Defendant

16

CSI. That Plaintiff was Defendant’s employee seems somewhat of a “no-

17

brainer”, however, the Scientology enterprise operates by its own rules and

18

version of reality. Simply put, Plaintiff worked for Defendant CSI to earn a

19

living, such as it was. Defendant controlled tasks, pay, hours and working

20

conditions. Plaintiff was economically dependant upon his employment with

21

CSI. (See Plaintiff Marc Headley’s Declaration in Support of Motion (hereinafter

22

“Headley Declaration” and in particular #’s 7 - 39.) A trial is not necessary to

23

establish that Plaintiff was Defendant’s employee at times herein material.

24

All four of the conditions set forth in Hale, supra, 967 F.2d 1364 are

25

satisfied by essentially indisputable facts. CSI controls employment, pay and

26

working conditions. CSI generates and maintains records of its workers and even

27

gives pay stubs with the $50 a week pay showing deductions.

28 16 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

Plaintiff March Headley’s Declaration in Support of Motion, filed

2

concurrently herewith, is submitted in its entirety as support for this motion. The

3

following paragraphs address selected key points and are offered for illustrative

4

purposes.

5

1)

My name is Marc Headley. I was a staff member of the Church of

6

Scientology International from 1989 until January 2005. (Headley Declaration

7

#2)

8

2)

As a staff member, I was required to follow the issued schedule of

9

the organization I worked for. This was issued to all staff members regularly and

10

included mandated hours to get up in the morning, get transported in to work on

11

buses, eat breakfast, get accounted for at roll call or muster (regular meetings

12

throughout the day to ensure all staff are present), work hours throughout the day,

13

lunch, dinner, etc. During my work hours I was first required to make an exact list

14

of what I was going to get done that day. Failure to do so resulted in disciplinary

15

action, as did failure to get those actions completed, follow the schedule, and do

16

what was required of me. (Headley Declaration #7)

17

3)

I was required to work in order to be paid the small amount of

18

money I was paid. If I did not work, I would not be paid. Simple as that. The

19

small amount of money I did receive weekly was used to buy toilet paper, soap,

20

shampoo and deodorant etc and any other personal items I could afford with what

21

little was left over, such as snacks or cigarettes. (Headley Declaration #9)

22

4)

I was required to do the work required of me, in the manner it was

23

required of me, to the quality standards required, and meet the production targets

24

that had been set and if I failed to do so in any way, I was punished for non

25

performance. (Headley Declaration #12)

26

5)

Lack of performance of duties also resulted in threats of being

27

terminated by Golden Era and assigned elsewhere, all of which carried the threat

28

of being cut off completely from my wife and family. (Headley Declaration #13) 17 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

6)

Church of Scientology International controlled my work

2

environment, schedule, and all other aspects of my production and my life.

3

(Headley Declaration #15)

4

7)

My production supervisor regularly inspected my work and

5

performance, set targets and was there to ensure I met those targets. My task list

6

would be inspected at least once daily and sometimes multiple times daily and

7

each day we were required to report and graph daily progress made on task lists.

8

Not graphing or marking completed tasks daily would result in disciplinary

9

actions. (Headley Declaration #16)

10

8)

While working at Golden Era productions I worked on producing

11

CD’s and cassettes that were sold in organizations all around the world. (Headley

12

Declaration #18)

13

9)

I worked on the production of videos and promotional materials that

14

were used to promote a fiction movie written by L Ron Hubbard. (Headley

15

Declaration #21)

16

10)

I worked on the design and installation of complex audio visual

17

systems that Golden Era Productions (a DBA of CSI) would buy the equipment

18

for at wholesale price and then sell to organizations around the world and charge

19

for them for the equipment, design & installation. (Headley Declaration #23)

20

11)

I personally designed and oversaw the fabrication, manufacturing

21

and production of over 300 “Registration Systems” for CSI. CSI charges $8,800

22

for each of these systems produced. That is $2,640,000 in income for CSI.

23

(Headley Declaration #24)

24

12)

I designed over 30 individual audio visual systems for CSI to be

25

installed in organizations around the world. These would range from a film room

26

system to a display or presentation system. In any one organization they usually

27

have one or more of these systems. The average price to outfit a single

28

organization with the systems I designed would generate $275,000 of income to 18 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

CSI. At over 300 organizations, the total net worth to CSI of the systems I

2

designed was well over $81,000,000. (Headley Declaration #26)

3

13)

Church of Scientology International set the pay rate for all staff and

4

that is what I was paid, as long as I produced what was required of me, and as

5

long as there were funds to pay. (Headley Declaration #27)

6 7

14)

required resulted in loss of pay. (Headley Declaration #28)

8 9

Work performed was for the pay given. Failure to perform the work

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

10

frequent through the years, new uniform parts, shoes, laundry detergent, contact

11

lenses, etc. (Headley Declaration #29)

12

16)

They kept a treasury file of my payroll records, taxes withheld, and

13

the weeks I was paid or not paid and whether the lack of pay was due to non

14

performance or no money available to cover staff payroll. (Headley Declaration

15

#34)

16

17)

While working for CSI I could be called to work at any point during

17

the day or night and was so called on many occasions. Frequently, I was gotten

18

out of bed in the middle of the night, interrupted during a meal break, ordered to

19

come in early each day or stay many hours late at night. These were a normal

20

occurrence. If I refused for any reason, I would be subject to disciplinary

21

procedures and most definitely docked the little pay I was receiving weekly.

22

(Headley Declaration #36)

23

18)

During my employment for CSI, I had no other source of income and

24

was dependant on what little money I was getting to afford basic living supplies.

25

I was dependent upon my work for CSI for a place to sleep and food to eat.

26

(Headley Declaration #37)

27 IX. CONCLUSION 28 19 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

A major purpose of the wage and hour laws is to prevent the abuse of

2

employees by an employer tyrant such as Defendant CSI. Defendant CSI works

3

its employees 10 – 16 hours a day, seven days a week and truly treats them like

4

they have no legal rights. It hires the young (Plaintiff Headley started as a minor)

5

and drains them during their prime working years. Plaintiff Headley suffered

6

from long hours, sleep deprivation, poor nutrition and poverty.

7

In W.J. Usery v. Pilgrim, 527 F.2d 1308, 1315 (5th Cir. 1976), the court

8

explained the rationale of the “economic reality” test in poignant terms as

9

follows:

10

“In deciding whether these operators are employees for

11

the purposes of the Fair Labor Standards Act, (t)he ultimate

12

criteria are to be found in the purposes of the Act. . . . (T)he

13

Act is intended to protect those whose livelihood is dependent

14

upon finding employment in the business of others. It is

15

directed toward those who themselves are least able in good

16

times to make provisions for their needs when old age and

17

unemployment may cut off their earnings . . . to those who, as

18

a matter of economic reality, are dependent upon the business

19

to which they render service.” (Emphasis supplied)

20

This describes the worker bees of the Scientology enterprise. They work

21

hard but have no ability to seriously consider a plan for retirement,

22

unemployment or other employment with pay of $50 a week. Even this illegal

23

pay is arbitrarily and illegally “docked” by the “employer”. Unfortunately,

24

Scientology has abused its workers for so long, it seems to think it has destroyed

25

labor rights and acquire the right to abuse workers by a power analogous to

26

“adverse possession.” A start in addressing this social problem would be a proper

27

ruling of “employment” and entitlement to minimum wage in response to this

28

motion. That might get CSI’s attention and signal the danger of continued abuse 20 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1

of workers and ignoring labor laws. There are many past and present employees

2

of Scientology enterprises who are working, or have worked, under illegal

3

working conditions for far less than minimum wage. It is past time for such

4

practices to be recognized as illegal and for remedial measures to be

5

implemented. Also, a finding of “employment” will greatly simplify this

6

litigation, shorten or avoid trial and, hopefully, force the Scientology enterprise

7

into compliance with labor laws.

8 9

Scientology thrives on fear, secrecy and misinformation. It is an enterprise that markets “copyrighted” advice and “trade secrets” at high prices and in the

10

name of religion. Plaintiff was employed by that enterprise. As an employee of

11

that enterprise, Plaintiff Headley had an unwaivable and unalterable right to

12

minimum wage and overtime pay. Defendant CSI owes Plaintiff additional

13

compensation. The only material question is how much.

14

July 7, 2009

15 16 17

BARRY VAN SICKLE Attorney for Plaintiff MARC HEADLEY

18 19 20 21 22 23 24 25 26 27 28 21 MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION