Motion For Summary Adjudication - Memorandum

1 BARRY VAN SICKLE - BAR NO.
98645
1079 Sunrise Avenue
2 Suite B-315
3 Roseville, CA 95661
Telephone: (916) 549-8784
4 E-Mail: bvansickle@surewest.net
5 Attorney for Plaintiff
MARC HEADLEY
6
7
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
11 MARC HEADLEY, CASE NO. CV 09-03986 RSWL
12 (MANx)
Plaintiff,
13 vs. MEMORANDUM IN SUPPORT OF
14 PLAINTIFF’S MOTION FOR
CHURCH OF SCIENTOLOGY SUMMARY ADJUDICATION OF
15 INTERNATIONAL, a corporate FACTS AND CONCLUSIONS OF
16 entity, AND DOES 1 - 20 LAW PURSUANT TO F.R.C.P
RULE 56(d) RE ISSUES OF:
17 Defendants.
18 1) EMPLOYMENT STATUS;
2) COVERAGE OF WAGE LAW;
19
3) LIABILITY FOR ADDITIONAL
20 COMPENSATION
21
DATE: August 11, 2009
22 TIME: 9:00 am
23 PLACE: Spring Street Courthouse,
Courtroom 21
24
25 ASSIGNED TO THE HONORABLE
JUDGE RONALD S.W. LEW
26
27
28
MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

1 TABLE OF CONTENTS
2
3 I. SYNOPSIS ........................................................................................................1
4 II. POINTS AND AUTHORITIES: INTRODUCTION................................2
5 III. EMPLOYEE IS BROADLY DEFINED FOR PURPOSES OF THE
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
10 VI. LABOR LAWS CANNOT BE IGNORED IN THE NAME OF
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
1 TABLE OF AUTHORITIES
2 CASES
3 Anderson v. Mt Clemens Pottery Co.
4 328 U.S. 680 .....................................................................................................3
5 Barrentine v. Arkansas-Best Freight System, Inc.,
6 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981) ........................8, 9, 11
7 Bartels v. Birmingham,
8 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947) ....................... 5, 6, 8, 13
9 Bonnette v. California Health and Welfare Agency
10 704 F.2d 1465, 1469 (9th Cir. 1982) ................................................................2
11 Brennan v. Partida,
12 492 F.2d 707, 710 (5th Cir. 1974) .............................................................3, 14
13 Broberg v. The Guardian Life Ins. Co. of America
14 171 Cal. App.4th 912 (2009) ............................................................................4
15 Bureerong v. Uvawas
16 922 F.Supp. 1450, 1463 (C.D. Cal. 1996) ..................................... 4, 8, 14, 16
17 Cortez v. Purolator Air Filtration Products Co.
18 23 Cal.4th 163, 173-5 (2000).................................................................3, 4, 16
19 Dunlop v. Carriage Carpet Co.,
20 548 F.2d 139, 144 (6th Cir. 1977) ...................................................................6
21 Elvig v. Calvin Presbyterian Church
22 397 F.3d 790, 792 (9th Cir. 2005) ............................................................11, 12
23 Estrada v. FedEx Ground Package System, Inc.
24 154 Cal.App.4th 1, 10 (2007) ........................................................................15
25 Goldberg v. Whitaker House Cooperative,
26 366 U.S. 28, 33, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961) (FLSA) ..................2, 7
27 Hale v. State of Arizona,
28 67 F.2d 1356, 1360 (9th Circuit 1992).................................................. passim
ii
1 Mednick v. Albert Enterprises,
2 508 F.2d 297, 299 (5th Cir. 1975) ...................................................................6
3 Mitchell v. Pilgrim Holiness Church Corp.
4 210 F2d 879 (1954) ........................................................................................12
5 Patel v. Quality Inn South
6 846 F.2d 700, 702-3 (11th Cir. 1988)...............................................................4
7 Randolph v. Budget Rent-A-Car,
8 97 F.3d 319, 325-6 (9th cir. 1996)..............................................................5, 15
9 Real v. Driscoll Strawberry Associates Inc.
10 603 F2d 748, 754 (9th Cir. 1979) .................................................... 6, 7, 12, 14
11 S. G. Borello & Sons, Inc. v. Department of Industrial Relations
12 48 Cal.3d 341, 349 (1989) .............................................................................15
13 Scott v. Harris
14 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed. 2d 686, 694 (2007) ..............3
15 Tony and Susan Alamo Foundation v. Secretary of Labor
16 471 U.S. 290, 297, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985)................ passim
17 United States v. Silk,
18 331 U.S. 704, 712, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947) ..............................6
19 W.J. Usery v. Pilgrim Equipment Co.,
20 527 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
25 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
1 I. SYNOPSIS
2 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-
5 referenced in Section VIII below. Plaintiff worked primarily for a division of CSI
6 known as Golden Era Productions. Golden Era makes videos, advertisements and
7 promotional materials for the Scientology enterprise. Plaintiff Headley worked
8 on production of such materials and installation of display facilities. This was a
9 full-time job and Plaintiff’s only source of income and support. The mode,
10 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
12 Defendant CSI as a matter of law.
13 As an employee, Plaintiff was entitled to minimum wage and overtime pay.
14 Plaintiff was paid less than legal wages and seeks the difference in his First and
15 Second Causes of Action. Defendant CSI refuses to acknowledge that its workers
16 are or were “employees” subject to the wage and hour laws. Defendant is wrong.
17 Plaintiff Headley worked for and earned a meager livelihood as compensation for
18 his labors. Defendant controlled working conditions, hours and wages. (See
19 Plaintiff’s Declaration filed concurrently herewith.) These historical facts can
20 lead to only one reasonable legal conclusion, Plaintiff worked as an employee of
21 Defendant.
22 Defendant CSI has no valid excuse for failure to pay its employees,
23 including Plaintiff, minimum wage or overtime rates. There is no legal
24 justification for refusing to pay employees minimum wage and overtime pay. As
25 demonstrated by authorities cited herein, purported justifications of waiver,
26 disclaimer and “religion” are contrary to statute and controlling case law. The
27 law of the land trumps the musings of L. Ron Hubbard, Scientology’s founder, on
28 the treatment of employees.
1
1 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
17 discussed below. The economic reality standard is well satisfied by the
18 underlying facts concerning Plaintiff’s day-to-day work for Defendant CSI.
19 Plaintiff Headley was employed by Defendant CSI as his sole occupation and
20 source of income. Working long hours under the control of Defendant CSI was
21 how Plaintiff earned his food, shelter and cash income. Under the historical facts
22 of Plaintiff’s working conditions and dependence on his job with Defendant CSI
23 for his livelihood, there is no genuine dispute of material fact on employment
24 status. The existence of this employer/employee relationship under the facts of
25 the working relationship, and for purposes of the labor laws, presents a question
26 of law for the court. Hale v. State of Arizona, 967 F.2d 1356, 1360 (9th Circuit
27 1992) and Bonnette v. California Health and Welfare Agency, 704 F.2d 1465,
28 1469 (9th Cir. 1982). There is no genuine disputes concerning a material fact on
2
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
5 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 Rule 56(d) of the Federal Rules of Civil Procedure authorizes summary
9 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
18 federal labor laws. The First Cause of Action seeks restitution of unpaid wages as
19 an illegal and unfair business practice pursuant to California Business and
20 Professions Code (B&P) §§17200 et. seq. Seeking additional compensation due
21 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,
24 173-5 (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
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
12 exempted by the FLSA, he or she is covered by the federal labor laws. Hale v.
13 State of Arizona, supra, 967 F.2d 1362-3. See, also Patel v. Quality Inn South,
14 846 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
17 v. State of Arizona, 967 F.2d 1356, 1362-3 (9th Cir. 1992).
18 In Patel, supra, the Eleventh Circuit addressed the issue of FLSA coverage
19 to undocumented aliens. The court found in favor of FLSA coverage. The court
20 discussed legislative history and the Supreme Court’s expansive definition of the
21 term “employee”. Based upon its review of legislative history and Supreme
22 Court decisions, the court concluded that the FLSA covered all categories of
23 workers for hire not specifically excluded from the federal labor laws. Patel v.
24 Quality Inn South, 846 F.2d 700, 702-3 (11th Cir. 1988). The Ninth Circuit
25 reached essentially the same conclusion in Hale v. State of Arizona, 967 F.2d
26
27
1
The B&P Code §17200 claim has the advantage of a 4-year statute of limitation and case law holding that the
28 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
1 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
7 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.
12 Apparently, Scientology believes it can avoid Alamo by forcing self-serving
13 documents upon employees.
14 Defendant CSI has had its legal team trying to draft and maneuver its way
15 out of paying legal wages for years; however, such efforts should be found
16 ineffective under a proper legal analysis. What counts, and the only thing that
17 counts, is the economic reality of the job. Under that test, Plaintiff was an
18 employee of Defendant and nothing Defendant can put on paper changes
19 “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
21 Cir. 1976) the court explained its rulings in terms pertinent to this case. The court
22 stated:
23 “…the lesson taught by the Supreme Court's 1947 trilogy is
24 that any formalistic or simplistic approach to who receives the
25 protection of this type legislation must be rejected. In Bartels
26 v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947
27 (1947), the Court held that in the application of social
28 legislation employees are those who as a matter of economic
5
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:
11 “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.
14 See, e. g., Dunlop v. Carriage Carpet Co., 548 F.2d 139, 144
15 (6th Cir. 1977); Usery v. Pilgrim Equipment Co., 527 F.2d
16 1308, 1311 n.6 (5th Cir.), Cert. denied, 429 U.S. 826, 97 S.Ct.
17 82, 50 L.Ed.2d 89 (1976). Cf. United States v. Silk, 331 U.S.
18 704, 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
21 the FLSA's coverage. See W.J. Usery v. Pilgrim Equipment
22 Co., supra, 527 F.2d at 1311 n.6; Mednick v. Albert
23 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.
27 126, 130, 67 S.Ct. 1547, 1550, 91 L.Ed. 1947 (1947) (Social
28 Security Act) (emphasis added).) See Goldberg v. Whitaker
6
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:
19 “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)
22 had the power to hire and fire employees, (2) supervised and
23 controlled employee work schedules or conditions of
24 employment, (3) determined the rate and method of payment,
25 and (4) maintained employment records.” Hale v. State of
26 Arizona, (967 F.2d 1356, 1364 (9th Circuit 1992).
27 The “economic reality” test has also been described in terms of “economic
28 dependency”. As stated by a Central District Court:
7
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”
4 (emphasis supplied/citation omitted) “Citing Bartels v.
5 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.
9 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.
26 “This Court's decisions interpreting the FLSA have frequently
27 emphasized the nonwaivable nature of an individual
28 employee's right to a minimum wage and to overtime pay
8
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
28 “the evil of ‘overwork’ as well as ‘underpay.’” Barrentine v.
9
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
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
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
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
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 Id at 1467.
21 4) The importance of “dependency” in evaluating an
22 employment relationship. Id at 1468
23 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 In application, the California and federal labor laws are essentially
27 equivalent. Plaintiff would clearly be an employee under a state law test of
28
14
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
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
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
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.
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
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 14) Work performed was for the pay given. Failure to perform the work
7 required resulted in loss of pay. (Headley Declaration #28)
8 15) Pay was used to cover living costs – per diem expenses of food and
9 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.
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.
27 IX. CONCLUSION
28
19
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
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 Scientology thrives on fear, secrecy and misinformation. It is an enterprise
9 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 BARRY VAN SICKLE
Attorney for Plaintiff
17
MARC HEADLEY
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MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY ADJUDICATION

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