UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION
MARIA DEL ROCIO BURGOS GARCIA
and LUIS A. GARCIA SAZ,
Plaintiffs,
v.
CHURCH OF SCIENTOLOGY
RELIGIOUS TRUST, CHURCH OF
SCIENTOLOGY FLAG SERVICE
ORGANIZATION, INC., CHURCH OF
SCIENTOLOGY FLAG SHIP SERVICE
ORGANIZATION, INC., IAS
ADMINISTRATIONS, INC. and U.S. IAS
MEMBERS TRUST,
Defendants.
I
~ ~
ORDER
Case No: 8:13-cv-220-T-27TBM
BEFORE THE COURT is the Second Amended Plaintiffs' Renewed Motion to Amend
Complaint and Memorandum of Law (Dkt. 108) attaching a proposed amended complaint (Dkt. 108-
1), and Defendants' Flag Church and Ship Church, M.emorandum in Opposition (Dkt. 110). Also
before the Court is Defendants IAS Administrations, Inc.'s, U.S. IAS Members Trust's and Church
of Scientology Religious Trust's Joint Motion to Dismiss for Lack of Subject Matter Jurisdiction
(Dkt. 90) and Plaintiffs' response (Dkt. 93). The parties were permitted to conduct jurisdictional
discovery, following which they filed additional briefing regarding diversity jurisdiction (Dkts. 104
& 112). Upon consideration, Plaintiffs' Motion to Amend (Dkt. 108) is GRANTED. Defendants'
motions (Dkts. 93 & 96) are DENIED as moot.
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I. Background
Plaintiffs Maria Del Rocio Burgos Garcia and Luis Garcia Saz originally filed a complaint
against five Scientology entities, alleging claims of fraud, breach of contract, and unfair and
deceptive trade practices in connection with monetary contributions and payments made to various
Scientology entities.
1
According to the Complaint (Dkt. 1 ), Plaintiffs are former members of the
Church of Scientology who contributed hundreds of thousands of dollars to these various entities as
a result of false and misleading representations and/or omissions regarding the "Super Power
Project" and various humanitarian initiatives.
2
In addition, the Complaint alleges that Plaintiffs paid
deposits towards counseling services ("auditing"), training, and accommodations that were never
provided.
3
Defendants moved to compel arbitration of all of Plaintiffs' claims in accordance with several
purported agreements to arbitrate contained in the numerous Religious Services Enrollment
Applications, Agreements and General Releases Plaintiffs completed as a prerequisite to
participating in Scientology religious training and services (Dkts. 8, 15, 18). While these motions
were pending, Defendants CSRT, USIMT, and IASA filed a motion to dismiss based on lack of
diversity jurisdiction (Dkt. 90). Specifically, CSRT, USIMT, and IASA contend that they, like
1
The five Scientology entities currently named as defendants are: Church of Scientology Flag Service
Organization, Inc. ("Flag Church"), Church of Scientology Flag Ship Service Organization, Inc. ("Ship Church"),
Church of Scientology Religious Trust ("CSRT''), IAS Administrations, Inc. ("IASA"), and U.S. IAS Members Trust
("USIMT").
2
The Super Power Project involves the construction of a Scientology facility in Clearwater, Florida, which
took over eighteen years to complete and open (Dkt. 1, 126). Plaintiffs allegedly contributed a total of$340,000 to
this project (id, -,i 32). The humanitarian initiatives involve funding for various church campaigns and relief efforts
(id, 1153-68). Plaintiffs allegedly contributed a total of$40,4IO to these humanitarian initiatives (id, 1118).
3
Plaintiffs deposited $3 7 ,413 .56 with Flag Church and $31,445 .45 with Ship Church for these services and
accommodations (Dkt. 1, 11 41-42).
2
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Plaintiffs, are citizens of California, and therefore diversity jurisdiction is lacking.
The case was stayed pending resolution of the jurisdictional issue (Dkt. 100). Following the
ninety-day period for discovery, the parties were given leave to file supplemental memoranda in
connection with the motion to dismiss (Dkt. 102). Two days before Defendants' memorandum was
due, Plaintiffs filed the a motion to amend their Complaint based on new information learned
through discovery (Dkt. 103). The motion to amend was denied without prejudice to refiling it with
a proposed amended complaint (Dkt. 105). Plaintiffs filed a renewed motion to amend (Dkt. 108),
attaching their proposed amended complaint (Dkt. 108-1 ).
Plaintiffs claim to have discovered that Defendant Flag Church "spearheaded all activities
relating to the other entities which have given rise to this suit" (Dkt. 108 at 4). As such, Plaintiffs'
proposed amended complaint drops CSRT, USIMT, and IASA as defendants, purporting to resolve
the diversity jurisdictional issue.
4
The proposed amended complaint revises several paragraphs to
conform the allegations to the contention that Flag Church and Ship Church were the real actors in
the events giving rise to Plaintiffs' claims. Plaintiffs contend that dropping CSRT, USIMT, and
IASA should be permitted as these entities are nominal and dispensable parties. Plaintiffs assert that
none of the parties will be harmed by dismissal of CSRT, USIMT, and IASA as their presence
provides no tactical advantage to Flag Church and Ship Church and the close inter-relationship
among the Scientology entities permits those entities to resolve the sharing of damages amongst
themselves (Dkt. 112 at 3). Alternatively, Plaintiffs suggest that CSRT, USIMT, and IASA could
be dismissed with prejudice. (id.).
4
Plaintiffs do not dispute that the evidence Defendants submitted with their supplemental memorandum in
support of the motion to dismiss reflects that CSRT, USIMT, and IASA are not diverse from Plaintiffs (Dkt. 112 at 2
n. I).
3
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Flag Church and Ship Church respond that dismissal of CSRT, USIMT, and IASA does not
cure the jurisdictional defect because the amended complaint continues to allege a joint venture,
partnership, or other similar relationship, such that the citizenship of these entities must be
considered for purposes of diversity jurisdiction. Second, they contend that because CSRT, USIMT,
and IASA are indispensable parties, dropping them would be highly prejudicial to Flag Church and
Ship Church. The crux of their argument is that Plaintiffs originally alleged conduct by CSRT,
USIMT, and IASA and individuals associated with them which made them the main players in the
case, that Plaintiffs tied in Flag Church and Ship Church by alleging a joint enterprise between the
five defendants, and after the diversity jurisdictional issue was raised, changed their theory.
II. Standard
"The court should freely give leave [to amend] when justice so requires." Fed. R. Civ. P.
15(a)(2). "In the absence of any apparent or declared reason-such as undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment,
futility of amendment, etc.-the leave sought should, as the rules require, be 'freely given."' Foman
v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962).
III. Discussion
A. Plaintiffs' proposed amendment is not futile because it does not allege a joint
venture or partnership
Flag Church and Ship Church argue that Plaintiffs' proposed amendment is futile because
it continues to allege a joint venture, partnership, or other similar relationship, but fails to allege the
identity or citizenship of the other members of the purported joint venture. "Leave to amend a
4
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complaint is futile when the complaint as amended would still be properly dismissed or be
immediately subject to summary judgment for the defendant." Cockrell v. Sparks, 510 F.3d 1307,
1310 (11th Cir. 2007).
In the proposed amended complaint, Plaintiffs contend that the high pressure solicitation and
fundraising activities and fraudulent representations with respect to the Super Power project were
carried out by employees of Flag Church at Flag Church facilities, as opposed to CSRT, as originally
alleged in the Complaint (see Dkt. 108-1, , 25). The proposed amended complaint alleges that
"specially appointed fundraising representatives," are "contracted employees of FLAG (even though
they may claim to be 'staff members' of other entities, an internal Scientology designation that has
no legal significance but is designed to deceive Plaintiffs and others)" (id.,, 28).
With respect to the claims regarding the humanitarian initiatives, the proposed amended
complaint alleges that International Association ofScientologists ("IAS") representatives, as opposed
to IAS Administrations, Inc. ("IASA") and/or U.S. IAS Members Trust ("USIMT"), solicited
contributions and made representations, for which Flag Church and Ship Church are responsible by
way of a "fraudulent enterprise" (see Dkt.108-1, ,, 56, 102, 108). It also alleges that "Defendants
and their agents" made false statements in order to induce Plaintiffs to give money (id.,, 74). In
addition, the proposed amended complaint alleges specific conduct by Flag Church and Ship Church
representatives (see id.,,, 52-53, 57, 71, 73, 75, 76, 77, 78).
Despite Plaintiffs' use of various legal terms of art, such as joint venture, joint enterprise,
concert of action, agents, and employees, the proposed amended complaint at the most suggests that
the various Scientology entities may have acted in concert as joint or multiple tortfeasors in allegedly
defrauding Plaintiffs and causing them to suffer monetary losses, rather than as a joint venture or
5
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partnership.
5
Although the proposed amended complaint includes the allegation that "the Church of
Scientology ... is comprised of various corporations and related entities" that "make some efforts
to appear distinct, [when] they are not in fact separate" (id, 4 ), this general allegation does not
amount to an allegation of a joint venture or partnership.
6
The proposed amended complaint also alleges that Defendants "function as an interrelated
and interdependent network of entities" (id., 20) and that "Defendants acted in concert either as
agents or principals of one another, partners, joint venturers, or co-conspirators" (id, 21 ).
Importantly, "Defendants," for purposes of the proposed amended complaint, are Flag Church and
Ship Church, and not CSRT, IASA, or USIMT. These allegations will not be construed as a claim
that Flag Church and Ship Church acted as part of a joint venture or partnership with unnamed
entities such that the citizenship of these entities must be considered for purposes of diversity
jurisdiction. And that is not what the amended complaint alleges.
Moreover, whether Plaintiffs will be successful on their theory that the fundraising
representatives are contracted employees of Flag Church and Ship Church is not an appropriate
consideration in considering whether the proposed amendment is futile. See Jackam v. Hosp. Corp.
5
"Joint and several liability among multiple tortfeasors exists when the tortfeasors, acting in concert or
through independent acts, produce a single injury." Acadia Partners, L.P. v. Tompkins, 759 So. 2d 732, 736 (Fla.
5th DCA 2000) (citing Smith v. Department of Ins., 507 So. 2d 1080, 1090 (Fla.1987)).
6
"A joint venture is a 'legal relationship resulting from an agreement between two or more persons to
engage in an enterprise of limited scope and duration."' Advanced Prot. Technologies, Inc. v. Square D Co., 390 F.
Supp. 2d 1155, 1159 (M.D. Fla. 2005) (quoting Kislakv. Kreedian, 95 So.2d 510, 514 (Fla.1957). "The essential
elements of a joint venture are: ( 1) a community of interest in the performance of a common purpose, (2) joint
control or right of control, (3) a joint proprietary interest in the subject matter, (4) a right to share in the profits and
(5) a duty to share in any losses which may be sustained." Id. (citations omitted). A joint venture will not be found to
exist if any element is missing." Id (quotations and citations omitted). These elements are not alleged in the
proposed amended complaint.
6
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of Am. Mideast, Ltd., 800 F.2d 1577, 1579-80 (11th Cir. 1986) ("The issue is not whether [the
plaintiffs] may ultimately prevail on [their] theory, but whether the allegations are sufficient to allow
them to conduct discovery in an attempt to prove their allegations.").
B. Plaintiffs' proposed amendment is not futile because CSRT, USIMT, and IASA
are neither required nor indispensable parties
Flag Church and Ship Church argue that Plaintiffs' proposed amendment is futile because
it would not include indispensable parties (CSRT, IASA, or USIMT) and would thereby be
prejudicial to Flag Church and Ship Church.
Rule 19 sets out a two-step approach for determining whether a party must be joined as
indispensable. Winn-Dixie Stores, Inc. v. Dolgencorp, LLC, _F.3d _, 2014 WL 842949, 24
(11th Cir. Mar. 5, 2014). First, it must be determined whether the party "is one who should be joined
if feasible." Id. "Second, for all such necessary parties, a court determines whether the Rule 19(b)
factors permit the litigation to continue if the party cannot be joined, or instead whether they are
indispensable." Id. If the party is a required party, "but cannot be joined--i.e., because they are
non-diverse--Rule 19(b) provides a list of factors to determine whether, in equity and good
conscience, the action should proceed among the existing parties or should be dismissed." Molinas
Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1344 (I Ith Cir. 2011)(citations and quotations
omitted); Focus on the Family v. Pinellas Suncoast Transit Auth., 344 F.3d 1263, 1280 (11th Cir.
2003) (quoting Challenge Homes, Inc. v. Greater Naples Care Ctr., Inc., 669 F.2d 667, 669 (11th
Cir. 1982)). This analysis has a direct bearing on whether the proposed Amended Complaint would
be futile.
Flag Church and Ship Church contend that complete relief cannot be afforded because
7
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CSRT, USIMT, and IASA "solicited, received, used, and possess the alleged contributions or their
equivalent" (Dkt. 110 at 15). They also argue that CSRT, USIMT, and IASA cannot defend their
rights if they are not before the Court. Finally, they contend that CSRT, USIMT, and IASA would
be subject to a substantial risk of inconsistent obligations because Plaintiffs' claims against CSRT,
USIMT, and IASA, if any, would have to be brought in another forum.
The feasibility question turns on whether a person is subject to service of process and
whether their joinder will deprive the court of subject matter jurisdiction. See Fed. R. Civ. P.
19(a)(l). The parties acknowledge that CSRT, USIMT, and IASA are non-diverse and "spoil"
diversity jurisdiction. (Dkt. 112 at 2 n. l ). It is, therefore, not feasible to join them as parties. In any
event, they are not necessary parties under Rule 19(a).
i. Rule 19(a)(l)(A): Complete relief can be accorded in CSRT's, USIMT's,
and IASA's absence
"It has long been the rule that it is not necessary for all joint tortfeasors to be named as
defendants in a single lawsuit." Temple v. Svnthes Corp., Ltd., 498 U.S. 5, 7, 111 S.Ct. 315, 112
L.Ed.2d 263 ( 1990); see also Fed. R. Civ. P. 19 advisory committee's note (1966) (noting that jointly
and severally liable defendants are permissive parties); Ingram v. CSXTransp., Inc., 146 F.3d 858,
861 n.2 (11th Cir. 1998) (the alleged joint tortfeasorwas a dispensable party); United States v. Janke,
09-14044-CIV, 2009 WL 2525073, *2 (S.D. Fla. Aug. 17, 2009). As discussed, to the extent
Plaintiffs' proposed amended complaint implicates CSRT, USIMT, and IASA, they are implicated
as joint tortfeasors. As such, their joinder would be permissive. Moreover, Plaintiffs seek
compensatory and punitive damages in their fraud claims. There is no apparent reason complete
relief on these claims could not be afforded from Flag Church and Ship Church. See United States
8
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v. TownhomesofKingsLakeHOA, Inc., 8:12-CV-2298-T-33TGW,2013 WL807152, *4(M.D.Fla.
Mar. 5, 2013) (quoting Molinas Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1345 (11th Cir.
2011) ('"money is fungible; the recipient cares not from whence it came."').
ii. Rule 19(a)(l)(B): CSRT, USIMT, and IASA have not claimed a legally
protected interest
"Rule 19 requires 'a legally protected interest, and not merely a financial interest or interest
ofconvenience."' Axiom Worldwide, Inc. v. Becerra, 808-CV-1918-T-27TBM, 2009WL1347398,
*4 (M.D. Fla. May 13, 2009) (quoting Kenko Int'/ Inc. v. Asolo S.r.l., 838 F.Supp. 503, 506
(D.Colo.1993)). CSRT, USIMT, and IASA have not claimed a legally protected interest in this
litigation. Flag Chuch and Ship Church assert that CSRT, USIMT, and IASA cannot defend their
rights before this Court. However, that interest amounts to no more than a speculative financial
interest.
7
See id; Conceal City, L.L.C. v. Looper Law Enforcement, LLC, 917 F. Supp. 2d 611, 622
(N.D. Tex. 2013) (an interest in the outcome of the lawsuit (ie. possible future harm) is not the type
of "interest" contemplated under Rule 19(a)(l)(B)). Because neither the requirement of Rule
19(a)(l)(A) nor 19(a)(l)(B) are met, CSRT, USIMT, and IASA are not required parties.
iii. Rule 19(b): CSRT, USIMT, and IASA are not indispensable parties
There is authority that following the conclusion that CSRT, USIMT, and IASA are not
7
Even ifCSRT, USIMT, and IASA had a legally protected interest in this litigation, Flag Church and Ship
Church misconstrue the meaning of Rule 19(a)(l)(B)(ii)'s "multiple liability" clause in arguing that they would be
subject to inconsistent obligations if Plaintiffs were to bring claims against CSRT, USIMT, and IASA in another
forum. "The clause was designed to compel joinder in order to 'avoid inconsistent obligations,' not 'inconsistent
adjudications."' Janke, 2009 WL 2525073, *5 (citing 4 James Wm. Moore et al., Moore's Federal Practice,
19.03[4][d]-[e] (3d ed.1997)). '"Inconsistent obligations occur when a party is unable to comply with one court's
order without breaching another court's order concerning the same incident."' Winn-Dixie Stores, Inc. v.
Dolgencorp, LLC, supra, (quoting Delgado v. Plaza Las Ams., Inc., 139 F.3d 1, 3 (1st Cir.1998)); Becerra, 2009
WL 1347398, at *4. That Flag Church and Ship Church may be found liable in this action, and CSRT, USIMT, and
IASA not liable in another hypothetical action, or vice versa, "does not raise the specter of conflicting obligations
that Rule 19 guards against." Janke, 2009 WL 2525073, *5.
9
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required parties under Rule 19(a), an inquiry under Rule 19(b) is unnecessary. See Winn-Dixie
Stores, Inc. v. Dolgencorp, LLC, supra, ("Big Lots does not face section (B)(ii) 'inconsistent
obligations,' and has no other Rule 19( a) hook on which to hang its mandatory joiner hat. As a result,
we need not reach the second step to consider, under Rule 19(b), whether, in equity and good
conscience, the action should proceed among the existing parties or should be dismissed.").
Assuming, however, that CSRT, USIMT, and IASA are required parties, they are not indispensable
under Rule 19(b ).
To begin with, no compelling argument has been presented to show that any of the
Scientology entities would suffer meaningful prejudice were this action to proceed in the absence
of CSRT, USIMT, and IASA, the first factor in a Rule 19(b) analysis. And, none can be discerned.
8
"The second factor calls attention to the measures by which prejudice may be averted or lessened."
Fed. R. Civ. P. 19 advisory committee's notes (1966). The third factor "calls attention to the extent
of the relief that can be accorded among the parties joined." Fed. R. Civ. P. 19 advisory committee's
notes (1966). This factor meshes with other factors, especially the second. Id.
However, factors two and three only "come into play when ... litigants seek specific relief
such as an injunction. In that context, if a party ultimately responsible for the plaintiffs woes is not
present, the court cannot direct that party to change its behavior. Money damages lack these
concerns. Money is fungible; the recipient cares not from whence it came." Molinas, 633 F.3d at
1344 (quotation and citation omitted). Plaintiffs seek money damages for all of their claims, with
the exception of the unfair and deceptive trade practices claim (Count VI). If, however, Flag Church
8
Although Flag Church and Ship Church state they will be "highly prejudiced" if the other defendants are
dismissed as parties, (Dkt. 110 at 14), they do not elaborate as to what prejudice they will suffer.
10
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'
is the entity that "spearheaded" the alleged improper practices, enjoining it from engaging in further
improper conduct will accord Plaintiffs the relief they seek. Moreover, having found no prejudice
to either Plaintiffs or any of the Scientology entities, the relevance of the second factor is severely
diminished, if not completely eliminated.
The fourth factor "indicates that the court should consider whether there is any assurance that
the plaintiff, if dismissed, could sue effectively in another forum where better joinder would be
possible." Fed. R. Civ. P. 19 advisory committee's notes (1966). Presumably, Plaintiffs could sue
all five entities in state court, although neither party has addressed this issue. However, as in
Molinos, this Court has invested significant resources in this matter.
9
Molinos, 633 F.3d at 1345.
The concern expressed in Molinos for conserving judicial resources is present here and weighs
against a finding that CSRT, USIMT, and IASA are indispensable parties. See id
In sum, joinder of CSRT, USIMT, and IASA is not feasible because their joinder would
deprive the court of diversity jurisdiction. None of the factors weigh in favor of finding that CSRT,
USIMT, and IASA are indispensable parties. The proposed amendment dropping CSRT, USIMT,
and IASA is not futile.
Accordingly,
1. The Second Amended Plaintiffs' Renewed Motion to Amend Complaint (Dkt. 108)
is GRANTED. Plaintiffs may file an amended complaint, as proposed, within ten (10) days of this
Order.
2. Defendants IAS Administrations, Inc. 's, U.S. IAS Members Trust's and Church of
9
The action has been proceeding for almost sixteen months and has required extensive motion practice and
court resources on issues such as attorney disqualification, arbitration, and jurisdiction.
11
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Scientology Religious Trust's Joint Motion to Dismiss for Lack of Subject Matter Jurisdiction(Dkt.
90) is DENIED as moot.
3. Defendants' Objection and Motion to Strike Affidavit of Luis A Garcia (Dkt. 96) is
DENIED as moot.
4. The stay is lifted. ,.,/_.
DONE AND ORDERED this L day of May, 2014.
Copies to: Counsel of Record
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