Memo for Summary Judgment Claire Headley Labor Case

8/9/2019 Memo for Summary Judgment Claire Headley Labor Case

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JEFFER, MANGELS, BUTLER & MARMARO LLPMARC MARMARO (Bar No. 85242)AM Y LERNER HILL (Bar No. 216288)1900 Avenue of the Stars" Seventh FloorLos Angeles, California ,0067-4308Telephone: (310) 203-8080FaCSImile: (310) 203-0567Attorneys for Defendant Religious Technology CenterANTHONY J. ONCIDI, SBN 118135aoncidi(al,proskauer. comHAROCO M. BRODY, SBN [email protected] ROSE LLP2049 Cen!UI)' Park Eas.!,. 32nd FloorLos Angeles, CA 9006/-3206Telephone: (310) 557-2900FacsImile (310) 557-2193ERIC M. LIEBERMAN, admitted pro hac viceeliebermanfairbskl.comRABINOWfTZiBOUDIN, STANDARD,KRINSKY & IEBERMAN, P.C.III Broadway, 11th FloorNew York, NY 10006Attorneys for Defendant Church ofSCientology International

UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA

EASTERN DIVISIONCLAIRE HEADLEY,

Plaintiff,v.

CHURCH OF SCIENTOLOGYINTERNA n O N A ~ J.rnLIGIOUSTECHNOLOGY CtlNTER, andDOES 1-20, .Defendants.

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Case No. CV 09-3987 DSF (MANx)MEMORANDUM IN SUPPORTOF DEFENDANTS' JOINTMOTION FOR PARTIALSUMMARY JUDGMENTDate:Time:Judge:Dept.:

April 5,20101:30 p.m.Hon.TIa1e S. Fischer840


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TABLE OF CONTENTS

INTRODUCTION AND SUMMARY OF ARGUMENT ............................ ISTATEMENT OF FACTS .......................................................................... 2A. Facts Concerning Defendants and the Scientology Religion .............. 2

I. Scientology's Fundamental Precepts ....................................... 32. Training and Auditing .............................................................. 53. Scientology's Ethics and Justice System .................................. 64. Scientology's Religious Structure ............................................ 8

a. Churches providing religious services to parishioners .... 8b. CJJurch of Scientology International .............................. 8c. Golden Era Productions ................................................. 9d. Religious Technology Center ....................................... 10e. Recognition and tax exemption .................................... 10

5. The Sea Org ........................................................................... IIB. Facts Concerning Oaire Headley ..................................................... 12

I. Raised as a Scientologist, Headley Joined the Sea Org in1991 ....................................................................................... 12

2. In 1992 Headley Was Assigned to Golden Era ...................... 133. In 1996 Headley Joined RTC ................................................. 14

ARGUMENT: PLAINTIFF WAS NOT COVERED BY THEMINIMUM WAGE LAWS BECAUSE SHE DID NOT WORK FORORDINARY COMMERCIAL BUSINESS VENTURES INCOMPETITION IN THE COMMERCIAL MARKETPLACE ................. 16A. FLSA Does Not Apply to Non-Commercial Activities ofChurches .......................................................................................... 16B. California's Minimum Wage Laws Do Not Apply ........................... 25

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IV.

V.

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T ABLE OF CONTENTS[CONTINUED]

C. Plaintiff Was Not Covered by the Minimum Wage Laws ................ 26I. Plaintiff's Positions at RTC Were Religious in Nature .......... 262. Headley's Positions at Golden Era Were Religious ............... 303. As a Member of a Religious Order, Headley Was Not a

Covered Employee Under the Minimum Wage Laws ............ 32THE MINISTERIAL EXCEPTION BARS APPLICATION OF WAGEAND HOUR LAWS TO HEADLEY'S labor FOR CSI AND RTC ........... 34CONCLUSION ......................................................................................... 39

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3CASES

4 Alcazar v. Catholic Archbishop ofSeal/Ie,5 2006 WL 3791370 (W.D. Wash., Dec. 21, 2006) ............................. 2,35,366 Alicea-Hernandez v. Catholic Bishop ofChicago,7 320 F.3d 698 (7th CiT. 2003) ................ ............... ................ ............... ......... 368 Ashwander v. Tenn. Valley Authority,9 297 U.S. 288 (1936) ................. ......... .......... .......... ......... .......... .......... ....... 2610 Boekemeier v. Fourth Universalist Society in the City ofNew York,1! 86 F. Supp. 2d 280 (S.D.N.Y. 2000) .................. ................... ............... 22, 23

"I 12I! 13U 14Bowrin v. Catholic Guardian Society,

417 F. Supp. 2d 449 (S.D.N.Y. 2006) .................... .................... ........... 22, 23Bureerong v. Uvawas,

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922 F. Supp. 1450 (C.D. Cal. 1996) ...................... ....................... ............... 25Catholic Charities ofSacramento, Inc. v. Superior Court,

32 Cal. 4th 527 (2004) ............................................................................2,3418 Dole v. Shenandoah Baptist Church,19 899 F.2d 1389 (4th CiT. 1990) ......................................................... 19,33,3520 EEOC v. Catholic University ofAmerica,21 83 F.3d 455 (D.C. CiT. 1996) ...................................................................... 3622 EEOC v. Roman Catholic Diocese ofRaleigh, NC,23 213 F.3d 795 (4th CiT. 2000) ............. ................ ............... ............... .. 2, 35, 3624 EEOC v. Southwest Baptist Theological Seminary,25 651 F.2d 277 (5th CiT. 1981) .................................................................36,3726 Elvig v. Calvin Presbyterian Church,27 375 F.3d 951 (9th CiT. 2004) ............. .............. .............. .............. ............ 2, 3428

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TABLE OF AUTHORITIESPagels)

FLSA. Brief or the Department ofLabor,1985 WL 669832 ........................ .......................... ............ " ................. 20, 32

Hollins v. Methodist Healthcare, Inc.,474 F.3d 223 (6th Cir. 2007) ................................................................... .35

Holy Spirit Associationfor the Unification ofWorld Christianity v. New YorkCity Tax Commissioner,55 N.Y.2d 512, 450 N.Y.S.2d 292 (1978) .................................. ................. 29

Hope International University v. Superior Court,119 Cal. App. 4th 719 (2004) ........................................................ 36, 37, 38

IBP, Inc. v. Alvarez,546 U.S. 21 (2005) ......................................................................................21

Lemon v. Kurtzman,403 U.S. 602 (1971) ............ ............ ............. ............ ............ ............. ......... 24

Lewis v. Holy Spirit Association,589 F. Supp. 10 (D. Mass. 1983) ........... ............ ........... ............ ............ ...... 25

McClung v. Employment Development Department,34 Cal. 4th 467 (2004) ........... .......... ........... ........... .......... ........... ........... .... 26McClure v. Salvation Army,

460 F.2d 553 (5th Cir. 1972) ....................... .......................... ................ 34, 37Mitchell v. Pilgrim Holiness Church Corp.,

210 F.2d 879 (7th Cir. 1954) ................... ......... ......... .......... ......... ........ 23, 24Murdock v. Pennsylvania,

319 U.S. 105 (1943) ..................... ...................... ....................... .................. 30Murdock v. Pennsylvania,

343 U.S. at 111 ........................................................................................... 31

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2 Page(s)

3Murray v. The Charming Betsy,

6 U.S. (2 Cranch) 64 (1804) ............................ .............................. .............. 2645 Myers v. Philip Morris Cos.,28 Cal. 4th 828 (2002) ...................... ........................... ........................... .... 2667 NLRB v. Catholic Bishop ofChicago,440 U.S. 490 (1979) ..............................................................................24,2689 National Credit Union Admin. v. First National Bank & Trost Co.,522 U.S. 479 (1998) ............................. ............................... ........................ 211011 Paul v. Watchtower Bible & Tract Society ofNew York,1213U 14

819 F.2d 875 (9th CiT. 1987) ........................ .......................... ..................... 29Ramirez v. Yosemite Water Co.,

20 Cal. 4th 785 (1999) .............................................................................. 37

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Rayburn v. General Conference ofSeventh-Day Adventists,772 F.2d 1164 (4th Cir. 1985) ............................ ............................... 2,36,38

Roman Catholic Archbishop ofLos Angeles v. Superior Court,18 13l Cal. App. 4th 417 (2005) ........... ............ ........... ............ ........... ............ 3419 Rosati v. Toledo, Ohio Catholic Diocese,20 233 F. Supp. 2d 917 (N.D. Ohio 2002) ................... .................................. .. 3821 Ross v. Metropolitan Church ofGod,22 471 F. Supp. 2d 1306 (N.D. Ga. 2007) ........................................ ................ 3623 Schleicher v. Salvation Army,24 518 F.3d 472 (7th CiT. 2008) ........................ ......................... 2, 19,24,33,3525 Schmoll v. Chapman University,26 70 Cal. App. 4th 1434 (1999) .................. ..................... .................... .... passim27 Serbian Eastern Orthodox Diocese v. Milivojevich,28 426 U.S. 696 (1976) ......................... .......................... .......................... . 28, 29

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Labor CodeSection 3352(b ) ....................... ........................... ........................... ............. 25

26U.S.C.Section 501(c)(3) ........................................... ................................ ............. 10

29 U.S.c.Section 207 (emphasis added) .....................................................................21

106 Congo Rec. 16703 .............................. ................................. ............................ 17107 Congo Rec. 6255 (1961) ..................... .............................. ........................ 17, 20112 Congo Rec. 11371 (1966) ............................................................................... 19H.R.Rep. 75, 87th Cong. 1st Sess. 8 (1961) .......................................................... 17IRS Rev. Proc. 91-20, 1991-10 LR.B. 26 .............................................................. 33S. Rep. 86-1744, 86th Congo 2d Sess. 28 (1960) ................................................... 17S. Rep. 87-145, 87th Congo 1st Sess. 41 (1961) ........... ................................... 17, 20

OTHER AUTHORITIESWage and Hour Division, U.S. Department of Labor, Field OperationsHandbook

Section 10b03(b) .................................................................................. 19, 33Am. Jur. 2d Social Security and Medicare

Section 613 (2009)(adopting IRS definition) ..................................... ......... 34

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I. INTRODUCTION AND SUMMARY OF ARGUMENTPlaintiff Claire Headley was a follower of the Scientology religion for her

entire life Wltil she left the church in January 2005. Her mother and stepfather wereScientologists, and, by her admission, she was brought up to believe and ,believed inthe concepts, principles and theology of Scientology. In 1991, at the age of 16 andwith the written consent of her parents, Headley joined the Sea Organization, an elitereligious order of the Scientology religion whose members dedicate their lives toservice to the Scientology religion without expectation ofmonetary compensation.For the next fourteen years, Headley worked as a volunteer staff member fordefendants Church of Scientology International ("CSJ") and Religious TechnologyCenter ("RTC"), including as a senior ecclesiastical official of the Scientologyreligion. Her primary duties were church management and governance, supervisingthe provision of Scientology courses, the provision of Scientology religious servicesand the application of Scientology ethics to Sea Org members who were staffmembers of CSI or RTC. At no time were Headley's church positions directed tocommercial activities in competition with other commercial businesses.

Having left the church in 2005 and renounced her former religiouscommitment, Headley now asserts in her first claim for relief that she should havebeen paid minimum wages and overtime for her nearly fourteen years of voluntaryservice to the defendants as a Sea Org member. Her claim must be rejected as amatter of law, for two independent but doctrinally related reasons.

First, as this court held in the case brought by Marc Headley, Claire Headley'shusband, the federal and California minimum wage statutes do not apply to thevoluntary, non-commercial, and religious activities of the staff of a church or nonprofit religious organization. The activities of the staff of such organizations aresubject to coverage under the applicable minimum wage statutes only to the extentthat such activities are in furtherance of an ordinary business purpose and incompetition with the activities of other businesses. Claire Headley's positions with6770313vl - I -


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CSI and RTC involved responsibilities which in no manner or respect could beconsidered ordinary competitive business activities.

Second, Claire Headley's positions and responsibilities with CSI and RTCmust be excluded from coverage under the minimum wage statutes under the"ministerial exception" to statutes regulating employment. Elvig v. CalvinPresbyterian Church, 375 F.3d 951, 960-61 (9th Cir. 2004); Catholic Charities ofSacramento, Inc. v. Superior Court, 32 Cal. 4th 527, 543-44 (2004); Schmoll v.Chapman Univ., 70 Cal. App. 4th 1434, 1442-44 (1999). The ministerial exception ismandated by the First Amendment and bars application ofminimum wage laws to achurch's relationship with those coming within the exception. Alcazar v. CatholicArchbishop ofSeattle, 2006 WL 3791370, at *7 (W.O. Wash., Dec. 21, 2006)(exception applies to state minimum wage law); Schleicher v. Salvation Army, 518F.3d 472, 478 (7th Cir. 2008); Shaliehsabou v. Hebrew Home ofGreater Washington,363 F.3d 299,305 (4th Cir. 2004). The exception applies to all church workerswhose "primary duties consist of teaching, spreading the faith, church governance,supervision of a religious order, or supervision or participation in religious ritual andworship," or "is important to the spiritual and pastoral mission of the church."Rayburn v. Gen. Conference ofSeventh-Day Adventists, 772 F.2d 1164, 1168-69 (4thCir. 1985); EEOC v. Roman Catholic Diocese ofRaleigh, NC, 213 F.3d 795,803 (4thCir. 2000) (quoting Rayburn); Schmoll, 70 Cal. App. 4th at 1439 (quoting Rayburn).That definition reads as if it were devised precisely to apply to Claire Headley'spositions at CSI and RTC.II. STATEMENT OF FACTS

A. Facts Concerning Defendants and the Scientology ReligionThe Declaration ofWarren McShane sets forth a detailed description of the

origins, nature, theology, practice and organization of the Scientology religion. TheDeclaration ofDr. Frank Flinn, an expert on comparative religion, provides comparisons

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of Scientology's religious order, the Sea Org, with religious orders ofother religions, botheastern and western. We summarize those showings here.

1. Scientology's Fundamental PreceptsThe Scientology religion is based upon the research, writings and lectures of itsFounder, L. Ron Hubbard. (SUF' I.) All ofMr. Hubbard's writings and lectures onScientology constitute the Scripture of the religion, and are the source of the beliefs,practices, rituals and policies of the religion. (SUF 1-2.) They encompass more than300 books and other writings, thousands of written bulletins and policy letters aboutthe religion, over 3,000 recorded lectures and numerous religious instruction films.(SUF 2.) The doctrine and practices of the Scientology religion are known asScientology's religious "technology." (SUF 16.) Many of the scriptural writings ofScientology are contained in two multi-volume collections of Mr. Hubbard'swritings: The Technical Bulletins ofDianetics and Scientology ("The TechnicalBulletins "), which sets forth the religious technology, and The Organization ExecutiveCourse ("The OEC "), which includes numerous policies developed specifically for themanagement of Scientology churches to further the expansion and dissemination ofScientology pursuant to its ultimate goal to "Clear the Planet", a concept describedbelow. (SUF 3-4, 12-13.)

The basic tenet of Scientology is that man is an immortal spiritual being, calleda "thetan" (from the Greek "theta" meaning "spirit"), who has the potential of infmitesurvivaL A thetan has had one continuous life; while his or her innumerable physicalbodies have died over time, his or her life experience never stops. A thetan isinherently good, with infinite spiritual capability. However, over eons, thetans havelost their spiritual identity and native ability. Only through exploration of their pasts canthetans overcome the negative experiences that affect and reduce their inherent spiritualability. (SUF 5,6.)

I References to "SUF_" are to paragraphs in the Statement of Uncontroverted Facts.

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Scientology posits the existence of the ''reactive mind." Scientologists believe thatduring moments ofpain and partial or full unconsciousness, the reactive mind makes afun "mental image picture" of everything taking place. These are calIed "engrams."While the reactive mind retains these engrams, both from current and past physicallifetimes, a thetan is not aware ofthern. These engrams, however, affect one's behavior,are the source of irrationality, fear and psychosomatic illness, and impede spiritualenlightenment. (SUF 7-8.)'

Scientology seeks to remove the effects of engrams through the practice ofaUditing, described below. When one has eliminated the reactive mind, one is caIled"Clear." Beyond that, one must travel the path to fun spiritual ability and freedom,caned "Operating Thetan" or "OT." This path is known as The Bridge to TotalFreedom (''The Bridge"), and is represented in the Classification, Gradation andAwareness Chart (the "Grade Chart"). When enough people have attained the stateof "clear" and above, the entire planet will be cleared, and the ultimate Scientologygoal of "a civilization without msanity, without criminals and without war . . . " winbe achieved. This concept is called "Clear ing the Planet." (SUF 10-12.)

Scientologists believe that the dynamic principle ofexistence is to "Survive!" Thisprinciple is compartmented into eight parts, which Scientology refers to as the "eightdynamics": I) Self, the effort to survive as an individual; 2) Family; 3) Groups, such as acommunity, friends, a company, a nation; 4) Mankind; 5) Life forms, including animalsand plants; 6) The physical universe, encompassing matter, energy, space and time; 7)The spirit, the urge to survive as spiritual beings; 8) infinity, including a supreme being.

2 The concepts of engrams and the reactive mind were first set forth in Mr. Hubbard'swritings on "Dianetics", which he later defined as "What the soul is doing to the body." Asexplained by Rev. McShane, "The practices described in Diane/ies led to the phenomena ofindividuals recalling past lives. This was soon followed by the phenomenon of exteriorization fromthe body and Mr. Hubbard came to the inescapable conclusion that the 'I ' referred to in Diane/ieswas the human spirit. This discovery marked the evolution ofDianetics to Scientology. Today,Dianetics is considered to be the forerunner of and part ofScientology, since the discoveries ofScientology clarify and amplify the subject of Dianetics." (SUF 9.)

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A thetan's spiritual advance in Scientology is represented as one's expansion across alldynamics, addressing every facet of a thetan's existence as necessary to achievingspiritual salvation. (SUF 14.)

2. Training and AuditingOne advances along The Bridge to higher levels of spiritual awareness as

represented on the Grade Chart by participation in Scientology's core religiouspractices: "training" and "auditing." Training involves the study of the Scripturethrough Scientology religious courses. Auditing usually is ministered in confidentialone-on-one sessions between a specially trained individual called an auditor and aparishioner. Auditing uses "processes": exact sets of questions asked or directionsgiven by an auditor to help a person locate areas of spiritual distress. (SUF 15-18.)Auditing is supervised by a trained Case Supervisor, whose role is to see that theauditing is ministered in a correct orthodox manner. (SUF 19.) In auditing, theauditor uses a device called an "E-Meter," which Scientologists believe helps theauditor and the parishioner locate areas of spiritual distress. (SUF 20.) Dr. Flinnprovides some comparative context (Flinn Decl., 47-48)':

To the Scientologist, the E-meter is what religions aroundthe world call a sacramental. In Scientology training andauditing are the key sacraments. Objects used in assistingtraining and auditing-most especially the E-meter-aresacramentals. Thus the E-meter is fully comparable to thesacred utensils and vestments used in Roman Catholicism(chasubles, chalices, monstrances, patens, censors, etc.) orin Buddhism (incense burners, hand cymbals, mandalas,diamond Vajra scepters, etc.). In Scientology, the use oftheE-meter is essential to ensure that the technology has been

, In accordance with the Court's Standing Order, when referring the court to those materialfacts upon which the motion is based, defendants cite to the numbered paragraphs in the Statementof Uncontroverted Facts, rather than the underlying evidence. However, with respect to facts thatare not included in the Statement and are provided for context only, defendants cite to theunderlying evidence. Defendants believe that such facts and evidence, although not necessary todetermine this motion, will provide the court with helpful background information.

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delivered precisely and exactly as L. Ron Hubbarddetermined in his writings and communications.To the skeptic, the consecrated bread and wine in theRoman Catholic Eucharist is just chemical wine and breadover which someone said prayers. To the devout RomanCatholic and Eastern Orthodox communicant, that breadand wine are the Body and Blood of their Savior. To theskeptic, the E-meter is measuring electrical charges givenoffby sweat in the palms of the hands. To the devoutScientologist the E-meter is indicating spiritual states of thesoul-- whether an engram or other impediment remains orwhether the person is free to proceed upward to the nextspiritual stage on the Bridge to Freedom.

Scientology includes policies and procedures, compiled in The DEC, to correctstaff who make mistakes ("flub") on post and err in the application of the Scripture.The Qualification Division exists in each church "[t]o find and restore lost tech andsafeguard knowledge; to ensure the technical honesty and results of Scientology andDianetics, correct them when needful and attest to them when attained." Among thepositions in the Division are "Cramming Officers," who are specially trained,pursuant to scripture in The Technical Bulletins, to "isolate and correct real causes ofstaff and student misapplication of technology or policy." The Cramming Officer"teaches students what they have missed." "Cramming is the key to f1ublessauditing." (SUF 21-22.)

3. Scientology's Ethics and Justice SystemCentral to the SCientology religIOn is its system of ethics and justice,

summarized in the book, Introduction to Scientology Ethics (SUF 24.) An essentialprecept of the Scientology religion is that if one has acted unethically, one carmotachieve spiritual progress, and will act in a manner contrary to the survival of oneself,one's family, one's group and all mankind, i.e., across all "dynamics." InScientology, such a harmful unethical act is referred to as an "overt," a conceptanalogous to that of sin in western religions. In Scientology, however, an overt may

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be a transgression in a past lifetime, consistent with Scientology beliefs in the conceptof past lifetimes. Once a person commits an overt act, he or she will often withholdfrom others the commission of that act. This is called a "withhold." A person withaccumulated overts and withholds is incapable of spiritual progress and will notbenefit from auditing or training. (SUF 24.)

Scientology scriptures set forth techniques, called "Confessionals" (sometimescalled "Security or Sec Checking"). Mr. Hubbard wrote that Confessionals areintended to address the harmful effects ofoverts and withholds and to rehabilitate anindividual's personal integrity and ability to achieve "case gain," i.e., spiritualprogress, not only for the individual but also for the family and groups with whichone associates. (SUF 25.) Most ofthese writings are collected in The TechnicalBulletins, and are, as Headley acknowledges, "part of the Scientology belief system"(SUF 29.) Confessionals are conducted with an E-meter, and follow concepts andprocedures developed by Mr. Hubbard. (SUF 30.)

One form of Confessional is intended solely to help individuals unburdenthemselves ofpast transgressions. As stated in Mr. Hubbard's bulletin "ConfessionalProcedure," such a Confessional is considered "auditing and is kept confidential.""When the Confessional is fully completed, the auditor who has administered theConfessional informs the person he is forgiven for the overts and withholds he hasjust confessed." As Ms. Headley testified, this form ofConfessional is "c1ose[] to theRoman Catholic confessional whcre at the end you tell the person you're forgiven forwhat you've confessed to." (SUF 26.)

A second form of Confessional, called a Hubbard Communications Office("HCO") Confessional, is part of the Scientology Justice system Within RTC andCSI, it is applied to Sea Org members who may have committed "overts" or"withholds" against the rules of the Order. (SUF 27.) They are similar to practiceswithin Buddhist and Catholic religious orders which have strict codes of conduct andprovide for public confessions and punishments for those who infringe the rules of67103!3vl - 7 -


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the order_ (See Flinn Decl., 10, 15-15,23,28.) In the Sea Org, if a member hascommitted overts against the Rules, he or she may be called before a Committee ofEvidence, which can impose disciplinary action. As stated in "ConfessionalProcedure," HCO Confessionals are conducted in the same way as regularconfessionals. The only difference is that ethics officers start an HCO Confessionalsession by saying, "I am not auditing you," because it is a Scientology justice actionand can be used as a basis to impose discipline upon errant members of the Order.(SUF 27.) The use and method of such Confessionals is also set forth in TheTechnical Bulletins and The DEC, and is a practice of the religion. (SUF 29.)

4. Scientology's Religious Structurea. Churches providing religious services to parishionersScientology Missions provide lower-level aUditing. Scientology Churches

provide auditing to the state of "Clear" and training through Class V auditor (and thusare known as "Class V Churches"). The Advanced Churches provide training andauditing for the higher levels of Scientology auditing and training, known as the OTlevels. The Church of Scientology Flag Service Organization ("FSO") provides thehigher levels of training and auditing services except the highest OT level, which isprovided only at the Advanced Church located on the motor vessel Freewinds. (SUF31.)

b. Church of Scientology InternationalThe Scientology religious structure is hierarchical. Overall ecclesiastical

management of the Scientology religion is exercised principally by CSI. CSI isdenominated the "Mother Church," and is dedicated to the advancement anddissemination of the religion. CSI oversees the administration of all Scientology churchesand missions, disseminates the beliefS and practices ofScientology and provides religiousservices and training to its own staff members. (SUF 32.)

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d. Religious Technology CenterReligious Technology Center is responsible for insuring the orthodox practice

of the religion and the eternal preservation, transmission and application ofScientology doctrine and practices. For that reason, only individuals who havedemonstrated an exceptionally high level ofdedication to Scientology are accepted asstaff members. RTC acts with great diligence since the Church believes that it is vitalto maintain the precise, correct application of Scientology religious practices. Indoing so, if necessary, RTC will take appropriate action, including imposing churchdiscipline, to insure that churches and clergy comply strictly with church writings anddirectives. (SUF 37.)'In addition, RTC provides auditing, training, ethics counseling andconfessionals, cramming and other religious practices to its own staff, and to thesenior management staff ofCSI and the staffmembers of Golden Era Productions,both of which are located on the same physical premises as RTC in Gilman HotSprings, California. (SUF 38, 87, 89.) The Gilman property is often referred to asthe International Base. (SUF 37.)

e. Recognition and tax exemptionThe United States Internal Revenue Service, after conducting an extensive and

thorough review and audit ofCSI, RTC, and other Scientology churches, recognizedthem all as tax-exempt churches under 26 U.S.c. 501(c)(3). (SUF 47.) Inherent insuch recognition, as stated in the statute, the IRS found that the activities of CSI andRTC and all Scientology churches are exclusively in furtherance of their exempt,religious purpose and are not commercial in nature.'

, As stated by Dr. F1ilUl, RTC's role is similar to that played by the Congregation for theDoctrine of the Faith in the Vatican, which enforces religious orthodoxy upon Catholic clergy andlaity. (FlilUl Decl., 43.) Before becoming Pontiff, Pope Benedict was the Director of theCongregation for the Doctrine of the Faith., The IRS' review ofCS! ineluded examination of Golden Era's operations. The IRS foundall these activities furthered Scientology's religious mission and did not constitute commercial

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5. The Sea OrgAll CSI and RIC staff, as well as the staff members ofthe Advanced Churches,

belong to the Scientology religious order known as the Sea Organization, or Sea Org.(SUF 39, 41.) To qualifY to join the Sea Org, a Scientologist must undertake extensivetraining and study, pass a fitness examination, and receive certification that he or sheis qualified for the rigors of Sea Org life. (SUF 42.) Sea Org members sign asymbolic commitment of one billion years, reflecting their dedication to service I I Ifurtherance of the Scientology religion and the salvation of humanity and theirawareness of themselves as immortal spiritual beings. Because of this commitment,it is exclusively from the Sea Org that the senior leadership of Scientology is drawn,including the entire staff of senior management and Advanced Scientology churches.(SUF 41.) They subscribe to The Code o/a Sea Org Member, which contains vowsthat are repeated at Sea Org ceremonies that take place annually. Among the vowsare "I promise to use Dianetics and Scientology for the greatest good for the greatestnumber ofdynamics," and "I promise to take responsibility for the preservation andthe continued full and exact use of the technologies ofDiane ics and Scientology."(SUF 42.)

Sea Org members serve without expectation that they will receive materialcompensation, a fact they acknowledge in writing before becoming members and whenthey periodically repeat their vows. (SUF 41-43, 45.) They share tradition and lifestyle.They wear uniforms when on duty and have a merit-based maritime rank and ratingsystem and etiquette. Sea Organization members live communally and eat incommon dining halls. All living necessities are provided - berthing, food, uniforms,transportation, medical, dental, etc. Additionally, they generally receive a smallweekly allowance for personal incidentals, but are not paid a salary and do not expectactivity. Additionally, the property tax authorities of Riverside County, where Golden Era islocated, extensively examined all production facilities, offices and living accommodations andfound them all to be exempt from property tax because their used was purely religious. (SUF 48.)

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one. (SUF 44.) After surrnnarizing these attributes of the Sea Org, Dr. Flinn concludesthat "[ ]his level of commitment is typical of religious orders throughout history" and thatthe Sea Org has all the attributes of religious orders around the world:

(SUF 46.)

All of these types of religious activities Scientology shareswith members of religious orders around the world. Thisspiritual communal life allows the Sea Organization tofulfill its high religious mission, the preservation andtransmission of the teachings of1. Ron Hubbard and thecareful and exact preservation and delivery of the trainingand auditing technology.

The United States Department ofHomeland Security has found "that the SeaOrg qualifies as a religious order [under written federal guidelines], and that itsmembers practice a religious vocation," thereby permitting Sea Org members to enterthe country under that rubric. The Inland Revenue Department of the UnitedKingdom likewise has found that the Sea Org is a religious order and that "membersof the Sea Organization are not workers as defined by [applicable British statutes]and that the National Minimum Wage Act does not appear to apply" to Sea Orgmembers. (SUF 40.)

B. Facts Concerning Claire Headley1. Raised as a Scientologist, Headley Joined the Sea Org in 1991

Claire Headley's mother was a Sea Org member when Claire was a youngchild, and remains a Scientologist to this day. Claire' s stepfather also was and is aScientologist. (SUF 49.) Like most children of other faiths, she was raised in thefaith of her parents, and was taught and accepted the theology and doctrine of theScientology religion. (SUF 50.) At the agc of 16, with her parents' writtenpennission, she joined the Sea Org. She understood at the time what the lifestyle of aSea Org member entailed, including wearing uniforms, living communally, workinglong hours, and receiving a small allowance, because her mother, uncle and cousins

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students and supervisors. (SUF 80.) In addition, while she was at FSO, Ms. Headleyoversaw the provision of the Flag Metering Course, in which "students were studyingto learn use of the E-meter." (SUF 83.)

In early 1997, Ms. Headley returned to the International Base where she wasposted as "Director AVC [Authorization, Verification, and Correction] Correction,"which she held for almost three years. (SUF 84-85.) Prior to assuming this position,Headley undertook a training course that required her to read and analyze numerousbulletins and policy letters written by Mr. Hubbard and contained in both multi-volumeseries. Foremost among them was a policy stating that the purpose of her position was"to ensure the results of Scientology, correct thern when needful and attest to them whenattained." (SUF 86.) While holding this post, Headley trained and acted as a CrannningOfficer, and also trained and supervised RTC trainees. (SUF 89.)

From March 2000-September 2004, Headley held the position of InternalExecutive RTC, for which she also undertook training that included reading andmastering numerous writings contained in The Technical Bulletins and The OEC.This position is in charge ofRTC's internal operations, and is a senior position inRTC's ecclesiastical governance. (SUF 90.) Headley wrote the description of thisposition's purpose: "To observe, supervise, plan and execute the expansion,effectiveness, production, training, hatting, correction, and establishment of theorganization, resulting in an established organization accomplishing its purpose . . . "(SUF 90.) When Headley was posted as Internal Exec for RTC, her duties andfunctions included quality control related to reviewing issues and programs withinRTC, and undertaking programs within RTC to get the organization operatingaccording to RTC policies and procedures. (SUF 91.)

During the same period that she was Internal Exec RTC, Headley also "held fromabove" (meaning held while the lower position was vacant) the position ofEnhancernentOfficer RTC, which is in charge of the provision ofScientology religious services andpractices to RTC staff. (SUF 92- 94.) Headley also wrote the description of his6770.11hl - 15 -


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position's pUIpOse: "[tlo ensure that all staff make excellent training and caseprogress, that the organization is reviewed and corrected, and that the application ofthe technologies of ethics, tech and admin are standardly applied within theorganization, resulting in the achievement ofRTC's purpose . . ." (SUF 93.)

In September 2004, according to CSI and RTC records, Headley wastransferred to CSI, where she was designated as the HCO ChiefCMO INT, a seniorecclesiastical governance positlOn in the Scientology religion. According to Headley,she never fully assumed the duties and responsibilities of that position, but rathercontinued to carry out the same duties and responsibilities she had been undertakingwhile at RTC. She left on January 24,2005. (SUF 96.)III. ARGUMENT: PLAINTIFF WAS NOT COVERED BY THE MINIMUM

WAGE LAWS BECAUSE SHE DID NOT WORK FOR ORDINARYCOMMERCIAL BUSINESS VENTURES IN COMPETITION IN THECOMMERCIAL MARKETPLACEIn the related case Marc Headley v. Church ofScientology International, CV

09-3986 DSF, this court recognized that the federal and state minimum wage lawsreach only the ordinary commercial activities, in competition with other businesses,of religious organizations. (Order Denying Pl.'s Mot. Summ. Adjud., Sept. 22, 2009,(Docket No. SO) at 2-3.) From what we have shown above, there can be no basis toconclude that Claire Headley's positions and labor for Defendants constitutedordinary commercial activities in competition with other businesses. Accordingly,summary judgment must be granted, dismissing Count I ofthe SAC.

A. FLSA Does Not Apply to Non-Commercial Activities of ChurchesThe contemporaneous understanding and intention of Congress and the

continuing and consistent interpretation by the United States Department of Laborwas and is that the FLSA does not apply to the activities of churches except to theextent, and only to the extent, that they engage in ordinary business activities ineconomic competition with other commercial entities. When enterprise coverage wasb110313vl - 16 -


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proposed in 1960, Congress recognized that only such commercial activities ofchurches and non-profits would be covered. See S. Rep. 86-1744, 86'h Congo 2d Sess.28 (1960). See 106 Congo Rec. 16703 (Exchange between Senators John F. Kennedy,Floor Manager of bill, and Barry Goldwater, agreeing that "a church that has abusiness operation on the side . . . would not be exempt" for those activities, but thatotherwise churches would not be subject to the Act).

The following year, when the legislation was again considered and this timeenacted, Senator McNamara, chairman of the committee that reported the bill,explained that the committee had declined to provide a blanket exception to taxexempt non-profits because of concern that some non-profit entities might "competewith private industry to such a degree that the competition would have a very adverseimpact on private industry." 107 Congo Rec. 6255 (1961). The Senate and HouseReports on the 1961 legislation thus emphasized the distinction between the coveredcommercial activities ofnon-profits' as opposed to their religious or educational oreleemosynary activities that do not compete with businesses and that are excludedfrom coverage under the Act's definition of "enterprise":

Eleemosynary, religious, or educational and similaractivities [are] not included in the term "enterprise"[because] [s]uch activities performed by non-profitorganizations are not activities performed for a commonbusiness purpose.

H.R.Rep. 75, 87 'h Congo 1st Sess. 8 (1961); S. Rep. 87-145, 87th Congo 1" Sess. 41(1961).

After enactment of the amendment, the Department of Labor issuedregulations, consistent with the congressional debates and committee reports, thatmade clear that only the commercial activities of a non-profit or church would beconsidered to be an "enterprise" subject to the Act; such activities, to the extent anon-profit carried them on, would not subject the other activities or acts of the non-

28 profit to coverage. Thus, after recognizing that the "[a]ctivities of eleemosynary,PRJNTED ONRECYCLED PAPER

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religious or educational organizations may be performed for a business purpose" andthus treated as an "enterprise," the regulations specify that:

"the nonprofit, educational, religious, and eleemosynaryactivities will not be included in the enterprise . . . Suchacti vities were not regarded as performed for a businesspurpose under the prior Act [i.e., the pre-196l Act that waslimited to "individual coverage"] and are not consideredunder the Act as it was amended [i.e., the 1961 amendmentadding "enterprise coverage"] ...."

29 C.F.R. 779.214 (emphasis added).The lower federal courts followed this rule, including in a case involving a

Scientology church. See Van Schaick v. Church ofScientology ofCal., 535 F. Supp.1125, 1140 (D. Mass.1982) (holding that staff member of Church ofScientology ofCalifornia, the forerunner of CSI, was not covered by federal and state minimumwage laws because "the legislative history and regulations [ofFLSA] suggest thatreligious activities ofnon-profit organizations were to be exempt," she was not a"person whose employment contemplated compensation," no "employer-employeerelationship was ever established between her and the California Church," and "thelabor she provided [was not] related to commerce or the production of goods forcommerce"); Turner v. Unification Church. 473 F. Supp. 367,377 (D. R.I. 1978),affd, 602 F.2d 458 (1st Cir. 1979) (holding that staff member ofUnification Churchwho provided labor, without compensation except meals and lodging, to help "createa better world," was not covered by FLSA because "performing services forcharitable purposes without expecting any tangible compensation does not give riseto an employer-employee relationship within the meaning of the F.L.S.A.").

In addition, the Department of Labor has recognized that certain religiousworkers historically and constitutionally must be deemed to be excluded from theAct's scope. Thus, the Wage and Hour Division's Handbook adopts and implementsthe congressional intention to exclude ministers and members of religious orders

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from either enterprise or individual coverage:" "Persons such as nuns, monks, priests,lay brothers, ministers, deacons and other members of religious orders who servepursuant to their religious obligations . . . shall not be considered to be 'employees.'"Wage and Hour Division, Dep't of Labor, Field Operations Handbook IOb03(b).See Shaliehsabou v. Hebrew Home ofGreater Washington, supra 363 F.3d at 306(Labor Department guidelines compelled by legislative history and FirstAmendment); Schleicher v. Salvation Army, supra 518 F.3d at 476 (members ofreligious orders not covered by FLSA).

In Tony and Susan Alamo Foundation v. Secretary ofLabor, 471 U.S. 290(1985), the Court, following closely arguments made by the Solicitor General onbehalf of the Department of Labor, engaged in a careful and nuanced analysisconsistent with the history and congressional intent as discussed above. The Courtrecognized that commercial business activities of churches, if any, were quitedifferent from their religious activities, and that the latter were not covered by theFLSA, even though the statute contained no explicit religious exemption.

The critical factor in Alamo was the nature of the activities that the AlamoFoundation was conducting: ordinary businesses in direct competition with other

" This intention of Congress was explicitly restated in the legislative debates over the 1966amendments to FLSA, which extended enterprise coverage to certain limited non-profits, includingeducational institutions:Mr. PUCINSKI. Let us consider a parochial elementary school, in which the nuns do the workin the cafeteria. Would they have to be paid a minimum wage?Mr. COLLIER. No, they would not be covered. [Continued on next page.]Mr. BURTON ofCalifornia. Mr. Chairman, will the gentleman yield?Mr. COLLIER. I am delighted to yield to the gentleman from California.Mr. BURTON. As I understand, it is not the gentleman's intention to include members of areligious order under the definition of an employee, and therefore a nun would not beconsidered an employee. Therefore, a minimum wage would not be required to be paid a nun.Am I correct in my understanding of he gentleman's intention?Mr. COLLIER. That is correct. I did not intend to cover them.

Dole v. Shenandoah Baptist Church, 899 F.2d 1389, 1395 (4th Cir. 1990) (quoting112 Congo Rec. I I371 (1966)).

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activities undertaken with a 'business purpose,' and would therefore have no impacton petitioners' own evangelical activities . . ."). See also general discussion, 471 U.S.at 296-99.

Under Alamo, therefore, churches can be subjected to minimum wage lawsonly if, and only to the extent that, they engage in ordinary commercial activities thatcompete with those of other businesses.

In her portion ofthe Rule 26 Statement (Docket No. 30), however, Plaintiff hasargued that she was a covered employee under the "individual" coverage provisions ofFLSA even if she was not under the "enterprise" coverage provisions that were directly atissue in Alamo. This argument is belied both by the words and structure of the statuteand by the government's brief and the Court' s decision in Alamo.

First, the FLSA itself is silent with respect to and makes no distinction betweenthe scope of individual and enterprise coverage as applied to religious organizationsand non-profits. Individual and enterprise coverage are defined in haec verba: theAct extends to individuals "engaged in [interstate} commerce or in the production ofgoods fo r commerce" and to "enterprise[s] engaged in [interstate} commerce or inthe production o fgoods for commerce." 29 U.S.c. 207 (emphasis added); id. 206. These identical defining phrases contained in the same sentence must beconstrued to mean the same thing. Nat'l Credit Union Admin. v. First Nat 'I Bank &Trust Co., 522 U.S. 479, 501 (1998) ("Similar language within the same section of astatute must be accorded a similar meaning"); IBP, Inc. v. Alvarez, 546 U.S. 21,34(2005) (same, applying principle to two FLSA sub-sections). It is inconceivable thatin using the same phrase Congress intended to exclude churches engaged in noncommercial activities from the FLSA' s mandates under the rubric of "enterprise"coverage while extending it, under the rubric of "individual" coverage, to the verychurch workers providing such labor.

Second, if church workers not engaged in ordinary commercial activities incompetition with for-profit businesses nevertheless are subject to individual coverage,67703I3v[ - 21 -


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the limitations upon enterprise coverage for churches so carefully preserved in Alamowould be rendered meaningless. It would have made little sense for the SolicitorGeneral and the Supreme Court to have taken such pains to explain that theapplication of the FLSA to the workers at issue in Alamo did not touch in any wayupon workers engaged in religious functions of worship, liturgy, doctrine, prayer,preaching, or internal organization, in which, as the Labor Departmentacknowledged, "government may play no part," if those same workers could besubject to coverage merely by using the phones, the Internet, the mails or thehighways in the course of carrying out their religious functions and duties. If churchworkers not subject to enterprise coverage under FLSA nevertheless potentially weresubject to individual coverage, churches would be required to maintain detailedrecords for such religious workers which would be subject to ongoing inspection bygovernment officials, directly contrary to the Supreme Court 's holding in Alamo andthereby raising the very substantial Establishment Clause concerns that the Courtfound were not present in Alamo. The Alamo Court therefore made clear that "[t]heAct reaches only the ordinary commercial activities' of religious organizations[citation], and only those who engage in such activities . . . ." 471 U.S. at 302(emphasis added), words clearly foreclosing "individual coverage." Indeed, theDepartment ofLabor's own regulation specifically states that the exclusion of noncommercial activities from enterprise coverage continued the exclusion of suchactivities from individual coverage under the pre-1961 Act: "Such activities were notregarded as performed for a business purpose under the prior Act and are notconsidered under the Act as it was amended ... . " 29 C.F.R. 779.214.

While two cases from the Southern District ofNew York suggest that personsproviding labor to a non-profit organization may be subject to individual coverageunder the FLSA even if the organization is not an enterprise, neither case is apposite.Bowrin v. Catholic Guardian Soc 'yo 417 F. Supp. 2d 449 (S.D.NY 2006);Boekemeier v. Fourth Universalist Soc 'y in the City ofNew York. 86 F. Supp. 2d 2806170J13vl - 22 -


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(S.D.N.Y. 2000). In each case, the entity in question was not subject to "enterprise"coverage for reasons having nothing to do with the exclusion from coverage forchurches engaged in religious activities as recognized in Alamo. but for independentreasons under the statute. Likewise, neither case involved members of a religiousorder. The courts therefore had no occasion to, and in any event did not, analyze thelimitations upon wage and hour coverage with respect to churches and their religiousworkers so carefully preserved in Alamo and recognized in the Labor Department'sField Operations Handbook.' If, however, the Act were held to apply to the activitiesofClaire Headley at CSI and RTC, every minister, rabbi, priest, monk, nun, or otherreligious official would be subject to it merely by use of the telephone, the mails, orinterstate travel. That would certainly have come as a surprise to the Alamo Court, tothe then-Solicitor General, to then-Senators Goldwater and Kennedy, and to the entireCongress.

Similarly, in Mitchell v. Pilgrim Holiness Church Corp . 210 F.2d 879 (7th Cir.1954), decided before enterprise coverage was created by the 1961 amendments tothe FLSA, the defendant, while denominated a church, engaged exclusively in thepublishing business, including publication of substantial materials unrelated to itsreligious mission. Pilgrim, of course, was decided 31 years before the Supreme

, Thus, in Bowrin, the defendants were not churches, but rather government-fundedreligiously affiliated entities that provided secular services to neglected children, and whoseemployees consisted of secular workers, including child care workers, substance abuse counselors,social workers and nurses who did not provide their labor for religiOUS motivation. While theentities were not "enterprises" for reasons independent of Alamo, those non-religious workersnevertheless were held subject to individual coverage. 417 F. Supp. 2d at 467-471. In Bockemeier,while the defendant was a church, the case had nothing to do with the church's religious activities;the defendant engaged in a separate real estate business unrelated to its religious mission, andconceded it would have been subject to enterprise coverage for that part of its activities underAlamo but for the fact that its revenues from such activities fell short of he threshold level forenterprise coverage. The district court merely held that the employee engaged in the real estatebusiness, but not the other church workers engaged in religious activities, would come withinindividual coverage. 86 F. Supp. 2d at 287-288. Neither case presented a conflict betweenindividual coverage and the Alamo Court's insisterice that "The Act reaches only the 'ordinarycornmercial activities' of religious organizations [citation], and only those who engage in suchactivities.,." 471 U.S. at 302 (emphasis added).

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Court's decision in Alamo, and is of limited precedential value in light of thatdecision, to say nothing of the substantial doctrinal developments under theEstablishment and Free Exercise clauses since 1954. See, e.g., Lemon v. Kurtzman,403 U.S. 602, 612 (1971) (summarizing and setting forth the non-entanglementprinciple); NLRB v. Catholic Bishop a/Chicago, 440 U.S. 490, 502 (1979) (warningagainst government intrusion into relationship between Catholic parochial schoolsand even lay teachers because "[i]t is not only the conclusions that may be reached. . . which may impinge on rights guaranteed by the Religion Clauses, but also thevery process of inquiry leading to findings and conclusions")."

Even on its own terms, however, Pilgrim only applies to workers who providelabor in expectation of salary. Critically, the publishing company did not claim thatthe workers provided their labor as volunteers with no expectation of compensation;the court "assume[d in the absence of contrary evidence] that the wages [the workers]received constituted the income on which they lived," and held that the workerstherefore were "employees" subject to individual coverage under the Act. 210 F 2dat 884. Pilgrim thus implicitly recognized that religious workers who voluntarilyprovide labor to support their religion without monetary motive (such as members ofreligious orders) would not be subject to individual coverage. The case accordinglywas not deemed apposite, even before A lama, by the district courts in Van Schaickand Turner, both ofwhich, as we have seen, held that volunteer church workersengaged in religious, non-business activities were not covered by the minimum wagelaws precisely because they provided their labor without expectation ofmonetarycompensation. See Van Schaick, 535 F. Supp. at 1140 & n.1 5 (plaintiff was not a"person whose employment contemplated compensation") (quoting Walling v.

" The Van Schaick court noted Pilgrim's apparent incompatibility with such doctrines in thecourse of declining to follow it. 535 F. Supp. at 1140, n.\5. Indeed, Pilgrim has essentially beenoverruled in Schleicher v. Salvation Army, supra, 518 F.3d 472, 476, where Judge Posner, goingmuch further than necessary for purposes of this case, opined that even monks producingsacramental wine for public sale nevertheless would not be covered under FLSA.

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Portland Terminal Co., 330 U.S. 148,152 (1947; Turner, 473 F. Supp. at 377(same). See also Lewis v. Holy Spirit Ass n, 589 F. Supp. 10, 13 (D. Mass. 1983)(dismissing claims for quasi contract and workers' compensation because "plaintiffjoined the defendant Church for personal and religious reasons, and not for anyreason associated with securing employment or compensation for services performed.It is well established that no recovery can be had . . . for services rendered by reasonof religious or charitable motives").

Thus church workers not engaged in ordinary businesses in competition withsecular enterprises cannot be subject to either enterprise or individual coverage underAlamo, the Labor Department rules, and the First Amendment.B. California's Minimum Wage Laws Do Not Apply

As Headley's counsel initially acknowledged (but from which he laterattempted to backtrack) in the Marc Headley case, ''the Federal and Californiaminimum wage and overtime laws are 'analogous,' 'complementary,' and essentiallyequivalent in application," particularly in their definitions of "employer," "employee"and "employed." (PI. 's Reply Mem. Summ. Adjud. (Docket No. 47), at 14:23-25(quoting Bureerong v. Uvawas, 922 F. Supp. 1450,1470 (C.D. Cal. 1996. Whilethe California minimum wage law is silent on its applicability to churches, the onlyanalogous provisions of the Labor Code do not cover individuals who agree toengage in religious work on behalfof churches or religious organizations withoutmeaningful compensation. Labor Code 3352(b) excludes from the definition of"employee" anyone performing services for a religious organization "for aid andsustenance only." Section 3352(i) excludes anyone performing "voluntary service"for a non-profit organization who "receives no remuneration for the services otherthan meals, transportation, lodging, or reimbursement for incidental expenses."These provisions parallel the non-applicability of the FLSA to volunteer religiousworkers and members of religious orders. See discussion, ante; Turner, 473 F. Supp.

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at 377 (person who provided labor to church ''to create a better world" [as Headleycovenanted in her Sea Org application] not covered by minimum wage law).

California's minimum wage law must be construed narrowly with respect tochurch religious workers because such an application of the law would raise seriousquestions under the First Amendment. See, e.g., Point II, post, discussing theministerial exception. In such contexts, courts must, if possible, interpret a statute toavoid constitutional infirmity. Murray v. The Charming Betsy, 6 U.S. (2 Cranch) 64,118 (1804); Ashwander v. Tenn. Valley AUlh., 297 U.S. 288, 341 (1936) (Brandeis, J.concurring). Similarly, in California, "'[a]n established rule of statutory constructionrequires [courts] to construe statutes to avoid constitutional infirmit[ies].'" McClungv. Employmenl Dev. Dep'l, 34 Cal. 4th 467, 477 (2004) (quoting Myers v. PhilipMorris Cos., 28 Cal. 4th 828, 846-47 (2002) (some internal quotation marksomitted.

Where, as here, there is significant risk of infringement on First Amendmentrights, courts will require a clear expression oflegislative intent to regulate religiousactivities. NLRB v. Calholic Bishop ojChicago, supra 440 U.S. at 500, 507.Research discloses no clearly expressed intention by the California Legislature thatthe Labor Code, and in particular its wage-hour provisions, are to apply to religiousworkers. And, as this court noted in the Marc Headley case, "Plaintiff does not citeto any authority suggesting that the scope of California's labor laws is greater thanfederal law for people who are similarly situated." (Order Denying PI. 's Mot. Summ.Adjud. (Docket No. 50), Sept. 22, 2009, at 2, n.l.)

C. Plaintiff Was Not Covered by the Minimum Wage Laws1. Plaintiff's Positions at RTC Were Religious in Nature

RIC is a religious entity. Its function is unique and essential to theScientology religion: to insure that Scientology churches and ministers providereligious services in strict conformity with Scientology Scriptures and orthodox

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practices. (SUF 37.) In no way can RTC be said to engage in ordinary commercialactivities in competition with commercial businesses.

Headley worked as a member of the Sea Org for RTC for eight years. (SUF73.) As noted above, she held the senior position of Internal Executive RTC for overfour years, and was directly involved in church governance. (SUF 90-91.) Inaddition, she acted as an auditor, a course supervisor, an ethics officer, and acrarruning officer. (SUF 73, 89,91.) As set forth in the Rev. McShane's declaration,and as Headley repeatedly acknowledges, all these positions and functions weredefined and governed by Scientology written policy and scriprure; Headley providedand applied Scientology services and practices to RTC's s taff according to thewritings ofMr. Hubbard. (SUF 85-94.)"

In her deposition, Headley attempted to differentiate between herresponsibilities as an auditor, which she roncedes were religious, and herresponsibilities as an RTC executive, course supervisor, cramming officer or ethics

I L Headley testified that on one or more occasion she provided "manual labor" to assistGolden Era in completing the releaseof a new CD. Such efforts. of course, were in furtherance ofGolden Era's mission to teach or spread the religiOn, and did not compete with private businesses.Ms. Headley's episodic participation in such activity is called an "all hands" project, as describedby Rev. McShane (SUF 95):

In addition to their assigned duties for their particular positions, Sea Org staff membersoccasionally are asked to join in an all hands project at the particular church to which they areassigned. Such a project typically requires immediate and intensive completion, and 'all hands'temporarily join in to do so; they then return to their primary dutics at their assigned positions.The term 'all hands' is derived from a similar practice aboard ships, where the captain will order'all hands on deck' to complete an important and pressing task.... Such activities are neverthe primary duties of the participants asked to join in !be project.It is typical of life in a religious order for the members to engage in physical labor in addition totheir other duties and responsibilities. Thus, in Buddhist orders, "Even humble tasks-such asweeding the garden, baking bread, sweeping the monastery paths, cleaning the l a t r i n e s ~ a r e understood in a religious way. These ordinary duties contribute to the monastic's developing

attitudes of humility, modesty, and obedience, without which their progress in the stages ofmeditation leading to enlightenment and the spread of he Buddhist ideal would be impaired orthwarted." (Ainn Decl., 11 19.) Similarly, in Benedictine orders, "Under the heading of abara("Work"), monks and nuns engaged in both hard physical and mental labors as disciplinesconducive to the spiritual life (Rule, Chapter 46). In the first rank was the copying, binding andtransmitting of exts of the Bible, theological and philosophical writings which aid in understandmgand interpreting the Bible, and the Rule itself." (Id.,1 25.)

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officer, which she asserted were not part of the religion of Scientology, but ratherwere merely "administrative" or "ethics" or "justice" or "police" functions, as ifthegovernance, ethics and internal justice procedures of a religion or church can beseparated from its other practices. Churches and religions from time immemorialhave imposed ethics systems upon their followers and clergy, and have "policed"compliance with such edicts. "[QJuestions of church discipline . . . are at the core ofecclesiastical concern," Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S.696, 717 (1976). (Before Pope Benedict was selected Pontiff, he directed theVatican's Congregation for the Doctrine of the Faith, whose primary function was to"police" compliance with Church doctrine as stated by the Holy See. (Flinn Decl.,44).) The court must reject Headley'S false distinction between Scientology auditingand Scientology ethics and justice practices as a matter oflaw, just as it would aneffort to distinguish, for example, between the duties of a Catholic priest conducting a .religious service or prayer from those of a bishop managing a diocese, undertaking aninvestigation of whether clerical officials are complying with doctrine, or imposingdiscipline upon priests, nuns, or even congregants. Certainly a Bishop's impositionof an order denying communion to an "errant" congregant for publicly advocatingfreedom of choice on the abortion issue (such as Senator Kerry or RepresentativePatrick Kennedy), disciplining a priest for ethical misconduct after investigating hisactions, or requiring a member of the Jesuit Order to withdraw from electoral politics(as happened to Father Robert Drinan, a former Massachusetts Congressman), or aPope's order of excommunication for apostasy, heresy or schism is no less religiousbecause it is the exercise of a "police" function. The First Amendment prohibits civilcourts from interfering "on matters of discipline, faith, internal organization, orecclesiastical rule, custom, or law." Serbian Eastern Orthodox Diocese, 426 U.S.supra at 7\3.

Headley repeatedly concedes that what she calls "police" functions, such ascramming, correction procedures, or confessionals, required extensive study of and6770]Uvl - 28 -


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adherence to official writings and polIcies of Scientology and were "Scientologypractices" and part of the "Scientology belief system." (SUF 23, 27-29, 86, 89-91.) Itis not for her, or the Court, to determine whether such concededly Scientology beliefsand practices are part of the religion. It is the Church authorities' explanation anddescription of the beliefs and practices ofthe Scientology religion, here set forth inthe McShane Declaration, that must be accepted by the Court, lest the judiciarybecome entangled in a religious dispute as to what is the nature and content of areligion. It would be both anomalous and unconstitutional for a court to try to resolvea dispute as to what is or is not part of a religion, let alone to decide that what areligious body states is part of its religious beliefs and practices really is not. HolySpirit Ass n for the Unification ofWorld Christianity v. New York City Tax Comm 'r,55 N.Y.2d 512, 518,450 N.Y.S 2d 292 (1978) ("[Clourts may not inquire into orclassify the content of the doctrine, dogmas, and teachings held by that body to beintegral to its religion but must accept that body's characterization of its own beliefsand activities and those of its adherents, so long as that characterization is made ingood faith and is not sham""); Paul v. Watchtower Bible & Tract Soc 'y ofNew York,819 F.2d 875, 879 (9th Cir. 1987) ("Shunning is a practice engaged in by Jehovah'sWitnesses pursuant to their interpretation of canonical text, and we are not free toreinterpret that text"); id. at 878, n.1 (discussing source and meaning of this rule ofjudicial deference compelled by the First Amendment) (quoting Serbian EasternOrthodox Diocese, 426 U.S. at 709).

12 Reverend McShane 's characterization oflhe practices of the religion on its face is notmerely his own personal opioion set forth for litigation purposes, but is based entirely upon thewritings ofMr. Hubbard, as Rev. McShane repeatedly states and demonstrates. In particular,Reverend McShane demonstrates, and Ms. Headley repeatedly concedes, that Ms. Headley's actionsas an RTC executive, cOUl"e supervisor, cramming officer or ethics counselor were all based uponstudy of and adherence to written church policy and scripture, principally that set forth in TheTechnical Bulletins and The DEC. (See Statement of Facts, ante.)

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2. Headley's Positions at Golden Era Were ReligiousAs Headley acknowledges, "Golden Era is the dissemination org[anization] of

Scientology." (SUF 33.) Its function and purpose is to make the content of theScientology religion broadly available to Scientologists and to the outside world.(SUF 33,35.) Scientology is an evangelical religion. It is a fundamental tenet ofScientology that only by spreading the religion throughout the planet can humankindhope to achieve a peaceful and just world ("Clearing the Planet"). (SUF 12-13.)Thus, it is an essential function of CSI to reach out to bring new parishioners andfollowers into the faith. Golden Era produces considerable materials directed at sucha potential congregation. In doing so, it is carrying forward the command of theScientology scriptures. As the Supreme Court has emphasized, "[t]his form ofreligious activity occupies the same high estate under the First Amendment as doworship in the churches and preaching from the pUlpits. It has the same claim toprotection as the more orthodox and conventional exercises of religion." WatchtowerBible & Tract Soc'y a/New York v. Village a/Stratton, 536 U.S. 150,161 (quotingMurdock v. Pennsylvania, 319 U.S. 105,108-09 (1943.

In today's world, The Word is not spread merely by sermons in church or readinga bible. People get their information through a broad and ever-expanding range ofmedia,including film, video, audio, CDs, DVDs, computer media, smart phones, etc. GoldenEra produces such media with an explicitly Scientology content."

The fact that Scientology churches raise money from parishioners and thatGolden Era receives payments from such churches to pennit it to continue to producesuch religious materials that are then made available to parishioners in no way

" Dr. Flinn's experiences in the Franciscan Order were similar: "1 worked in the monasterybook bindery, binding new and rebinding old editions of the Bible and theological treatises. Iproduced holy cards and publications to advertise the work of the monastery. There was onedifference: Scientology and the Sea Organization avail themselves of the latest forms of technologyin carrying out their religious mission. We forget that when the monasteries first arose they did thesame thing." (Flinn Dec., '160.)

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converts the activities of the churches or of CSI and Golden Era into ordinarycommercial activity, let alone in direct competition with commercial businesses."[A] religious organization needs funds to remain a going concern." Murdock v.Pennsylvania, 343 U.S. at III. As long as the activity by which the funds are raisedconsists precisely of the provision or promotion of the religion itself, it furthers theexclusive religious purpose of the church and is therefore itself a religiOUS activity.As the Supreme Court pointedly observed in Murdock with respect to the sale ofreligious literature by Jehovah's Witnesses solicitors:

Id.

[T]he mere fact that the religious literature is "sold" byitinerant preachers rather than 'donated' does not transformevangelism into a commercial enterprise. If it did, then thepassing of the collection plate would make the churchservice a commercial product.

Moreover, Golden Era does not produce or sell non-Scientology related mediato the general public in competition with other entities, and it in no way competeswith other entities in creating and distributing materials about and for the Scientologyreligion. (SUF 36.) Indeed, no such competition is possible since the films and othermedia products about the religion are created by the Church to insure the requisitedoctrinal knowledge and control. (SUF 36.)" In short, no other entity can enter the"market" of creating such religious materials because there is and can be no such"market."

Moreover, Headley's positions and responsibilities at Golden Era, as sheconcedes, did not even involve the production of the religious media, but rather

" Similar control over the production of scriptural materials is exercised by other churches.For example, "A celebrated monastic press which prints the religious treatises of the BenedictineOrder today is SI. Meinrad Abbey Press, a subsidiary institution of SI. Meinrad Abbey in SI.Meinrad, Indiana." (ld., 25.) The monks who work for the Press are not paid, while outsidetechnical consultants who are not part of the Order are, allowing the order "to keep tight controlsover all publications that deal with [its1 ule, theology and other teachings." (ld.)

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consisted exdusively of the supervision of religious courses and the provision ofauditing, crarmning and Confessionals to the staffofGolden Era. (SUF 60.) As theSolicitor General and the Supreme Court emphasized in Alamo, even where someactivities of a religious entity arguably could be considered to be an "enterprise,"which is not true here, the non-commercial religious activities of the organization arenot induded within the "enterprise" and are not subject to minimum wage regulation.Brie ffor the Dept. ofLabor, 1985 WL 669832, at *14 ("this enforcement proceedingapplies solely to work performed in the commercial businesses of the Foundation[and] does not touch in any way upon the Foundation's core religious functions ofworship, liturgy, doctrine, prayer, preaching, or internal organization, in whichgovernment may play no part . . . .") (emphasis added). As we have shown, theSupreme Court's opinion closely adhered to the Solicitor General's arguments, andadopted the Labor Department's position that a church need not even keep recordswith respect to the activities of its workers that were not directed at ordinarycommercial activities. Alamo, supra 471 U.S. at 305-306. Accordingly, the LaborDepartment regulations explicitly provide that even where a non-profit engages incommercial activity that is covered as an enterprise, "the nonprofit, educational,religious, and eleemosynary activities will not be induded in the enterprise." 29C.F.R. 779.214.

In summary, the facts are indisputable that plaintiff Headley was not a coveredemployee under federal or state minimum wage laws, and her claim for unpaidminimum wage must be dismissed.

3. As a Member of a Religious Order, Headley Was Not aCovered Employee Under tbe Minimum Wage Laws

Independently and alternatively to the grounds set forth in sub-sections I and 2above, Headley was not a covered employee subject to minimum wage laws becauseshe was a member of a religious order, the Sea Org. When Headley joined the SeaOrg, she understood what the lifestyle of a Sea Org member entailed, because her6770313vl - 32 -


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material well-being; (2) members undergo a training program and make a long-termcommitment; (3) organization is under the control or supervision of a church orassociation of churches; (4) members live communally and are held to a strict level ofmoral and religious discipline; (5) members work full-time on behalf of goals of theorganization; (6) members engage in activities such as prayer, religious study,teaching, missionary work, or church reform or renewal; (7) the organization meetsthe requirements for tax exemption. See 70A Am .fur. 2d Social Security andMedicare 613 (2009)(adopting IRS definition). It is readily apparent that the SeaOrg meets all the criteria. (SUF 41-48.)IV. THE MINISTERIAL EXCEPTION BARS APPLICATION OF WAGE

AND HOUR LAWS TO HEADLEY'S LABOR FOR CSI AND RTCThe federal and state courts have recognized that the First Amendment religion

clauses mandate a "ministerial exception" to state and federal statutes regulatingemployment, wages, and hours. Elvig, supra, 375 F.3d at 960-61; Catholic CharitiesofSacramento, supra, 32 Cal. 4th at 543-44; Schmoll v. Chapman Univ., supra, 70Cal. App. 4th at, 1442-44. The ministerial exception was first stated in McClure v.Salvation Army, 460 F.2d 553, 558-59 (5th CiL 1972):

Just as the initial function of selecting a minister is a matterof church administration and government, so are thefunctions which accompany such a selection. It isunavoidably true that these include the determination ofaminister's salary, his [or her] place of assignment, and theduty he [or she] is to perform in furtherance of the religiousmission of the church.

(Emphasis added). "[T]he ministerial exception doctrine is based on the notion achurch's appointment of its clergy, along with such closely related issues as clericalsalaries, assignments, working conditions and termination of employment, is aninherently religious function because clergy are such an integral part of a church'sfunctioning as a religious institution." Roman Catholic Archbishop ofLos Angeles v.

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Superior Court, 131 Cal. App. 4th 417, 433 (2005) (emphasis added) (citing Werji v.Desert Sw. Annual Conference, 377 F.3d 1099, 1101 (9th Cir. 2004)). Allowingthestate to intrude in such matters "results in excessive [government] entanglement withreligion in violation of the establishment clause", and "violate[s] the free exerciseclause" because "'churches . . . must have power to decide for themselves, free fromstate interference, matters of church government as well as those of faith anddoctrine.'" Silo v. CHW Med. Found, 27 Cal. 4th 1097, 1106 (2002) (quotingSchmoll, 70 Cal. App. 4th at 1442-43).

"[T]he ministerial exception . . . is robust where it applies," precluding "anyinquiry whatsoever into the reasons behind a church's ministerial employmentdecision." EEOC v. Roman Catholic Diocese ofRaleigh, NC, supra, 213 F.3d at 80 I.It encompasses all facets of a church's relationship with its clergy employees and isapplied to virtually all federal and state antidiscrimination statutes. See Hollins v.Methodist Healthcare, Inc. 474 F.3d 223,225 (6thCir. 2007).

Most significantly for current purposes, the ministerial exception barsapplication of federal and state minimum wage laws to a church's relationship withthose coming within the exception. Alcazar v. Catholic Archbishop ofSeattle, 2006WL 3791370, at *7 (W.D. Wash., Dec. 21, 2006) (exception applies to stateminimum wage law); Schleicher, supra, 518 F.3d at 475,478 ("adopt[ing] apresumption that clerical personnel are not covered by the FLSA" and suggesting"the ministers exception is better termed the 'internal affairs' doctrine", because it isnot limited to ministers); Shaliehsabou, supra, 363 F.3d at 305. Indeed, the FourthCircuit has held that the ministerial exception exists as a statutory matter under theFLSA as "derived from the congressional debate [about the FLSA] and delineated inguidelines issued by the Labor Department's Wage and House [sic] Administrator"that exclude clergy or members of religious orders as "employees" under that act. Id.(quoting Dole v. Shenandoah Baptist Church, 899 F.2d 1389, 1396 (4th Cir. 1990)).The FLSA's ministerial exception for clergy and members of religious orders is6?70313vl - 35 -


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"coextensive in scope" with the constitutionally mandated ministerial exceptionapplied in other contexts. Shaliehsabou, 363 F.3d at 306.

Equally significant, the ministerial (or "internal affairs") exception is appliedbroadly to all church workers, except those engaged in activities with a "strictlysecular purpose." EEOC v. Sw. Bapt

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