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Case No. 18-13452-B


__________________________________________________________________
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
__________________________________________________________________

MARIA DEL ROCIO BURGOS GARCIA


and LUIS A. GARCIA SAZ,

Plaintiffs-Appellants/Cross-Appellees,

vs.

CHURCH OF SCIENTOLOGY FLAG SERVICE ORGANIZATION


and CHURCH OF SCIENTOLOGY FLAG SHIP SERVICE ORGANIZATION,

Defendants-Appellees/Cross-Appellants.
__________________________________________________________________
On Appeal from the United States District Court
Middle District of Florida, Tampa Div. – Case No. 8:13-cv-220-T-27TBM
__________________________________________________________________

COMBINED BRIEF FOR DEFENDANTS-APPELLEES/CROSS-


APPELLANTS (1) IN SUPPORT OF CROSS-APPEAL AND
(2) RESPONDING TO PLAINTIFFS’ INITIAL BRIEF
__________________________________________________________________

Johnson, Pope, Bokor, Ruppel Rabinowitz, Boudin, Standard,


& Burns, LLP Krinsky & Lieberman, P.C.
F. Wallace Pope, Jr. /Fla. Bar No. 0124449 Eric M. Lieberman, Esq.
wallyp@jpfirm.com elieberman@rbskl.com
Robert V. Potter /Fla. Bar No. 0363006 14 Wall St., Ste. 3002
bobp@jpfirm.com New York, NY 10005
Post Office Box 1368 Telephone: (212) 254-1111
Clearwater, FL 33757
Telephone: (727) 461-1818

Counsel for Defendants-Appellees/Cross-Appellants Church of Scientology Flag


Service Organization and Church of Scientology Flag Ship Service Organization
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Case No. 18-13452-B
Garcia, et al v. Church of Scientology Flag Service Organization, et al.

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE


DISCLOSURE STATEMENT

In accordance with Federal Rule of Appellate Procedure 26.1 and Eleventh


Circuit Rule 26.1-2(c), Appellees/Cross-Appellants make the following corporate
disclosure:

1. The Church of Scientology Flag Service Organization, Inc., Appellee,


is not publicly traded, and has no parent company or subsidiaries.

2. The Church of Scientology Flag Ship Service Organization, Inc.,


Appellee, is not publicly traded, and has no parent company or subsidiaries.

In compliance with Fed. R. App. P. 26.1, 11th Cir. R. 26.1-1, 11th Cir. R.
26.1-2(a), and 11th Cir. R. 26.1-3, the undersigned hereby certifies that the
following persons and entities have an interest in the outcome of this case:

1. Burlington & Rockenbach, P.A. – Counsel for Appellants

2. Burlington, Philip M. – Counsel for Appellants

3. The Church of Scientology Flag Service Organization, Inc.,


Clearwater, Florida, Appellee

4. The Church of Scientology Flag Ship Service Organization, Inc.,


Clearwater, Florida, Appellee

5. Deixler, Bert H. – Appellees’ Counsel

6. Garcia, Maria Del Rocio Burgos – Appellant

7. Johnson, Pope, Bokor, Ruppel & Burns, LLP – Appellee’s Counsel

8. Johnson, Robert E. – Appellants’ Counsel

C-1
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Case No. 18-13452-B
Garcia, et al v. Church of Scientology Flag Service Organization, et al.

9. Gray Robinson, P.A. – Appellants’ Counsel

10. Lieberman, Eric M. – Appellees’ Counsel

11. Rabinowitz, Boudin, Standard, Krinsky & Lieberman – Appellees’


Counsel

12. Pope, F. Wallace, Jr. – Appellees’ Counsel

13. Potter, Robert V. – Appellees’ Counsel

14. Saz, Luis A. Garcia – Appellant

15. Weil Quaranta McGovern, P.A. – Counsel for Appellants

16. Weil, Ronald – Appellants’ Counsel

17. Weil, Snyder, Schweikert & Ravindran, P.A. – Counsel for Appellants

18. Whittemore, James D. – United States District Judge, M.D. Fla.

19. Theodore Babbitt – Appellants’ Counsel

20. Babbitt & Johnson, P.A. – Appellants’ Counsel

C-2
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STATEMENT REGARDING ORAL ARGUMENT

Appellees/Cross-Appellants do not believe oral argument is necessary. For

reasons stated in the brief, the district court did not have jurisdiction to decide the

plaintiffs’ motion to vacate an arbitration decision involving parties of non-diverse

citizenship and with no other basis for federal court jurisdiction, and this court

accordingly lacks appellate jurisdiction, except to decide the question of jurisdiction.

In Appellees’ view, the facts and law in this respect are so clear that no purpose

would be served in prolonging the proceedings by oral argument.

Appellees/Cross-Appellants also submit that in the event the court were to

reach the plaintiffs’ appeal, the grounds set forth are so insubstantial in light of the

established doctrine against judicial interference with arbitration proceedings,

especially religious arbitration, as to make oral argument unnecessary.

Appellees/Cross-Appellants of course are prepared to participate in oral

argument in the event the court deems it appropriate.

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TABLE OF CONTENTS
Page
CORPORATE DISCLOSURE STATEMENT AND CERTIFICATE
OF INTERESTED PERSONS ...............................................................................C-1

STATEMENT REGARDING ORAL ARGUMENT ................................................i


TABLE OF CONTENTS .......................................................................................... ii
TABLE OF CITATIONS ..........................................................................................v
OPENING BRIEF FOR CROSS-APPELLANTS IN SUPPORT OF
CROSS-APPEAL .................................................................................................... 1
STATEMENT OF JURISDICTION OVER CROSS-APPEAL ............................... 1
STATEMENT OF ISSUES PRESENTED................................................................ 2
STATEMENT OF THE CASE RELEVANT TO CROSS-APPEAL ....................... 3
Proceedings Below..............................................................................................3
Statement of Facts .............................................................................................12
SUMMARY OF ARGUMENT ...............................................................................16
ARGUMENT ...........................................................................................................19
I. DIVERSITY JURISDICTION IS NARROWLY
CONSTRUED, AND IT WAS PLAINTIFFS’ BURDEN
TO PROVE IT ......................................................................................... 19

II. THE DISTRICT COURT DID NOT HAVE SUBJECT


MATTER JURISDICTION OVER PLAINTIFFS’ MOTION
TO VACATE THE ARBITRATION DECISION BECAUSE
THEIR ARBITRATION CLAIMS WERE AGAINST NON-
DIVERSE PARTIES ............................................................................... 21

III. THE ORIGINAL AND AMENDED COMPLAINTS


SHOULD HAVE BEEN DISMISSED
BECAUSE THEY ALLEGED A PARTNERSHIP OR
JOINT VENTURE AMONG FSO AND FSSO AND
THE NON-DIVERSE PARTIES – CSRT, IASA, AND USIMT ........... 22

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IV. THE DISTRICT COURT ERRED BY PERMITTING


PLAINTIFFS TO FILE A SHAM AMENDED
COMPLAINT IN AN ATTEMPT TO CREATE
DIVERSITY JURISDICTION ................................................................... 29

CONCLUSION TO BRIEF ON CROSS-APPEAL ................................................. 31


BRIEF ON BEHALF OF DEFENDANTS-APPELLEES
RESPONDING TO PLAINTIFFS’ INITIAL BRIEF ......................................... 32
JURISDICTION.......................................................................................................32
STATEMENT OF ISSUES PRESENTED..............................................................32
INTRODUCTION AND SCOPE OF REVIEW .....................................................33
STATEMENT OF THE CASE ................................................................................34
Additional Facts ................................................................................................34
Scientology Ecclesiastical Justice System .................................................34
Charitable Donations to Scientology Organizations and “Refunds” ......... 38
Relevant Proceedings Below and Arbitration Proceedings ..............................41
SUMMARY OF ARGUMENT ...............................................................................50
ARGUMENT .......................................................................................................... 54
I. THE DISTRICT COURT CORRECTLY HELD
PLAINTIFFS’ CLAIMS WERE SUBJECT
TO RELIGIOUS ARBITRATION ......................................................... 54

A. The Enrollment Agreements Establish an


Arbitrable Agreement Enforceable Under the
Federal Arbitration Act and Florida Law .............................................54

B. The District Court Properly Found That the


Enrollment Agreements Were Not Unconscionable .......................... 56

1. The Agreement to Arbitrate Was Not


Procedurally Unconscionable ....................................................57

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2. The Agreement to Arbitrate Was Not


Substantively Unconscionable .................................................... 65

a. Plaintiffs Failed to Raise Lack of Mutuality in


the District Court; In Any Event, the Agreement
Was Mutual ......................................................................... 65

b. Plaintiffs’ Claims Were Non-justiciable in a


Civil Court, and the Agreement to Arbitrate
Created a Remedy Where None Existed ............................ 67

c. Plaintiffs Made a Knowing Rational Decision


to Choose Arbitration Before Three Scientologists
and are Bound by that Choice ................................................ 70

d. The District Court Correctly Held That Plaintiffs’


Argument That Scientology Religious Doctrine
Precludes A Fair Hearing Before Scientologist
Arbitrators, Contrary To The Church’s Definition
Of Its Doctrine, Is Non-Justiciable Under The
First Amendment.................................................................... 73

II. THE DISTRICT COURT CORRECTLY DENIED


PLAINTIFFS’ MOTION TO VACATE THE
ARBITRATION DECISION ...................................................................... 74
CONCLUSION TO RESPONDING BRIEF ON BEHALF OF
DEFENDANTS-APPELLEES ................................................................................82
CONCLUSION TO COMBINED BRIEF................................................................. 83
CERTIFICATE OF COMPLIANCE ......................................................................... 84
CERTIFICATE OF SERVICE ................................................................................... 84

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TABLE OF CITATIONS
Cases
Ainsworth v. Schoen,
606 So. 2d 1275 (Fla. 3d DCA 1992) ....................................................................55
Am. Union of Baptists, Inc. v. Trustees of Particular Primitive Baptist Church,
335 Md. 564 (1994) ..............................................................................................77
Amos v. Glynn County Bd. of Tax Assessors,
347 F.3d 1249 (11th Cir. 2003) ............................................................................19
AMS Staff Leasing, Inc. v. Taylor,
2015 WL 71705 (Fla. 4th DCA Jan. 7, 2015) ................................................ 56-57
Anders v. Hometown Mortg. Serv., Inc.,
346 F.3d 1024 (11th Cir. 2003) ............................................................................55
AT&T Mobility, LLC v. Concepcion,
563 U.S. 333 (2011) ................................................................................. 50, 54, 55
Basulto v. Hialeah Auto.,
141 So. 3d 1145 (Fla. 2014) .............................................................. 50, 51, 56, 58
BDO Seidman, LLP v. Bee,
970 So. 2d 869, (Fla. 4th DCA 2007) ...................................................................72
Beach Resort Hotel Corp. v. Wieder,
79 So. 2d 659 (Fla. 1955) .....................................................................................56
Belcher v. Kier,
558 So. 2d 1039 (Fla. 2d DCA 1990) ............................................................ 56, 57
Belleri v. United States,
712 F.3d 543 (11th Cir. 2013) ................................................................................1
Berg v. Berg,
2008 WL 415562 (N.Y. Sup. Ct. 2008)...............................................................77
Best Canvas Prods. & Supplies, Inc. v. Ploof Truck Lines, Inc.,
713 F.2d 618 (11th Cir. 1983) ....................................................................... 17, 24
Bland v. Health Care & Ret. Corp. of Am.,
927 So. 2d 252 (Fla. 2d DCA 2006) .....................................................................57
Brea Sarasota, LLC v. Bickel,
95 So. 3d 1015 (Fla. 2d DCA 2012) .....................................................................57
Carden v. Arkoma Assocs.,
494 U.S. 185 (1990) ..................................................................... 18, 25, 26, 27, 28
Church of Scientology v. City of Clearwater,
2 F.3d 1514 (11th Cir. 1993) ......................................................................... 60, 67

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City of Indianapolis v. Chase Nat’l City Bank,


314 U.S. 63 (1941) ................................................................................................20
Community State Bank v. Strong,
651 F.3d 1241 (11th Cir. 2011) ............................................................................21
Cooper v. Meridian Yachts, Inc.,
575 F.3d 1151 (11th Cir. 2009) ............................................................................24
Dominion Video Satellite, Inc. v. Echostar Satellite LLC,
430 F.3d 1269 (10th Cir. 2005) ............................................................... 33, 53, 74
Doscher v. Sea Port Group,
832 F.3d 372 (2d Cir. 2016) .................................................................................21
E.R. Squibb & Sons, Inc. v. Accident Cas. Ins. Co.,
160 F.3d 925 (2d Cir. 1998) .................................................................................28
Easterly v. Heritage Christian Sch., Inc.,
2001 WL 2750099 (S.D. Ind. 2009) ............................................................... 56, 72
Estate of Perez v. Life Care Ctrs. of Am., Inc.,
23 So. 3d 741 (Fla. 5th DCA 2009) ......................................................................57
Evans v. Georgia Reg’l Hosp.,
850 F.3d 1248 (11th Cir. 2017) ............................................................................65
Gainesville Health Care Center, Inc. v. Weston,
857 So. 2d 278 (Fla. 5th DCA 2003) ............................................................. 56, 57
Garrett v. Janiewski,
480 So. 2d 1324 (Fla. 4th DCA 1985) ..................................................................56
Gen. Conference of Evangelical Methodist Church v.
Evangelical Methodist Church of Dalton, Georgia, Inc.,
807 F. Supp. 2d 1291 (N. D. Ga. 2011) ......................................................... 56, 72
Gonzalez v. United States,
284 F.3d 281 (1st Cir. 2001) .................................................................................31
Grupo Dataflux v. Atlas Global Grp., L.P.,
541 U.S. 567 (2004) ....................................................................................... 25, 26
Hertz Corp. v. Friend,
559 U.S. 77 (2010) ..................................................................................................7
Hosanna Tabor Evangelical Lutheran Church and Sch. v. EEOC,
565 U.S. 171 (2012) ....................................................................................... 36, 68
In re Holy Spirit Ass’n for the Unification of World Christianity
v. Tax Comm’n of the City of New York, 55 N.Y.2d 512 (1978) .......................68
Indiana Gas Co., Inc. v. Home Ins. Co.,
141 F.3d 314 (7th Cir. 1998) ................................................................................27

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Inetianbor v. CashCall, Inc.,


768 F.3d 1346 (11th Cir. 2014) ............................................................................64
Intracoastal Ventures Corp. v. Safeco Ins. Co. of Am.,
540 So. 2d 162 (Fla. 4th DCA1989) .....................................................................61
Jackson v. Payday Fin., LLC,
764 F.3d 765 (7th Cir. 2014) ...............................................................................64
Jenkins v. Trinity Evangelical Lutheran Church,
356 Ill. App. 3d 504, 825 N.E.2d 1206 (2005) .............................................. 55, 72
Kantor v. Wellesley Galleries, Ltd.,
704 F.2d 1088 (9th Cir. 1983) ..............................................................................20
Kedroff v. St. Nicholas Cathedral,
344 U.S. 94 (1952) ................................................................................... 74, 76, 77
Kislak v. Kreedian,
95 So.2d 510 (Fla. 1957) ......................................................................................25
Kohl v. Bay Colony Club Condo., Inc.,
398 So. 2d 865 (Fla. 4th DCA 1981) ....................................................................57
Laborers’ Local 938 Joint Health and Welfare Tr. v. B.R. Stames Co.,
827 F.2d 1454 (11th Cir. 1987) ...............................................................................6
Lang v. Levi,
16 A.3d 980 (Md. Ct. Spec. App. 2011) ............................................ 34, 53, 76, 77
Lawrence v. Dunbar,
919 F.2d 1525 (11th Cir. 1990) ............................................................... 10, 16, 20
Ledford v. Peeples,
657 F.3d 1222 (11th Cir. 2011) ............................................................................65
Lieberman v. Lieberman,
149 Misc.2d 983 (N.Y. Kings Cty. 1991) ............................................................77
Marbury v. Madison,
1 Cranch 137 (1803) .............................................................................................19
McCabe, Hannity & Remington, Co. v. ILWU,
557 F. Supp. 2d 1171 ............................................................................................75
McCormick v. Aderholt,
293 F.3d 1254 (11th Cir. 2002) ..................................................................... 16, 20
McNutt v. Gen. Motors Acceptance Corp.,
298 U.S. 178, 182 (1936)......................................................................................19
Merritt v. Dillard Paper Co.,
120 F.3d 1181 (11th Cir. 1997) ............................................................................55

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Meshel v. Ohev Sholom Talmud Torah,


869 A.2d 343 (D.C. 2005) ............................................................................. 69, 70
Mortensen v. First Fed. S&L, Association.,
549 F.2d 884 (3d Cir. 1977) .................................................................................20
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1 (1983)................................................................................................... 54, 55
Multi–Fin. Sec. Corp. v. King,
386 F.3d 1364 (11th Cir. 2004) ............................................................... 34, 53, 64
Nat’l Football League Mgmt. Council v. Nat’l Football
League Players Ass’n, 820 F.3d 527 (2d Cir. 2016) ............................... 53, 71, 72
O.R. Sec., Inc. v. Prof’l Planning Assocs., Inc.,
857 F.2d 742 (11th Cir. 1988) ..............................................................................75
Odyssey Marine Expl., Inc. v. Unidentified Shipwrecked Vessel,
657 F.3d 1159 (11th Cir. 2001) ......................................................... 11, 19, 30, 31
Orchid Quay, LLC v. Suncor Bristol Bay, LLC,
178 F. Supp. 3d 1300 (S.D. Fla. 2016) .................................................................26
Ortiz-Espinosa v. BBVA Sec.,
852 F.3d 36 (1st Cir. 2017) ...................................................................................21
Oxford Health Plans LLC v. Sutter,
569 U.S. 564 (2013) ..............................................................................................75
Pintando v. Miami-Dade Housing Agency,
501 F.3d 1241 (11th Cir. 2007) ............................................................................24
Powertel, Inc. v. Bexley,
743 So. 2d 570 (Fla. 1st DCA 1999) ....................................................................57
Presbyterian Church v. Mary Elizabeth Blue Hull Mem’l Presbyterian
Church, 393 U.S. 440 (1969) ......................................................................... 68, 74
Ritter v. Shamas,
452 So. 2d 1057 (Fla. 3d DCA 1984) ...................................................................67
Rolling Greens MHP, L.P. v. Comcast SCH Holdings LLC,
374 F.3d 1020 (11th Cir. 2004) ............................................................................26
Schiavone Constr. Co. v. City of New York,
99 F.3d 546 (2d Cir. 1996) ...................................................................................27
Serbian E. Orthodox Diocese v. Milivojevich,
426 U.S. 696 (1976) ..................................................................................58, 76, 77
Shamrock Oil & Gas Corp. v. Sheets,
313 U.S. 100 (1941) ..............................................................................................20

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Shuler v. Ingram & Assocs.,


441 Fed. App’x. 712 (11th Cir. 2011) ..................................................................24
Sinaltrainal v. Coca–Cola Co.,
578 F.3d 1252 (11th Cir. 2009) ............................................................................19
Sizova v. Nat’l Inst. of Standards & Tech.,
282 F.3d 1320 (10th Cir. 2002) ............................................................................31
Solymar Invs., Ltd. v. Banco Santander S.A.,
672 F.3d 981 (11th Cir. 2012) ..............................................................................55
Spector v. Torenberg,
852 F. Supp. 201 (S.D.N.Y. 1994) .......................................................................76
Spicer v. Tenet Florida Physician Servs., LLC,
149 So. 3d 163 (Fla. 4th DCA 2014) ....................................................................61
State of California v. Southern Pac. Co.,
157 U.S. 229 (1895) ....................................................................................... 16, 19
Steinhardt v. Rudolph,
422 So. 2d 884 (Fla. 3d DCA 1982) ........................................................ 50, 56, 57
Underwriters at Lloyd’s, London v. Osting-Schwinn,
613 F.3d 1079 (11th Cir. 2010) ......................................................... 18, 26, 27, 28
Vaden v. Discover Bank,
556 U.S. 49 (2009) ......................................................................................... 17, 21
Walker v. Comm’r of Internal Revenue,
91 F.2d 297 (5th Cir. 1937) ..................................................................................67
Wallace v. Buttar,
378 F.3d 182 (2d Cir. 2004) .................................................................................75
Watson v. Jones,
80 U.S. 679 (1871) ............................................................................. 51, 60, 67, 77
Winfrey v. Simmons Food, Inc.,
495 F.3d 549 (8th Cir. 2007) ................................................................... 50, 71, 75

Other Authorities
Fed. R. App. P. 28 (a)(4) and (5)................................................................................. 32
Fed. R. Civ. P. 12 (b)(1) .............................................................................. 6, 10, 19, 20
9 U.S.C. §1, et seq. (Federal Arbitration Act) .................................................. 41, 43
26 U.S.C. §170. ........................................................................................................67
28 U.S.C. §1332 ................................................................................................ 19, 31

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5 Charles A. Wright and Arthur R. Miller,


Federal Practice and Procedure (3d ed. 2018 update) ..................... 16, 19, 20, 30
13F Charles A. Wright and Arthur R. Miller,
Federal Practice and Procedure (3d ed. 2018 update) ........................... 18, 27, 28
38A C.J.S. Gifts §64.................................................................................................67

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COMBINED BRIEF FOR DEFENDANTS-APPELLEES/CROSS-


APPELLANTS (1) IN SUPPORT OF CROSS-APPEAL AND
(2) RESPONDING TO PLAINTIFFS’ INITIAL BRIEF

Defendants-Appellees/Cross-Appellants Church of Scientology Flag Service

Organization (“FSO”) and Church of Scientology Flag Ship Service Organization

(“FSSO”) (“the Churches”) submit this combined Brief (1) In Support of the

Churches’ Cross-Appeal, and (2) Responding to the Initial Brief of Plaintiffs-

Appellants/Cross-Appellees Luis A. Garcia Saz and Maria Del Rocio Burgos Garcia

(“the Garcias”). The Brief on Cross-Appeal, which addresses subject matter

jurisdiction, is set forth first, for reasons this court has emphasized:

We may not consider the merits of Belleri’s complaint unless and


until we are assured of our subject matter jurisdiction. …
[J]urisdiction takes precedence over the merits. Unless and until
jurisdiction is found, both appellate and trial courts should
eschew substantive adjudication.
Belleri v. United States, 712 F.3d 543, 547 (11th Cir. 2013).

OPENING BRIEF FOR CROSS-APPELLANTS FSO AND FSSO


IN SUPPORT OF CROSS-APPEAL

JURISDICTION OVER CROSS-APPEAL

This court has determined it has jurisdiction: “[T]he interlocutory orders

granting the Garcias’ motion to amend the complaint and denying the motions to

dismiss for lack of subject matter jurisdiction are reviewable because those motions

produced the final order and merged into it.” (DE291).

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STATEMENT OF ISSUES PRESENTED

1. After the district court compelled arbitration and stayed this action,

plaintiffs requested religious arbitration from the International Justice Chief (“IJC”)

of the Church of Scientology International and submitted arbitration claims

including, inter alia, against four non-diverse parties. The arbitration proceeded and

rejected plaintiffs’ arbitration claims against the non-diverse parties on the merits.

The district court denied plaintiffs’ motion to vacate, and plaintiffs have appealed

from that decision. Did the district court lack subject matter jurisdiction to decide

the motion to vacate and does this court lack appellate jurisdiction over plaintiffs’

appeal because plaintiffs’ arbitration claims included claims against non-diverse

parties and no other jurisdictional basis exists?

2. Where the district court lacked subject matter jurisdiction over the

Complaint because three defendants were non-diverse and the Complaint alleged the

diverse and non-diverse defendants were members of a joint venture/partnership, did

the district court, prior to ordering arbitration, erroneously permit plaintiffs to amend

to dismiss the non-diverse parties/joint venturers?

3. Did the district court, prior to ordering arbitration, erroneously deny

defendants’ motion to dismiss the amended complaint where both the original and

amended complaints alleged that the remaining diverse defendants acted as partners

or members of a joint venture/enterprise with non-diverse parties?

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4. Did the district court erroneously hold plaintiffs were not bound by the

factual allegations of their original Complaint, including that all five defendants

constituted a partnership/joint venture/enterprise?

5. Where the original Complaint alleged that only the non-diverse

defendants had made the representations upon which plaintiffs’ fraud claims were

based, did the district court, prior to ordering arbitration, erroneously permit

plaintiffs to amend their Complaint to dismiss the non-diverse defendants/joint

venturers and to re-allege their fraud claims exclusively against the remaining

diverse defendants, where the defendants had demonstrated that the new allegations

were a sham to create the illusion of diversity jurisdiction?

6. Did the district court err in declining to resolve factual disputes material

to jurisdiction where defendants submitted evidence that the amended complaint was

founded upon false allegations creating the illusion of diversity?

STATEMENT OF THE CASE RELEVANT TO CROSS-APPEAL

Proceedings Below

Plaintiffs filed this lawsuit on January 23, 2013. (DE11) [AA Tab 2]. In

addition to FSO and FSSO, plaintiffs sued Church of Scientology Religious Trust

1
References to “DE” are to docket entries. References to “AA” are to Appellants’
Appendix. References to “SA” are to Supplemental Appendix. References to the
Appendices are repeated only where necessary for the convenience of the Court.

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(“CSRT”), International Association of Scientologists Administrations (“IASA”),

and U.S. IAS Members’ Trust (“USIMT”) and alleged all “Defendants acted in

concert either as agents or principals of one another, partners, joint venturers, or

co-conspirators.” DE1 at 7, ¶23 (emphasis added). In addition, the Complaint

separately alleged a joint enterprise between and among the defendants. Id. at 22,

¶76 (“The efforts of the IAS and FLAG 2 constitute a joint enterprise”); at 23, ¶79

(“The efforts of IAS and SHIP constitute a joint enterprise”); at 34, ¶139 (“Ship and

IAS operated a joint enterprise”); at 28, ¶100 (“The efforts of CSRT and FLAG

constitute a joint enterprise”).

Plaintiffs sought return of donations they made to defendants. First, plaintiffs

sought to recover donations of $340,000 to CSRT. (DE1 at 9-10, ¶31). They alleged

specific named representatives of CSRT had fraudulently induced them to donate to

support the “Super Power Project” to build a church cathedral in Clearwater, Florida

for the provision of advanced religious services to Scientologists from throughout the

world: “Between 1998 and 2005,3 representatives of CSRT, acting principally through

their agent, Charmaine Roger, made repeated requests for funding from plaintiffs.”

(Id.; see also ¶¶32-36, 86, and 93). Plaintiffs alleged CSRT raised more funds than

2
Plaintiffs referred to FSO as “FLAG” and FSSO as “SHIP.”
3
Plaintiffs’ Complaint filed in January 2013 would appear to be barred by the
statute of limitations if it were litigated in civil court.

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necessary for the project and used them for other unspecified purposes,4 and asserted

claims against CSRT for fraud and Deceptive and Unfair Trade Practices (DE1 at

24, 26). Plaintiffs also alleged fraud against FSO on the basis that it and CSRT

constituted a “joint enterprise.” (DE1 at 28, ¶100).

Second, plaintiffs sought return of membership donations totaling $40,410

they made to IASA 5 and USIMT from 1997-2007. (DE1 at 15-20, ¶¶53-68).

Plaintiffs alleged they made the donations based on representations by a specific

officer of “IAS” 6 – Michelle Villeneuve – that the donations would support

“humanitarian initiatives” sponsored by those organizations, but the donations were

not used for those purposes. (Id., ¶69). Plaintiffs also asserted fraud against FSO

4
Plaintiffs’ Brief falsely states that “at least $200 million had been raised, although
less than half of that was spent on construction.” Garcia Br. at 2. No facts support
that allegation; plaintiffs never attempted to prove it at the arbitration. CSRT, in
contrast, certified that every dollar raised for the project was in fact expended on it.
(DE276-3 at 21 [SA Tab 31]). Plaintiffs did not controvert that showing.
5
While plaintiffs named IASA in the caption and served IASA, in the body of their
complaints they refer only to purported actions of “IAS” and “IAS officers.” IAS is
an unincorporated association headquartered in England. IASA is the United States
administrative corporation for IAS; its “nerve center” is in Los Angeles. (DE90 at
13 [SA Tab 4]). IASA was responsible for the fundraising activities at issue in the
instant case, and it was IASA officials who solicited donations from plaintiffs.
(DE119-3 [SA Tab 16]). USIMT is a California trust that serves as a qualified
recipient of deductible charitable donations to IASA. (DE119-1 at 6). It was to
USIMT that plaintiffs paid donations solicited by IASA representatives.
6
See n. 5, ante.
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and FSSO, alleging they constituted a joint enterprise with IASA. (Id., ¶¶76, 79, 133,

139).

Finally, plaintiffs alleged “breach of contract” claims against FSO and FSSO,

seeking return of tax-deductible donations plaintiffs made in contemplation of

participating in religious services. (DE1, ¶¶39-50, ¶¶104-109 and ¶¶110-115).

Plaintiffs, however, did not allege they had signed or verbally agreed to a contract.

Rather, they alleged Scientology policy and practice required the Churches to return

such donations and asked the court to enforce that purported religious policy and

practice as if it were a “contract.” (DE1 at 28-29).

Plaintiffs alleged diversity as the sole basis of jurisdiction. It is undisputed

the district court did not have jurisdiction when the lawsuit was filed. (DE113 [SA

Tab 14])(Court Order at 3, n. 4)(“Plaintiffs do not dispute that the evidence

Defendants submitted with their supplemental memorandum to support the motion

to dismiss reflects that CSRT, USIMT, and IASA are not diverse from Plaintiffs”).

Defendants moved to dismiss for lack of subject matter jurisdiction, pursuant

to Fed. R. Civ. P. 12(b)(1). (DE90 [SA Tab 4]). Specifically, since defendants CSRT

and USIMT are trusts, the court was required to look to the citizenship of each trustee.

Laborers’ Local 938 Joint Health and Welfare Trust v. B.R. Stames Co., 827 F.2d

1454, 1457 (11th Cir. 1987). Several trustees of each trust were citizens of California,

destroying diversity. In addition, the citizenship of defendant IASA, a corporation, is

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determined by looking to its “nerve center,” Hertz Corp. v. Friend, 559 U.S. 77, 92-

93 (2010), which was in California. Defendants demonstrated the trustees of the two

trusts were citizens of California and the nerve center of IASA was in California.

(DE90 at 6-13).

The district court ordered limited jurisdictional discovery. (DE99). Plaintiffs

did not take depositions and served limited interrogatories and document requests

directed solely to domicile of the trustees and the nerve center of IASA. Defendants

took the deposition of Mr. Garcia.

Following discovery, the district court requested the parties to submit

supplemental memoranda on jurisdiction. Instead, plaintiffs moved to file an

amended complaint (“AC”) (DE108 [SA Tab 13]), which proposed to drop the three

California defendants and to re-assert the fraud claims against only FSO and FSSO.

Plaintiffs alleged that the fraudulent representations they previously had alleged to

have been made by CSRT and IASA had been made by FSO and FSSO.

Specifically, with respect to the plaintiffs’ donations for the Super Power

Project, plaintiffs now alleged that the representations plaintiffs formerly asserted to

have been made by CSRT officials were in fact made by unnamed “FLAG [FSO]

representatives,” who, “on [never explained] information and belief” were “contracted

employees of [FSO].” (DE114, ¶¶27-30, 35 [AA Tab 3]). Plaintiff Luis Garcia’s

declaration (DE93-2) stated that all representations made to him about the Super

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Power Project had been made by representatives of FSO, that CSRT had no

employees and performed no functions, and he never met or spoke to anyone

connected to it. These statements directly contradicted the original Complaint.

(DE1, ¶¶31, 32-36, 53-68, 86, 93). As shown below, they also were false.

The AC’s allegations of fraud with respect to donations for “humanitarian

initiatives” contradict not only the original Complaint, but themselves. On one hand,

it alleges “representations [were] made by [FSO]” and that “[FSO] representatives

pressured” plaintiffs to make donations. (DE114, ¶¶55-57). Similar allegations are

made that the “Senior [FSSO] fundraiser” fraudulently solicited donations. These

allegations are contrary to the original Complaint. On the other hand, however, the

AC also states plaintiffs “rel[ied] upon the representations of the IAS” and “paid

$1300 to the IAS;” “three IAS fundraisers badgered plaintiffs for a substantial

donation;” “an IAS fundraiser met with Plaintiff” to ask for a donation; and FSO and

FSSO “sponsored fundraising activities for the IAS” and such activity was part of a

“fraudulent enterprise” among FSO, FSSO, and IAS. (DE114, ¶¶57, 59, 61, 63, 65).

It repeats the allegations from the Complaint that Michelle Villeneuve solicited

donations for the initiatives but refers to her as a “[FSO] fundraising representative

of the IAS.” (Id., ¶59).

Plaintiffs’ only attempt to explain their radical change in factual allegations,

stated in the passive voice, was that “information ... has been learned throughout the

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process of discovery in this matter,” (DE108 at 1 [SA Tab 13]), but they pointed to

no fact learned in discovery. None existed.

Defendants submitted a supplemental motion to dismiss (DE104), and opposed

the motion to amend. (DE110). First, defendants argued that plaintiffs were bound

by the factual allegations in their original Complaint that their donations had been

solicited by representatives of CSRT and IASA and that all original defendants were

engaged in a joint venture/enterprise to carry out the alleged fraudulent schemes.

Since all members of a joint enterprise or partnership must be considered for

purposes of diversity jurisdiction, whether named as defendants or not (see

discussion, post), the amendment was futile because it did not and could not cure the

jurisdictional defect.

Second, defendants showed that even on its face the AC did not cure the

jurisdictional defect. The AC alleged “[T]he Scientology movement … is comprised

of various corporations and related entities, … trusts and acronyms …” (DE114, ¶4)

which “function as an interrelated and interdependent network of entities.” (Id., ¶20).

Indeed, the allegation of joint venture or partnership was repeated in the very next

paragraph, although the identities of CSRT and USIMT (but not IASA) as members

of that interdependent network/joint venture/partnership were concealed. (DE114,

¶21). It was plaintiffs’ burden to allege the identity and citizenship of all partners

and joint venturers to demonstrate complete diversity. See discussion, post at 18-20.

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The failure to do so itself was grounds to dismiss the AC. Plaintiffs further alleged,

moreover, that FSO, FSSO and IASA were members of a “fraudulent enterprise”

(id., ¶56), also defeating diversity jurisdiction.

Third, defendants submitted that the proposed AC was a sham pleading, as

discussed below.

Nevertheless, the district court granted plaintiffs’ motion to amend and denied

defendants’ motion to dismiss as “moot.” (DE113 at 1 [SA Tab 14]). The court

construed the allegation that FSO and FSSO acted “in concert either as agents or

principals of one another, partners, joint venturers, or co-conspirators” as meaning

only that they acted with themselves and not with others, despite the never repudiated

allegations from the original Complaint that they acted in such capacities with the

non-diverse defendants, and despite the allegations of an “interdependent and

interrelated network of entities” and of a “fraudulent enterprise” among FSO, FSSO

and IASA, which the district court ignored.

After plaintiffs filed their AC, FSO and FSSO again moved to dismiss.

(DE119). Pursuant to Rule 12(b)(1), defendants submitted evidence in support of

their motion. Lawrence v. Dunbar, 919 F.2d 1525 (11th Cir. 1990) (Matters outside

the pleadings are considered in factual attacks). That evidence showed that the AC

falsely attributed the acts upon which plaintiffs based their claims of fraud to FSO

and FSSO, and not to CSRT, IASA, and USIMT as they had alleged in their original

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Complaint, all designed to preserve diversity jurisdiction that did not exist. See

“Statement of Facts,” post.

The district court denied the motion. (DE124 [SA Tab 21]). It held that

plaintiffs were not bound by their earlier allegations, including that all original

defendants acted as members of a partnership or joint venture. It adhered to its

strained reading of the AC’s allegation that FSO and FSSO acted in concert with

partners or joint venturers as not referring to entities other than the named

defendants, again in the face of the contrary allegation of the original Complaint.

And it rejected defendants’ attempts to make a factual showing that the AC was a

sham pleading designed to create the illusion of diversity, because it found that the

“jurisdictional facts are intertwined with the merits of the claim,” (citing Odyssey

Marine Expl., Inc. v. Unidentified Shipwrecked Vessel, 657 F.3d 1159, 1169 (11th

Cir. 2001)).

The district court then stayed the case pending arbitration. (DE189). Plaintiffs

submitted a request for arbitration to the Convening Authority for the arbitration, the

Scientology International Justice Chief (“IJC”). Once again reversing course,

plaintiffs named as defendants not only FSO and FSSO, but also CSRT, IASA, and

USIMT. (DE210-3 at 1 [SA Tab 26]). The IJC asked plaintiffs to clarify their

arbitration claims. In response, Mr. Garcia wrote that plaintiffs’ claims “are as set

forth in the original complaint filed with Judge Whittemore,” which he provided to

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the IJC (emphasis added). (Id. at 2). In addition, plaintiffs sought arbitration of fraud

claims against Church of Scientology of Orange County, California (“CSOC”) that

had not been included in plaintiffs’ complaints.

The arbitration took place on October 23-24, 2017, as more fully discussed in

Appellees Responding Brief, post at 32, et seq. The arbitrators issued a decision

rejecting plaintiffs’ claims (except for a claim for return of unused accommodations

at religious retreats), including specifically each of their fraud claims against the

California entities. (DE276-7, 8 [SA Tabs 35-36]).

Following arbitration, plaintiffs returned to the district court and moved to

vacate the arbitration decision. (DE272). Plaintiffs sought review, inter alia, of the

arbitrators’ denial of their fraud claims against CSRT, IASA, USIMT, and CSOC.

The district court denied the motion to vacate. It specifically found that the

arbitrators had considered and decided plaintiffs’ fraud claims against the

California defendants. (DE282 at 7 [AA Tab 10]). Plaintiffs appealed from the

decision denying their motion to vacate the arbitration decision. (DE284).

Statement of Facts

1. Plaintiffs became Scientologists and were members of the religion for

approximately 28 years. (DE195 at 8-9 [SA Tab 25], L.Garcia testimony). They

engaged in the life of their religion and participated in Scientology’s unique religious

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practices of auditing and training.7 (Id. at 9-10, 13). Around 2009-2010, plaintiffs

suffered a loss of faith. (Id. at 14-15). Mr. Garcia complained that Scientology

churches had departed from what he characterized as orthodox Scientology practice

and distributed a denunciation to numerous Scientologists, encouraging them to join

him in an independent religion. (Id. at 37, 40). As a result, the Church of Scientology

International, the senior management body in the religion, declared the Garcias to

be “suppressive persons” and expelled them from the Church, the equivalent of

excommunication. (DE276-3 at 11 [Tab 31]).

2. The representations plaintiffs allege in support of their fraud claims

were made by representatives of the California original defendants, as alleged in the

original Complaint, and not FSO or FSSO, as plaintiffs falsely pleaded in their AC.

Contrary to Mr. Garcia’s declaration that CSRT performs no functions, has no assets,

and has no employees, the record establishes that CSRT has existed since 1981; had

17 full-time staff members; contracted for construction of the Super Power Project

building in Clearwater, Florida, the Church’s spiritual headquarters; paid for the

construction of the Super Power Project building out of funds it raised; is the owner

of the Super Power Project building; has numerous offices and activities separate

7
“Auditing” is a form of spiritual counseling to achieve spiritual progress.
“Training” is study of the Scientology-related writings, lectures, tapes and films of
Scientology Founder L. Ron Hubbard which are the basis of the religion. (DE8-1,
¶¶6-8 [SA Tab 1]).
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and distinct from FSO and FSSO; and its representatives are religious workers of

CSRT and not employees of FSO or FSSO. (DE104-16, 17 [SA Tabs 6, 7])(DE119-

2, 4, 6).

Likewise, contrary to allegations of the AC that unnamed FSO representatives

fraudulently solicited his donations for the Super Power Project, CSRT’s staff

member Charmaine Roger solicited the donations. (DE104-17 [SA Tab 7])(DE119-

6). Ms. Roger’s declarations established that the Super Power Project was a CSRT

project; Ms. Roger used an identified CSRT office as her base; she wore clothing

and insignia identifying her as CSRT staff; and she always asked that Super Power

Project donations be payable to CSRT. (Id.). Plaintiffs knowingly wrote Super

Power Project checks payable to CSRT, received receipts for each donation from

CSRT, and received from CSRT written commendations and letters of appreciation

for those donations. (DE104-18, 19 [SA Tabs 8, 9]).

3. Defendants took Mr. Garcia’s deposition. When Mr. Garcia was

confronted with numerous receipts and commendations from CSRT for his

donations, he claimed he never noticed that the documents were from CSRT even

though CSRT’s identity prominently appeared on the documents. (DE104-15 [SA

Tab 5])(Garcia Depo. Tr. at 23-24, 27-28, 32, 33)(invoice from CSRT “to me reflects

that CSRT acknowledges receiving $10,000 from me via Visa, which is different

than acknowledging that I made a donation to them”); (Tr. at 62)(“CSRT to me was

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meaningless. It didn’t mean anything. It probably didn’t even register that it was

on this letter”). Upon further questioning, Mr. Garcia testified that he did not know

the organizational affiliation of the people who made representations to him and who

solicited his donations and that he did not understand the hierarchy or structure of

the Church or what entities did what. (Id. at 84-86). Given this lack of knowledge,

Mr. Garcia’s incredible testimony that he did not know on behalf of which entity

Ms. Roger made the representations upon which he based his fraud claims is not

competent evidence that it was some entity other than CSRT.

4. Plaintiffs knowingly made donations for humanitarian causes to

representatives of IASA/USIMT. Mr. Garcia acknowledged that he repeatedly met

with or spoke to IASA representatives; he knew they were IASA representatives;

they solicited donations from him; and he knew he was donating to IAS projects.

(Id. at 64-67, 71, 75-77, 79). Plaintiffs’ donations for IAS causes were confirmed

by receipts from USIMT. (DE104-20, 21, 22 [SA Tabs 9-11]).

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SUMMARY OF ARGUMENT

1. Federal courts are courts of limited jurisdiction, extending no farther

than the limits authorized by Article III and created by Congress within those

boundaries. State of California v. Southern Pac. Co., 157 U.S. 229, 261 (1895). The

burden of pleading and proving facts supporting subject matter jurisdiction is on the

plaintiff. 5 C. Wright and A. Miller, Federal Practice & Procedure §1350 (3d ed.

2018 update); McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002). A

motion to dismiss for lack of subject matter jurisdiction is not limited to the face of

a complaint. A party moving to dismiss may bring to the court’s attention facts

outside the complaint, and the court must consider those facts in determining the

motion, and if necessary resolve factual disputes. Lawrence v. Dunbar, 919 F.2d

1525, 1529 (11th Cir. 1990).

2. After the district court stayed the case and compelled arbitration,

plaintiffs sought and obtained arbitration of claims against numerous parties

including the very non-diverse parties that plaintiffs originally had sued in federal

court but had dropped in their AC. Having lost those claims at arbitration, plaintiffs

moved the district court to vacate the decision including with respect to the non-

diverse parties. The district court denied their motion and specifically rejected on

the merits plaintiffs’ claims against non-diverse entities as set forth in their original

Complaint. By defining their arbitration claims to include the very California

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entities they had conceded destroyed jurisdiction over their original Complaint, and

then returning to federal court to challenge the arbitration decision, plaintiffs ousted

the district court of subject matter jurisdiction, if it ever existed. Vaden v. Discover

Bank, 556 U.S. 49, 63 (2009)(in determining subject matter jurisdiction, court should

“assume the absence of the arbitration agreement and determine whether it would

have jurisdiction under Title 28 without it”). This court lacks appellate jurisdiction

over plaintiffs’ appeal as well.

3. The district court improperly allowed plaintiffs to amend their

Complaint to attempt to “cure” the admitted lack of diversity jurisdiction. The

original Complaint alleged a partnership or joint venture/enterprise among all

original defendants, several of whom were non-diverse. The AC repeated that

allegation against FSO and FSSO but failed to identify additional members of the

joint venture. The court erred in holding that plaintiffs were not bound by the factual

allegations in their Complaint that all five original defendants were part of a joint

venture or enterprise. Contrary to the district court’s decision, “judicial admissions

are proof possessing the highest possible probative value. Indeed, facts judicially

admitted are facts established not only beyond the need of evidence to prove them,

but beyond the power of evidence to controvert them.” Best Canvas Prods. &

Supplies, Inc. v. Ploof Truck Lines, Inc., 713 F.2d 618, 621 (11th Cir. 1983). The

district court failed to recognize that plaintiffs’ allegations that all original

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defendants acted as a partnership or joint venture required the court to consider the

citizenship of all defendants, even if they had not been named or defendants were

dropped by plaintiffs to disguise the lack of diversity. Underwriters at Lloyd’s,

London v. Osting-Schwinn, 613 F.3d 1079, 1087 (11th Cir. 2010).

The district court magnified its errors in denying the Churches’ motion to

dismiss the AC. Given the prior allegations of joint venture/enterprise among the

original defendants and the AC’s adoption of the same language, as well as the AC’s

allegation that Scientology churches “function as an interrelated and interdependent

network of entities,” the plaintiffs had done precisely what is not permitted: “The

opposing party may not sue individual members of an unincorporated organization

selectively for the purpose of establishing complete diversity of citizenship.” 13F

C. Wright and A. Miller, Federal Practice & Procedure §3630.1. Plaintiffs cannot

avoid Carden v. Arkoma Assocs., 494 U.S. 185 (1990) by dismissing three members

of a joint venture or partnership and proceeding against only two members

“selectively for the purpose of establishing complete diversity of citizenship.”

4. The district court further erred by giving no weight to defendants’

factual showing that the AC was a sham pleading to preserve the illusion of diversity

jurisdiction. The district court erroneously held it could not resolve factual disputes

going to the jurisdictional question because those facts were inextricably intertwined

with the merits. But facts are inextricably intertwined only “when a statute provides

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the basis for both the subject matter jurisdiction of the federal court and the

plaintiff’s substantive claim for relief.” Odyssey Marine, 657 F.3d at 1169-70. Here

the diversity statute arose under federal law while plaintiffs’ claims were unrelated

state law claims.

ARGUMENT

I. DIVERSITY JURISDICTION IS NARROWLY CONSTRUED,


AND IT WAS PLAINTIFFS’ BURDEN TO PROVE IT

This court reviews de novo a district court’s denial of a Rule 12(b)(1) motion

to dismiss for lack of subject matter jurisdiction. Sinaltrainal v. Coca–Cola Co., 578

F.3d 1252, 1260 (11th Cir. 2009), including whether a district court properly

interpreted and applied the provisions of 28 U.S.C. §1332. See Amos v. Glynn Cty.

Bd. of Tax Assessors, 347 F.3d 1249, 1255 (11th Cir. 2003).

Federal courts have limited jurisdiction, extending no farther than authorized

by Article III and created by Congress within those boundaries. Marbury v. Madison,

1 Cranch 137, 173-174 (1803). “The jurisdiction is limited, and manifestly intended

to be sparingly exercised, and should not be expanded by construction.” State of

California v. Southern Pac. Co., 157 U.S. 229, 261 (1895). The burden of pleading

and proving facts supporting subject matter jurisdiction is on the plaintiff. McNutt

v. Gen. Motors Acceptance Corp., 298 U.S. 178, 182 (1936). See 5 C. Wright and

A. Miller, Federal Practice & Procedure §1350 (3d ed. 2018 update)(“[T]he burden

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of proof on a Rule 12(b)(1) motion is on the party asserting that subject matter

jurisdiction exists”); McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002).

Accordingly, a motion to dismiss for lack of diversity jurisdiction is not

limited to the face of a complaint. Rather, a party moving to dismiss may bring to

the court’s attention facts not apparent on the face of the complaint, and the court

must consider those facts in determining the motion. Lawrence v. Dunbar, 919 F.2d

1525, 1529 (11th Cir. 1990); 5 C. Wright and A. Miller, §1350 (“The district court,

not a jury, must weigh the merits of what is presented on a Rule 12(b)(1) motion to

dismiss, including resolving any issues of fact, and decide the question of subject

matter jurisdiction”)(citing cases).

In short, no presumptive truthfulness attaches to plaintiff’s


allegations, and the existence of disputed material facts will not
preclude the trial court from evaluating for itself the merits of
jurisdictional claims.
Mortensen v. First Fed. S&L Association, 549 F.2d 884, 891 (3d Cir. 1977).

The limitations of federal court jurisdiction are strictly applied to diversity

jurisdiction, City of Indianapolis v. Chase Nat’l City Bank, 314 U.S. 63, 77 (1941),

and doubts are resolved against jurisdiction. Kantor v. Wellesley Galleries, Ltd., 704

F.2d 1088, 1092 (9th Cir. 1983); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,

108–09 (1941). A plaintiff bears the burden of proving complete diversity. City of

Indianapolis, 314 U.S. at 77.

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II. THE DISTRICT COURT DID NOT HAVE SUBJECT MATTER


JURISDICTION OVER PLAINTIFFS’ MOTION TO VACATE
THE ARBITRATION DECISION BECAUSE THEIR
ARBITRATION CLAIMS WERE AGAINST NON-DIVERSE
PARTIES

The Federal Arbitration Act is “something of an anomaly in the realm of

federal legislation: it bestows no federal jurisdiction but rather requires for access to

a federal forum an independent jurisdictional basis over the parties’ dispute.” Vaden

v. Discover Bank, 556 U.S. 49, 59 (2009). The Vaden Court instructed that courts

should “look through” a petition to compel arbitration to the underlying substantive

controversy to determine whether the claims come within the subject matter

jurisdiction of the federal courts. Id. at 62. Specifically, a court should “assume the

absence of the arbitration agreement and determine whether it would have

jurisdiction under title 28 without it.” Id. at 63. Vaden’s “look through” approach

applies equally to motions to vacate or modify arbitration decisions. Doscher v. Sea

Port Group, 832 F.3d 372, 381-89 (2d Cir. 2016); Ortiz-Espinosa v. BBVA

Securities, 852 F.3d 36, 45 (1st Cir. 2017). See also Community State Bank v. Strong,

651 F.3d 1241, 1247-48 (11th Cir. 2011) (applying Vaden).

Plaintiffs’ appeal is “from the [district court’s] Order … denying Plaintiffs’

Amended Motion to Vacate Arbitration Awards.” (DE284). A “look through” at

plaintiffs’ motion to vacate discloses plaintiffs’ disturbing pattern of changing their

allegations in attempts to preserve their claims while giving the illusion of diversity

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jurisdiction. Plaintiffs presented to the arbitration panel claims based upon their

original Complaint. Their arbitration claims explicitly and in detail were brought

against CSRT, IASA, USIMT, and CSOC, in addition to FSO and FSSO. The

arbitrators specifically considered and decided plaintiffs’ claims against the

California entities. (DE276-7, 8; DE282 at 7 [AA Tab 10]). After the arbitration

decision, plaintiffs returned to the district court and asked it to vacate a decision

involving the very California entities that they previously conceded defeated

diversity. By defining their arbitration claims as encompassing claims against

California entities, and then returning to federal court to challenge the arbitration

decision, plaintiffs ousted the federal courts of jurisdiction, if it ever existed.

Certainly, had plaintiffs initially proceeded by requesting arbitration, as

required by their agreements, and had they included claims against non-diverse

parties, they subsequently could not have invoked diversity jurisdiction to seek to

vacate a decision of the arbitration panel. They no more can do so now.

III. THE ORIGINAL AND AMENDED COMPLAINTS


SHOULD HAVE BEEN DISMISSED BECAUSE THEY
ALLEGED A PARTNERSHIP OR JOINT VENTURE
AMONG FSO AND FSSO AND THE NON-DIVERSE
PARTIES – CSRT, IASA, AND USIMT

Paragraph 23 of the original Complaint (DE1) alleged that FSO and FSSO

acted as partners or part of a joint venture with the non-diverse original parties.

Plaintiffs repeated the allegation in AC ¶21 (DE114), although conspicuously

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omitting the identities of the other members of the joint venture: “Defendants acted

in concert either as agents or principals of one another, partners, joint venturers, or

co-conspirators.” But the failure to name non-diverse joint venturers as defendants

is irrelevant to determination of diversity, since the citizenship of the unnamed

entities still must be considered, as discussed immediately below. And it was

plaintiffs’ burden to plead and prove the non-diverse citizenship of all unnamed

members of a partnership or joint venture/enterprise. See Point I, ante.

The district court held, however, that the allegation in AC ¶21 alleged merely

a joint venture or partnership between the two remaining named defendants, and not

among the original five defendants or anyone else. The court both misread the AC

and improperly failed to hold plaintiffs to their admissions in their original

Complaint.

First, the words “partners, joint venturers, or co-conspirators” in AC ¶21 do

not modify “one another,” but rather are alternative objects of the preposition “of.”

Plaintiffs allege that the named defendants acted “in concert as agents or principals

of ... [unnamed] partners, joint venturers, or co-conspirators,” as well as “one

another.” This is clear when ¶21 is read together with ¶20, which alleges that FSO

and FSSO “function as an interrelated and interdependent network of entities” (the

other members of which once again are intentionally not named) with respect to

“soliciting contributions.” Even more clear is AC ¶56, which alleges a joint

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“fraudulent enterprise” among FSO, FSSO, and IASA, an allegation the district court

erroneously ignored, and which by itself is fatal to diversity jurisdiction.

Second, the court ignored that the identical language was used to describe the

relationship of the five defendants in the original Complaint. If the district court was

correct that the language alleges a joint venture or partnership between the two

defendants in the AC, then it clearly alleged a similar relationship with the non-

diverse defendants named in the original Complaint. The plaintiffs must be bound

by those allegations. In addition, plaintiffs must be bound by their separate

allegations of joint enterprise throughout the original Complaint.

[T]he general rule [is] that a party is bound by the admissions


in his pleadings. [In] Hill v. FTC, 124 F.2d 104, 106 (5th Cir.
1941), the … Fifth Circuit stated, “judicial admissions are proof
possessing the highest possible probative value. Indeed, facts
judicially admitted are facts established not only beyond the
need of evidence to prove them, but beyond the power of
evidence to controvert them.” Id. 124 F.2d at 106.

Best Canvas Prods. & Supplies, Inc. v. Ploof Truck Lines, Inc., 713 F.2d 618, 621

(11th Cir. 1983)(additional citations omitted). See also Cooper v. Meridian Yachts,

Inc., 575 F.3d 1151, 1177-78 (11th Cir. 2009); Shuler v. Ingram & Assocs., 441 Fed.

App’x. 712, 718-19 (11th Cir. 2011).

The district court, however, held plaintiffs were not bound by their prior

factual allegations and were free to ignore or contradict them. The court mistakenly

relied on an inapposite line of cases that hold an amended pleading generally

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supersedes the former pleading. (DE124, Order at 7, n. 6, citing Pintando v. Miami-

Dade Housing Agency, 501 F.3d 1241, 1243 (11th Cir. 2007)). But in that and other

cases, the issue was not whether a plaintiff is bound by factual allegations in her

prior complaint, but rather whether she could dismiss a federal question legal claim

the effect of which would be to render the case beyond the jurisdiction of a federal

court. Nothing in that line of cases suggests a plaintiff may ignore earlier factual

allegations or replace them with opposite allegations.

Those allegations required dismissal of the AC because all members of a joint

enterprise or partnership must be diverse from the opposing party. Whether called

a “joint venture” or “joint enterprise,” the legal consequences are the same. See

Kislak v. Kreedian, 95 So. 2d 510, 514 (Fla. 1957). Such joint enterprise/joint

venture is treated identically as a partnership. Id. (“It has been universally held that

while ‘joint venture’ and partnership are separate legal relationships, both

relationships are governed by the same rules of law.”)

For purposes of determining diversity, the citizenship of all members of the

partnership/venture/enterprise must be counted, whether or not they are named or

later dropped as parties. See Carden v. Arkoma Assocs., 494 U.S. 185, 186, 192-

196 (1990) (all partners must be counted in determining diversity jurisdiction);

Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 572-73, 578 (2004)(While

in some instances a court can drop a dispensable non-diverse party to cure a

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jurisdictional defect, the “equation of a dropped partner with a dropped party is flatly

inconsistent with Carden”).

Grupo Dataflux … cements the rule that a member or partner of


a party that is an unincorporated association cannot be deemed a
“dispensable” or “nominal” party. … Grupo Dataflux
demonstrates that the concept of a dispensable party is inapposite
to an unincorporated entity’s members or partners. Dismissing a
dispensable non-diverse party is not analogous to dropping a
non-diverse member.
Orchid Quay, LLC v. Suncor Bristol Bay, LLC, 178 F. Supp. 3d 1300, 1304-05 (S.D.

Fla. 2016).

Carden was not limited to partnerships; the citizenship of all members of any

type of unincorporated association must be considered in determining diversity

jurisdiction. See Carden, 494 U.S. at 195 (“There could be no doubt … that at least

common-law entities … would be treated for purposes of the diversity statute

pursuant to … [t]he tradition of the common law, which is ‘to treat as legal persons

only incorporated groups and to assimilate all others to partnerships.’” Carden, 494

U.S. at 190. This Circuit, in holding that the citizenship of a limited liability

company “is the citizenship of each of its members,” relied on “the long-standing

rule that the citizenship of an artificial, unincorporated entity generally depends on

the citizenship of all the members composing the organization.” Rolling Greens

MHP, L.P. v. Comcast SCH Holdings LLC, 374 F.3d 1020, 1021 (11th Cir.

2004)(citing Carden); see also Underwriters at Lloyd’s, London v. Osting-Schwinn,

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613 F.3d 1079, 1087 (11th Cir. 2010)(“the Court in Carden provided a general rule:

every association of a common-law jurisdiction other than a corporation is to be

treated like a partnership”).

This rule applies to “joint ventures” and religious associations of churches 8,

even where the parties to the association are separately incorporated:

[T]he Carden principle is not limited to the facts of that case and
applies to a wide range of unincorporated associations. Accordingly,
whenever a partnership, a limited partnership, a joint venture, … a
religious or charitable organization, … or a similar association brings
suit or is sued in a federal court, the actual citizenship of each of the
unincorporated association’s members must be considered in
determining whether diversity jurisdiction exists.

13F C. Wright and A. Miller, Federal Practice & Procedure §3630.1 (3d ed. 2018

update); see id. n.5 (citing joint venture cases); Schiavone Constr. Co. v. City of New

York, 99 F.3d 546, 548 (2d Cir. 1996)(Plaintiff was a joint venture between two

corporations)(“For diversity purposes, the citizenship of a joint venture is the

citizenship of each of its members”); Indiana Gas Co., Inc. v. Home Ins. Co., 141

F.3d 314, 316 (7th Cir. 1998)(joint venture/partnership of various corporations and

other entities)(“associations such as … joint ventures take the citizenship of each

member”); Osting-Schwinn, 613 F.3d at 1083 (“Names [i.e., members of

8
As noted, plaintiffs alleged that “the Scientology movement … is comprised of
various corporations and related entities, … trusts and acronyms …” (DE114, ¶4)
which “function as an interrelated and interdependent network of entities.” (Id., ¶20).
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underwriting syndicate] can be people or corporations” each of whose citizenship

must be taken into account.)

A plaintiff cannot avoid Carden’s requirement of complete diversity of all

members of an unincorporated entity by suing only some members of that entity.

“The opposing party may not sue individual members of an unincorporated

organization selectively for the purpose of establishing complete diversity of

citizenship.” 13F C. Wright and A. Miller, Federal Practice & Procedure §3630.1.

See E.R. Squibb & Sons, Inc. v. Accident Cas. Ins. Co., 160 F.3d 925, 931 (2d Cir.

1998)(citizenship of all members of underwriting syndicate, including corporations,

must be considered, even though only lead underwriter was named defendant). This

court in Osting-Schwinn pointed out that “[a]nalytically, the Second Circuit’s

approach is very similar to the one we take here,” with the distinction being that in

Squibb the plaintiff sued only the lead underwriter, not the unincorporated syndicate,

while in Osting-Schwinn, the plaintiff sued the unincorporated syndicate. 613 F.3d

at 1089 n.6. The result was the same – the citizenship of all members (including

corporate members) of the syndicate must be counted. Plaintiffs cannot avoid

Carden by dismissing three members of what plaintiffs alleged was a joint venture

or partnership and proceeding with their lawsuit against only two members

“selectively for the purpose of establishing complete diversity of citizenship.” 13F

C. Wright and A. Miller, Federal Practice and Procedure §3630.1.

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IV. THE DISTRICT COURT ERRED BY PERMITTING


PLAINTIFFS TO FILE A SHAM AMENDED COMPLAINT IN
AN ATTEMPT TO CREATE DIVERSITY JURISDICTION

The district court failed to recognize that the amended complaint was a sham

pleading submitted to create the illusion of diversity jurisdiction. The district court

committed several errors in reaching its conclusion.

First, the court improperly held, as discussed above, that plaintiffs were not

bound by their prior judicial admissions and were free to file an amended complaint

that directly contradicted the allegations of their original Complaint. In ¶31 of the

original Complaint, the plaintiffs set forth detailed allegations of fraud committed

by a specific individual – Charmaine Roger – whom plaintiffs identified as an

employee of non-diverse defendant CSRT. (DE1, ¶31 [AA Tab 2]). Other

paragraphs also set forth detailed allegations that several IASA officials had made

false representations on behalf of IASA. (Id., ¶¶53, 59, 61 (“an IAS officer”); ¶¶55,

57, 63, 65 (“Michelle Villeneuve, an IAS representative”)). Yet in the AC, those

allegations as to the identity and representative capacity of CSRT and IAS officials

not only were omitted, but they were replaced by directly contrary allegations that

the representations upon which the fraud claims were based had been made by

representatives of FSO and FSSO, although, as shown above, even that allegation

was contradicted within the AC with respect to IASA.

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In response, the defendants submitted detailed and uncontroverted evidence

demonstrating that the alleged representations upon which plaintiffs based their

complaints were made, if at all, precisely by the individuals and on behalf of the

non-diverse entities that plaintiffs had alleged in their original Complaint.

Nevertheless, the district court not only declined to hold plaintiffs to their

judicial admissions, but also held it could not resolve the contradiction because Mr.

Garcia’s testimony created an issue of fact.9 (DE124 at 6). While the court

recognized jurisdictional challenges to subject matter jurisdiction are subject to

factual resolution, it held that rule did not apply because subject matter jurisdiction

was “inextricably intertwined” with the merits, citing Odyssey Marine, which

recognized an exception to a district court’s duty to resolve factual issues concerning

subject matter jurisdiction when jurisdictional facts are “inextricably intertwined”

with the merits of a plaintiff’s substantive claims. 5 C. Wright and A. Miller, Federal

Practice & Procedure §1350. But that exception is narrow and well-defined:

“[J]urisdiction becomes intertwined with the merits of a cause of action when a

statute provides the basis for both the subject matter jurisdiction of the federal court

9
In fact, it did not because Garcia admitted he lacked knowledge of the hierarchy or
structure of Scientology churches or what entities did what. See ante at 15.

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and the plaintiff’s substantive claim for relief.” Odyssey Marine, 657 F.3d at 1169-

70.10 Odyssey well illustrates the distinction:

Since the FSIA provides only subject matter jurisdiction, and is


not the basis for Odyssey’s substantive claims, the same statute
does not provide the basis for both the subject matter
jurisdiction of the court and the plaintiff’s substantive claims
for relief such that jurisdiction is intertwined with the merits of
the claim. …

Here, 28 U.S.C. §1332 is purely a jurisdictional statute, and creates no

substantive claim. Plaintiffs’ substantive claims arise under state law and are not

intertwined with §1332 within the meaning of the Odyssey Marine exception.

Accordingly, both because of the allegations in the original Complaint to

which plaintiffs are legally bound and because of the defendants’ uncontroverted

factual showing, the district court fundamentally erred in permitting plaintiffs to

dismiss them as parties and to substitute sham allegations against the remaining

Florida defendants to create the illusion of diversity.

CONCLUSION TO BRIEF ON CROSS-APPEAL

At no point did the district court have subject matter jurisdiction. Plaintiffs’

attempts to create the illusion of diversity are proven baseless by their own

pleadings. When compelled to try to prove their claims before the arbitration panel,

10
Accord, Gonzalez v. United States, 284 F.3d 281 (1st Cir. 2001); Sizova v. Nat’l
Inst. of Standards & Tech., 282 F.3d 1320 (10th Cir. 2002).

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plaintiffs reversed course for the second time and returned to their original

allegations focused primarily on the non-diverse defendants they originally sued.

Such creative license with the facts should not be countenanced in the federal courts.

The action should be dismissed for lack of subject matter jurisdiction.

BRIEF OF DEFENDANTS-APPELLEES RESPONDING TO


PLAINTIFFS’ INITIAL BRIEF

JURISDICTION11

As set forth above, the district court lacked subject matter jurisdiction over

plaintiffs’ complaints and motion to vacate the arbitration decision, and this court

lacks subject matter over plaintiffs’ appeal.

STATEMENT OF ISSUES PRESENTED 12

1. Whether the district court lacked subject matter jurisdiction over

plaintiffs’ motion to vacate the arbitration decision? See Cross-Appellants’ Brief,

above.

2. Whether the district court properly held that plaintiffs’ voluntary

agreements, over years of participation in the Scientology religion, to submit all

disputes between themselves and Scientology churches to resolution by the

11
The “Jurisdictional Statement” in plaintiffs’ Brief fails to meet the requirements
of FRAP 28(a)(4)(A-D). It improperly avoids addressing, inter alia, the question of
whether the district court and this court have subject matter jurisdiction.
12
Plaintiffs fail to meet the requirements of FRAP 28(a)(5) and Circuit Rule 28-1(h)
to identify the issues presented for review in their appeal.
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Scientology religion’s internal dispute resolution and justice system, including to

binding arbitration before three Scientologists in good standing with the senior

Scientology church, and to forego resorting to civil courts for resolution of such

disputes was enforceable under the Federal Arbitration Act with respect to plaintiffs’

claims for refunds of tax deductible donations?

3. Whether the district court properly held that such agreements were

neither procedurally nor substantively unconscionable?

4. Whether the district court properly required plaintiffs to pursue their

refund claims through the Scientology arbitration process, and stayed proceedings?

5. Whether the district court properly denied plaintiffs’ motion to vacate

the arbitration decision?

INTRODUCTION AND SCOPE OF REVIEW

This case involves a religious arbitration conducted pursuant to religious

doctrine. Religious resolution of disputes between Scientology churches and

Scientologists is mandated by important tenets of the religion. All persons who wish

to participate in Scientology must agree to internal religious resolutions of disputes

under the robust and comprehensive Scientology Ethics and Justice System that

governs all such disputes.

Judicial review of even ordinary civil arbitration is “among the narrowest

known to law,” Dominion Video Satellite, Inc. v. Echostar Satellite LLC, 430 F.3d

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1269, 1275 (10th Cir. 2005). It is even more limited when an arbitration is conducted

under religious aegis and doctrine. Lang v. Levi, 16 A.3d 980, 989 (Md. App. 2011)

(“The addition of the religious context further narrows the standard to make our

intervention nearly impossible”). “This Court reviews de novo questions of law, such

as a district court’s interpretation of an agreement to arbitrate (and whether it binds

the parties to arbitrate), but accepts the district court’s findings of fact that are not

clearly erroneous.” Multi–Fin. Sec. Corp. v. King, 386 F.3d 1364, 1366 (11th Cir.

2004).

Appellants’ Brief ignores these well-established principles. It presents an

often distorted and inaccurate portrayal of the facts and record. It raises arguments

that were waived below. The district court engaged in a thorough review of the

factual and legal issues and properly held that plaintiffs’ claims must be submitted

to religious arbitration. It also rejected plaintiffs’ subsequent effort to vacate the

arbitration decision. Its decision should be affirmed.

STATEMENT OF THE CASE

Additional Facts

1. Scientology Ecclesiastical Justice System

Of fundamental importance to the Scientology religion is its establishment of

an internal ethics and justice system applicable to Scientology churches, ministers,

and parishioners. The system was described in a book written by L. Ron Hubbard

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entitled Introduction to Scientology Ethics. (DE174, Ex. 26).13 In it, Mr. Hubbard

demanded that “we must use Scientology … justice in all our affairs.” (Id. at 296).

He asserted his belief that in civil courts “truth has little bearing on findings” and

that adjudication is “like throwing dice.” (Id. at 297). In comparison, he asserted

that “we have a superior law code and legal system which gives real justice to

people.” (Id. at 294).

It is a central tenet of the Scientology religion that Scientologists and

Scientology churches resolve all disputes among each other through the Scientology

internal justice system. (DE8-1 at 3-4 [SA Tab 1]). Scientologists believe that

system works faster and with less random uncertainty than the civil justice system

and is far less expensive. (Id.) Moreover, many of the issues that may arise in such

disputes will require application of Scientology doctrine, including what

Scientologists believe to be a stricter moral and ethical code of conduct. Only

Scientologists would have the understanding and background in Scientology

necessary to understand and apply those doctrines. (Id.)

Mr. Garcia shared those beliefs and engaged in a thorough study of this system

by completing a course at his local church. (DE195, H’rg Tr. at 22 [SA Tab 25]).

He favorably compared the Scientology system of justice and dispute resolution with

its civil counterpart:

13
Book admitted as Ex. 3 at 2/18/15 hearing. See DE175 and 183.
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The current [civil] justice system is not too worried about establishing
the truth about something. … The Scientology … system is a sane one.
It’s true justice and its object is not to suppress or punish but to
rehabilitate. It’s just great.

(Tr. 27). Garcia acknowledged that “those were [his] true sentiments at the time.”

(Id.)14

Scientologists who wish to participate in Scientology must commit

themselves in writing to that doctrine when they undertake such participation.

Plaintiffs did so several dozen times by executing Enrollment Agreements. (DE8-2,

3 [SA Tab 2]). The provisions of the agreements relevant to arbitration include:

6. a. . . . I am forever abandoning, surrendering, waiving, and


relinquishing my right to sue, or otherwise seek legal recourse
with respect to any dispute, claim or controversy against the
Church, all other Scientology churches, …
d. [S]hould any dispute, claim or controversy arise
between me and the Church, any other Scientology church, … I
will pursue resolution of that dispute, claim or controversy solely
and exclusively through Scientology’s Internal Ethics, Justice
and binding religious arbitration procedures, which include
application to senior ecclesiastical bodies, including, as
necessary, final submission of the dispute to the International
Justice Chief of the Mother Church of the Scientology religion,
Church of Scientology International (“IJC”) …

14
The Scientology doctrine that any dispute between Scientologists and/or their
churches will be resolved by the Scientology internal justice system and not the civil
courts is hardly unique. Similar provisions apply in many religions. See, e.g.,
Hosanna Tabor Evangelical Lutheran Church and Sch. v. EEOC, 565 U.S. 171, 194
(2012)(noting rule of Lutheran Church that all disputes between parishioners or
between parishioners and church be submitted to internal dispute resolution) and
204-205. (Alito, J., concurring).
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e. Any dispute, claim or controversy which still


remains unresolved after review by the IJC shall be submitted to
binding religious arbitration in accordance with the arbitration
procedures of Church of Scientology International, which
provide that:
I. I will submit a request for arbitration to
the IJC and to the person or entity with
whom I have the dispute, claim or
controversy;
II. in my request for arbitration, I will
designate one arbitrator to hear and
resolve the matter;
III. within fifteen (15) days after receiving
my request for arbitration, the person
or entity with whom I have the dispute,
claim or controversy will designate an
arbitrator to hear and resolve the
matter. If the person or entity with
whom I have the dispute, claim or
controversy does not designate an
arbitrator within that fifteen (15) day
period, then the IJC will designate the
second arbitrator;
IV. the two arbitrators so designated will
select a third arbitrator within fifteen
(15) days after the designation of the
second arbitrator. If the arbitrators are
unable to designate a third arbitrator
within the fifteen (15) day period, then
the IJC will choose the third arbitrator;
V. consistent with my intention that the
arbitration be conducted in accordance
with Scientology principles, and
consistent with the ecclesiastical
nature of the procedures and the
dispute, claim or controversy to which
those procedures relate, it is my

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specific intention that all such


arbitrators be Scientologists in good
standing with the Mother Church.
Garcia testified that when he signed the agreements it was his “personal belief

at the time that the internal Scientology system of justice was fair” and that he

“accepted the idea that Scientologists in good standing would decide any

disagreements that came up between [him] and the church.” (DE195, Tr.19-20).

2. Charitable Donations to Scientology Organizations and “Refunds”

Scientologists support their religion by making tax deductible donations.

These include:

A. Donations to Scientology’s membership organization, the IAS. 15 The

IAS often undertakes public service activities, among its functions. As stated on the

gift form (DE104-20, 21 [SA Tabs 10-11]), donations to IAS are made to further its

general purposes and are not refundable.

B. Donations to further a specific religious project, such as the Super

Power Project which built the religion’s cathedral in Clearwater, Florida or the

building of local Scientology churches, called Ideal Orgs. Such donations are made

to the church responsible for the project, which with respect to the Super Power

Project was CSRT, which built and owns the building. (DE104-16 [SA Tab 6]). The

donation forms state that donations are not refundable. (DE104-18, 19).

15
See ante at 5, n.5.
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C. Donations made to individual Scientology churches with respect to

immediate or anticipated direct participation in specific Scientology religious

services. Before beginning such services, Scientologists complete and execute an

Enrollment Agreement. Written religious policy identifies such payments as tax

deductible donations and specifies that “A return of donation is neither a legal right

of a parishioner, nor a legal obligation of any Church…. A donation is by definition

a gift and is not something that one gives with the expectation of getting it back.”

Scientology Policy Directive 13 March 1996. (DE8-4 at 20 [SA Tab 3]).

Scientology religious policy, however, provides a limited mechanism by

which a donor, “under particular and compelling circumstances” (id.), may seek to

obtain a return of this kind of donation. The Policy Directive provides:

Under certain circumstances, the Church of Scientology to which


the parishioner made his or her donation may return all or a
portion of the person’s donation to him provided his request is
approved by the Claims Verification Board which verifies 1) that
the donation was actually received by the Church, 2) that the
person meets the criteria for return [e.g., “particular and
compelling circumstances”] and 3) that the person has availed
himself of all remedies to resolve his or her upsets with the
religion. Failure to follow this procedure or any deviation from it,
such as by seeking to involve third parties, including attorneys,
immediately ends the procedure and the Church will take no
further action to return the funds.
Id.

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When plaintiffs executed Enrollment Agreements described above, they

specifically acknowledged having read and understood the Policy Directive and

agreed to its terms. The Agreements stated:

c. No Scientology church is under any duty or obligation


whatsoever to return any portion of any religious donation I make.
However, I have read Scientology Policy Directive 13 March 1996,
Return of Donations, and understand that under certain circumstances
identified in published ecclesiastical policies such as that Scientology
Policy Directive, a return of donations may be obtained through my
strict compliance with those published policies and procedures relating
to the Claims Verification Board. I further understand, acknowledge
and agree that:
I. such procedures require my direct participation to the
exclusion of any third parties, including, but not limited
to, attorneys;
II. returns of donations are exclusively within the
ecclesiastical authority and sole discretion of the Claims
Verification Board;
III. any violation, or deviation from, such published policies
by me voids any possibility of my receiving a return of a
donation; and
IV. should I, at any time, ever request a refund or repayment
of donations, such refund or repayment will be given if and
only if I have followed the exact procedures of the Claims
Verification Board and this Contract. …
Luis Garcia acknowledged in writing that “I am very familiar with the

enrollment forms I signed numerous times. I agree that these forms state that ‘a

return of donations may be obtained through my strict compliance with those

published policies and procedures relating to the Claims Verification Board.’ It also

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refers to ‘Policy Directive 13 March 1996, Return of Donations.’” (DE276-3 at 31

[SA Tab 31]).

Relevant Proceedings Below and Arbitration Proceedings

1. The defendants moved to compel plaintiffs to pursue their claims

through Scientology’s religious arbitration procedures, and to stay proceedings

under the Federal Arbitration Act, 9 U.S.C. §1, et seq. (DE8). The motion was based

upon the Enrollment Agreements that plaintiffs had executed.

2. Plaintiffs opposed the motion to compel arbitration. (DE30). They

claimed that the Enrollment Agreements were unconscionable.

3. After an evidentiary hearing, the district court upheld the arbitration

provision, holding that it was enforceable, encompassed the disputes set forth in the

plaintiffs’ complaints, and was neither procedurally nor substantively

unconscionable under Florida law. The court stayed further judicial proceedings.

(DE189). This Court dismissed plaintiffs’ appeal sua sponte for lack of appellate

jurisdiction. (DE205).

4. Plaintiffs then requested religious arbitration from the IJC. Plaintiffs

once again changed allegations. Now, they specified that their claims were based on

their original Complaint after all and named as defendants the very three non-diverse

entities – CSRT, IASA, and USIMT – that they had dropped from their Complaint

to avoid dismissal for lack of diversity. Plaintiffs also sought arbitration of

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previously unasserted claims for return of donations for a church building (“Ideal

Org”) and donations for religious services to the Church of Scientology of Orange

County, California (“CSOC”). (DE210-3 at 1-2 [SA Tab 26]).

As a result, the fraud claims for which plaintiffs sought arbitration were their

original claims against CSRT, IASA, and USIMT that were no longer part of this

case and a new claim against CSOC that never was. The only fraud claims they

alleged against FSO and FSSO at the arbitration were those in the original Complaint

that FSO and FSSO were part of a joint venture with CSRT, IASA, and USIMT.

5. The Enrollment Agreements established the procedures by which the

arbitrators were to be chosen. Critically, as specifically stated in the Agreements,

all arbitrators must be Scientologists in good standing with CSI, to ensure “that the

arbitration be conducted in accordance with Scientology principles, and consistent

with the ecclesiastical nature of the procedures and the dispute, claim or controversy

to which those procedures relate.” (DE8-3 [SA Tab 2]). The Agreements clearly

contemplate that only Scientologists in good standing would be competent to

understand and conduct Scientology justice procedures.

Plaintiffs were required to select one qualified arbitrator, the defendants

would then select the second arbitrator and the two arbitrators would select the third,

with a deadlock to be settled by the IJC. Plaintiffs failed to select a Scientologist in

good standing as an arbitrator for over a year, repeatedly offering individuals who

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were not in good standing with CSI. 16 The IJC made eight separate written offers of

names of Scientologists in good standing (the Churches had not contacted any of

them), cumulatively totaling 244 (DE235 at 10 [Tab 28]), but plaintiffs refused to

pick any person on such a list.17 Ultimately, the court, after several unsuccessful

efforts at resolving the problem, acting pursuant to Section 5 of the Federal

Arbitration Act (9 U.S.C. §5), directed the Churches to provide a list of 500

Scientologists in good standing selected at random. (DE243). The court then

randomly and confidentially selected potential arbitrators from that list. The court

directly and confidentially communicated with the potential arbitrators and settled

on five to serve as arbitrators and alternatives. The court undertook painstaking

measures to ensure that no party knew the identity of the chosen arbitrators until the

16
Plaintiffs repeatedly chose names from the small group of individuals who, like
them, had splintered from the Church and engaged in virulent and offensive attacks
upon the Church and its leadership. Such persons clearly were not Scientologists in
good standing. (DE210, 224, 231). Similarly, as the district court noted, “three
individuals proposed by Plaintiffs [] are also represented by Plaintiffs’ counsel and
have asserted claims against the Church similar to Plaintiffs’ claims. … Moreover,
Plaintiffs rejected or ignored offers by [IJC] Ellis to provide them with lists of
qualified arbitrators.” (DE215 at 5 and n.6 [SA Tab 27]).
17
The court expressed frustration at plaintiffs’ refusal to choose from hundreds of
names provided to them: “Therein is the problem. You just asked me to direct them
to give you a list of members in good standing in the LA area. … They have done
that. And you have refused or declined to select any of them. That’s bordering on
failure to comply with a court order and it’s close to justifying a dismissal for lack
of prosecution as a sanction. I will leave it at that, sir, because the message has to be
loud and clear to your clients.” (DE235 [SA Tab 28], Tr. at 9-10).
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eve of the arbitration or communicated with the chosen arbitrators until the

proceeding was convened.

6. The religious arbitration took place over two days, October 23-24,

2017, in Los Angeles to accommodate plaintiffs.

7. The account of the arbitration proceedings in plaintiffs’ Brief is replete

with inaccuracies and falsehoods. It is taken exclusively from the declaration of Mr.

Garcia in support of his motion to vacate the arbitration decision. The district court

properly gave it little weight considering the demonstrable record.

On the first day, the IJC provided the arbitrators with materials explaining

their roles according to Church written policy and submitted to them written

evidence and claims from both sides, met with plaintiffs to explain the procedures,

and received from them their proposed written exhibits and reviewed them.18

(DE276-1, IJC Aff. at 2 [SA Tab 30]). The IJC gave the arbitrators written

18
In a preposterous statement, plaintiffs argue that “on the day before the arbitration
hearing, it is undisputed that Defendants spent also the entire day with the arbitrators,
outside the presence of the Plaintiffs.” Br. at 47. First, no one, including the IJC,
spent time with the arbitrators the day before the arbitration began; the date of first
contact was October 23, 2017, the first day of a two-day arbitration. Second, on that
first day, no representative of “Defendants,” i.e., FSO or FSSO, met the arbitrators
at all. The only person to meet with the arbitrators was the IJC, who was the Con-
vening Authority for the arbitration. Third, in his unrebutted declaration, the IJC
stated that he met with the arbitrators for a total of about one hour over the course of
two days, the same amount of time he spent meeting with plaintiffs. (DE276-1 at 4,
¶11 [SA Tab 30]).

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instructions setting forth the nature of the proceedings. The instructions stated, “You

are to conduct this arbitration in a fair and neutral manner, notwithstanding

the Garcias have been declared.” (DE276-4, original bold [SA Tab 32]). The IJC

also provided the arbitrators (and plaintiffs) with relevant Scientology religious

justice policies, plaintiffs’ Statement of Claims, including their original Complaint,

and their Enrollment Agreements.19 (DE276-1 at 2). Later that day the IJC provided

both the arbitrators and plaintiffs with a letter from the Church Claims Verification

Board explaining that it was the response by the Church parties to plaintiffs’ claims.

(Id.; DE276-3 [Tab 31]). 20 The arbitrators then studied the applicable religious

policies and the evidentiary materials with which they had been supplied.

19
According to Mr. Garcia, the IJC stated that he was “hatting” the arbitrators, which
he suggested was a nefarious effort to “train” them to reject plaintiffs’ claims. Such
“hatting” consisted of nothing more than providing them with the appropriate written
religious policies and his written instructions, which took well less than an hour.
(DE276-1 at 2, 4).
20
Plaintiffs claim that the IJC “also gave the arbitrators two reports from Mr.
Garcia’s confidential Priest-penitent Ethics File” which were “irrelevant” and
“intended only to prejudice plaintiffs.” Br. at 48. This also is wrong. First, the
documents in question were exhibits to the Claims Verification Board submission
referred to in the text above. (DE276-3 at 14-20, 29-30). Second, on their face, the
documents were written by Garcia, were not of a confessional nature and could not
have come from a privileged confessional file. Third, the documents were
devastating to Garcia’s overall credibility and his claim that he was fraudulently
induced to donate money for the Ideal Org for CSOC. Garcia related that he had a
“perception” that he and his wife were “opinion leaders” and that they needed to lead
by making a substantial donation. After discussing with his wife, they donated
$350,000, which is the major portion of the donation that they now claim they were
defrauded into making. (Id. at 29). The second document was a long hand-written

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Plaintiffs presented the IJC with 54 documents, totaling 268 pages 21, they

wished to introduce. (DE276-1 at 3). The IJC “went through each of these

documents carefully and determined, in accordance with Scientology Justice

Procedures, whether each exhibit should be allowed or disallowed.” (Id.) The IJC

prepared a document showing each exhibit offered by the Churches and by plaintiffs,

a brief description of the exhibit, whether it was allowed or not and the grounds for

any disallowance. (DE276-5 [SA Tab 33]). The exhibits he “excluded were things

like newspaper articles and internet postings having nothing to do with plaintiffs’

claims, incomplete documents, and Church policies with notations by Mr. Garcia.”

(DE276-1 at 3 [SA Tab 30]). The IJC provided the Church policies, without

notations, to the arbitrators and plaintiffs were provided opportunities to comment

on or discuss the policies with the arbitrators. They never did. The IJC “admitted

“participation summary” in which Mr. Garcia recounted his extended support for the
Ideal Org project, among other matters. (Id. at 14-20).
21
Mr. Garcia claimed he submitted 900 pages of evidence, a claim repeated here.
That is false. The IJC stated he received 268 pages, and carefully documented each
of plaintiffs’ proposed exhibits, unlike plaintiffs. Plaintiffs had the opportunity to
submit to the district court in support of their motion to vacate whatever evidence
they deemed relevant, including evidence that had been rejected in the arbitration.
Not only did they not submit the non-existent 900 pages, but they did not submit a
single document in support of their claims of false representations with respect to
the Super Power Project or the IAS donations. Indeed, plaintiffs point to no such
“evidence” in their Brief here, because it does not exist.

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22 of the exhibits proposed by the Garcias and provided them to the arbitrators.”

(Id.)22

On the second day, plaintiffs appeared before the arbitrators. The IJC attended

and briefed everyone on the procedure. (Id. at 4). He repeatedly asked plaintiffs

whether there was any other evidence or arguments they wished to present to the

arbitrators. (Id., ¶16). “The arbitrators asked questions of the Garcias in accordance

with Scientology justice procedures which included asking the Garcias … if they

had anything else they wished to say or present. They did not do so.” (Id.). To

repeat, at their hearing before the arbitrators, the plaintiffs offered no additional

evidence and no testimony whatsoever, despite being invited to do so.

8. The IJC presented the arbitrators with two documents (id.): (1) a

Religious Arbitration Findings Form, which allowed the arbitrators to address and

make findings with respect to the relevant questions to be decided at the arbitration;

(2) a Religious Arbitration Decision Form, which allowed the arbitrators to deliver

22
Defendants argue (Br. at 50) that the IJC excluded “entheta,” which they describe
as a Scientology term that means anything critical of the Church. They are wrong.
The term is defined in Introduction to Scientology Ethics as “in a turbulent state,
agitated or disturbed.” (DE174, Ex. 26 at 419). Mr. Garcia described it as “irrational
or confusing or destructive thought.” (DE276-11). In a judicial context, that
definition is similar to the concepts of incompetence and likely to be misleading and
unduly prejudicial. The IJC did not exclude a single piece of evidence exclusively
on the basis that it was “entheta”; rather the only two items deemed “entheta” were
also found to be irrelevant or hearsay. (DE276-5, Nos. 28, 58). Garcia does not raise
an issue about the exclusion of those two exhibits.

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a verdict with respect to each of the specific claims set forth by plaintiffs in the

arbitration.

The arbitrators awarded plaintiffs return of $18,495.36 for accommodations

at church religious retreats. In doing so, as the district court later noted, the

arbitrators rejected the Churches’ position that plaintiffs should receive nothing.

With respect to the plaintiffs’ other claims, the arbitrators explicitly found that they

were not credible and that plaintiffs had failed to demonstrate a basis for return of

donations. The arbitrators specifically and separately addressed each claim plaintiffs

had asserted, including their claims for breach of contract against FSO and FSSO,

for fraud by CSRT relating to the Super Power Project donations, for fraud by IASA

and USIMT relating to their IAS donations, and for fraud relating to the Orange

County Ideal Org donations. (DE276-7, 8 [SA Tabs 35-36]). Plaintiffs’ statement

here that “the so-called findings of the arbitrators refer only to Plaintiffs’ failure to

fill out the CVB form” (Br. at 53) is demonstrably untrue, as a cursory glance at the

findings or the district court’s opinion rejecting that very argument (DE282 at 7 [AA

Tab 10]) demonstrates.

The IJC sent the arbitrators’ Findings and Decision to plaintiffs (DE276-9 [SA

Tab 37]) with $18,495.36 from FSO and FSSO. Plaintiffs rejected and returned the

award.

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9. Plaintiffs moved to vacate the arbitration decision. (DE272). They

argued that the IJC had excluded all evidence they had offered and refused to allow

them to present evidence or make arguments in support of their claims, arguments

that the Churches refuted, as shown above. Notably, nowhere in their motion did

plaintiffs refer to a single document that was excluded that in their view would have

supported their fraud claims. With respect to their contract claims for refunds of

donations for religious services, the only excluded documents upon which they

relied were Scientology religious policy documents that were incomplete and/or

inaccurate. (DE276-6 [SA Tab 34]). The IJC provided the full and relevant

documents to the arbitrators. Plaintiffs were free to say whatever they wanted about

the documents. They said nothing.

10. The district court denied the motion. (DE282). The court emphasized

that “judicial review of arbitration awards under the Federal Arbitration Act … is

extremely limited, … [a]nd whereas here a religious arbitration award is challenged,

judicial review is even more limited, as the Garcias acknowledge.” It rejected

plaintiffs’ argument that the arbitrators were not impartial because they were

Scientologists in good standing, emphasizing that they had agreed to submit their

claims to such an arbitration: “Where an agreement entitles the parties to select

interested arbitrators, ‘evident partiality’ cannot serve as a basis for vacating an

award under §10(a)(2) absent a showing of prejudice,” for which it found no support

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(quoting Winfrey v. Simmons Foods, Inc. 495 F.3d 549, 551 (8th Cir. 2007)). The

court also rejected plaintiffs’ claim of misconduct as “unpersuasive,” found that the

IJC acted properly in carefully considering the evidence to be presented and

disallowing irrelevant and hearsay evidence, and properly met with the arbitrators to

instruct them on their duties and procedures. It held that plaintiffs’ “contention that

their attorney was not permitted to attend is disingenuous,” both because it was

contrary to the IJC’s position that he could attend to provide advice and guidance to

plaintiffs and because he did not show up. Finally, the court found that the arbitrators

had considered each of plaintiffs’ claims, including their fraud claims based upon

their donations for the Super Power Project and the IAS “humanitarian initiatives.”

SUMMARY OF ARGUMENT

1. The Federal Arbitration Act reflects a “‘liberal federal policy favoring

arbitration.’” AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339 (2011). There

is a strong presumption in favor of enforcement of arbitration agreements, and a party

seeking to avoid enforcement carries the burden of persuasion.

2. The district court properly found the Enrollment Agreements were

neither procedurally nor substantively unconscionable. Unconscionability may be

invoked only under extraordinary circumstances. Steinhardt v. Rudolph, 422 So. 2d

884, 890 (Fla. 3d DCA 1982). To invalidate a contract as unconscionable, Florida

requires that it be both procedurally and substantively unconscionable. Basulto v.

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Hialeah Auto., 141 So. 3d 1145, 1158 (Fla. 2014). Procedural unconscionability

relates to the manner in which the contract was entered. Substantive

unconscionability applies only when the terms are so outrageously unfair as to shock

the judicial conscience, such that no man in his sense and not under delusion would

make on the one hand, and as no honest and fair man would accept on the other.

Unconscionability must be measured at the time the agreement is made and not some

later date.

3. The district court properly found the Enrollment Agreements were not

procedurally unconscionable. Plaintiffs’ argument here that they had no opportunity

to consider the agreements before signing them and that they had already made their

donations was explicitly waived in open court by their trial counsel. Moreover, the

Agreements are not adhesion contracts because they are religious agreements that

set forth the conditions under which persons may participate in the Scientology

religion. That religion has a constitutional right to accept or reject members, religious

employees or clergy on any basis it wishes. It may impose conditions on membership

or participation in its religious services free from government intrusion or

interference. Watson v. Jones, 80 U.S. 679, 729-31 (1871). Plaintiffs were free to

choose any or no religion; they could not unilaterally ignore the doctrine or practices

of the religion they chose.

4. The district court also correctly held the Enrollment Agreements

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adequately set forth arbitration procedures. Florida law does not require an

arbitration agreement to specify extensive procedures, only that it be definite enough

that the parties have “some idea” of what matters are to be arbitrated and set forth

some procedures by which arbitration is to be carried out. Here the Enrollment

Agreements meet the standards set forth in Florida cases: they state how the

arbitrators are to be selected and the number of arbitrators; they identify what matters

are to be submitted to arbitration; they expressly provide for “binding religious

arbitration.” Finally, as the district court found, “the Garcias, as ‘committed’

Scientologists, necessarily would have ‘some idea’ of the procedures by which

arbitration is to be conducted.” No more is required under Florida law.

5. Nor are the Enrollment Agreements substantively unconscionable.

First, plaintiffs’ argument that the Agreements are unconscionable because they lack

mutuality was not presented to the district court and may not be considered. In any

event, the comprehensive Scientology religious justice system applies equally to the

Church and its followers precisely because its use is a matter of religious doctrine.

Second, the Agreements provide a limited and narrow opportunity for Scientologists

to obtain a return of donations in extraordinary circumstances where none exists at

civil law. A person would not have to be senseless and delusional to enter such an

agreement.

Third, as their counsel conceded and the district court found, plaintiffs agreed

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to the terms of the arbitration, including that the arbitrators be Scientologists in good

standing, numerous times over many years. “Arbitration is a matter of contract, and

consequently, the parties to an arbitration can ask for no more impartiality than

inheres in the method they have chosen.” Nat’l Football League Mgmt. Council v.

Nat’l Football League Players Ass’n, 820 F.3d 527, 548 (2d Cir. 2016). Finally, the

district court properly rejected plaintiffs’ argument that Scientology religious

doctrine prohibits Scientologists from treating them fairly, contrary to the definitive

statement of Scientology officials and writings that require fairness and impartiality

in Scientology justice proceedings. As the district court wrote: “the First Amendment

prohibits consideration of this contention, since it necessarily would require an

analysis and interpretation of Scientology doctrine.”

6. The district court also properly rejected plaintiffs’ motion to vacate the

arbitration decision. Even in a secular context, the scope of judicial review of

arbitration proceedings and determinations is “among the narrowest known to law,”

Dominion Video Satellite, Inc. v. Echostar Satellite LLC, 430 F.3d 1269, 1275 (10th

Cir. 2005). “The addition of the religious context further narrows the standard to

make [a court’s] intervention nearly impossible.” Lang v. Levi, 16 A.3d 980, 989

(Md. Ct. Spec. App. 2011). This court reviews the evidence under a narrow clearly

erroneous standard. Multi–Fin. Sec. Corp. v. King, 386 F.3d at 1366.

None of the grounds propounded by plaintiffs justify vacating the arbitration

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decision. The IJC briefed the arbitrators on the applicable church doctrine and

plaintiffs’ claims. He instructed them to be fair in deciding the claims and to put

aside consideration of plaintiffs’ public opposition to Scientology. The arbitrators

reviewed plaintiffs’ evidence, after the IJC excluded evidence deemed irrelevant or

hearsay. He kept a written log of evidence admitted and excluded. Plaintiffs were

invited on several occasions to submit additional evidence or argument; they

declined. They did not even seek to support their claims of false representations

with respect to their donations. The arbitrators considered the evidence and the

claims. They found that plaintiffs were not credible and had not shown a basis for

return of their donations. The arbitrators did award plaintiffs return of $18,495.36

for religious accommodations, contrary to the position of the Churches. No basis

exists for overturning their decision, especially within the extremely limited scope

of federal court review of a religious arbitration.

ARGUMENT

I. THE DISTRICT COURT CORRECTLY HELD PLAINTIFFS’


CLAIMS WERE SUBJECT TO RELIGIOUS ARBITRATION

A. The Enrollment Agreements Establish an Arbitrable Agreement


Enforceable Under the Federal Arbitration Act and Florida Law

The Federal Arbitration Act reflects a “‘liberal federal policy favoring

arbitration.’” AT&T Mobility, LLC v. Concepcion, 563 U.S. 333, 339 (2011)(quoting

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). It is

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“Congress’ clear intent, in the Arbitration Act, to move the parties to an arbitrable

dispute out of court and into arbitration as quickly and easily as possible.” Id. at 22.

The FAA reflects a “statutory policy of rapid and unobstructed enforcement of

arbitration agreements.” Id. at 23.

“[A]ny doubts concerning the scope of arbitrable issues should be resolved

in favor of arbitration.” Solymar Invs., Ltd. v. Banco Santander S.A., 672 F.3d 981,

988 (11th Cir. 2012). In Anders v. Hometown Mortg. Serv., Inc., 346 F.3d 1024

(11th Cir. 2003), this court construed an arbitration agreement covering “any action,

dispute, claim, counterclaim or controversy”:

“Any disputes” means all disputes, because “any” means


“all.” And so, of course, does the word “all” by itself. The
agreement reaches this dispute because the agreement
reaches any and all disputes.

Id. (citing Merritt v. Dillard Paper Co., 120 F.3d 1181, 1186 (11th Cir. 1997)(“the

adjective ‘any’ is not ambiguous … ‘any’ means all”)).

The strong presumption in favor of enforcement of arbitration agreements

extends to arbitration by a religious tribunal. See e.g., Ainsworth v. Schoen, 606 So.

2d 1275 (Fla. 3d DCA 1992). Courts have not hesitated to enforce such provisions

requiring religious arbitration of even secular disputes. See Jenkins v. Trinity

Evangelical Lutheran Church, 356 Ill. App. 3d 504, 825 N.E.2d 1206, 1214 (2005);

Gen. Conf. of Evangelical Methodist Church v. Evangelical Methodist Church of

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Dalton, Georgia, 807 F. Supp. 2d 1291, 1294-95 (N.D. Ga. 2011); Easterly v.

Heritage Christian Sch., 2009 WL 2750099 (S.D. Ind. 2009).

B. The District Court Properly Found That the Enrollment Agreements


Were Not Unconscionable

The unconscionability doctrine provides a limited, “infrequently used”

exception to freedom of contract. Steinhardt v. Rudolph, 422 So. 2d 884, 890 (Fla.

3d DCA 1982). A court “with great caution” may invoke the doctrine in

extraordinary circumstances to refuse to enforce contract provisions. Weston, 857

So. 2d 278, 284. “Synonyms for the term unconscionable include ‘shocking to the

conscience’ and ‘monstrously harsh.’” Garrett v. Janiewski, 480 So. 2d 1324, 1326

(Fla. 4th DCA 1985). Unconscionability does not permit a court to correct

“contractual terms which are unreasonable or impose an onerous hardship.”

Steinhardt, 422 So. 2d at 890; see also Belcher v. Kier, 558 So. 2d 1039, 1043 (Fla.

2d DCA 1990)(noting “legal distinction between ‘unreasonable’ and

‘unconscionable’”); Beach Resort Hotel Corp. v. Wieder, 79 So. 2d 659, 663 (Fla.

1955) (“[C]ourts may not rewrite a contract . . . to relieve one of the parties from the

apparent hardship of an improvident bargain.”).

To invalidate a contract, Florida law requires it to be both procedurally and

substantively unconscionable. Basulto v. Hialeah Auto., 141 So. 3d 1145, 1158 (Fla.

2014). Procedural unconscionability relates to the manner in which the contract was

entered. AMS Staff Leasing, Inc. v. Taylor, 2015 WL 71705, at *4 (Fla. 4th DCA
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2015); Brea Sarasota, LLC v. Bickel, 95 So. 3d 1015, 1017 (Fla. 2d DCA 2012);

Powertel, Inc. v. Bexley, 743 So. 2d 570, 574 (Fla. 1st DCA 1999). Substantive

unconscionability “requires an assessment of whether the contract terms are so

outrageously unfair as to shock the judicial conscience.” Bland v. Health Care &

Ret. Corp., 927 So. 2d 252, 256 (Fla. 2d DCA 2006); Kohl v. Bay Colony Club

Condo., Inc., 398 So. 2d 865, 868 (Fla. 4th DCA 1981). Substantive

unconscionability is defined as an agreement “‘no man in his sense and not under

delusion would make on the one hand, and as no honest and fair man would accept on

the other.’” Belcher, 558 So. 2d at 1044 (quoting Hume v. U.S., 132 U.S. 406 (1889)).

Unconscionability must be measured at the time the contract is made and not

some later date. Steinhardt, 422 So. 2d at 889. “A party to a contract is not ‘permitted

to avoid the consequences of a contract freely entered into simply because he or she

elected not to read and understand its terms before executing it, or because, in

retrospect, the bargain turns out to be disadvantageous.’” Estate of Perez v. Life Care

Ctrs. of Am., Inc., 23 So. 3d 741 (Fla. 5th DCA 2009) (quoting Weston, 857 So. 2d

at 288). The party seeking to avoid the arbitration provision has the burden to

establish unconscionability. Perez, 23 So. 3d at 742.

1. The Agreement to Arbitrate Was Not Procedurally Unconscionable

The Enrollment Agreements set forth a dispute resolution and arbitration

system founded on the religious principles of Scientology. Plaintiffs knew about and

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agreed to abide by that system as a condition of participation in the religion. A secular

court has at most an extremely limited ability to interfere with that religious arbitration

system or to adjudge its fairness. As the district court recognized:

As the Supreme Court has instructed, “[c]onstitutional concepts


of due process, involving secular notions of ‘fundamental
fairness’ or impermissible objectives, are . . . hardly relevant to
such matters of ecclesiastical cognizance.”

(DE265 at 3 [SA Tab 29]), quoting Serbian Eastern Orthodox Diocese v.

Milivojevich, 426 U.S. 696, 715 (1976).

Plaintiffs argue that “the primary consideration in considering whether an

arbitration agreement is procedurally unconscionable is whether the complaining

party lacked a meaningful choice when entering into the contract,” quoting Basulto,

141 So. 3d at 1157, n.3. (Br. at 21). They argue that plaintiffs had no choice in

agreeing to the Enrollment Agreements because “failure or refusal to sign the

application would prevent receipt of the services which the member had already

paid for.” (Id. at 22)(Plaintiffs’ emphasis).

Plaintiffs’ trial counsel below explicitly waived this very point in open court.

He conceded that plaintiffs could not claim procedural unconscionability on the basis

that they did not know about the arbitration provision before being asked to agree to

it, or that they had already donated for a religious service before signing an Enrollment

Agreement for that service. Plaintiffs had executed over three dozen such agreements

over many years and knew that they could not participate in Scientology services
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unless they agreed to the dispute resolution provisions. As plaintiffs’ counsel

acknowledged:

But really it wasn’t a situation that they didn’t have a chance to


because they were rushed into it, that’s not really our claim. Our
claim is the question of unconscionability does not rise or fall on
that issue. . . . I can hardly make the claim that that’s the basis of
our argument because they did it many times over many years.
(DE129 at 38-39 [SA Tab 23]). When Churches’ counsel stated:

Let me say something else about this business about they paid
their money and then they had an agreement stuck in their nose
and had to sign it. This is something that went on with them for
28 years,

the court responded, “Well, Mr. Babbitt just acknowledged that he’s not in a position

to contend that they were rushed or forced to sign something because of that very

point. So I’m moving on.” (Id. at 41).

Plaintiffs’ adhesion argument also must be rejected under the First Amendment.

Plaintiffs did not enter into a commercial employment relationship with the Churches

or engage in a secular commercial transaction. They sought to participate in religious

practices and agreed to the requirements necessary to do so. The Church is neither a

public accommodation, a common carrier, nor a secular employer. It has a

constitutional right to accept or reject members or clergy on whatever basis it wishes.

It may impose conditions on membership or participation in its religious services free

from government intrusion.

All who unite themselves to [a church] do so with an implied

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consent to [its] government, and are bound to submit to it. …

We cannot decide who ought to be members of the church …


[W]hen they became members they did so upon the condition of
continuing or not as they and their churches might determine, and
they thereby submit to the ecclesiastical power and cannot now
invoke the supervisory power of the civil tribunals.

Watson v. Jones, 80 U.S. 679, 729-31 (1871). See Church of Scientology v. City of

Clearwater, 2 F.3d 1514, 1544 (11th Cir. 1993)(striking down a city ordinance

requiring a church to disclose to its members all its expenditures from their

donations: “The City may not intervene on behalf of such dissidents. If they remain

dissatisfied with the church’s voluntarily assumed disclosure policy then they may

attempt to reform that policy from within, they may acquiesce in the policy despite

their objections or they may leave the church”).

While as a matter of Scientology doctrine, plaintiffs could not enroll in

religious services without agreeing to be bound by the religion’s dispute resolution

provision, no one compelled them to participate in Scientology. There are many

religions, and plaintiffs were free to choose to participate in or donate to any or none

of them. They chose to be Scientologists and to be governed by the religious

conditions of that denomination. If plaintiffs disagreed with the condition of

participating in the Church, i.e., that they agree to its arbitration of disputes policy,

they had the choice to try to reform it, to acquiesce in it, or to leave. They acquiesced

for over twenty years, and then they left. What they may not do now is ask this court

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to intervene, after the fact, on the basis that they purportedly lacked bargaining

power and had no choice but to maintain their participation in the Church in

accordance with church law and governance. The concept of an adhesion contract

is meaningless in a church religious context. Just as there is “no crying in baseball,”

there is no bargaining in church.

The district court also was correct in rejecting plaintiffs’ argument that the

Enrollment Agreements did not set forth arbitration procedures. Florida law does not

require an arbitration agreement to specify extensive procedures. Florida merely

requires that an arbitration provision be “definite enough that the parties at least have

some idea as to what particular matters are to be submitted to arbitration and set forth

some procedures by which arbitration is to be effected.” Spicer v. Tenet Florida

Physician Servs., LLC, 149 So. 3d 163, 165-66 (Fla. 4th DCA 2014)(emphasis in

original)(quoting Malone & Hyde, Inc. v. RTC Transp., Inc., 515 So. 2d 365, 366

(Fla. 4th DCA 1987)).

In Intracoastal Ventures Corp. v. Safeco Ins. Co. of Am., 540 So. 2d 162 (Fla.

4th DCA 1989)(reversed on other grounds, 833 So. 2d 762), the court found the

procedures sufficiently identified where the agreement provided for selecting two

independent appraisers, the two appraisers were then to select an impartial umpire,

and if an umpire could not be agreed upon within fifteen days, either party could

petition the court to appoint one; if the appraisers could not agree upon an amount

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within a reasonable time, they were to submit their differences to the umpire. (Id. at

163).

In Malone & Hyde, an arbitration provision was invalidated because it did not

identify the number of arbitrators, how the arbitrators were to be selected, or the

issues to be decided. (Id. at 366). The arbitration provision in this case does identify

the matters to be submitted to arbitration and does set forth procedures by which

arbitration is to be carried out.

The district court carefully applied these principles in holding that the

Enrollment Agreements were sufficient:

[T]he arbitration clauses in the Enrollment Applications satisfy


the essential requirements of an enforceable arbitration
agreement under Florida law, meaning that the Garcias had
“some idea” of what disputes were subject to arbitration and the
procedures by which arbitration was to be effected.

First, the agreements outline how the arbitrators are to be


selected and the number of arbitrators. Second, the agreements
clearly identify what matters are to be submitted to arbitration:
“any dispute, claim or controversy [that] arise[s] between me and
the Church, any other Scientology church, any other organization
which espouses, presents, propagates or practices the
Scientology religion, or any person employed by any such
entity...” Third, the agreements expressly provide for “binding
religious arbitration.”

(DE189 at 15).

In addition, the district court pointed out Mr. Garcia had engaged in a

thorough study of Scientology religious dispute resolution and justice policies and

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was aware of a Scientology procedure called a Committee of Evidence. Garcia

testified:

I was familiar with the ethics and justice procedures. And I knew
there was a system whereby Scientologists could settle disputes,
have hearings. … I was aware of the committee of evidence, I
knew how that worked. … We study … the ethics specialty course,
and become well versed on how these things are supposed to work.

(DE104-15 at 23-24, 46-48 [SA Tab 5]). The written policy establishing the

Committee of Evidence stated that it “is for use in all matters of justice in

Scientology,” including “refunds.” (DE127-2 at 1, 2 [SA Tab 22]). While the district

court held that the Committee of Evidence was not created specifically for use in

Scientology arbitration procedures, having been written years before the creation of

the arbitration process and bearing several characteristics that were different than

those described in the Enrollment Agreements, the court nevertheless recognized

that many of the procedures of the Committee of Evidence were well known and

understood by Scientologists including plaintiffs and could be invoked by the IJC in

carrying out his religious duty to insure that the arbitration proceed, as stated in the

Enrollment Agreements, in accordance with Scientology’s Ethics, Justice and

arbitration procedures. 23

Moreover, by virtue of the ecclesiastical nature of the dispute

23
The district court thus rejected a later attempt by plaintiffs to prohibit the IJC from
utilizing certain of the procedures used in a Committee of Evidence, holding that “it
is within the authority of the Church to determine the procedures for ecclesiastical
arbitration.” (DE265 at 1, n.1 [SA Tab 29]).
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resolution procedures set forth in the Enrollment Applications,


the Garcias, as “committed” Scientologists, necessarily would
have “some idea” of the procedures by which arbitration is to
be conducted. Indeed, Luis Garcia testified that he successfully
completed the “Ethics Specialist Course,” during which he
studied, among other things, the Committee on Evidence and
its procedures, as well as the Scientology Justice System. He
agreed to arbitrate any disputes that might arise “in accordance
with the arbitration procedures of Church of Scientology
International.” From a secular perspective, one can only
assume that they had “some idea” of what those procedures
were.

(DE189 at 16). The district court’s finding was not “clearly erroneous.” Multi–Fin.

Sec. Corp., 386 F.3d at 1366). In fact, it was clearly correct.

Plaintiffs claim support from two appellate decisions refusing to uphold a

clause in a “payday” loan scheme requiring arbitration by the Cheyenne River Sioux

Tribal Nation. See Inetianbor v. CashCall, Inc., 768 F.3d 1346 (11th Cir. 2014);

Jackson v. Payday Fin., LLC, 764 F.3d 765 (7th Cir. 2014). Those cases are

inapposite for the simple reason that the Tribe had no arbitration forum and refused

to create one, stating it “has nothing to do with the arbitration process.” Inetianbor,

768 F.3d at 1349. Here, the Churches have established an arbitration forum and

rules by which it may be invoked, for what claims, and for the choosing of

arbitrators, as well as the requirement that it be conducted according to Scientology

principles and consistent with the ecclesiastical nature of the proceedings. Plaintiffs’

effort to find support in the two cited cases is an act of desperation.

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Accordingly, plaintiffs have no credible argument to support a claim of

procedural unconscionability. This Court need go no further, because plaintiffs bear

the burden of showing both procedural and substantive unconscionability. They also

cannot carry the burden on substantive unconscionability.

2. The Agreement to Arbitrate Was Not Substantively Unconscionable

a. Plaintiffs Failed to Raise Lack of Mutuality in the District Court;


In Any Event, the Agreement Was Mutual

Plaintiffs argue that the agreement to submit all disputes to the Scientology

justice system lacks mutuality. This is the first time that plaintiffs have raised this

issue. They did not argue it in their opposition to the motion to compel arbitration,

in their “Bench Memorandum” submitted prior to the evidentiary hearing before the

district court, in their motion for reconsideration of the district court’s order

requiring arbitration, or in their oral arguments to the district court. Plaintiffs’ failure

to raise the issue below is a classic example of waiver and may not be considered on

this appeal. Ledford v. Peeples, 657 F.3d 1222, 1258 (11th Cir. 2011)(“It requires

no citation of authority to say that, except when we invoke the ‘plain error doctrine,’

which rarely applies in civil cases, we do not consider arguments raised for the first

time on appeal. A mere recitation of the underlying facts, furthermore, is insufficient

to preserve an argument; the argument itself must have been made below”); Evans

v. Georgia Reg’l Hosp., 850 F.3d 1248, 1257 (11th Cir. 2017)(same).

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Moreover, plaintiffs are wrong. As described ante at 34-38, the Church has

established a robust and comprehensive justice system precisely for use by all

churches and parishioners. Hubbard wrote “we must use Scientology … justice in

all our affairs.” He asserted his belief that in civil courts “truth has little bearing on

findings” and that adjudication is “like throwing dice.” In comparison, he asserted

that “we have a superior law code and legal system which gives real justice to

people.” To that end, Hubbard created the Committee of Evidence procedure, which

states on its title page, “This system is for use in all matters of justice in

Scientology.” (DE127-2). A Scientology church is thus required to convene a

Committee of Evidence to address a dispute it may have with an individual

Scientologist. And a party dissatisfied with the result of a Committee of Evidence

may request arbitration, as set forth in the Enrollment Agreements.

Even if mutuality were absent, application of a mutuality requirement in a

religious context would be improper for similar reasons as discussed above with

respect to adhesion contracts. The mutuality requirement applies in a commercial

context such as those at issue in the cases plaintiffs cite24; it is related to the

requirement that parties may bargain over contractual provisions. But where an

agreement to arbitrate is a condition for participation in a church, a court lacks power

24
In those cases, lack of mutuality was but one of several indicia of substantive
unconscionability.
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to impose conditions as might apply to purely commercial contracts and contexts.

Watson v. Jones, 80 U.S. at 729-31; Church of Scientology v. City of Clearwater, 2

F.3d at 1544.

b. Plaintiffs’ Claims Were Non-justiciable in a Civil Court, and the


Agreement to Arbitrate Created a Remedy Where None Existed

Plaintiffs asserted “contract” claims based upon donations to FSO and FSSO

for religious services. The IRS recognizes such donations are irrevocable tax-

deductible gifts; only irrevocable gifts are deductible under 26 U.S.C. §170. See

Walker v. Comm’r of Internal Revenue, 91 F.2d 297 (5th Cir. 1937). See also 38A

C.J.S. Gifts §64 (“A completed inter vivos gift cannot be revoked by the donor once

the gift is delivered and accepted by the donee”); Ritter v. Shamas, 452 So. 2d 1057,

1059 (Fla. 3d DCA 1984).

Thus, any claim that plaintiffs are entitled to return of donations does not arise

under civil law, but only if there exists a Scientology policy or an agreement

permitting it. Significantly, plaintiffs base their “contract” claims precisely upon their

interpretation of Scientology religious policy. See, e.g., DE114, ¶44 (resting cause of

action on allegation that “Defendants maintain a policy of returning funds”), ¶43

(alleging FSSO induced donations “with the express understanding” that they would

be returned upon demand), ¶45 (resting claims on alleged Scientology “principles of

exchange”), ¶¶90 and 96 (resting contract claims on defendants’ alleged

“represent[ations] in [their] policy and publications”).


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The Enrollment Agreements and the Scientology Policy Directive, however,

specify that such donations are not refundable, except under “specific and

compelling circumstances” within the exclusive ecclesiastical discretion of the

Claims Verification Board (CVB). Those documents create the very limited

possibility of a refund, set forth the strict limitations of that possibility, and establish

the exclusive procedure by which a refund must be requested.

Without the Agreements and the Scientology doctrine upon which they are

based, plaintiffs would have no basis to request return of donations. A civil court may

not determine whether plaintiffs’ interpretation of church doctrine is correct and the

church’s incorrect. Presbyterian Church v. Mary Elizabeth Blue Hull Mem’l

Presbyterian Church, 393 U.S. 440, 450 (1969)(First Amendment “forbids civil

courts from [making their own] interpretation of particular church doctrines and the

importance of those doctrines to the religion”); In re Holy Spirit Ass’n for the

Unification of World Christianity v. Tax Comm’n of the City of New York, 55 N.Y.2d

512, 527-28 (1978)(“It is for religious bodies themselves, rather than the courts or

administrative agencies, to define, by their teachings and activities, what their

religion is”). See also Hosanna Tabor, 565 U.S. at 197 (Thomas, J.,

concurring)(warning that judicial attempts to decide religious doctrine might

“disadvantag[e] those religious groups whose beliefs, practices, and membership are

outside of the ‘mainstream’ or unpalatable to some”). Because the Enrollment

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Agreements and the arbitration provisions provide plaintiffs with a potential, albeit

limited, remedy for return of donations where no remedy exists under civil law, a court

could not conclude that “no man in his senses and not under delusion” would make

such an agreement. The agreements, as applied to plaintiffs’ “contract” claims, cannot

be deemed unconscionable as a matter of law.

The same is true for plaintiffs’ claims for return of Super Power Project and

IAS donations. Such donations were for the general purposes of CSRT and the IAS

and were not refundable. Plaintiffs alleged, however, that their donations were not

used for the purposes for which they were solicited.

The mere fact that plaintiffs label these as claims for civil fraud, however,

does not mean that they do not require examination of church doctrine, governance

and procedures beyond review of civil courts. Such claims implicate matters of

church financial management, record keeping, accounting, and decision making

governed by ecclesiastical principles, including whether to modify or alter

construction designs in accordance with religious requirements, thereby

substantially delaying completion. As the court in Meshel v. Ohev Sholom Talmud

Torah, 869 A.2d 343, 355-56 (D.C. 2005), explained:

[I]n determining whether the adjudication of an action would require


a civil court to stray impermissibly into ecclesiastical matters, we look
not at the label placed on the action but at the actual issues the court
has been asked to decide. The claim in Bible Way Church [v. Beards,
680 A.2d 419, 429 (D.C.App.1996)] was one of negligent accounting
principles, a cause of action with a distinctly secular sound to it. Yet
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when we looked behind the label, we determined that a church’s


accounting principles involve core ecclesiastical matters, such as the
church’s collection, tithing, and offering practices, that raise questions
of internal church governance, are often based upon the application of
church doctrine, and are therefore beyond the subject matter
jurisdiction of the civil courts.
Thus, as with their contract claims based explicitly on church policy, plaintiffs

lacked a viable civil court remedy for their allegations of fraudulent misuse of funds

they donated. By agreeing to Scientology arbitration of such claims, plaintiffs

obtained a remedy where none otherwise existed. Here, too, a court could not

conclude that “no man in his senses and not under delusion” would make such an

agreement at the time that plaintiffs did.

c. Plaintiffs Made a Knowing Rational Decision to Choose


Arbitration Before Three Scientologists and are Bound by that
Choice

Mr. Garcia conceded that when he entered into the Enrollment Agreements, he

was rational, sober, and non-delusional, and made a conscious decision:

Q. And you weren’t under the influence of drugs or alcohol when you signed,
correct?
A. No. …
Q. And any kind of mind-altering drugs, correct?
A. Yes
Q. And you weren’t mentally impaired when you signed these agreements?
A. No.
Q. And you weren’t delusional when you signed these agreements?
A. No…
Q. And at the time you signed these agreements, wasn’t it your personal
belief that at that time the internal Scientology system of justice was fair?
A. Yes.

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(DE195, Hr’g Tr. 18-19 [SA Tab 25]). Garcia specifically “accepted the idea that

Scientologists in good standing would decide any disagreements that came up

between [him] and the church.” (Id. at 19-20). He was “accepting of this internal

justice system … had good feelings about it … [and] never suggested to anyone in

the church that the enrollment agreements were objectionable and should be

changed. …” (Id. at 20-21).

Only now after having left the religion do plaintiffs object to faith-based

arbitration. Unconscionability must be measured at the time the agreement is made.

Steinhardt, 422 So. 2d at 889. When a person agrees to arbitration before a certain

class of arbitrators, he may not later ask a court to find his agreement was delusional

and the agreement unconscionable:

[T]he “parties to an arbitration choose their method of dispute


resolution and can ask no more impartiality than inheres in the
method they have chosen.” Delta Mine Holding Co. v. AFC Coal
Properties, 280 F.3d 815, 821 (8th Cir. 2001). “[W]here the
parties have expressly agreed to select partial party arbitrators, the
award should be confirmed unless the objecting party proves that
the arbitrator’s partiality prejudicially affected the award.” Id.
Winfrey v. Simmons Food, Inc., 495 F.3d 549, 551 (8th Cir. 2007). The Second

Circuit reasoned similarly in the Tom Brady “Deflategate” case:

In their collective bargaining agreement, the players and the League


mutually decided many years ago that the Commissioner should
investigate possible rule violations, should impose appropriate
sanctions, and may preside at arbitrations challenging his discipline.
Although this tripartite regime may appear somewhat unorthodox, it

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is the regime bargained for and agreed upon by the parties, which we
can only presume they determined was mutually satisfactory.

Nat’l Football League Mgmt. Council v. Nat’l Football League Players Ass’n, 820

F.3d 527, 532 (2d Cir. 2016), and at 548 (“arbitration is a matter of contract, and

consequently, the parties to an arbitration can ask for no more impartiality than

inheres in the method they have chosen”). See BDO Seidman, LLP v. Bee, 970 So.

2d 869, 873, 875 (Fla. 4th DCA 2007)(upholding arbitration clause in partnership

clause of accounting firm requiring arbitrators to be partners of firm against

challenge of former partner claiming firm improperly denied retirement benefits,

claiming agreement was substantively unconscionable).

In both Gen. Conference of Evangelical Methodist Church, 807 F. Supp. 2d at

1294-95, and Easterly v. Heritage Christian Sch., 2001 WL 2750099 (S.D. Ind. 2009),

courts rejected claims that arbitrators would be inherently biased because of their

religious beliefs and affiliations. Gen. Conference of Evangelical Methodist Church,

807 F. Supp. 2d at 1301. (“‘The Supreme Court has repeatedly counseled that [under]

the FAA . . . courts should not presume, absent concrete proof to the contrary, that

arbitration systems will be unfair or biased’” (quoting Easterly, 2009 WL 2750099 at

*3)). See also Jenkins, 825 N.E.2d at 1214 (rejecting partiality argument based on

fact that “the dispute resolution procedure calls for arbitrators who are either members

or employees of the [defendant] Synod,” because “Plaintiff has not pointed to any

specific prejudice he would suffer under the bylaws, but only a generalized fear of
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partiality. This anxiety is insufficient to overturn the LCMS arbitration process”).

d. The District Court Correctly Held That Plaintiffs’ Argument That


Scientology Religious Doctrine Precludes A Fair Hearing Before
Scientologist Arbitrators, Contrary To The Church’s Definition
Of Its Doctrine, Is Non-Justiciable Under The First Amendment

Based upon their interpretation of selected passages from pieces of

Scientology writings, plaintiffs argue that as a matter of Scientology religious law

they could not receive a fair hearing because as declared Suppressive Persons they are

considered enemies of the religion. The IJC, however, testified that an arbitration

panel would be required by Scientology written policy and by his specific

instructions to be impartial and to judge plaintiffs’ claims fairly and impartially.

[T]he justice policies of Scientology have to do with finding out


what is the truth of the matter and what are the facts of the matter.
It has nothing to do with personality or opinion or whatever. …
In this particular scenario … of a person who’s been declared
suppressive asking for use of Scientology justice procedures,
whether it be arbitration, committee of evidence, or whatever
form of Scientology justice, the members who are Scientologists
in good standing would know from justice policies and they
would also be instructed to read justice policies that they would
be impartial in that matter.
Whether … they’re declared … is not relevant to the matter
they’re deciding. They’re just looking for the truth of the matter
they’re looking into. …
The arbitrators will be instructed, based on basic Scientology
justice principles that they are impartial, and they are not going
to have any predetermined idea of what to believe or not believe.
They’re there to get facts, … collect whatever evidence is needed
so that they can arrive at a fair conclusion.

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(DE188-3 [Tab 24]).


Plaintiffs’ efforts to invoke isolated passages from volumes of Scientology

policy25 to prove that no Scientologist in good standing could act as an impartial

arbitrator not only is contrary to religious policy as described by the IJC but is

fundamentally at odds with the First Amendment. Plaintiffs ask this court to construe

church doctrine in a manner contrary to the Church’s interpretation. But the First

Amendment “forbids civil courts from [making their own] interpretation of

particular church doctrines and the importance of those doctrines to the religion.”

Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393

U.S. at 450. As the district court wrote:

[T]he First Amendment prohibits consideration of this


contention, since it necessarily would require an analysis and
interpretation of Scientology doctrine. That would constitute a
prohibited intrusion into religious doctrine, discipline, faith,
and ecclesiastical rule, custom, or law by the court.
(DE189, citing Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 115 (1952)).

II. THE DISTRICT COURT CORRECTLY DENIED PLAINTIFFS’


MOTION TO VACATE THE ARBITRATION DECISION
Even in a secular context, the scope of judicial review of arbitration

proceedings and determinations is “among the narrowest known to law,” Dominion

Video Satellite, Inc. v. Echostar Satellite LLC, 430 F.3d 1269, 1275 (10th Cir. 2005).

25
It is well recognized that passages from the Old and New Testament and Koran
often conflict and can be subjected to numerous and diverse interpretations.
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That limited judicial review, we have explained, maintains


arbitration’s essential virtue of resolving disputes straightaway.
If parties could take full-bore legal and evidentiary appeals,
arbitration would become merely a prelude to a more
cumbersome and time-consuming judicial review process.
Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568-569 (2013)(internal citations

and quotations omitted). See also id. at 572-73 (“All we say is that convincing a

court of an arbitrator’s error—even his grave error—is not enough. … The potential

for those mistakes is the price of agreeing to arbitration.”).

Thus, for example, a court may not vacate an arbitration decision even if the

arbitrators did not explain their reasons. O.R. Sec., Inc. v. Prof’l Planning Assocs.,

Inc., 857 F.2d 742, 747 (11th Cir. 1988). Likewise, a court may not engage in a

review of the factual record to determine if the arbitration panel ruling was “contrary

to strong evidence.” Wallace v. Buttar, 378 F.3d 182, 193 (2d Cir. 2004)(“If a ground

for the arbitrator’s decision can be inferred from the facts of the case, the award

should be confirmed. Only this approach to the evidentiary record is consistent with

the great deference which must be paid to arbitral panels by federal courts”). Nor,

as noted above, will a court look beyond the choices made by the parties to determine

whether the arbitrators were partial. Winfrey v. Simmons Food, Inc., 495 F.3d at

551. And the standard for finding partiality of an arbitrator based on his conduct is

extremely high. See McCabe, Hannity & Remington, Co. v. ILWU, 557 F. Supp. 2d

1171, 1182 (D. Haw. 2008)(Arbitrator expressed sympathy with one party’s

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situation (stating he should have received a “hero’s welcome” and the parties were

receiving a judgment “with a vengeance!”) Held: “The Arbitrator’s expressions of

sympathy and anger are an insufficient basis for vacating his award”); Spector v.

Torenberg, 852 F. Supp. 201 (S.D.N.Y. 1994)(“An arbitrator is not precluded from

developing views regarding the merits of a dispute early in the proceedings, and an

award will not be vacated because he expresses those views. In addition, what

petitioners characterize as the coaching of witnesses, this Court views as in keeping

with the relative informality of arbitral proceedings”).

Whatever limited scope of review applies in the context of secular arbitration

is virtually eliminated when the issue concerns religious arbitration. Lang v. Levi, 16

A.3d 980, 989 (Md. App. 2011)(“The addition of the religious context further

narrows the standard to make our intervention nearly impossible”).

It is of the essence of these religious unions, and of their right


to establish tribunals for the decision of questions arising
among themselves, that those decisions should be binding in all
cases of ecclesiastical cognizance, subject only to such appeals
as the organism itself provides for.
Kedroff, 344 U.S. at 115, quoting Watson v. Jones, 80 U.S. at 728-29. Indeed, courts

must accept decisions of religious tribunals even if arbitrary:

[N]o ‘arbitrariness’ exception … is consistent with the


constitutional mandate … [I]t is the essence of religious faith
that ecclesiastical decisions are reached and are to be accepted
as matters of faith, whether or not rational or measurable by
objective criteria. Constitutional concepts of due process,
involving secular notions of ‘fundamental fairness’ or
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impermissible objectives, are therefore hardly relevant to such


matters of ecclesiastical cognizance.
Serbian Eastern Orthodox Diocese, 426 U.S. at 709.

Courts have scrupulously applied the limitations of the

Watson/Kedroff/Serbian doctrine. See, e.g., Berg v. Berg, 2008 WL 415562 at *9

(N.Y. Sup. Ct. 2008)(First Amendment precludes court from “deciding whether

religious law has been violated”); Lang v. Levi, 16 A.3d at 985 (court “cannot delve

into whether under Jewish law there is legal support” for arbitrator’s decision);

Lieberman v. Lieberman, 149 Misc. 2d 983, 987 (N.Y. Kings Cty. 1991)(rejecting

motion to vacate on ground that wife was coerced to participate by threat of a

“Sirov,” a religious decree “that subjects the recipient to shame, scorn, ridicule, and

public ostracism by … religious community”); Am. Union of Baptists v. Trustees of

Particular Primitive Baptist Church, 335 Md. 564, 578 (1994)(“This dispute cannot

be resolved ... without inquiries into the religious doctrine and custom of the

Primitive Baptist faith. The constitution will not permit such inquiries, and we will

therefore not review the award of the arbitrators in the instant case”).

Whether viewed through the lens of the limited review of secular arbitrations

or constitutional doctrine, none of the grounds propounded by plaintiffs justify

vacatur of the determination of the arbitration panel. The district court thoroughly

reviewed the showing before it, rejected the arguments of plaintiffs, and upheld the

arbitrators’ decision.

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Plaintiffs challenge the district court’s ruling on several grounds, many of

them invented and all of them baseless. They argue:

1. The arbitrators “refused to hear any evidence critical of Scientology.”

(Br. at 17). False. The arbitrators reviewed written submissions critical of the

Church, including plaintiffs’ original Complaint and request for arbitration;

substantial portions of a document prepared by plaintiffs entitled “Detailed

Timeline;” a letter from Lynne Hoverson critical of CSRT; a Policy Letter from 1977

upon which Garcia wrote critical comments; letters from Church officials denying

refunds to others; a multi-page document containing email correspondence between

Luis Garcia and Church officials containing extremely critical and uncomplimentary

comments from Garcia; letters from Luis Garcia to FSSO critical of its refusal to

refund his donations and threatening legal action; and another timeline critical of

CSRT. (DE276-5, Nos. 1, 8, 31, 44-56, 59-61 [SA Tab 27]). The plaintiffs made no

effort to offer oral evidence or statements to the arbitrators, despite repeatedly being

invited to do so.

2. “Plaintiffs had no opportunity to present evidence or their case to the

arbitration panel.” Brief at 44. False. Plaintiffs offered 54 documents into evidence;

22 were admitted. The remainder were rejected on grounds of relevance,

competence, or hearsay. (Id.) Plaintiffs neither identified nor brought prospective

witnesses to the arbitration, or even declarations or statements of proposed

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witnesses, despite being asked if they wished to submit further evidence. As noted,

plaintiffs did not offer oral evidence or statements of their own to the arbitrators,

despite repeatedly being asked if they wished to do so. (DE276-1, ¶¶12, 16).

3. Mr. Garcia was not permitted to bring an “assistant” to help him with

reading problems. Brief at 12. Misleading. The IJC made clear that the Church

would provide someone to help him read or present materials, as Garcia conceded.

(DE276-11 at 1: “In all fairness, Mr. Ellis offered to provide a person to read for

me.”). Garcia never requested such assistance.

4. The IJC and arbitrators refused to consider the plaintiffs’ fraud claims

and the issues raised in the lawsuit. (Br. at 44-45, 50). False. Plaintiffs’ fraud claims

were set forth in their Complaint alleging misrepresentations by officials of CSRT

and IASA to induce donations for the Super Power Project or IAS “initiatives.”

Plaintiffs did not offer evidence, documentary, oral, or otherwise, that any person or

entity made a representation to induce such donations, let alone how or why such

representations were false or in what manner plaintiffs reasonably relied on them.

Plaintiffs have not attempted to show here or in the district court that such evidence

was offered. The “fraud” claims plaintiffs tried to argue to the arbitrators were that

the entire Church and religion is a fraud; it was those efforts that were disallowed by

the IJC and the arbitrators as irrelevant and hearsay. As noted above, the arbitrators’

findings specifically and separately addressed and rejected each of plaintiffs’ fraud

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and other claims, finding that plaintiffs’ allegations were not credible, hardly

surprising since plaintiffs did not try to offer proof of those claims. As the district

court held:

Finally, the “Religious Arbitration Findings Form” and


“Religious Arbitration Decision Form” belie the Garcias’
contention that the arbitrators refused to consider their fraud
claims and failed to provide sufficient written findings. Both
forms include their claims for $340,000 from the Church of
Scientology Religious Trust (CSRT) for donations to the Super
Power project (Flag Building) and $510,000 from Orange
County Org for donations to the Ideal Org fund. (Dkt.275-6).
According to the Findings Form, the arbitrators found that the
Garcias’ claims that they were misled by Church fundraisers
were not credible with respect to the Super Power project and
the Ideal Org fund. (Id. at ¶¶31, 36, 39). The arbitrators checked
“no” on the Decision Form, indicating their decision that the
Garcias were not entitled to refunds for these donations. That
is a sufficient finding. See O.R. Sec., Inc. v. Prof’l. Planning
Assocs., Inc., 857 F.2d 742, 747 (11th Cir. 1988) (“Arbitrators
are not required to explain their reasons for an award”).

(DE282 at 7).

5. The IJC had “unfettered ex parte contact with the arbitration panel.”

Brief at 44. False and misleading. The IJC met separately with the arbitrators and

with plaintiffs for short periods, pursuant to Scientology justice procedures. He

instructed the arbitrators as to the procedures and the nature of the dispute. He

presented to the arbitrators the written claims of plaintiffs and the written response

of the Church. He provided the arbitrators with the governing religious policies, and

with those of plaintiffs’ documents that he found admissible. He did not present

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evidence of his own; he only forwarded to them evidence presented by the parties.

Moreover, the IJC did not “train” the arbitrators. He spent no more than an hour

with them over two days, and instructed them as to their role, the dispute, and the

procedures and provided them with applicable religious policy. (DE276-1).

6. The arbitrators did not refuse to allow plaintiffs’ lawyer to attend the

arbitration. The IJC consistently stated prior to the arbitration that plaintiffs could

bring a lawyer to advise them, but that he could not directly participate in the

proceedings themselves. As the district court stated on the eve of arbitration, “As

for [plaintiffs’] concern that counsel will not be permitted to attend, the IJC testified

that their attorney may be present.” (DE265 at 4, n.5 [SA Tab 29]). The Churches

and the IJC fully anticipated that plaintiffs’ lawyer would attend. He never showed

up, despite the opportunity to do so to consult with and provide advice to his client.

The district court held that plaintiffs’ argument was “disingenuous.” At the least.

7. The CVB told the arbitration panel how to rule. (Br. at 47). False. The

CVB letter was presented to the arbitrators as the Churches’ response to the

plaintiffs’ claims. It argued that plaintiffs did not qualify for return of their

donations. The arbitrators were instructed to decide those issues themselves and

were free to come to whatever decision they thought appropriate. (DE276-1 at 2-4).

The arbitrators awarded plaintiffs over $18,000 despite the CVB’s argument that

they be awarded nothing. As the district court found, “The arbitration award of more

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than $18,000 demonstrates that the arbitrators made an independent finding.”

(DE282 at 6, n.4).

8. Plaintiffs had no opportunity to respond to the letter and exhibits from

the CVB setting forth the Churches’ position on plaintiffs’ claims. False. Plaintiffs

could have responded when repeatedly asked by the arbitrators if they wished to be

heard further or to present any further materials. They declined the opportunity to

do so, despite the fact that up to two weeks had been set aside for the arbitration and

plaintiffs easily could have requested time to collect and present evidence they

deemed relevant and material.

CONCLUSION TO RESPONDING BRIEF ON BEHALF OF


DEFENDANTS-APPELLEES
The district court correctly rejected plaintiffs’ arguments and upheld the

decision of the arbitrators within the extremely narrow scope of judicial inquiry

permitted. The decision should be affirmed.

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CONCLUSION TO COMBINED BRIEF

Plaintiffs’ appeal should be dismissed for lack of subject matter jurisdiction.

Alternatively, the orders of the district court compelling arbitration and denying

plaintiffs’ motion to vacate the arbitration decision should be affirmed.

Respectfully submitted,

/s/ ERIC M. LIEBERMAN


elieberman@rbskl.com
Rabinowitz, Boudin, Standard,
Krinsky & Lieberman, P.C.
14 Wall Street, Suite 3002
New York, NY 10005
(212) 254-1111

F. WALLACE POPE, JR.


wallyp@jpfirm.com
ROBERT V. POTTER
bobp@jpfirm.com
Johnson, Pope, Bokor, Ruppel & Burns, LLP
Post Office Box 1368
Clearwater, Florida 33757
(727) 461-1818; (727) 462-0365-fax

Attorneys for Defendants-Appellees/Cross-


Appellants

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CERTIFICATE OF COMPLIANCE

I HEREBY CERTIFY that this filing complies with the type-volume

limitations contained within Federal Rule of Appellate Procedure 32 and further

complies with this Court’s Order entered April 29, 2019 in that the combined principal

and response brief specifically contains 19,984 words.

By: /s/ Robert V. Potter


Robert V. Potter
Florida Bar No. 0363006

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 2nd day of July, 2019, a copy of the
foregoing has been electronically filed with this Court via CM/ECF, and has been
furnished via email to:
Theodore Babbitt, Esq. Robert E. Johnson, Esq.
BABBITT & JOHNSON, P.A. GRAYROBINSON, P.A.
1641 Worthington Road, Suite 100 401 E. Jackson Street, Suite 2700
West Palm Beach, FL 33409 Tampa, FL 33601
tedbabbitt@babbitt-johnson.com rjohnson@gray-robinson.com
valerie.taylor@gray-robinson.com

Philip M. Burlington, Esq.


BURLINGTON & ROCKENBACH, P.A.
444 West Railroad Avenue, Suite 350
West Palm Beach, FL 33401
pmb@FLAppellateLaw.com
kbt@FLAppellateLaw.com
JOHNSON, POPE, BOKOR,
RUPPEL & BURNS, LLP

By: /s/ Robert V. Potter


Robert V. Potter
Florida Bar No. 0363006
bobp@jpfirm.com
84
Case: 18-13452 Date Filed: 07/02/2019 Page: 98 of 98

F. Wallace Pope, Jr.


Florida Bar No. 0124449
wallyp@jpfirm.com
Post Office Box 1368
Clearwater, Florida 33757
Telephone: 727-461-1818

85