Garcia v. Church of Scientology Flag Serv. Org.
| Decision Date | 02 November 2021 |
| Docket Number | 18-13452 |
| Parties | MARIA DEL ROCIO BURGOS GARCIA, LUIS A. GARCIA SAZ, Plaintiffs-Appellants-Cross Appellees, v. CHURCH OF SCIENTOLOGY FLAG SERVICE ORGANIZATION, INC., a Florida nonprofit corporation, CHURCH OF SCIENTOLOGY FLAG SHIP SERVICE ORGANIZATION, INC., a foreign corporation doing business in Florida, d.b.a. Magestic Cruise Lines, Defendants-Appellees-Cross Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
DO NOT PUBLISH
Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:13-cv-00220-JDW-TBM
Before WILLIAM PRYOR, Chief Judge, ROSENBAUM, and LUCK, Circuit Judges.
The main issues in this appeal are whether the district court correctly compelled arbitration of a dispute between two former members of the Church of Scientology and two church entities and whether it correctly denied a motion to vacate the resulting arbitration award. Luis and Maria Garcia filed this action to recover funds they donated to the church when they were Scientologists. But because they agreed to submit any disputes with the church to religious arbitration, the district court compelled arbitration before a panel of Scientologist arbitrators. After the arbitrators awarded the Garcias about $18, 000, far less than they sought, the Garcias moved to vacate the award based on evident partiality and arbitrator misconduct. The district court denied the motion. The Garcias appeal the orders that compelled arbitration and denied their motion to vacate. The church entities cross-appeal, arguing that the district court lacked subject-matter jurisdiction over this action and that it erred by granting leave to amend the complaint. We affirm because the district court had jurisdiction, did not abuse its discretion by granting leave to amend, correctly compelled arbitration, and correctly rejected the grounds for vacating the award.
Luis and Maria Garcia are former members of the Church of Scientology. As Scientologists, the Garcias donated to projects and causes that the church promoted, and they paid to receive religious services. They also agreed to resolve any disputes with the church through binding religious arbitration. The Garcias later left the church, which led its leadership to declare them "suppressive per-sons"-a term that refers to people who have been expelled from Scientology. After their expulsion, the Garcias unsuccessfully sought refunds of their donations and payments.
The Garcias filed a complaint in the district court against five entities associated with the Church of Scientology. They alleged claims of fraud, breach of contract, and unfair and deceptive trade practices under state law and sought more than $400, 000 in damages. In addition to two nonprofit corporations-Church of Scientology Flag Service Organization Inc., and Church of Scientology Flag Ship Service Organization, Inc.-the Garcias named as defendants two religious trusts and a nonprofit corporation that served as the official membership organization of Scientology. They alleged that all five entities "acted in concert either as agents or principals of one another, partners, joint venturers, or co-conspirators."
Three of the Scientology entities-the two trusts and the membership organization-moved to dismiss the complaint for lack of diversity jurisdiction. The entities argued that the district court lacked diversity jurisdiction because they and the Garcias were all citizens of California.
The Garcias moved for leave to amend their complaint to drop the three nondiverse defendants. They explained that they had since determined that Flag Service spearheaded the activities underlying their complaint and that the nondiverse entities were dispensable parties. The amended complaint attributed to Flag Service and Flag Ship much of the conduct that the original complaint attributed to the nondiverse parties. It also alleged that Flag Service and Flag Ship "acted in concert either as agents or principals of one another, partners, joint venturers, or co-conspirators."
Over the objection of Flag Service and Flag Ship, the district court granted leave to amend and denied the pending motion to dismiss the original complaint as moot. Flag Service and Flag Ship then moved to dismiss the amended complaint for lack of diversity jurisdiction, but the district court denied that motion too.
After Flag Service and Flag Ship moved to compel arbitration and stay the proceedings, the Garcias responded that the arbitration agreements they signed were unenforceable. They argued the agreements were procedurally unconscionable because they were contracts of adhesion and provided no procedures to govern an arbitration. And they contended the agreements were substantively unconscionable because Scientology doctrine regards suppressive persons as enemies of the church who have no rights. According to the Garcias, this doctrine would prevent them from receiving a fair hearing before arbitrators who were "Scientologists in good standing," as the arbitration agreements required.
The district court held an evidentiary hearing on the motion to compel arbitration. It found that the Garcias signed multiple enrollment applications for religious services during their time as Scientologists that contained broad arbitration agreements. The agreements covered "any dispute, claim or controversy" between the Garcias 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." The Garcias agreed to resolve any disputes that could not be settled informally "solely and exclusively through Scientology's Internal Ethics, Justice and binding religious arbitration procedures." The agreements provided for "binding religious arbitration in accordance with the arbitration procedures of Church of Scientology International." They included procedures for submitting a request for arbitration to the International Justice Chief of Scientology and the opposing party and for the selection of three arbitrators "to hear and resolve the matter." Under those procedures, each party would designate one arbitrator, and those two arbitrators would select a third. If the arbitrators were not designated within a specified time, the Justice Chief had the authority to appoint arbitrators. Finally, the agreements provided that the arbitration would "be conducted in accordance with Scientology principles" and that all arbitrators would be "Scientologists in good standing with the Mother Church." The district court also heard testimony from the Justice Chief who identified various sources of Scientology justice procedures.
Following the hearing, the district court ruled that the arbitration agreements were enforceable and granted the motion to compel arbitration. It concluded that the agreements were not procedurally unconscionable because they included enough procedures to give the Garcias some idea of the matters to be arbitrated and the manner of effecting arbitration. And it ruled that deciding whether Scientology teaching about suppressive persons rendered the agreements substantively unconscionable would have required "an analysis and interpretation of Scientology doctrine," which the First Amendment forbids civil courts to undertake.
As the arbitration agreements required, the Garcias sent a request for arbitration to the International Justice Chief of Scientology. They requested arbitration against all the Scientology entities named in the original complaint and explained that their claims were "as set forth in the original complaint." They also asserted claims against an additional Scientology entity not named in either complaint.
The parties were unable to agree on the selection of arbitrators, so the district court invoked its authority under the Federal Arbitration Act to appoint them. See 9 U.S.C. § 5. It ordered Flag Service and Flag Ship to provide a list of 500 Scientologists in good standing. It then confidentially selected five Scientologists to serve as arbitrators or alternates.
The parties participated in a two-day arbitration-the first in the history of the Church of Scientology. The Garcias' attorney did not attend the arbitration because church representatives informed him that Scientology procedures did not allow secular lawyers to play a substantive role in the proceedings. Luis tried to bring a reading assistant with him to the arbitration, but a security guard denied the assistant access because she was not on the guest list. When Luis raised the issue, the International Justice Chief refused to admit Luis's reading assistant but offered to provide someone else to assist him. Luis declined the offer.
On the first day of arbitration, the International Justice Chief met with the Garcias and the arbitrators separately. The Justice Chief told the Garcias that he needed to "hat" the arbitrators-a term that the Garcias say Scientologists use to mean "train"-be-cause it was their first arbitration. He gave the arbitrators background materials about the case, including the request for arbitration, the complaint, and church policies. He also gave the arbitrators a report from the Scientology Claims Verification Board which expressed the Board's view that the Garcias were not entitled to a refund. The Justice Chief gave the Garcias copies of these documents. He also collected documentary evidence from the Garcias so that he could review it for "entheta," a term that the Garcias say Scientologists use to refer to anything critical of the church. According to an affidavit Luis submitted to the district court, the Justice Chief...
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