Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 1 of 27 PageID 4524

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

LUIS A. GARCIA SAZ and Wife,

MARIA DEL ROCIO BURGOS
GARCIA,

Plaintiffs, CASE NO: 8:13-CV-220-T27 TBM

vs.

CHURCH OF SCIENTOLOGY FLAG

SERVICE ORGANIZATION, INC., and
CHURCH OF SCIENTOLOGY FLAG SHIP
SERVICE ORGANIZATION, INC.,

Defendants.
____________________________________/

PLAINTIFFS’ MOTION TO VACATE ARBITRATION AWARDS

AND INCORPORATED MEMORANDUM OF LAW

The Plaintiffs, LUIS A. GARCIA SAZ and MARIA DEL ROCIO BURGOS

GARCIA, under 9 U.S.C. § 10(a) (2012), file this Motion to Vacate the Arbitration Awards

and Incorporated Memorandum of Law. The Arbitration Awards are dated October 23,

2017, and signed by the arbitration panel on October 24, 2017 (Ex. 1 Arbitration Findings

Form & Ex. 2 Arbitration Decision Form).

1. The Plaintiffs have a statutory right to move to vacate an arbitration award

when: (1) the award was “procured by corruption, fraud, or undue means;” (2) the arbitrators

acted with “evident partiality or corruption”; or (3) the arbitrators engaged in “misconduct in

. . . refusing to hear evidence pertinent and material to the controversy” or “any other

misbehavior by which the rights of any party have been prejudiced.” 9 U.S.C. § 10(a). The

1
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 2 of 27 PageID 4525

Plaintiffs move to vacate based upon sections 10(a)(2) and 10(a)(3). While the ability of

courts to review ecclesiastical arbitrations is limited, the Defendants (the “Church”)1 agreed

that the Plaintiffs have the right to file a motion to vacate on the grounds authorized by

section 10(a) (DE196:87 Tr. 2/19/15).

2. Under section 10(a)(3), this Court should vacate the arbitration award because

the arbitration panel engaged in misconduct by refusing to hear any evidence critical of the

Church (Ex. 3 Garcia Aff. at 4-5, 9-10, 13-15, 17).

3. In conjunction with the motion to compel arbitration, the Church presented the

testimony of the International Justice Chief (“IJC”) Mike Ellis, who told this Court that the

Plaintiffs would have a full opportunity to “present evidence” and “originate whatever [they]

wanted . . . to present [their] side of the story” (DE188-3:176-78 Dep. Mike Ellis). When

this Court later denied the Plaintiffs’ motion for miscellaneous relief, it relied upon this

testimony that the Plaintiffs would have the opportunity to present their evidence: “For

example, [IJC] Ellis has testified that . . . [the Plaintiffs] would be able to ‘originate whatever

[they] wanted to’ in order to present their side of story . . . .” (DE265:3, n.4 Order 10/16/17).

4. Directly contrary to this representation, the IJC and arbitration panel refused

to allow the Plaintiffs to present any witnesses or evidence at all because the IJC deemed the

Plaintiffs’ evidence to be “entheta” (Ex. 3 Garcia Aff. at 4-5, 9-10, 13-15, 17). “Entheta” is a

Scientology term meaning critical of the Church (Id. at 4).

1
The Defendants are the CHURCH OF SCIENTOLOGY FLAG SERVICE
ORGANIZATION, INC. and the CHURCH OF SCIENTOLOGY FLAG SHIP SERVICE
ORGANIZATION, INC. This motion refers to the Defendants collectively as “the Church.”
All emphasis is supplied unless otherwise indicated. This motion refers to documents filed in
this Court by docket entry number (DE[docket entry number]:[page number]).

2
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 3 of 27 PageID 4526

5. The Plaintiffs alleged claims against the Church for fraud, breach of contract,

and violations of the Deceptive and Unfair Trade Practices Act (DE114 Am. Compl.

5/12/14). The Plaintiffs alleged that the Church extracted funds from them by soliciting

contributions for purposes that were never fulfilled and failing to repay deposits for services

that were never rendered (Id. at 1-4, 7-29). The Plaintiffs could not prove these claims

without submitting evidence critical of the Church (Ex. 3 Garcia Aff. at 4-10, 13-15, 17).

6. Before this Court compelled arbitration, the Church also told this Court that

whether the Plaintiffs requested a refund by filling out a form with the Claims Verification

Board (CVB) would not be dispositive of the issues in this suit (DE196:88-89 Tr. 2/19/15).

The Church stated the claims verification board process does not apply to persons, like the

Plaintiffs, who have been declared by the Church to be suppressive persons (Id. at 89;

DE188-3:147-48, 151 Dep. Mike Ellis).

7. At arbitration, the IJC reversed course and stated that the only issues for

arbitration were whether the Plaintiffs followed the correct procedure to request return of

funds from the Church by filling out a CVB form (Ex. 3 Garcia Aff. at 11, 13-14). The IJC

and arbitrators refused to consider the Plaintiffs’ fraud claims and the issues raised in the

lawsuit (Id.). The only questions the arbitrators asked the Plaintiffs involved whether they

had filled out a CVB form (Id. at 12-18).

8. The issues presented in the Plaintiffs’ lawsuit are much broader than whether

they filled out a CVB form (DE114 Am. Compl. 5/12/14; Ex. 3 Garcia Aff. at 4-10, 13-15,

17).

3
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 4 of 27 PageID 4527

9. The Plaintiffs tried to submit over 900 pages of evidence supporting their

claims, but the IJC redacted all information critical of the Church (Ex. 3 Garcia Aff. at 5, 7-

10). The IJC presented the arbitration panel with only 70 of the pages the Plaintiffs

submitted (Ex. 3 Garcia Aff. at 9). The IJC heavily redacted the few pages that the IJC

allowed the Plaintiffs to give the arbitrators (Id. at 9-11). As an example, the Plaintiffs asked

the IJC to present to the arbitration panel an accounting summary of the Orange County Ideal

Org (Id. & Attached Ex. F Unredacted accounting summary proffered by the Plaintiffs). The

IJC redacted all but a few lines of the accounting summary before giving it to the arbitrators

(Ex. 3 Garcia Aff. at 9-11 & Attached Ex. G Accounting summary as redacted by IJC before

presenting it to arbitrators). The redacted accounting summary no longer contained any

information related to the Plaintiffs’ fraud claims. (Id. & Compare Ex. F Unredacted

summary with Ex. G Redacted summary). The IJC refused to allow the Plaintiffs to present

letters from former Church members with similar requests for the Church to return donations,

statements published on the Church’s website, the Church’s promotional materials, and

copies of Church policies that demonstrated the Church’s fraud (Id. & Ex. H Church flyer the

IJC excluded from evidence).

10. This Court should also vacate the arbitration award because the panel engaged

in misconduct by allowing the IJC to have ex parte contact with the arbitration panel and

present evidence outside the Plaintiffs’ presence.

11. The arbitration panel engaged in further misconduct in refusing to allow the

Plaintiffs’ counsel to attend the arbitration, but allowing the Church to have counsel present

(Ex. 3 Garcia Aff. at 6-7, 10 & Attached Ex. B Screen Shot showing wireless network “Gary

4
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 5 of 27 PageID 4528

Soter’s iPhone” 10/23/17). This contradicted the Church’s representations to this Court that

the Plaintiffs’ counsel had the right to attend the arbitration (DE188-4:194-95 Dep. Mike

Ellis).

12. The arbitration panel also engaged in misconduct by failing to provide written

findings sufficient for this Court to review the arbitration awards (Ex. 1 Arbitration Findings

Form & Ex. 2 Arbitration Decision Form). This Court asked counsel for the Church, “Will

there be a record of the proceeding if I’m asked to review it”? (DE196:87 Tr. 2/19/15). The

Church’s counsel repeatedly assured this Court that the arbitration panel would create a

written report sufficient for this Court to rule on a motion to vacate (DE196:88-89 Tr.

2/19/15; DE255:9 Tr. 8/15/17). Directly contrary to the Defendants’ repeated representations

to this Court, the only written documents the arbitration panel provided were checklists

prepared on October 23, 2017, the day before the arbitration began and signed on the day the

arbitration actually took place, October 24, 2017 (Ex. 1 Arbitration Findings Form & Ex. 2

Arbitration Decision Form). Nothing in the checklists gives this Court any explanation of

what evidence the panel considered or how the findings were determined (Id.).

13. In addition, under 9 U.S.C. § 10(a)(2), this Court should vacate the arbitration

award because “there was evident partiality or corruption in the arbitrators, or either of

them.” Again, the Defendants represented to this Court that the IJC would instruct the

arbitration panel to “treat everyone impartially regardless of who they are” (DE188-2:80,

Dep. Mike Ellis; see id. at 81; DE188-3:161, 177; DE188-4:222).

14. This Court relied on this evidence when it rejected the Plaintiffs’ argument

that because the Church had declared them to be “Suppressive Persons,” it would be

5
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 6 of 27 PageID 4529

impossible for them to receive a fair and neutral arbitration from a panel of arbitrators

comprised of Scientologists in “good standing” (DE189:19-20 Order Compelling Arbitration

3/13/15; Ex. 4 Church Order Garcia Suppressive Persons Declare 11/20/10). This Court

found that IJC “Mike Ellis testified that this would not be the case, essentially because the

arbitrators would be instructed to be fair and neutral.” (Id.).

15. That did not happen. Instead, outside the Plaintiffs’ presence, IJC Mike Ellis

“hatted” the arbitration panel (Ex. 3 Garcia Aff. at 4-6, 12). “Hatting” is a Scientology term

for “training” them (Ex. 3 Garcia Aff. at 4). Contrary to the IJC’s representations to this

Court, this “hatting” did not merely consist of instructing the arbitrators to be fair and

neutral. Outside the presence of the Plaintiffs, the IJC gave the arbitration panel several

documents to review, including church policies, the complaint, and the 10-page report from

the Claims Verification Board (CVB report) (Id. at 4-9 & Attached Ex. E CVB report). This

report was tantamount to a directed verdict for the Church (Id. at 8-9, 15 & Attached Ex. E

CVB report). The Plaintiffs had never seen the CVB report before and had no opportunity to

respond to it (Id. at 8-9, 15). The arbitration panel gave the IJC unfettered access and the

right to present evidence outside the Plaintiffs’ presence. This disparate treatment

demonstrated the evident partiality of the arbitration panel.

16. Members of the arbitration panel also made numerous statements

demonstrating their evident partiality. The Chairman of the arbitration panel, Peter Sokoloff,

told the Plaintiffs that once they were declared “Suppressive Persons,” they ceased to have

any rights as Scientologists (Ex. 3 Garcia Aff. at 16). He told the Plaintiffs their payments to

the church were charitable donations and, therefore, non-refundable (Id.).

6
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 7 of 27 PageID 4530

17. These payments, and the Church’s fraudulent statements to induce the

payments, formed the basis for the Plaintiffs’ lawsuit (DE114 Am. Compl. 5/12/14). The

statements of Chairman Sokoloff demonstrated that the arbitration panel had already decided

the dispute in favor of the Defendants, before even meeting the Plaintiffs (Ex. 3 Garcia Aff.

at 12-13). The evident partiality of the arbitration panel requires this Court to vacate the

arbitration awards.

18. The Plaintiffs opposed the Church’s motion to compel arbitration on the

grounds of procedural and substantive unconscionability (DE30 Pls. Resp. Opposing

Arbitration 4/22/13; DE170 Pls. Trial Brief 2/16/15; DE191 Pls. Mot. for Reconsideration

4/9/15). The Plaintiffs argued, vigorously, that as persons declared “Suppressive” by the

Church, they could never receive a fair hearing before an arbitration panel composed of

Scientologists in “good standing” (DE30; DE170; DE191; Ex. 4 Garcia Declare Order). The

events during the arbitration proved the Plaintiffs correct on the unconscionability of the

arbitration procedure. This Court should grant the Plaintiffs’ motion to vacate the arbitration

awards and order trial on the merits of the claims in Plaintiffs’ lawsuit.

MEMORANDUM OF LAW

A. The arbitration awards should be vacated because of the arbitrators’

misconduct in refusing to hear material evidence critical of Scientology
and allowing the IJC to present evidence outside the Plaintiffs’ presence.

This Court should vacate an arbitration award “where the arbitrators were guilty of

misconduct . . . in refusing to hear evidence pertinent and material to the controversy;

or of any other misbehavior by which the rights of any party have been prejudiced.” 9

U.S.C. § 10(a)(3). The arbitrators’ evidentiary rulings “must give the parties a fundamentally

7
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 8 of 27 PageID 4531

fair hearing.” Rosenweig v. Morgan Stanley & Co., 494 F.3d 1328, 1333 (11th Cir. 2007)

(citing Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20 (2d Cir. 1997)). This Court

should vacate the arbitration award when the “arbitrator’s refusal to hear pertinent and

material evidence prejudices the rights of the parties.” Id. (quoting Hoteles Condado Beach,

La Concha & Conv. Ctr. v. Union De Tronquistas Local 901, 763 F.2d 34, 40 (1st Cir.

1985)).

Every representation the Defendants made to the Court about how the arbitration

would be conducted has proven to be false. This Court relied on these representations. The

orders directing arbitration and ruling on the Plaintiffs’ multiple motions were fatally

infected by those misrepresentations. The awards should be vacated.

This Court took great pains to prohibit both parties from contacting the arbitrators

before the start of the arbitration. At the April 7, 2017, hearing, this Court warned that it

would not countenance anyone attempting to influence the arbitrators before the arbitration

(DE235:11-14 Tr. 4/7/17). This Court ordered the parties “not [to] contact, attempt to

contact, or respond to any contact by any individual listed by Defendants or selected to

serve as an arbitrator by the Court.” (DE238:3 Order 4/10/17).

Despite this warning, on October 23, 2017, before the arbitration began, the

Defendants spent an entire day with the arbitrators without the Plaintiffs (Ex. 3 Garcia Aff. at

4-6, 8-9, 12). This directly violated this Court’s order directing the parties “not [to] contact,

attempt to contact, or respond to any contact by any individual listed by Defendants or

selected to serve as an arbitrator by the Court.” (DE238:3 Order 4/10/17). No Court

8
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 9 of 27 PageID 4532

should countenance this behavior, which makes a mockery of fair arbitration procedure and

allows the IJC to dictate a decision to the arbitrators.

The IJC told the Plaintiffs that he had to “hat” the arbitration panel, a scientology

term for “training” the arbitration panel, outside the Plaintiffs’ presence (Ex. 3 Garcia Aff. at

4-6, 12). During the “hatting,” the IJC gave the arbitration panel numerous documents to

review, including the report from the Claims Verification Board (CVB report) (Id. at 4-9 &

Attached Ex. E CVB report). The CVB report was dated that day—October 23, 2017—and

the Plaintiffs had never seen it before (Id.). The CVB report stated that the IJC had

“referred” the Plaintiffs’ request for arbitration to the CVB “for response” (Ex. 3 Garcia Aff.,

Attached Ex. E CVB report at 1).

The CVB report read like an expert opinion of someone who had conducted an

extensive investigation into the Plaintiffs (Ex. 1 Garcia Aff. at 8-9 & Attached Ex. E CVB

report). The CVB, in no uncertain terms, told the arbitration panel how to rule for the

Church: “There is no written evidence supporting the Garcias’ claims that their donations for

building campaigns were made as a result of false promises” (Ex. 1 Garcia Aff., Attached Ex.

E at 7; see id. at 9). “Policy is clear that if it is not written it is not true” and “that the Church

is not responsible for statements made by individual staff” (Id. at 7 & 9). “Luis Garcia seeks

a refund for services he elected not to participate in” and “admitted he was well aware of the

Church’s policy on Return of Donations and his responsibility pursuant to the enrollment

forms he signed multiple times” (Id. at 10). According to the CVB:

The Garcias failed to follow the steps of dispute resolution set

forth in the Enrollment Forms and failed to follow the full
procedures of the Claims Verification Board with respect to
their claims for refund or repayment of donations for services,

9
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 10 of 27 PageID 4533

and therefore do not qualify for a refund. Building donations

and membership donations are not refundable.

(Id.).

The IJC also gave the arbitration panel two reports from Mr. Garcia’s confidential

“Priest/penitent Ethics file” (Ex. 3 Garcia Aff. at 8-9). These confidential reports were

completely irrelevant to the arbitration and the IJC intended only to intimidate and harass the

Plaintiffs (Id.).

The IJC is not just another Scientologist. As shown from the record, the IJC enforces

the dictates of the Church and, on his word alone, any one of the arbitrators could be

“declared Suppressive,” thereby losing his or her ability to speak to his or her spouse, losing

his or her livelihood, and losing all Scientologist friends (DE188-1:17-18; DE188-3:138-41,

157, 159-60, 193; DE188-4:184-85, 199, Dep. Mike Ellis). How could any Court believe

that it is appropriate for the IJC to spend the entire day telling the arbitrators how to proceed

with arbitration in the absence of the Plaintiffs? While the Court permitted the IJC to instruct

the arbitrators on the arbitration process, the Court could not have possibly intended that this

instruction permitted the admission of evidence outside the Plaintiffs’ presence for an entire

day before arbitration began. Based on what the IJC represented, the Court reasonably

expected the IJC would, in the presence of the plaintiffs, tell the arbitrators to be fair, explain

the procedure, and then step aside for the arbitrators to take over (DE188-2:80-81; DE188-

3:161, 177; DE184-4:222, Dep. Mike Ellis). Instead, the IJC completely controlled the

arbitrators and their decision.

The Defendants also told this Court that the Plaintiffs would be given a chance to

present their case (DE255:13 Tr. 8/15/17; DE188-3:176-78 Dep. Mike Ellis; DE196:88, 102

10
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 11 of 27 PageID 4534

Tr. 2/19/15). In the Order denying the Plaintiffs’ motion for miscellaneous relief, this Court

repeated the Defendants’ representations that the Plaintiffs would be given an opportunity to

present their case (DE265:3, n.4 Order 10/16/17) (“For example, [IJC] Ellis has testified that

. . . [the Plaintiffs] would be able to ‘originate whatever [they] wanted to’ in order to present

their side of story . . . .”). Yet, the arbitrators refused to allow the Plaintiffs to call any

witnesses (Ex. 3 Garcia Aff. at 3, 17). In fact, no one besides the Plaintiffs themselves was

even allowed on the premises (Id. at 2-3, 10, 17; Ex. 5 E-mails from the Church’s counsel

regarding attendance of the Plaintiffs’ counsel at arbitration). Mr. Garcia has a medical

condition that makes reading extremely difficult (Ex. 3 Garcia Aff. at 2-3 & Attached Ex. A,

letter from Mr. Garcia’s doctor). The Church refused to allow Mr. Garcia’s assistant, who

helps him read documents, attend (Id. at 2-3).

In their Amended Complaint, the Plaintiffs allege the Defendants used high-pressure,

illegal sales tactics to fraudulently solicit large contributions from the Plaintiffs (DE114 Am.

Compl. 5/12/14). The Plaintiffs brought several claims, including fraud, violations of the

Deceptive and Unfair Trade Practices Act, and breach of contract (Id.). During the

arbitration, the Defendants took the position that the arbitrators were not allowed to hear

anything about fraud because it was considered “entheta” (Ex. 3 Garcia Aff. at 4-5, 9-10, 13-

15, 17). That is a word that means Scientologists cannot hear anything critical of the Church,

even if factual and true (Id. at 4).

Mr. Garcia gave the IJC over 900 pages of documents to present to the arbitration

panel (Ex. 3 Garcia Aff. at 5, 7-10). The IJC redacted all information he felt was “entheta,”

critical of the Church, and gave the arbitration panel only 70 of the pages the Plaintiffs

11
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 12 of 27 PageID 4535

requested (Id. at 9). He rejected the rest as “irrelevant and/or ‘entheta.’” (Id.). Most of the

documents the IJC allowed constituted copies of commendations the Plaintiffs received for

their contributions (Id.). Other pages were highly redacted (Id. at 9-11 & Compare Attached

Ex. F unredacted accounting summary of the Orange County Ideal Org. proffered by the

Plaintiffs with Ex. G the version of this document the IJC redacted and presented to the

arbitration panel).

When Mr. Garcia finally got a chance to speak to the arbitration panel, and mentioned

his claims of fraud, the IJC cut him off and shouted, “WHAT YOU ARE SAYING IS

‘ENTHETA.’” (Ex. 3 Garcia Aff. at 13). The IJC even refused to allow Mr. Garcia to show

the arbitration panel a Church flyer as evidence of false statements made in promotional

material (Id. & Attached Ex. H Church flyer). When Mr. Garcia protested that his claims

involve fraud, the IJC said they were “not here to discuss any lawsuit or any claims in it,

but to find out whether or not [the Plaintiffs] followed proper church procedure and policy in

requesting a refund.” (Id. at 13). The Chairman of the arbitration panel admonished the

Plaintiffs, “we don’t want to hear anything about fraud because it has nothing to do with

the purpose of this arbitration” (Id. at 14).

No reasonable person could find that the Plaintiffs had an adequate remedy for their

fraud claim when they were precluded from ever mentioning it at arbitration. No Court

would hold that an arbitration where the Plaintiffs’ claims could not even be mentioned is an

adequate substitute for a civil action. Such a holding would completely immunize the

Church against any civil wrong that criticizes the Church. For example, if the Church’s truck

ran over someone in the parking lot, the Church could exclude all evidence of the accident as

12
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 13 of 27 PageID 4536

critical of the Church. The proceeding here was a sham that does not deserve to be called

arbitration. This was a star chamber proceeding, completely controlled from start to end by

the Church, with no ability for the Plaintiffs to present their case.

The Church told the Court at the hearing on February 19, 2015, that it was not relying

upon the CVB form because it did not apply to this case:

THE COURT: But they haven’t filed this voucher

thing yet.

MR. POPE: Bill of particulars?

THE COURT: No, voucher. Remember the witness

yesterday told us that before you can get an arbitration, you
have to submit this voucher thing. And if you don’t do that --

MR. POPE: No, Your Honor, that actually doesn’t

apply to persons who are declared. You mean the, what do
you call it, claims verification board [CVB]. That process
does not apply to people who are declared.

THE COURT: So we can bypass that.

MR. POPE: You bypass that. You go straight to the

international justice chief. And first they pick an arbitrator, the
church picks one, the two of them pick a third, and those
people get together and form the process that is compatible
with arbitration under the Committee of Evidence, interviewing
-- it’s an informal process, but it does result in a final report.

(DE196:88-89 Tr. 2/19/15).

As it turns out, nothing could be further from the truth. At the beginning of the

arbitration, the IJC told the Plaintiffs that the only issue to be arbitrated was whether they

followed the right procedure for requesting a refund from the Church (Ex. 3 Garcia Aff. at

11, 13-14). The only questions the arbitrators asked Mr. Garcia pertained to why he did not

fill out the CVB form (Ex. 3 Garcia Aff. at 12-18). The so-called findings of the arbitrators

13
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 14 of 27 PageID 4537

refer only to the Plaintiffs’ failure to fill out the CVB form (Ex. 1 Arbitration Findings Form;

Ex. 2 Arbitration Decision Form).

The Plaintiffs could not have filled out the CVB form because they had been declared

suppressive persons (DE188-3:147-48, 151, Dep. Mike Ellis; Ex. 4 Garcia Declare Order).

The form has to be filled out on church property and once declared, the Plaintiffs were not

permitted to go on Church property (DE188-3:147-48, 151; Ex. 4 Garcia Declare Order at 3).

This “Catch 22” makes it impossible for anyone declared suppressive to follow the CVB

procedure (Id.; Ex. 3 Garcia Aff. at 16 & Attached Ex. D Letter from Cara Golashesky, Flag

Land Base Justice Chief, denying Janet Akpobome’s request for return of donations 9/17/13).

Thus, no refunds, ever.

The Defendants misled this Court. The Court specifically asked whether there was

any sense to order arbitration if the Defendants were going to take the position that the failure

to fill out that form was dispositive (DE196:88-89 Tr. 2/19/15). The Defendants responded

that this Court should order arbitration because the form was inapplicable (Id.). Yet, that was

the only matter the arbitrators considered (Ex. 3 Garcia Aff. at 11, 12-18). This was a fraud

on the Court and should not be countenanced by confirming the arbitration awards.

The arbitrators’ evidentiary rulings excluded all evidence critical of the Church and

relevant to the Plaintiffs’ claims for fraud, deceptive and unfair trade practices, and breach of

contract. This deprived the Plaintiffs of a fundamentally fair hearing. See, e.g., Rosenweig v.

Morgan Stanley & Co., 494 F.3d 1328, 1333 (11th Cir. 2007); Tempo Shain Corp. v. Bertek,

Inc., 120 F.3d 16, 20 (2d Cir. 1997); Hoteles Condado Beach, La Concha & Conv. Ctr. v.

Union De Tronquistas Local 901, 763 F.2d 34, 40 (1st Cir. 1985). The decisions in Tempo

14
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 15 of 27 PageID 4538

Shain and Hoteles, which the Eleventh Circuit cited in Rosenweig, demonstrate that the

arbitrators’ misconduct in excluding evidence requires this Court to vacate the arbitration

award.

In Tempo Shain Corp., the arbitration panel refused to continue the proceedings to

allow the testimony of a witness temporarily unavailable due to his wife’s illness. 120 F.3d

at 17-18. The decision reasoned, “although not required to hear all the evidence proffered by

a party, an arbitrator ‘must give each of the parties to the dispute an adequate opportunity to

present its evidence and argument.’” Id. at 20 (quoting Hoteles, 763 F.2d at 39). There was

no reasonable basis for the panel’s conclusion that the testimony would be cumulative

because the unavailable witness handled the contract negotiations. No other witness could

testify to support the fraudulent inducement claims. Id.

The same is true here. The misconduct of the arbitration panel in excluding all

evidence critical of the Church left the Plaintiffs unable to present any evidence material and

relevant to their claims for fraud, deceptive and unfair trade practices and breach of contract.

The arbitrators’ misconduct prejudiced the Plaintiffs and requires this Court to vacate the

arbitration awards.

B. The arbitration awards should be vacated because of the arbitrators’

misconduct refusing the Plaintiffs’ request to have counsel present, while
allowing the Defendants’ counsel to be present.

This Court may vacate an arbitration award “where the arbitrators were guilty of

misconduct . . . or of any other misbehavior by which the rights of any party have been

prejudiced.” 9 U.S.C. § 10(a)(3). At his deposition, the IJC Mike Ellis testified that while

the Plaintiffs’ counsel would not be permitted to take an active part in the proceedings, he

15
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 16 of 27 PageID 4539

would be able to be present to advise the Plaintiffs (DE188-4:194-95 Dep. of Mike Ellis). In

this Court’s Order denying the Plaintiffs’ motion for miscellaneous relief, this Court relied on

this testimony: “For example, Ellis has testified that an attorney may be present, but may not

‘represent’ the Plaintiffs” (DE 265 Order 10/16/17 at 3 n.3).

Shortly before the arbitration, the Church reversed its position, stating:

The arbitration will be conducted in accordance with Church

ecclesiastical justice procedures and those procedures do not
contemplate participation by an attorney.

The arbitrators will be instructed by the International Justice

Chief on the application of Scientology principles to arbitrate
this dispute in a neutral and fair manner.

(Ex. 5 at 2, E-mail to the Plaintiffs’ counsel from Bob Potter, sent on behalf of F. Wallace

Pope, 10/10/17). A week later, defense counsel reiterated that the Plaintiffs’ counsel could

not participate in the arbitration:

As we have stated repeatedly and as the court has just

reiterated, the arbitration is an “ecclesiastical arbitration” and
the conduct and procedures of the arbitration are within the
control and discretion of the IJC in “accordance with Church
ecclesiastical procedures [and] principles.” It is not a matter
to be negotiated with between the civil lawyers, who have
no role to play at the arbitration. If Mr. Garcia has a
question about the arbitration, he should address it to the IJC at
that time.

(Ex. 5 at 4, E-mail to Plaintiffs’ counsel from Bob Potter, sent on behalf of F. Wallace Pope,

10/18/17). The Plaintiffs’ counsel did not attend the arbitration because he was not allowed

(Ex. 3 Garcia Aff. at 10).

Attorney Gary Soter, who represented the IJC during his deposition, was present in

the building to advise the Church and the IJC during the arbitration. The Defendants did not

16
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 17 of 27 PageID 4540

reveal this, but Mr. Garcia, in an attempt to use his phone, found Mr. Gary Soter’s iPhone in

the building broadcasting as a potential “hot spot” (Ex. 3 Garcia Aff. at 6-7, 10 & Attached

Ex. B Screen Shot). When the IJC was confronted with this fact, he admitted that Mr. Soter

was there to advise the Church (Id. at 10). It was fundamentally unfair to permit the

Defendants to have their lawyer present to advise them, but to deny the Plaintiffs a similar

right to counsel (Id.; Ex. 5 at 2-4, E-mails from the Church’s counsel to the Plaintiffs’

counsel 10/10/17 & 10/18/17). The IJC refused to allow Mr. Garcia even the presence of an

assistant to help him read (Ex. 3 Garcia Aff. at 2-3). Mr. Garcia needs assistance reading due

to a medical condition (Id. at 3 & Attached Ex. A letter from Mr. Garcia’s doctor). This

arbitration was a sham. The Church’s misconduct prejudiced the Plaintiffs, requiring this

Court to vacate the arbitration awards.

C. The arbitration awards should be vacated because the arbitration panel

engaged in misconduct by failing to provide written findings.

On February 19, 2015, this Court specifically asked the Defendants what would be

provided in the way of findings that this Court could review (DE196:87-89). This Court

asked, “Will there be a record of the proceeding if I’m asked to review it” by either party?

(DE196:87 Tr. 2/19/15). This Court asked for assurance there would “be some

memorialization of whatever the arbitrators decide” and that the Court would “get something

in writing signed by these three arbitrators saying here are the facts, here’s our

conclusions, and we agree or disagree with the Garcias.” (Id. at 88). Defense counsel

assured this Court that “a report is written up with a binding decision” (Id.). According to

defense counsel, “There is a report that comes out of the process.” (Id.) “[I]t does result in a

17
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 18 of 27 PageID 4541

final report and decision.” (Id. at 89). As late as August 2017, defense counsel assured the

Court, “they wind up producing a report.” (DE255:9 Tr. 8/15/17).

Thus, the Court was under the impression there would be formal findings and

conclusions for this Court to review and decide whether there was misconduct or inherent

prejudice of the arbitrators. In fact, no such findings were rendered. To the contrary, the only

documents are checklists prepared on October 23, 2017, the day before the arbitration began,

and signed the day the arbitration ended, on October 24, 2017 (Ex. 1 Arbitration Findings

Form; Ex. 2 Arbitration Decision Form). While the arbitration was set for October 23,

nothing happened that day except for the Defendants’ ex parte communications with the

arbitrators, which violated this Court’s April 10, 2017, order (Ex. 3 Garcia Aff. at 2-10;

DE238:3 Order 4/10/17).

Nothing in the checklists tells the Court anything about the testimony received or how

the “findings” were determined. The Plaintiffs have no idea what the Defendants discussed

with the arbitrators other than what was revealed in the conversation with the IJC, set forth in

Mr. Garcia’s affidavit (Ex. 3 Garcia Aff. at 2-10).

Defense counsel, in response to the Court at the February 19, 2015, hearing, agreed

this Court has the right to review the arbitration proceedings when determining whether to

vacate the arbitration award (DE196:87-89 Tr. 2/19/15). He agreed that this Court could

review a report recapping the facts, evidence and the arbitrators’ conclusions:

THE COURT: Let me ask you a hypothetical. If I

agree with you and compel arbitration and it happens, although
it’s never happened in the history of this organization, and then
one of you is unhappy with the result, where do you turn?

18
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 19 of 27 PageID 4542

MR. POPE: I believe that you would have the right

of any court that compels arbitration to do a review limited
to those areas that courts are limited to and that is
partiality, unfairness and partiality and corruption and that
sort of stuff.

THE COURT: Mr. Babbitt is happy to hear that is

[sic]. There [sic] going to be a record of it?

MR. POPE: Your Honor, there is the complicating

factor of the First Amendment in this. And you’ve already said
where you can’t go on the fairness issue.

THE COURT: Well, I’ve said that, but if something

happens in arbitration and it becomes apparent that one of
the arbitrators has been bought off, paid off, I think there
might be appropriate judicial scrutiny of that.

MR. POPE: I would have to agree, I believe.

THE COURT: Will there be a record of this

proceeding if I’m asked to review it by you on behalf of your
client or Mr. Babbitt on behalf of his? What am I going to
review?

MR. POPE: Well, as I understand the process, it is less

formal than would be required under the Florida Arbitration
Code. There are -- the witnesses are interviewed, the facts
are gathered from them over a period of time, documents
are looked at. In this case he’s got a claim for fraud. He
comes in, he puts out, he brings whatever witnesses, he
testifies himself or gets interviewed on the subject, and a
report is written up with a binding decision and that’s what
would come back to you as the court compelling the
arbitration.
THE COURT: So you do contemplate that there would
be some memorialization of whatever the arbitrators decide?
....
Am I going to get something in writing signed by
these three arbitrators saying here are the facts, here’s our
conclusions, and we agree or disagree with the Garcias?

MR. POPE: That was the import of what Mr. Ellis

said. There is a report that comes out of the process.

19
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 20 of 27 PageID 4543

(DE196:86-88 Tr. 2/19/15). Mr.Pope reiterated, “[I]t does result in a final report.” (Id. at

89). None of this happened.

The Defendants assured this Court that the CVB form “doesn’t apply to persons who

are declared” and would not be dispositive of the arbitration (DE196:88-89 Tr. 2/19/15;

DE188-3:147-48, 151 Dep. Mike Ellis). Instead, the CVB provided the arbitrators with a 10-

page report that can only be described as highly prejudicial to the Plaintiffs’ case (Ex. 3

Garcia Aff. at 8-9, 15 & Attached Ex. E CVB report). The CVB told the arbitration panel

how to rule for the Church: “There is no written evidence supporting the Garcias’ claims that

their donations for building campaigns were made as a result of false promises” (Ex. 3 Garcia

Aff., Attached Ex. E CVB report at 7; see id. at 9). According to the CVB, “Policy is clear

that if it is not written it is not true” (Id. at 7 & 9). The CVB concluded the Plaintiffs “failed

to follow the steps of dispute resolution set forth in the Enrollment Forms and failed to

follow the full procedures of the Claims Verification Board [CVB] with respect to their

claims for refund or repayment of donations for services, and therefore do not qualify for a

refund” (Id. at 10). Further, “Building donations and membership donations are not

refundable.” (Id.).

This Court rejected the Plaintiffs’ request for a court reporter (DE265 Order

10/16/17). The Plaintiffs believe the Court’s decision was influenced, in part, by the

Defendants’ representation that the arbitrators would prepare formal findings for this Court to

review (Id.; DE255:9 Tr. 8/15/17; DE196-86 Tr. 2/19/15). At the August 15, 2017 hearing,

the Defendants reiterated that the arbitrators “wind up producing a report” (D255:9 Tr.

8/15/17). The Defendants’ false representations fatally infected the Court’s decision not to

20
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 21 of 27 PageID 4544

allow a court reporter. As a result, there is no record of the arbitration proceedings. This

misconduct, coupled with the lack of findings, warrants this Court vacating the arbitration

awards.

D. The arbitration awards must be vacated due to evident partiality of the

arbitrators.

This Court may vacate an arbitration award “where there was evident partiality or

corruption in the arbitrators.” 9 U.S.C. § 10(a)(2). “This rule is meant to be applied

stringently” because courts are “‘even more scrupulous to safeguard the impartiality of

arbitrators than judges, since the former have completely free rein to decide the law as well

as the facts and are not subject to appellate review.’” Univ. Commons-Urbana, Ltd. v.

Universal Constructors, Inc., 304 F.3d 1331, 1338 (11th Cir. 2002) (quoting Commonwealth

Coatings Corp. v. Cont’l Cas. Co., 393 U.S. 145, 149 (1968)).

Evident partiality is shown if “either (1) an actual conflict exists, or (2) the arbitrator

knows of, but fails to disclose, information which would lead a reasonable person to believe

that a potential conflict exists.” Id. at 1339. In other words, “‘evident partiality’ within the

meaning of 9 U.S.C. § 10 will be found where a reasonable person would have to conclude

that an arbitrator was partial to one party to the arbitration.” Morelite Constr. Corp. v. New

York City Dist. Council Carpenters Benefit Funds, 748 F.2d 79, 84 (2d Cir. 1984); see

Middlesex Mut. Ins. Co. v. Levine, 675 F.2d 1197, 1200-02 (11th Cir. 1982) (affirming an

order vacating an arbitration award where the arbitrator failed to disclose a substantial

dispute with a party that resulted in a bar grievance against the arbitrator). These questions

are fact-intensive and require an evidentiary hearing upon a showing of a “mere appearance

of bias or partiality.” Univ. Commons-Urbana, 304 F.3d at 1340-41 & 1345. Based on Luis

21
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 22 of 27 PageID 4545

Garcia’s affidavit and the evidence cited in this motion, this Court should, at a minimum,

order an evidentiary hearing on the Plaintiffs’ motion to vacate.

The Court at the hearing on February 19, 2015, observed that if “one of the arbitrators

has been bought off, paid off,” then any Court would review the findings (DE196:87 Tr.

2/19/15). While we cannot say that the arbitrators were bought off for money, they were

certainly bought off by the Church’s undue influence. The arbitrators’ evident partiality here

requires this Court to vacate the arbitration award.

The partiality began at the outset of the arbitration when IJC Mike Ellis told the

Plaintiffs that he was “hatting” the arbitration panel, a Scientology term for “training” them

outside the Plaintiffs’ presence (Ex. 3 Garcia Aff. at 4-5, 12). Outside the Plaintiffs’

presence, the IJC gave the arbitration panel numerous documents to review, including church

policies, the complaint, and the 10-page report from the Claims Verification Board (CVB)

(Id. & Attached Ex. E CVB report). Before the arbitration, the Defendants had assured this

Court that the CVB form would not be dispositive of the arbitration (DE196:88-89 Tr.

2/19/15; DE188-3:147-48, 151). The CVB report read like an expert opinion of someone

who had conducted an extensive investigation into the Plaintiffs and they could not respond

(Ex. 3 Garcia Aff. at 8-9, 15 & Attached Ex. E CVB report).

The IJC also gave the arbitration panel two reports from Mr. Garcia’s confidential

“Priest/penitent Ethics file” (Ex. 3 Garcia Aff. at 8-9). These reports were completely

irrelevant to the arbitration and intended only to intimidate and harass the Plaintiffs (Id.).

The fact that the IJC had unfettered ex parte contact with the arbitration panel, to

“hat” or train them and provide numerous documents, demonstrates the evident partiality of

22
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 23 of 27 PageID 4546

the arbitrators. As discussed above, Plaintiffs had no opportunity to present evidence or their

case to the arbitration panel (Ex. 3 Garcia Aff. at 4-5, 9-10, 13-15 & 17). The Chairman of

the arbitration panel, Peter Sokoloff, told the Plaintiffs that, once they were declared

Suppressive Persons, they ceased to have any rights as a Scientologist (Ex. 3 Garcia Aff. at

16). He told the Plaintiffs their payments to the Church were charitable donations and,

therefore, non-refundable (Id.).

At the end of the arbitration, Mr. Garcia protested that the IJC and arbitrators refused

to allow the Plaintiffs to present any evidence, witnesses, or their own experiences because

the arbitrators did not want to hear about “alleged fraud.” (Ex. 3 Garcia Aff. at 17). Mr.

Garcia explained in his affidavit:

Chairman Sokoloff then exploded in a long platitude

that lasted almost five minutes. He kept talking on and on
without the slightest interruption by Mr. Ellis. Here are some
things Mr. Sokoloff said:

“I am the wrong guy to talk to about that. You don’t

know anything about me. I am a big proponent of the Ideal
Org program and when you showed us that flyer I know
what it says is true. I know the numbers! I know the Truth!
We are making a better planet! For some stroke of luck the
judge chose me out of a list of 500 people. And I know what is
happening here: there are a lot of SPs [Suppressive Persons]
out there trying to destroy our church and one of those SPs
has fed you all these lies. One of your compadres, Ned
McCrink, sent me a bunch of sh*t. I checked it out and it
was sh*t! It was sh*t! [I distinctly recall he said that word
three times. I had no idea what he was referring to, and
“Compadres” means friend in Spanish]. So don’t you go telling
me that I don’t know what is going on because I do know! You
have been sold a bill of goods! What you should do is recant
and atone, come back to the church and support it like
before!”

(Ex. 3 Garcia Aff. at 17-18). Chairman Sokoloff’s statements demonstrate his evident

23
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 24 of 27 PageID 4547

partiality.

In their Amended Complaint, the Plaintiffs allege the Defendants used high-pressure,

illegal sales tactics to fraudulently solicit large contributions from the Plaintiffs (DE114).

The Plaintiffs brought several claims, including fraud, violations of the Deceptive and Unfair

Trade Practices Act, and breach of contract (Id.). Before the arbitration began, Chairman

Sokoloff stated he was “a big supporter of the Ideal Org program” (Ex. 3 Garcia Aff. at

12). Chairman Sokoloff’s statements demonstrate his evident partiality.

The Defendants were not satisfied that they had three arbitrators who were inherently

prejudiced and at risk of their own immortal souls, livelihoods, friends and family by

deciding this case (DE188-4:199 Dep. Mike Ellis). They needed to completely humiliate the

Plaintiffs and prevent them from having any semblance of a fair hearing. The statements the

arbitrators themselves made during the proceeding show the arbitrators had no ability to be

fair and impartial and were unquestionably prejudiced against the Plaintiffs before the

arbitration ever started. The Defendants’ conduct eliminated any semblance of a fair

arbitration. The Defendants made sure that even devout Scientologists, who were inherently

incapable of giving the Plaintiffs a fair hearing, were made even more prejudiced against the

Plaintiffs. The arbitration was a mockery that no judge should countenance. This Court

should vacate the arbitration award.

E. This Court should order a trial on the merits because the arbitration was
procedurally and substantively unconscionable.

This Court should order a trial on the Plaintiffs’ claims instead of ordering arbitration

before a new panel. Plaintiffs opposed the Church’s motion to compel arbitration as both

procedurally and substantively unconscionable (DE30 Pls. Resp. Opposing Arbitration;

24
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 25 of 27 PageID 4548

DE170 Pls. Trial Brief; DE191 Pls. Mot. for Reconsideration). The Plaintiffs argued that an

arbitration before three Scientologists in “good standing” could never be a fair proceeding

because the Church had declared the Plaintiffs to be “Suppressive” persons (Ex. 4 Garcia

Declare Order; DE30; DE170; DE191).

The events during the arbitration proved the Plaintiffs correct. The arbitration was

both procedurally and substantively unconscionable. For the reasons discussed in this

motion and the Plaintiffs’ motions opposing arbitration, the arbitration was unconscionable

and fundamentally flawed. This Court should grant the Plaintiffs’ motion to vacate the

arbitration awards and order a trial on the merits of the claims in the Plaintiffs’ lawsuit.

Theodore Babbitt, counsel for the Plaintiffs, certifies that he has conferred with the

Church’s counsel, F. Wallace Pope, and counsel for the parties cannot agree on the resolution

of this Motion to Vacate the Arbitration Award.

DATED: This 19th day of January, 2018.

Respectfully submitted,

By: /s/ Theodore Babbitt

Theodore Babbitt
Fla. Bar No: 091146
Babbitt & Johnson, P.A.
1641 Worthington Road, Suite 100 (33409)
P. O. Box 4426
West Palm Beach, FL 33402-4426
T: (561) 684-2500; F: 561-684-6308
[email protected]
-and-

25
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 26 of 27 PageID 4549

Jane Kreusler-Walsh
Fla. Bar No: 272371
Rebecca Mercier Vargas
Fla. Bar No: 0150037
Kreusler-Walsh Vargas & Serafin, P.A.
501 South Flagler Drive, Suite 503
West Palm Beach, FL 33401-5913
T: (561) 659-5455; F: (561) 820-8762
Primary: [email protected]
[email protected]
Secondary: [email protected]
-and-
Ronald Weil
Fla. Bar No: 169966
Weil Quaranta, P.A.
Southwest Financial Center, Suite 900
200 South Biscayne Blvd.
Miami, FL 33131
T: (305) 372-5352; F: (305) 372-5355
[email protected]

CERTIFICATE OF SERVICE

We hereby certify that, on January 19, 2018, we electronically filed the foregoing

document with the Clerk of the Court using CM/ECF. We also certify that the foregoing

document is being served this day on all counsel or pro se parties identified below in the

manner specified, either via transmission of Notices of Electronic Filing generated by

CM/ECF or in some other authorized manner for those counsel or parties who are not

authorized to receive electronically Notices of Electronic Filings.

By: /s/ Theodore Babbitt

Theodore Babbitt, Esq.
Florida Bar No: 091146
Babbitt & Johnson, P.A.
1641 Worthington Road, Suite 100
West Palm Beach, FL 33409
T: (561) 684-2500; F: 561-684-6308
[email protected]

26
Case 8:13-cv-00220-JDW-TBM Document 270 Filed 01/19/18 Page 27 of 27 PageID 4550

F. Wallace Pope, Jr., Esq.

FBN: 124449
Robert Vernon Potter, Esq.
FBN: 363006
Johnson Pope Bokor Ruppel & Burns, LLP
911 Chestnut Street
Clearwater, FL 33757
Phone: (727) 461-1818
Fax: (727) 462-0365
E-mail: [email protected]
[email protected]
Counsel for Flag Church & Ship Church

Eric M. Lieberman
NYBN: 105543
Rabinowitz, Boudin, Standard, Krinsky & Liberman, P.C.
45 Broadway, Suite 1700
New York, NY 10006
Phone: (212) 254-1111
Fax: (212) 674-4614
E-mail: [email protected]
Counsel for Flag Church & Ship Church

27