How Hooters -- Yes, Hooters -- Could Mess Up Scientology's Refund Scam

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We've been telling you for the past year about the large number of longtime Scientologists who are walking away from their church. It seems like nearly every week we hear about someone like Dave Fagen who gives up after years of dedication because of the continuing crisis over David Miscavige's leadership.

One thing about people who have been in Scientology for so long is that they tend to be conditioned to spend huge amounts of money for L. Ron Hubbard's "technology" -- counseling at the upper levels (called "auditing") can reach $1,000 an hour. In order to keep that cash coming in, the church encourages members to keep large sums of money on account.

When they leave, ex-Scientologists often find that one of the challenges facing them is how to get back the money they didn't get around to using for services. And with so many people leaving, that's not only becoming a bigger problem for them, but also for the church, which naturally doesn't want to lose all that cash.

The question of refunds has led to a fascinating court battle in Florida we've been keeping an eye on. In that lawsuit, Scientology told a judge he had no business deciding an issue that is essentially religious in nature -- and the judge bought it.

But now the case is on appeal, and we're learning that Scientology's position may be undermined by, of all things, a restaurant known for its breasts and thighs.

The lawsuit was filed by ex-church members Bert Schippers and Lynne Hoverson, who live in Seattle but still have $27,583.39 on account in Clearwater, Florida at the church's spiritual headquarters.

The Tampa Bay Times explained in March how Pinellas County Circuit Judge John A. Schaefer agreed with Scientology's position that Schippers and Hoverson had no right to sue for that money in court, but instead had to follow Scientology's internal rules regarding refunds:

...the couple must abide by church agreements they signed and submit to internal arbitration.

That means taking their dispute to a panel of three Scientologists in good standing.

"It would be like going in front of the hanging judge," Hoverson said.

At the time, we noted how cynical the church's position was. While church attorneys were telling a Florida judge that he had no business intervening in what looked like a contract dispute, church attorneys in Texas were arguing the exact opposite -- that former Scientology executive Debbie Cook's religious rights had nothing to do with what the church believed was a broken contract in her case.

In Texas, in other words, the church wanted the court to ignore religious questions and intercede on its behalf, while in Florida it wanted the court to butt out of what it says was a religious dispute.

As it turned out, Scientology didn't seem to have much sway with the Texas judges it came before, and the church ended up being embarrassed badly in the Cook matter and may have, we are learning, paid a hefty sum on top of it.

But Florida is another matter. Over the years, Scientology has often found the friendly confines of the Florida court system to be consistently amenable to its arguments.

In this case, Schaefer agreed that Scientology not only could exclude the court and force Schippers and Hoverson into arbitration, but that it could set the terms of that arbitration by requiring the arbitrators to come from among its own members.

The thing is, another organization tried to pull off the same maneuver, and it eventually got smacked down, hard, by a federal court.

That organization? Hooters restaurants.

By some cosmic coincidence, Hooters is, like the Church of Scientology, headquartered in Clearwater, Florida. The first Hooters restaurant opened there in 1983, just a few years after L. Ron Hubbard moved his operation running Scientology from the yacht Apollo to the little Florida coastal town.

In 1996, a Hooters bartender named Annette Phillips quit her job in Myrtle Beach after she claimed she had been sexually assaulted by one of her managers. She then threatened to sue, but Hooters attorneys pointed out that she had signed, twice, an employee contract that required her to take any dispute to arbitration.

In general, courts encourage people to settle their disputes through arbitration. It's less expensive, and saves the courts from hearing every squabble between parties. It saves time and resources if two parties can agree to hear their beef in front of an impartial arbitrator who has no interest in the case.

And that's the essential point -- if Hooters wanted to require its employees to take disputes to arbitration, it also had to ensure that the arbitration was a fair setup. Instead, its rules also gave Hooters the right to choose the arbitrators and stack the deck against its employees.

Said the Fourth Circuit Court of Appeals in 1999 as it smacked down Hooters' plan...

By creating a sham system unworthy even of the name of arbitration, Hooters completely failed in performing its contractual duty....

By promulgating this system of warped rules, Hooters so skewed the process in its favor that Phillips has been denied arbitration in any meaningful sense of the word. To uphold the promulgation of this aberrational scheme under the heading of arbitration would undermine, not advance, the federal policy favoring alternative dispute resolution. This we refuse to do.

In some ways, the Hooters case is eerily similar to the situation Schippers and Hoverson find themselves in today, something their attorney, Brian Leung, pointed out in their appeal...

Just as in Hooters, the Flag arbitration agreement is illusory and substantively unconscionable as it allows one party (Flag) to have unrestricted control over the arbitrators, who are all required to be Scientologists in good standing....Just as in Hooters, Flag has defended the unfair arbitration agreement by pointing out that the agreement was entered multiple times by the Plaintiffs....Accordingly, as the arbitration agreement requires the arbitrators to be Scientologists in good standing the agreement is inherently unfair. Scientology doctrine prevents the arbitrators from siding with the Plaintiffs and against the Church....Nothing prevents the Church from punishing arbitrators that do not rule in the Church's favor. As the Church has created a system that is void of an impartial decision maker, the arbitration agreement is substantively unconscionable.

It's not hard to see his point. Like in the Hooters case, Scientology wants to require ex-members to abide by its own rules requiring an internal arbitrating panel -- and then stacks that panel with its own members, who are likely to rule that money on account is a donation, not refundable money unspent on services.

Could the harsh denunciation of Hooters's former arbitration rules help Schippers and Hoverson get their money back?

Scientology's attorney doesn't think so. I e-mailed Clearwater attorney Wally Pope, and he was good enough to send me this response...

In Hooters, the question involved the construction and application of a federal statute, and the dispute was entirely secular. In our case the First Amendment is implicated because we are dealing with a religious institution and it involves questions of the application of Scientology policy and religious law. Secular courts simply have no subject matter jurisdiction over this dispute. The relevant range of arbitrators is not restricted to a list prepared by the Churches, and includes any Scientologists anywhere in the world. Florida cases have upheld similar restrictions on eligible arbitrators in the past: See the Johnson, Pope case at 67 So. 3d 315 and the BDO Seidman case at 970 So. 2d 869. But the underlying point is that secular courts are prohibited from deciding disputes like this, according to a long line of US Supreme Court cases, which will be cited in our brief when it is filed.

Well, we figured he'd say something like that. Our own legal expert, Scott Pilutik, had already warned us that there might be some trouble equating the two cases...

Just like the arbitration scheme of its Clearwater brethren Hooters, Scientology's arbitration is as rigged as a 1919 World Series. Unlike Hooters' arbitration clause though, which the court rightly shredded clause by clause, Scientology's isn't so transparent.

Nor will it be, most likely. This is because the presumption favoring arbitration extends to religious tribunals, which also must adhere to recognized notions of fairness. See Kovacs v. Kovacs, 633 A.2d 425, 433 (Md. Ct. Spec. App. 1993) ("[I]f arbitration proceedings [conducted by a religious tribunal] do not conform to notions of basic fairness or due process, the court would be justified in refusing to confirm an award").

But Scientology still has an ace up its sleeve, that being the free exercise clause of the First Amendment. Their argument on appeal will be that the arbitrable matter -- money held on account -- is inexorably intertwined with religious questions, rending the underlying legal question beyond the court's jurisdiction and capacity. Schippers and Hoverson have to argue that the underlying issue -- who owns money on account -- is not the least bit religious, and perhaps also that their alleged agreement to arbitrate is similarly severable from religious doctrine.

I personally think the answer to the former question is obvious -- money (the subject to 99% of contracts) can't be made non-justiciable by a wave of the 'doctrine of exchange' wand, as was found in Commissioner v. Hernandez. The second question, which I don't believe has been litigated, will put Scientology's arbitration clause under the microscope, not only for fairness but for religiosity.

I pointed out during the Debbie Cook case that Scientology was making a contradictory argument in Schippers/Hoverson, even as the cases were occurring simultaneously. Well, the converse applies -- and I wonder to what extent Scientology's hypocritical on-the-record statements as to what it saw as justiciable subject matter with respect to Debbie Cook's overtly religious e-mail can come back to haunt them here.

I asked Pope about that -- the radical difference the church has taken in its Texas and Florida cases -- but I didn't get a reply. (I also tried to interview Schippers, but he asked me to call his attorney, Leung. I left Leung a message but didn't hear back from him.)

Well, to this layman, the Hooters case does seem a strong parallel to what Scientology is trying to argue -- both feel like completely unfair schemes that are intended to stack the deck against employees or members so that they cannot, in any case, obtain justice.

In the case of Hooters, the federal court system would not stand by and let that happen.

So far, a Florida judge is (perhaps predictably) willing to let Scientology have its own rules on its own terms. We'll see before too long if an appeals court agrees. Arguments in the matter should be coming within a few months.


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Scientology on the High Seas!

In November the Voice obtained hundreds of copies of L. Ron Hubbard's previously unpublished "Orders of the Day," which he gave to crew members as he sailed the Atlantic and the Mediterranean on the yacht Apollo. Our documents cover the period from late 1968 through 1971, and this time we're looking at what was happening the week of June 17 - 23 during those years.

This week, the Commodore celebrates Mary Sue's birthday...


1969

June 17: LRH is in a good mood.

Daily Report

You can write me a Daily Report any evening before Midnight if you think there is something I should know.

Our Courier returned successfully. It was all good news, some of it especially the DAC was wonderful.

The famous pop group The People finished a Concert to 15000 people and then reported to Com Pac Flot Jerry McDonald for SO training!

The E/R should divide watches into 6 watches as soon as easy to do and as we settle into Sea Routine.

The Bridge watches are about to be divided into 12 also when we are settled down at sea and it's announced.

I'm calling a B of I on violation of command intention by slowing study by overheating in Hold II by no blowers etc.

We are sailing. Going first to anchor and then to sea.

A mail packet leaves today. Clear the traffic!

LRH, COMMODORE


June 18: If we get angry with you, it's for your own good.

Daily Report

Mary Sue had a very nice birthday with some lovely presents she greatly appreciated.

---

I suddenly realized what the situation was in regard to officers or myself getting cross at people. We have to keep things running and prevent upsets and even disasters which occur due to others not having enough info or experience to operate as a team. In ship situations it sometimes occurs that if we do not act very fast indeed we will be damaged or sunk. Crew members haven't enough data or experience to see what the situation is or know the consequences and when somebody urgently acts to handle it, crew members only know that "somebody yelled at them."

The remedy for all this is to study up, with paper boats etc. evolutions, collision courses etc. so that one knows what is going on. Also the org board and functions and purposes.

A very heavy burden is carried by a very few to keep the ship functioning and safe and the programmes we get out are activated only through the heroic endeavors of a very few.

I do not think it is fair if anyone to ask others to carry the full weight of understanding and handling situations.

Every member of a watch and every member of the team should have a complete understanding of what is going on and why.

Team members who don't get run into. For them then to feel bruised is not a compliment to their grasp of the events in which they are participating.

No one can do any of his jobs without understanding why he is doing them and how they contribute to the general effort and what is going on at any given instant.

If I have to save your lives occasionally I refuse to have to also do it quietly. The quietest thing I know of is a dead man or/a dead activity.

Well we got in and out of that port with no explosions. Maybe we're getting better!

---

I hear training on DAC and VIII are going great.

Hold II used to have its hatch cover half off when it was not in Valencia.

LRH, COMMODORE


1970

June 17: Oiliness and the Time Machine in one utterance! I'm on a Super Power high!

ORDERS

4. HCO AT YOUR SERVICE: The TIME MACHINE is oiled and operational. Please use it.

Lt. Leon Steinberg


June 22: Rumors of our cruelty are greatly exaggerated.

FLAG RUMOURS

You should write all your friends to correct field impression of Flag with brutal ethics and cat-o-nine.

I worked out what really happened. In Melilla in the Spring of '68 we had a flood of raw, relatively untrained, unaudited people arrive. We also had five people who were very heavy handed and suppressive, since blown or dismissed (Berez was booted out of the SO for drug use and is in jail for drug running and possibly Taunton). The ship during the VIII Class was (a) poorly manned (b) had SPs aboard and (c) had very few trained Scientologists and (d) was under heavy enemy attack (the Greek affair with bird dogs aboard). (The UK ban.)

What happened was, we trained and processed up the crew, we opened the gate on the SPs and dumped them, we made quite a few auditors and beat the enemy attack with excellent PRO Area Control and the "dead agent" caper, meaning getting documentary proof that what was said of us was lies and getting the agents booted out of the country.

Two years ago we built up a ship and have since been improving it and all Orgs.

It is quite a tribute to Dianetics and Scientology that we could make it go so right so fast. It is an accomplishment that should not be invalidated by silly rumours about how mean and vicious we are. The vicious actions today are not in the SO.

You should spread the word.

...

LRH, COMMODORE


1971

June 17: A little PAC base history.

NEW SHIP

The purchase of an 185 foot vessel for Pac has just been okayed. She sleeps 115 and could double it. A handsome vessel built after WW II and mothballed in '69 and just brought out. Same engines as Bolivar. Looks like Bolivar but much more beam, (33') and very heavy hull plate (3/4").

...

BIG WIN

The Adelaide Ban is to be repealed according to the Attorney General at the Adelaide Labour Convention.

This is a GO victory. The A/G there Tom Minchin did it. He is being made a Kha Khan.

So the tide rolls back the way it came.

A lovely birthday present for Mary Sue. The Telex arrived in the first few minutes of her birthday today.

LRH, COMMODORE


June 22: Fully exterior, full perception!

L10 INCOMPLETES

Last November and onward almost 150 crew were started on L10. NONE OF THESE COMPLETED IT.

Somebody eager got a lot of them to "attest L10 Completion". This was NOT a completion and was false.

The End Phenomena of L10 is Clear OT, fully exterior full perception while exterior, no bank. It takes 50 to 150 hours of auditing.

Only those who make this EP are "L10 Completions".

I have just found out about these enforced attests. It upsets people to be told to attest to something not made.

The bulk of the crew will be completed eventually. The best bet is to get some of this groovey yum yum auditing on Dn and Lower Grades and onto Solo.

...

LRH, COMMODORE


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More 1970s Awesomeness!

While L. Ron Hubbard had moved HQ from the yacht Apollo to the Florida coast, Advance! magazine was thrilling Scientologists with tales of "OT Phenomena." Those church members who had reached the higher levels of spiritual training shared their stories of superhuman powers with fellow dupes -- er, enthusiasts. This excerpt is from Issue 38, January 1976. (And another cover featuring a photo by the Commodore!)


I went to the Los Angeles Airport one evening to pick up my wife, Yvonne, who was returning from a lecture trip. As we started to leave the car park we both heard screaming.

I exteriorized and saw a man beating up a woman. I stopped the car and told Yvonne to go and help the girl while I caught the mugger (he was already leaving the scene of the beating).

Yvonne went to the girl's aid and began giving her an assist. Her face had already greatly puffed out from the beating. I started walking at an intercept angle to the mugger who was not yet visible to me with the physical eyes. Sure enough he appeared from behind a row of cars walking fast. I walked faster and he began to run. I knew it was him because I had seen his shirt while exterior. I ran after him and called for help at the same time. The police came and helped me run him down and he was captured.

We then went back to the police station and Yvonne brought the girl in who, after the touch assist, looked fantastically improved. We both realized that we had exteriorized and seen what had happened through several rows of cars and concrete pillars. Well, maybe someday we'll have a real OT Police who capture the real criminals of society. That would be a real help towards world peace. -- Heber C. Jentzsch, OT


We were having trouble with the windshield wipers on our car. Sometimes they would work and sometimes they wouldn't work. We took the car to the garage to have it fixed. The mechanic said that they would have to go through all of the electrical system to find out what was wrong. We had planned to go on a trip, and didn't want to have the car tied up, so we took it like it was. We were driving along, my husband was driving. I got to thinking about the windshield wipers, left my body in the seat and took a look under the hood. I spotted the wires that were shorting and caused them to weld themselves together, like they were supposed to be.

We haven't had any trouble with them since. -- Jane Berquist, OT


Oh Heber, we wish we could ask you about this amazing episode of OT crime fighting. If we only knew what hole you're being held in, that is.

With a new trailer of The Master and Debbie Cook's travel news, this has turned out to be quite a week. Make sure you check our Facebook author page for updates.



**********
Tony Ortega has been the editor in chief of the Village Voice since March, 2007. He started writing about Scientology in 1995. You can reach him by e-mail at tortega@villagevoice.com, and if you ask nicely he'll put you on his mailing list for notifications of new stories. You can also catch his alerts at Twitter (@VoiceTonyO), at his Facebook author page, on Pinterest, a Tumblr, and even this new Google Plus doohickey.

New readers might want to check out our primer, "What is Scientology?" Another good overview is our series from last summer, "Top 25 People Crippling Scientology." At the top of every story, you'll see the "Scientology" category which, if you click on it, will bring up all of our most recent stories.

As for hot subjects we've covered here, you may have heard about Debbie Cook, the former church official who rebelled and was sued by Scientology. You might have also heard about the Super Power Building, Scientology's "Mecca," whose secrets were revealed here. We also reported how Scientology spied on its own most precious object, Tom Cruise. (We wrote Tom an open letter that he has yet to respond to.) Have you seen a Scientology ad on TV lately? We debunked some of the claims in that 2-minute commercial you might have seen while watching Glee or American Idol.

Other stories have looked at Scientology's policy of "disconnection" that is tearing families apart. You may also have heard something about the Sea Org experiences of the Paris sisters, Valeska and Melissa, and their friend Ramana Dienes-Browning. We've also featured Paulette Cooper, who wrote about Scientology back in the day, and Janet Reitman, Hugh Urban, and the team at the Tampa Bay Times, who write about it today. And there's plenty more coming.

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