Federal judge sides with Scientology on refund issue

Tampa — A federal judge has ruled in favor of the Church of Scientology, saying two former members must go through the church's internal arbitration process if they want a refund of more than $1.3 million in donations.

U.S. District Judge James D. Whittemore issued a 21-page order Friday stating that plaintiffs Luis and Rocio Garcia are bound by contracts they signed during their 28 years with the church that require them to use the arbitration process to get their money back.

The Garcias' closely watched lawsuit, filed in 2013, alleges the church used fraudulent, deceptive and high-pressure tactics to solicit donations. But now that the order has put their refund demands in church hands, the federal court proceedings are at a standstill.

In addition to donations, the California couple said they also paid deposits on Scientology counseling services, training and accommodations that were never provided.

According to Whittemore, the hearing was limited to two subjects: whether the church had arbitration procedures that were applicable to the Garcias' claims and whether the contracts they signed were unconscionable — that is "whether the complaining party lacked a meaningful choice when entering into the contract" or if it was "so unfair that enforcement should be withheld."

The Garcias contend that, with Scientology conducting the arbitration, they would never get a fair hearing on their refunds because the church now considers them enemies called "suppressive persons" or SPs. But Whittemore said he could not analyze that issue because the First Amendment prohibits him from interpreting religious matters such as Scientology's doctrine on SPs.

The judge did side with the Garcias in acknowledging that the church "failed to provide any convincing evidence" that it had a working process in place to oversee arbitration.

Furthermore, Whittemore wrote, "There has never been an arbitration in the church, further supporting plaintiff's arguments that no rules and procedures for conducting arbitration exist."

But the judge said the absence of particular rules does not make the church's arbitration clause unenforceable.

Because the contract does include information on the number of arbitrators, how they'd be selected, what matters they could arbitrate and if the decision was binding, Whittemore said the contract satisfies the essential requirements under Florida law.

Representatives from the church's media relations office did not respond to requests for comment.

The Garcias' attorney, Theodore Babbitt of West Palm Beach, said Monday he was surprised by the ruling, as the judge seemed to agree with the plaintiffs on many of the issues. He said he is scheduled to meet with the Garcias on Wednesday to discuss their next steps.

"That's up in the air yet," Babbitt said. "They're still considering whether to file a motion for rehearing and also other options that we have."

Babbitt said those options include an appeal and proceeding with the arbitration under the church's rules.