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Drug rehab foundation urges Fifth Circuit to decertify patient class action

The lead plaintiff says he quit Cenikor's program because it was making him work 60 hours a week for no pay amid toxic chemicals in a Dallas plant.

(CN) — A drug rehab organization accused of exploiting addicts and providing them minimal counseling asked a Fifth Circuit panel Thursday to reverse certification in an unpaid wages class action brought by its former patients.

Employment is the cornerstone of the Cenikor Foundation’s approach to helping addicts get clean. “We help nearly 10,000 people per year on their individual roads to recovery — and to a better, healthier life,” says the Houston-based nonprofit, which has 10 facilities in Texas and one in New Mexico.

Cenikor believes “meaningful work instills crucial self-confidence and achievement, which empower individuals as they reclaim their sobriety,” it states on its website.

Yet lead plaintiff Timothy Klick claims its high-minded ideals are a farce.

He says it treated him and other recovering addicts like slaves, farming them out to work for various companies, including Walmart, ExxonMobil and Shell, for long hours that left no time for counseling after having them sign contracts stating they would not be paid wages, but would receive housing, food, clothing and medical care during a 16- to 18-month period of vocational therapy. It even barred them from having any spending money.

Klick checked himself into Cenikor’s Fort Worth facility in September 2018 after a Cenikor recruiter gave a presentation at a different rehab program he was enrolled in, according to his May 2019 lawsuit.

Cenikor assigned him and several other patients to work for dinnerware maker ThermoServ at its Dallas plant. He says he worked full-time there and sometimes 50 to 60 hours per week.

“Klick quit the program because he was being exposed to what he believed were dangerous chemicals at ThermoServ and because he was not being paid for the long hours he was required to work,” he says in his lawsuit.

Despite its nonprofit status, Cenikor’s staffing services were lucrative, the plaintiffs claim. From 2017 to 2020, they say, Cenikor's clients paid it more $19 million for its patients’ work.

Cenikor stopped the program in 2021 after Reveal and the Center for Investigative Reporting published an exposé, citing former Labor Department officials who said its business model likely violated the Fair Labor Standards Act, and former patients who said it made them work grueling hours in unsafe conditions without proper training and safety gear.

Following consolidation of Klick’s lawsuit with five others filed by Cenikor alums, U.S. District Judge Keith Ellison, a Bill Clinton appointee, certified a class action. He determined their claims were so similar the merits question of whether they were in fact employees entitled to cash wages — and not volunteers as Cenikor maintains — should be hashed out collectively in one case.

More than 200 ex-Cenikor patients have joined the class action and another 2,500 are eligible to opt in.

Cenikor appealed the class certification to the Fifth Circuit and a three-judge panel of the New Orleans-based appellate court heard arguments Thursday.

Cenikor’s attorney, Chris Dove, stressed the terms were clear in its work program enrollment forms.

“You agree that you are a volunteer, a beneficiary of the services being provided to you, and you are not an employee. You are told you will have to work as part of your therapy and you will not receive cash wages,” said Dove, a Locke Lord partner.

Dove argued Cenikor tailored its program to the needs of its patients and plaintiffs’ cases should be analyzed separately with inquiries into whether they worked for Cenikor with the expectation of compensation or for the “personal purpose” of getting sober.

Plaintiffs’ attorney John Borsellino, principal of the Fort Worth firm Borsellino PC, urged the panel to affirm class certification.

He said an “economic realities test” the U.S. Supreme Court established in its 1985 Alamo Foundation v. Secretary of Labor decision makes clear Cenikor’s patients were employees entitled to federal labor law protections.

The Tony and Susan Alamo Foundation was a nonprofit religious organization that employed around 300 destitute recovering drug addicts, ex-convicts and petty criminals in its commercial businesses. Instead of paying these “associates” cash wages, it compensated them with shelter, food and clothing.

The Labor Department sued the foundation claiming violations of the Fair Labor Standards Act’s minimum wage and overtime pay requirements.

While the associates who testified at trial insisted they were volunteers, the trial court found, and the Supreme Court affirmed, they were actually employees because the benefits the foundation provided to them were another form of wages.

Dove tried to distinguish Alamo's treatment of its associates. “What happened there is you went to stay with the Alamo Foundation … You were told you must work to eat. If for any reason you don’t work, you were ill, you injured yourself, you don’t eat.

“This is a very different situation. It is not a quid pro quo. It is not a you-must-do-this or else,” he added.

U.S. Circuit Judge James Graves, a Barack Obama appointee, questioned what happened to Cenikor patients if they did not work.

Dove said counselors would talk to them and try to find out why they were having trouble adapting to work; many had not had a job in a long time due to their struggles with addiction. And Cenikor would offer to place them with a different employer.

But he acknowledged if they refused to work, Cenikor could kick them out of the program. “Because to graduate you are going to have to hold down a job.”

Borsellino countered that all the Cenikor class members meet the Alamo test for employment.

“In Alamo the long period of economic dependence by program participants was significant because it created the inference that workers must have expected something in return for their work, namely the in-kind benefits on which they survived,” Borsellino argued.

“Similarly here, program participants were entirely dependent on Cenikor for all of their needs for 18 to 24 months,” he continued.

Noting that some Cenikor patients were enrolled in the program by court order in their criminal cases, U.S. Circuit Judges Stephen Higginson and Dana Douglas, Barack Obama and Joe Biden appointees, respectively, asked Borsellino if that would undercut class consideration.

But Borsellino insisted the plaintiffs are “similarly situated,” a standard for certifying class actions.

They all lived at the same facilities. They all accepted the same policies. They all signed same the paperwork,” he said.

The judges did not say when they would rule on the appeal.

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Categories / Appeals, Employment

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