Gerry Armstrong -- Hearing transcript, 1984-04-19, Scientology v. Armstrong, LASC No. C 420153

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SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

DEPARTMENT NO. 57 HON. PAUL G. BRECKENRIDGE, JR., JUDGE

CHURCH OF SCIENTOLOGY OF CALIFORNIA,

Plaintiff,

vs.

GERALD ARMSTRONG,

Defendant.

MARY SUE HUBBARD,

Intervenor.

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NO. C 420153

REPORTER'S TRANSCRIPT OF PROCEEDINGS

Thursday, April 19, 1984

APPEARANCES: (See next page.)

NANCY L. HARRIS, CSR #644
Official Reporter

APPEARANCES:

For the Plaintiff
and Intervenor:

LITT & STORMER
BY: BARRETT S. LITT
Paramount Plaza
3550 Wilshire Boulevard
Suite 1200
Los Angeles, California 90010
(213) 386-4303
-and-
BARRETT S. LITT
BY: MICHAEL S. MAGNUSON
The Oviatt Building
617 South Olive Street
Suite 1000
Los Angeles, California 90014
(213) 623-7511

For the Plaintiff
Only:

PETERSON & BRYNAN
BY: JOHN G. PETERSON
8530 Wilshire Boulevard
Suite 407
Beverly Hills, California 90211
(213) 659-9965

For the Defendant:

CONTOS & BUNCH
BY: MICHAEL J. FLYNN and
JULIA DRAGOJEVIC
5855 Topanga Canyon Boulevard
Suite 400
Woodland Hills, California 91367
(213) 716-9400

INDEX

PAGES 1 through 134, incl.

DAY	DATE		PAGE

Thursday	April 19, 1984	A.M.	1
		P.M.	82
PRETRIAL MOTIONS			1

LOS ANGELES, CALIFORNIA; THURSDAY, APRIL 19, 1984; 9:10 A.M.

-o0o-

THE COURT: Good morning, counsel.

ALL COUNSEL: Good morning.

THE COURT: You people have practically buried me in

paperwork here. I have been doing a lot of reading and I

am not sure I have as good a handle on some of these problems

as I'd like to, but at least I think we could probably get

started with some of these motions.

Plaintiff has suggested an order of review of

motion. I don't know whether defense has any particular

feeling one way or another about the suggested order.

MR. FLYNN: I believe the first motion was the

disqualification.

THE COURT: I think they had that at the bottom.

Counsel, would you state your appearances for

the record from my left to right?

MR. PETERSON: John Peterson for plaintiff Church of

Scientology.

MR. LITT: Barry Litt and Michael Magnuson for plaintiff

and intervenor.

MR. FLYNN: Michael Flynn and Julia Dragojevic for

the defendant.

MR. LITT: Your Honor, while Mr. Flynn is looking at

that in terms of the order that we suggested, I would make

one modification which is, it seems to me, that the court

might want to put the question of the equitable claim issue

and the jury trial issue after it has determined the motions

in limine.

THE COURT: Yes, I would prefer to deal with that later.

MR. FLYNN: The only suggestion I would make, Your

Honor, is with regard to the motion regarding disqualification.

THE COURT: We have joint motions. Would you prefer

to hear those first?

MR. FLYNN: I think those should probably be heard

first.

THE COURT: Okay, I will take that.

Plaintiff's motion to disqualify the defense

counsel Flynn and defendant's motion to disqualify the

plaintiff's counsel Litt. I guess what is sauce for the

goose is sauce for the gander.

My tentative ruling would be to deny both motions.

If you want to be heard further, I will be happy to hear

further.

MR. LITT: I would like to be heard if I may.

THE COURT: Certainly.

MR. LITT: Your Honor, I should first clarify the nature

of our motion which is not to disqualify Mr. Flynn from any

representation of Mr. Armstrong, but it is to disqualify

him from certain forms of participation.

The first has to do with the question of the

documents under seal. The second has to do with the question

of the implications of his status as a witness and what role

he plays in the trial. Let me take each of them in turn.

I don't need to spend a lot of time, I don't

think at this stage, going over the nature of the materials

under seal. Suffice it to say that they are the private

materials of Mr. and Mrs. Hubbard, that they were sent to

Mr. Flynn for use in his other litigation, and it is our

contention that given the fact that the essence of the wrong

committed here was precisely Mr. Armstrong taking these

materials to provide them to Mr. Flynn to allow Mr. Flynn

access to these materials through the back door of status

of counsel in this case, when it is admitted that they were

provided to him for use in other cases, constitutes a

substantial and unjustifiable intrusion into the privacy

of the Hubbards and the church in the very process of

vindicating those rights.

Now, if it were just that these have been provided

to Mr. Flynn, perhaps the balance might not tip so much in

our favor. But I think that there are other circumstances

that make it even more compelling.

Firstly, we have made reference in our papers

to the fact that Mr. Flynn represented a son of Mr. Hubbard's

from a former marriage and he brought on this man's behalf an

action to attach Mr. Hubbard's assets on the theory that

he was missing. In that action, as in this case, many broad

ranging allegations concerning Mr. Hubbard were made.

Mr. Flynn was ultimately disqualified from actually

representing Mr. Hubbard's son because of his conflict of

interest with the estate because Mr. Flynn is suing the estate.

However, Mr. Flynn had been permitted to act as counsel for

out of state depositions. Mr. Flynn did so.

In the course of the proceedings there was

discovery taken into the financial records of Mr. Hubbard

from various banks. Mr. Flynn obtained those records. There

was an order placing those records under seal by the court

in that case, Judge Hennigan in Superior Court of Riverside

County.

There was an order that the materials could not

be used for any other litigation. Mr. Flynn was held in

contempt by that court for having used the sealed materials,

private financial materials relating to L. Ron Hubbard in

other proceedings connected to Scientology or to Mr. Hubbard.

Mr. Flynn has said and we have cited in our papers

that he is incapable of distinguishing what comes from one

set of documents and what comes from another set of documents,

and yet we have an order here prohibiting the use of the

information and the materials for any case other than this

case. Mr. Flynn has admitted his inability to do that in

the deposition taken of him only within the last two months.

Mr. Flynn, by his own testimony, represents 35

parties in litigation with the Church of Scientology, L. Ron

Hubbard and Mary Sue Hubbard. Mr. Flynn himself is a plaintiff

in a case filed in the United States District Court in the

District of Massachusetts in which L. Ron Hubbard is the

sole named defendant.

When all of these circumstances are taken together,

when we realize that one of the fundamental problems with

the court processes in dealing with privacy issues is that

the process itself threatens to undermine the very privacy

which it is the function of the court to protect, then we

believe that Mr. Flynn should not be permitted access to

these documents when all the circumstances are taken together.

That is the present status of the matter.

Judge Shimer, and Mr. Flynn did not contest this,

agreed to enter an order that Mr. Flynn could not have access

to the documents pending further ruling of this court, which

means as the matters presently stand, Mr. Flynn does not

have access to the documents. It is our contention, one,

that that should at a minimum remain until the issue of the

admissibility of the documents is determined because if they

are not admissible, Mr. Flynn has no need to gain access

to them and should not be permitted to gain access to them,

and that secondly, even if certain materials from the sealed

documents are found to be admissible, Mr. Flynn should not

be permitted to do that, and Miss Dragojevic, who, while,

she has some similar conflicts here they do not amount to

the totality of the circumstances here, or anyone from her

firm should be the counsel to handle that part of the case

for the defendant in order to insure that the privacy rights

of the Hubbards and the church are not undermined by

Mr. Flynn's access.

I could say quite honestly that based on the

experience of the parties from our side of the table, it

is the concern that these materials and the information in

them will be misused for purposes outside of this litigation

which has a track record to it. It is not speculation.

It is sufficiently substantial that we think that the court

should at least take the measure of preventing access to

the documents, and that there is no substantial prejudice

to the defendant in doing that. That is the first element

of our motion.

The second element of our motion has to do with

the implications of Mr. Flynn's status as a defendant --

I am sorry, as a witness in this case. I have already

described that the heart of the case has to do with Armstrong's

taking these materials, copying them or in some cases taking

originals, sending them to Mr. Flynn for use in other

litigation.

Mr. Flynn will be a witness called by us. Whether

he will be a witness called by the defendant, I do not know.

I don't believe he was on the defendant's witness list.

He will be a witness called by us.

The defendant has argued that this is a trial

tactic on our part. I think the facts speak for themselves.

It is not a trial tactic.

The court should be aware that in December, I

believe it was prior to any indication, Mr. Flynn was not

of record in this case, Your Honor. He filed a motion to

appear pro haec vice in this case to be heard the day of

trial, the day the case was originally set for trial which

was March 22nd. That was filed approximately -- it was filed

sometime in March.

In December or January we had made clear to the

law and motion court our need for a commission to take

Mr. Flynn's deposition because he was a witness in the case

and we intended to take testimony from him and use that

testimony in this case. So that the record is quite clear

that before there was any question of Mr. Flynn acting as

trial counsel, our need and our intention to use testimony

from Mr. Flynn and to use him as a witness was clear, and

the circumstances in light of the allegations, are clear

that he is a probative and important witness in the case.

The problem is that we are now going to be in

a position where frankly one of the central actors in this

case, Mr. Flynn, because the heart of the case has to do

with what happened between Mr. Flynn and Mr. Armstrong in

the transfer of the documents, is now going to be the person

to argue as an attorney on behalf of another defendant.

He is not representing himself, his own credibility and his

own, by implication or directly, his own motives.

The ABA, the recent Model Rules of Professional

Conduct of the American Bar Association, which are not in

force in this state, state that a lawyer shall not act as

an advocate at a trial in which a lawyer is likely to be

a necessary witness except where one, the testimony relates

to an uncontested issue; two, the testimony relates to the

faith and value of legal services rendered; or three, it

would work a substantial hardship on the client.

The Comment to that rules goes on to talk about

the problem, not just when a client is calling a lawyer as

a witness but for either side, the problem of combining the

role of advocate and witness. It says, "Combining the role

of advocate and witness can prejudice the opposing party

and can involve a conflict of interest between the lawyer

and party. The opposing party has a proper objection where

the combination of roles may prejudice that party's rights

in the litigation."

That is precisely the situation we are in here.

Mr. Flynn, in effect, is going to have the opportunity to

argue his own credibility, his own motivation, and to infer

to the jury in the context of arguing as attorney for another

party the propriety of Mr. Armstrong's conduct in association

with him.

In light of the lateness with which the application

was made from Mr. Flynn in the role of counsel in this case,

the firm of Contos & Bunch was sole counsel of record in

this case from the time the action was filed until the time

that the court ruled on Mr. Flynn's pro haec vice motion

which was, I believe, April 2nd or actually by the time it

got ruled on it was like April 9th.

So that the argument that Mr. Armstrong will

be substantially prejudiced under the circumstances should

not carry a great deal of weight because frankly until a

week or two ago it was not known whether the court would

grant Mr. Flynn permission to appear pro haec vice.

It was known that the problems that I have raised

with issues in the case and the work on this case has been

done by the firm of Contos & Bunch. They are California

counsel. They have represented Mr. Armstrong throughout,

and the prejudice to us is simply greater than any benefit

to Mr. Armstrong. This does not mean that Mr. Flynn cannot

assist the firm of Contos & Bunch. What we are talking about

is the ability and the problem in acting as counsel before

the jury.

We are not even saying he can't argue the motions

to the court. We are talking about the particular problem

of being able to play the dual role before the jury of advocate

and witness.

So it is on the basis of these facts and

circumstances that we raise the issues that we do and we

ask not for a complete disqualification, but we do ask that

these forms of participation be prohibited by the court.

THE COURT: Very well.

MR. FLYNN: If Your Honor's ruling is the same, then

I will refrain from argument. If Your Honor wishes to have

me be heard --

THE COURT: Well, my reaction is, of course, that his

first point deals with your use of these exhibits, I suppose,

as it might relate to other cases, and my reaction is that

if counsel remains in this case, he is subject to the power

of this court to control these proceedings and access to

exhibits, and the court can make any appropriate orders it

may see fit with respect to any exhibits that are available.

I assume that counsel has knowledge of these exhibits gained

from things which occurred in the past. He knows pretty

much what is there and it seems to me that I can't erase

that from his mind, and it seems to me that the court has

the power to control the use of any of the exhibits in this

proceeding, and this should cover that problem.

So far as the other aspects of it, it again seems

to me that this case has been expedited. It has not taken

five years to get to trial like most of our cases, and the

fact that Mr. Flynn has only come in of recent date only

bears upon the fact that this case hasn't been around all

that long.

It seems to me that the present state of our

ethical rules are that as long as there is no prejudice to

the client and the client wants a particular lawyer to

represent him, then the client's wishes should be respected

and if Mr. Armstrong is willing to waive any possible claim

of prejudice by reason of the fact that Mr. Flynn is here

and apparently is going to represent him, that is satisfactory

with the court.

Also, the court would make the proviso that

Mr. Flynn, if he is to argue the case,can't argue his own

credibility as to matters as to which he is testifying or

would be required to testify, and if under those circumstances

Mr. Armstrong wants Mr. Flynn to represent him and is willing

to waive any claim of prejudice, then as far as I am concerned,

Mr. Flynn may remain as counsel in the case.

MR. FLYNN: Thank you, Your Honor.

Mr. Armstrong is here so we could put that on

the record right now.

THE COURT: It is Mr. Gerald Armstrong?

MR. ARMSTRONG: Your Honor.

THE COURT: You heard my statement?

MR. ARMSTRONG: Yes.

THE COURT: You understand that plaintiff has indicated

they are going to call Mr. Flynn as a witness in this case.

If that occurs and he testifies, if he remains as counsel,

he will not be permitted to argue his own credibility; that

is, be can't argue to the jury that he should be believed

over somebody else.

MR. ARMSTRONG: I understand, Your Honor.

THE COURT: And that conceivably might be considered

prejudicial to your case. I don't know.

So, do you waive any claim of prejudice by reason

of this fact?

MR. ARMSTRONG: Yes, I do.

THE COURT: And any other claim of prejudice that might

exist by reason of the fact that your attorney may be called

as a witness in this trial?

MR. ARMSTRONG: Yes.

MR. FLYNN: In that light, Your Honor, I would like

to correct one statement which is in the record regarding

this contempt proceeding which is somewhat personal to me

and somewhat important, I would think, for purposes of the

record. And that is that it is true that I was held in

contempt, but the court should be aware that it was done

under the following circumstances: I did not appear and

defend the contempt proceeding because that was at that point

the third contempt proceeding and the twelfth legal proceeding

that had been brought against me. It was the church's practice

to notice my deposition in various areas of the country all

at the same time, and then when I didn't appear, they would

bring contempt actions in different areas of the country

all at the same time, and this, in fact, happened on one

occasion when I was conducting legislative hearings with

the City of Clearwater, Florida relative to the Church of

Scientology where my deposition was noticed in Florida, in

Massachusetts and in California in three separate cases,

all at the same time, and I was unable to appear in those

three separate locations, and then ex parte the Church of

Scientology went in and sought contempt actions.

With regard to this one matter that I did not

even appear and contest because I thought it was so frivolous

on its face, it related to the following facts: A deposition

was taken in the De Wolfe proceeding, the probate proceeding,

and thereafter two members, a member of the Church of

Scientology and its attorney Sherman Lenske filed affidavits

with the court relative to part of that deposition proceeding,

even though the deposition was under seal, and distributed

those copies of their affidavit to the news media on the

front steps of the Riverside Superior Court.

Thereafter Miss Dragojevic obtained possession

of those two affidavits and called me on the telephone and

asked me about the two affidavits, and I said on the telephone

that I confirmed that in the deposition a bank official had,

in fact, testified that there was an attempted forgery in

the amount of $2 million of one of L. Ron Hubbard's checks

on or about the time that he disappeared and this other group

had taken control of his assets.

On that basis, Miss Dragojevic, unaware of the

sealing order in connection with my response to the two

affidavits that had been made public, filed an affidavit

in an unrelated federal action, and thereafter the Church

of Scientology brought the contempt, Mary Sue Hubbard and

the Church of Scientology brought the contempt action against

me in the Riverside Probate Court on the basis of

Miss Dragojevic's affidavit relative to that simple phone

conversation.

I did not appear and defend it and the judge

apparently found me in contempt. I subsequently went out

there and asked him to vacate it. I had not filed a memorandum

in support of it, and the judge at the hearing said, "Well,

there was no bad faith. It was only a mere technicality

and that is why I entered it." And he chose not to vacate

it.

Those were the circumstances under which that

took place, and as I indicated, it was a long succession

of harassing legal actions that the Church of Scientology

has taken against me.

Other than that, I would just like to correct

the fact of what took place before Judge Shimer. Judge Shimer

had the issue on my petition for pro haec vice before him,

and in the middle of the argument I simply stood up and told

Judge Shimer that rather than address the issue of my access

to the documents during the week that has transpired between --

the week that transpired between the time of the motion and

the time that this trial would actually begin, he simply

said enter an order preventing the access during that time

period and leave everything else to the trial judge as to

how he will conduct the trial and what documents will be

examined at that time.

Secondly, as the court is going to find out through

the course of this proceeding, I have long known about the

contents of all of those documents. In fact, I had them

in my possession for two months and, in fact, the great bulk

of the documents, as the court is going to find out, are

already in the public arena and approximately a year before

Mr. Armstrong ever came to me, I filed a 200 page report

with the City of Clearwater in which some 10,000 pages of

exhibits, including many of those documents, were attached

to that report. So, on those two items, I would just like

to correct the record.

MR. LITT; Well, Your Honor, that is one of the problems

I have. What has just occurred is one of the problems I

have in the case.

I am not going to go through all Mr. Flynn's

claims about legal proceedings that have been brought against

him and everything else.

Mr. Flynn was represented in the contempt hearing.

All I did was recite the basis of what happened, and the

reason we are concerned about his access. That is still

our concern, and we would ask a minimum; one, I point out

that Mr. Flynn states that he cannot recall many of these

documents so that the issue that he has had access does not

really solve the problem. That is from his deposition

testimony.

What Judge Shimer ordered, and I am quoting from

the transcript here in response to Mr. Flynn's offer to

stipulate that the matter of access to the documents go over

to the trial court. Judge Shimer said:

"I accept your offer and that

will be the condition to the granting of the

application, that you are not to be allowed

access to the sequestered documents except

on order of the trial court judge."

Now I would ask that at a minimum this issue

of the documents and access to the documents, that the status

quo remain until the court has made rulings on the motion

in limine regarding the documents.

THE COURT: Well, he is here. Where is he going to

go look at the documents while he is here, counsel? I suppose

that sooner or later I will get around to ruling on these

motions.

MR. LITT: He doesn't need to look at the documents

if they are not going to be admitted in evidence.

THE COURT: I haven't ruled upon that.

MR. LITT: I understand that, so what I am asking is

that the status quo with respect to no access to the documents

remain until such time as the court does rule because if the

court rules that the documents are not admissible, then

there is no need for the representation of Mr. Armstrong

for Mr. Flynn to have access to these documents.

THE COURT: I haven't made any orders of any kind,

so I don't know what you are referring to.

MR. LITT: I understand.

Well, what I am referring to is the somewhat

confused, the present status of Judge Shimer's order. Does

that remain in effect until further order of the court?

THE COURT: Yes.

Do you want to take up the defendant's motion

to disqualify Mr. Litt?

MR. FLYNN: I will waive it, Your Honor, if your

preliminary ruling is as stated.

THE COURT: Okay. Motion is denied.

The next motion purports to be the motion limiting

the subject matter of admissible evidence and testimony of

various witnesses.

MR. LITT: Your Honor, if I may make a suggestion.

I think that the issues would probably flow more naturally

if I argued the motion in limine regarding the documents

before that.

THE COURT: Which motion is that; sub (b), documents

sealed by the court?

MS. DRAGOJEVIC: Yes, Your Honor.

MR. LITT: Yes, Your Honor, and the relevant pleadings

in that, Your Honor, are three. There is a motion in limine

regarding admission of and testimony relating to the documents

sealed by this court, and then there is an opposition to

that motion, and then there is a combined reply memorandum

which largely speaks to that but is also a reply on the motion

in limine regarding the subject matter.

THE COURT: Very well.

I have read the documents that both parties have

submitted on this matter.

So far as the tentative rulings are concerned

on this, I don't know whether I have any tentative rulings.

I am leaning toward the position that once we determine what

the issues are, that any evidence that is in the documents

that is relevant to those issues should be received in

evidence.

MR. LITT: Let me begin, Your Honor, by discussing

briefly --

THE COURT: I have some problems with some of the issues,

but be that as it may, go ahead.

MR. LITT: Discussing briefly what the issues are,

what the circumstances are because I think the defendant's

papers make clear that at least as we view it that the

purported relevance of the documents essentially relates

to issues that are not permissible issues in the case at

all.

The case, this case is, in essence, a very simple

case, although nothing simple about the litigation of the

case exists.

But the case itself involves the following

circumstances: Mr. Armstrong was a member of the Church

of Scientology and active in the Scientology movement from

1969. He was a dedicated Scientology staff member who worked

full time for the church for many years.

L. Ron Hubbard is the founder of the religion

of Scientology. He is revered by Scientologists. He is

considered the sole source of doctrine for the Scientology

religion, and his writings and researches are the basis of

the religion, and as such, be holds the title of founder

and holds an esteemed position to any Scientologist, which

is beyond really what one who has not had direct experience

with it can characterize, and it really can only be understood

in the context of a characteristic ken that a religious

follower has for the person who started that religion.

Mr. Armstrong in 1980, January or February of

1980, petitioned within the church that he be appointed

as an archivist to gather up materials that had been found in

a building on church property in a place out in the desert

called Gilman Sot Springs, it turned out to be a great deal

of old material of the Hubbards which had been gathered,

as Mrs. Hubbard will demonstrate eventually and Mr. Armstrong

does not dispute, over years of marriage and from Mr. Hubbard's

life before the marriage. And these materials had been

gathered up in 1959 when the Hubbards left Washington, D.C.

and stored for many years by them privately, and then moved

to church property and stored there.

These were come upon. Mr. Armstrong says that

they were come upon in the course of what he calls a shredding

party. Regardless of the circumstances, they were come upon

and according to him, realizing the importance of these

documents, he took them to this superior. The upshot of

it was that it was deemed that these materials were of great

importance and great value and should be preserved and

maintained and protected, and Mr. Armstrong petitioned to

hold the post to do that. He petitioned to Mr. Hubbard,

with copies to various church Scientologists for approval.

He got back a note, which it is not clear whether

it was written by Mr. Hubbard or not, but that essentially

approved his holding this position. This was a church

position. The evidence that will be given to establish that,

including from Mr. Armstrong himself, although he waffles

on the subject, is undisputed.

So he sets about gathering up these materials.

The materials that he gathered were the most private of papers.

They were letters between Mr. Hubbard and his current wife,

Mary Sue Hubbard, the intervenor. They were letters between

Mr. Hubbard and his first two wives. They were letters between

Mr. Hubbard and his parents.

There was a marital agreement between Mr. and

Mrs. Hubbard. There were private journals of Mr. Hubbard

through various years of his life. There were Naval records.

There was correspondence with attorneys. There was business

correspondence.

There were letters with friends. There were

certain writings concerning international activities of the

church.

There were manuscripts, tax records, divorce

records. This is the type of things. These were all things,

by the way, that were given to Mr. Flynn.

Mr. Armstrong, as part of his function as

archivist, was responsible to provide information to a man

named Omar Garrison. Omar Garrison had contracted with the

Scientology publishing house to write an authorized biography

of Mr. Hubbard which was subjected to approval, and he was

given access to various of these materials from these archives,

and without getting into whether it was fully understood

by Mrs, Hubbard that this was, in fact, going on, nonetheless

it clearly happened under the auspices of the church, and

we are not making an issue out of it in this case.

Mr. Armstrong gave these materials to Mr. Garrison.

By Mr. Armstrong's own testimony, he gave them to Mr. Garrison

solely for use on the biography. It was not done for any

other purpose. He didn't think he had the right to use them

for any other purpose. Mr. Garrison didn't think he had

the right to use them for any other purpose. They were

considered confidential by both of them. They had only this

limited purpose which had control on it because ultimately

the manuscript itself was subject to review.

Mr. Armstrong at a certain point became

disillusioned, for whatever reasons, with the church. He left

the church in December of 1981. Prior to doing that,

he made copies of voluminous amounts of material to give

to Mr. Garrison because he felt that Mr. Garrison should

be sure to have access to that.

He then says that he helped Mr. Garrison on the

biography for a period of time. Mr. Garrison says that he

did up until pay of 1982. In May of 1982, Mr. Armstrong

took a letter, a private, and by his description, extremely

private letter of Mrs. Hubbard to Mr. Hubbard and took it

to Clearwater, Florida and showed it to Mr. Flynn.

The conversation that took place between Mr. Flynn

and Mr. Armstrong I do not know the details of because it

has been consistently asserted that it is protected by the

attorney-client privilege. Nonetheless, subsequently

Mr. Armstrong went to Mr. Garrison and asked Mr. Garrison

if he could take copies of various materials. He said he

needed them for his case. They were legally related, and

in the course of the next several months he made copies of

8 to 10,000 pages of these private materials which were

provided either to Mr. Flynn and later in, I believe it was,

a second delivery also to the firm of Contos & Bunch.

Those are the materials that are under seal. Those

are the materials that are at issue in this case and the

materials are what I described to the court earlier. What

I picked out are things that have been established were sent

by Mr. Armstrong to Mr. Flynn or to the firm of Contos &

Bunch.

Now the issue, therefore, is whether or not these

private materials can be used by the defendant and introduced

into evidence. We have made clear our position that we will

not introduce the evidence -- I am sorry -- the documents.

By not introducing the documents, we are foregoing from a

legal point of view a substantial issue in the case because

the documents are very private documents, but because we

are not prepared to vindicate our rights solely by giving

them up in the very course of doing it, we have chosen to

limit the issue, and we will present testimony that simply

categorizes the nature of the documents in the way that I

stated before, most of which testimony comes from

Mr. Armstrong.

These are letters and correspondence. They are

this period, they are that, most of which Mr, Armstrong has

testified to.

Now, in light of that issue, the defendant has

put forward certain theories of the relevancy of this. We

don't intend to introduce them, and given the fact that all

we are doing is providing general categorizations, most of

which come from Ms. Armstrong, we are not opening up in any

way in our case the contents.

The defendant has put forward a variety of theories

as to why it is relevant, the most important of which I will

address last, and that is his public policy theory. I will

say that because that theory, I think, is the real theory

on which he rests his argument of the relevance of the

documents, but let we briefly speak to the other theories

that he puts forward.

He says first it is relevant to damages. It

is not relevant to damages because providing a private letter,

even if the contents of the document do not speak to anything

particularly private, is an invasion of privacy and therefore

we are entitled to proceed strictly on the fact that these

were private materials that were provided in an unauthorized

way, and if we don't rely upon the contents of those materials

to establish damages, which we do not, then the defendant

is not entitled to argue that the contents show that they

are not private because we are not arguing that the contents

show that they are private. We are arguing that the nature

of the material is private.

If you write a letter to your spouse and in it

all you do is talk about what happened in court today, which

the whole courtroom saw, you are entitled to an action for

invasion of privacy for somebody improperly gaining that

letter and taking it from you and showing it to someone to

whom you did not authorize it, and you could rely strictly

on the fact that it was a private letter, and if you didn't

argue that the contents were particularly private and rested

solely on the fact of the privacy of the material in its

general nature, then the defendant would have no reason to

argue that the contents aren't private. Only if you asserted

that there was something independently private about the

contents would you do this.

So, we rely upon the general characterizations.

They are journals. We rely really on Mr. Armstrong.

Mr. Armstrong says these are private materials. Mr. Armstrong

says they are confidential materials, and it is on that that

we are preparing to put forward our case.

So, they are not relevant for damages. It is

contended that they are relevant because the facts in them

are in the public record. The problem is that this confuses

the issue. We are not talking here about a particular fact.

We are talking about providing copies of private documents.

Therefore, if one of the facts in the documents is private,

given the way that we are framing the case, it does not matter.

Again, only if we were asserting the contents

of the documents themselves as an independent basis would

this be relevant. What facts are in those documents and

whether any of them have ever been published anywhere or

not is not relevant in light of the way that the case is

being framed by us and in light of the way that we will put

forward the evidence which is without reference to the contents

themselves of the documents.

Therefore, the only real issue has to do with

the public policy issue because if there is public policy,

the defense is not available which, as we will demonstrate

it is not, then the damages theory and the publication

theory does not apply.

The most that could be done on the publication

theory is to show that a particular document that is under

seal, there is a public copy of. In other words, if Mr. Flynn

contends that there is a Naval record that was already in

the public record, then it could be put forward that that

document was not private. That is at least discoverable

although we would contend that is not a defense because since

they were taken from Mr. Hubbard or from the church or

Mr. Garrison, they were private materials, and the fact that

some other copy existed in the public record did not obviate

their privacy.

But even on that basis, it becomes relevant.

That is the only basis on which any documents -- and that

would be by introducing the public record documents and then

a determination could be made at that point, and we would

frankly, if necessary, enter into stipulations as to whether

or not it is the same as the documents under seal without

introducing the documents under seal. So that the heart

of this comes down to quite an extraordinary public policy

issue.

Now, in discussing that issue, we would suggest

to the court that the court should understand the context

in which we are dealing. The real theory that the defendant

is advancing and especially as it applies to the document

is to accomplish through the vindication process what they

were not entitled to accomplish on their own, to wit:

Mr. Armstrong takes the documents. Court restrains his use

of the documents. Requires them to be put with the court.

Requires Mr. Flynn and requires the firm of Contos & Bunch

to return the documents.

Why were the documents taken? So that they could

be used by them against Mr. Hubbard, against Mrs. Hubbard

and against the church.

Now we come to trial. They weren't allowed to

do it by taking them. What they want to accomplish is to

be allowed to do it under the imprimatur of this court on

the theory that it is evidence. We have cited cases that

talk about the dilemma that a party seeking to vindicate

privacy rights faces in that there is a danger that the very

process of vindication will intrude worse than what occurred

originally, and we face the potential problem of that in

this case, and I think it is critical for the court to

understand that.

They want these documents spread on the public

record for use elsewhere. That is the intended objective.

It is an effort to engage in, and the theory that is being

put forward is an effort to engage in trial by calumny.

It is a desire to intrude into these private materials so

that they can be used in the public arena in various ways

as part of what is in reality a very intense litigation battle

and public battle that exists throughout the country in which

Mr. Flynn is involved with the church, and I am not asking

for the court to rule on the merits of these issues, but

the implications of how the defendant is trying to utilize

the processes of this court, I think, are important. It

is important to understand that context.

Now, before addressing the public policy issue

as such, I think that it is important to first speak to the

standard that the court has to use with respect to the

documents. I argued before relevance and, in fact, it is

our contention that under traditional relevancy standards

these documents are not relevant given how we have framed

and intend to frame the case, But the standard, in fact,

is not relevant. The standard, as we have demonstrated in

our brief, is that because these documents are private

documents, that they must be more than relevant once it is

established that the documents themselves are private and

are entitled to the privacy protections of the United States

Constitution and the California Constitution, and I will

not elaborate on the discussion in the brief.

We cited several cases; Boyd, Couch, United States

versus Hubbard, Nixon, all of which clearly establish that

materials of the type that we are dealing with here are private

papers.

The cases cited in a rather weak effort to oppose

that concept are essentially cases having to do with the

scope of the exclusionary rule and nothing else, and it is

very clear that the materials themselves are private documents.

Now, once they are private, the traditional

standards for infringing upon constitutionally protected

rights that are fundamental rights comes into play. The

California cases in the context of discovery are crystal

clear on that. Britt versus Superior Court is crystal clear on

that. Therefore, what must be shown, a compelling state

interest in disclosure or in use in this case where there

are no less intrusive means available. That is the standard

that must be met in order for this court to determine that

these documents may be admitted into evidence.

We have cited numerous cases that show that

material frankly much less private than what we are dealing

with here has been protected.

In the case of Porten, student transcripts that

were on file; in Valley Bank of Nevada, financial data; in

Board of Trustees versus Superior Court, personnel files

were not discoverable.

These are materials frankly that on their face

are not nearly as private as the materials that we are talking

about here. The defendant cannot begin to meet this standard.

We have already said that we are not going to

introduce the documents. We have already said that the

defendant admits these categories in general. The reference

to the categories, which is all that is needed, is far less

intrusive than permitting the contents of the documents

themselves.

Now, since the materials meet the constitutional

requirement, it is the burden of the defendant to demonstrate

that that constitutional right way be infringed by the

introduction of the documents. In the exhibit list submitted

by the defendant, the list for the documents under seal says

"Documents under seal" which is reflection of what we are

talking about.

Any admission of the documents at all could only

be done based on a particularized finding by this court that

the individual documents, and only those portions of the

individual documents, meet this test. It is impermissible

for a sweeping admissibility of documents, even if any

documents do come in which I will turn to more in a moment,

but I wanted to emphasize this point. But any determination,

if the court finds that any of these theories are permissible

or potentially applicable, then on a document by document,

and for that matter, paragraph by paragraph basis, a

determination using this standard must be made by the court.

We cited to the court the case of United States

versus Hubbard which is a case fn which documents were used

in a suppression hearing, and the issue was whether or not

the documents would be sealed or unsealed.

Now, we are in a slightly different procedural

posture here, but it was the contention of the appellant,

the church, that it had an interest in maintaining them under

seal. They were private materials, just as we are maintaining

that we have an interest in their not being introduced into

evidence and their being held under seal which they already

are.

The court recognized the church had an interest

in their being under seal, that it had a privacy interest,

that the constitutional analysis that I have set forth applied,

and that therefore the general order on sealing them was

illegal. That any unsealing order had to be gone through

on a document by document basis with written findings

justifying under the constitutional standards the intrusion

involved, and as to the theory that evidence of criminality,

which is a somewhat vague issue that seems to get thrown

around in this case, was relevant, that that would have to

be determined, and then that was not a generalized basis

but was simply a factor in the court's making, engaging in

this balancing process to see whether or not the privacy

interest was outweighed based on the standards that I have

set forth.

Now before I turn to the merits of the defendant's

public policy theory, I just want to note that at the time

of any such document by document.determination, if it were

to occur and we don't think that we should ever get that

far, the other evidentiary issues we would raise at that

time -- it is obviously very difficult to deal with whether

something is hearsay in the abstract. So it seemed to us

that the best procedure was to reserve those questions until

we knew what, if any, documents we were dealing with, and

I wanted to note that.

The public policy defense, as it is called,

defendant contends that he was justified in invading the

Hubbard's privacy, in taking other people's documents, in

copying other people's documents, in providing them materials

to use against them essentially on the ground that it exposed

alleged frauds of Mr. Hubbard or the church.

We will establish first that this is no defense

at all. It is not a recognized defense, It does not exist.

The cases cited by the defendant do not apply or even comply

to the circumstances here and secondly, we will establish

that even if such a defense existed and were applicable here,

that the defense in the context of this case is barred by

the First Amendment because the issues of trying to put on

trial alleged fraudulent representations concerning

Mr. Hubbard and his role in the church are themselves barred

by the First Amendment. They are not justiciable and since

they are not justiciable, they cannot be a defense.

Before I discuss the first prong of our analysis,

which is this is not a defense, I want to read from what

the defendant says they want to show. The defendant says,

they set forth in their opposition to our motion the things

that they want to establish through introducing these documents

to show that Mr. Armstrong was justified in doing what he

did, and they say the following:

"The documents which are under

seal in this court prove that these representations" --

we never know really what they are -- "are

false and that plaintiff and intervenor knew

they were false when made."

Then they state what they establish, They

established that L. Ron Hubbard is a fraud. He doesn't have

the qualifications that have been claimed. His personal

life and practices contradict how he is represented. Promises

and claims made by Scientology are false. Mr. Hubbard has

controlled the Church of Scientology for a long time.

Mrs. Hubbard was his agent in effectuating that control.

Mr. Hubbard owns the Church of Scientology as well as controls

it. There is no corporate integrity to any Scientology

organizations.

I set these forth because the defendant from

their own mouth or the defendant has demonstrated precisely

the First Amendment problems inherent in the whole theory

that he wishes to advance which is, in essence, to argue

that Scientology is a fraud. That is the heart of what this

is about. That is what they are trying to do as I will

elaborate.

First, leaving aside the constitutional issues

and taking simply the issue of whether or not this

public policy theory is a defense. The defendant has made an

extraordinary number of allegations without any specificity,

particularity, definition, character. He says that there

have been various misrepresentations regarding Mr. Hubbard's

background that aren't true.

We don't know when they were supposed to have

occurred. We don't know where they were supposed to have

occurred. We don't know the circumstances under which they

occurred. We don't know who said them.

What we do know is that Mr. Armstrong said that

the whole time he was the archivist people were coming to

him to check with him to make sure that facts about Mr. Hubbard

were accurate, and now he wants to use generalized statements

that in the past misstatements have been made to justify

his impermissible and tortious conduct here.

Such generalized statements do not come close

and cannot come close to constituting a fraud. You cannot --

it is not fraud to argue that anything that someone contends

is incorrect amounts to fraud. Fraud is a very narrow

standard. It is a very high standard, and I note preliminarily

simply that even if fraud were a defense, which as we will

see it is not, that they have not come close to establishing

that they are, not to mention the fact that many of these

facts can simply not be established to be fraudulent as a

matter of law, and that allegations like this characterize

this litigation, and it creates a difficult situation.

We are in court trying to vindicate our rights,

and what we are faced with is a barrage of wild allegations,

all over the board. The court heard Mr. Flynn the other

day. Grand juries here, this here, that here.

It is a situation in which to have access to

the courts, it is like running a gauntlet of allegations

of every sort to deal with a simple, straightforward issue

of whether Mr. Armstrong was entitled to do what he did.

The church and Mrs. Hubbard are not on trial in this

proceeding.

Now, the defendant's argument that there is a

public policy exception relies on two main cases, copies

of which the defendant provided to the court, and this is

again leaving aside the First Amendment issue. First they

cite the Pearson versus Dodd. That was the case in which

Drew Pearson and Jack Anderson published information concerning

Senator Dodd. It was information that one or more of

Senator Dodd's employees had taken from his files and given

to Drew Pearson and Pearson knew that that had gone on.

The court was faced with the issue of whether or not, not

Dodd's employees who took the information, who took the

documents and provided copies, but whether or not Drew Pearson

and Jack Anderson could be liable based upon the press

publication of the information, and as such, it was a public

disclosure of private facts case.

The court said in dealing with this, and it is

a mixed tort analysis of invasion of privacy and constitutional

analysis, basically said that where information is published

in the press that is of general interest, that is a factor

and in this case was a decisive factor that can be taken

into account and should be taken into account. It is the

traditional newsworthiness issue on invasion of privacy and

public disclosure of private facts.

So, in an invasion of privacy analysis there

are certain things about me which are not newsworthy even

if I am a public figure and they cannot be published, but

if I am a public figure and they are published and they are

newsworthy, they are protected both as a defense to the tort

but also more fundamentally constitutionally protected.

However, the court specifically said we are not

here deciding Senator Dodd's employees, and Mr. Armstrong

is in the position of Senator Dodd's employees. He went

and improperly took these materials. He copied then. He

knew it was for an improper purpose and he sent them off.

He is in the position of Senator Dodd's employees.

What the court said there is, "We don't have

them before us. We will assume that what they did was

improper although we don't decide it."

And the court stated in making the distinction

between a publication situation, such as was the issue with

Drew Pearson, and an intrusion situation said the following,

and this is a quote:

"Wherever there is intrusion,

the intruder should generally be liable

whatever the content of what he learns."

The concurrence in that case was very careful

to say that this case is confined to the fact that there

were stipulated facts. It is a narrow case. It is a press

case, and it should not be taken for more than what it was,

and the defendant is trying to take it for more than what

it is. The defendant is trying to use it for the proposition

that a public figure is subject to tortious conduct if you

believe that the tortious conduct will give you information

that is newsworthy.

That seems to be the defendant's theory. That

is certainly the proposition that they are arguing from this

case, and this case does not come close to that.

Pearson versus Dodd is essentially a First

Amendment press case under New York Times versus Sullivan

and its progeny, and the whole question of press privilege

in the context of publication.

The second case cited by the defendant is Willig

versus Gold. This is the other main case that they rely

on, In Willig versus Gold, Gold, the defendant, had acted

as a broker for Willig, the plaintiff. He had particularised

information that Willig had made specific false representations

to a buyer just in a time frame that is contemporaneous with

the activities in the case.

He told the buyer -- Gold, the agent, the broker,

told the buyer about this. Willig sued, the plaintiff sued

saying, "You breached a fiduciary duty and you breached it

because you had learned that I had made this misstatement

to this person in confidence."

The court said that it was not a breach of

fiduciary duty for him to have disclosed this information.

There is no question there of him having gone into the

plaintiff's office and taking copies of confidential materials.

The issue in Willig versus Gold was after this was over,

he went to the buyer and he said, "Hey, I think you got ripped

off. You got cheated."

That is what happened there. There is no invasion

of privacy, and the court said informing someone of this

is permissible, and it is not a breach of fiduciary duty.

That is all that case stands for. It is a case from 1946,

and to use it for the proposition that the generalized right

to privacy, which every California Supreme Court decision

discussing has given expansive interpretation to, to argue

that this case from 1946 stands for the proposition that

is being put forward here that you can willfully take someone's

private documents on your belief that it will expose them

as a fraud is simply so far from what the case stands for

that it is really hard to respond to it. But suffice it

to say that under the facts, the case is not close to what

we are dealing with here.

The last authority on which the defendant relies

is the Restatement of Agency Section 395 Comment (F), which

is cited in Pearson versus Dodd and in reality is pretty

much parallel to Willig versus Gold. What that says is one

can reveal information. It doesn't say anything about taking

things. One can reveal information concerning one's principal

if the principal is committing or about to commit a crime.

So what this does is it carves out a very discrete

exception to the confidentiality of a fiduciary relationship.

If one is committing or will in the future commit a crime,

you can tell the interested party. Essentially that is what

that says.

Obviously there are no facts and circumstances

here that begin to come under this. The court should be

aware that the allegations that Mr. Hubbard is a fraud have

been made by Mr. Flynn for five years, have been made by

others for decades. That Scientology is a fraud. That these

statements are fraudulent.

No law enforcement agency has ever expressed

any interest in prosecuting the claim that statements about

Mr. Hubbard's background are a fraud. The theory that this

is evidence of crime, not to mention Mr. Armstrong's own

statement that it wasn't going on because he was making sure

and people were coming to him to make sure that information

was accurate.

Now, let me pose to the court in terms of analyzing

the logic of defendant's position the following questions

or hypotheticals: There are a series of public figures,

well known public figures who information has come out in

recent years made substantial misrepresentations.

John F. Kennedy was nominated for the vice-

presidency in large part upon his purported authorship of

"Profiles in Courage" which there is some substantial question

about whether he ever wrote.

Franklin Delano Roosevelt had a mistress for

years while he and his public relations people asserted the

healthy state of the marriage between Franklin and Eleanor

Roosevelt.

Joseph Conrad, the famous English writer, promoted

the fact that he had extensive maritime experience and had

risen to the rank of captain. It turns out that this is

simply not so. If you ever read any of the books of Conrad,

you know this his books sold on the basis of his abilities

to describe scenes having to do with the sea.

Elliot Janeway, the noted economist, has claimed

to have graduated from Cornell University. According to

a recent press report, he never graduated from Cornell

University. He attended Cornell University.

Jimmy Carter had ghostwritten his autobiography

shortly before he began his campaign for the presidency.

It was not publicly disclosed that it was ghostwritten.

I use these examples simply to say are we now

in a situation where any person can -- after all these are

arguably misstatements of fact about an important public

figure. Is there really a license to engage in the kind

of conduct that defendant is asserting here? The implications

are staggering. The ability for self-defining justification

is enormous.

It makes any public figure a legitimate object

of theft, lies, deception, dishonesty, maybe even not only

public figures, and how is this done? It is done in the

name of public interest.

I mentioned to the court the other day and we

will discuss later on the issue of the Fair Game Doctrine.

THE COURT: Maybe it's a good time to take a recess.

We've been going for quite a while.

(Recess.)

THE COURT: We are back in session. You may continue,

counsel.

MR. LITT: Thank you, Your Honor,

Essentially, Your Honor, the theory that the

defendant is putting forward is, to paraphrase their

characterization of what they call the Fair Game Doctrine,

is that the defendant was entitled and any defendant in the

position would be entitled to lie, cheat, steal from another

and it would be justified by public policy, and that is really

the heart of their defense.

Now, I have spent some time on cases that they

have cited in support of their proposition, but I think more

to the point are the cases that clearly show that this is

not a defense at all, the cases that have not been noted

by the defendant in his papers.

We have cited to the court the cases of Snepp

and Marchetti. That is a United States Supreme Court case

and the Circuit Court of Appeals case, federal decision.

It is a former CIA employee signed a nondisclosure agreement

with the CIA. Wrote a book and put it in the hands of his

publisher, and the CIA moved on the grounds that he had not

cleared the book with the CIA to enjoin the publication of

the book and to impose a constructive trust on any profits

that had been made.

The Supreme Court said -- and the argument was

this information is in the interests of the public and this

is a restraint on information that is of great public

importance, information which, among other things, would

show misdeeds by the CIA.

The court said that there had been a clear

agreement. There was a confidential relationship, and there

was no first Amendment problem here at all. The injunction

was entirely proper and the CIA was entirely within its rights

to restrain the dissemination of information that he had

learned in the course of his employment with the CIA.

Perhaps the closest case to ours is a case cited

in our papers, Dietemann versus Time. That is a Ninth Circuit

case decided under California law.

Dietemann versus Time is quite an interesting

case because, in fact, it is much more compelling than those

asserted here. The court squarely decided against the theory

being advanced by the defendant. In Dietemann two reporters

who were working with a district attorney had information

that an individual was practicing medicine without a license

and was engaging in fraudulent conduct and saying that he

could heal people through various unscientific ways.

After talking with the law enforcement officers

and basically pursuant to an arrangement with them that by

ruse they would gain access to this man's home and get

information about him, the reporters went to this man's home.

Said they had been sent there by some individuals who had

referred them. Got inside the home and had with them a camera,

a hidden camera, on which they took pictures and a hidden

microphone on which they recorded events that went on there.

the individual involved, based upon the evidence

obtained by these people, was prosecuted for practicing

medicine without a license. The man sued in federal district

court and the defendants, the reporters who had gained access

to his home through the ruse, argued that they were entitled

to do what they did because it was part of their news gathering

function, that public policy and the First Amendment protected

their doing that and that the information showed that the

man was a quack and a fraud, and this fact had been used

in evidence to demonstrate that he was acting illegally and

that clearly they were entitled to do this.

The court's response, and I am quoting, was as

follows:

"The First Amendment is not a

license to trespass, steal or to intrude by

electronic means into the precincts of another's

home or office. It does not become such a

license simply because the person subjected to

the intrusion is reasonably suspected of

committing a crime."

That is the theory of the defendant in much less

compelling circumstances because this was a press case

and the press had special protection under the First Amendment.

The court clearly rejected it and it seems to me that the

harmony of all these different decisions from Pearson versus

Dodd and Dietemann versus Time is essentially that acts that

are impermissible as such, that constitute improperly going

into one's home, taking someone else's things, there is simply

no defense to that. There is no public policy defense to

that.

Under certain circumstances there may be a public

policy defense to simply information, publication or receipt

and use of it that otherwise might be wrongful but where

the acts involved are direct intrusions and violations of

the person's rights, there is simply no public policy defense.

That is what Dietemann clearly says, and Pearsons versus

Dodd, in fact, says the same thing.

THE COURT: Well, of course, one of the problems I

have is that I gather your complaint is couched in terms

of, at least on behalf of Mrs. Hubbard, deals with invasion

of privacy and deals with the idea of intrusion. Yet from

everything that's been submitted to me, it appears, and I

am not entirely sure of all that will be submitted, but

Mr. Armstrong came into possession of all this information

with the consent of the church or Mr. Hubbard or possibly

even Mrs. Hubbard as to some of it, either actually or apparent

consent.

MR. LITT: But limited consent.

THE COURT: Well, be that as it may, there was no spying

out, no subterfuge as I gather to gain any information.

That the gravamen of the problem is because he didn't return

it when requested or turned it over to his attorney.

MR. LITT: No, he didn't turn it over to his attorney.

He gave it to Mr. Flynn, an attorney, and he has admitted

that that was for use in other cases. So that the argument

that they were given to his attorney --

THE COURT: Maybe that is a publication if he gives

it to somebody else.

MR. LITT: It is not a publication under public

disclosure and private facts cases. Publication has to be

a public form of dissemination.

It is, however, a clear violation of privacy

under California law. In the Porten case, it involved exactly

transferring a copy of a document in the rightful possession

of the university to another person without permission.

They had it only for a limited purpose. They gave a copy

of it to another party outside of that authorized purpose.

The court said --

THE COURT: What case is that?

MR. LITT: Porten, P-o-r-t-e-n. I can give the court

the cite. It is 64 Cal.App.3d 825, Porten versus University

of San Francisco.

THE COURT: All right, go ahead.

MR. LITT: The other thing I think that is important

is that Mr. Armstrong did not have access to these materials

by his own testimony for any purpose other than to put them

in the archives and give them to Mr. Garrison. He went to

Mr. Garrison and said, and Mr. Garrison knew that and

Mr. Garrison testified to that, that he only had the documents

for work on the biography, and that the biography itself was

subject to control.

Mr, Armstrong went to Mr. Garrison and basically

asked him, and Mr. Garrison agreed, and I think also could

but isn't subject to a tort action, to give the materials

which they both knew were for a purpose beyond the terms

under which they had been provided them.

In terms of the question that the court raises,

an employee by definition has access to materials. It is

clearly not the case that an employee therefore can use them

for any purpose in a privileged way.

THE COURT: Now you are talking about a breach of

fiduciary duty, He is not an employee of Mrs. Hubbard.

The church is not suing him for invasion of privacy.

MR. LITT: Well, to some extent that is true and to

some extent it is not true. We would contend that he clearly

has a fiduciary duty to Mrs. Hubbard even though he wasn't

an employee of Mrs, Hubbard because he knew that he had her

materials and he had a duty to keep them, and we think the

evidence will, in fact, support and justify a jury instruction

on that issue as well.

The church invasion of privacy is somewhat more

problematic. Where the privacy interest in particular comes

in is that the information was private, the documents were

private and he knew they were entrusted with maintaining

their privacy, and the fact that they were private is an

element of his breach of fiduciary duty, but the point is,

in fact, it is an invasion of privacy and this is what Pearson

versus Dodd says.

It says it is an intrusion and it is talking

in the context of the facts of Pearson versus Dodd. It is

an intrusion to do what was done here. That was the clear

implication of Pearson versus Dodd, and what these employees

who had access to all of these materials which were given

to Drew Pearson engaged in was an intrusion. In fact, the

court assumed that they engaged in an intrusion without

deciding, by taking copies of these things which they clearly

had access to but using them for a different purpose, and

there is substantial law cited in our trial brief that talks

about the fact that unauthorized use or unauthorised disclosure

constitutes an improper invasion of privacy under California

law.

That is not the same thing as public disclosure

of private facts. That is precisely the issue in Porten.

The court says this isn't a public disclosure of private

facts case because there is not publication within that meaning

because it has to be relatively broadly disseminated, but

it is an invasion of privacy and it is actionable.

To take another example, and this was discussed

also in the Dietemann versus Time, is the Pentagon Papers

case. Now the New York Times, just like Drew Pearson, was

able to publish the Pentagon Papers, but Daniel Ellsburg

was able to be prosecuted for giving them to them, and that

is the distinction. It is one thing where the press receives

something and it can use it. Was Daniel Ellsburg privileged --

THE COURT: Well, that case was never resolved.

MR. LITT: No, it wasn't resolved.

THE COURT: It was dismissed. We don't know what the

law would have been had it resulted in some conclusion.

MR. LITT: But the law is quite clear, and where it

has been raised, it has never been permitted.

The draft cases where Father Berrigan went into

various military installations and raised a defense that

he was justified in doing it to stop the war. Those defenses

have not been permitted.

The defense of justification and necessity, as

we explained in our memorandum, is extremely limited and

is not available in a criminal case.

Dietemann versus Time makes clear that in the

precise, not precise, but in almost totally analogous

circumstances where based on a purported relationship you

gain access to private information and then you use it in

a way which was not authorized and you engage in improper

intrusion or you engage in improper disclosure, that is what

Porten stands for, it is an invasion of privacy and there

is no defense of public policy under those circumstances.

If there is any such defense, it is only for

publication of newsworthy information, one, and conceivably

for a verbal communication that in and of itself doesn't

do anything wrong advising someone of discrete information

that you otherwise are obligated not to in connection with

commission of a crime, neither of which are the circumstances

here.

Other than that, those two arguable situations,

there is no such defense. There is no case establishing

that there is such a defense and every case that touches

on the issue clearly indicates to the contrary.

Let me give the court another example. That

is an example from this court, the PDID case.

Judge Olson recently heard a motion by the PDID

for the return of all the documents obtained through California

discovery in that case. The police department went into

court and said, "We want the documents back. Even though

they were lawfully obtained, the only purpose for which they

were obtained was this lawsuit. Now we are entitled to them

back, entitled to the copies back and all copies made from

the copies. We are entitled to those back."

The ACLU opposed the motion, arguing that there

was evidence of criminal and illegal conduct in the papers

in that case. That the public was entitled to know about

that information and that they were entitled to have it to

enforce the settlement that included certain standards

applicable to the PDID.

The court ruled that even though these documents,

unlike the circumstances here, were obtained completely

lawfully, the documents that had been provided to the ACLU

had to be returned and all copies had to be returned, and

this public policy defense in compelling circumstances where,

in fact, it could be established quite clearly that there

had been violations of law by the PDID was simply not

permissible. It was not a defense and the court so found.

This decision occurred only, I believe, last week.

Given these authorities, the proposition, the

extraordinary proposition that is put forward here for which

there is not one case, I have discussed all the cases that

are cited that come close to being on point that are cited

by the defendant. There is not one case, and every case

that reaches it in any form close to this, such as Dietemann

versus Time, clearly rejects this defense, and the reason

is obvious.

Let me give a hypothetical. Let us suppose that

there is an employee who works in the court and that employee

decides that one or another court staff member is engaging

in unlawful conduct and therefore goes into the person's

drawer or has access to the person's drawer because it is

part of their functions and takes things from that person

that are their private materials.

Now, it may be that that information may be usable

by some other party. That is not the issue that we are dealing

with, but clearly that is not allowed. You cannot give private

citizens any more than you can give the government license

to violate people's rights, trample on their rights in the

generalized name of public policy, a self-defined public

policy.

The implications for how society operates, for

how any organization operates are enormous.

If this is the law and the defendants can cite

no case that comes close to establishing that this is the

law, and every case that really begins to get at the issues

such as Snepp and Marchetti or such as Dietemann versus Time,

clearly rejects it out of hand. Only cases dealing with

attenuated circumstances where there is a thirdhand receipt

or there is a discrete verbal disclosure have said that it

may be able to made permissible. Those are the circumstances

here.

Now, even leaving aside for the moment whether

or not such a defense is available in some circumstances

and even leaving aside whether it would arguably be available

here, it is our position that the First Amendment prohibits

putting on this defense in order to make claims that

Mr. Hubbard has been misrepresented by the church or by himself

in the context of Scientology activities or that

representations concerning his role in the church or ownership

of the church are permissible.

If these fraud allegations are not justiciable,

then they cannot be a defense because the jury cannot decide

that there was fraud, so that this is a second independent

issue that must be resolved even if there is some arguable

public policy defense available here. We provided to the

court a declaration by a religious expert concerning this

issue of whether or not there have been misstatements of

fact concerning L. Ron Hubbard's background, and in that

evidence of Frank Flynn, he discusses the traditional

circumstance of tendencies toward exaggeration by religious

movements concerning personages who have been important in

the development of this movement.

He discusses in the Catholic Church the tradition

of hagiography which was biographical writings about saints

and the fact that historical study has shown that the

statements made in these hagiography files are in large part

exaggerated, and he goes on to explain, he discusses, for

instance, the fact that the story of the Virgin birth did

not originate at the time of the beginning of the Christianity

religion but actually came somewhat later in the development

as did certain alleged facts concerning the genealogy of

Jesus.

He discusses Moses, Buddha, St. Francis, Catherine

of Sienna. There are a variety of examples given, but the

point of this is that these representations arise and cannot

be separated from a religious context.

In fact, Mr. Flynn says quite the contrary.

To the extent that they occur, they are one form of indication

of the religious character of the movement because the tendency

for this to occur within religious movements independently

frankly of any individual is so strong that, in fact, it

evidences the very religious character of the movement; rather

than what Mr. Flynn wants us to assert which is that it is

somehow a demonstration of fraud.

He also says that he has seen the precise

phenomenon occur in Scientology. That when he has studied

the subject of Scientology -- he, himself is not a

Scientologist. He has been trained in the Catholic religion,

but is also a student of comparative religion -- that the

forms and the ways in which people talk about Mr. Hubbard

is exactly -- within Scientology is exactly characteristic

of this very phenomenon.

He explains that these things are simply

inseparable from religious conviction and belief. He gives

the example, for instance, within the Catholic religion of

the view that transubstantiation of bread into the body and

blood of Jesus, now this is precisely the circumstance we

are dealing with here but I think it makes an important point.

He says someone could argue that that was fraudulent by showing,

that scientifically there had been no change in the chemical

properties of the bread. Clearly not, his point being that

quote factual representations that occur in a religious

context, that are often accompanied by metaphor and a variety

of languages peculiar to the religion cannot be pulled out

of their context and of the circumstances from which they

come and alleged to be facts or not facts. They are part

of the fabric of the way that the religion developed and

of religious beliefs and activities, and as such are not

justiciable under the First Amendment.

Any question about this, this particular issue

in terms of background and representations about a religious

leader in particular were settled by the case of United States

versus Ballard. In that case the United States Supreme Court

was faced with the issue of a fraud prosecution against the

Ballards who were the founders of a religious movement called

the "I Am" movement, and it was concerned that in fact it

was a religious movement, and the issue before the Supreme

Court was whether or not the trial court had properly

determined that the truth or falsity of the representations

that the government wished to prove were not justiciable.

Now, in and of itself one could think that that

is simply referring to generalized religious doctrine, but

actually an analysis of the record in that case shows that

precisely the types of representations that Mr. Flynn wants

to have adjudicated in this court were deemed impermissible

to be adjudicated in Ballard.

Let me be specific, and some of this is not in

the opinion itself, but it is in the record and we have

searched the record itself and we cite to the Supreme Court

records as well as to the opinion to get the actual

representations which the government was not permitted to

adjudicate.

The Ballards had claimed that they were free

from ailments and that they had conquered death, disease

and old age. The government wanted to prove that

scientifically they could demonstrate that that was false.

They could not do that.

The Ballards claimed that they could heal ailments,

diseases and injuries which were otherwise incurable. That

they had, in fact, done so on hundreds of occasions, and

more importantly that they had proof in the form of written

testimonials from the people whom they had healed. The

government said, "We will prove that these written testimonials

that they have held out were, in fact, written by the Ballards

themselves and were falsified and that the people whose names

are on them never signed them." Could not be adjudicated.

The Ballards had claimed, Guy Ballard had claimed

that a religious book he wrote was dictated to him by

St. Germain. You would think you can't adjudicate that.

He said it was written by him at a certain time in a certain

place in 1930 in Mt. Shasta.

The government offered to prove, aside from whether

St. Germain had dictated the book to him, that he was never

in that time and place. Could not be adjudicated.

The Ballards had claimed that they had a portrait

of St. Germain which an artist by the name of Charles

Sindelar had drawn, and they were promoting this portrait.

The government offered to prove that the portrait

had been drawn 20 years earlier by a different artist. Could

not be adjudicated.

The Ballards had claimed that they had helped

destroy three enemy submarines during World War II which

were on their way to the Panama Canal.

The government offered to prove that no such

incident ever occurred and they could not have done it.

Could not be adjudicated.

Ballard is dispositive of the theory that gets

promoted here that one's representations about a religious

leader's background are not religious and somehow can be

pulled out and dealt with in a separate world. Ballard just

disposes of that in circumstances so much more clear-cut

than those here.

It is self-evident from the Ballard decision

that representations about backgrounds are considered by

the court and were considered by the Supreme Court to be

inherently intertwined with religious belief and doctrine

and advocacy, and it simply was not a matter that the courts

can deal with. They could not decide it.

The claim of fraud that the United States

Government brought against the Ballards on these theories

to prove these discrete facts were simply impermissible.

Here the claims that get made by the defendant

about various misrepresentations about Mr. Hubbard, many

of which claims I won't even get into what would be involved

in determining what claims we are talking about, what was

accurate, what was inaccurate, what the context was and all

of the matters that would be involved in trying this issue

which would, I don't even want to imagine what would be

involved in trying those issues.

Even if there is a public policy defense available

here, the issue should not be and cannot be tried because

it is impossible that they could be dealt with in a way that

did not intrude on religious belief and, in fact, it is

impossible to address them in any context except the context

of Scientology.

Then the defendant says that a second basis of

his fraud claim concerns Mr. Hubbard's control, ownership

and role within Scientology. It says it has been contended

that Mr. Hubbard has no position, has no corporate position

in Scientology, and that this is a fraud because in reality

he controls Scientology.

Well, Mr. Hubbard has no corporate position in

any Church of Scientology. He has a role in Scientology

which is defined by Scientology and which under the cases

that we have cited cannot be challenged and adjudicated by

the court. He has the role of founder.

Any control that he has is religious control.

It is precisely the kind of thing that cannot be gotten into

by the courts. What role he has, what authority, religious

authority, moral authority, whatever authority he has is

precisely an issue that is not of concern to the courts and

it may not be adjudicated by the courts, and when the church

says that he is not responsible for the activities of the

church, that he doesn't run the church and the defendant

wants to show you that he really does run the church, the

very process of this inquiry of intruding into those questions,

making determinations about those questions, how his role

operates, what is involved, on what basis people do or do

not listen to him, it is impossible to address those issues

without intruding in a totally impermissible way into protected

First Amendment rights and making determinations which

undermine the protections of the First Amendment.

We have cited cases such as Catholic Bishop which

is the United States Supreme Court case involving the

applicability of the Title VII -- I as sorry, the NLRA to

religious organizations in which the court discusses this

problem of unfolding a process of inquiry into the internal

activities and roles and functions of different people, and

we have cited various other cases on this.

Now, there is a case that, in fact, the Supreme

Court cases that is fairly close, although it is not precise,

to the kinds of claims that they want to adjudicate here.

In two cases which are Kresich, K-r-e-s-i-c-h, and Kedroff.

The full cites are in the memorandum.

New York had passed a statute and it had to do

with the Russian Orthodox Church which was located in

the Soviet Union and had a branch in the United States, and title

rested with the Soviet Union Church, and the New York Court

passed -- I am sorry, the New York Legislature passed a law

that said basically that if you are an agent of a foreign

power, you can't own property in the United States, something

like that, and on that basis moved to vest title in the church

property with the New York church which had split off from

the former mother church. The court said that the process

of inquiring into the whole issue of resolving church property

disputes but also of resolving the issue of Soviet control --

the theory was that the Soviet Government really controlled

the Soviet church, so it really wasn't a church and it was

really a secular institution. It was controlled by a foreign

body which was an enemy of the United States. The court

simply said that could not be done.

When it was tried a second time eight years later,

the court again said it could not be done. That time they

tried it in the form of bringing a lawsuit under common law,

and Justice Frankfurter in his concurrence talks about this

issue of misrepresentations about relationships between the

church and someone else. He talks about the relationship

between the Catholic Church and the Mussolini Government

under the Lateran Agreements and said we can't go into that.

By the way it was represented that this Soviet

church wasn't controlled by the Soviet Government. That

representation was not subject to judicial inquiry and

investigation. That is what the defendant wants to do here

to justify unbelievably his own wrongful conduct.

We are not even dealing with a suit where this

is in issue. We are dealing with a circumstance where this

is trying to be brought in through the back door to justify

what is on its face clearly impermissible conduct.

The defense also says that these documents show

that promises and claims made by the Church of Scientology

are false. Well, the promises and claims are more straight-

forward, and I think we talked about Ballard. Obviously

if it is the kind of representations and facts that I talked

about, they are not justiciable, so, too, these are not

justiciable and the Ballard case is dispositive about that.

What is important about the inclusion of the promises and

claims, and that is a quote from the defendant's memorandum,

that that is part of what is the fraud," is it shows, in

fact, precisely the point that we are talking about here

is that, in essence, the theory here is to attack the

foundation of Scientology and to try to show that Mr. Hubbard

and Scientology are frauds and that just cannot be done.

Now, there are some religious issues, but they

arise in the context of the subject matter of the motion

and so I will reserve them at this time, having to do with

whether the court can go into them or not, and the only final

point that I want to make is that if we get this far, we

have cited substantial case law to the court about the need

for an evidentiary hearing. In the event that any First

Amendment related issues are going to be at issue in this

trial, that the court has to hold an evidentiary hearing

and we would submit that this is required, both by the

religious clauses of the California and United States

Constitution and by the rules of evidence for preliminary

facts to make a determination that they are not -- must make

an independent factual determination before submission to

a jury that these do not arise in a religious context and

are not protected representations so that I will address

that issue more if we ever have to walk that far down the

road. But I did want to note it for the court at this point,

and in such a hearing the burden would be, in light of the

presumptive issues that we have raised and the law, the burden

would be on the defendant.

Now, the only final point I want to make is that,

and I think this will become clear when Mr. Flynn argues,

is that the nature of the defendant's public policy theory

and its implications are extraordinary, not only for how

this case would be tried but for the whole processes of the

court. I fully expect that Mr. Flynn will stand up and advance

allegations concerning the church, Mr. Hubbard, Mrs. Hubbard

of wrongdoing, misconduct. I have heard him do it before

and I expect to hear him do it again, and if we ever have

to, we will respond to those allegations. But we should

not in this court with these allegations where the issue

is the taking of the church's and the Hubbards' property

wrongfully have to be in a position where what we are

responding to is they are generalized, sweeping, wild

allegations which are brought out in every proceeding in

which Scientology is involved.

I have been involved in the probate case that

I described before. Mr. Flynn represented Mr. De Wolfe.

The probate petition which was filed supposedly because

Mr. Hubbard was a missing person and his estate needed

preservation, in which the allegations were that Scientologists

were seeking money from him. That case was ultimately won

by Mrs. Hubbard on summary judgment who had opposed the

petition, but the petition itself contained within it every

one of the kinds of allegations that the court will hear

here. They were stricken by the court there as irrelevant,

but the tactic is clear. Bring all these things out. Make

emotional charged, wild allegations which can prejudice a

court, which can prejudice a jury, which puts the jury in

a position or the Hubbards in a position where it is virtually

impossible to defend their rights, and you can do what you

want to them and they begin to turn around allegations that

they made against us. In reality what they do and what they

wish to do in this court is precisely what they say the church

does. They want to say that the church and the Hubbards

are fair game for any wrongful conduct and that this is a

legal defense, not some international policy about whether

you have access to their justice system. This is a legal

defense. You can do what you want to them and it is okay

because they are bad people. That is the heart. That is

what the court will hear in the argument, and that is what

ultimately the court must respect.

Thank you.

THE COURT: Mr. Flynn?

MR. FLYNN: If Your Honor please, at the outset let

me say that I feel like I have come from Boston to watch

the Dodgers and Giants game and I have arrived here and found

myself in the middle of a Red Sox game against another National

League team.

Much of what Mr. Litt had to say, which I hope

I will be able to demonstrate to the court, I don't really

believe has got anything to do with any defense of

Mr. Armstrong. I think Mr. Litt basically overlooked the

fact that I am defending a case brought by Mary Sue Hubbard

and the Church of Scientology, his clients. They have thrust

themselves, particularly the Church of Scientology, a

supposedly religious organization, into this court system,

into the temporal matters that relate to the issues that

are involved in this case. It is not a case where

Mr. Armstrong thrust himself on the court with regard to

some of these allegations. It is a case where he has been

forced to defend himself and that matter seems to have been

basically completely overlooked.

Secondly, the case relates to property rights

and personal rights. That is what the case relates to.

This extensive argument with regard to quote public policy,

to follow up on my baseball game analogy, I don't even know

what he is referring to. If he is referring to the public

interest, public figure defense against a private right for

invasion of privacy, then if he intends to pursue his invasion

of privacy counts through Mary Sue Hubbard, then we will

defend based on whatever cases we can defend on; namely, the

public interest, public figure defense.

The public policy theory which he continually

calls such, I assume with regard to the invasion of privacy

and breach of fiduciary duty counts, he really means that

which is a legal defense. It is not a public policy defense.

If he is talking about the conversion count or possession

of personal property count, then the defense is a supervening

or superceding interest on the part of Armstrong to do what

he did.

The legal justification, the Restatement of Agency

defense, the Restatement of Torts defense which is set forth

in our memorandum, that is not a public policy defense.

That has to do with property rights and under what

circumstances property rights, as alleged by a plaintiff,

can be defended by a defendant.

Now, Mr. Litt stated that Mr. Armstrong hopes

to do in this court what he couldn't do illegally, suggesting

that Mr. Armstrong had stolen or in some way improperly

converted these documents. Well, first of all, and he suggests

that the follow-up or the sequitor to that is that

Mr. Armstrong wants the documents disseminated in various

litigation around the United States.

Well, this court has already ruled that

Mr. Armstrong can do that. The preliminary injunction that

was issued gives authority to third party litigants to come

into the court to get documents for purposes of other

litigation. That's been the ruling of this court for almost

a year and a half.

So, therefore, the idea that there is something

wrong with third party litigants coming in and getting

documents that are under seal in this court is just totally

frivolous, and the court has already approved of it, and

that's been the law throughout the United States for years.

In fact, since Mr. Litt has raised this issue,

and it really has not been briefed in the memoranda submitted

to the court by him, in anticipation of it, I did a little

bit of research into the issue of the admissibility of stolen

property. Assuming that Mr. Armstrong under some subterfuge

as in the Dietemann case or just outright conducting a breaking

and entering, broke into church property or through some

subterfuge went in and obtained these documents, took them

out and gave them to me or some third party, the case law

is absolutely clear that if that evidence is relevant and

material in other judicial proceedings, then it can be

introduced into evidence.

In California there is a Herrescher case which

held that documents stolen by a private detective from a

law office could be admitted into evidence in a State Bar

proceeding.

There is the Munson case in which a wife or a

husband, one or the other, stole a private letter from the

home of her divorced spouse, and the other divorced spouse

during the divorce proceeding tried to block it from coming

into evidence. The Appeals Court of California held that

since it was just purloined, it could not be admitted into

evidence because no wrongdoer should be able to take advantage

of his own wrong. The Supreme Court of California reversed

that decision and held the letter admissible.

Of course, the Pearson versus Dodd case is a

recent case. The Herrescher case which held that documents

taken from an attorney's trash container if they weren't

privileged under the attorney-client privilege could be

admitted into evidence.

There is The People versus Johnson case which

held an employer who took materials from the trunk of his

employee's car and gave it to the police could be used in

evidence.

There is the NLRB versus South Bay Daily Breeze

case, a Ninth Circuit circus case which holds the same.

I am going to explain the facts to the court

under which Mr. Armstrong came into possession of these

documents which I submit to this day has still not been fully

understood by the plaintiff in this action and will be the

evidence fn this case. But in any event, even if Mr. Armstrong

had stolen them, if third party litigants could prove in

the court where they are then litigating, which is precisely

incidentally what the United States versus Hubbard case held

on remand, third party litigants could demonstrate a need

for them for competency and materiality, then the documents

could be used and I believe this court has recognized that

by entering the preliminary injunction that it did.

Now, addressing myself in the context of the

facts through the conversion count, which is what we are

defending as I see this case essentially, because I don't

believe if the court really looks at the law of the breach

of fiduciary duty and invasion of privacy -- if Mr. Litt

does, in fact, have the jury, what he represented to the

court; namely, not put into evidence anything that would

offend the sensibilities of the ordinary and prudent person

on the invasion of privacy count, then we are entitled to

a directed verdict if he brings up some abstruse

characterisation, for example, of this letter. He's brought

up this letter now twice with regard to a letter between

Mary Sue Hubbard and L. Ron Hubbard, so I went out and checked

with my client as to what this letter is.

Well, first of all, the letters that are

predominently under seal, as I understand it, are letters

that have nothing to do with really quote personal

correspondence. They have to do with the Hubbards taking

money from the organization. They have to do with running

the organization as a business. There was one personal letter

that Mr. Armstrong is aware of, and apparently he

mailed it back to Mary Sue Hubbard. Now that may or may not be

the letter that Mr. Armstrong brought to me in Clearwater,

Florida. Frankly, I don't remember, but even if it is, if

he is simply going -- and this really indicates the whole

problem with the contents of the documents. If he says in

front of the jury, "Well, there is a letter between Mary

Sue Hubbard and L. Ron Hubbard," and showing that letter

to me constituted invasion of privacy and stops right there,

and he does that with other documents, then I submit to the

court I will be entitled to a directed verdict on the invasion

of privacy count and on the breach of fiduciary duty count

if he only addresses those points.

Now, with regard to the conversion count, which

I really think is where this case as I indicated in chambers

comes down to, the facts are basically as follows: Armstrong

worked for an organization which was generally denominated

the Sea Organization, and he, in fact, was out on a ship

of L. Ron Hubbard's. In every port they went and since

Mr. Armstrong was the personal public relations officer of

L. Ron Hubbard, it was his duty to tell the people in the

port who they were. Well, every port they went into they

said, "We are not the Church of Scientology. We have nothing

to do with the Church of Scientology. We are an independent

business group called the Overseas or Operation Transport

Corporation, and we are conducting research."

It was his job for some six years to disseminate

that lie across the world which he did. Then he, after the

ship was sold in 1975 and they landed in Clearwater, Florida,

and under another subterfuge called the United Church of

Florida tried to offer the City of Clearwater, again not

the Church of Scientology, he worked again for the Sea

Organisation, and he eventually came to California on Hubbard's

orders, was locked up for a period of time on Hubbard's orders,

but eventually became assigned to Hubbard's household unit.

In Hubbard's household unit he was assigned the task by

Hubbard of taking care of all of Hubbard's personal property.

That is essentially what he did.

During that period of time he was drilled and

trained to state that he was not an employee of the Church

of Scientology of California, the plaintiff in this action.

Thereafter, in the middle of probably the fourth

raid, as I understand it, or the fourth threat of a raid --

there was an original raid in 1977, and then there were threats

of raids in 1978, another threat of a raid in 1979, and in

the middle of a fourth threat of a raid because of ongoing

grand jury proceedings in Hew York, Washington, D.C., presently

Toronto, Canada, a conviction for criminal fraud of L. Ron

Hubbard in France -- contrary to what Mr. Litt told the court

with regard to Hubbard's biographical background, he's been

convicted of fraud -- in the middle of all this, the internal

intelligence agency of the church called the Guardian's Office

thought there was going to be another raid because of the

IRS case, so they mustered 25O people, headed by a group

of people which included a woman named Diane Riesedorf, Laurel

Sullivan, Gerald Armstrong, Gail Irwin, David Mayo and under

the control of this group they seized probably some hundreds

of thousands of documents, five ton truckload of documents.

They rented a commercial paper shredder which they called

Igor and for a period of several weeks they went through

all of the documents in several locations and began to shred

them, and that is the key circumstance under which Armstrong

got these documents because a girl named Brenda Black came

to Armstrong and there will be extensive testimony on this

point on the defense side, if necessary, came to

Mr. Armstrong and showed him a box of materials.

It was Armstrong's decision what to shred. He

decided that it shouldn't be shredded on an initial cursory

examination of the box and entrusted it to Laurel Sullivan.

Subsequently after a lot of other documents in the identical

location were shredded, Armstrong began to look through the

box of documents and he found documents which he thought

had quote historical significance, and he wrote a petition

to Hubbard asking for permission to collect more materials

to complete the biography project which had actually started

in 1973, and the evidence will be that Laurel Sullivan and

others actually began this biography project, But at various

times it got derailed because the authors, one being a fellow

named Peter Tompkins, wouldn't write what Hubbard wanted

him to write.

So eventually we come up to 1980. Armstrong

writes to Hubbard. Hubbard approves it.

Now, there is a key fact here and that is that

Hubbard is in the process of fleeing because his wife has

just been convicted of a felony, obstruction of justice for

stealing documents. There is a pending grand jury in New

York for the frame-up of a journalist named Paulette Cooper,

and there is evidence which was then coming in before the

grand jury relative to Hubbard's involvement in that frame-

up. So, Hubbard flees. Subsequently he is determined to

be concealing himself as a fugitive and a federal court in

Tampa so found.

What happened is because Mary Sue Hubbard was

on her way to jail, because L. Ron Hubbard was fleeing, the

control mechanisms within the organization over the documents

deteriorated, and no one really knew and to this day I submit

to the court no one knows, other than Gerald Armstrong, really

what is in those documents because he is the one, other than

Omar Garrison, who has analyzed them for years. So, even

Hubbard himself did not precisely know what was in the

documents.

Now, Armstrong begins to go through them.He

gets approval from Hubbard and, in fact, there are

negotiations, and this has all been brought out in discovery

and it is not protected by the attorney-client privilege

because there are attorneys representing the church and

attorneys representing Hubbards particularly an attorney

named Wertheimer. Wertheimer brings out in these meetings

that Armstrong can't work for the church because it would

violate the Internal Revenue Laws, and there vas then an

ongoing Internal Revenue investigation because of the doctrine

of inurement.

MR. LITT: I am going to object. We have a motion

on this concerning the use of any of these materials on the

attorney-client privilege, and I really don't think that

is the appropriate way to deal with this. The next thing

I am going to hear is that Mr. Flynn is going to turn around

and say we waived it because it's been talked about. I just

want to at least make clear that we have an objection to

any information related to what he is talking about. It

is protected by the attorney-client privilege and cannot

be gone into and is not an appropriate subject of discussion.

The court can handle the argument on that however

it wants, but I did think it was important to point it out

at this point.

MR. FLYNN: In any event, Your Honor, Mr. Wertheimer

states that Armstrong has to work for Hubbard, and, in fact,

there is a document which essentially so states.

Mr. Armstrong considers himself right at the

outset of this project the agent of L. Ron Hubbard, not the

agent of the Church of Scientology and there are extensive

documents which support this theory of the defendant's case.

Now, Mr, Armstrong initially collects probably

what turned out to be a relatively small number of documents

in terms of what was actually saved from the shredder because,

as the court is going to find out, these documents come from

probably at least six or seven different sources and they

also involve documents which were collected by Mr. Garrison

which have nothing to do with origins of or ownership of

or possession in either L. Ron Hubbard, Mary Sue Hubbard

or the Church of Scientology.

Over a period of a year and a half Armstrong

collects all these documents, turning them over to Garrison

and Garrison begins to analyze them to write the book and

starts writing the book.

In the contract that Garrison has with Hubbard,

there is no provision of any nature or description as to

what Garrison can do with the documents. The only protective,

covenant or protective or restrictive provision in the contract

is that Hubbard has to give final approval to the ultimate

biography.

Well, Garrison begins doing this biography and

he realizes that the representations that were made by L. Ron

Hubbard right from his birth right up to the present time,

which is the whole thrust of the book, are false, and the

representations cover, and I won't bother to go into them

all right now but just for an example, he's held out as a

nuclear physicist and a medical doctor with doctorates and

degrees from universities and all kinds of things which,

as it turns out, are all fallacious. So Garrison realizes

that he can't write what Hubbard wanted him to write. In

fact, if he follows any journalistic ethics, he's got to

write just precisely the opposite.

Now, Armstrong, in working with Garrison, realizes

this and writes a letter to the organisation. Writes a letter

which we submit should come into evidence to a person named

Sara Shriven, and in the letter he states that everything

that is being said about Hubbard is false. We have grossly

mischaracteriaed his background and, in fact, we have got

to correct it.

So, as then the agent of L. Ron Hubbard, he is

acting in Hubbard's behalf to correct the lies, and in the

documentary evidence, one month before Mr. Armstrong leaves

the church, proves that.

He then is called in by the church to be security

checked because he is saying bad things about Mr. Hubbard

and that is not tolerated. He then has the choice of either

undergoing that procedure or leaving, and at the same time

he is told to sign a nondisclosure and release bond, and

under this nondisclosure and release bond, one of which he

had previously signed, he can be held liable for $10,000

temporal, not spiritual, temporal damages in a court of law

if he discloses the contents of anything he's ever learned

in the Church of Scientology.

Well, that bond has been found by a number of

courts to be not worth the paper it is printed on, but in

any event, he leaves the church and he begins working

independently with Garrison. Now the key fact for the court

to understand is that Garrison is in rightful possession

of the documents. Hubbard is hiding. Mary Sue Hubbard is

on her way to prison, and Garrison rightfully, pursuant to

the contract, has the documents.

Armstrong has no documents at this point. He's

turned them all over to Garrison. For the next five to six

months he works intermittently with Garrison on the biography

project because they are now going to write their own, and

he also works in a law firm part time, subsequently full

time.

Thereafter the church begins to harass

Mr. Armstrong because they realize, and at this point in

time -- Mr. Armstrong has never come to me. They begin to

harass him. They do a number of things. For one thing,

they make him an enemy. They issue what they call an S.P.

Declare, a written document where they make him an enemy

of the church, which we will show the court when we get into

the argument, subject him to the Fair Game Doctrine.

They steal photographs from him. Photographs

have nothing to do with any of these archive materials.

They are his own private materials which he actually received

from a third party named Jim Dincalci who will testify

in this court.

They steal other materials from him which have

nothing to do with the collection of documents when he was

working for Hubbard. He has a meeting with them and they

tell him to go get a lawyer because they are going to sue

him.

At the same time in light of a lot of harassive

acts, he's got very paranoid. He's seen what the Church

of Scientology over the last decade has done to other people.

He knows what they did in the criminal cases and he is fearful

pursuant to the Fair Game Doctrine, which calls for the

destruction of enemies, that they are going to kill him and

he gets on an airplane and in late May 1982 he flies to

Clearwater, Florida, and for the first time he sees me, and

I can only describe to the court that he was in a state of

total fear because he thought the organization was not only

to kill him but they were going to sue him.

He then goes back to Garrison and tells Garrison

what is happening, and Garrison then gives him the documents,

and this will be the testimony of Mr. Garrison, to defend

himself because he's now been threatened by the church,

et cetera, told he is going to be sued.

So, he goes to a lawyer; namely, me, and the

reason he came to me is because he thought that there were

very few lawyers in the United States who were willing to

litigate against the organization because of what they do.

That is the reason he came to me.

Garrison then gives him back documents which

he copies with his own money. So, now, you have got in issue

whether Garrison is in rightful possession. Armstrong copies

Garrison's documents with his own money, so we submit that

those pieces of paper, aside from the privacy issues which

we will get into, but just on the conversion issue, those

pieces of paper actually now belong to Mr. Armstrong.

Mr. Garrison is in the position more so of like,

of being the employees in the Pearson versus Dodd case.

Mr. Litt cited extensively from Pearson versus Dodd and said

the case was inapplicable because the court assumed that

the employees would have been held liable for conversion

in that case. However, Mr. Litt did not read the rest of

the opinion after it made that assumption where it said:

"Where the claim is that private

information concerning plaintiff has been

published" -- assuming the publication is to

me or assuming even that Garrison made the

publication to Armstrong -- "has been published,

the question of whether that information is

genuinely private or is of public interest

should not turn on the manner in which it

was obtained."

Which goes to the intrusion allegedly by Armstrong,

but as the facts show, in fact, Armstrong never even intruded

because the documents were given by Garrison back to Armstrong,

and I believe all of the testimony from the beginning to

the end of this case will bear those facts out.

So, in any event, if anyone is in the position

of being the so-called Dodd employee, it is Garrison at this

point because he is in rightful possession. The contract

is silent on what he can do with the documents, and he gives

them to Gerald Armstrong to defend himself, who gives them

to his lawyer.

Garrison, for the next year thereafter, continues

to prepare the biography and, in fact, comes up with a

publisher. Approximately one month after Mr. Garrison comes

up with a publisher for the true biography of L. Ron Hubbard

he is approached by the Church of Scientology, attorneys

for Mr. Hubbard, and they basically make a deal with

Mr. Garrison. He will give them back every document he has.

He will not disseminate the information. He will give them

back the manuscript that he has done based upon the documents,

and he will be paid some, I understand, $240,000 or something

in that range, although we have never seen a settled agreement

because they won't produce it in discovery, although we submit

on the conversion count it is relevant for purposes of this

case. But in any event, that took place in the summer of

1983.

Now, at that time for the first time someone

other than Garrison has the right to possess the documents.

Hubbard is not around. He has never come in and asserted

his property rights, let alone his privacy rights which are

purely personal. Hubbard is not around, so the documents

go back to the control of a lawyer who represents L. Ron

Hubbard. That is essentially what happened.

The case is already one year in process. They

have the burden of proving that there has been -- they have

a right to possession at the time of the alleged conversion.

Well, the time of the alleged conversion, since

Garrison was in rightful possession, could only have taken

place, we submit, since conversion only deals with the right

to possession, the time for the conversion could only arise

when Garrison is out of the picture, even if it legally can

arise at all, which I really doubt, which is why I think

we are entitled to a motion for directed verdict at the close

of the opening.

But in any event, Garrison in the summer of 1983,

one year after the case is brought, is out of the picture.

But the documents have already been under seal for almost

a year, so if the conversion took place at that point in

time, there has been no deprivation from then, the summer

of 1983 to the present by Mr. Armstrong. He doesn't even

have the documents. The court has the documents.

So, we submit that as the facts evolve, it is

going to become very, very clear that there has been no

conversion by Mr. Armstrong because he received the documents

rightfully from Mr. Garrison, and Mr. Garrison at all points

in time, at least until he made the arrangements with

Mr. Lenske on behalf of Mr. Hubbard, had the right to possess

the documents.

Now, those issues essentially raise many issues

relating to the conversion count. Who had the right to

possession. What documents. When, and what damages, which

they have the burden of proving flowed from the alleged

conversion.

Now, first of all, if they pursue their conversion

count, as Pearson versus Dodd states, conversion is essentially

a forced sale of the documents. Mr. Armstrong, if he is

found liable by a jury for conversion of the documents, will

have to pay damages. Conversion does not give them the

documents back. He will have to pay damages to them and

he keeps the documents, which I am sure is not what this

case is about.

So even if they prevail on their conversion count,

they would not get the documents back. The essential issue

comes down to whether or not the court under its equitable

jurisdiction and/or under the claim of Mary Sue Hubbard on

her personal property claim under the California Code of

Civil Procedure can get the documents back.

Now, with regard to Mary Sue Hubbard, the evidence

will be that most of the documents have nothing to do with

Mary Sue Hubbard, were never under her possession or control.

In fact, she was stripped of her possession or control when

she was convicted and removed from her post by her husband

through another individual who took over the Church of

Scientology named William Franks, who will testify in this

courtroom. Mr. Franks will testify that he removed Mary

Sue Hubbard from her post on the order of her husband so

that she had no right to possess the documents. So, even

to this date, we submit, the evidence will be that Mary Sue

Hubbard has no claim to possession.

With regard to the admissibility of the documents,

in light of the facts I have laid out to the court, as I

submit the evidence will be, the admissibility of the documents

on solely the conversion count, which is the property count,

the court is confronted, as I see it, with somewhat of a

dilemma and the dilemma has nothing to do with all the First

Amendment arguments and some of the other arguments that

were raised with regard to the Ballard case which I happen

to be very familiar with.

I don't know if Mr. Litt read both Supreme Court

opinions, but the bottom line in the Ballard case is that

the Ballards went to jail for fraud, and the bottom line

in the Ballard case is that the court did adjudicate the

good faith and the truth or falsity of some of the

representations and the good faith of the others, and the

Ballards went to jail. The representations by Mr. Litt as

to what the Ballard case stands for, I submit to the court,

are simply inaccurate.

But in any event, the narrow question of on the

conversion count what documents are admissible, if Mr. Litt

introduces evidence that only categories of documents were

taken, assuming he can even prove that all the facts I have

given to the court are false but that Armstrong just took

the documents, and he introduces evidence as to just general

categories, then the question is going to become for the

court, as Mr. Armstrong will testify, who owns or has the

right to possess what documents?

When this case started, when they got their

preliminary injunction, they filed an affidavit under the

name of a fellow by the name of Andrew Lenarcic, and I won't

bother to read it to the court now, but we intend to introduce

it into evidence. The affidavit states that the Church of

Scientology owns the documents and has the right to possess

them, and on that basis they got the preliminary injunction.

Well, a few months later, Mary Sue Hubbard, who

has had a lot of conflict with the church, intervenes and

she says, "That is wrong. I own and have the right to possess

them because I as the wife of L. Ron Hubbard."

She files an affidavit and states under oath

in her deposition what I have just informed the court.

The organization then comes back and says, "Well,

we gave them to Mr. Armstrong and we didn't do so with Mary

Sue Hubbard's permission, but we gave them to him because we

thought that Mr. Garrison needed them."

So, now, the church is in the position of being

an agent of someone, probably Hubbard, saying we gave them

to Garrison and didn't have authority to do so, so the Church

of Scientology of California may be, the plaintiff in this

action, arguably could be a wrongdoer on their own affidavit

presently filed in the court.

Mary Sue Hubbard then comes back and says, "I

have a present right to possession."

We then uncover documents; namely, to CSW, the

petitioner that initially went to Mr. Hubbard in which Mary

Sue Hubbard's handwriting appears on it approving Mr. Armstrong

getting the documents. So, now, Mary Sue Hubbard is in the

possession, having stated under oath before this court that

she had never given Mr. Armstrong permission. She is in

the position of stating something contrary to what the facts

will show.

Eventually, L. Ron Hubbard, through a letter

to the court, who is supposedly in seclusion, which I submit

to the court is just a nice word for a fact that he is

concealing himself, Mr. Hubbard writes a letter to the court.

Doesn't even mention Mary Sue Hubbard and says give the

documents to an organization called the Church of Scientology,

International which isn't even before the court.

If, on the admissibility of these documents,

Mr. Litt tries to prove through interrogatories what documents

are owned or who had the right to possess them, we have the

right to defend on the issue of they didn't own or have the

right to possess them. In fact, as this court is going to

see, many of these documents have nothing to do with either

L. Ron or Mary Sue Hubbard. They have to do with an

organization called the Guardian's Office and potential

criminal involvement of that agency with regard to concealing

facts from the United States Government.

Those documents and in the category that I just

told the court about didn't even go through Mr. Armstrong.

They were collected by another person who is going to testify

on the witness stand, and given directly to Mr. Garrison

as part of the biography project.

Now, subsequently Mr. Garrison gave some of those

documents to Mr. Armstrong, but, in fact, Mr. Armstrong never

even collected some of the documents, so on the issue of

these supposed categories of documents, we are going to be

able to show the court that they didn't even come from the

people who are now claiming they have a right to possess

them. So on the issue of who has the right to possess, which

is the underlying issue in this case, we submit that we should

be able to admit into evidence the documents to prove that

neither one of these parties has the right to own then or

possess them.

If the court solely dealt with categories without

getting into content on strictly the conversion issue now,

I submit you are going to end up in an intractable dilemma

because one document could be brought up as falling within

a particular category.

Mr. Armstrong is going to testify that document

doesn't fall into that category. It falls into this category.

It didn't cone from Mr. Hubbard's archives here or the Hubbard

archives there. It came from a meeting, subsequently came

from a person named Vaughn Young and was again directed to

Mr. Garrison.

The court is going to say then let me see the

document. The best evidence may be the document itself.

If that is the case, the court and the jury is almost going

to have to look at the contents to decide the origin of the

documents, so in that respect on just the conversion count,

aside from all the problems on the invasion of privacy and

breach of fiduciary duty counts, the documents as a practical

matter have to come into evidence. There is a practical

solution which we submit to save the time of the court.

What Mr. Armstrong can do is he can collect the

documents from downstairs where apparently they presently

are, and under an order of the court bring them up here and

categorize them along with categories that I am just informing

the court about, and he can tell the court where they come

from, either by stipulation or by me making a proffer as

to what the evidence will be.

There are some five or six thousand pages of

documents down there. We can limit the number of documents

we need to prove the defense of these various counts, so

if we could take probably 40 or 50 documents, and some of

them are multipage documents, but 40 or 50 specific documents,

we could prove that with regard to those documents, they

don't have the right to possess them, that they never came

from Mr. Armstrong when he was a member of the church, and

that, in itself, would defeat, at least with regard to those

documents, the conversion count.

If Mr. Litt wanted to pursue his case with the

rest of the thousands of documents, then he is right. We

would be constrained to have to go through the documents

to try to prove the origin of them and who has the ownership

or the right to possess them. But as I indicate to the court,

I submit that isn't even what this case is about because

that wouldn't even give them the relief that they need.

This case is not about commercial instruments that have value,

literary works that have value, something that, as our trial

brief indicates, their cause of action would be more

appropriately for copyright infringement if they didn't want

Mr. Armstrong to gain an economic advantage from the document.

The case has to do with the contents and this is really what

the Pearson versus Dodd case is about.

THE COURT: We will stop right there and take a recess.

Reconvene at 1:30.

(A recess was taken until 1:30 p.m.

of the same day.)

LOS ANGELES, CALIFORNIA; THURSDAY, APRIL 19, 1984; 1:45 P.M.

-o0o-

THE COURT: All right, we are back in session. You

may continue, Mr. Flynn.

MR. FLYNN: I spent a great deal of time on the facts.

I am going to try to narrowly focus a little bit and try

to wrap this up.

One of the issues that's been raised is whether

the documents are private, and it is our view that the

documents, notwithstanding Mr. Litt's representation that

Mr. Armstrong testified that they are private -- as Your

Honor is going to find out, he testified that they were private

until they were given to Garrison -- we feel that is a major

issue in this case.

If Senator Dodd had given his documents to Drew

Pearson for the purposes of publication, then obviously there

would be absolutely no case called Pearson versus Dodd.

Now, maybe Senator Dodd was there at the tine and in control

of his documents, so he vas willing to do so.

In this case Mr. Hubbard, because he had fleed,

was not around and in control of his documents, so he was

not really sure, I give him this credit, he probably doesn't

know to this date what is in those documents.

We feel that there is powerful evidence, including

court holdings, including evidence as I have indicated to

the court that he is a fugitive from justice, the French

authorities are after him. There is a penal investigation

in Toronto. I believe Mr. Hubbard is going to be indicted

in Canada.

I don't think that he knew, even though he approved

the petition, exactly what he was giving to Mr. Armstrong,

to be perfectly candid with the court, but that is Mr.

Hubbard's problem and Mr. Hubbard is not a party to this

lawsuit, and these are for the most part his documents which

I think, in itself, is a serious defect in the plaintiff's

case which I am going to get into.

But in any event, if Senator Dodd had given those

documents to Drew Pearson, there would be no lawsuit. In

effect, what has happened here is Mr. Hubbard has given these

documents to Omar Garrison pursuant to a contract that is

totally silent on what Garrison can do with the documents,

so that our view is that once you give documents to a

journalist to write a book based on the documents, you have

given whatever privacy, aside from all the public interest

and public figure issues, and whether there was information

already in the public records, aside from all that, if you

gave your private documents to a journalist to write a book,

then you lose your right of privacy in those documents.

That is basically what has happened because Mr. Garrison,

as he will testify, is a journalist. So, therefore, the

question of whether these documents are private, we think

we should be entitled to a directed verdict on that point

alone.

Let's suppose that Garrison went ahead and wrote

the book and the book was a true reflection of what is in

these documents, and Mr. Litt is accusing me of making

mischaracterizations or defamatory characterizations of

Mr. Hubbard, so I won't even go into the details which are

plentiful, but in any event, let's assume that Garrison wrote

the book and published this material, that they hadn't entered

into the contract that they did in the summer of 1983; clearly

there would be no cause of action for invasion of privacy.

There would be no cause of action for defamation if the

contents of the documents -- if the story as predicated on

the contents of the documents is accurate. There certainly

would be no cause of action for conversion, and that is

basically what the Pearson versus Dodd case ended up saying.

What really protects this type of situation is a defamation

in libel and slander type of lawsuit. That is really the

rights that are being protected here, and if there is no

libel and slander, then there is no cause of action. So,

if Mr. Garrison had published the book, I submit to the court

that there would be no cause of action and Mr. Armstrong

certainly is in no worse position as the receiver of documents

than Mr. Garrison who was rightfully in possession of than

Mr. Garrison would have been. In fact, if Mr. Armstrong

went out and wrote a book now based on what is in the

documents, then our First Amendment of the United States

and the California Constitution would entitle him to write

what he wrote.

That is the basis of this case, This case involves

information. It doesn't really revolve around any inherent

value in the documents themselves.

Now, when Mr. Armstrong came to me, and I am

not sure I made this clear this morning, but it is a very

important fact. This what they call Suppressive Person

Declare, which is a written document which will be introduced

into evidence, accused Armstrong of stealing the documents.

So at this point in time on April 22, 1982, Armstrong had

never spoken to Michael Flynn, and he gets accused and it

is disseminated across the United States because these Declares

are sent out all over the country. He is accused of stealing

documents from the church.

At that point in time all he's done is do what

Hubbard authorized him to do and continued to work with

Garrison. He hasn't disseminated any documents to anyone,

and yet he is accused of theft of the documents.

In effect, by now coming into court and claiming

he stole the documents in this conversion count, they have

only reiterated what they said on April 22nd, so on April

22nd, Gerald Armstrong, having been accused of theft in a

public document was entitled to get a lawyer and the lawyer

he chose was Michael Flynn. That goes to our legal

justification argument, in part.

Mr. Litt got into this public policy argument

which I really have not understood, but the legal justification

argument is that Armstrong in the circumstances under which

possession was being moved around was entitled to hire a

lawyer. He had a contractual defense because he had contracted

with the Hubbards as Hubbards' agent to give the documents

to Garrison.

For the organization to attack him on the grounds

that he stole them when under the circumstances as I outlined

this morning he dealt with the documents he did, I submit

to the court would show that he dealt with the documents

in the manner of an ordinary and reasonably prudent man.

He did what any ordinarily reasonably prudent man would do.

Having been accused of theft of them, he then hired a lawyer

and showed his lawyer what he was accused of stealing, and

I submit that that in itself is going to be a defense on

the conversion count and he is going to be entitled to show

the jury what he's been accused of stealing, the contents

of the documents.

Now, narrowing myself simply to the issue of

relevancy on the conversion counts and their admissibility,

in addition to those two, the reasons I brought up earlier;

namely, who, what, when and where. Who owns the documents?

What are the documents? When were they taken?

We should be able to show what documents were

dealt with at what point in time on the issue of who owned

them, on the issue of legal justification of privilege,

we should be able to show, since he's been accused of theft,

what he's been accused of stealing, and we should also be

entitled to show that since he is the contractual defendant

on the underlying possession issue, what documents related

to the contract; namely, the biography.

Since the documents we contend having been given

to a journalist aren't even private documents and under Pearson

versus Dodd theories and other cases that are cited in a

memo relating to what the nature of conversion is, when you

deal with documents, they have the burden, we submit, of

showing either that they have some type of intrinsic value

or that they are literary works or that they are commercial

instruments.

We are entitled to go into the documents to show

that they fall into none of those categories, but really

what we are talking about here is simply information,

information that for the most part is on pieces of paper

that are owned by Gerald Armstrong because he paid for the

cost of copying them with a few exceptions of originals that

are currently under seal, and with regard to those originals,

they have never been deprived of dominion or control over

the contents because they have had copies of them from the

outset, from the time that Mr. Armstrong left the church

there were always copies maintained in the church.

So, our basic argument on the conversion counts

with regard to their relevancy and admissibility is one,

they are not private. They are not literary. They are not

commercial instruments. We can show the jury that they are

none of those things.

Two, they are the types of documents that the

law of conversion doesn't even really protect because all

they are is information.

Three, he had the legal justification to defend

this case that he stole documents which, in fact, he was

accused of stealing and then simply went to a lawyer and

showed his lawyer what he allegedly stole.

With regard to the invasion of privacy counts,

I think the issue is obvious. If they are going to contend

that materials have been either intruded upon, which I submit

under the facts that I outlined to the court, there hasn't

even been an intrusion because the documents were given by

Mr. Garrison to Mr. Armstrong, but even assuming an intrusion

and assuming even further a publication to his lawyer to

defend himself on a charge of theft, they have the burden

of proving that the materials intruded upon and/or published

are offensive to the sensibilities of the ordinary prudent

person.

That is the burden on an invasion of privacy

count. They have to show the jury exactly what the contents

are that have been published or intruded upon. That entitles

us to show first that the information is already in the public

record, and I have this 200 page report to the City of

Clearwater with me which I can submit to the court which

lays out in some 30 or 40 pages, a year before Armstrong

ever left the church, a lot of, probably 80 to 90 percent

of what is in the documents with regard to Hubbard's

biographical data which is really what they want to conceal

because most of it is in Hubbard's own handwriting.

So, therefore, the information about a lot of

these items was already in the public record, and we believe

we are going to be able to make an overwhelming showing to

that effect.

Even if it weren't in the public record, the

issue becomes is it a matter of public interest? Did L. Ron

Hubbard and Mary Sue Hubbard thrust themselves into the public

arena on issues; namely, their personal lives or any other

issues in which the public has a right to know and Gerald

Armstrong has a right to defend an invasion of privacy count

by showing that they are public figures and/or that the matters

in the documents are of public interest, even if they weren't

previously in the public records, and I submit to the court

that if L. Ron Hubbard had been making the false

representations, which we laid out in our memoranda, for

the 20 years that we can conclusively prove he made -- we

have book jackets here in which all these misrepresentations

have been made. If we can show that he has earned millions

of dollars, which we will be able to prove -- in fact, if

this case gets litigated to the real narrow details; namely,

has L. Ron Hubbard as a public figure taken moneys from the

Church of Scientology, if need be, we have a witness we can

put on the witness stand who will testify that L. Ron Hubbard

has taken over $350 million and put it into Lichtenstein

bank accounts underneath the table and that the public and

the Church of Scientology and the citizens of California

and the citizens of the United States have been victimized

by a monstrous fraud, of which they have no knowledge, that

issue alone, the issue of what Hubbard has done, what

representations he has made, which is what justified Armstrong

to do what he has done, is a public interest issue, and on

the invasion of privacy count, it is not a public policy

defense. It is a defense to a private right that is being

asserted by a private individual.

The Dietemann case which is cited by Mr. Litt,

I submit to the court, has no relevance. It was an electronic

eavesdropping case on a private individual in his home, and the

court took the time to specify that the plaintiff had

no listing and his home had no sign of any kind. He did

not advertise nor did he have a telephone. He made no charges

when he attempted to diagnose or prescribe herbs and minerals.

He did accept contributions.

In the present case, we will prove that

Mr. Hubbard has himself held himself out as the leading public

figure of our time. That is in his own publications as the

greatest man who ever lived. Aside from all the

representations which he has made about his scientific

background, his academic credentials, his Naval background,

all of those issues have generated millions of dollars of

income for Mr. bubbard. The public has relied on very concrete

items, not items like whether or not if you believe that

L. Ron Hubbard is the new Messiah, you are going to go to

heaven, but L. Ron Hubbard has a doctorate from Princeton

or is a graduate in nuclear physics from George Washington

University. If you pay $500 to take one of his courses,

then you are guaranteed the following results, and we could

put 30 people on the witness stand, very short witnesses,

who each one would say, "I relied on all those things. I

paid that money. Had nothing to do with religious conviction.

They told me it had nothing to do with religion and I relied

on those representations and paid the money and now find

out that it is all false."

That is the essence of what is in these documents,

and that is the essence of where they are claiming

Mr. Hubbard's privacy is invaded.

Now, they admit that the great bulk of the

documents -- they didn't do this at the outset because, as

I have indicated to the court, they initially claimed that

the church owned the documents. They now admit, as they

have to if the court looks at the documents and you will

see why, because most of them are Hubbard's handwriting of

any significance, that Hubbard owns the documents. But the

invasion of privacy, the law is very clear, is a personal

right. It has got to be asserted by the person whose privacy

has been invaded. Mr. Hubbard isn't even here.

The County of Los Angeles and the State of

California are taking the time to litigate this case and

potentially spend thousands of dollars to litigate it on

invasion of privacy issues and the principal, the one who's

perpetrated this entire scheme, has sent a letter to the

court saying what he thinks should be done with the documents

while all of us sit here and litigate it. I submit to the

court that an invasion of privacy count is a private count

and for Mr. Hubbard, where even the plaintiffs now and the

intervenor now admit the documents belong to him, to assert

an invasion of privacy from afar through his current agent

is preposterous.

On the breach of fiduciary duty count, the law

is very clear that they have to prove what duty Mr. Armstrong

owed to the principal and in what way he breached it and

damages. Well, the state of mind, and there is a case directly

on point, the state of mind of Mr. Armstrong with regard

to his dealings with his principal is a fundamental issue

under only the breach of fiduciary duty count.

Mr. Armstrong, as the evidence will show, wrote

that letter to Shriven. When he found out that all these

documents proved that there had been 30 years of lies, he

wrote to Shriven saying, "We have got to correct the lies

to protect Hubbard."

Then when he left because they refused to do

it, he gets accused of theft by Hubbard's agents and now

is confronted with defending himself against Hubbard through

his agents now for breaching a fiduciary duty that related

to fraud in the first place, and that goes directly to Willig

versus Gold. We submit that the law is that an agent is

under no legal duty not to disclose dishonest acts of his

principal, particularly as the Willig versus Gold court noted

where the principal turns around and sues him and accuses

him of stealing documents when at this point he has done

absolutely nothing. So we submit that the specific documents

on the breach of fiduciary duty count come into evidence

on the issue not only of Armstrong's state of mind, but on

the issue of whether or not he was justified. Based on the

Restatement of Agency and the Willig versus Gold case, he

was justified in doing what he did.

Lastly on the equitable issues in the case, in

our memoranda we cited the De Garmo case which basically

says that if facts are brought to the attention of the court

which indicate that there's been acts against public policy,

crimes, fraud, then the court is at least compelled to listen

in terms of whether to apply the doctrine of unclean hands.

Mr. Litt says there is no evidence of a crime

here. Section 135 of the Penal Code of California, and now

the new Smith case on the spoliation of documents holds,

and the statute says that destruction of evidence during

the pendency of judicial proceedings is a misdemeanor.

Well, we are prepared to show on the equitable

side of the case that there was a then pending grand jury

in New York. There was a then pending criminal investigation

in Washington, D.C. Three federal statutes are violated

by the destruction of documents when the people know there

is going to be an FBI raid to get the documents.

I intend to put the former executive director

of the Church of Scientology on the witness stand who was

in charge at the time, who headed up the responsibility

for destroying these documents so the federal government

wouldn't get them. That is a direct violation of Section

135 of the California Penal Code, aside from all the civil

cases that were then pending which related to what was in

the documents. Even aside from that direct commission of

a crime, and incidentally the Smith case which is attached

to the cases we have given to the court involved the

destruction of evidence before the suit was even brought,

and that is somewhat akin to the situation we have here.

The court would be in the rather remarkable

position of returning these documents under the equitable

theories to the defendant and consummating the following

transactions: Garrison was going to write a book about

L. Ron Hubbard. The very heart of this case is these documents

in this book.

Garrison, the author, realizes that if he writes

the book based on what the plaintiff and the intervenor want,

it will all be false, a monstrous fraud will continue to

be perpetrated on the public and people will be buying the

book believing it is true. He will, as an author, be making

statements that he knows are false. His alternative is to

write a true book based on the documents. If he did that

and got sued for defamation and the documents had been

destroyed or subsequently stolen, and Mr. Armstrong will

testify they stole photographs from him during the pendency

or just prior to these proceedings, then the court would

be giving its aid to consummating the fraud, not only the

fraud with regard to the biography but the 30 years which

goes directly to the heart of this case and brings the unclean

hands doctrine into specific application to this case, but

it would be consummating the fraud of destruction of the

documents. It would aid in the commission of the crime.

If Your Honor takes some time to read some of

the documents which we can categorize, Your Honor will realize

what this case is about. Some of these documents, as we

have previously said, are earth shattering in terms of the

knowing fraud by both Hubbard and the Church of Scientology,

and I mean knowing fraud about very specific things. Going

to the Veterans Administration examination, knowing he is

lying to the VA where he is talking in his own writing about

lying to the VA to get a disability, and then walking out

and saying he will laugh at the fools if they gave him a

disability; documents of that type.

MR. LITT: If Mr. Flynn intends to discuss prior to

a ruling on the admission of any documents the contents of

the documents, then I am going to ask for a closed hearing

on it.

MR. FLYNN: I will refrain from discussing it further.

In any event, on the equitable side, the point

I am trying to make is for the court to determine what it

should do with regard to the equitable considerations in

the case, it has to look at the documents and the documents

have to be admitted into evidence on the equitable side of

the case in order to resolve these equitable issues.

So, on every aspect of this case, this is what

this case is about. The case is not about literary properties.

The case is about contents of documents. To hold in the

context of this case that the contents are inadmissible before

the case even begins, I submit, Your Honor, would totally

deprive Mr. Armstrong of a defense. In effect, what Mr. Litt

wants to do is simply tell the jury that Armstrong has got

them. He took them wrongfully and Armstrong can't say anything

further in return.

It is somewhat akin, to use a sample analysis

if the minister of a congregation told the congregation that

he wanted to go out and buy a $10,000 gold chalice and for

the congregation to come up with $10,000 so he could go buy

it, which they did, and then the next Sunday the minister

walks in and says, "Here is the gold chalice." And the

congregation says, "Well, okay, that's what we spent our

$10,000 on," and then one of the members of the congregation

is entrusted to clean the gold chalice. So he goes out and

he starts cleaning it and he finds out that it is made of

lead and it is gold plated.

Now, the minister has said, "You can only take

the gold chalice to go clean it"; the cleaner being a member

of the congregation realizes that we have just paid $10,000

for a piece of lead. So he takes the gold chalice and he

goes back to the congregation and he says, "We have just

been victimized by a monstrous fraud. This is just a piece

of lead."

The congregation then seizes the gold chalice

in order to perhaps sue the minister, but before the minister

could even be sued, the minister sues the member of the

congregation, claiming that the gold chalice has been converted

by him and that he is the rightful possessor of it because

he is the minister of the congregation.

That is essentially what has happened in this

case. For the court to rule that the gold chalice shouldn't

even be looked at to see whether it is a piece of lead but

simply be returned to the minister and that the minister

of the congregation should be found liable in damages for

doing what he did under those circumstances is simply

preposterous.

So we submit, Your Honor, that the documents

are relevant on each and every count. The case realistically

can't be tried without looking at what is in the documents.

If Your Honor tries the equitable side of the case first,

as you have mentioned, then Your Honor would have to look

at the documents. They'd have to be marked in some way for

an Appellate Court to review, to determine whether Your Honor's

rulings are correct or incorrect, whether they are marked

for identification or marked as an exhibit. If it was purely

an equitable hearing outside the scope of the jury would

almost become irrelevant at that point, we submit, in terms

of the disclosure of the contents.

If Your Honor held that type of hearing in private

so that no one could hear what was in the documents, then

I submit, Your Honor, you would, in effect, if what we are

saying is true, that these documents prove the fraud that

we allege that they do, what Your Honor, in effect, would

be doing is perpetrating the same misrepresentations that

drove Mr. Armstrong from the church and eventually caused

the church to write this Suppressive Person Declare and accuse

him of stealing the documents. The court would be, in effect,

perpetuating the wrongs that have gone on that were discovered

by Mr. Armstrong.

Thank you, Your Honor,

THE COURT: Well, you mentioned or you did mention

the religious First Amendment problems. Did you want to

discuss that at all or how that affects the situation?

MR. FLYNN: I will address that briefly, Your Honor.

As I said initially, the Ballard case was totally

mischaracterized by Mr. Litt. The Ballards in that case

went to prison for representations of the type, and I will

get a copy of the case, the type of representations which

we will admit were religious, and I don't remember exactly

what they are, but they have to do with whether or not Guy

Ballard was a particular type of prophet from a particular

saint. I remember that language is in there and even on

that representation the courts held that that is the type

of thing that could go to the jury as to whether or not it

was made in good faith, In other words, whether the type of

representation which is not capable of exact certitude

could still go to the jury on whether it was made in good

faith and whether Mr, Ballard sincerely believed at the time

he made the representation that it was true.

If the government, as it did, could prove that

Ballard really didn't believe that he was a descendant of

a particular angel or a particular saint, then they could

find him liable in fraud and that is precisely what happened.

The other allegations where the information or

the representation is capable of being proffered with exact

certitude; namely, whether or not he went to a particular

university, whether he, as Mr. Litt indicated, was responsible

for doing away with three German submarines or whatever,

those are the types of things that have got nothing to do

with spiritual doctrine, in other words, and we have argued

this in court all over the United States, In other words,

if a priest, a member of the Catholic Church, was on the

street corner down at Wilshire with his clerical garb and

he says, "I am a member of the Catholic Church" to someone

walking up to him. He says, "I am going to sell you

confession for $50. You could go to confession. You give

me $50, and here is what you are going to get. I am going

to guarantee to you I am going to raise your I.Q., cure your

arthritis, improve your grades in school, guarantee it."

This is what this U.S. versus Article or Device case is all

about which we have submitted to the court, and the person

says, "Well, are you a member of the Catholic Church. Is

this some type of religious thing?"

And the priest says, "No. I am a priest, but

this has got nothing to do with that. You just give me the

$50 and I will guarantee you that I will cure your arthritis."

The U.S. versus Article or Device is very clear and the

Founding Church case written by Judge Wright is very clear

with regard to whether that is the type of representation

made in a nonreligious context; in a religious way but a

nonreligious subject which is capable of being sued for in

fraud because that type of guarantee, if there is a motive

solely to get money in a religious context, is denied by

the person who is receiving the money, and the representation;

namely, the guarantee, whether those types of things can

be guaranteed or not, which is susceptible of exact proof,

is the type of thing that a temporal jury can resolve.

But we don't even have those issues in this case.

Those are some of the issues perhaps in other litigation,

but that isn't even what is at stake here. Mr. Hubbard,

as the evidence will show, sold Dianetics, not as part of

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a religious organization, but sold Dianetics during the period

of time that is involved with these documents as a secular

thing for which he earned money.

Well, the proof in the documents is, among other

things, that the whole basis of Dianetics namely, his 30

years of research, his physics background, his doctorate

is all false. All of those items; namely, whether he did

30 years of research, whether or not he went to a particular

university, whether he was crippled and blinded from war

wounds -- Mr. Armstrong will testify that he told many people

in a nonsecular manner, reporters, people who were

investigating Hubbard, that Hubbard had been crippled and

blinded in World War II from war wounds -- well, these

documents prove that not only was he not crippled and blinded,

he was never in combat. He was disqualified from duty in

the United States on three different occasions for a variety

of different reasons and ended up in a hospital at the end

of the war.

Whether he was crippled and blinded is something

that is susceptible to exact proof. Whether or not people

believed in that representation in a nonsecular context and

paid money for it, which is what our evidence will be, is

an issue that has got nothing to do with a religious

connotation or religious doctrine or the truth or falsity

of religious doctrine.

In fact, if Mr. Litt attempts to introduce evidence

of the truth or falsity in a religious context, we will object

because we only intend to introduce evidence of these

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representations made in a nonreligious context, in a purely

secular context and the people who relied on them in a secular

context.

In every case, and I can give the court a hundred page

memorandum that we submitted to other courts on these

points, every single precedent in the United States has

uniformly held; the Federal District Court in Los Angeles,

the Supreme Court of Oregon, the State and Federal District

Court in Massachusetts, the Federal District Court in Florida,

the State Court in Florida have all uniformly held that if

you make a representation in a wholly secular context, it

is actionable even if it is not susceptible to proof within

an exact certitude.

Here the evidence will be only on items that

relate to exact proof. Whether Hubbard did, in fact, do

those things.

The religious issue, Your Honor, is being injected

into the case, and Your Honor will note that this memo that

was filed a couple of days ago which we just received on

the First Amendment issue was filed at the eleventh hour

in the case, and the reason it was filed, I submit to the

court, was to lead the court astray into believing that there

is somehow a religious issue before this court.

If the court were to find that any religious

organization could make any representation it chose in the

twentieth century, and these arguments about what happened

two thousand years ago, I submit to the court in light of

modern day jurisprudence, without saying more, is simply

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ridiculous. But if this court were to rule that a church,

for example, on the Fair Game Doctrine could go out and sue

someone pursuant to a written policy of the church to sue

to harass, and then do what it has done to Mr. Armstrong;

namely, sue him pursuant to that policy, thrust themselves

into the legal arena and then when they get in the legal

arena, when Mr. Armstrong tries to defend himself, say, oh,

when we say sue, we don't mean legally. We meant spiritually

or ecclesiastically. That is an ecclesiastical doctrine

and what we mean is within the confines of the Church of

Scientology.

I submit, Your Honor, that this court is compelled

under those circumstances to determine when they say sue

and bring a lawsuit, to determine whether or not that is

spiritual or religious.

Similarly for the representations about Hubbard

to be excluded on the grounds that they are religious doctrine

as to whether he went to George Washington, Princeton,

suffered war wounds or whatever, to be excluded on the grounds

that they are religious doctrine would make the First Amendment

free exercise of religion a weapon for every person, and

there are many cases on this point, for every person to go

out and simply say, well, I am a minister and do whatever

they wanted to get money when the representations have nothing

to do with truth or falsity of something that is not

susceptible of exact proof, and that is not what the evidence

will be.

The evidence will be very concrete that

103

Mr. Armstrong for years traveling around the world told people

that he was not part of the Church of Scientology. That

was the representations that they made. There could be 15

witnesses that we could bring on who would support that type

of evidence.

So, for the argument to be asserted in this court

that because Hubbard is a religious figure and, in fact,

on that point Mr. Armstrong tells me that there is a policy

in which Hubbard, in fact, there is a document under seal

in this court written in Hubbard's handwriting which says

that Hubbard is not a religious figure and not a religious

leader and wants to be known as a scientist. So, for

Mr. Litt to argue that Hubbard is a religious leader and

because people believe that he was either reincarnated or

whatever, therefore, everything he says and does is to be

removed from the secular arena or from the legal arena is

simply preposterous when Mr. Hubbard in his own documentation

now under seal in this case says he is not a religious leader.

In addition to that, the Church of Scientology,

and the resignation is under seal in this court, has held

out since 1966 that Mr. Hubbard has nothing to do with the

church. Of course, the facts, as is also set forth in the

documents with regard to control and money issues, particularly

the fact that he has taken $250 million and put it in

Lichtenstein bank accounts shows that that representation

in itself; namely, that he's had nothing to do with the church

since 1966 is also false.

The documents are replete with proving that he's

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had total control of all kinds of secular activities that

have nothing to do with religion, They have got to do with

money, property, attacking people, putting people on enemies'

lists.

For example, in the Allard case tried in 1970,

'69-'70, the church had taken the position in that case that

the Fair Game Doctrine was cancelled, and Charles O'Reilly,

who tried that case, who has told me or someone from his

office has told me that the First Amendment issue was litigated

from day one to the end of the case, so whether the Fair

Game Doctrine was a religious doctrine came up every day,

every minute of the trial.

The church took the position in that trial that

the Fair Game Doctrine was cancelled. In fact, there is

a footnote that says that the judge gave the defendant church

the opportunity throughout the trial to show that they had

cancelled the Fair Game Doctrine. Well, they never did it

because the evidence, if they had taken that route, the

evidence of what they have done subsequently would be

overwhelming as to how they have applied the Fair Game

Doctrine. But in any event, that is what they were telling

the court.

There is a document in Hubbard's handwriting

under seal in this court dated in 1967 or '68 right after

this alleged cancellation in which a person writes to them

and says -- well, a lawyer, his own lawyer writes to him

and --

MR. LITT: Your Honor, if we are going -- now, we

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not only have private documents being discussed. We have

correspondence with a lawyer being discussed, which is a

reflection of the problem in this case. I raised it before.

Mr. Flynn said he was not going to refer to the contents

of the documents. Some of the documents are privileged.

These are private documents, and it is not proper, especially

when the court is making a determination of how to handle

the issue to undermine it.

THE COURT: Well, I suppose there is a possibility of

attorney-client privilege on this. You mentioned something

here you were about to say?

MR. FLYNN: It was waived. They gave it to a journalist.

The law is very clear if you give it to a third party, the

attorney-client privilege is waived.

THE COURT: I realize that. If the journalist had

it, why is it such a secret in this case?

MR. FLYNN: Because they paid the journalist off so

he wouldn't reveal it.

THE COURT: You mean Garrison?

MR. FLYNN: They paid Garrison $240,000 so he wouldn't

reveal it, but in any event, the document says, "No, I am

not cancelling the Fair Game Doctrine. I am modifying it

basically so people won't know I am going to use it in a

different way." That is, in essence, what the document says.

The point is that the bulk of these documents

have nothing to do with religiosity. They have got nothing

to do with the free exercise of religion in terms of the

truth or falsity of religious documentation or religious

106

doctrine.

Since we only received this memorandum on the

First Amendment several days ago, I could have a memo prepared

and to the court by this coming Monday about the full scope

of the protection that the free exercise clause would afford

this plaintiff and this intervenor. But in any event, Your

Honor, we would submit to the court that we don't intend

to introduce any evidence as to the truth or falsity of

religious doctrine.

With regard to Hubbard's involvement with the

Church of Scientology, they have been saying since 1966 that

he is not part of the church. Of course, these documents

and secular things prove that he is part of the church, so

for them to come in now before the court and claim that

Mr. Hubbard is a religious leader of the church and therefore

the free exercise clause would prevent this evidence from

coming in is simply 180 degrees contrary to what they have

been saying since 1966, and we could introduce evidence to

prove that.

But in any event, with respect to the First

Amendment issue, I'd like to be given an opportunity to provide

further memoranda to the court.

THE COURT: Well, first you mentioned a couple of cases

apparently that you have given me that I haven't read.

MR. FLYNN: U.S. versus Article or Device.

THE COURT: Is that in the collection of federal cases?

MR. FLYNN: It is. Apparently it isn't -- it is,

No. 40, which is in 333 F.Supp. 357, No. 40 in our collection

107

of cases. And then the Founding Church case which I will

go down and have a copy made.

THE COURT: Is that a California case?

MR. FLYNN: No, it is the District of Columbia Circuit

Court of Appeals.

What basically happened is the U.S. versus Article

and Device case was tried before a jury. A jury convicted

the Church of Scientology for mislabeling under the Food

and Drug Act. The case went up on appeal. Judge Wright

wrote an opinion, reversed it and remanded it because of

the jury instructions, claiming that the jury was improperly

instructed.

THE COURT: I think I read that.

MR. LITT: We submitted it.

THE COURT: I did go through it.

MR. FLYNN: It went back to the district court. It

was retried, convicted again and the U.S. versus Article

or Device case was, the final result of the case they then

did appeal it again but the District Court of Columbia Circuit

Court of Appeals merely affirmed the judgment of the Federal

District Court.

The Christofferson case, which I will also give

to the court if I have not already done so, held basically

as I stated, that the good faith of representations made

if made in a wholly secular context, even if they are not

susceptible of exact certitude, can be the foundation for

a civil fraud action.

Secondly, the case held it was for the jury to

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determine it, which has recently been upheld by the Federal

District Court here in Los Angeles, Judge Marshall.

Thirdly, the case held that proof of a sole motive

to get money by making the representation is evidence of

a secular context. So, that is the Supreme Court of Oregon.

But in any event, the court, since it is not

dealing with the church and church representations in this

case, it is dealing with Hubbard and representations about

Hubbard, an individual, which, of course, that is the

convoluted problem of the whole case. They are trying to

get his documents back and assert his interests in privacy

and he isn't even here to litigate.

So the status of L. Ron Hubbard in this litigation

with regard to these documents, particularly with regard

to the breach of fiduciary duty and invasion of privacy counts

is a serious issue for this court with regard to a motion

for directed verdict because it is a private right and

Mr. Hubbard isn't here. If they assert that Mary Sue Hubbard

and the Church of Scientology of California have privacy

rights, then we will make a very strong showing that both

of those entities or individuals are public figures.

Mary Sue Hubbard has been in the news since 1977

on almost a monthly basis. Virtually every news, every major

broadcasting company in the United States; "20/20," "60

Minutes" has had extensive programs about her relationship

to the church, the criminal activities that she was involved

in. Time Magazine, Newsweek, all the major newspapers across

the country have carried extensive articles about Mary Sue

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Hubbard and this what is called Operation Snow White to break

in and burglarize from 126 state and federal agencies, which

was conducted from a ship. She signed a statement of evidence

admitting basically six years of nonstop harassment of private

organizations, public and state agencies that has been

disseminated all over the United States. If she claims a

privacy right and claims that her rights of a particular

type as a convicted felon have been invaded, I submit that

the McNally case, which we set forth in our memo, clearly

establishes that under the circumstances of this case, there

is no privacy interests that she could legitimately set forth.

With regard to the Church of Scientology of

California, there has been a plethora of publicity about

the Church of Scientology of California as a religious

organization and as a secular organization which almost defies

description. It is probably even greater than L. Ron Hubbard.

I probably have four legal packets of probably four to five

inches thick of newspaper articles just in the last four

years about the Church of Scientology of California and the

litigation that has been involved in it.

The Church of Scientology of California has brought

probably in excess of 100 lawsuits to attack and harass people

in the last decade.

It's been found to have brought malicious

prosecution actions. Cases have been dismissed that it has

brought. Eight cases that it's brought against me have been

dismissed, one case, the McLean case in the Federal District

Court. The Cazares case in the Federal District Court in

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Tampa awarded some $42,000 of attorneys fees on a suit brought

for the Church of Scientology in California by finding about,

just on that suit, that it was brought frivolously and

maliciously, and now there is a new suit brought by Cazares

against the church.

The church has thrust itself into litigation

all over the United States pursuant to a policy of the Church

of Scientology relating to the law and I happen to have that

policy with me, but I can almost dictate it off the top of

my head, and it is written and copyrighted by L. Ron Hubbard

as the policy of the church, and it says:

"The law can be used very easily

to harass. The purpose of the law is to

harass and discourage rather than win. Enough

harassment on someone is enough to destroy

them utterly."

The church has basically followed that policy

in hundreds of cases across the country. It has thrust itself

into the legal arena and, in fact, in the case of United

States versus Siegelman, the Federal District Court in New

York City found that where the church was alleging that it

had been defamed on issues that were arguably religious,

the church found itself in the peculiar position of claiming

that it had been defamed and the court threw the case out

on the grounds that, well, on the areas of a claimed

defamation, they were arguably religious. So the church

couldn't even assert them. So, the church has found itself

in the curious position in cases across the country of suing

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people, as it has sued Mr. Armstrong here. They are walking

into the court and basically claiming everything is protected

and trying to handcuff defendants from putting up any defense,

as was the situation in the Allard case, from putting up

any defense on the ground that they are a religious

organization.

I submit, Your Honor, that the First Amendment,

and I will submit a memorandum on the subject, simply cannot

be used as a weapon to prevent someone like Mr. Armstrong

from one, defending himself, and we haven't even addressed

the issue of his counter claim. His counter claim goes to

all of the issues relating to the biographical fraud of

L. Ron Hubbard, reliance on it and all of those issues, where

none of them, in fact the people at the top of this

organization call it a company, call it The Organization.

They used to laugh about the fact that people thought it

was a church. They used to joke about it.

There was one policy they called the Minister's

Mockup where they would go out and pretend to be a church

and the people at the top who drafted it laughed about it.

So, without even reaching the question of

Mr. Armstrong's counter claim and how he is entitled to use

those documents in his counter claim, he is entitled clearly

to use the documents to defend himself in this lawsuit.

As long as the counter claim is existent and all those issues

have been asserted, then we submit to the court he is entitled

to use the documents to prove his counter claim.

If the court ever gave these documents back to

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these people, they are forever gone. The church would then

turn around and sue Mr. Armstrong if he said anything for

defamation, and he'd be deprived of the right to defend himself

with the documents.

Every judge that has been involved, Judge Cole

initially, Judge Shimer, Judge Cole specifically stated when

he issued the preliminary injunction that he was impressed

by the argument, and that is a quote, that he was impressed

by the argument that Mr. Armstrong saved these documents

from the shredder.

Judge Shimer specifically brought up the fact

that Mary Sue Hubbard had fled the United States in the 1950's,

had been involved in obstruction of justice and that further

these documents had been involved in a shredding operation

in 1980.

If this court were to return the documents to

these people, they would never see the light of day again

because they are devastating to the representations that

have been made about Mr. Hubbard. So, we submit, Your Honor,

their First Amendment issues in this case are really just

simply not there. We don't certainly intend to inject them.

We intend to focus on Hubbard and Hubbard's activities.

We are not going to introduce any evidence with regard to

the truth or falsity of any religious doctrine.

The two issues we seek to have come into evidence

are the Suppressive Person Declare and the Fair Game Doctrine.

The Suppressive Person Declare said that he stole

documents. That has been issued all over the United States.

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That has been thrust into the temporal and legal arena and

has been made an issue in the lawsuit.

We submit the First Amendment has got nothing

to do with the case.

THE COURT: Did you want anything further, Mr. Litt?

MR. LITT: Yes, I would, Your Honor.

I find it a bit difficult because what I expected

would happen, has happened. Mr. Flynn has one, distorted

the record and two, put forward a hope that the reality of

what he is putting forward will not be clearly understood.

The basic proposition that you can steal from

someone if you don't like them and you think they are a

wrongdoer, that is their defense. When it is stripped away,

that is what all of the legerdemain, all of the statements --

Mr. Flynn, I could spend three days because after all, it

is easy to make an allegation. Then to respond to it requires

explaining what the person is talking about and explaining

that no, this isn't true and no, this is true.

I will give the court just one example in the

probate case that I talked about before. Allegations

Mr. Hubbard transferred $85 million -- I am sorry -- the

church stole $85 million from Mr. Hubbard, Proof? Zero.

Zero.

It was an allegation as to part of the fact that

Mr. Hubbard's estate was in need of preservation and care

that Mr. Flynn was so generously putting forward to protect

his estate, and so he had to make allegations about

mismanagement of his estate, and he made the allegation that

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$85 million had been stolen. There was not a shred of

evidence, In the summary judgment motion there was not a

shred.

We spent months --

THE COURT: I hope that word is not a Freudian slip.

MR. LITT: We spent months responding in that one case

to allegations that had no basis, and there was a summary

judgment ultimately granted.

But what we are dealing with in this court is

the desire of the defendant to justify criminal conduct,

if you strip it right down. If you want to take the theft

that Mr. Flynn argues, even if it was a theft, if you want

to strip it down, then he is trying to argue that a thief

can steal from some people.

The Dietemann case that we cited is directly

on point. The facts of the case, the facts of what we are

dealing with here are so far from what Mr. Flynn has put

forward.

Let me take this shredding issue which seems

to be made sufficiently a big deal of, and I will assume

for purposes of my argument that all of Mr. Armstrong's

testimony is 100 percent accurate and I will rely solely

on what he has had to say. He said documents were being

shredded in the fear that there was going to be a raid.

That is his testimony. Not these documents, none of these

documents.

He says that in the course of that activity about

other documents, somebody came to him with a box, a single

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box of documents that turned out to be from the storage

materials of Mr. Hubbard and says, "Well, what should happen

to these?"

He said, "Well, they should not be shredded."

He took them to his organizational senior. He was a

Scientology church staff member. He has testified that he

could have been removed by seniors within the Scientology

organization. He took them to his post senior and said,

"What should be done with them?" The post senior said they

should be kept,

Now this occurred in February, according to him,

or January 1980. Well, what happens? He, according to him,

realizes that these are important documents to the church.

He petitions to Mr. Hubbard, with copies to his organizational

seniors, would be on the organizational lines within the

church, saying, "These materials have been discovered."

He is appointed to be archivist to gather them.

Quote, it was my job to preserve, protect and maintain the

materials. That was his function. That is his testimony,

and yet somehow, somehow we walk into this court and

Mr. Armstrong has saved these documents.

Mr. Armstrong says, "I had to get them for my

defense." Where in the law, where in any case does it say

that if someone says, 'I am going to sue you," you can go

out and take things that aren't yours for part of your defense.

That is unheard of. It is incredible that it is being put

forward as a defense, but more importantly, I am concerned

because the very nature, the very inflammatory nature of

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the charges that get made, of the sweep of them, of the

character of them. Mrs. Hubbard has admitted to six years

of criminal conduct, which is totally false. It would take

me 15 minutes to explain why, but it is totally false. It

is one example.

What is going on here? What is going on in this

courtroom today and what will go on in the trial of this

case if it is permitted that a justification defense can

be put forward? That sweeping claims of every imaginable

sort will be made before this court.

Mr. Flynn says that none of these have anything

to do with the First Amendment. He says well, I can show

that Mr. Hubbard made a statement in the 1950's.

Well, let me just give you an example. Under

Scientology teaching, Dianetics was the precursor to

Scientology, a religious philosophy. Dianetics did not begin

as a religion. Scientology doesn't claim that Dianetics

began as a religion. It involved no religion. In the case

of Malnek versus Yogi on transcendental meditation, the people

involved in meditation said they were not a religion. They

were teaching in the schools and the issue was whether they

could do that. The court said, "We don't care what you call

it. We care what it is. It is a religion."

That is just one example to show the problem

that exists with the theory that is being put forward.

Mr. Flynn says I just want to show that certain

statements have been made, but then he said Mr. Hubbard has

been promoted as the leading personage in the country.

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Well, in the Catholic Church there is a doctrine

of the infallible pope. The pope is never wrong in the

Catholic Church. That is a doctrine.

Now, I have no doubt that I could prove that

the pope is wrong many times. I have no doubt that I could

prove that he has made statements on secular subjects that

are wrong, inaccurate, incorrect, misleading, whatever it

may be because that is the nature of people. I think you

can prove that infallibility is, from a scientific perspective,

wrong and the terms in which we are dealing, but you can't

get into it.

Mr. Flynn says that Mr. Armstrong took the

documents. He was the subject of Fair Game. I am still

reserving the Fair Game issues because it really comes in

as a separate motion, although I can address it if the court

wants.

THE COURT: No, no, let's try to finish this aspect.

MR. LITT: He says that Mr. Hubbard has said he is

not a religious leader, he is a scientist. I don't know

what documents he is referring to.

What I do know is that it poses the precise

problem. How is it that a court is going to take the life

of a man and the development of a religion and put it on

trial. That is what is being asked of the court. Make no

mistake. That is what is being asked of the court to put

on trial the life of L. Ron Hubbard, his role in Scientology,

the development of Scientology, and Mr. Flynn slides into

it because it is so inherent in his theory that even though

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he is trying to make it quote secular, he cannot avoid the

problem.

So he says, well, we will show that the money

was given to the Church of Scientology, mind you where people

bought services for what is called auditing, which is the

central practice, religious practice of Scientology, that

they bought it because of their belief in L. Ron Hubbard

and it was a fraud.

Well, the idea that you can sort this out is

inconceivable. Mr. Flynn says we have won this issue all

over the country. That is simply wrong. What has occurred

so far is that the court has said that the two courts that

have dealt with it have said that summary judgment will not

resolve this issue.

However, in the case in the United States District

Court in Massachusetts in which Mr. Flynn was the counsel,

District Judge Garrity, on a motion to dismiss, which had

fraud allegations in it, ruled that some things couldn't

be dealt with on a straight motion to dismiss, but it was

the court's function to make the determination and it would

hold an evidentiary hearing in which the plaintiff, in that

case the plaintiff, Mr. Flynn's client, had the burden of

showing that these matters had arisen in a wholly secular

context. Mr. Flynn then dropped those allegations before

the court held it. In all consolidated cases in Massachusetts

on May 11th then: will be a hearing before Judge Garrity

of the Boston Circuit Court, I believe it is called, in which

this very issue of whether or not any of these supposed

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allegations can be heard at all will be resolved in a hearing,

evidentiary hearing before the court.

THE COURT: Assuming we finish this case.

MR. LITT: Yes.

Now, I will leave for the moment the First

Amendment theories and I will leave some of the particular

issues of, for instance, whether any documents are necessary

for damages or whatever, but there is a general point that

runs through the way in which Mr. Flynn frames the issues.

He tries to posit Mr. Armstrong in the position

of a reporter, but I think the court may not be fully aware

of circumstances of these documents and this again I am relying

and everything that I say solely on the testimony, of

Mr. Armstrong or in some particulars of Mr. Garrison who

is a good friend, by his own testimony, of Mr. Armstrong.

Mr. Garrison says, "I considered the documents

confidential. I treated them confidentially.

"I had a ten year working relationship with the

church.

"Yes, I intended to return the documents. Yes,

they were given solely to me for use on the biography. Yes,

the biography could not be published without approval.

"There was a buy out clause.

"No private information in that biographay could

be disseminated without approval. The biography was subject

to review and it had to be approved."

It had to be approved by Mr. Hubbard, according

to Mr. Armstrong. It had to be approved by Mrs. Hubbard.

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Now, that is not a journalist case. That is

not giving it to a journalist and waiving one's privacy.

Mr. Garrison said he was given it solely for the biography.

Mr. Armstrong said he didn't give it to him for any other

purpose.

When I asked him, "Could it be used for any other

purpose?" He said, "I couldn't imagine it at the time.

What happened later is a wholly different picture." That

is a quote.

So that the privacy of these materials, of these

documents was maintained throughout without question based

on the undisputed testimony in this case.

Now, Mr. Flynn argued that in reality Mr. Armstrong

is not like the employees in Pearson versus Dodd since the

court says that the employees couldn't do what they did.

He is like Drew Pearson.

Well, the facts are that he went to Mr. Garrison

and induced him to give the documents that he knew were

private, that he knew were confidential, that he knew were

not to be used for any other purpose, that he knew he was

not authorized to take.

I said to him, "Do you contend or do you believe

that Mr. or Mrs. Hubbard ever would have authorized you to

do what you did by sending these documents to Mr. Flynn?

"Absolutely not."

THE COURT: We are getting into things that go beyond

the problems here because we are not trying the case. We

are here to determine, assuming his side of the presentation,

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what his offer is, whether these documents are going to be

permitted to go into evidence.

MR. LITT: His argument here, Your Honor, is that somehow

there's been a waiver of the privacy interests in the

documents and, therefore, there is no privacy in the documents

so they can be introduced, That is why the testimony

demonstrating that the privacy was maintained is important

and that is why it is important for the court to note that

that testimony is based upon uncontradicted testimony.

That is not our allegation. That is Mr. Armstrong's testimony.

The case of the United States versus Hubbard,

which I talked about earlier, clearly demonstrates that even

where the government has taken documents on a lawful search,

not where a rampant, lawless individual has taken them for

an improper purpose, that the privacy in documents taken

remains on a constitutional basis, and that when they are

in a court, the court when it is dealing with private

documents, and it was alleged that these documents contained

extraordinary evidence of crime, and it has been alleged

that throughout that the privacy interest in the documents

remains. The court is required to use the standard that

I set out before.

At some point in this case if this theory or

some of these theories are going to be allowed to be developed,

we are going to have to specify what the issues are. I hope

that the court can get a sense of the virtual impossibility

of dealing with this case in the way that the defendant,

not the plaintiff, frames it.

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The plaintiff frames the case quite simply.

The defendant frames the case so that the allegations and

claims that have to be responded to are so numerous, and

Mr. Flynn in the course of his argument talks about what

has happened to him and what has happened to Mrs. Hubbard,

and he claims that Mr. Hubbard is a fugitive and he talks

about grand juries here.

Now, I can assure the court that I am perfectly

prepared, if necessary, to demonstrate that much of what

he says is false, other of what he says is distorted, other

of what he says are conclusions.

Even without evidence, to do so would take more

time than we certainly have today, but what has to be

determined in this case is whether the court is going to

allow this kind of an approach to a simple, straightforward

case. The court must resolve preliminarily whether or not

on the theory that is put forward, which is directly contrary

to the case of Dietemann versus Time, the theory that the

defendant puts forward that it is a defense to take documents

either one, because the person is a public figure about whom

you want to expose information, or two, you are afraid you

are going to be sued and therefore want to take the documents

of evidence of I don't know what.

The irony is that Mr. Armstrong has been sued

because he took them. It flies in the very face of their

allegation of fair play. Mr. Armstrong wasn't sued in April.

Mr. Armstrong was sued after it came to light that he had

been taking all of these documents and sending them to

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Mr. Flynn, which by his own admission in a request to admit,

was for use in other cases, so that this justification is

an Alice in Wonderland theory. It is a theory that says

it is okay to engage in crimes when you determine that it

is in your interests to do so or when you determine that

it is in someone else's interests to do so.

There is no such defense and we will never deal

with the issues in this case until this court resolves this,

and in resolving it, I can only emphasize, because it is

not going to go through. I have so many notes of statements

that I could respond to and I am not going to do that, but

I cannot emphasize to the court enough the importance of

the court's realizing that what is going on here is a whirling

dirvish of allegations that cannot help but have a prejudicial

impact on a court, on anyone else that is dealing with it,

and cannot help but resolve that instead of a determination

of whether or not certain property was ours and whether it

was confidential and whether Mr. Armstrong took material

that wasn't his, which was private, that we end up in this

never, never land of wild charges and claims about Mr. Hubbard

which can never, ever be separated from the claims about

the church itself and the issue of fraud.

Mr. Flynn has indicated he wants to submit a

supplemental memorandum, and we will discuss, I suppose,

the issue more at that point and I can deal more clearly

with it.

The Ballard case, Your Honor, stands for the

proposition that I stated. Some of the facts that I stated

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are not in the opinion, We went back to the Supreme Court

record and took it, but what I have said in each respect

is accurate, and if the court wants it, I can go and have

copies made from the Supreme Court record to demonstrate

it.

THE COURT: No.

MR. LITT: Guy Ballard --

THE COURT: The opinion is here, I have read the

opinion again.

MR. LITT: It is important that the court read -- I

summarized the things from the record because some of the

representations that were permitted to be litigated are not

stated in the opinion, but it was the trial court's ruling,

which was upheld by the Supreme Court, and it was discussed

in the briefs and in the record. It was not reflected in

the opinion, but that is the actual circumstances.

Mr. Flynn says that Ballard permits sincerity.

Yes, Ballard permits sincerity. Cases since Ballard have

amply demonstrated that essentially a sincere determination

must be very truncated, must be based on extrinsic evidence

and must essentially be shown to be a sham, and basically

since he is alleging, in reality, that the church is insincere,

after all, these publications he is talking about in which

some statement was made. That is a book jacket written by

some church member, published by a church publishing company.

He is going to have to argue that the church is insincere,

and he is going to have to establish, which he cannot do

and which no court has done, that, in fact, Scientology itself

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is not a religion.

That is their theory in reality. He keeps trying

to frame it in terms of Mr. Hubbard, but it keeps coming

back it is really a money-making scheme. You go and buy

these things, but it is really to make money.

The only point I want the court to understand

is if the court is going to get into that, which it shouldn't

do, which I believe it is not permitted to do, and which

in any event it is not necessary to do given the reasons

that are being advanced, then the court is going to have

to take on the whole question of having a full evidentiary

hearing, which frankly could be longer than the projected

trial in this case in which it is determined whether or not

these supposed representations that he is talking about were

made in a wholly secular context.

We will bring in experts to speak to the issue.

We will bring in church members. We will trace the history

of church doctrines at issue, but that is what will have

to occur if the court is going to entertain it, and I am

very concerned that there not be a short-circuiting of these

issues based on generalized claims or efforts to paint

Mr. Hubbard in a certain way by putting a secular label on

it. That cannot be done.

THE COURT: I am going to take a 15 minute recess and

look at a couple of these other cases.

(Recess.)

THE COURT: Well, anything either side want: to submit

on this issue that we are talking about now? Not hearing

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any, I will go ahead.

I think we are all generally familiar with the

Bill of Rights, the First Amendment. Sometimes when we get

into dealing with some of these specific cases that have

been tried over the years involving that amendment, dealing

in these types of cases from day to day, it is not easy to

keep track of various ramifications of the rights.

I think that we all generally think in terms

of the rights in the sense of a shield, a shield that protects

our exercise of our rights in a certain fashion. It is of

note, of course, that this case did not involve directly

the situation where plaintiff is exerting the rights as a

shield, but instead is seeking to use them in a sense as

a sword.

Plaintiff is here seeking monetary damages in

tort in addition to its equitable issues, but I think that

the primary considerations that we are dealing with now have

to do with the problems relating to the admissibility of

the evidence in a civil proceeding or tort, money damages.

So, I think that that has to be borne in mind, the extent

to which that becomes a factor in the case.

Plaintiff is seeking damages. He is suing upon

specific theories of law, torts, and certainly the general

rule is the defendant is entitled to a fair trial, whether

it be a civil case or criminal case, and is entitled to

present evidence in defense of that action so long as it

is relevant and material and doesn't conflict with some other

overriding principle.

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In this case the plaintiffs have asserted directly

and as a representative to rights relative to some of these

exhibits.

It seems to me that on balance that the right

to defend oneself has to have more significance than the

right of privacy that might, in general, attach to some

exhibits or else there is no way to defend oneself against

what may or may not be proper accusations.

Of course, we are not dealing with the exlusionary

clause, the concepts involved in the Fourth Amendment directly.

Obviously the right of privacy has its foundation in the

Fourth Amendment.

At the same time, the law is very clear that

the proscription against using illegally seized evidence

deals only with the use by government, the state, district

attorney, attorney general, city attorney in criminal and

quasi-criminal prosecutions.

Even there, where the property is obtained through

the wrongful conduct of a lay person, a nonpolice officer,

that evidence can be used by the government authority because

the law enforcement has not violated the constitutional rights

of the individual for use by the court. Under those

circumstances, therefore, it doesn't violate the constitutional

rights of the person who is the proprietary person relative

to the evidence.

The problem, of course, in this case is assuming

that is so, what is relevant to the defense of this case

and, of course, it gets into discussion of these different

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issues that we have talked about. We are dealing with specific

torts on behalf of the church here. The church is suing

on breach of fiduciary relationship, breach of confidence,

aside from the equitable issues, and conversion; and

Mrs. Hubbard is suing on theories of breach of fiduciary

duty, breach of confidence and conversion, and also invasion

of her privacy. She purports to be acting in this behalf

as a representative of her husband.

Now, the defense has indicated that it has

essentially as to the conversion, that they have received

the documents with the consent of the people or the people

that the defendant was dealing with, and that there is no

literary value in these and that essentially there's been

no interference with the rights of the plaintiffs to use

these because the substance of the contents are still

available, either in the possession of the court or subject

to their use if that is something that is required in the

trial of this lawsuit or some other lawsuit.

Turning over the exhibits to counsel in the context

of which the defendant has set forth in his offer of proof

seems to me to be a proper use of the exhibits.

Been harassed and threatened physically and with

lawsuits. I am not saying whether he can prove that or not.

Certainly the solicitation of counsel and turning over the

exhibits, it seems to me to be reasonable, assuming it is

reasonably done in good faith for those purposes.

So far as the matter of public interest, private

persons and public persons, it is clear under Pearson versus

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Dodd that the public character of the individuals would not

be a defense to a cause of action based upon the common law

intrusion concept, and under this Porten case which has been

cited to me at 64 Ca1.App.3d, it would appear that the mere

turning over of the information to one person would not

constitute a publication. It must be turned over to the

public or substantial group of public for the publication

aspect of the tort of breach of privacy to be involved.

Of course, it is a demurrer case. It is not

a judgment for trial. The court didn't really talk about

intrusion. They found that there was a cause of action stated

upon the constitutional principle as adopted by the electorate

back in whatever it was, 1971, '72, and they also relied

upon some statutory provisions in the Education Code.

The court did say that the allegations of

plaintiff's complaint or appellant's complaint, "Which for

present purposes must be deemed true, state a prima facie

violation of the state constitutional right of privacy.

At trial, of course, the university may contest any of the

allegations of the complaint as well as show some compelling

public interest justifying the transmittal of the Columbia

transcript to the commission."

So it would appear to me that there is a

justification defense to this cause of action based upon

this constitutional provision dealing with public interests

which would justify the transmittal of the information to

the third party.

So, it seems to me that we have to be concerned,

130

I suppose, with the reasons which the defendant has asserted

to why he turned these documents over to third parties or

a third party, and it seems to me that he had a reasonable

good faith belief that this is evidence of a crime or criminal

conduct, that he would be justified in turning it over to

a third person.

Well, to put it another way, when a search warrant

can be issued. It used to be thought that a search warrant

could not be issued for mere evidence. It could only be

obtained for the fruits of the crime, contraband, things

which would be illegal to possess such as narcotics, burglary

tools and things of that nature. But certainly the law now

is that a search warrant can issue or a police officer can

seize evidence which appears, reasonably appears to be evidence

of a crime.

So it seems to me that by analogy, whether a

crime could be prosecuted, whether or not a criminal

prosecution could be successful isn't the sole test here.

It seems to ne that the issue really has to be on this matter

of justification as to whether Mr. Armstrong reasonably and

in good faith believed, and from an objective standard also

that this evidence was evidence which was indicative of

criminality, would tend to prove criminality.

So, it seems to me that under the constitutional

cause of action, if that is what it is, that there would

be this justification defense or the right of the public

to know about people who are in the public eye, and so far

as the common law idea of intrusion, it would seem to me

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that while there may be evidence of justification, still

if he testifies that there wasn't any illicit activities,

everything was given to him, that there can't be any intrusion

under common law, concept of invasion of privacy.

Of course, on the breach of fiduciary duty, these

things are subject to whose agent was he. Also, of course,

which would be developed I assume here in the trial and also

to some extent the privilege given under -- set forth in

the Restatement of Agency, I think that the privilege goes

to a higher duty to himself or to some third party or other

interests, superior interests. This again becomes a rather

amorphous subject.

They use an example, of course, which deals with

the duty of a lawyer in the attorney-client privilege which

is probably the most hallowed privilege, the most zealously

protected privilege in the law. That is a lawyer cannot,

of course, disclose what his client tells his about his past

misdeeds, but if he tells him about things he is going to

commit or do, he has not only a privilege, he has a duty

to disclose that information.

So, I don't really think that particular analogy

in relating to the distinction between past offenses and

future really is definitive. It is an illustration, but

it seems to me that if the reasonably good faith belief that

these things were things that had happened in the past were

going to continue in the future, as it might relate to a

variety of possible criminality, it seems to me that he would

have the privilege to act as he did.

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So, I realize this presents problems and the

court would certainly be willing to scrutinize any of these

exhibits, not that it particularly wants to, but because

it has an obligation to do so to be sure that they would

bear reasonably upon these possible defenses that may be

raised in this lawsuit. So, I don't propose to limit or

exclude the use of any documents that are contained in these

four boxes in general. That doesn't mean that everything

becomes admissible. The court will have to deal with each

individual exhibit and will have to deal with it probably

before we ever get started with the trial so we don't unduly

take up the time of the jury on these things.

Coming back to the First Amendment, of course,

the cases do seem to indicate that if we are dealing with

things which deal with the doctrines or tenets of the church

being a bona fide church, of course we have no business

becoming involved in the right or wrong, truth or falsity.

But, of course, I have no way of knowing at this point.

I am not conversant with some of these things, but certainly

from reading some of these Scientology cases that have been

submitted to me, there are activities which they have engaged

in which are secular as distinguished from religious, assuming

that it is a religion, and apparently most cases that have

dealt with it have concluded, at least, there's been a prima

facie case established and nobody has attempted to establish

that it wasn't a religion, so that may also, of course, bear

upon the issue of some of the problems we have to deal with.

Again, I think where the church here is using

133

the forum of the court as a sword, not as a shield, that

the rights of the defendant to defend himself are very

significant and outweigh some of the considerations that

might be involved so far as Mrs. Hubbard is concerned or

the church as it relates to some of these writings.

Well, I am kind of tired. I suppose you are,

too, from talking. Maybe we should recess until 9:00 tomorrow

and take up the next motion.

MR. LITT: That is fine, Your Honor.

Can I make a suggestion in the context of the

court's ruling? It seems to me that in order to even know

what we are dealing with at this point in light of the

indicated ruling, that the defendant should now specify the

particular items, documents which he wishes to introduce

into evidence, along with a statement of what their relevance

is.

We cited to the court the case of United States

versus Hubbard, which in a somewhat different context, but

I think it is applicable, talks about the need for a document

by document analysis, and the court also indicated that would

be the procedure necessary. I think he's already put forth

some of the documents which he intends to rely upon which

are included in these exhibits; am I not correct on that?

MR. FLYNN: That is correct, Your Honor.

THE COURT: I don't really want to get involved with

that at this point. We have so many other motions to deal

with here. Once we get all the other motions out of the

way, then we can deal with evidence.

134

MR. LITT: Oh, I understand, Your Honor. I was just

suggesting so that when we reach it we have a procedure set.

I know in their opposition they have specified, I am not

sure whether I can identify, but they make some particularized

reference. I don't know whether that is an exhaustive list.

THE COURT: You mean he made that when he was tired?

MR. LITT: What I am suggesting is just that we know

the terrain we are on so if there are other documents other

than that, and I am not saying we should deal with that

tomorrow because I, for one, would need to look at then if

I am going to have to deal with the particulars of them.

That is why I would like to have some advance notice.

THE COURT: I think it is a good idea.

MR. FLYNN: We will try to give as such particularization

by Monday as we are able to, Your Honor.

THE COURT: Okay, then, we will recess until 9:00.

(At 3:45 p.m., an adjournment was taken

until Friday, April 20, 1984, at

9:00 a.m.)

135

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

DEPARTMENT NO. 57 H0N. PAUL G. BRECKENRIDGE, JR., JUDGE

CHURCH OF SCIENTOLOGY OF CALIFORNIA,

Plaintiff,

vs.

GERALD ARMSTRONG,

Defendant.

MARY SUE HUBBARD,

Intervenor.

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NO. C 420153

REPORTER'S CERTIFICATE

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

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I, Nancy L. Harris, Official Reporter of the Superior

Court of the State of California, for the County of

Los Angeles, do hereby certify that the foregoing pages

1 through 134, comprise a full, true, and correct transcript

of the proceedings held in the above-entitled matter on

Thursday, April 19, 1984.

Dated this 24th day April, 1984.

/s/ Nancy L. Harris, CSR #644
Official Reporter

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