Gerry Armstrong-- Reporter's Transcript of Proceedings 04-20-1984 Case 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

Friday, April 20, 1984

VOLUME 1

Pages 200 through 327, incl.

APPEARANCES: (See next page.)

NANCY L. HARRIS, CSR #644
DIANA R. GRACE, CSR #1672
Official Reporters

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

200

LOS ANGELES, CALIFORNIA, FRIDAY, APRIL 20, 1984, 9:08 A.M.

---o---

THE COURT: All right, let's see. The next motion

is, I think, motion in limine on the subject matter of

admissible evidence and testimony of various witnesses;

is that what you next have suggested?

MR. LITT: Yes, your Honor.

THE COURT: Bear with me. Everything is sort of ---

I have got it.

I gather the first item is evidence relating

to "shedding, destruction of, vetting" -- v-e-t-t-i-n-g --

"of documents allegedly carried out by members of the Church

of Scientology.

MR. LITT: Yes, that is correct, your Honor.

THE COURT: All right, do you want to address that?

201

MR. LITT: Yes, Your Honor.

I have a suggestion -- I don't know whether the

court will want to follow it or not -- about how to do this.

We have set out in our motion the areas which

we determined, as best we could from the discovery in the

case and the pleadings in the case, that we felt should not

be admitted; and I think it might be easier if the defense

explained why these various areas were relevant and we respond,

since really to some extent we are striking blind because

we are not exactly sure what it is or what their theories

are. We made our best estimate here.

But it seems to me it would perhaps be more

expeditious to have a reversal of the order because I will

argue and Mr. Flynn will argue, and I will want to respond

to the actual theories he puts forward rather than with respect

to what our guess is.

THE COURT: All right.

Do you want to offer any argument relating to

this subject, Mr. Flynn?

MR. FLYNN: I do, Your Honor.

I think I am the one now being placed in the

position of being a little blind because we both have the

advantage of each other's briefs; but I don't really know

what their position, in terms of oral argument, is before

the court.

But basically our position is this: There are

all those categories which are set forth in their motion.

With regard to the shredding of all the 14 or 15 categories --

202

of all the 14 or 15 categories, we think several are moot.

We don't intend to offer any evidence on some of them; but

the most important one, we think, is the shredding one.

The shredding and the Fair Game Doctrine are the two most

important.

But the shredding issue is probably the most

important because, one, it explains the circumstances under

which Armstrong came into possession. On the conversion

count what the plaintiff and the intervenor would have the

court or the jury believe is that he, all of a sudden, had

these documents dumped into his hands and then gave them

to Mr. Garrison without any real explanation of the

circumstances under which they came into his hands. We think

that is very important because it relates to the possessory

interests that he had and the possessory interests thereafter

that Garrison had, particularly when you get into the

particularization of the documents because, as I indicated

to the court yesterday, I don't believe that anyone, in all

candor, knows what is in those documents, probably, other

than Garrison and Armstrong. And without the court or the

jury understanding exactly how that occurred, we think we

would be deprived of the most essential defense that we have

with regard to the possessory rights of Garrison and Armstrong.

203

Secondly, the issue of Mr. Armstrong and

S.P. Declare, having been accused of stealing the documents,

and I am not sure the court has seen the copy of the Declare

yet, but it is in the record, in addition to being accused

of stealing them, he was accused of making false statements

about Mr. Hubbard, and that is right in this S.P. Declare.

He was then placed in the position of having

to prove that what he said, particularly where he thought

that there was going to be a pending lawsuit against him,

of having to prove what he said about Hubbard was true.

If the circumstances under which he came into possession

of the documents was not allowed into evidence, then his

state of mind with regard to his belief that the plaintiff

and the intervenor would destroy the documents and destroy

the evidence of what the truthfulness of his statements

were, then again he would be deprived of one of his funda-

mental defenses.

Lastly on the issue of credibility, we believe

that evidence that a party intends to destroy evidence

is specifically relevant to the question of credibility,

particularly where this, and this intervenor for a period

of five years had been destroying evidence in connection

with numerous civil and criminal cases pending across the

United States. This is particularly relevant based on

the Smith case which has recently been decided in California

on the spoliation of evidence.

So, these three items, we think, justify this

particular piece of evidence coming in. In fact, of all

204

the evidence that we intend to introduce, my personal

conviction is that the most important piece of evidence

is the shredding evidence because it explains to the court

and to the jury what the whole case is about, that he

obtained possession of documents. The documents had certain

types of information in them. He gave them to Garrison.

When the organisation discovered what type of information

was in them, they refused to conform to the truth.

They then attacked him and then sought to get

the evidence back for the purposes of destruction, and

they have a history of destroying the documents. So, for

those reasons we think it should come in.

Lastly, there is the issue of value and damages.

If the evidence is that the documents were going to be

destroyed, then the issue that has to be raised for the

last year and a half in the mounds of paper that have been

filed that these documents have intrinsic value of millions

of dollars because they are the memorabilia of their founder,

then that evidence would clearly be disputed by the fact

that they are about to destroy it, number one, and number

two, as the court is going to hear, the only person who

stood between the destruction of these documents and the

shredder itself was Gerald Armstrong.

The documents were brought to him. It was

his decision to make. He brought them to Laurel Sullivan

and they were preserved, but at that critical instant in

time, which is the focus of the circumstances under which

Armstrong came into possession, at that critical instance

205

the sole discretion to destroy or keep these documents

was left in the hands of Gerald Armstrong.

If the plaintiff, the intervenor, and Mr. Hubbard,

the absent party here, really thought the documents had

value, then they wouldn't have left Mr. Armstrong with

the sole discretion as to whether to destroy them or not.

So, on the issue of damages we think it is also relevant.

THE COURT: All right, Mr. Litt, what is your position?

MR. LITT: Your Honor, let me start out explaining

some circumstances and again I will because there are

disputed facts on some things, for purposes of what I say,

I will rely only on what Mr. Armstrong has said so that

I am not dealing in an area where there are factual disputes.

Mr. Armstrong claims that there was a shredding

of documents, not these documents, that occurred in January

of 1980. Mr. Armstrong may contend it was to hide evidence.

If we have to get into it, we will establish that that

is simply false, but I won't address that at this point.

These were not the documents that we are talking about.

What Mr. Armstrong says occurred is that while

this was going on, a box from an area called "Our Storage"

which had Mr. Hubbard's personal possessions, furniture,

a variety of materials, a woman came up to him and said,

"What should happen to these?"; a single box containing

a small number of materials.

Mr. Armstrong took the box, took then to his

organizational senior, said, "What should happen to these?"

The decision was clearly they should be saved.

206

One, they are L. Ron Hubbard's materials and should not

be destroyed.

Two, they are of value and should not be destroyed,

and then, your Honor, Mr. Armstrong petitioned to obtain

a post to take that box, but not just that box because

we are talking about a single box that he testifies about,

but some 25 other boxes that he had never been asked about

what to do with, and that is the basis of his archives,

but that is only the beginning, your Honor.

For the next 22 months his job is to collect

up these materials in an archives. There are, your Honor,

some 4,000 pages of original materials. Those original

materials were in Mr. Hubbard's archives that Mr. Armstrong

obtained in September of 1981, 18 months after this purported

shredding, and Mr. Flynn says these documents were saved

by Mr. Armstrong from the shredder in January 1980. It

is a complete distortion of Mr. Armstrong's own testimony.

He says one box.

Your Honor, there are tens and tens of thousands

of pages that were in the archives. Mr. Armstrong only

took a small percentage of what the total archives are

and those amount to not one box but approximately in terms

of the size of the box that he found, 17 times that amount,

just what was given, not what was in the archives because

that would be 100 times the amount.

207

So that on the first issue, whether or not there

is any basis in the record to contend that Mr. Armstrong

saved these documents -- and when I say "these," I mean the

archives in total or what was under seal. I don't believe

that anything that was under seal was in that box at all;

if so, a very small part of it. The materials regarding

Mrs. Hubbard that came from her archives were not.

Mr. Armstrong never even saw those until, literally, a year

and a half later so that it cannot explain the circumstances

of his possession of these archives documents because the

two are completely independent.

There is no rational relationship between the

fact that one set of documents, assuming Mr. Armstrong's

version, vas being destroyed and the fact that this other

set of documents was saved. That was his job. That is his

testimony. It was his job to preserve them. He was assigned

that position. He was paid by the church to preserve them.

He obtained money from the church, Your Honor, to go and

purchase materials. We have purchase orders where he was

given money to go and buy materials that were put into the

archives.

So that on the first theory, which is that this

somehow goes to a right of possession, it simply -- it is

completely irrational. There is no basis on which one can

argue that what happened with that box provides a basis for

saying that he saved these materials, and he has never

contended that they were his. He never contended that because

he, quote, saved them that they became his. In deposition

208

he said the materials are Mr. Hubbard's. Mrs. Hubbard's and

some Scientology organizations. That is a quote from

Mr. Armstrong.

Now, Mr. Flynn then slides into this Declare;

and I suppose I may have to begin to get into the issue now

because he asserts that.

THE COURT: We are not trying the case, counsel. It

is just to determine whether or not there is some basis for

receiving this evidence --

MR. LITT: I understand.

THE COURT: -- and whether that is outweighed by any

prejudicial effect.

MR. LITT: I understand that, Your Honor. But the

first basis is; Mr. Flynn makes statements that are not

supported by the record and the testimony of his defendant;

and, therefore, the reason I spell out those facts is because

when the facts, as he testifies to them, are known, there

is no rational basis. There is no reasonable relationship

to anything that is relevant; because given his own testimony,

this is not relevant.

Then he argues that somehow what was stated in

this Declare -- this takes us directly back into the First

Amendment issue in the case. A Declare, Your Honor, is an

internal excommunication notice within Scientology; it is

nothing else.

There is an internal procedure by which a person

who is declared can challenge that Declare or can get back

into good standing with the church. It is a statement that

209

you are excommunicated from the church. It refers to

Scientology crimes, not civil crimes. That is the basis

of it.

Mr. Flynn says that in this Declare, in this

internal document, that Mr. Armstrong was placed in the

position of having to prove that what he said about Mr. Hubbard

was true and that somehow, therefore, shredding of documents

can come in. The Declare has nothing to do with that. It

is not justiciable. It is an internal church affair. It

cannot be intruded into by the court. That is point one.

But point two, it is not an accusation in any

court. Declares are issued commonly, including to people, by

the way, Your Honor, who remain in the church. It is

not exclusively for people who leave the church. It has

to do with internal systems and procedures, so that there

cannot --

First of all, the court cannot allow the testimony

about the Declare to come in under the First Amendment.

But, secondly, it has nothing to do with anything; and what

is going on is: Once again the defendant is putting forward

theories and if these generalized claims of destruction

of evidence, which are not supported by the record in this

case about these documents, are permitted to come in, the

prejudicial effect is obvious. The relevance, if it has

any, is extremely remote, given Mr. Armstrong's own testimony;

and there is no -- there is no evidence that a person can

rationally conclude that there was any intention to destroy

these documents.

210

THE COURT: It seems to me that is a question for the

jury to decide, counsel. You are raising a number of points

which go to the ultimate issues in this case, but I am not

dealing with the ultimate issues. We are dealing with whether

or not evidence should be received. And it seems to me he

has a right to explain why he did what he did, when he did;

and it is for the jury to determine whether that is truthful

or not.

If this is part and parcel of his justification --

and apparently there is documentation from other cases that

there was, at different places, different times, shredding,

that is apparently not a secret and that has been judicially

established, I gather. It seems to me --

MR. LITT: I don't know that that is judicially

established.

THE COURT: Pardon?

MR. LITT: I am not aware that that has been judicially

established.

THE COURT: Maybe it hasn't, but I had a feeling I

had read somewhere there was some evidence of that that had

been referred to in some of the cases that have been published,

various decisions in the United States over the last 20 years

dealing with the Church. And it seems to me that he is

entitled to present this, and it seems to me if it is a

substantial basis for his justification then it is something

he is entitled to present. And if it isn't true, if it can

be established it isn't true, then that is for the jury to

determine.

211

MR. LITT: Your Honor, the point is that they are going

to introduce evidence about other shredding activity which

will prejudice the jury, which has nothing to do with these

documents. That is why it can't come in. That is why I

have to explain the circumstances. Its prejudicial effect --

the real purpose is to say, "These people would destroy

anything," not these documents; because there is no evidence

that a single document was ever destroyed of these archives

or anything that Mr. Armstrong took.

THE COURT: I got the impression that there was an

operation going on out there at the Springs and that things

were being shredded and that he came across this box and

inquired as to whether or not it was something -- what should

be done with it, and he was advised that apparently it should

not be destroyed. So it seems to me you have relied upon

that in some of your statements, I believe, or briefs, that

this is how the whole thing originated. And it seems to

me that that is part and parcel of this case; and whether

it is true, that is for the jury to decide. I think that

we can --

MR. LITT: Your Honor, they intend not only to introduce

evidence of how Mr. Armstrong came into possession of this

box, they intend to introduce testimony from people talking

about a variety of shredding activity.

Mr. Flynn said it yesterday, "This was the fourth,"

according to him, "of some series of activities."

Are we going to get into all of those?

THE COURT: Well, I don't know.

212

What do you have in mind in that respect?

MR. FLYNN: Your Honor, what I have in mind is just

this one shredding operation; and if evidence is introduced

to try to rebut that, then I think I could then introduce

evidence to show a pattern of conduct. But, in any event,

all I intend to introduce right now is the circumstances

surrounding how this box came into Mr. Armstrong's possession.

213

THE COURT: Well, his state of mind with respect

to, I assume, what might happen to it if it were returned

to the church.

MR. FLYNN: Exactly, your Honor.

MR. LITT: I just want to make clear that it is our

position that his state of mind is not an element of any

of the torts in this case, and if I understand the court

correctly, it is basically on the theory of this justifi-

cation defense that the court referred to yesterday that

it is being found to be relevant. I just want to understand --

THE COURT: Well, you are understanding it correctly.

Well, I can give a limiting instruction that

they are not to consider it for any other purpose unless

the court instructs them to the contrary.

I will deny the motion except that it will

be received for the limited purposes as we have indicated

and in dealing with this one situation out there at

Gilman Springs, and that the defense will not be permitted

to go into other shredding operations without first bringing

it to the attention of the court outside the presence of

the jury so that the matter can be thoroughly argued by

both sides.

Number two is the suggestion that Mrs. Hubbard

and Mr. Hubbard are not legally married. Do you have any

intention to get into that, counsel?

MR. FLYNN: No, your Honor.

MR. LITT: Let me raise a question about that. He

says in his response that he doesn't intend to get into that.

214

He does intend apparently to make the contention or to

try to introduce into evidence a marital agreement signed

in, I believe, 1952, 31 years ago between Mr. and Mrs. Hubbard,

which, according to the characterization, says that either

side will grant a divorce to the other without a property

claim if either side desires, which has never occurred.

He does say he intends to get into that to

argue that she has no right to the joint property of her

and her husband.

THE COURT: I don't see what that's got to do with

whether or not they are legally married. We can talk about

some other points on that subject.

He says he is not going to present anything

that they are not legally married, so that motion is granted.

There will be no evidence or no suggestion that the parties

are not legally married.

MR. LITT: What I am reading, your Honor, is that

when we wrote this, we did the best we could as to what

the type of evidence was. They have stated what evidence

in this regard --

THE COURT: Well, we can deal with that as an additional

item if you want to. Let's just deal with what you have

got here first.

MR. LITT: Okay.

THE COURT: Three, the fact that defendant Armstrong

has filed a cross-complaint against the Church of Scientology

of California and other parties with the allegations on

which the cross-complaint is based.

215

Do you have any intention of getting into that?

MR. FLYNN: We don't intend to introduce it, your

Honor.

In your Honor's initial statement to the jury

as to what the case is about, we think that your Honor

should explain that there is a cross-complaint that they

are not hearing. But in terms of putting it into evidence,

we don't intend to.

MR. LITT: The existence of a cross-complaint has

no relevance either in any indications from the court or

in evidence in the case. I don't understand what -- the

effect of the court saying that there is a cross-complaint

is to give more weight to it than if Mr. Flynn were to

say it.

THE COURT: Well, it seems to me it has no relevancy

except it might show some bias on the part of the defendant

and I would think the plaintiff might want to get into

that, but if he is not geting into it, I don't see any

reason to deal with it so I will make the order that there

is to be no reference to the cross-complaint and with all

of these things where I am making an order prohibiting

something, it is always subject to the proviso that if

something else develops that makes something rational or

reasonable or relevant, it can be brought to the attention

of the court outside the presence of the jury. We will

discuss it and the court would be willing to reconsider

the position. This is a starting point.

Four, any alleged misrepresentations to fraudulent

216

practices committed by L. Ron Hubbard, Mary Sue Hubbard

or the Church of Scientology or any scientology organizations

or any individual acting on behalf of any such organizations.

MR.FLYNN: Well, your Honor, I thought -- I think

that was extensively discussed yesterday. That is what

the case is about in terms of not only Mr. Armstrong's

state of mind but on all of the issues, virtually every

issue in the lawsuit And every count as to why he did what

he did.

For example, if the invasion of privacy count

and the breach of fiduciary duty counts are tried, then

the upshot, the result of trying those issues is to go

into those facts. It isn't that we are intentionally trying

to put fraud or misrepresentation before the jury, but

in putting before the jury the issues of public figure

and what public interest is involved and whether or not

over a period of years certain statements were made about

Hubbard, and how the documents relate to the public interest

and public figure issues of what was said about Hubbard

in the context of these documents, the documents, as I

have indicated from the outset to the court, are going

to disprove what the public statements have been about

Mr. Hubbard. That is the essence of the entire case.

In terms of trying to prove that L. Ron Hubbard

and Mary Sue Hubbard or the Church of Scientology of California

are frauds or involved in fraudulent activities, that is

not the purpose of the introduction of the evidence. The

outcome of the introduction of the evidence, because it

217

relates to the documents, is, however, that.

THE COURT: Mr. Litt?

MR. LITT: Well, your Honor, we did argue this at

some length yesterday and I am not going to go through

the whole argument. I do want to make a couple of comments.

The first is I just want to say again that, and we will

have to return to this a little later just so I can understand

how we are going to handle certain things, but the First

Amendment implications of what this court is apparently

permitting in allowing Mr. Armstrong's beliefs about fraud,

alleged fraud by the church, L. Ron Hubbard, the first

amendment implications of that in the whole way that the

case is tried are, in my view, beyond description.

I can only reiterate that I believe that to

the extent that the court adopted a theory that by a church

bringing a suit it somehow has less of a standing to raise

its First Amendment interests, if that was the import of

the court's ruling, I think that is incorrect and I would

ask that the court give it further consideration.

THE COURT: Well, I think that that may misstate

what I am saying. I am saying that if the church seeks

to obtain money damages, the defendant has a right to a

fair defense and a fair defense may include the reference

to these writings or documents as an effort to explain

what he did or attempt to justify it under the law.

MR. LITT: He is trying to justify it on a theory

of religious fraud which is not justiciable and which can't

go to a jury. That is the basis of what we are saying. He is

218

trying to say, I believe, that they were a fraud. A court

can't make that determination that they were a fraud.

Therefore, it can't be a defense.

I am just trying to say that the logic, I think,

of what has been done and what is going to happen in this

case as a result, Mr. Flynn said it himself, it is not

my purpose but it is the outcome, and what this court is

permitting, if it allows that to happen, is a trial of

religious fraud on a theory of defense.

THE COURT: You are the one that is pursuing these

actions. I am not. Defendant is not pursuing these in

this action.

We can deal with the case solely as an equitable

matter if the plaintiff wants to do so, but you are seeking

monetary damage. But at the same time you are saying I

don't want punitive damages. I give up my claim for that.

I don't want anything other than the nominal damages on

the amount of the conversion. So we are trying this, I

guess, for whatever expenses were involved, and if you

can proceed on a theory of establishing that there was

conversion and that is what we are trying it for, you are

seeking this release, all right, they have a point of view.

They have a claim that they have certain rights and they

are entitled to present them, and I can't put blinders

over this case in order to present only a one-sided picture.

There are two sides apparently to this lawsuit, as most

lawsuits, and it is for the jury to decide.

MR. LITT: I would like one point of clarification

219

because I am going to have to, as I will explain further

on, have some discussion with my clients concerning the

implications of some of the court's rulings, but just so

I understand what that ruling is, is the court's ruling

that this is relevant to the damages claims but not relevant

to the equity claims?

220

THE COURT: No, I am not.

MR. LITT: There is a question --

THE COURT: I don't think I can decide the case on

an equitable basis without hearing the evidence presented.

At the same time --

MR. LITT: But, Your Honor, you started out saying

that we are pursuing the damages claim. That may be, but

we are also pursuing the documents; and there is no -- there

is no compromise. There can be no give from the church's

point of view and Mrs. Hubbard's point of view about returning

the documents.

THE COURT: I am not suggesting there should be.

MR. LITT: If these matters are relevant according

to the court's theory, to the equitable claim, then whether

we are pursuing the damages claim doesn't really resolve

anything; because even if we weren't pursuing the damages

claim, all these issues would have to be tried, and then

the court would be ruling that trying to get the documents

back by the church opens these matters up.

THE COURT: Well, I would think that the extent that

they -- we wouldn't be dealing particularly with any questions

of justifications on the part of the defendant or his state

of mind or why he did what he did. We would be dealing more

with who has rights to this property at this time; and if

it is evidence, it may be that it would be required to be

preserved in some fashion. But the point is that this is

being juxtaposed in this context because they have a right

to defend themselves against these allegations that you have

221

raised.

MR. LITT: Yes, but the reason I raised this -

THE COURT: I am not saying that I, at this time, am

deciding what evidence could be received in the equitable

action. I don't think it would be necessary to get involved

in many of these things that you have discussed without the

thing being tried; but we have some maxims, "He who seeks

equity must do equity." We have some other problems that

deal --

MR. LITT: The unclean hands defense is not in this

case, Your Honor,

THE COURT: We would have to deal with raising all

these problems to a jury trial, which sometimes creates

problems,

MR. FLYNN: Your Honor, if I could interject at this

point. The defendant is giving serious consideration --

and we may know by noontime today -- of waiving our jury

claim and having the case tried solely before Your Honor

in whatever procedural posture it ends up. We feel that

that could greatly expedite this case.

In the introduction of evidence in this case

the problem of sanitizing before the jury all this evidence

could result in a prolonged trial and numerous side bar

conferences with regard to what they are going to hear and

what they are not going to hear. So we are giving serious

consideration, in order to short-circuit what is seemingly

turning into potentially a four to five week trial -- we

are giving serious consideration to waiving the jury.

222

The plaintiff and the intervenor in this action

tried to block our jury rights, and they have taken a very

strong position that they don't want a jury. So in that

light I am informing the court of this at this point so

Mr. Litt will also be informed. If we let the court know

by noontime, then a lot of the problems with regard to what

has to be sanitized in front of the jury will be obviated.

MR. LITT: Your Honor, I am going to object to the

comment that we have tried to block their jury rights. I

don't know what Mr. Flynn is talking about.

THE COURT: I don't know. I assumed that the plaintiff

was seeking the jury trial on these matters, primarily.

MR. LITT: No. The defendant had requested the jury

trial. We had originally waived jury trial.

THE COURT: It is immaterial to me.

MR. LITT: I object to the characterization that we

have done anything to block their jury rights.

THE COURT: I will sustain the objection. I am not

considering that in any fashion.

Insofar as item No. 4, I will receive the evidence

as it relates to, obviously, the issues dealing with

Mr. Armstrong that we have talked about before. Obviously,

at the same time, we are not going to go out on a fishing

expedition as to other purported improprieties that have

no relationship to this particular situation.

By denying this motion I am not suggesting that

we would go out and get involved in other things other than

what have been specifically referred to by Mr. Flynn in his

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stated offer of proof as to what Mr. Armstrong is going to

be testifying to.

Item 5, alleged criminal or tortious activity

by L. Ron Hubbard, Mary Sue Hubbard, Scientologists, the

Guardian's office or any Scientology organization. Well,

obviously, just in general something like that could not

come in. Now, as it may relate, as we talked about in item

No. 4 or in item No. 1, in the more specific situations there

may be relevance to some of these things; and so I don't

know whether this is intended as just a general blanket type

of objection.

MR. LITT: Your Honor, in part it is and in part it

reflects the problem that we have, especially in terms of

the court's rulings, which I think is best saved for the

end.

But we are going to ask the court, just for case

management and so we even know what it is we are supposed

to respond to in the way of this novel affirmative defense

that the court has permitted, that we get -- that the court

require some specification as to the evidence that the

defendant intends to introduce.

I think the court will see more, when we argue

some of the other things, why that is necessary; and, in

part, I think the real solution to this problem can only

be posed then. We just know from experience, in general,

the kinds of charges that get made. You have heard many

of them in the courtroom today, ranging from purported theft

of $250 million from the Church of Scientology by L. Ron

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Hubbard, its founder. You name it, and we hear it. So we

raised it simply to flag the issue in general.

I would just save for the end a discussion of

procedurally how we are going to proceed, in fact, so we

know what we are dealing with and how to proceed with the

case. Obviously the general illegality, the court has said,

is not admissible. I don't know what it is that the defendant

intends to introduce in this regard. I haven't the faintest

idea at this point, and we would like to know if there is

any --

THE COURT: Mr. Flynn has been talking about it. Of

course, I realize that both counsel in their presentations,

that are somewhat emotionally charged, have strayed somewhat

from relevant matters in their eloquence.

At the same time, I think that basically what

he is saying is what he said this morning insofar as what

Mr. Armstrong is going to testify to. And certainly all

of the Supreme Court cases say that we are protecting what

people believe but not how they act or what they do; and

if conduct was directed at Mr. Armstrong's actions, which

cause him to have certain beliefs and do certain things, it

seems to me those things are relevant and admissible.

225

So as a general blanket proposition, I will

grant your motion.

Six, alleged tortious or alleged activity by

the Church of Scientology or the Hubbards against individuals

viewed as enemies of scientology.

This, of course, again, I suppose, if it is

something that Mr. Armstrong knows about or relies upon

or believes, it may well be admissible as a justification

for any conduct that he took. As it may have no relationship

to that, it would have no admissibility clearly.

MR. FLYNN: It is limited to that, your Honor.

THE COURT: All right. As a general proposition,

I will grant the motion excluding matters which are more

specifically relevant to matters which Mr. Armstrong knew

about and more believed or reasonably believed and relied

upon.

Item seven, an incident which took place in

April 1982 regarding a dispute over photographs between

Gerald Armstrong and certain scientology staff members.

I think Mr. Flynn has already mentioned this

in passing. This had to do with his ideas as to what might

happen with property.

MR. FLYNN: That is exactly correct. This is a key

fact in this case as to what caused him to come to me.

He believed that since they came and they stole these

photographs at the same time he was declared, that they

were going to Garrison once they knew the contents of the

documents and steal them all. That is why he hired an

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attorney.

THE COURT: Any comment, Mr. Litt?

MR. LITT: My only comment, your Honor, is that if

theory is what is in Mr. Armstrong's mind, which is just

wrong once you adopt that premise, I can't really argue

on the photo.

Our position, I think, is clear.

THE COURT: All right, then, the motion will be denied

as to item No. 7.

8, the Fair Game Doctrine.

MR. FLYNN: Our entire case, your Honor, is predicated

upon the fact that Mr. Armstrong went to a lawyer because

he observed for ten or 12 years the specific application

of the Fair Game Doctrine, not as a personal church policy,

and he does not intend to testify about all of the instances

where he thought applied.

For the court's information, the instances

where he thought applied are just shocking. They involve --

MR. LITT: I thought he wasn't going to testify about

that. What does it have to do with this?

MR. FLYNN: He is not going to, but I am going to

explain the background of the doctrine.

MR. LITT: I am going to object to this. I think

it is a blatant effort to prejudice the court. Mr. Flynn

has just said he doesn't intend to introduce this evidence,

but he wants you to know about that. I don't understand

that. I don't understand such a procedure. If it is not

relevant and he is not attempting to assert it, and now

227

he is suggesting that this court is going to sit as the

trier of fact in the whole case and he will put in all

of those things that he, quote, doesn't intend to introduce.

If it is not proper, if he is not arguing it is admissible,

then he should not be presenting it to the court for the

court to determine if it is admissible.

MR. FLYNN: If I can respond to that.

THE COURT: Yes.

MR. FLYNN: In the Allard case, as the footnote indicates,

the trier of fact in that case or the judge took evidence

initially or took it apparently de bene from what

Mr. O'Reilly's office tells me, and the footnote seems

to suggest and give the rest of the trial to the defendant

in the action to introduce evidence that a Fair Game Doctrine

had been canceled as they had alleged in their briefs and

apparently during the course of the proceeding. They never

did introduce evidence that the Fair Game Doctrine had

been canceled, and the reason, I submit to the court, is

because if they had introduced evidence that it had been

canceled, the plaintiff in that action would have been

entitled to introduce evidence that it had not been canceled,

and picking up on Mr. Litt's suggestion, I will not go

into the details.

Suffice it to say, that the application of

the Fair Game Doctrine over the last 10 or 12 years the

defendant knew about and the 18 years that it has been

in force is probably, to quote the U.S. attorney of the

Federal District Court --

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THE COURT: I don't want to get into that. Just

deal with what the evidence might be.

MR. FLYNN: It basically involves a rampant attack

on everyone who ever opposed the Church of Scientology

with every crime virtually that could be committed, and

everything that could be done, ranging from "we suggest

death," all the way to simple, frivolous lawsuits, and

I won't get into the details. The details would take me

two hours just to give an outline of.

Now, Mr. Armstrong, because of his position,

knew and saw and heard, for example, of assassination plots.

He knew what the Fair Game Doctrine was. Not only did

he know, he was drilled on a Pact called the PTS and SP,

which basically taught him as a Sea Org member how to

deal with enemies.

The Pact is some two inches thick, which we

don't intend to put into evidence, but basically explains

how the Fair Game Doctrine works and what you do to enemies

of the church.

It has got nothing to do with internal church

policy. In fact, if it had to do with internal church

policy, then either one of two things would occur.

In light of the reality in the real world for

the way the Fair Game Doctrine operated, it would make

all Church of Scientology policy non-religious or all of

it religious.

It is simply inconceivable, and I would suggest

that in the criminal case of the United States vs.

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Mary Sue Hubbard they raised the religious defense that

they were entitled as a religious matter, and it is suggested

right in the case when the District Court of Columbia Court

of Appeal dismisses it in a footnote as being just entirely

frivolous, but they address some 30 or 40 pages of their

memo to it that breaking into 136 state and federal offices

was not entitled to a religious defense.

But that brings up probably the basic logical

problem with claiming that the Fair Game Doctrine is a

religious doctrine. Assuming an entirely legitimate religious

organization, one that has been recognized as such for

hundreds of years, the Presbyterian Church, the Catholic

Church, whatever, took a doctrine and said, "Well, the

fundamental doctrine of our religion is that anyone who

opposes our religion can be lied to, sued, cheated or destroyed,

which is the quote from the Fair Game Doctrine in part."

Well, if Mr. Litt was correct and all that meant

was that in the ecclesiastical circle of that legitimate

religion the person could be brought in before the

ecclesiastical court or the person could be lied to in

the ecclesiastical environment or cheated in the ecclesiastical

environment, or another part of it is depriving them of

property in the ecclesiastical environment, and if the

individual somehow consented as an ecclesiastical matter

to even the deprivation of his property, then some spectre

of an argument perhaps could be raised that as long as

it is confined to the ecclesiastical environment, then

it is only a religious doctrine.

230

When you get into the last element, destruction,

and your Honor may or may not hear, depending on how the

evidence comes in, words in the Church of Scientology are

very significant.

231

Someone who undergoes Scientology training is

drilled on the specific meaning of words. For instance,

when you do this PTS and PT Pact, you have to go and look

up in a dictionary the exact meaning of every word. And

these courses dealing with the definitions of words relate

to the fact that you have to have a concrete understanding

in your mind of what the word means.

So if you take the word "destroy," these Guardian's

office agents that implemented these policies -- and I have

seen numerous course pacts of Guardians office agents who

did this -- have to go and check off that they understand

specifically what the word means, specifically what the word

"destroy" means in all of its context.

If, as my brother might argue, the word "destroy"

only means spiritual destruction, then someone who has

undergone the training to implement the Fair Game Doctrine

would be limited to the definition in the training manuals.

Well, as Your Honor may see in a voir dire hearing,

for example, that is simply not what happened in training

Guardian's office agents to go destroy enemies. They were

trained, if we ever get into a voir dire hearing on this

issue -- they were trained to go out in the temporal world

and do things like putting LSD in toothpaste, putting drugs

in drinks, framing journalists --

MR. LITT: I thought we weren't getting into this.

MR. FLYNN: That is what they are trained to do.

But assuming, even, that some idea of spiritual

destruction was only what they are trained on, which is simply

232

not the case, but further assuming that, if members of the

church believed that the Fair Game Doctrine was soley an

ecclesiastical doctrine which has got nothing to do with

reality, but even if they believed it and even if Mr. Armstrong

during the course of his tenure in the church believed that

it was a purely ecclesiastical doctrine which has got nothing

to do with reality, once they engaged in conduct outside

that belief, in granting full scope of religious belief to the

doctrine itself -- once they engaged in conduct outside

that belief which resulted in some type of conduct in the

temporal world, such as taking photographs, subjecting

Mr. Armstrong to some of the things he was subjected to,

or suing him in the Los Angeles Superior Court --

Once that conduct was injected into the previously

ecclesiastical environment, the Supreme Court has said over

and over and over again, one, religions can't commit fraud

and, two, once they engage in conduct there is a big dichotomy

between belief and conduct. When it becomes expressed, it

is cognizable in a civil or criminal court.

Now, I would suggest to the court that if Your

Honor followed the alternative to that, the logical

alternative, namely that the Fair Game Doctrine is purely

ecclesiastical, and even if it somehow got expressed by mistake

of a staff member who went out and did something in the

temporal world to Mr. Armstrong, aside from hiring private

detectives to smash into his car, assault him on the street,

things that Judge Cole in this court recognized -- aside

from doing things like that, if this court were to adopt

233

the view that words such as are expressed in the Fair Game

Doctrine are, one, purely ecclesiastical and, two, even if

understood by staff members is purely ecclesiastical and,

three, even having that understanding the staff member could

thereafter go out and engage in conduct which was detrimental

to Mr. Armstrong -- if that rule was followed, that the court

could not recognize that type of conduct as being actionable

in a civil court, society would be totally -- we would be

suffering totally from anarchy. There would be no law.

Any religion could adopt any law whatsoever, claim that it

was religious doctrine and lie to, sue, cheat or destroy

or take property on the premise that they are doing it under

the belief that it is religious.

If Your Honor adopted that logical approach,

then either one of two things would happen. Either all of

the religious doctrine in every religion would have to be

cognizable in order to make it somehow legitimately involved

in civil court, or Your Honor would have to do what every

court in the country does and particularize between what

is legitimately religious doctrine on a threshold finding and

what has to do with the civil courts.

Now, with regard to this particular case,

Mr. Armstrong, as the testimony will show, at least initially

in voir dire or, if the jury is waived, before the court

or before the jury, if it is permitted, was in a state of

terror after he left the Church of Scientology because of

what he knew and because he knew that the Fair Game Doctrine

was going to be applied against him. When the S. P. Declare

234

came out and it said very temporal, nonspiritual things,

like he had lied about Hubbard, he had stolen documents and

a host of some 20 or 25 other things that he had allegedly

done, that, as the evidence will overwhelmingly show if we

ever have to prove it from former Guardian's office agents,

former staff members who knew what the Fair Game Doctrine

implies, in Mr. Armstrong's mind subjected him to an immediate,

unended, open attack and assault by anyone in the Church of

Scientology; and that is, in effect, what began. That

is what drove Mr. Armstrong to see me.

So all of that evidence goes to his state of

mind; and if Your Honor wishes to put Mr. Armstrong on the

witness stand right now and ask him all the questions you

want relative to his state of mind, I would suggest to the

court you will see, in very candid terms, where Mr. Armstrong's

mind was at the time all of this took place. But, in any

event, his state of mind with regard to hiring a lawyer when

he knew what he was going to be subjected to, we submit,

was justified. That is one reason why the Fair Game Doctrine

should come into evidence.

Probably more importantly, and the reason we

argued at length in our brief, which I won't completely

reiterate, which was recognized in the Allard case, is that

there are already on this record, going to the fundamental

issues in this lawsuit, namely who owns or had the right

to possess these documents, totally 180 degree inconsistent

statements, not only between the plaintiff and the intervenor

but inconsistent statements on the part of the intervenor

235

herself, all of which goes to the issue of credibility.

Now, the sequel to the Fair Gage Doctrine, which

I don't intend to introduce into evidence, but which fleshes

it out a little bit, is called TR-L, Trained Routine for

Lying under oath. It is a written policy of the Church of

Scientology where Guardian's office agents or witnesses are

drilled on horn to lie under oath. It has been recognized

and introduced in other judicial proceedings.

236

It is a formal training procedure. In fact,

I will tell the court right now that every witness who

appears on this witness stand for the Church of Scientology

will have gone to witness school and will have been drilled

in that policy.

MR. LITT: Your Honor, this is really out of hand.

I prepared these witnesses and that is false. I am the

person who prepares the witnesses.

Mr. Flynn has no right to make these kinds

of allegations. This is just out of control. I don't

have anything else to say.

THE COURT: I don't know whether it is in control

or out of control in a sense because, I suppose, this may

be the subject of another in limine motion as to whether

he is permitted to cross-examine these witnesses on the

subject. If he has a reasonable basis for believing this

is the truth, it may be he is entitled to go into it. I

don't know.

MR. FLYNN: Some of my basic witnesses, including

probably the most significant witness in this case, was

drilled and went to witness school for the IRS proceeding

in which she didn't pass witness school. They dropped

her as a witness.

But in any event, the Fair Game Doctrine says,

"Lie to and cheat." It is hard for the court, I am sure,

to try to comprehend in a realistic manner that someone

could really believe that an enemy, a suppressive person,

can justifiably be lied to and cheated, but it is the policy

237

of the Church of Scientology to lie and cheat enemies as

a matter of course.

That is why the Judge, I submit, in the Allard

case introduced it on the issue of credibility because

the witnesses in that, just as Mary Sue Hubbard will testify

here, and other witnesses for the Church of Scientology

will testify here, are entitled to as a matter of policy to

lie to enemies of the church, of which Mr. Armstrong

is one of the top enemies in the world now.

So, on the issue of credibility the Fair Game

Doctrine, I submit, should come into evidence if we can

make a prima facie showing that it is the policy of the

organization to lie to Mr. Armstrong and/or lie, period,

and I submit to the court that we will be able to make an

overwhelming showing to that effect if that is necessary.

So, under the Allard case we submit on the

issue of credibility it is admissible, and again on that

point, that issue was fully resolved by the California

Court of Appeal with regard to its admissibility.

The claim that Mr. Litt made at the outset

of this proceeding that the First Amendment issue was not

raised with respect to that is simply shown by a reading

of the Allard case, which I don't have in front of me right

at the moment, but right at the beginning the paragraph

or two right before where the court is talking about the

credibility, that paragraph relates to religious doctrine.

Right at the end of where the court is talking

about religious doctrine, it is talking about the

238

introduction of the Fair Game Doctrine goes back into the

same consideration, and says that it is not inadmissible

because it was religious doctrine.

So, given all of that, your Honor, we submit

that on the state of mind and on the credibility of the

witnesses, the reason we are in this courtroom is because

of the Fair Game Doctrine.

THE COURT: Okay, Mr. Litt?

MR. LITT: Well, let me start out with the inconsistent

statements. The inconsistent statements that Mr. Flynn

refers to are inconsistent statements, and there are such

inconsistent statements made because Mr. Armstrong took

the documents and nobody else knew what he had except him.

So when the church first filed the action, it said they

are our documents. It turns out that most of them were

Mr. Hubbard's documents, so then the church changed based

on Mr. Armstrong's testimony and said, "They are

Mr. Hubbard's documents." And that is this major inconsis-

tency. This is the exemplification apparently of the policy

of lying that Mr. Flynn is referring to.

Now, we really have to break this up into two

parts. There is an evidentiary part and there is a First

Amendment part. The defense wants to say and presumably

this would apply to any bad, quote bad organization that

they are bad, and they have bad policies and those bad

policies are to rob. Therefore, we can show that these

have these bad policies to rob in a burglary prosecution.

What is the difference?

239

Somebody is a member of an organization, gang.

This comes up quite a bit in criminal cases, a gang member-

ship, and the cases generally in discussing something as

attenuated as that, just membership in a gang for purposes

of showing therefore that they are more likely to do this,

it is not permitted just as an evidentiary matter.

What Mr. Flynn really lays out here is he wants

to say they have a policy to do A, and therefore they did

A. Well, it doesn't work that way. Prove A.

You don't prove A by proving a policy to do A.

It is not habit or custom evidence. You can't use habit

or custom which talks about routine activities as an eviden-

tiary theory to admit policies, so that the first problem

that exists is that the -- this type of evidence which

is, I think the court has heard enough to know, is extremely

highly-charged and extraordinarily prejudicial is being

used to substitute for proof of facts. It is really an

effort to say that any allegation we make is true because

look at this policy. That is the purpose. That is the

effect of it, and it is, I don't care if this were not

a religious organization, and I don't care if the policy

were go after enemies in the second World War.

The impact of that is overwhelmingly prejudicial.

It is not permitted to prove acts through policies except

in extraordinary limited circumstances which do not apply

here, but that is not -- that is only half of the problem.

Mr. Flynn refers to the Allard case. The only

thing I can say about the Allard case is that the full

240

presentation of the religious context of this was not presented

to that court, and frankly I am not presently prepared

to do it fully, but I will make a partial offer of proof

and we will supplement it so it, at least, is in the record

in this case. But I would like the court to be aware.

Mr. Flynn quotes from a one-paragraph statement

in a policy letter of Mr. Hubbard made in 1967. Now I

want to show that the court under the context of this policy

letter which is pulled out of context and which intrudes,

as I will show, into religious belief and doctrine. I

want to quote from the first mention that at least I have

been able to determine of this in Scientology materials.

It is from a policy letter of 1 March 1965 called

"Suppressive Acts. Suppression of Scientology and Scientolo-

gists. The Fair Game Law."

Now the court should understand. the very title

shows the problems that we face. "Suppressive acts" are

Scientology terms. They are religious terms. They refer

to acts that within Scientology are considered against

the interests of Scientology.

241

There are a lot of things there. For instance,

testifying in court against a Scientologist, without opposing

it, is considered a suppressive act. Okay. Scientology,

as many religions, just using that one example, they have

an internal justice system; and you must make recourse to

that within Scientology. You do not sue Scientologists in

the civil courts. Those disputes are to be resolved

internally. The Jewish tradition was identical, as one

example.

Now, this document says, this first mention of

Fair Game says, "A suppressive person or group is one that

actively seeks to suppress or damage Scientology or

Scientologists by suppressive acts. Suppressive acts are

acts calculated to impede or destroy Scientology or

Scientologists." And it goes on at great length, which I

am not going to read.

(Reading:)

"A suppressive person or group

becomes fair game. By fair game is meant

without right for self, possession or position,

and no Scientologist may be brought before

a Committee of Evidence or punished for any

action taken against a suppressive person or

group during the period that that person is

fair game. A Committee of Evidence may be

called by any convening authority who wishes

more concrete evidence of efforts to suppress

Scientology."

242

And then it talks about amnesties for people

declared fair game. The court should understand that fair

game refers mainly to Scientologists.

In a later policy letter it talks about the fact

that for commission of certain Scientology crimes or

suppressive acts that one can have cancellation of

certificates, cancellation of classifications and awards

and can become fair game.

Then it goes on to say, in another policy letter

written by Mr. Hubbard also in 1965 -- he says that "When

a person announces he is no longer a part of a group, he

has rejected the group. He has also rejected its codes and

rules. Of course, he has also rejected the protection to

which he was entitled as a group member. It does not make

sense to extend the protection of the group to the person

seeking to destroy the group. That is like encouraging a

disease. Hence, we have a fair game law."

And then it goes on to talk about -- let me see.

It goes on to talk about the problem of sort of making this

policy too expansive. It says, "Students or PC's" -- that

is a reference to PreClears -- "who seek to resign or leave

courses or sessions and refuse to return, despite normal

efforts, become suppressive of that course." And then in

this context it talks about the fact that in such cases there

may be a cancellation or the fair game law may be invoked.

Now, I am reading these to give the court a sense

of the context of this Fair Game Doctrine, which we will --

I don't have it yet. The case has a lot of things going.

243

We can demonstrate, and we will be prepared to demonstrate,

that the type of policy that I am describing here is a typical

religious policy that is not unusual.

In another document from 1965, a policy letter

from Mr. Hubbard, it states, "Only when this," referring

to a waiver or quitclaim, "is signed may the student" --

this is referring to a Scientology student -- "have his course

fee returned, but no other fees, as he accepted that service.

The ex-student should realize this makes him fair game and

outside our justice codes. He may not have recourse of any

kind beyond refund and after signing can only return to

Scientology as per policy on fair game."

In another document it says, "Civil court

action --" remember that I said that Scientologists could

not be sued by other Scientologists. It says, "Civil court

action against S. P.'s to effect collection of moneys owed

may be resorted to as they are fair game."

Then in a document from the end of 1965, entitled

"Suppressive Acts, Suppression of Scientology and

Scientologists, the Fair Game Law," which replaces the document

that I began with, it says, "By fair game is meant may not

be further protected by the codes and disciplines of

Scientology or the rights of a Scientologist."

Now, let me read to you from the testimony of

Gerald Armstrong, not in this case but in another case where

he was being called as a purported expert, among other things,

on fair game. This is from the case of Cooper versus Church

of Scientology. It is pending in this district. On what

244

the meaning of the doctrine itself is, not on what he says

the church does but on the meaning of the doctrine itself,

in answer to a question by me, his answer was the following:

(Reading:)

"So, okay. I would say these two

things. He," referring to a suppressive

person, "who has been declared has no rights

as a Scientologist; and a Scientologist who

commits acts against him is not actionable

within the Scientology justice system,"

although I will tell the court that that is no

longer true. But that is his description.

"So that pretty well covers the

attitude or the direction that is given toward

the handling of a suppressive person, and

that direction or attitude is fair game."

Mr. Armstrong says that as to what the doctrine

was it is what I have just said. Now, the policy that

Mr. Flynn is so fond of quoting is not a policy that is on

fair game. In fact, it is from a policy which has since

been cancelled which talks about penalties for lower

conditions.

There are various conditions within Scientology.

I hope the court is getting the sense of the context in which

we will deal with this and what Mr. Flynn is asking us to

have to put on trial here. That is why I am going through

this with the court, and this is really only scratching the

surface.

245

These are the religious writings that guide the

Church of Scientology that I am now having to interpret for

this court, and this is only an indication of what it is

and why it cannot come into evidence. This policy is not

a policy on fair game. It is not a policy on suppressive

persons. It is not a policy on suppressive acts. It is

a penalty on various conditions, conditions relating to whether

or not the person has questions or reservations. There have

been written over the years by Mr. Hubbard various policy

letters that talk about different conditions, and they are

states of mind in relationship to Scientology; and one of

those conditions is the condition of enemy. A person can

be declared, within Scientology, an enemy and remain a

Scientologist. And if we have to, we will present evidence

from people who have been declared and are Scientologists

today.

246

So in this context of the conditions being

material in relationship to state of mind regarding

Scientology in a document entitled "Points For Lower Conditions"

it states:

"Mini SP Order. Fair game may be deprived

of property or injured by any means by any

Scientologist without any discipline of

the Scientologist."

Then goes on: "May be tricked, sued or lied

to or destroyed."

The four words that I can assure the court

I have heard more times since I have been involved in Scien-

tology litigation than any other four words one could name

because it is grist for the mill of anybody who wants

to be involved in litigation with the church. You take

these words, you take them out of context. You throw

them out. You frighten people. You say that this

organization has a policy of telling people to go out

and destroy anybody who is an enemy.

It is so far -- this categorization which

is no longer -- if the court wants, and I will just represent

at this point so i can cut things short, that I can go

through and track the later descriptions of enemy which

do not use this language. It is true and the Fair Game

Doctrine that is, the use of the term "fair game" was

canceled, and Mr. Hubbard said quite straight-forwardly,

"It has an adverse public relations effect," meaning that

it gets misconstrued.

247

The doctrine that I have described, the doctrine

that says that Scientology will not provide access to

its internal systems for those who are opposed to it remains

true.

So, in that sense what Mr. Flynn says is right,

the real Fair Game Policy hasn't been canceled. What

it meant hasn't been canceled with one modification, which

has to do with the fact that any crime committed by a

Scientologist today is actionable within Scientology.

I have not put forward at this point the materials

that we will, if necessary, provide to the court from

religious experts, from people who have been through this

process, and this was not prepared in Allard, your Honor.

I am sorry. It simply wasn't. What I have just told

the court and the context of this was simply not presented.

I have checked and there is no indication

that a serious presentation and explanation and offer

of proof of the First Amendment elements of the doctrine

were involved.

If this doctrine is allowed to be introduced,

you are opening the door to the introduction of religious

doctrine. If they want to prove fact A, let them prove

fact A. That is the normal course.

Now, the other theories, this is the real

sticking point, especially in light of the court's rulings,

Mr. Armstrong's state of mind is relevant. Mr. Armstrong

therefore can say whatever he thinks. He can distort.

He can refer to religious doctrine. He can do anything,

248

and somehow it becomes relevant because whatever is in

his mind is all of a sudden all right.

The court must place some limitations on that,

at least where it intrudes into First Amendment issues

because you will be requiring us otherwise to try in this

court the meaning of religious doctrine.

The court cannot -- we have cited cases, Serbian

Archdiocese, there is a whole line of cases. You cannot

try religious doctrine. This court and a jury sitting

there cannot determine what that means. It is not allowed,

and yet Mr. Flynn stands up and says this is the most

important thing. Taking the church's religious doctrine

and putting it on trial is the most important thing for

their defense.

Well, if that is the most important thing,

then one or another thing is going to happen. Either

this court is going to allow gross invasion of constitutional

rights and First Amendment rights or the court is going

to require them to prove a case and to prove this affirmative

defense in the normal way and not by resort to generalized

claims based on internal doctrine about what this organization

does and how bad it really is.

THE COURT: Well, gentlemen, I guess if I were to

rule in some ways, I would be doing things that were prepos-

terous, according to Mr. Flynn, and if I rule the other

way, I will be doing things that are totally outrageous

and incredible and stamping on the First Amendment. So

I really probably should abdicate, but I don't want to

249

do things that are either preposterous or stamp on the

First Amendment.

Be that as it may, it seems to me that we

come right back down to where we were and where we have

been. Once you start on a logical train, you follow that

logical train and it seems to me it is one thing to talk

about religious principles. It is something else to talk

about how they are applied in practice and how they are

interpreted in practice and whether it results in conduct

which may be criminal or tortious.

It seems to me that obviously the Allard case

stands for exactly what is presented there and nothing

more or nothing less. On the evidence that was presented

there it was permissible to receive that evidence in evidence.

There was no problem. The Court of Appeal bought that.

This is a different case and there may be

different problems, but it seems to me coming back to

why Mr. Armstrong took these particular documents and

turned them over to his lawyer and/or amassed them and

turned them over to his lawyer, getting into his state

of mind, the reasonableness of his conduct, whether he

acted in good faith, whether he was really taking them

for some other purposes, whether or not as an objective

matter there was some reasonable basis for his belief.

So, it seems to me that to the extent that it can be supported

through testimony that this is something other than simply

a religious principle, that the evidence would be admissible.

So, to the extent that it affected, amounted to conduct,

250

I would assume we are talking about not principles but

how they are actually applied in practice, in reality,

there may be two sides to the coin, but it seems to me

that is not something about which I can exclude evidence.

So far as credibility of witnesses is concerned

of course, any time you permit evidence, you are going

to have evidence that bears upon the subject of credibility

of witnesses. Obviously this language that was in this

1965 or whatever certainly would be very detrimental to

any witness' credibility if he said I believed that. I

accepted it and followed it.

251

I suppose if we are going to get into whether

or not they should be received on the matter of credibility

of witnesses, as distinguished from previously stated, there

probably should be some evidentiary presentation before we

get into that before any jury; because if that doctrine didn't

have any factual basis to how Scientologists act in relation

to somebody who is given a suppression order, then, of course,

the prejudice would surely outweigh any probative value that

goes to credibility of witnesses.

Again, of course, I don't know what is in these

documents that are under seal. Since the source of any of

these policies is Mr. Hubbard, if there is something suggested

that there is some documents that are under seal in which

he takes a contrary position on some of these purported

changes, I presume that that would be admissible as to what

this concept, this doctrine, means in practice. Certainly

the Fair Game Doctrine, as you have expressed it, is certainly

very ambiguous. Certainly one could interpret it in various

ways.

If the person who is declared suppressed or an

enemy or subject to the Fair Game Doctrine -- if people within

Scientology who deal with him are not subject to discipline

under the rules of Scientology, that suggests or one

interpretation could be that they are free to do whatever

they want to do so far as the church is concerned in dealing

with them. They cannot be disciplined within the Scientology

system.

So, again, as it relates to how Mr. Armstrong

252

behaved and what he did, why he did it, I think that his

knowledge of the doctrine as it applied in practice and in

principle and things which may have occurred, or at least

his version of what nay have occurred, to him would be

admissible. It is being offered as to credibility. I think

we will have to have some type of hearing outside the presence

of the jury as to whether any of these particular phrases

would have application.

I would also indicate that if there is any thought

of cross-examining any Scientology witnesses on this witness

school, again, this may have to be something which we would

have to take up outside the presence of the jury to be sure

there is a factual basis for it or something which would

warrant going into that subject; because certainly that would

be very prejudicial to present to a jury if it cannot be

proved up.

MR. FLYNN: I wouldn't ask any question like that,

Your Honor, until I cleared it with the court.

THE COURT: All right. No. 9, Suppressive Person

Declared or Declare either in relation to Gerald Armstrong

or in general, I think we have pretty much thrashed that

out already.

Mr. Flynn has indicated he wants to present the

fact that his client received this communication, he was

a suppressive person declared; and his knowledge or beliefs

as to what that meant, it seems to me, would be relevant

and material. Just in general as to other people I don't

think it would be have any bearing, except insofar as

253

Mr. Armstrong was aware of it and had some reason to believe

that it might apply to him. So I will deny it in that sense.

The use of "Black Propaganda" -- let's take a

recess before we get into that, we have been going for an

hour and a half or so. Fifteen minutes.

(Recess.)

254

THE COURT: All right. We are back in session. We

were talking about the subject of Black Propaganda.

Is that something you plan to get into,

Mr. Flynn?

MR. FLYNN: I don't know at the present time, your

Honor. It depends on what evidence the plaintiff intends

to introduce to refute the evidence of the Suppressive

Person Declare.

The policy basically says, and I have got it

here, that you take germs of truthful information and you

add on them false information, and you disseminate it to

destroy the person's reputation. It is a policy that is

extensively followed, a very important policy of the Church

of Scientology.

In order to keep the issues more focused, I

don't intend to get into it unless they try to introduce

evidence that some of the things in the Suppressive Person

Declare are actually true.

THE COURT: Okay. I will grant the motion with the

proviso that if you desire to get into that, you have to

do it outside the presence of the jury and establish a

basis for it.

11. Alleged control by L. Ron Hubbard of

Scientology organizations and finances.

MR. FLYNN: This is one of the major reasons that

Mr. Armstrong was declared suppressive, and one of the

major reasons he came to me, and one of the major reasons

that the documents are important particularly with regard

255

to item number 13, and probably the key witness in the

case, Laurel Sullivan, Mission Corporate Category Sort-out.

What we intend to do is simply try to introduce

evidence as to in a narrow way his course of conduct and

his state of mind with regard to the documents as to why

he came to me. There is extensive information in this

document relative to this issue. Mr. Hubbard issued a

dispatch in late 1979 and early 1980 when the IRS case

was ongoing, there was this fear of the shredding operation,

the fear of a raid which I have already explained to the

court which was the purpose of the shredding operation,

to take all information that connected Hubbard to the church

or particularly to organizations and finances in order

to prevent the IRS and the Justice Department from getting

the materials.

Now, because of that, they then entered into

the Mission Corporate Category Sort-out where they destroyed

some 600,000 documents which totally showed that Hubbard

did control the church and which related to the funneling

of approximately $250 million to Lichtenstein bank accounts.

Hubbard issued a dispatch saying that he had

resigned in 1966 and that he had had absolutely no involvement

with the church and had received no church funds since

that period of time other than $35,000 a year as a consulting

fee. Well, the documents, of course, prove total control

by Hubbard during this period of time, and the witness

who was in charge of MCCS, Laurel Sullivan, Mission Corporate

Category Sort-out, which there are two very important tape

256

recordings on file in this court, these tape recordings -- they

are having a meeting --

THE COURT: Well, we talked about this being a possible

attorney-client privilege.

MR. LITT: That is correct, your Honor.

MR. FLYNN: We claim it is waived because the tape

recordings were given to Omar Garrison, and, in fact --

MR. LITT: By Mr. Armstrong, your Honor, after he

left the church when he had these tapes that he had gotten

while he was a church staff member which were thought to

be blank. He found out what was on them. That is his

testimony.

MR. FLYNN: Your Honor, the evidence will be that

as part of the collection of documents they gave these

tape recordings to a journalist. The case law, and I don't

have it right in front of me, but I submit to the court

the case law is very clear. First of all, the party has

got to assert it.

Let me back up further. First of all, it isn't

even an attorney-client meeting. Let me explain to the

court what it is since we are getting into it.

MR. LITT: Your Honor, he cannot go into the conver-

sation itself until he establishes the waiver. You cannot

violate the privilege in order to establish that no privilege

exists. He must prove by extrinsic evidence --

THE COURT: All I think he is saying is he wants

to show that it wouldn't be privileged.

MR. LITT: He wants to show by the contents of the

257

conversation.

THE COURT: No, I agree you can't do that. You can't

show it is not privileged by the contents. You have to

first determine that it is either privileged or not privileged

and if it is not privileged or it is privileged and then

waived, then you get into the contents.

MR. FLYNN: I will confine myself to the argument

without content itself.

What it was, it was a meeting of Laurel Sullivan

and Alan Wertheimer, an attorney who appeared in behalf

of L. Ron Hubbard.

On behalf of the church an attorney named

Charles Parsell and several other individuals.

MR. LITT: Including two other attorneys.

MR. FLYNN: Including several other attorneys.

They were negotiating, one attorney representing

Hubbard, Wertheimer; the other attorneys representing the

church, and if the court listens to the tape this will

be very clear. They were negotiating how to sort out and

without getting into the contents, they were negotiating

how to sort out Hubbard's potential liability.

MR. LITT: That is getting into the contents and

the point -- the prima facie issue is that it was a meeting

by Mr. Flynn's own description of attorneys and clients

representing different parties. He claims that there was

a fear of litigation according to Mr. Flynn. He just said

it a moment ago and now he wants to halfway go into the

contents.

258

When you have a meeting between lawyers and

clients, whether it is one lawyer with one client or various

lawyers with their clients, it is privileged; and that is

the end of the discussion, and the only issue left is waiver.

THE COURT: I am not so sure about that. It depends

on the circumstances. If they are up there negotiating a

contract at arm's length, I don't see how you can --

MR. LITT: It is not a contract, Your Honor. It related

to the whole -- Mr. Flynn claims that there was issues about

litigation. At the time there was Internal Revenue Service

litigation going on with respect to the Church, in which

Mr. Hubbard was a prominent personage raised, although he

was not a party to the IRS litigation. And we have a

declaration that has been submitted to the court from a woman

named Lisa Britowich, who was a staff member of the Church

at the time, who establishes that this meeting related to

the whole question of the relationship between L. Ron Hubbard

and the Church, and the litigation issues involving any

liabilities that may face one party or the other in relation

to expected litigation or existing litigation.

THE COURT: Where is that declaration? We have so

many different documents here.

MR. FLYNN: If I could just correct one thing, Your

Honor. You will hear right in the tape recording --

THE COURT: It may be that I won't be hearing the tape

recording if I conclude that it is privileged and hasn't

been waived. That is the problem.

MR. FLYNN: They were negotiating movie rights and

259

what to do with $10 million, and there was an attorney who

was clearly representing one party, namely the church, and

an attorney clearly representing another party, namely

Mr. Hubbard; and they were negotiating these rights, and

then they got into the issue of what to do with these funds

illegally funneled to a corporation called Religious Research

Foundation.

MR. LITT: Your Honor --

THE COURT: Now we are getting into the substance,

and we are talking about whether this is privileged or not.

I don't want to hear about it if I conclude there is a

privilege.

MR. LITT: On the question of where the declaration

is, unfortunately, I thought it was attached to the subject

matter motion in limine. It is at least not attached to

my copy, but it should have been attached to the court's

copy. If it wasn't, then a mistake was made; and we can

provide the declaration to the court and would ask that any

further discussion of this wait.

THE COURT: You have an item No. 2 on your exhibits

in support. This may be it. Let's see if I can find it.

MR. FLYNN: I can tie more direct relevance in, too,

Your Honor.

THE COURT: I finally found it at the bottom of this.

I have read this declaration, and I would think

this would certainly create a prima facie finding or basis

for finding that there was an attorney-client privilege.

So I will sustain the objection at this point.

260

It doesn't mean to say that if other evidence

were presented to me or a question of waiver -- that presents

another problem. If Mr. Armstrong had these documents with

permission and was authorized to turn them over to third

parties, I don't see that there could be any --

MR. LITT: That is not the case, and it is not his

testimony, Your Honor. His testimony is that he was given

what were thought to be blank tapes to use as a Scientology

staff member in his archives post. After he left the church

he took the tapes with him and inadvertently played them

and found out that they had these conversations on them,

and he gave them either to Mr. Garrison or Mr. Flynn. That

was his testimony. That is not a waiver. A waiver has to

be a knowing and intentional foregoing of the privilege.

THE COURT: I know that, a knowing, intentional

relinquishment of a known right. And if he didn't have

authority to have them and wasn't authorised to make a waiver

on their behalf, the privilege can be asserted.

MR. FLYNN: Your Honor, if I could just -- I will accept

Your Honor's ruling, but just bring a couple of things to

Your Honor's attention for when we get into the evidence.

These tapes are quite important to our case for

a number of reasons, and I believe the evidence will be totally

contrary to what Mr. Litt just said. But without getting

into it, one of the reasons that the problems came to a boil

when Armstrong left was this document I have in front of

me which is attached to some of the -- it is attached to

the record. It is what they tried to make him sign the day

261

he left the church: And the first few sentences state, "I

recognize and understand that neither Ron nor Mary Sue Hubbard

receive any compensation or remuneration from training or

processing by the Church, that neither Ron nor Mary Sue Hubbard

are officers or directors of the Church, and that neither

of them are in any manner responsible for actions of the

Church."

MR. LITT: Your Honor, can I ask what we are arguing?

THE COURT: This goes, I guess, to this subject of

item No. 11, alleged control by L. Ron Hubbard of Scientology

organizations and finances.

MR. FLYNN: So he was supposed to sign this under oath;

and then he could be made subject to, apparently, a $10,000

legal penalty if he violated it by giving out information

that was contrary to what he had signed. Well, he knew,

because of what he had been collecting for a year and a half

and because of these tape recordings, that it was just totally

false. He knew that L. Ron Hubbard had been receiving millions

of dollars for years, over $200 million, in fact.

MR. LITT: Your Honor, this has nothing to do with

anything. I don't understand what this has to do with.

THE COURT: Let counsel finish before you interrupt

him.

MR. LITT: All right.

MR. FLYNN: So he knew that they were making him --

the organization, the plaintiff here, was trying to make

him sign a document which he knew was totally false. That

is one of the reasons he left the organization, and that

262

was his state of mind with regard to the type of activities

that the organisation engaged in and would engage in against

him in the future.

But, in any event, we can leave this issue at

the present time, I submit the evidence from the person

who ran the MCCS Mission, Laurel Sullivan, will be contrary

to what Mr, Litt has just informed the court. The evidence

from Mr. Armstrong will be contrary, that it was a negotiation

for movie rights between two arm's length parties.

263

The tape recordings themselves say that.

MR. LITT: Your Honor --

THE COURT: Well, I am not considering --

MR. FLYNN: And we have got the issue of waiver.

THE COURT: Well, at this point I will grant the

motion at this time. It doesn't seem terribly relevant.

We get into a trial as to who controls the

Scientology organization and finances. At the same time,

subject to the same proviso, the court will reconsider

if something else develops and if we have other testimony

which would cause the court to change its position on

the privilege problem.

Number 12. Biographical information concerning

the history or background of L. Ron Hubbard, Mary Sue Hubbard,

or the religious movement of Scientology.

Well, I gather that you desire to present evidence

concerning what information Mr. Armstrong gleaned from

the documents concerning the background of Mr. Hubbard

and Mrs. Hubbard and/or the religious movement of Scientology

as the basis for his actions?

MR. FLYNN: That is correct, your Honor.

THE COURT: All right. Well, we have batted this

around enough. I know that Mr. Litt doesn't feel it is

appropriate. This may be information that would be

characterized as a biography of the church, hagiography

of the church. I probably mispronounced that, depending

on which syllable you stress.

At any rate, it seems to me in some context

264

it totally would be inappropriate and it seems to me in

the context of this case it would be appropriate, so I

will deny that request.

13. Reference to the Mission Corporate Category

Sort-out, or the activities or conversations associated

therewith.

MR. LITT: That is in large part these tapes that

Mr. Flynn was referring to, but it is our position, and

if Miss Sullivan is going to testify we are going to be

inserting attorney-client privilege, information that

she had was obtained in the context of acting in respect

of legal interests involved. It was a mission to deal

with various legal matters. That was integrally related

with assistance from counsel and advice of counsel on

a variety of legal matters.

THE COURT: Well, does this all have to do with

what was said on the tape in this meeting?

MR. LITT: Well, I think that is the heart of what

they want to do, although I don't know whether they intend

to elicit other information from Miss Sullivan in addition,

and if they do, we want to make known there is an attorney-

client privilege there as well.

MR. FLYNN: It can be very brief if it becomes relevant

and at this point in time it is a question in my mind.

We will tie it into the documents that Mr. Armstrong was

supposedly forced to sign.

I should inform the court at this point that

Miss Sullivan has testified already before several

265

governmental agencies and there are ongoing criminal

investigations involving Mr. Hubbard and her testimony.

That evidence of a crime or the commission of a crime

or a crime to be committed in the future which, in part,

is what is involved in these tape recordings, is not protected

by the attorney-client privilege in any situation, but

regardless --

MR. LITT: Your Honor, this is not relevant.

MR. FLYNN: She's already --

MR. LITT: Just a moment. This is the fifth time

I have had to stand up to object to indirect reference

to the contents of these tapes.

THE COURT: That might be a separate basis and might

not be privileged.

MR. LITT: The court has found it is privileged.

Mr. Flynn, in order to establish the court rule, has to

rely on extrinsic evidence and what he does is he keeps

referring to these tapes. He continues through indirection

to do it, and it should not be permitted.

THE COURT: Let's leave it at this time.

At this point you don't intend to go into

it. If you intend to go into it with a witness, you should

probably take it up outside the presence of the jury before

we get to this testimony and have a preliminary ruling

on it.

14. Use of hearsay articles, reports and/or

memoranda containing critical statements concerning the

Church of Scientology, the religious movement of Scientology,

266

the L. Ron Hubbard or Mary Sue Hubbard.

Do you have any intention of getting into

this business?

MR. FLYNN: The issue is this, your Honor, on the

invasion of privacy count, if the material is already

in the public record, then we have the -- I believe under

the invasion of privacy cases we have the appropriate

defense of showing that the material is already in the

public record.

Now, you could put a stack of materials 10 feet

high in front of the court which relate to the critical

statements concerning Scientology and L.Ron Hubbard and

Mary Sue Hubbard which is what we would attempt to do.

For example, this report to the City of Clearwater is

some 40 pages in length with regard to information that

is most germane to this case that has a lot of information

that is under seal in it.

The difference between what is under seal

and what was already in the public record to some degree

is that most of this material is in Hubbard's handwriting

and authenticated as such, and that the organization has

been claiming for years that what has been in the public

record is false.

For example, Mr. Litt said to you yesterday

that if the church wrote the dust jacket on these books

that it published, then Mr. Hubbard shouldn't be held

responsible for it.

Well, among the documents under seal, and you

267

will see this from Miss Sullivan, is that Hubbard wrote

the dust jacket and the handwritten biographical summaries

are written by Mr. Hubbard.

THE COURT: In any event, I think we have to wait

on this subject to hear what the plaintiff's contentions --

what are you going to claim actually on how Mrs. Hubbard's

privacy has been invaded, then you are in a position to

perhaps defend against it.

MR. FLYNN: I agree with your Honor.

MR. LITT: I think we have to understand what we

are dealing with here.

Let me take this one example, the Clearwater

report. This report is a report written by Mr. Flynn.

Mr. Flynn was hired by the City of Clearwater to investigate

the Church of Scientology because the City of Clearwater

preferred that the Church of Scientology not be in the

City of Clearwater.

Extensive legislative hearings put together

by Mr. Flynn were held. In these legislative hearings

every imaginable derogatory statement about Scientology

was made. Legislation proposed by Mr. Flynn was passed

and subsequently declared unconstitutional by the

United States District Court for the middle district of

Florida.

MR. FLYNN: That is inaccurate.

MR. LITT: That is completely accurate. I will

give the court the opinion.

THE COURT: I am not going to go down there.

268

MR. FLYNN: It wasn't my legislation.

MR. LITT: No, yours was rejected.

THE COURT: I don't really -- we are beating a dead

horse, but go ahead.

MR. LITT: The problem is, your Honor, that if there

are documents, the only thing that they can do on the

public record is not say all of these things have been

said about L. Ron Hubbard or Mary Sue Hubbard. Therefore

the documents are not private. That is just not permissible

because as long as we are not relying on the privacy of

the contents of those documents, then that is irrelevant.

Therefore, all they can do is the following: If they

have a document that is under seal and that is also in

the public records, for example, Mr. Flynn has claimed,

and I don't know whether this is accurate or not, that

he had from independent sources Mr. Hubbard's Naval records,

and that he submitted them to the Clearwater City Commission.

These were also among the materials given

by Mr. Armstrong to Mr. Flynn.

269

And, indeed, if they can make the foundational

showing, we will stipulate that that particular document

under seal was -- a version of it had been publicly

disseminated. Other than that, this is not, in any conceivable

way, relevant; and this report that he wants to introduce

on the theory that you have no privacy because he has made

so many claims about you, it is unbelievable. He wants to

put in a report that wasn't subjected to any judicial

examination, with all of these charges and claims and

statements framed by him as evidence in some form in this

case, when it can't conceivably go to the privacy issue

because the documents are private and the only way that they

can show that the documents aren't private is on a document

by document basis, by showing that this document is in the

public record.

So it seems to me that the limitation that the

court should impose is that what they can show with respect

to public information is simply the issue of whether or not

a particular document was in the public record. If the issue

is that the Church of Scientology is a public figure, then

we can deal with whether or not there needs to be any evidence

on that because I don't really dispute -- I am not stipulating

at this point, but that problem can presumably be resolved,

if that is the theory of its admissibility.

THE COURT: Well, counsel, it seems to me that the

only person here that is suing for invasion of privacy is

Mrs. Hubbard; and certainly nothing in the abstract would

be admissible here until we first find out what Mrs. Hubbard

270

says has invaded her privacy.

Then if counsel wants to present something on

the theory that this is already in the public domain, I will

consider it outside the presence of the jury. Then you will

have an opportunity to object and counter it. Obviously

a person can't create his own, I suppose, defense on this

subject by speaking out on some perceived problem, thereby

making it a matter of public record.

But there are other things, certainly, in the

public record, I am sure, concerning this case. The problem

is really what is the plaintiff's contention going to be

and what can the defendant, by fair means, attempt to either

deny it or contradict it or meet it. So we will deal with

that in due course.

At this point the motion is granted.

Next is a reference to Mr. Hubbard's unavailability

or the fact that he is not a witness in this case. Well,

I assume the jury will make that determination themselves

if he is not called as a witness. But his unavailability,

I don't know whether anybody plans to refer to that or not.

MR. LITT: Let me explain. I am assuming that -- and

I could be wrong -- that Mr. Flynn intends to argue why

Mr. Hubbard is not here. The court should be aware that

in this probate case that I discussed earlier there was

extensive evidence that Mr. Hubbard was in seclusion, and

the question was whether he was a missing person. The court

made a judicial determination that although his whereabouts

were not known to the court that he was entitled to keep

271

his whereabouts unknown as a matter of his constitutional

right to privacy.

Mr. Hubbard has not been in the public for at

least four years now, and what we are raising is simply the

argument that may be advanced as to why Mr. Hubbard is not --

was not produced. We don't want these claims that he is a

fugitive from justice. There is no judicial determination

that he is a fugitive from justice. There is no charge pending

against him, any criminal charge, anyplace; and we are very

concerned that this is going to be one more of the rings

of charges that we are going to face, and we do have and

can provide to the court the statement of findings by

Judge Hennigan that discusses the privacy right of Mr. Hubbard

in that regard.

We would at least like, before any statements

he wants to make in that regard, that they have to be cleared

by the court.

MR. FLYNN: If I could be heard briefly, Your Honor.

First of all, to correct the misstatements in

the probate proceeding, the probate proceeding is very narrow,

"Is L. Ron Hubbard missing for a particular provision of the

California Code?"

L. Ron Hubbard submitted a signed sworn affidavit

to Judge Hennigan the day before Judge Hennigan was going

to rule he was missing. Over a period of some six or seven

months Judge Hennigan continually told Mr. Litt that

Mr. Hubbard should either make himself available for deposition

and/or submit a declaration to the court. And over a period

272

of six or seven months Mr. Litt failed to do so. The day

before the ruling was going to be made, Mr. Litt showed up

with a declaration supposedly signed by L. Ron Hubbard saying

he wasn't missing. That is the only thing that Judge Hennigan

resolved.

This reference yesterday to the adjudication

of the $85 million was entirely incorrect. The only

adjudication was: He is not missing for purposes of this

proceeding because he says he is not missing.

With regard to whether he is a fugitive from

justice, a California court has already ruled that he is

concealing himself from process. So that statement of

Mr. Litt is inaccurate, He is a fugitive from justice in

France, having been convicted of criminal fraud; and he is

currently the subject of several ongoing criminal

investigations. So that statement of Mr. Litt is inaccurate.

273

The issue before the court here is the following:

Who owns these documents? Who has the right to possess

them on at least the conversion count?

Well, Mr. Hubbard has sent a letter to the

court in which he says, "Send them to the Church of Scientology

International." They want to introduce that in evidence

under a state of mind exception to the hearsay rule which

Miss Dragojevic will argue to the court to show that it

is admissible to show what Mr. Hubbard's state of mind

is with regard to who should have the documents. We have

been denied all discovery from Mr. Hubbard because he

is hiding. We have tried to depose him. We have tried

to get judicial approval of the deposition under a particular

provision of the California Code, and we have been unable

to do so. We were thinking of appealing it, but we haven't at

this time.

It it not that he is unavailable. The Federal

Court has ruled that he is hiding. Under Section 412

of the California Code of Evidence there is a provision

which relates to a party having power to produce better

evidence.

Well, the fundamental issue in this case is

who should have these documents. It is admitted by the

parties that these are Hubbard's documents for the most

part. The person who is most appropriate to tell the

court or the jury who should have the documents is

L. Ron Hubbard. We believe that we should be entitled

to a request for instructions to the jury that if they

274

fail to produce Hubbard to testify on that subject, then

an inference should be made against them in the evidence

that they offer according to the language of the code

should be, quote, viewed with distrust because there's

already before the court a false declaration on which

a preliminary injunction has been issued in this case,

and they have already admitted that that declaration,

which was the sole basis for Judge Cole to issue the

preliminary injunction, was false.

Now, they come forward and they say, "Mary Sue

Hubbard should have the documents," or that is what she

says. But in this supposed letter from L. Ron Hubbard,

he never mentioned Mary Sue Hubbard. So we submit that

if they don't produce L. Ron Hubbard to say what should

be done with his documents, Evidence Code Section 412

should allow us the following instruction:

"If weaker and less satisfactory

evidence was offered when it was within

the power of the party to produce stronger

and more satisfactory evidence, the evidence

offered should be viewed with distrust."

So, we submit that the issue of L. Ron Hubbard's

unavailability threads through this entire case and, in

essence, we are in the position of defending a case involving

the documents of a man who Gerald Armstrong worked for

and the man hasn't even come forward and said, "I want

the documents."

THE COURT: Well, I am going to short-circuit this.

275

Time is moving on.

It seems to me that the fact that you have

been unable to locate him to depose him is something you

could present, but he is not a party to this action as

such, and so I don't -- and further, of course, I don't

think it would be appropriate to go into the possibility

of his motivations for not appearing.

I doubt that the United States has any treaty

obligation with France which would require them to extradite

where a person has been tried in absentia. That would

be probably contrary to the fundamental principles of

American justice. So I don't think that that type of

conviction, while it may be very important if he were

to surface in France, would be of any particular great

moment in the United States. The fact that he may be

under investigation by various agencies, of course, that

just gets into the area of rumor, suspicion. We don't

know what they are doing. We don't know whether -- what

his defense might be and so forth, so the fact that he

is not available is something that you can refer to. The

fact that you made efforts to attempt to subpoena him,

to depose him, you certainly are entitled to go into.

If, in fact, the person has a constitutional

right to privacy and to seclude himself from other people,

which is probably something that is true as long as he

doesn't violate any law in doing so, certainly no inferences

could be drawn from the fact that he chooses to exercise

such a constitutional right.

276

The jury can draw their own conclusions. I

am sure they may well do so, but be that as it may, and,

of course, I could not give such an instruction as you

posed, although you may cite it, because he is not a party

to this action and the instruction does not apply to situations

even where both parties have, in theory anyway, in legal

contemplation the equal right to subpoena a particular

witness. Plaintiff can undoubtedly make the same contention

that they have been unable to subpoena him, too. It may

be the jury may not want to believe that, but be that

as it may, it is something that can be touched upon in

argument and it is not something that the court can give

an instruction when both parties have, at least in legal

contemplation, the same equal right to subpoena.

So, the motion is going to be denied as it

relates simply to Hubbard's unavailability or the fact

that he is not a witness. The fact that he is not a witness

is going to be obvious and the fact that he is not available,

if counsel wants to develop that, can be developed.

The plaintiff wants the defendant to make

an offer of proof for every witness. Well, I don't think

I am going to buy that. There may be some specific witnesses

that may be a problem we should go into.

277

MR. LITT: Let me explain the problem, Your Honor.

We will get into this more.

Actually the next section of this has to do with

limiting witnesses who weren't mentioned in discovery.

But the court should understand that the defense

that the court has adopted here is not pled in this file.

The only affirmative defense that exists is a defense that

they were entitled to disseminate, under the First Amendment,

information about Mr. Hubbard.

The defense that this court has provided permission

for is far beyond the pleadings in this case. We have no

idea at this point what is being permitted and what is not

and what the defendant intends to introduce; and we have

no reasonable notice, and we will discuss that problem more.

I am willing to defer it, because I think it

may best be discussed when we have finished all of the motions

and see where we stand at the end. I think that might be

a better way to handle the matter; because some of the other

rulings of the court, depending on what happens, also implicate

this issue. So that would be my suggestion at this point,

rather than my continuing to argue it now.

MR. FLYNN: My only comment, Your Honor, is that I

am defending the case. Unless the evidence goes in, I really

don't know who I am going to call as a witness. I don't

know what the evidence is going to be yet. We listed them

because I understand from Mrs. Dragojevic that under California

procedure we have to list the witnesses we may call. But

it would be entirely premature, I suggest to the court, to

278

go into it at this point because I don't even know who I

am going to call, because I haven't been able to figure out

what their claim is. I don't know what Mary Sue Hubbard

is claiming with regard to invasion of property. It is a

mystery to me.

THE COURT: All right. We will deal with that in due

course.

MR. LITT: I think the next item, Your Honor, which

is also in that same motion is this question of striking

witnesses. It is not listed under the subcategories.

THE COURT: Striking witnesses? Are we going to hit

some witnesses?

MR. LITT: It is actually found in our motion on page

82.

THE COURT: Trial by combat, you mean?

MR. LITT: Well, it looks like you are getting your

share.

THE COURT: Page 82 what?

MR. LITT: Page 82 of the subject matter motion.

THE COURT: The one we just finished?

MR. LITT: Yes, the one you thought we just finished.

THE COURT: All right. I will come back to page 82.

Okay. This court should exclude witnesses because

defendant failed to disclose them through discovery. I thought

I saw that somewhere.

The only problem with that, counsel, is your --

Wasn't that a separate motion?

MR. LITT: No. Miss Dragojevic filed a motion,

279

Your Honor, to strike our witnesses on the ground that she

propounded the question, "Who are you going to call at trial?"

and we said we didn't know. But our motion is different.

THE COURT: All right. Let me look again at it, then.

I don't have your interrogatories and responses.

I am not quite sure when these interrogatories were submitted,

what the answers were, whether there is any motion to compel

further answers.

MR. LITT: There was not a motion to compel further

answers. They answered the questions.

THE COURT: What was the question? What was the answer?

Give me the exact words.

MR. LITT: The question was, "Identify all witnesses

having knowledge about the causes and occurrences set forth

in the complaint." And it was done two months before trial.

There were other more specific ones which they

objected to; and because we were too close to trial, we were

not able to compel. But this question was answered by them

and it listed nine people, only two of whom are on their

witness list. And the thing that I think is of particular

note for us is that the question asked for the causes and

occurrences. We were basically just trying to get a list

of who we potentially had to deal with in the case.

Now, the theory of the defense that has been

put forward here today is that --

THE COURT: Do you want to give me that question again?

MR. LITT: Yes. "Identify all witnesses having

knowledge of the causes and occurrences set forth in the

280

complaint."

THE COURT: You didn't ask him about the answer?

MR. LITT: No, it was not an inquiry about the answer.

It was an inquiry about the complaint.

Remember, the theory that has been put forward

here is that Mr. Armstrong did this because his state of

mind was thus and such and he knew this and he knew that,

and this witness is going to corroborate this and this witness

is going to say that.

The question that we asked specifically asked

for the reasons that he did what are set forth in the

complaint.

THE COURT: If you can read that into it -- I don't.

If I had been sitting in law and motion and they had objected

to that, I would have sustained the objection. It is just

overly broad.

If you want to ask them as to a particular

paragraph or a couple of paragraphs, whether people have

knowledge of these facts, that would be one thing. But the

causes and occurrences in the complaint, when you have got

multiple causes of action by two different parties, I don't

think anybody should be required to just answer that in any

fashion.

MR. LITT: They did answer.

THE COURT: You are asking for sanctions here.

MR. LITT: No. What I am asking for --

THE COURT: Exclusion of people who were not identified.

MR. LITT: Something has to be done, Your Honor. The

281

defense that the court has adopted here vas not pled. These

witnesses were not named in discovery. They were not named

in response to that interrogatory question. They were not

named as having knowledge by Mr. Armstrong about any of the

occurrences in the complaint.

We are now in a situation where, in the course

of discovery, none of these have been disclosed and,

furthermore, the affirmative defense -- much of what the

court has ruled is in issue in this case has not been put

in issue by the pleadings because the public policy affirmative

defense that was asserted was essentially a First Amendment

defense, which was asserted essentially to the equitable

claim and argued around the preliminary injunction to begin

with and lost; and we are now in a posture in this case --

and I am not sure of what I am suggesting to the court --

where if the court is not prepared to strike the witnesses,

then other relief we might request I would just defer. But

I do want the court to be aware of the problem from our point

of view.

There is a substantial problem in terms of our

having notice of what we had to deal with in this case.

282

THE COURT: Well, Mr. Dragojevic, you want to respond

to that?

MISS DRAGOJEVIC: Yes, your Honor. I'd like the

court to know that I looked through all of your answers

to interrogatories and wrote a list that came out with

40 witnesses that we listed throughout the answers to

interrogatories as individuals who had knowledge of various

claims. 29 of these people were listed on our witness

list, so when Mr. Litt indicates that we didn't disclose

these witnesses during discovery, that is inaccurate because

they were listed in answers to interrogatories. Even

though they weren't listed in the answer to that one specific

interrogatory, they were throughout our answers to various

interrogatories.

MR. LITT: Well, I would just point out that by

her own admission, 21 were not.

THE COURT: Well, of course, you asked about the

complaint. I don't know about the answer. There may

have been things that deal with the answer here.

Also, of course, one of our trial setting

conference orders is that they disclose the witnesses.

I guess they disclosed everybody conceivable to avoid

the possibility of sanctions being applied for not complying

with trial setting conference orders. I see this every

day. Because they are afraid of being caught without

being able to call a witness, they list every conceivable

witness.

That presents a problem if you want to start

283

deposing people, but that goes to the character, I suppose,

of our order. Well, obviously I don't -- I am not really

sure. This was an expedited case. It isn't a situation

where the parties have had five years to prepare for trial.

All I can suggest, counsel, I am not going

to make any blanket order precluding witnesses. If they

call some witness that you feel presents an element of

surprise, if they don't appear to you to have any knowledge,

approach the bench and we can discuss it. Maybe counsel can

make an offer of proof if the court feels it is appropriate

at that time.

So, I am not sure what the motion was. Motion

to strike, I guess, is denied.

Well, we have a couple of other motions by

the plaintiff. Intervenor's motion in limine regarding

admission of a prior felony conviction; is that one that

we should take up next?

MR. LITT: That is fine, your Honor.

THE COURT: I have read -- go ahead.

MR. LITT: Oh, that is all right.

THE COURT: I was going to say I have read it, the

motion. My disposition would be that I will accept the

premise that Beagle applies to civil cases and Proposition 8

does not affect civil litigation. It seems to me this

particular type of a felony would be one which does relate

to honesty and integrity, and that it would be a proper

felony for impeachment purposes under Beagle.

Generally speaking, you can only -- that is,

284

the person who is offering it can only go into the fact

of the conviction, the date and the general nature of

the conviction. If the other side wants to develop more

in detail, they may do so in litigation.

I don't know. Counsel did mention yesterday

that one of the reasons for what occurred was that Mrs.

Hubbard was apparently no longer available because of

the fact that she was confined.

MR. LITT: That is not so, your Honor.

THE COURT: I mean, that is a factual matter. I

don't see any problem with letting that evidence in if

they are going to know about the conviction anyway, that

she was in custodia legis and unavailable.

MR. FLYNN: No, she wasn't actually in prison at

that point. What happened is this: Because of her conviction,

she was removed by her husband from post so the key fact

that occurred was the following: She proved initially

that Mr. Armstrong notwithstanding her present testimony

could get the documents, and we have this petition with

her handwriting on it.

Subsequently there were more documents that

were given to Mr. Armstrong, and the person who sent the

petition in then sent this to the person who was in the

post that Mary Sue Hubbard had been in. So, Mr. Armstrong

got permission -- the post is called Controller. Mr.

Armstrong got permission from the successor to

Mary Sue Hubbard.

Now, Mary Sue Hubbard is coming forward --

285

we are not trying to introduce the evidence on that point

to show she was in custody. We are trying to introduce

the evidence to show simply the nature of the conviction,

the fact and the date for impeachment purposes, but with

regard to the other issue, which is a totally separate

issue as to whether or not Mr. Armstrong had approval

to give more documents to Mr. Garrison, which Mary Sue Hubbard

is claiming he didn't have authority to do, our position

is that she wasn't even in a position to give or not to

give approval at that point in time. That it had nothing

to do with her husband. She had been removed from her

post. That was the cross-reference.

Now, in any event, I had further stated that

because she was no longer involved because she had been

convicted and for that reason removed from her post, she

was not in a position to possess the documents which I

think the evidence is going to be very clear on. She

had no control or right of possession of any nature or

description once she was removed because of the conviction,

and that our position is very clear and therefore she

has no right in this courtroom to come in and assert that

she owns or has the right to possess the documents because,

in fact, the evidence is to the contrary.

In fact, when they got their preliminary injunction,

they said that they owned the documents and then she came

in and asserted a contrary interest.

THE COURT: Well, it seems to me that is something

the jury is going to have to determine, I suppose. But

286

it seems to me -- do you have something further you want

to add to it?

MR. LITT: Well, I want to point out one thing that

was not really argued in our motion, which is in light

of this defense which I have trouble quite defining, but

in light of this defense somehow public interest and

Mr. Armstrong's state of mind constitutes a defense and

with the information that Mr. Flynn has clearly indicated

he is going to use, the fact -- if Mrs. Hubbard who, as

I will explain, is going to testify on very limited matters.

If the court permits the use of this prior

conviction to impeach her, especially in the context of

this defense, what will really happen is that the fact

of conviction will be used to force the theory substantively

that is being put forward here that this is a criminal

organisation against whom it was all right for Mr. Armstrong

to act criminally which seems to be the defense, and this

brings it much more so than when we first framed the issues

in our papers into the area of causing problems in terms

of in a criminal case before Proposition 8 where someone

is charged with a crime and you try to use a prior offense,

similar offense for impeachment purposes.

In reality, given their theory here and given

now what the defense in the case is, allowing that to

be used will clearly have that effect and the court should

understand that the credibility issues here with respect

to Mrs. Hubbard are extremely limited.

287

Mrs. Hubbard does say that she did not realize

that Mr. Armstrong had these documents; however, she does

not contend that in the totality of circumstances he was

unauthorized. She is not claiming invasion of privacy against

him for having taken the documents from the controller's

archives and putting them in the archives of the Church or

from taking them from the archives of the Church and giving

them to Omar Garrison. She is claiming it from taking them

from Omar Garrison and giving them to Michael Flynn.

So that the questions of whether or not

Mr. Armstrong was entitled to take these documents are not

in issue in the case. We are not claiming that while he

was in the Church Mr. Armstrong couldn't get the documents

he got and couldn't give them to Mr. Flynn.

The complaint has to do with what he did after

he left the Church. Therefore, all of these conflicting

facts that Mr. Flynn refers to we are not putting in issue.

It will only come in to issue if they bring it up. So there

is no credibility on that.

Mr. Hubbard has admitted that the documents are

Mrs. Hubbard's. There is no factual issue on that, and the

damages claimed -- we are not claiming any damages beyond

the normal damages that a person would suffer under

circumstances such as these. So that, in fact, the credibility

issues regarding Mrs. Hubbard, in terms of the testimony

that we intend to put forward by her, do not -- they really

don't relate to any significant disputed facts.

In light of that and in light of the extraordinary

288

potential for prejudice attendant upon asking her about her

conviction, in light of the evidence that the court is going

to allow in on this defense, we would like the court to

reconsider because I think there are circumstances beyond

what were originally defined in our motion.

THE COURT: Miss Dragojevic.

MISS DRAGOJEVIC: Yes, Your Honor. Contrary to what

Mr. Litt has just indicated, there are significant disputed

facts with respect to Mrs. Hubbard's testimony. Just from

her own declaration and from her deposition testimony, she

testified that Mr. Armstrong had no authority to use the

documents in question, that she never gave him permission

to copy or gain access to the documents, that he had no

agreement with Mr. Hubbard regarding his personal storage

and the use of documents from his personal storage.

So what Mr. Litt is saying, that there is no

significant dispute of facts, is totally inaccurate. We

intend to call Mrs. Hubbard, and we intend to question her

about these representations that she has made under oath;

and I believe that we will be able to impeach her credibility

with documents that we have, which we intend to use, and

with the testimony of other witnesses to show that her

inconsistent testimony goes directly to her credibility and

that the felony for which she was convicted also goes directly

to credibility as well.

So I would disagree with Mr. Litt's interpretation

of what Mrs. Hubbard's testimony has been throughout the

discovery in this case, and I would indicate that the court's

289

ruling is correct and that the admission of a prior felony

conviction should come in.

THE COURT: It seems to me that we are not just trying

Mrs. Hubbard's case in a vacuum. We are trying the case

of the Church, also, versus Mr. Armstrong; and while she

may say things in her testimony and limit her testimony in

an attempt to narrow down what she is testifying to, this

is a civil action and she is a witness to, I gather, a number

of matters that deal with the church's case as well against

Mr. Armstrong.

It seems to me that balancing the different

interests that that is a proper area of interest or concern

to the trier of fact; and, of course, it would be subject

to a limiting instruction. They can consider that only for

the purpose of testing the witness' credibility.

It seems to me, further, that, of course, the

court could, I suppose, say, "I will take it under advisement

and we will reconsider it later on."

It seems to me if it is likely that it is going

to get into evidence counsel's better attack is to certainly,

with a jury, meet it head on and voir dire the jury on this

subject. I have tried a lot of criminal cases as a lawyer,

defense lawyer; and before Beagle felony convictions were

always admissible, and we just took it head on. We would

just voir dire the jury about it, whether that would prejudice

them against the client. And my experience was, of course,

you could be overwhelmed by priors; but if you hit it head

on and if you had any kind of a case, the jury tended not

290

to pay a whole lot of attention to that, tried to judge the

case on its merits and not be prejudiced.

Then, every lawyer has their own way of trying

a case. I think it is something that in this case is relevant

and it goes to credibility and it is part of the total picture.

So I will permit counsel to go into that.

Trial motion to compel responses to requests

for admissions and requests for admissions of genuineness

of documents. I am not going to get involved at this late

date in an order compelling discovery. Plaintiff sought

an expedited trial date, and it seems to me that doing that

he has to give up some of his --

MR. LITT: I would like to make one point on that,

Your Honor --

THE COURT: Yes.

MR. LITT: -- which is that the court should understand

that the reason we could not move to compel that before the

law and motions court is that we gave an extension to the

defendant to answer these based on the understanding that

they would be answered.

The defendant asserted Rule 333, which was no

longer in effect, saying that the questions were out of time,

which they were not under the new Rule 222. But because

we had given them the extension, we could not move and we

were not able to get an order shortening time. We could

not move on 15 days' notice. We could have done that had

we not given the extension, and we gave the extension based

on the understanding that they were going to answer the

291

requests to admit which were not out of time under the current

rules.

We basically feel that it was simply unfair,

and that is the reason that we have suggested it here. We

feel that the issues in the case could be substantially

narrowed. My understanding is that the answers were prepared,

in fact, by the defense and then they realized that they

could raise this out of time claim. And we just think it

was unfair and that the court has discretion to determine

that under all of the circumstances that they should answer

it. And it could substantially narrow the issues in the

trial, because much of our case is based upon the testimony

of Mr. Armstrong; and if these requests to admit the

genuineness of the documents are dealt with, much of the

case could potentially be put on through such requests.

292

THE COURT: Well, what about that?

MS. DRAGOJEVIC: Your Honor, this issue has already

been litigated before Commissioner Stoutt. We appeared

before him on an order shortening time so that they could

get this motion heard. They put before him the same exact

argument which they put before this court, and he indicated

that they did not have sufficient good cause for the order

shortening time to get their motion heard.

The fact that I have indicated that we have

answers prepared is not accurate. I never indicated that

we have answers prepared. I indicated to Commissioner

Stoutt that we would have extensive objections to the

request for admissions and the request to admit the genuineness

of documents. I have never indicated to anyone that we

had the answers prepared.

These responses would have been due since

they were served on February lst, they would have been

due on March lst. At that time we had a trial date of

March 22nd. Commissioner Stoutt felt that they had placed

themselves in the position where they had put themselves

against the clock and against the wall, and that I shouldn't

have to respond to these things, so this has already

been before the Commissioner and he has made a rule on

it and he is aware of Rule 333 and what it provides for

and still indicated that the motion would not go forward.

THE COURT: Well, I am disinclined to get involved

in discovery at this time. After all, people are here.

They are trying to get their case ready for trial.

293

If they had to devote themselves to dealing

with all of these problems and then coming back and arguing

further on it, I think it would take longer to do than

to probably try the case.

Motion is denied.

There is a request to take judicial notice

or to hold evidehtiary hearings that Scientology is a

religion. Now, at this point I don't really know what

the significance of this would be. Why we would -- I

have indicated there is plenty of case authority indicating

certainly that prima facie the Church of Scientology of

California is a religious institution and I have no idea

or understanding that the defense is going to actually

attempt to show that they are not.

MR. FLYNN: I won't, your Honor. I think that will

obviate the issue.

MR. LITT: No, it doesn't obviate the issue.

It is important, both in terms of the foundation

for the court's rulings on the First Amendment issues

that there be a determination of religiosity because we

have a substantial First Amendment issue in this case

which is bottomed on the status of the Church of Scientology

as a religious institution and the status of Scientology

as a religion, both of which are entitled to the protection

of the First Amendment.

Secondly, we intend to introduce evidence

that L. Ron Hubbard is the founder of the religion of

Scientology. We don't intend to introduce evidence that

294

it is a religion, but we want the jury to be informed

that it is a religion.

If Mr. Flynn wishes to stipulate for purposes

of this case that it is a religion, that is fine. If

the court wishes to take judicial notice of it in the

absence of Mr. Flynn's presenting any contrary evidence,

that is fine. But I think we are entitled to the determination

for purposes of this case at least.

MR. FLYNN: I don't think it is an issue in the

case, your Honor. I don't intend to stipulate to it.

I don't want to go into any lengthy evidentiary hearing.

I don't intend to introduce any evidence that they are

not.

If they introduce evidence that L. Ron Hubbard

is the founder, I will introduce evidence that L. Ron Hubbard

says he is not the founder. It is that simple. Whether

they are a religion or not is an extremely complicated

question that needs not even concern this court and even

perhaps the more complicated issue under the laws of most

states is whether they operated as a religious organization.

You can have a group of people that subscribe

to a collection of beliefs, and they can theoretically

be "a religion," but whether the corporation organization

that is embodied within those groups of people operated

as a religious organization, which is the subject of extensive

litigation involving the IRS and other jurisdictions,

is an altogether different issue. But I don't believe

the court is even involved in the issue.

295

I will introduce no evidence that they are

not a religious organization.

MR. LITT: Your Honor, one of the opinions there

is an opinion by the United States District Court from

the Central District of California. Mr. Flynn and

Miss Dragojevic represent the plaintiffs in that case

on summary judgment, not even on the evidentiary hearing

which is the real standard, but on summary judgment where

the issue was contested. The court found that Scientology

was a religion.

We have given the court also the Australian

opinion which relies extensively on the United States

First Amendment cases which all the way up to the Australian

courts Scientology was held by lower courts to not be

a religion, and the unanimous opinion by the high court

of Australia it was found to be a religion.

We feel that it is important that there be

a determination of this issue for purposes of this case,

both in terms of framing the defenses and also because

we are entitled to have the jury instructed on that and

we are going to be asking for jury instructions.

Keep in mind what has been allowed to be brought

into this case.

THE COURT: You don't have to remind me. I have

been sitting here for a day and a half.

MR. LITT: We are not going to be trying religious

doctrine. The court has already ruled on that. There

is going to be a whole series of supplemental jury

296

instructions on the First Amendment on this case at this

point, and we are clearly entitled through whatever procedure

the court wishes to follow but we are entitled to a resolution

of this issue and we are entitled to it by the court.

THE COURT: Well, I will take judicial notice of --

whatever your attachments are. You have a case of the

Church of Scientology of California, U.S. Court of Appeals,

District of Columbia Circuit.

You have got an exhibit 2, but there is

nothing there.

MR. LITT: There is not?

THE COURT: I don't know what exhibit 2 is.

MR. LITT: I'm sorry about that.

THE COURT: Exhibit 3 is something from the U.S.

District Court, Judge Marshall. Attached to that maybe

there is something -- we have a high court of Australia.

I can't take judicial notice of that.

297

MR. LITT: I am asking --

THE COURT: It is not certified, and I don't know

anything about it. But I will receive those as evidence

in this case on this issue. There is no contrary evidence.

So I will find that on the evidence presented to me that

plaintiff here is a religious institution.

Does that satisfy you?

MR. LITT: That is satisfactory, Your Honor.

THE COURT: I think that is all of the plaintiffs'

motions. Now we have some defense motions.

Okay. I will take up the motion to preclude

use of witnesses not disclosed in discovery, memorandum of

points and authorities -- it's time to take a recess. I

have to look at the clock once in a while. I will see you

at 1:30.

MISS DRAGOJEVIC: Your Honor, we are going to waive

that motion.

THE COURT: It is a good thing you waived it. I was

going to deny it.

(At 11:57 a.m., a recess was taken

until 1:30 p.m. of the same day.)

298

LOS ANGELES, CALIFORNIA, FRIDAY, APRIL 20, 1984, 1:31 P.M.

---o---

THE COURT: All right. Well, the defendant's motion

to preclude is withdrawn, so set that one aside.

MR. LITT: Your Honor, before we go on to the next

defendant's motion, there was one area that we discussed

and the court said to reserve until the end of the motions

in limine that we were making. That had to do with this

issue of the marital agreement between Mr. and Mrs. Hubbard.

This marital agreement, I have never seen

it, but as I understand it the marital agreement is an

agreement that says that in the event, the desire of one

party for a divorce, the other party will give them a

divorce. That was 31 or 32 years ago, '3 years ago, whatever,

and not make any property claims. The Hubbards remain

married.

The agreement is really nobody's business.

It has no probative value, and we would like an order

excluding the agreement.

THE COURT: Do you have any intention of offering

it, counsel?

MR. FLYNN: Well, first of all, that is not what

the agreement says. The agreement says that Mary Sue Hubbard --

it is strange language. I don't know whether Mr. Hubbard

drew it or someone else drew it.

But it says that she has no claim to any of

his property. Secondly, there's been extensive litigation

299

in other jurisdictions as to whether or not Mary Sue Hubbard

and/or L. Ron Hubbard are residents of the State of

California with regard to the community property provisions

of the State of California.

300

They have taken the position in these other

jurisdictions that Mr. Hubbard is a nomad and is stateless

for purposes of jurisdictional questions that have arisen

elsewhere. Since he is stateless by their own admissions,

we contend that there is no property claim that she has in

his property; and since it is pretty much admitted that almost

all of this material is his property, we think that that

is probative on the issue of whether or not she can make

any claim to it.

The marital agreement would be additional probative

evidence of that, that she has no claim to his property.

So for that limited purpose we submit that it is admissible.

MR. LITT: There are mutual agreements, Your Honor.

One was signed by Mr. Hubbard; one was signed by Mrs. Hubbard.

They are identical agreements. Mr. Peterson has seen both

of them. They are both under seal. They just have no

relevance.

After 30 years of marriage, to contend that the

joint property collected in the course of the marriage is

somehow not joint property on the theory that if someone

wants a divorce, which no one does, they can't make a claim

to the other's property is -- I don't know what it establishes.

THE COURT: I don't know. It is hard for me to evaluate

this without actually knowing the precise language and context

within which it is used. It may be that they are speaking

in terms of what they start out with at the time of marriage

and not with relationship to after-acquired property. I

just don't know whether they are each waiving any rights

301

in futuro. In order for that contract to be valid in

California, certain requirements have to be met.

Certainly without some type of preliminary hearing

to determine its validity, lawfulness and relevancy, there

should be no reference to it. I would have to see the

agreement.

Was it adopted purportedly in California or some

other place?

MR. FLYNN: See, the problem is: Mr. Litt has gone

into Florida and Massachusetts jurisdictions claiming there

is no community property interests between the Hubbards to

defeat jurisdiction.

MR. LITT: I haven't claimed that, Your Honor. Do

we want to get into this?

We claimed very simply that it cannot be

established that Mr. Hubbard has a domicile in any state

and that, therefore, diversity jurisdiction does not lie,

period. That's all.

THE COURT: I think that property in California, under

the public policy of the State of California, held by married

people is ordinarily treated as community property or quasi-

community property, which is California's determination that

that is the way people will hold property if they are married,

if they have it in California or if they have property in

other states over which the California court has in personam

jurisdiction over the other parties for the purposes of

dividing property at times of divorce and so forth, without

any kind of in rem jurisdiction of property in some other state.

302

We are talking about property that is in

California and held by one of the spouses, and most of

these old prenuptial agreements that I have ever seen

when they got to court were usually held to be invalid

for one reason or another.

As I say, we are not seeing it and hearing

what the circumstances are and checking the law regarding

prenuptial agreements.

I'd have to say don't get into it without

coming up here and discussing it and we will see what

it is all about.

MR. FLYNN: Fine, your Honor.

THE COURT: Now, the motion in limine to exclude

the letter of February 3rd.

Well, I don't know what the contents of the

letter are. Nobody furnished a copy of it.

MR. LITT: I realize that. I have a copy for the

court.

THE COURT: Can you give it to the clerk and let

me see what it is all about.

MR. LITT: The court has three pages there. The

top page is a typed version of the letter. The bottom

two pages are a Xerox of the letter itself, handwritten.

THE COURT: Okay, let me see it.

Well, I will read it into the record:

"Presiding Judge.

"Los Angeles County Superior Court

"Los Angeles, California

303

"3 February 1983

"Your Honor:

"It has come to my attention that

in a legal proceeding in Los Angeles Superior

Court many of my personal letters, manuscripts,

military and other historical records concerning

me or alleged to concern me have been impounded

by the court due to a question of rightful

ownership.

"Some years ago I loaned to the Church

of Scientology many of my personal papers

and entrusted them with the custody of

these. Many documents were held by me but

due to the fact that my writing and research

over the past several years has precluded

my establishment of any permanent residence,

I was too short of space in my baggage

to retain them and entrusted my personal

papers and such to the Church of Scientology

for safekeeping and storage.

"I hope I have set the record straight

and would sincerely appreciate your assistance

in assuring that my belongings are returned

to the church or their legal representatives.

"Sincerely,

"L. Ron Hubbard."

With a copy to the president of the Church

of Scientology, Int.

304

Well, I don't know what the plaintiff would

want to offer this for. Certainly, so far as the issues

involved in the tort counts, assuming that a foundation

of authenticity could be established, it is hearsay as

to what he did some time in the past, and it would not be

admissible.

So far as the issues that might be concerned

with the dealings with the equity proceedings, it seems

to me it would be probably relevant to show his present

state of mind as to what he'd like to have done with them.

To that extent, that is something the court would be willing

to consider, but that would be the only purpose for which

it could be received and that would only be in relation

to the decisions the court would have to make on the equity

case in the jury trial.

MR. LITT: Your Honor, on the damages claim and

on the equity claim, too, I suppose, the defendant contends

that he had a contract with Mr. Hubbard. He evidences

that contract by a one-line response to his petition.

It is not a contract, but that is his theory, which says,

"Fine. Take this post, good luck," or something like

that.

But he is contending that he had a contract

with Mr. Hubbard. This letter is relevant as to

Mr. Hubbard's state of mind at the time that the documents

were entrusted to the church as to whom they were entrusted.

THE COURT: Hearsay for that purpose.

MR. LITT: No, it is his understanding.

305

THE COURT: Don't tell me "no."

I said it is hearsay. You can say you don't

believe it is or you would urge that I not so find, but

I am telling you it is hearsay.

MR. LITT: I understand it is hearsay. What I am

suggesting to the court is that it is an exception to

the hearsay rule as to his state of mind.

THE COURT: Not as to something that transpired

some years before. It would be a clearly hearsay purpose

to show that he at some time before loaned the Church

of Scientology any of these personal papers and entrusted

them for safe custody. If you are talking about a state

of mind when he wrote this as to what he wants to do with

these papers, fine. That would be something that doesn't

deal with something that transpired years ago over which

there is no opportunity to cross-examine and so forth.

306

MR. LITT: Your Honor, under Section l252 of the Evidence

Code, "Evidence of a declarant's state of mind, emotion or

physical sensation at a time prior to the statement is not

made admissible if the declarant is unavailable as a witness,

and the evidence is offered to prove such prior state of

mind, emotion or physical sensation when it is itself an

issue in the action."

We are --

THE COURT: His state of mind is nothing unless it

is dealing with whether he loaned to the Church of Scientology

his personal papers and didn't enter into a contract with

Mr. Armstrong. That's clearly hearsay. That isn't just

to show a state of mind. It is to show that he didn't do

these things. Produce him and he can testify to it.

MR. LITT: In order to have a contract, Your Honor,

you must have a meeting of the minds. Therefore, if

Mr. Armstrong is going to contend, as he does, that

Mr. Hubbard's written response to him constitutes a contract,

then in terms of a statement made now as to his understanding

of what he did with the documents in the past, his state

of mind -- I am not saying whether it is true or not; but

as to his understanding, he reflects in the letter his view

that what he did was entrust these to the Church.

Since the defendant is contending that there

was a contract, which requires a meeting of the minds,

Mr. Hubbard's then existing state of mind is relevant. This

is a statement concerning his past state of mind, and it

seems to me that under that theory, and only for that purpose,

307

it would be admissible.

THE COURT: It doesn't deal with state of mind. It

deals with whether or not he loaned to the Church of

Scientology these papers or whether he did something else

with them, and that is clearly a hearsay purpose. You can't

say that from this you must conclude that some time ago he

had a lending state of mind as distinguished from a contracting

state of mind. That isn't what we are talking about.

There is no way that this can come in without

being used for a hearsay purpose, and that would not be proper;

and I wouldn't receive it on these tort causes of action.

So that issue will be granted.

MR. LITT: That is on the damages claim only, I take

it?

THE COURT: Yes, on the tort causes of action. So as

far as the problems that I have to deal with about what I

want to do with these records, it certainly would be relevant

as to his state of mind as to these papers and what he wants

done with them. The extent to which the court is going to

be influenced will depend upon all the other evidence that

is presented.

MR. FLYNN: Your Honor, just on that last point, we

would be prepared to show at the appropriate time that he

is not unavailable, that he is in daily communication with

the people that are running this lawsuit.

THE COURT: Well, obviously there would have to be

a foundation laid for its admissibility. I am assuming,

without saying it is or isn't, they can lay the foundation.

308

Notice for motion for leave to amend answer,

declaration of Miss Dragojevic. On these, matters my tentative

decision would be to -- I don't know whether anybody is aware

of it, but apparently I struck, when I was sitting in law

and motion one day, the answer of the defendant to the

intervenor as to that subject. I gather it was just because

it was a bare conclusion, it was asserted; and I gather there

was never any amendment. But be that as it may, as to the

tort causes of action, I don't really think it is particularly

appropriate.

At the same time, as far as the equitable action

is concerned, whether it is amended or not, I think all of

this would be before the court in a sense because the court

has to determine what is fair and what is just.

Does anybody want to be heard further on that?

MR. FLYNN: Your Honor, I don't believe we added anything

on the tort causes of action. On the equitable, I think

Your Honor's last observation is basically the nature of

the situation.

MR. LITT: Well, let me start by saying I am not clear

what the indication from the court was.

THE COURT: Okay. What I am saying is: Even though

unclean hands arose out of equity, it can be asserted as

a defense to a legal cause of action in law in this state

at this time. All I am saying is: I don't think that I

would permit it to be asserted against the tort causes of

action; but since the court will have to deal with the

injunction, it seems to me that all of this is going to be

309

before the court anyway, and it almost doesn't require an

amendment as far as what evidence is going to be presented.

MR. LITT: Your Honor, we have --

THE COURT: I am probably disposed to permit it to

be pleaded because I can't see that there is any prejudice,

because the court is going to have to deal with what is fair

and equitable on the injunction, anyway.

MR. LITT: Well, there is substantial prejudice, Your

Honor, which goes to the whole way that the issues have now

been framed in the case.

The striking of the unclean hands defense

eliminated precisely the issues that the court is referring

to, since it was the only affirmative defense pled that could

potentially get into these issues. That is one problem.

We consider that the approach that allows unclean

hands to be pled is prejudicial. Furthermore, we think it

is not permitted under the law. The claims here concerning

the shredding, which is what was originally put forward as

the basis for unclean hands, does not have to do with the

issues in this case. We have already quoted to the court

Mr. Armstrong's testimony that the events of the alleged

shredding occurred more than two years prior to the issues

in this complaint.

310

THE COURT: Well, I am not impressed with that as

any kind of a basis for an unclean hands defense. My

conception would have to be the idea that if there was

anything that was done in a physical sense to attempt

to retrieve these documents that was tortious or criminal

or -- it seems to me that would be more in the nature

of what I would consider the appropriate clean hands defense

as to retrieving the records.

In other words, if the people have a dispute

and then go to court and seek to obtain their property

back through the civil processes, I think that that is

appropriate. If they seek to use self-help in the sense

that they go out and harass somebody, and I am not saying

it was done. I am saying this is taking the defense evidence

that they have harassed or threatened or intimidated or

thought to be intimidated, then I think that that goes

to the question of clean hands in that respect.

It goes to the question of the extent to which

I think the court should consider equitable relief.

MR. LITT: Well, the only thing I can say to the

court in that regard is that we have never considered,

given the pleadings in the case and the rulings striking

these answers, that that was a defense in this case. We

have not prepared the case on that basis, and we do believe

that it constitutes prejudice to us.

MR. PETERSON: May I be heard on that just a moment?

THE COURT: Sure.

MR. PETERSON: Part of the reason why Mr. Litt was

311

designated by the Church, which is my client, I have

represented the church all along in this matter and in

other matters, too, but in reviewing the case specifically

on the unclean hands defense, this is about, I think,

the fourth time that this unclean hands defense has arisen.

It came in the first answer. We moved to

strike it. The court struck it. They asked for a recon-

sideration, I believe. The Judge says -- he struck it

again.

Mary Sue Hubbard filed her cross-complaint.

There was a -- her complaint in intervention, I should

say, where unclean hands was raised. The court, that

may have been the time you struck the unclean hands defense.

It was struck then.

THE COURT: Well, with leave to amend. I don't

think it was ever amended.

MR. PETERSON: At one time it was granted without

leave to amend, and then again about three weeks ago,

Miss Dragojevic brought it as part of an ex parte order

shortening time, and the court again denied that opportunity.

So, after having it denied four times, the

church thought, well, it isn't going to be an issue in

this case. The church's conduct will not be an issue

in the case. It will be a simple case on the conversion

torts and invasion of privacy torts, and Mr. Litt was

then asked to prepare the case.

We are totally unprepared, as Mr. Litt has

indicated, and we would have to at this point have independent

312

counsel represent the church and not continue having

Mr. Litt litigate the activities of the church when he

hasn't prepared it and we haven't prepared it, so I just

think that should be brought to the court's attention.

MS. DRAGOJEVIC: I'd like to clarify a few things

because I was present at all the hearings regarding motions

to strike the affirmative defense.

First of all, the defense was originally stricken

because the court felt we had too much material, too much

extraneous material in the affirmative defense that didn't

relate to the action and, of course, that was because

we had just entered into the action. We really didn't

know what the scope of the case was going to be, as your

Honor has indicated numerous times, the case has moved very

quickly.

At that time we just put in whatever we thought

might apply. The Judge indicated that he thought it was

too overbroad and struck it, but we did get leave to amend.

We amended, this time only putting in a line that said,

"Plaintiff is liable for unclean hands," something very

simple. It really didn't elaborate or go into anything.

We went into court. At that time the Judge

said, "Well, now, this time you haven't given me enough.

Last time you gave me too much. This time you haven't

given me enough, so I am going to strike it again."

At that time we had filed the same affirmative

defense to the complaint in intervention, and it was stricken,

I think, by you, your Honor, I think for the same reason

313

that it just didn't give enough.

All of the motions were granted with leave

to amend. We held off amending, so that we could kind

of put together what we wanted to say. We have always,

in every paper filed in front of the court, whether it

was on motions on the preliminary injunction, motions

to modify the preliminary injunction, motion for summary

judgment, whatever it was, we have always indicated that

we feel there is an unclean hands defense. It has always

been in our papers, and I think if the court looked through

the papers, the court would see that.

Plaintiff and intervenor have always been

on notice that that has been our position. When I went

in for the order shortening time, it was shortly before

trial. Commissioner Stoutt just felt that there wasn't

good cause for the order to shorten time. He didn't make

any remarks about whether the affirmative defense was

appropriate or not. His role there was simply to indicate

whether I had good cause for the shortened time order.

So, we didn't get a chance to have it heard

and I felt that since these types of things can be brought

even during trial that we could bring it up to the trial

court, which is what we have done, but they have always

been on notice that this is one of our defenses and it

hasn't been stricken for any substantive reason. It has

only been stricken for procedural problems in the past.

MR. FLYNN: I'd like to add one thing, if I could,

your Honor.

314

Mr. Armstrong had been deposed on five full

separate days in this case. His counsel, namely me, has

been deposed on two days. Miss Dragojevic has been deposed.

Mr. Bunch has been deposed.

We have been unable to depose Mr. Hubbard,

and we are the defendants in the action. Mary Sue Hubbard

was deposed for several hours, and if your Honor saw the

transcript, virtually every question we asked was objected

to.

We have been given almost no discovery and

having been involved in discovery extensively in the last

four years against the Church of Scientology, virtually

every avenue of discovery that one seeks, one gets the

First Amendment defense, every defense that can be interposed

under modern jurisprudence.

It is very difficult but more importantly

it is very costly to try to obtain discovery from either

the plaintiff or the intervenor. The intervenor was in

prison for a time and unavailable.

Mr. Armstrong, as the court knows, has no

money, so it has been almost impossible to get any discovery

from the other side.

On the other hand, they have had full discovery

from Mr. Armstrong, from his counsel and from every other

witness that they wish to depose, and they have pushed

this case forward as rapidly as possible.

So, for them to now come into court and claim

that they have been prejudiced in discovery is simply

315

inaccurate.

MR. LITT: Your Honor, there has not been a single

order in this case which has found that there was even

an improper objection to discovery. Mrs. Hubbard answered

virtually every question asked in her deposition. I told

Miss Dragojevic that she could reschedule the deposition.

She did not schedule a second day of deposition. She

was available.

The statements made concerning discovery in

this case are simply not supported and it is a typical

problem. There is nothing in the record to support these

claims made concerning how we have conducted ourselves

in discovery, and as to our awareness that they made certain

claims of what should be in the case, of course, we were

aware of that. We were also aware of the rulings that

the court had made and we were relying on the state of

the pleadings.

THE COURT: Well, I don't envision that my permitting

this on the equitable cause of action is going to open

the door to any evidence other than what we have already

talked about in this case. Technically it is something

that should be a part of it and I don't envision that

this goes to open the door to any new evidence that I

haven't already discussed and I would consider appropriate

to permit.

316

MR. PETERSON: What it has done, Your Honor, it has

opened up new evidence of 21 witnesses that we knew nothing

of. Miss Dragojevic said that 21 of the 50 witnesses on

her list never showed up in any of the discovery. So we

have no idea. We relied on the court's ruling that unclean

hands would not be a defense in this case.

You gave these defendants ample opportunity to

amend or seek to amend and correct the mere technicalities,

as they call it -- I call it a very substantive thing that

they didn't correct -- and they didn't. And here we are

on the eve of trial, and it is coming in; and the equitable

part of this case is equally important to us as any other

part of the case.

THE COURT: Certainly it is. I am not suggesting it

isn't. But the court is going to hear this evidence anyway,

so the court is going to have to make its own determination.

If it feels it is appropriate, it will deal with it, if it

considers it appropriate.

MR. PETERSON: It doesn't go to the court's ability to

hear it and react to it. It goes to our ability to prepare

and defend against it. We will walk in unarmed and unprepared

for whatever the defendants want to put before the court.

The court will take it, and we have not properly prepared

a defense. We are prejudiced. We are being put on trial.

We are the defendants under those circumstances.

MR. FLYNN: I can clear that up. Whatever we have

talked about so far that Your Honor has ruled upon is the

scope of the factual evidence that will be put in the record.

317

How that gets legally interpreted in terns of the unclean

hands doctrine, I submit to the court, is a technical matter.

But our evidence will be limited to basically

what we have talked about.

MR. LITT: I think, Your Honor, we understand the court's

ruling. I want to explain a problem that we have at this

point and make a suggestion to the court.

In the course of this two day hearing, as we

view it the court has defined the issues in this case in

a way that was substantially, as we understood it, beyond

the pleadings in the case. The only affirmative defense

that conceivably could relate to this that was in the case

throughout the case is the affirmative defense that the

defendant -- it is the seventh affirmative defense, that

the defendant had First Amendment rights to disclose this

information.

We at this point, having now heard the court's

rulings and having heard how the issues are defined, frankly

need the opportunity to consult with our clients on several

different issues that are implicated by the court's rulings

and to come back to the court and make a suggestion of how

we think they should be handled, at least as we see it.

Those include issues that Mr. Peterson raised with respect

to whether, from our point of view at this point, we want

to have separate counsel represent Mrs. Hubbard and the Church;

because some of the rulings that the court has made raise,

in my mind, trial tactics questions about whether it is

desirable to have joint counsel, which we didn't feel was

318

a problem as we viewed the permissible scope of the evidence

in the case based on the pleadings in the file.

Secondly, the ruling of permitting unclean hands

and, in general, the scope of allowing claims about misconduct

to become an affirmative defense in the case, we need to

discuss with the clients what the implications of that are,

what the implications are for the damages case, what the

implications are for the equitable relief case and what posture

we wish to take with respect to that.

The court has made rulings which we feel implicate

serious constitutional issues and whether we want to seek

any remedy at this point is an issue that needs to be

discussed.

What I am raising with the court is that now

that we have gone through this series of motions we need

basically to go into the beginning of the week for us to

be able to consult with out clients and come back to the

court and at least state what our position is with respect

to any of these matters and what effect it has on the trial,

as we view it; and if we have any motions that we wish to

make in regard to this, based upon the court's rulings, that

we have the opportunity to make them at that time.

So what I was going to suggest at this point

was that this matter -- both Miss Dragojevic and I have an

appearance in Federal District Court on Monday morning in

another Scientology case, same case, involving a summary

judgment motion on a First Amendment issue which has been

continued three times.

319

So I would like to suggest to the court that

we do the following: we go over until either Monday afternoon

or Tuesday morning. We have a chance to confer with our

clients on all of these issues and see if we have any

requests to make of the court at that time.

Mr. Flynn and Miss Dragojevic prepare the

list of documents that they intend to introduce as we

discussed before so that we would know what documents

we are dealing with.

When we come in, one of our requests may be

based on some of the factors that I have talked about

before that the court require some kind of a specification

of proof or limitation of evidence just to define what

are the facts and issues in the case. I don't know. We

haven't had a chance to really go through all of this

in light of the full scope of all the court's rulings

and we see exactly where we are at this point. If we

have any requests to make of the court, that we would

make them at that time and also Mr. Flynn mentioned earlier

that he was considering a jury waiver. We would like

to know whether that is their position or not and if it

is their position, we have not had a chance to discuss

our position with respect to that with our clients either.

So essentially what I am saying at this point is that

now that we have completed going through the advance motions,

that we come in and have a discussion with the court and

we will be prepared at that time to set forth our position

on any of the issues that have been raised so far.

320

MR. FLYNN: Your Honor, I am not sure I understand

what is going on, but the position that they have with

regard to everything that has gone on so far has already

been set forth in probably 200 pages of briefs which have

been ruled upon, which also would suggest that they have

been thoroughly prepared for this case all along as is

obvious from the amount of paperwork. They knew that

these were the issues and they have extensively briefed

them and litigated them for a year and a half before this

court.

With regard to bringing another counsel in

at this point, we waived our motion, which they objected

to, to have separate counsel because we believe, even

though we have waived it, that there is a conflict. But

they chose to go forward with one counsel.

If all we are talking about is the amount

of time between now and Monday afternoon, even though

I have been out here for two weeks so far and we really

haven't heard any evidence, I really have no objection

to that. If, however, the suggestion is that they are

now going to file more motions to re-review everything

that's already occurred, which is kind of what the suggestion

was because Mr. Litt indicated that he wanted to find

out from his client what their position will be. Well,

the position is already established as to what the framework

of the case is, then I would object to more motions on

something we have already argued about.

On the jury waiver issue, basically our position

321

is this: We think that if the case was litigated in front

of the jury and all of the issues that legitimately have

to be put forward for Mr. Armstrong, we would be here

a lot longer because of side-bar conferences,

voir dire hearings and similar efforts to try to sanitize

or constrain the evidence.

For that reason -- your Honor is probably

now more familiar with this case than any other judge

has ever been, and your Honor is probably the only judge

who has read everything.

We think that at this point we are prepared

to waive our jury claim.

Mr. Litt, on behalf of the intervenor, and

Mr. Peterson on behalf of the church did not file any

jury claims in the action. Exactly what posture that

leaves them in, I am not precisely clear. Whether they

could pick up the jury claim is some question that I have,

but in any event, we are prepared to waive it because

we believe, as I said from the very first moment in chambers

and the very beginning of my argument, what this case

is about is what is in the documents and how they should

be preserved. That is what the case is about.

Most of these other claims are just basically

fluff to try to affect outcome. That is really at the

heart of this lawsuit. For that reason we think that

a jury-waived trial would be appropriate.

Whether or not that is going to require more

than one afternoon to change the posture of the case

322

as far as the intervenor and the plaintiff see it is something

that does bother me to some degree. If they come in and

claim that well, now, because we are waiving the jury,

they are going to need another week or two to try to prepare

the case, then I would have severe objections to that.

If the state of the record today is going

to be left that we are going to adjourn until Monday afternoon

and we are going to come back in and we are going to proceed

with the jury-waived trial, then I have no objection to

this, apparently it is a request for continuance and I

have no objection.

But if it is an effort to buy several weeks

of time, then I specifically bring up the following point

which I'd like to put on the record at this time. If

they are going to claim that what they have got to do

is acquaint and educate new counsel and they are going

to need weeks of preparation to do so, then I have a strenuous

objection to that, if that is what is being done because

that, I will submit to the court, is what has been done

on almost every Scientology case once it gets to trial

across the country. As soon as the case comes to trial,

new counsel appear. Old counsel go out and continuances

are requested. That has almost uniformly occurred, and

if that is what is going to happen next Monday afternoon,

then I strenuously object.

MR. PETERSON: First of all, your Honor, there has

been no other Scientology case come to trial. There has

been no case across this country where at the last minute

323

during trial an attorney has been substituted in. Mr. Flynn

is painting this parade of horrors. We are not, and I

will repeat, we are not going to ask for any extension

of time based on the fact that we have to bring in new

counsel and reacquaint that counsel with the trial.

324

That will not be our request. We didn't ask

for it, and we will not ask for it.

THE COURT: This has nothing to do here, but obviously

we are not going to start the trial this afternoon, and Monday

is just a few days away, so it is no big deal.

If you have got to be in Federal Court, we in

the state system here are stuck with the fact that the Federal

Court doesn't recognize we exist, so --

MR. PETERSON: If I may interrupt a second. I was

not sure. I mean it sounded to me like Mr. Flynn was waiving

the jury; but as we indicated, if he in fact is waiving the

jury, I would like that to be made clear so that I may go

back to my clients, inform them of the ramifications of

requesting a jury.

I am not sure the court would grant us the

opportunity at this time to have a jury if we requested it.

THE COURT: Counsel, if either side wants a jury trial

and they want to pay for it, they can have a jury trial.

MR. PETERSON: I have to explain that to my clients

if, in fact, he has waived it.

THE COURT: The only way we can deny a jury trial is

if you have no jurors. We have jurors by the score, by the

bushel.

MR. PETERSON: Has there been a waiver?

THE COURT: I took it as an offer to be a waiver.

MR. FLYNN: It is a waiver, Your Honor.

MR. LITT: I didn't expect that we were going to go

any further today. I just wanted to indicate to the court

325

that we are not making any requests at this point. We just

feel we need to have a conference with the clients. We may

have requests that relate to petitioning for a writ. We

haven't made any determination of that. They may relate

to whether or hot we have had an adequate opportunity to

prepare. They may relate to several things. I just wanted

to give the court an idea of what the concerns were for us,

not make any requests at this point, and say that we would

raise whatever we have to raise on Monday afternoon.

THE COURT: Okay. What time will you be through over

at the Federales?

MR. LITT: If we get through in the morning, we should

be through by 12:00 or 12:30. Normally the law and motions

calendar on civil matters is heard Monday mornings and

theoretically finished Monday mornings. It is not always

finished, in fact, Monday morning. Judge Marshall has

continued this particular motion three times. It is

substantive. I don't have any information on this. It is

possible --

THE COURT: You tell her that her former colleague,

Judge Breckenridge would like to have you at 1:30.

MR. LITT: I will certainly pass it on, Your Honor.

THE COURT: I guess we have run out of steam here today.

There was a motion to amend an answer. I will

allow the amendment as it goes to the equitable causes of

action only, not to the legal causes of action. The basic

reason is that I feel that there is nothing new as far as

facts are concerned, having been discussed between the parties

326

for a year and a half the case has been pending. Apparently

Armstrong has been deposed numerous times and his story has

been told, I have to assume, and that there is nothing new

that has been stated. Maybe the inflection is different,

maybe the emphasis is a little different; but I assume the

story has been reasonably consistent during this period of

time.

It seems to me that when you are applying a legal

tag to some facts it is the facts which are important, at

least insofar as the discovery phase is concerned; and the

parties should be prepared to anticipate the facts may give

rise to different legal concepts and they should be prepared

on legal concepts rather quickly. I don't think that it

is the facts that create problems.

It seems to me reasonably I can conclude that

all of Mr. Armstrong's contentions, the version of what

occurred, has been dealt with rather thoroughly in these

depositions.

Insofar as the plaintiff has moved to expedite

the case and the court has attempted to accommodate the

plaintiff, and we have been here yesterday and today and

then there were two days the court spent reading all these

documents after you came here Monday some time -- so there

has been a week of the court's time already devoted to this

case -- my disposition, of course, is that the case should

move forward.

On the other hand, I am not going to prejudge

any motions that you might submit which you, after consulting

327

with your clients, feel are appropriate in the interests

of your clients. After all, that is what a 1awyer's job

is, to deal with situations as they arise and bring proper

matters to the court.

So with that I guess we will just trail the matter,

then, till Monday, hopefully at 1:30.

MR. LITT: Thank you, Your Honor.

MISS DRAGOJEVIC: Thank you, Your Honor.

MR. FLYNN: Thank you.

(At 2:10 p.m., an adjournment was taken

until Monday, April 23, 1984, at

1:30 p.m.)

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