Reporters' Daily Transcript (April 19, 1984)

Armstrong 1




NO. C 420153


Thursday, April 19, 1984

(See next page.)
Official Reporter

For the Plaintiff and Intervenor: LITT & STORMER
Paramount Plaza
3550 Wilshire Boulevard
Suite 1200
Los Angeles, California 90010
(213) 386-4303
The Oviatt Building
617 South Olive Street
Suite 1000
Los Angeles, California 90014
(213) 623-7511
For the Plaintiff Only: PETERSON & BRYNAN
8530 Wilshire Boulevard
Suite 407
Beverly Hills, California 90211
(213) 659-9965
For the Defendant: CONTOS & BUNCH
5855 Topanga Canyon Boulevard
Suite 400
Woodland Hills, California 91367
(213) 716-9400


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




THE COURT: Good morning, counsel.

ALL COUNSEL: Good morning.

THE COURT: You people have practically buried me in paperwork here. I have been doing a lot of reading and I am not sure I have as good a handle on some of these problems as I’d like to, but at least I think we could probably get started with some of these motions.

Plaintiff has suggested an order of review of motion. I don’t know whether defense has any particular feeling one way or another about the suggested order.

MR. FLYNN: I believe the first motion was the disqualification.

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

Counsel, would you state your appearances for the record from my left to right?

MR. PETERSON: John Peterson for plaintiff Church of Scientology.

MR. LITT: Barry Litt and Michael Magnuson for plaintiff and intervenor.

MR. FLYNN: Michael Flynn and Julia Dragojevic for the defendant.

MR. LITT: Your Honor, while Mr. Flynn is looking at that in terms of the order that we suggested, I would make one modification which is, it seems to me, that the court might want to put the question of the equitable claim issue


and the jury trial issue after it has determined the motions in limine.

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

MR. FLYNN: The only suggestion I would make, Your Honor, is with regard to the motion regarding disqualification.

THE COURT: We have joint motions. Would you prefer to hear those first?

MR. FLYNN: I think those should probably be heard first.

THE COURT: Okay, I will take that.

Plaintiff’s motion to disqualify the defense counsel Flynn and defendant’s motion to disqualify the plaintiff’s counsel Litt. I guess what is sauce for the goose is sauce for the gander.

My tentative ruling would be to deny both motions. If you want to be heard further, I will be happy to hear further.

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

THE COURT: Certainly.

MR. LITT: Your Honor, I should first clarify the nature of our motion which is not to disqualify Mr. Flynn from any representation of Mr. Armstrong, but it is to disqualify him from certain forms of participation.

The first has to do with the question of the documents under seal. The second has to do with the question of the implications of his status as a witness and what role he plays in the trial. Let me take each of them in turn.

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


think at this stage, going over the nature of the materials under seal. Suffice it to say that they are the private materials of Mr. and Mrs. Hubbard, that they were sent to Mr. Flynn for use in his other litigation, and it is our contention that given the fact that the essence of the wrong committed here was precisely Mr. Armstrong taking these materials to provide them to Mr. Flynn to allow Mr. Flynn access to these materials through the back door of status of counsel in this case, when it is admitted that they were provided to him for use in other cases, constitutes a substantial and unjustifiable intrusion into the privacy of the Hubbards and the church in the very process of vindicating those rights.

Now, if it were just that these have been provided to Mr. Flynn, perhaps the balance might not tip so much in our favor. But I think that there are other circumstances that make it even more compelling.

Firstly, we have made reference in our papers to the fact that Mr. Flynn represented a son of Mr. Hubbard’s from a former marriage and he brought on this man’s behalf an action to attach Mr. Hubbard’s assets on the theory that he was missing. In that action, as in this case, many broad ranging allegations concerning Mr. Hubbard were made.

Mr. Flynn was ultimately disqualified from actually representing Mr. Hubbard’s son because of his conflict of interest with the estate because Mr. Flynn is suing the estate. However, Mr. Flynn had been permitted to act as counsel for out of state depositions. Mr. Flynn did so.


In the course of the proceedings there was discovery taken into the financial records of Mr. Hubbard from various banks. Mr. Flynn obtained those records. There was an order placing those records under seal by the court in that case, Judge Hennigan in Superior Court of Riverside County.

There was an order that the materials could not be used for any other litigation. Mr. Flynn was held in contempt by that court for having used the sealed materials, private financial materials relating to L. Ron Hubbard in other proceedings connected to Scientology or to Mr. Hubbard.

Mr. Flynn has said and we have cited in our papers that he is incapable of distinguishing what comes from one set of documents and what comes from another set of documents, and yet we have an order here prohibiting the use of the information and the materials for any case other than this case. Mr. Flynn has admitted his inability to do that in the deposition taken of him only within the last two months.

Mr. Flynn, by his own testimony, represents 35 parties in litigation with the Church of Scientology, L. Ron Hubbard and Mary Sue Hubbard. Mr. Flynn himself is a plaintiff in a case filed in the United States District Court in the District of Massachusetts in which L. Ron Hubbard is the sole named defendant.

When all of these circumstances are taken together, when we realize that one of the fundamental problems with the court processes in dealing with privacy issues is that the process itself threatens to undermine the very privacy


which it is the function of the court to protect, then we believe that Mr. Flynn should not be permitted access to these documents when all the circumstances are taken together. That is the present status of the matter.

Judge Shimer, and Mr. Flynn did not contest this, agreed to enter an order that Mr. Flynn could not have access to the documents pending further ruling of this court, which means as the matters presently stand, Mr. Flynn does not have access to the documents. It is our contention, one, that that should at a minimum remain until the issue of the admissibility of the documents is determined because if they are not admissible, Mr. Flynn has no need to gain access to them and should not be permitted to gain access to them, and that secondly, even if certain materials from the sealed documents are found to be admissible, Mr. Flynn should not be permitted to do that, and Miss Dragojevic, who, while, she has some similar conflicts here they do not amount to the totality of the circumstances here, or anyone from her firm should be the counsel to handle that part of the case for the defendant in order to insure that the privacy rights of the Hubbards and the church are not undermined by Mr. Flynn’s access.

I could say quite honestly that based on the experience of the parties from our side of the table, it is the concern that these materials and the information in them will be misused for purposes outside of this litigation which has a track record to it. It is not speculation. It is sufficiently substantial that we think that the court


should at least take the measure of preventing access to the documents, and that there is no substantial prejudice to the defendant in doing that. That is the first element of our motion.

The second element of our motion has to do with the implications of Mr. Flynn’s status as a defendant — I am sorry, as a witness in this case. I have already described that the heart of the case has to do with Armstrong’s taking these materials, copying them or in some cases taking originals, sending them to Mr. Flynn for use in other litigation.

Mr. Flynn will be a witness called by us. Whether he will be a witness called by the defendant, I do not know. I don’t believe he was on the defendant’s witness list. He will be a witness called by us.

The defendant has argued that this is a trial tactic on our part. I think the facts speak for themselves. It is not a trial tactic.

The court should be aware that in December, I believe it was prior to any indication, Mr. Flynn was not of record in this case, Your Honor. He filed a motion to appear pro haec vice in this case to be heard the day of trial, the day the case was originally set for trial which was March 22nd. That was filed approximately — it was filed sometime in March.

In December or January we had made clear to the law and motion court our need for a commission to take Mr. Flynn’s deposition because he was a witness in the case


and we intended to take testimony from him and use that testimony in this case. So that the record is quite clear that before there was any question of Mr. Flynn acting as trial counsel, our need and our intention to use testimony from Mr. Flynn and to use him as a witness was clear, and the circumstances in light of the allegations, are clear that he is a probative and important witness in the case.

The problem is that we are now going to be in a position where frankly one of the central actors in this case, Mr. Flynn, because the heart of the case has to do with what happened between Mr. Flynn and Mr. Armstrong in the transfer of the documents, is now going to be the person to argue as an attorney on behalf of another defendant. He is not representing himself, his own credibility and his own, by implication or directly, his own motives.

The ABA, the recent Model Rules of Professional Conduct of the American Bar Association, which are not in force in this state, state that a lawyer shall not act as an advocate at a trial in which a lawyer is likely to be a necessary witness except where one, the testimony relates to an uncontested issue; two, the testimony relates to the faith and value of legal services rendered; or three, it would work a substantial hardship on the client.

The Comment to that rules goes on to talk about the problem, not just when a client is calling a lawyer as a witness but for either side, the problem of combining the role of advocate and witness. It says, "Combining the role of advocate and witness can prejudice the opposing party


and can involve a conflict of interest between the lawyer and party. The opposing party has a proper objection where the combination of roles may prejudice that party’s rights in the litigation."

That is precisely the situation we are in here. Mr. Flynn, in effect, is going to have the opportunity to argue his own credibility, his own motivation, and to infer to the jury in the context of arguing as attorney for another party the propriety of Mr. Armstrong’s conduct in association with him.

In light of the lateness with which the application was made from Mr. Flynn in the role of counsel in this case, the firm of Contos & Bunch was sole counsel of record in this case from the time the action was filed until the time that the court ruled on Mr. Flynn’s pro haec vice motion which was, I believe, April 2nd or actually by the time it got ruled on it was like April 9th.

So that the argument that Mr. Armstrong will be substantially prejudiced under the circumstances should not carry a great deal of weight because frankly until a week or two ago it was not known whether the court would grant Mr. Flynn permission to appear pro haec vice.

It was known that the problems that I have raised with issues in the case and the work on this case has been done by the firm of Contos & Bunch. They are California counsel. They have represented Mr. Armstrong throughout, and the prejudice to us is simply greater than any benefit to Mr. Armstrong. This does not mean that Mr. Flynn cannot


assist the firm of Contos & Bunch. What we are talking about is the ability and the problem in acting as counsel before the jury.

We are not even saying he can’t argue the motions to the court. We are talking about the particular problem of being able to play the dual role before the jury of advocate and witness.

So it is on the basis of these facts and circumstances that we raise the issues that we do and we ask not for a complete disqualification, but we do ask that these forms of participation be prohibited by the court.

THE COURT: Very well.

MR. FLYNN: If Your Honor’s ruling is the same, then I will refrain from argument. If Your Honor wishes to have me be heard –

THE COURT: Well, my reaction is, of course, that his first point deals with your use of these exhibits, I suppose, as it might relate to other cases, and my reaction is that if counsel remains in this case, he is subject to the power of this court to control these proceedings and access to exhibits, and the court can make any appropriate orders it may see fit with respect to any exhibits that are available. I assume that counsel has knowledge of these exhibits gained from things which occurred in the past. He knows pretty much what is there and it seems to me that I can’t erase that from his mind, and it seems to me that the court has the power to control the use of any of the exhibits in this proceeding, and this should cover that problem.


So far as the other aspects of it, it again seems to me that this case has been expedited. It has not taken five years to get to trial like most of our cases, and the fact that Mr. Flynn has only come in of recent date only bears upon the fact that this case hasn’t been around all that long.

It seems to me that the present state of our ethical rules are that as long as there is no prejudice to the client and the client wants a particular lawyer to represent him, then the client’s wishes should be respected and if Mr. Armstrong is willing to waive any possible claim of prejudice by reason of the fact that Mr. Flynn is here and apparently is going to represent him, that is satisfactory with the court.

Also, the court would make the proviso that Mr. Flynn, if he is to argue the case,can’t argue his own credibility as to matters as to which he is testifying or would be required to testify, and if under those circumstances Mr. Armstrong wants Mr. Flynn to represent him and is willing to waive any claim of prejudice, then as far as I am concerned, Mr. Flynn may remain as counsel in the case.

MR. FLYNN: Thank you, Your Honor.

Mr. Armstrong is here so we could put that on the record right now.

THE COURT: It is Mr. Gerald Armstrong?

MR. ARMSTRONG: Your Honor.

THE COURT: You heard my statement?



THE COURT: You understand that plaintiff has indicated they are going to call Mr. Flynn as a witness in this case. If that occurs and he testifies, if he remains as counsel, he will not be permitted to argue his own credibility; that is, be can’t argue to the jury that he should be believed over somebody else.

MR. ARMSTRONG: I understand, Your Honor.

THE COURT: And that conceivably might be considered prejudicial to your case. I don’t know.

So, do you waive any claim of prejudice by reason of this fact?


THE COURT: And any other claim of prejudice that might exist by reason of the fact that your attorney may be called as a witness in this trial?


MR. FLYNN: In that light, Your Honor, I would like to correct one statement which is in the record regarding this contempt proceeding which is somewhat personal to me and somewhat important, I would think, for purposes of the record. And that is that it is true that I was held in contempt, but the court should be aware that it was done under the following circumstances: I did not appear and defend the contempt proceeding because that was at that point the third contempt proceeding and the twelfth legal proceeding that had been brought against me. It was the church’s practice to notice my deposition in various areas of the country all at the same time, and then when I didn’t appear, they would


bring contempt actions in different areas of the country all at the same time, and this, in fact, happened on one occasion when I was conducting legislative hearings with the City of Clearwater, Florida relative to the Church of Scientology where my deposition was noticed in Florida, in Massachusetts and in California in three separate cases, all at the same time, and I was unable to appear in those three separate locations, and then ex parte the Church of Scientology went in and sought contempt actions.

With regard to this one matter that I did not even appear and contest because I thought it was so frivolous on its face, it related to the following facts: A deposition was taken in the De Wolfe proceeding, the probate proceeding, and thereafter two members, a member of the Church of Scientology and its attorney Sherman Lenske filed affidavits with the court relative to part of that deposition proceeding, even though the deposition was under seal, and distributed those copies of their affidavit to the news media on the front steps of the Riverside Superior Court.

Thereafter Miss Dragojevic obtained possession of those two affidavits and called me on the telephone and asked me about the two affidavits, and I said on the telephone that I confirmed that in the deposition a bank official had, in fact, testified that there was an attempted forgery in the amount of $2 million of one of L. Ron Hubbard’s checks on or about the time that he disappeared and this other group had taken control of his assets.

On that basis, Miss Dragojevic, unaware of the


sealing order in connection with my response to the two affidavits that had been made public, filed an affidavit in an unrelated federal action, and thereafter the Church of Scientology brought the contempt, Mary Sue Hubbard and the Church of Scientology brought the contempt action against me in the Riverside Probate Court on the basis of Miss Dragojevic’s affidavit relative to that simple phone conversation.

I did not appear and defend it and the judge apparently found me in contempt. I subsequently went out there and asked him to vacate it. I had not filed a memorandum in support of it, and the judge at the hearing said, "Well, there was no bad faith. It was only a mere technicality and that is why I entered it." And he chose not to vacate it.

Those were the circumstances under which that took place, and as I indicated, it was a long succession of harassing legal actions that the Church of Scientology has taken against me.

Other than that, I would just like to correct the fact of what took place before Judge Shimer. Judge Shimer had the issue on my petition for pro haec vice before him, and in the middle of the argument I simply stood up and told Judge Shimer that rather than address the issue of my access to the documents during the week that has transpired between — the week that transpired between the time of the motion and the time that this trial would actually begin, he simply said enter an order preventing the access during that time


period and leave everything else to the trial judge as to how he will conduct the trial and what documents will be examined at that time.

Secondly, as the court is going to find out through the course of this proceeding, I have long known about the contents of all of those documents. In fact, I had them in my possession for two months and, in fact, the great bulk of the documents, as the court is going to find out, are already in the public arena and approximately a year before Mr. Armstrong ever came to me, I filed a 200 page report with the City of Clearwater in which some 10,000 pages of exhibits, including many of those documents, were attached to that report. So, on those two items, I would just like to correct the record.

MR. LITT; Well, Your Honor, that is one of the problems I have. What has just occurred is one of the problems I have in the case.

I am not going to go through all Mr. Flynn’s claims about legal proceedings that have been brought against him and everything else.

Mr. Flynn was represented in the contempt hearing. All I did was recite the basis of what happened, and the reason we are concerned about his access. That is still our concern, and we would ask a minimum; one, I point out that Mr. Flynn states that he cannot recall many of these documents so that the issue that he has had access does not really solve the problem. That is from his deposition testimony.


What Judge Shimer ordered, and I am quoting from the transcript here in response to Mr. Flynn’s offer to stipulate that the matter of access to the documents go over to the trial court. Judge Shimer said:

"I accept your offer and that will be the condition to the granting of the application, that you are not to be allowed access to the sequestered documents except on order of the trial court judge."

Now I would ask that at a minimum this issue of the documents and access to the documents, that the status quo remain until the court has made rulings on the motion in limine regarding the documents.

THE COURT: Well, he is here. Where is he going to go look at the documents while he is here, counsel? I suppose that sooner or later I will get around to ruling on these motions.

MR. LITT: He doesn’t need to look at the documents if they are not going to be admitted in evidence.

THE COURT: I haven’t ruled upon that.

MR. LITT: I understand that, so what I am asking is that the status quo with respect to no access to the documents remain until such time as the court does rule because if the court rules that the documents are not admissible, then there is no need for the representation of Mr. Armstrong for Mr. Flynn to have access to these documents.

THE COURT: I haven’t made any orders of any kind, so I don’t know what you are referring to.


MR. LITT: I understand.

Well, what I am referring to is the somewhat confused, the present status of Judge Shimer’s order. Does that remain in effect until further order of the court?


Do you want to take up the defendant’s motion to disqualify Mr. Litt?

MR. FLYNN: I will waive it, Your Honor, if your preliminary ruling is as stated.

THE COURT: Okay. Motion is denied.

The next motion purports to be the motion limiting the subject matter of admissible evidence and testimony of various witnesses.

MR. LITT: Your Honor, if I may make a suggestion. I think that the issues would probably flow more naturally if I argued the motion in limine regarding the documents before that.

THE COURT: Which motion is that; sub (b), documents sealed by the court?

MS. DRAGOJEVIC: Yes, Your Honor.

MR. LITT: Yes, Your Honor, and the relevant pleadings in that, Your Honor, are three. There is a motion in limine regarding admission of and testimony relating to the documents sealed by this court, and then there is an opposition to that motion, and then there is a combined reply memorandum which largely speaks to that but is also a reply on the motion in limine regarding the subject matter.

THE COURT: Very well.


I have read the documents that both parties have submitted on this matter.

So far as the tentative rulings are concerned on this, I don’t know whether I have any tentative rulings. I am leaning toward the position that once we determine what the issues are, that any evidence that is in the documents that is relevant to those issues should be received in evidence.

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

THE COURT: I have some problems with some of the issues, but be that as it may, go ahead.

MR. LITT: Discussing briefly what the issues are, what the circumstances are because I think the defendant’s papers make clear that at least as we view it that the purported relevance of the documents essentially relates to issues that are not permissible issues in the case at all.

The case, this case is, in essence, a very simple case, although nothing simple about the litigation of the case exists.

But the case itself involves the following circumstances: Mr. Armstrong was a member of the Church of Scientology and active in the Scientology movement from 1969. He was a dedicated Scientology staff member who worked full time for the church for many years.

L. Ron Hubbard is the founder of the religion of Scientology. He is revered by Scientologists. He is


considered the sole source of doctrine for the Scientology religion, and his writings and researches are the basis of the religion, and as such, be holds the title of founder and holds an esteemed position to any Scientologist, which is beyond really what one who has not had direct experience with it can characterize, and it really can only be understood in the context of a characteristic ken that a religious follower has for the person who started that religion.

Mr. Armstrong in 1980, January or February of 1980, petitioned within the church that he be appointed as an archivist to gather up materials that had been found in a building on church property in a place out in the desert called Gilman Hot Springs, it turned out to be a great deal of old material of the Hubbards which had been gathered, as Mrs. Hubbard will demonstrate eventually and Mr. Armstrong does not dispute, over years of marriage and from Mr. Hubbard’s life before the marriage. And these materials had been gathered up in 1959 when the Hubbards left Washington, D.C. and stored for many years by them privately, and then moved to church property and stored there.

These were come upon. Mr. Armstrong says that they were come upon in the course of what he calls a shredding party. Regardless of the circumstances, they were come upon and according to him, realizing the importance of these documents, he took them to this superior. The upshot of it was that it was deemed that these materials were of great importance and great value and should be preserved and maintained and protected, and Mr. Armstrong petitioned to


hold the post to do that. He petitioned to Mr. Hubbard, with copies to various church Scientologists for approval.

He got back a note, which it is not clear whether it was written by Mr. Hubbard or not, but that essentially approved his holding this position. This was a church position. The evidence that will be given to establish that, including from Mr. Armstrong himself, although he waffles on the subject, is undisputed.

So he sets about gathering up these materials. The materials that he gathered were the most private of papers. They were letters between Mr. Hubbard and his current wife, Mary Sue Hubbard, the intervenor. They were letters between Mr. Hubbard and his first two wives. They were letters between Mr. Hubbard and his parents.

There was a marital agreement between Mr. and Mrs. Hubbard. There were private journals of Mr. Hubbard through various years of his life. There were Naval records. There was correspondence with attorneys. There was business correspondence.

There were letters with friends. There were certain writings concerning international activities of the church.

There were manuscripts, tax records, divorce records. This is the type of things. These were all things, by the way, that were given to Mr. Flynn.

Mr. Armstrong, as part of his function as archivist, was responsible to provide information to a man named Omar Garrison. Omar Garrison had contracted with the


Scientology publishing house to write an authorized biography of Mr. Hubbard which was subjected to approval, and he was given access to various of these materials from these archives, and without getting into whether it was fully understood by Mrs, Hubbard that this was, in fact, going on, nonetheless it clearly happened under the auspices of the church, and we are not making an issue out of it in this case.

Mr. Armstrong gave these materials to Mr. Garrison. By Mr. Armstrong’s own testimony, he gave them to Mr. Garrison solely for use on the biography. It was not done for any other purpose. He didn’t think he had the right to use them for any other purpose. Mr. Garrison didn’t think he had the right to use them for any other purpose. They were considered confidential by both of them. They had only this limited purpose which had control on it because ultimately the manuscript itself was subject to review.

Mr. Armstrong at a certain point became disillusioned, for whatever reasons, with the church. He left the church in December of 1981. Prior to doing that, he made copies of voluminous amounts of material to give to Mr. Garrison because he felt that Mr. Garrison should be sure to have access to that.

He then says that he helped Mr. Garrison on the biography for a period of time. Mr. Garrison says that he did up until pay of 1982. In May of 1982, Mr. Armstrong took a letter, a private, and by his description, extremely private letter of Mrs. Hubbard to Mr. Hubbard and took it to Clearwater, Florida and showed it to Mr. Flynn.


The conversation that took place between Mr. Flynn and Mr. Armstrong I do not know the details of because it has been consistently asserted that it is protected by the attorney-client privilege. Nonetheless, subsequently Mr. Armstrong went to Mr. Garrison and asked Mr. Garrison if he could take copies of various materials. He said he needed them for his case. They were legally related, and in the course of the next several months he made copies of 8 to 10,000 pages of these private materials which were provided either to Mr. Flynn and later in, I believe it was, a second delivery also to the firm of Contos & Bunch.

Those are the materials that are under seal. Those are the materials that are at issue in this case and the materials are what I described to the court earlier. What I picked out are things that have been established were sent by Mr. Armstrong to Mr. Flynn or to the firm of Contos & Bunch.

Now the issue, therefore, is whether or not these private materials can be used by the defendant and introduced into evidence. We have made clear our position that we will not introduce the evidence — I am sorry — the documents. By not introducing the documents, we are foregoing from a legal point of view a substantial issue in the case because the documents are very private documents, but because we are not prepared to vindicate our rights solely by giving them up in the very course of doing it, we have chosen to limit the issue, and we will present testimony that simply categorizes the nature of the documents in the way that I


stated before, most of which testimony comes from Mr. Armstrong.

These are letters and correspondence. They are this period, they are that, most of which Mr, Armstrong has testified to.

Now, in light of that issue, the defendant has put forward certain theories of the relevancy of this. We don’t intend to introduce them, and given the fact that all we are doing is providing general categorizations, most of which come from Ms. Armstrong, we are not opening up in any way in our case the contents.

The defendant has put forward a variety of theories as to why it is relevant, the most important of which I will address last, and that is his public policy theory. I will say that because that theory, I think, is the real theory on which he rests his argument of the relevance of the documents, but let we briefly speak to the other theories that he puts forward.

He says first it is relevant to damages. It is not relevant to damages because providing a private letter, even if the contents of the document do not speak to anything particularly private, is an invasion of privacy and therefore we are entitled to proceed strictly on the fact that these were private materials that were provided in an unauthorized way, and if we don’t rely upon the contents of those materials to establish damages, which we do not, then the defendant is not entitled to argue that the contents show that they are not private because we are not arguing that the contents


show that they are private. We are arguing that the nature of the material is private.

If you write a letter to your spouse and in it all you do is talk about what happened in court today, which the whole courtroom saw, you are entitled to an action for invasion of privacy for somebody improperly gaining that letter and taking it from you and showing it to someone to whom you did not authorize it, and you could rely strictly on the fact that it was a private letter, and if you didn’t argue that the contents were particularly private and rested solely on the fact of the privacy of the material in its general nature, then the defendant would have no reason to argue that the contents aren’t private. Only if you asserted that there was something independently private about the contents would you do this.

So, we rely upon the general characterizations. They are journals. We rely really on Mr. Armstrong. Mr. Armstrong says these are private materials. Mr. Armstrong says they are confidential materials, and it is on that that we are preparing to put forward our case.

So, they are not relevant for damages. It is contended that they are relevant because the facts in them are in the public record. The problem is that this confuses the issue. We are not talking here about a particular fact. We are talking about providing copies of private documents. Therefore, if one of the facts in the documents is private, given the way that we are framing the case, it does not matter.

Again, only if we were asserting the contents


of the documents themselves as an independent basis would this be relevant. What facts are in those documents and whether any of them have ever been published anywhere or not is not relevant in light of the way that the case is being framed by us and in light of the way that we will put forward the evidence which is without reference to the contents themselves of the documents.

Therefore, the only real issue has to do with the public policy issue because if there is public policy, the defense is not available which, as we will demonstrate it is not, then the damages theory and the publication theory does not apply.

The most that could be done on the publication theory is to show that a particular document that is under seal, there is a public copy of. In other words, if Mr. Flynn contends that there is a Naval record that was already in the public record, then it could be put forward that that document was not private. That is at least discoverable although we would contend that is not a defense because since they were taken from Mr. Hubbard or from the church or Mr. Garrison, they were private materials, and the fact that some other copy existed in the public record did not obviate their privacy.

But even on that basis, it becomes relevant. That is the only basis on which any documents — and that would be by introducing the public record documents and then a determination could be made at that point, and we would frankly, if necessary, enter into stipulations as to whether


or not it is the same as the documents under seal without introducing the documents under seal. So that the heart of this comes down to quite an extraordinary public policy issue.

Now, in discussing that issue, we would suggest to the court that the court should understand the context in which we are dealing. The real theory that the defendant is advancing and especially as it applies to the document is to accomplish through the vindication process what they were not entitled to accomplish on their own, to wit: Mr. Armstrong takes the documents. Court restrains his use of the documents. Requires them to be put with the court. Requires Mr. Flynn and requires the firm of Contos & Bunch to return the documents.

Why were the documents taken? So that they could be used by them against Mr. Hubbard, against Mrs. Hubbard and against the church.

Now we come to trial. They weren’t allowed to do it by taking them. What they want to accomplish is to be allowed to do it under the imprimatur of this court on the theory that it is evidence. We have cited cases that talk about the dilemma that a party seeking to vindicate privacy rights faces in that there is a danger that the very process of vindication will intrude worse than what occurred originally, and we face the potential problem of that in this case, and I think it is critical for the court to understand that.

They want these documents spread on the public


record for use elsewhere. That is the intended objective. It is an effort to engage in, and the theory that is being put forward is an effort to engage in trial by calumny. It is a desire to intrude into these private materials so that they can be used in the public arena in various ways as part of what is in reality a very intense litigation battle and public battle that exists throughout the country in which Mr. Flynn is involved with the church, and I am not asking for the court to rule on the merits of these issues, but the implications of how the defendant is trying to utilize the processes of this court, I think, are important. It is important to understand that context.

Now, before addressing the public policy issue as such, I think that it is important to first speak to the standard that the court has to use with respect to the documents. I argued before relevance and, in fact, it is our contention that under traditional relevancy standards these documents are not relevant given how we have framed and intend to frame the case, But the standard, in fact, is not relevant. The standard, as we have demonstrated in our brief, is that because these documents are private documents, that they must be more than relevant once it is established that the documents themselves are private and are entitled to the privacy protections of the United States Constitution and the California Constitution, and I will not elaborate on the discussion in the brief.

We cited several cases; Boyd, Couch, United States versus Hubbard, Nixon, all of which clearly establish that


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

The cases cited in a rather weak effort to oppose that concept are essentially cases having to do with the scope of the exclusionary rule and nothing else, and it is very clear that the materials themselves are private documents.

Now, once they are private, the traditional standards for infringing upon constitutionally protected rights that are fundamental rights comes into play. The California cases in the context of discovery are crystal clear on that. Britt versus Superior Court is crystal clear on that. Therefore, what must be shown, a compelling state interest in disclosure or in use in this case where there are no less intrusive means available. That is the standard that must be met in order for this court to determine that these documents may be admitted into evidence.

We have cited numerous cases that show that material frankly much less private than what we are dealing with here has been protected.

In the case of Porten, student transcripts that were on file; in Valley Bank of Nevada, financial data; in Board of Trustees versus Superior Court, personnel files were not discoverable.

These are materials frankly that on their face are not nearly as private as the materials that we are talking about here. The defendant cannot begin to meet this standard.

We have already said that we are not going to introduce the documents. We have already said that the


defendant admits these categories in general. The reference to the categories, which is all that is needed, is far less intrusive than permitting the contents of the documents themselves.

Now, since the materials meet the constitutional requirement, it is the burden of the defendant to demonstrate that that constitutional right way be infringed by the introduction of the documents. In the exhibit list submitted by the defendant, the list for the documents under seal says "Documents under seal" which is reflection of what we are talking about.

Any admission of the documents at all could only be done based on a particularized finding by this court that the individual documents, and only those portions of the individual documents, meet this test. It is impermissible for a sweeping admissibility of documents, even if any documents do come in which I will turn to more in a moment, but I wanted to emphasize this point. But any determination, if the court finds that any of these theories are permissible or potentially applicable, then on a document by document, and for that matter, paragraph by paragraph basis, a determination using this standard must be made by the court.

We cited to the court the case of United States versus Hubbard which is a case in which documents were used in a suppression hearing, and the issue was whether or not the documents would be sealed or unsealed.

Now, we are in a slightly different procedural posture here, but it was the contention of the appellant,


the church, that it had an interest in maintaining them under seal. They were private materials, just as we are maintaining that we have an interest in their not being introduced into evidence and their being held under seal which they already are.

The court recognized the church had an interest in their being under seal, that it had a privacy interest, that the constitutional analysis that I have set forth applied, and that therefore the general order on sealing them was illegal. That any unsealing order had to be gone through on a document by document basis with written findings justifying under the constitutional standards the intrusion involved, and as to the theory that evidence of criminality, which is a somewhat vague issue that seems to get thrown around in this case, was relevant, that that would have to be determined, and then that was not a generalized basis but was simply a factor in the court’s making, engaging in this balancing process to see whether or not the privacy interest was outweighed based on the standards that I have set forth.

Now before I turn to the merits of the defendant’s public policy theory, I just want to note that at the time of any such document by document.determination, if it were to occur and we don’t think that we should ever get that far, the other evidentiary issues we would raise at that time — it is obviously very difficult to deal with whether something is hearsay in the abstract. So it seemed to us that the best procedure was to reserve those questions until


we knew what, if any, documents we were dealing with, and I wanted to note that.

The public policy defense, as it is called, defendant contends that he was justified in invading the Hubbard’s privacy, in taking other people’s documents, in copying other people’s documents, in providing them materials to use against them essentially on the ground that it exposed alleged frauds of Mr. Hubbard or the church.

We will establish first that this is no defense at all. It is not a recognized defense, It does not exist. The cases cited by the defendant do not apply or even comply to the circumstances here and secondly, we will establish that even if such a defense existed and were applicable here, that the defense in the context of this case is barred by the First Amendment because the issues of trying to put on trial alleged fraudulent representations concerning Mr. Hubbard and his role in the church are themselves barred by the First Amendment. They are not justiciable and since they are not justiciable, they cannot be a defense.

Before I discuss the first prong of our analysis, which is this is not a defense, I want to read from what the defendant says they want to show. The defendant says, they set forth in their opposition to our motion the things that they want to establish through introducing these documents to show that Mr. Armstrong was justified in doing what he did, and they say the following:

"The documents which are under seal in this court prove that these representations" –


we never know really what they are — "are false and that plaintiff and intervenor knew they were false when made."

Then they state what they establish, They established that L. Ron Hubbard is a fraud. He doesn’t have the qualifications that have been claimed. His personal life and practices contradict how he is represented. Promises and claims made by Scientology are false. Mr. Hubbard has controlled the Church of Scientology for a long time. Mrs. Hubbard was his agent in effectuating that control. Mr. Hubbard owns the Church of Scientology as well as controls it. There is no corporate integrity to any Scientology organizations.

I set these forth because the defendant from their own mouth or the defendant has demonstrated precisely the First Amendment problems inherent in the whole theory that he wishes to advance which is, in essence, to argue that Scientology is a fraud. That is the heart of what this is about. That is what they are trying to do as I will elaborate.

First, leaving aside the constitutional issues and taking simply the issue of whether or not this public policy theory is a defense. The defendant has made an extraordinary number of allegations without any specificity, particularity, definition, character. He says that there have been various misrepresentations regarding Mr. Hubbard’s background that aren’t true.

We don’t know when they were supposed to have


occurred. We don’t know where they were supposed to have occurred. We don’t know the circumstances under which they occurred. We don’t know who said them.

What we do know is that Mr. Armstrong said that the whole time he was the archivist people were coming to him to check with him to make sure that facts about Mr. Hubbard were accurate, and now he wants to use generalized statements that in the past misstatements have been made to justify his impermissible and tortious conduct here. Such generalized statements do not come close and cannot come close to constituting a fraud. You cannot — it is not fraud to argue that anything that someone contends is incorrect amounts to fraud. Fraud is a very narrow standard. It is a very high standard, and I note preliminarily simply that even if fraud were a defense, which as we will see it is not, that they have not come close to establishing that they are, not to mention the fact that many of these facts can simply not be established to be fraudulent as a matter of law, and that allegations like this characterize this litigation, and it creates a difficult situation.

We are in court trying to vindicate our rights, and what we are faced with is a barrage of wild allegations, all over the board. The court heard Mr. Flynn the other day. Grand juries here, this here, that here.

It is a situation in which to have access to the courts, it is like running a gauntlet of allegations of every sort to deal with a simple, straightforward issue of whether Mr. Armstrong was entitled to do what he did.


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

Now, the defendant’s argument that there is a public policy exception relies on two main cases, copies of which the defendant provided to the court, and this is again leaving aside the First Amendment issue. First they cite the Pearson versus Dodd. That was the case in which Drew Pearson and Jack Anderson published information concerning Senator Dodd. It was information that one or more of Senator Dodd’s employees had taken from his files and given to Drew Pearson and Pearson knew that that had gone on. The court was faced with the issue of whether or not, not Dodd’s employees who took the information, who took the documents and provided copies, but whether or not Drew Pearson and Jack Anderson could be liable based upon the press publication of the information, and as such, it was a public disclosure of private facts case.

The court said in dealing with this, and it is a mixed tort analysis of invasion of privacy and constitutional analysis, basically said that where information is published in the press that is of general interest, that is a factor and in this case was a decisive factor that can be taken into account and should be taken into account. It is the traditional newsworthiness issue on invasion of privacy and public disclosure of private facts.

So, in an invasion of privacy analysis there are certain things about me which are not newsworthy even if I am a public figure and they cannot be published, but


if I am a public figure and they are published and they are newsworthy, they are protected both as a defense to the tort but also more fundamentally constitutionally protected.

However, the court specifically said we are not here deciding Senator Dodd’s employees, and Mr. Armstrong is in the position of Senator Dodd’s employees. He went and improperly took these materials. He copied then. He knew it was for an improper purpose and he sent them off. He is in the position of Senator Dodd’s employees.

What the court said there is, "We don’t have them before us. We will assume that what they did was improper although we don’t decide it."

And the court stated in making the distinction between a publication situation, such as was the issue with Drew Pearson, and an intrusion situation said the following, and this is a quote:

"Wherever there is intrusion, the intruder should generally be liable whatever the content of what he learns."

The concurrence in that case was very careful to say that this case is confined to the fact that there were stipulated facts. It is a narrow case. It is a press case, and it should not be taken for more than what it was, and the defendant is trying to take it for more than what it is. The defendant is trying to use it for the proposition that a public figure is subject to tortious conduct if you believe that the tortious conduct will give you information that is newsworthy.


That seems to be the defendant’s theory. That is certainly the proposition that they are arguing from this case, and this case does not come close to that.

Pearson versus Dodd is essentially a First Amendment press case under New York Times versus Sullivan and its progeny, and the whole question of press privilege in the context of publication.

The second case cited by the defendant is Willig versus Gold. This is the other main case that they rely on, In Willig versus Gold, Gold, the defendant, had acted as a broker for Willig, the plaintiff. He had particularised information that Willig had made specific false representations to a buyer just in a time frame that is contemporaneous with the activities in the case.

He told the buyer — Gold, the agent, the broker, told the buyer about this. Willig sued, the plaintiff sued saying, "You breached a fiduciary duty and you breached it because you had learned that I had made this misstatement to this person in confidence."

The court said that it was not a breach of fiduciary duty for him to have disclosed this information. There is no question there of him having gone into the plaintiff’s office and taking copies of confidential materials. The issue in Willig versus Gold was after this was over, he went to the buyer and he said, "Hey, I think you got ripped off. You got cheated."

That is what happened there. There is no invasion of privacy, and the court said informing someone of this


is permissible, and it is not a breach of fiduciary duty. That is all that case stands for. It is a case from 1946, and to use it for the proposition that the generalized right to privacy, which every California Supreme Court decision discussing has given expansive interpretation to, to argue that this case from 1946 stands for the proposition that is being put forward here that you can willfully take someone’s private documents on your belief that it will expose them as a fraud is simply so far from what the case stands for that it is really hard to respond to it. But suffice it to say that under the facts, the case is not close to what we are dealing with here.

The last authority on which the defendant relies is the Restatement of Agency Section 395 Comment (F), which is cited in Pearson versus Dodd and in reality is pretty much parallel to Willig versus Gold. What that says is one can reveal information. It doesn’t say anything about taking things. One can reveal information concerning one’s principal if the principal is committing or about to commit a crime.

So what this does is it carves out a very discrete exception to the confidentiality of a fiduciary relationship. If one is committing or will in the future commit a crime, you can tell the interested party. Essentially that is what that says.

Obviously there are no facts and circumstances here that begin to come under this. The court should be aware that the allegations that Mr. Hubbard is a fraud have been made by Mr. Flynn for five years, have been made by


others for decades. That Scientology is a fraud. That these statements are fraudulent.

No law enforcement agency has ever expressed any interest in prosecuting the claim that statements about Mr. Hubbard’s background are a fraud. The theory that this is evidence of crime, not to mention Mr. Armstrong’s own statement that it wasn’t going on because he was making sure and people were coming to him to make sure that information was accurate.

Now, let me pose to the court in terms of analyzing the logic of defendant’s position the following questions or hypotheticals: There are a series of public figures, well known public figures who information has come out in recent years made substantial misrepresentations.

John F. Kennedy was nominated for the vice-presidency in large part upon his purported authorship of "Profiles in Courage" which there is some substantial question about whether he ever wrote.

Franklin Delano Roosevelt had a mistress for years while he and his public relations people asserted the healthy state of the marriage between Franklin and Eleanor Roosevelt.

Joseph Conrad, the famous English writer, promoted the fact that he had extensive maritime experience and had risen to the rank of captain. It turns out that this is simply not so. If you ever read any of the books of Conrad, you know this his books sold on the basis of his abilities to describe scenes having to do with the sea.


Elliot Janeway, the noted economist, has claimed to have graduated from Cornell University. According to a recent press report, he never graduated from Cornell University. He attended Cornell University.

Jimmy Carter had ghostwritten his autobiography shortly before he began his campaign for the presidency. It was not publicly disclosed that it was ghostwritten.

I use these examples simply to say are we now in a situation where any person can — after all these are arguably misstatements of fact about an important public figure. Is there really a license to engage in the kind of conduct that defendant is asserting here? The implications are staggering. The ability for self-defining justification is enormous.

It makes any public figure a legitimate object of theft, lies, deception, dishonesty, maybe even not only public figures, and how is this done? It is done in the name of public interest.

I mentioned to the court the other day and we will discuss later on the issue of the Fair Game Doctrine.

THE COURT: Maybe it’s a good time to take a recess. We’ve been going for quite a while.


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

MR. LITT: Thank you, Your Honor.

Essentially, Your Honor, the theory that the defendant is putting forward is, to paraphrase their


characterization of what they call the Fair Game Doctrine, is that the defendant was entitled and any defendant in the position would be entitled to lie, cheat, steal from another and it would be justified by public policy, and that is really the heart of their defense.

Now, I have spent some time on cases that they have cited in support of their proposition, but I think more to the point are the cases that clearly show that this is not a defense at all, the cases that have not been noted by the defendant in his papers.

We have cited to the court the cases of Snepp and Marchetti. That is a United States Supreme Court case and the Circuit Court of Appeals case, federal decision. It is a former CIA employee signed a nondisclosure agreement with the CIA. Wrote a book and put it in the hands of his publisher, and the CIA moved on the grounds that he had not cleared the book with the CIA to enjoin the publication of the book and to impose a constructive trust on any profits that had been made.

The Supreme Court said — and the argument was this information is in the interests of the public and this is a restraint on information that is of great public importance, information which, among other things, would show misdeeds by the CIA.

The court said that there had been a clear agreement. There was a confidential relationship, and there was no first Amendment problem here at all. The injunction was entirely proper and the CIA was entirely within its rights


to restrain the dissemination of information that he had learned in the course of his employment with the CIA.

Perhaps the closest case to ours is a case cited in our papers, Dietemann versus Time. That is a Ninth Circuit case decided under California law.

Dietemann versus Time is quite an interesting case because, in fact, it is much more compelling than those asserted here. The court squarely decided against the theory being advanced by the defendant. In Dietemann two reporters who were working with a district attorney had information that an individual was practicing medicine without a license and was engaging in fraudulent conduct and saying that he could heal people through various unscientific ways.

After talking with the law enforcement officers and basically pursuant to an arrangement with them that by ruse they would gain access to this man’s home and get information about him, the reporters went to this man’s home. Said they had been sent there by some individuals who had referred them. Got inside the home and had with them a camera, a hidden camera, on which they took pictures and a hidden microphone on which they recorded events that went on there.

the individual involved, based upon the evidence obtained by these people, was prosecuted for practicing medicine without a license. The man sued in federal district court and the defendants, the reporters who had gained access to his home through the ruse, argued that they were entitled to do what they did because it was part of their news gathering function, that public policy and the First Amendment protected


their doing that and that the information showed that the man was a quack and a fraud, and this fact had been used in evidence to demonstrate that he was acting illegally and that clearly they were entitled to do this.

The court’s response, and I am quoting, was as follows:

"The First Amendment is not a license to trespass, steal or to intrude by electronic means into the precincts of another’s home or office. It does not become such a license simply because the person subjected to the intrusion is reasonably suspected of committing a crime."

That is the theory of the defendant in much less compelling circumstances because this was a press case and the press had special protection under the First Amendment. The court clearly rejected it and it seems to me that the harmony of all these different decisions from Pearson versus Dodd and Dietemann versus Time is essentially that acts that are impermissible as such, that constitute improperly going into one’s home, taking someone else’s things, there is simply no defense to that. There is no public policy defense to that.

Under certain circumstances there may be a public policy defense to simply information, publication or receipt and use of it that otherwise might be wrongful but where the acts involved are direct intrusions and violations of the person’s rights, there is simply no public policy defense.


That is what Dietemann clearly says, and Pearsons versus Dodd, in fact, says the same thing.

THE COURT: Well, of course, one of the problems I have is that I gather your complaint is couched in terms of, at least on behalf of Mrs. Hubbard, deals with invasion of privacy and deals with the idea of intrusion. Yet from everything that’s been submitted to me, it appears, and I am not entirely sure of all that will be submitted, but Mr. Armstrong came into possession of all this information with the consent of the church or Mr. Hubbard or possibly even Mrs. Hubbard as to some of it, either actually or apparent consent.

MR. LITT: But limited consent.

THE COURT: Well, be that as it may, there was no spying out, no subterfuge as I gather to gain any information. That the gravamen of the problem is because he didn’t return it when requested or turned it over to his attorney.

MR. LITT: No, he didn’t turn it over to his attorney. He gave it to Mr. Flynn, an attorney, and he has admitted that that was for use in other cases. So that the argument that they were given to his attorney –

THE COURT: Maybe that is a publication if he gives it to somebody else.

MR. LITT: It is not a publication under public disclosure and private facts cases. Publication has to be a public form of dissemination.

It is, however, a clear violation of privacy under California law. In the Porten case, it involved exactly


transferring a copy of a document in the rightful possession of the university to another person without permission. They had it only for a limited purpose. They gave a copy of it to another party outside of that authorized purpose.

The court said –

THE COURT: What case is that?

MR. LITT: Porten, P-o-r-t-e-n. I can give the court the cite. It is 64 Cal.App.3d 825, Porten versus University of San Francisco.

THE COURT: All right, go ahead.

MR. LITT: The other thing I think that is important is that Mr. Armstrong did not have access to these materials by his own testimony for any purpose other than to put them in the archives and give them to Mr. Garrison. He went to Mr. Garrison and said, and Mr. Garrison knew that and Mr. Garrison testified to that, that he only had the documents for work on the biography, and that the biography itself was subject to control.

Mr, Armstrong went to Mr. Garrison and basically asked him, and Mr. Garrison agreed, and I think also could but isn’t subject to a tort action, to give the materials which they both knew were for a purpose beyond the terms under which they had been provided them.

In terms of the question that the court raises, an employee by definition has access to materials. It is clearly not the case that an employee therefore can use them for any purpose in a privileged way.

THE COURT: Now you are talking about a breach of


fiduciary duty, He is not an employee of Mrs. Hubbard. The church is not suing him for invasion of privacy.

MR. LITT: Well, to some extent that is true and to some extent it is not true. We would contend that he clearly has a fiduciary duty to Mrs. Hubbard even though he wasn’t an employee of Mrs, Hubbard because he knew that he had her materials and he had a duty to keep them, and we think the evidence will, in fact, support and justify a jury instruction on that issue as well.

The church invasion of privacy is somewhat more problematic. Where the privacy interest in particular comes in is that the information was private, the documents were private and he knew they were entrusted with maintaining their privacy, and the fact that they were private is an element of his breach of fiduciary duty, but the point is, in fact, it is an invasion of privacy and this is what Pearson versus Dodd says.

It says it is an intrusion and it is talking in the context of the facts of Pearson versus Dodd. It is an intrusion to do what was done here. That was the clear implication of Pearson versus Dodd, and what these employees who had access to all of these materials which were given to Drew Pearson engaged in was an intrusion. In fact, the court assumed that they engaged in an intrusion without deciding, by taking copies of these things which they clearly had access to but using them for a different purpose, and there is substantial law cited in our trial brief that talks about the fact that unauthorized use or unauthorised disclosure


constitutes an improper invasion of privacy under California law.

That is not the same thing as public disclosure of private facts. That is precisely the issue in Porten.

The court says this isn’t a public disclosure of private facts case because there is not publication within that meaning because it has to be relatively broadly disseminated, but it is an invasion of privacy and it is actionable.

To take another example, and this was discussed also in the Dietemann versus Time, is the Pentagon Papers case. Now the New York Times, just like Drew Pearson, was able to publish the Pentagon Papers, but Daniel Ellsburg was able to be prosecuted for giving them to them, and that is the distinction. It is one thing where the press receives something and it can use it. Was Daniel Ellsburg privileged –

THE COURT: Well, that case was never resolved.

MR. LITT: No, it wasn’t resolved.

THE COURT: It was dismissed. We don’t know what the law would have been had it resulted in some conclusion.

MR. LITT: But the law is quite clear, and where it has been raised, it has never been permitted.

The draft cases where Father Berrigan went into various military installations and raised a defense that he was justified in doing it to stop the war. Those defenses have not been permitted.

The defense of justification and necessity, as we explained in our memorandum, is extremely limited and
is not available in a criminal case.


Dietemann versus Time makes clear that in the precise, not precise, but in almost totally analogous circumstances where based on a purported relationship you gain access to private information and then you use it in a way which was not authorized and you engage in improper intrusion or you engage in improper disclosure, that is what Porten stands for, it is an invasion of privacy and there is no defense of public policy under those circumstances.

If there is any such defense, it is only for publication of newsworthy information, one, and conceivably for a verbal communication that in and of itself doesn’t do anything wrong advising someone of discrete information that you otherwise are obligated not to in connection with commission of a crime, neither of which are the circumstances here.

Other than that, those two arguable situations, there is no such defense. There is no case establishing that there is such a defense and every case that touches on the issue clearly indicates to the contrary.

Let me give the court another example. That is an example from this court, the PDID case.

Judge Olson recently heard a motion by the PDID for the return of all the documents obtained through California discovery in that case. The police department went into court and said, "We want the documents back. Even though they were lawfully obtained, the only purpose for which they were obtained was this lawsuit. Now we are entitled to them back, entitled to the copies back and all copies made from


the copies. We are entitled to those back."

The ACLU opposed the motion, arguing that there was evidence of criminal and illegal conduct in the papers in that case. That the public was entitled to know about that information and that they were entitled to have it to enforce the settlement that included certain standards applicable to the PDID.

The court ruled that even though these documents, unlike the circumstances here, were obtained completely lawfully, the documents that had been provided to the ACLU had to be returned and all copies had to be returned, and this public policy defense in compelling circumstances where, in fact, it could be established quite clearly that there had been violations of law by the PDID was simply not permissible. It was not a defense and the court so found. This decision occurred only, I believe, last week.

Given these authorities, the proposition, the extraordinary proposition that is put forward here for which there is not one case, I have discussed all the cases that are cited that come close to being on point that are cited by the defendant. There is not one case, and every case that reaches it in any form close to this, such as Dietemann versus Time, clearly rejects this defense, and the reason is obvious.

Let me give a hypothetical. Let us suppose that there is an employee who works in the court and that employee decides that one or another court staff member is engaging in unlawful conduct and therefore goes into the person’s


drawer or has access to the person’s drawer because it is part of their functions and takes things from that person that are their private materials.

Now, it may be that that information may be usable by some other party. That is not the issue that we are dealing with, but clearly that is not allowed. You cannot give private citizens any more than you can give the government license to violate people’s rights, trample on their rights in the generalized name of public policy, a self-defined public policy.

The implications for how society operates, for how any organization operates are enormous.

If this is the law and the defendants can cite no case that comes close to establishing that this is the law, and every case that really begins to get at the issues such as Snepp and Marchetti or such as Dietemann versus Time, clearly rejects it out of hand. Only cases dealing with attenuated circumstances where there is a thirdhand receipt or there is a discrete verbal disclosure have said that it may be able to made permissible. Those are the circumstances here.

Now, even leaving aside for the moment whether or not such a defense is available in some circumstances
and even leaving aside whether it would arguably be available here, it is our position that the First Amendment prohibits putting on this defense in order to make claims that Mr. Hubbard has been misrepresented by the church or by himself in the context of Scientology activities or that


representations concerning his role in the church or ownership of the church are permissible.

If these fraud allegations are not justiciable, then they cannot be a defense because the jury cannot decide that there was fraud, so that this is a second independent issue that must be resolved even if there is some arguable public policy defense available here. We provided to the court a declaration by a religious expert concerning this issue of whether or not there have been misstatements of fact concerning L. Ron Hubbard’s background, and in that evidence of Frank Flynn, he discusses the traditional circumstance of tendencies toward exaggeration by religious movements concerning personages who have been important in the development of this movement.

He discusses in the Catholic Church the tradition of hagiography which was biographical writings about saints and the fact that historical study has shown that the statements made in these hagiography files are in large part exaggerated, and he goes on to explain, he discusses, for instance, the fact that the story of the Virgin birth did not originate at the time of the beginning of the Christianity religion but actually came somewhat later in the development as did certain alleged facts concerning the genealogy of Jesus.

He discusses Moses, Buddha, St. Francis, Catherine of Sienna. There are a variety of examples given, but the point of this is that these representations arise and cannot be separated from a religious context.


In fact, Mr. Flynn says quite the contrary. To the extent that they occur, they are one form of indication of the religious character of the movement because the tendency for this to occur within religious movements independently frankly of any individual is so strong that, in fact, it evidences the very religious character of the movement; rather than what Mr. Flynn wants us to assert which is that it is somehow a demonstration of fraud.

He also says that he has seen the precise phenomenon occur in Scientology. That when he has studied the subject of Scientology — he, himself is not a Scientologist. He has been trained in the Catholic religion, but is also a student of comparative religion — that the forms and the ways in which people talk about Mr. Hubbard is exactly — within Scientology is exactly characteristic of this very phenomenon.

He explains that these things are simply inseparable from religious conviction and belief. He gives the example, for instance, within the Catholic religion of the view that transubstantiation of bread into the body and blood of Jesus, now this is precisely the circumstance we are dealing with here but I think it makes an important point. He says someone could argue that that was fraudulent by showing, that scientifically there had been no change in the chemical properties of the bread. Clearly not, his point being that quote factual representations that occur in a religious context, that are often accompanied by metaphor and a variety of languages peculiar to the religion cannot be pulled out


of their context and of the circumstances from which they come and alleged to be facts or not facts. They are part of the fabric of the way that the religion developed and of religious beliefs and activities, and as such are not justiciable under the First Amendment.

Any question about this, this particular issue in terms of background and representations about a religious leader in particular were settled by the case of United States versus Ballard. In that case the United States Supreme Court was faced with the issue of a fraud prosecution against the Ballards who were the founders of a religious movement called the "I Am" movement, and it was concerned that in fact it was a religious movement, and the issue before the Supreme Court was whether or not the trial court had properly determined that the truth or falsity of the representations that the government wished to prove were not justiciable.

Now, in and of itself one could think that that is simply referring to generalized religious doctrine, but actually an analysis of the record in that case shows that precisely the types of representations that Mr. Flynn wants to have adjudicated in this court were deemed impermissible to be adjudicated in Ballard.

Let me be specific, and some of this is not in the opinion itself, but it is in the record and we have searched the record itself and we cite to the Supreme Court records as well as to the opinion to get the actual representations which the government was not permitted to adjudicate.


The Ballards had claimed that they were free from ailments and that they had conquered death, disease and old age. The government wanted to prove that scientifically they could demonstrate that that was false. They could not do that.

The Ballards claimed that they could heal ailments, diseases and injuries which were otherwise incurable. That they had, in fact, done so on hundreds of occasions, and more importantly that they had proof in the form of written testimonials from the people whom they had healed. The government said, "We will prove that these written testimonials that they have held out were, in fact, written by the Ballards themselves and were falsified and that the people whose names are on them never signed them." Could not be adjudicated.

The Ballards had claimed, Guy Ballard had claimed that a religious book he wrote was dictated to him by St. Germain. You would think you can’t adjudicate that. He said it was written by him at a certain time in a certain place in 1930 in Mt. Shasta.

The government offered to prove, aside from whether St. Germain had dictated the book to him, that he was never in that time and place. Could not be adjudicated.

The Ballards had claimed that they had a portrait of St. Germain which an artist by the name of Charles Sindelar had drawn, and they were promoting this portrait.

The government offered to prove that the portrait had been drawn 20 years earlier by a different artist. Could not be adjudicated.


The Ballards had claimed that they had helped destroy three enemy submarines during World War II which were on their way to the Panama Canal.

The government offered to prove that no such incident ever occurred and they could not have done it. Could not be adjudicated.

Ballard is dispositive of the theory that gets promoted here that one’s representations about a religious leader’s background are not religious and somehow can be pulled out and dealt with in a separate world. Ballard just disposes of that in circumstances so much more clear-cut than those here.

It is self-evident from the Ballard decision that representations about backgrounds are considered by the court and were considered by the Supreme Court to be inherently intertwined with religious belief and doctrine and advocacy, and it simply was not a matter that the courts can deal with. They could not decide it.

The claim of fraud that the United States Government brought against the Ballards on these theories to prove these discrete facts were simply impermissible.

Here the claims that get made by the defendant about various misrepresentations about Mr. Hubbard, many of which claims I won’t even get into what would be involved in determining what claims we are talking about, what was accurate, what was inaccurate, what the context was and all of the matters that would be involved in trying this issue which would, I don’t even want to imagine what would be


involved in trying those issues.

Even if there is a public policy defense available here, the issue should not be and cannot be tried because it is impossible that they could be dealt with in a way that did not intrude on religious belief and, in fact, it is impossible to address them in any context except the context of Scientology.

Then the defendant says that a second basis of his fraud claim concerns Mr. Hubbard’s control, ownership and role within Scientology. It says it has been contended that Mr. Hubbard has no position, has no corporate position in Scientology, and that this is a fraud because in reality he controls Scientology.

Well, Mr. Hubbard has no corporate position in any Church of Scientology. He has a role in Scientology which is defined by Scientology and which under the cases that we have cited cannot be challenged and adjudicated by the court. He has the role of founder.

Any control that he has is religious control. It is precisely the kind of thing that cannot be gotten into by the courts. What role he has, what authority, religious authority, moral authority, whatever authority he has is precisely an issue that is not of concern to the courts and it may not be adjudicated by the courts, and when the church says that he is not responsible for the activities of the church, that he doesn’t run the church and the defendant wants to show you that he really does run the church, the very process of this inquiry of intruding into those questions,


making determinations about those questions, how his role operates, what is involved, on what basis people do or do not listen to him, it is impossible to address those issues without intruding in a totally impermissible way into protected First Amendment rights and making determinations which undermine the protections of the First Amendment.

We have cited cases such as Catholic Bishop which is the United States Supreme Court case involving the applicability of the Title VII — I as sorry, the NLRA to religious organizations in which the court discusses this problem of unfolding a process of inquiry into the internal activities and roles and functions of different people, and we have cited various other cases on this.

Now, there is a case that, in fact, the Supreme Court cases that is fairly close, although it is not precise, to the kinds of claims that they want to adjudicate here. In two cases which are Kresich, K-r-e-s-i-c-h, and Kedroff. The full cites are in the memorandum.

New York had passed a statute and it had to do with the Russian Orthodox Church which was located in the Soviet Union and had a branch in the United States, and title rested with the Soviet Union Church, and the New York Court passed — I am sorry, the New York Legislature passed a law that said basically that if you are an agent of a foreign power, you can’t own property in the United States, something like that, and on that basis moved to vest title in the church property with the New York church which had split off from the former mother church. The court said that the process


of inquiring into the whole issue of resolving church property disputes but also of resolving the issue of Soviet control — the theory was that the Soviet Government really controlled the Soviet church, so it really wasn’t a church and it was really a secular institution. It was controlled by a foreign body which was an enemy of the United States. The court simply said that could not be done.

When it was tried a second time eight years later, the court again said it could not be done. That time they tried it in the form of bringing a lawsuit under common law, and Justice Frankfurter in his concurrence talks about this issue of misrepresentations about relationships between the church and someone else. He talks about the relationship between the Catholic Church and the Mussolini Government under the Lateran Agreements and said we can’t go into that.

By the way it was represented that this Soviet church wasn’t controlled by the Soviet Government. That representation was not subject to judicial inquiry and investigation. That is what the defendant wants to do here to justify unbelievably his own wrongful conduct.

We are not even dealing with a suit where this is in issue. We are dealing with a circumstance where this is trying to be brought in through the back door to justify what is on its face clearly impermissible conduct.

The defense also says that these documents show that promises and claims made by the Church of Scientology are false. Well, the promises and claims are more straight-forward, and I think we talked about Ballard. Obviously


if it is the kind of representations and facts that I talked about, they are not justiciable, so, too, these are not justiciable and the Ballard case is dispositive about that.

What is important about the inclusion of the promises and claims, and that is a quote from the defendant’s memorandum, that that is part of what is the fraud," is it shows, in fact, precisely the point that we are talking about here is that, in essence, the theory here is to attack the foundation of Scientology and to try to show that Mr. Hubbard and Scientology are frauds and that just cannot be done.

Now, there are some religious issues, but they arise in the context of the subject matter of the motion and so I will reserve them at this time, having to do with whether the court can go into them or not, and the only final point that I want to make is that if we get this far, we have cited substantial case law to the court about the need for an evidentiary hearing. In the event that any First Amendment related issues are going to be at issue in this trial, that the court has to hold an evidentiary hearing and we would submit that this is required, both by the religious clauses of the California and United States Constitution and by the rules of evidence for preliminary facts to make a determination that they are not — must make an independent factual determination before submission to a jury that these do not arise in a religious context and are not protected representations so that I will address that issue more if we ever have to walk that far down the road. But I did want to note it for the court at this point,


and in such a hearing the burden would be, in light of the presumptive issues that we have raised and the law, the burden would be on the defendant.

Now, the only final point I want to make is that, and I think this will become clear when Mr. Flynn argues, is that the nature of the defendant’s public policy theory and its implications are extraordinary, not only for how this case would be tried but for the whole processes of the court. I fully expect that Mr. Flynn will stand up and advance allegations concerning the church, Mr. Hubbard, Mrs. Hubbard of wrongdoing, misconduct. I have heard him do it before and I expect to hear him do it again, and if we ever have to, we will respond to those allegations. But we should not in this court with these allegations where the issue is the taking of the church’s and the Hubbards’ property wrongfully have to be in a position where what we are responding to is they are generalized, sweeping, wild allegations which are brought out in every proceeding in which Scientology is involved.

I have been involved in the probate case that I described before. Mr. Flynn represented Mr. De Wolfe. The probate petition which was filed supposedly because Mr. Hubbard was a missing person and his estate needed preservation, in which the allegations were that Scientologists were seeking money from him. That case was ultimately won by Mrs. Hubbard on summary judgment who had opposed the petition, but the petition itself contained within it every one of the kinds of allegations that the court will hear


here. They were stricken by the court there as irrelevant, but the tactic is clear. Bring all these things out. Make emotional charged, wild allegations which can prejudice a court, which can prejudice a jury, which puts the jury in a position or the Hubbards in a position where it is virtually impossible to defend their rights, and you can do what you want to them and they begin to turn around allegations that they made against us. In reality what they do and what they wish to do in this court is precisely what they say the church does. They want to say that the church and the Hubbards are fair game for any wrongful conduct and that this is a legal defense, not some international policy about whether you have access to their justice system. This is a legal defense. You can do what you want to them and it is okay because they are bad people. That is the heart. That is what the court will hear in the argument, and that is what ultimately the court must respect.

Thank you.

THE COURT: Mr. Flynn?

MR. FLYNN: If Your Honor please, at the outset let me say that I feel like I have come from Boston to watch the Dodgers and Giants game and I have arrived here and found myself in the middle of a Red Sox game against another National League team.

Much of what Mr. Litt had to say, which I hope I will be able to demonstrate to the court, I don’t really believe has got anything to do with any defense of Mr. Armstrong. I think Mr. Litt basically overlooked the


fact that I am defending a case brought by Mary Sue Hubbard and the Church of Scientology, his clients. They have thrust themselves, particularly the Church of Scientology, a supposedly religious organization, into this court system, into the temporal matters that relate to the issues that are involved in this case. It is not a case where Mr. Armstrong thrust himself on the court with regard to some of these allegations. It is a case where he has been forced to defend himself and that matter seems to have been basically completely overlooked.

Secondly, the case relates to property rights and personal rights. That is what the case relates to. This extensive argument with regard to quote public policy, to follow up on my baseball game analogy, I don’t even know what he is referring to. If he is referring to the public interest, public figure defense against a private right for invasion of privacy, then if he intends to pursue his invasion of privacy counts through Mary Sue Hubbard, then we will defend based on whatever cases we can defend on; namely, the public interest, public figure defense.

The public policy theory which he continually calls such, I assume with regard to the invasion of privacy and breach of fiduciary duty counts, he really means that which is a legal defense. It is not a public policy defense. If he is talking about the conversion count or possession of personal property count, then the defense is a supervening or superceding interest on the part of Armstrong to do what he did.


The legal justification, the Restatement of Agency defense, the Restatement of Torts defense which is set forth in our memorandum, that is not a public policy defense. That has to do with property rights and under what circumstances property rights, as alleged by a plaintiff, can be defended by a defendant.

Now, Mr. Litt stated that Mr. Armstrong hopes to do in this court what he couldn’t do illegally, suggesting that Mr. Armstrong had stolen or in some way improperly converted these documents. Well, first of all, and he suggests that the follow-up or the sequitor to that is that Mr. Armstrong wants the documents disseminated in various litigation around the United States.

Well, this court has already ruled that Mr. Armstrong can do that. The preliminary injunction that was issued gives authority to third party litigants to come into the court to get documents for purposes of other litigation. That’s been the ruling of this court for almost a year and a half.

So, therefore, the idea that there is something wrong with third party litigants coming in and getting documents that are under seal in this court is just totally frivolous, and the court has already approved of it, and that’s been the law throughout the United States for years.

In fact, since Mr. Litt has raised this issue, and it really has not been briefed in the memoranda submitted to the court by him, in anticipation of it, I did a little bit of research into the issue of the admissibility of stolen


property. Assuming that Mr. Armstrong under some subterfuge as in the Dietemann case or just outright conducting a breaking and entering, broke into church property or through some subterfuge went in and obtained these documents, took them out and gave them to me or some third party, the case law is absolutely clear that if that evidence is relevant and material in other judicial proceedings, then it can be introduced into evidence.

In California there is a Herrescher case which held that documents stolen by a private detective from a law office could be admitted into evidence in a State Bar proceeding.

There is the Munson case in which a wife or a husband, one or the other, stole a private letter from the home of her divorced spouse, and the other divorced spouse during the divorce proceeding tried to block it from coming into evidence. The Appeals Court of California held that since it was just purloined, it could not be admitted into evidence because no wrongdoer should be able to take advantage of his own wrong. The Supreme Court of California reversed that decision and held the letter admissible.

Of course, the Pearson versus Dodd case is a recent case. The Herrescher case which held that documents taken from an attorney’s trash container if they weren’t privileged under the attorney-client privilege could be admitted into evidence.

There is The People versus Johnson case which held an employer who took materials from the trunk of his


employee’s car and gave it to the police could be used in evidence.

There is the NLRB versus South Bay Daily Breeze case, a Ninth Circuit circus case which holds the same.

I am going to explain the facts to the court under which Mr. Armstrong came into possession of these documents which I submit to this day has still not been fully understood by the plaintiff in this action and will be the evidence fn this case. But in any event, even if Mr. Armstrong had stolen them, if third party litigants could prove in the court where they are then litigating, which is precisely incidentally what the United States versus Hubbard case held on remand, third party litigants could demonstrate a need for them for competency and materiality, then the documents could be used and I believe this court has recognized that by entering the preliminary injunction that it did.

Now, addressing myself in the context of the facts through the conversion count, which is what we are defending as I see this case essentially, because I don’t believe if the court really looks at the law of the breach of fiduciary duty and invasion of privacy — if Mr. Litt does, in fact, have the jury, what he represented to the court; namely, not put into evidence anything that would offend the sensibilities of the ordinary and prudent person on the invasion of privacy count, then we are entitled to a directed verdict if he brings up some abstruse characterisation, for example, of this letter. He’s brought up this letter now twice with regard to a letter between


Mary Sue Hubbard and L. Ron Hubbard, so I went out and checked with my client as to what this letter is.

Well, first of all, the letters that are predominently under seal, as I understand it, are letters that have nothing to do with really quote personal correspondence. They have to do with the Hubbards taking money from the organization. They have to do with running the organization as a business. There was one personal letter that Mr. Armstrong is aware of, and apparently he mailed it back to Mary Sue Hubbard. Now that may or may not be the letter that Mr. Armstrong brought to me in Clearwater, Florida. Frankly, I don’t remember, but even if it is, if he is simply going — and this really indicates the whole problem with the contents of the documents. If he says in front of the jury, "Well, there is a letter between Mary Sue Hubbard and L. Ron Hubbard," and showing that letter to me constituted invasion of privacy and stops right there, and he does that with other documents, then I submit to the court I will be entitled to a directed verdict on the invasion of privacy count and on the breach of fiduciary duty count if he only addresses those points.

Now, with regard to the conversion count, which I really think is where this case as I indicated in chambers comes down to, the facts are basically as follows: Armstrong worked for an organization which was generally denominated the Sea Organization, and he, in fact, was out on a ship of L. Ron Hubbard’s. In every port they went and since Mr. Armstrong was the personal public relations officer of


L. Ron Hubbard, it was his duty to tell the people in the port who they were. Well, every port they went into they said, "We are not the Church of Scientology. We have nothing to do with the Church of Scientology. We are an independent business group called the Overseas or Operation Transport Corporation, and we are conducting research."

It was his job for some six years to disseminate that lie across the world which he did. Then he, after the ship was sold in 1975 and they landed in Clearwater, Florida, and under another subterfuge called the United Church of Florida tried to offer the City of Clearwater, again not the Church of Scientology, he worked again for the Sea Organisation, and he eventually came to California on Hubbard’s orders, was locked up for a period of time on Hubbard’s orders, but eventually became assigned to Hubbard’s household unit. In Hubbard’s household unit he was assigned the task by Hubbard of taking care of all of Hubbard’s personal property. That is essentially what he did.

During that period of time he was drilled and trained to state that he was not an employee of the Church of Scientology of California, the plaintiff in this action.

Thereafter, in the middle of probably the fourth raid, as I understand it, or the fourth threat of a raid — there was an original raid in 1977, and then there were threats of raids in 1978, another threat of a raid in 1979, and in the middle of a fourth threat of a raid because of ongoing grand jury proceedings in Hew York, Washington, D.C., presently Toronto, Canada, a conviction for criminal fraud of L. Ron


Hubbard in France — contrary to what Mr. Litt told the court with regard to Hubbard’s biographical background, he’s been convicted of fraud — in the middle of all this, the internal intelligence agency of the church called the Guardian’s Office thought there was going to be another raid because of the IRS case, so they mustered 25O people, headed by a group of people which included a woman named Diane Riesedorf, Laurel Sullivan, Gerald Armstrong, Gail Irwin, David Mayo and under the control of this group they seized probably some hundreds of thousands of documents, five ton truckload of documents. They rented a commercial paper shredder which they called Igor and for a period of several weeks they went through all of the documents in several locations and began to shred them, and that is the key circumstance under which Armstrong got these documents because a girl named Brenda Black came to Armstrong and there will be extensive testimony on this point on the defense side, if necessary, came to Mr. Armstrong and showed him a box of materials.

It was Armstrong’s decision what to shred. He decided that it shouldn’t be shredded on an initial cursory examination of the box and entrusted it to Laurel Sullivan. Subsequently after a lot of other documents in the identical location were shredded, Armstrong began to look through the box of documents and he found documents which he thought had quote historical significance, and he wrote a petition to Hubbard asking for permission to collect more materials to complete the biography project which had actually started in 1973, and the evidence will be that Laurel Sullivan and


others actually began this biography project, But at various times it got derailed because the authors, one being a fellow named Peter Tompkins, wouldn’t write what Hubbard wanted him to write.

So eventually we come up to 1980. Armstrong writes to Hubbard. Hubbard approves it.

Now, there is a key fact here and that is that Hubbard is in the process of fleeing because his wife has just been convicted of a felony, obstruction of justice for stealing documents. There is a pending grand jury in New York for the frame-up of a journalist named Paulette Cooper, and there is evidence which was then coming in before the grand jury relative to Hubbard’s involvement in that frame-up. So, Hubbard flees. Subsequently he is determined to be concealing himself as a fugitive and a federal court in Tampa so found.

What happened is because Mary Sue Hubbard was on her way to jail, because L. Ron Hubbard was fleeing, the control mechanisms within the organization over the documents deteriorated, and no one really knew and to this day I submit to the court no one knows, other than Gerald Armstrong, really what is in those documents because he is the one, other than Omar Garrison, who has analyzed them for years. So, even Hubbard himself did not precisely know what was in the documents.

Now, Armstrong begins to go through them.He gets approval from Hubbard and, in fact, there are negotiations, and this has all been brought out in discovery


and it is not protected by the attorney-client privilege because there are attorneys representing the church and attorneys representing Hubbards particularly an attorney named Wertheimer. Wertheimer brings out in these meetings that Armstrong can’t work for the church because it would violate the Internal Revenue Laws, and there vas then an ongoing Internal Revenue investigation because of the doctrine of inurement.

MR. LITT: I am going to object. We have a motion on this concerning the use of any of these materials on the attorney-client privilege, and I really don’t think that is the appropriate way to deal with this. The next thing I am going to hear is that Mr. Flynn is going to turn around and say we waived it because it’s been talked about. I just want to at least make clear that we have an objection to any information related to what he is talking about. It is protected by the attorney-client privilege and cannot be gone into and is not an appropriate subject of discussion.

The court can handle the argument on that however it wants, but I did think it was important to point it out at this point.

MR. FLYNN: In any event, Your Honor, Mr. Wertheimer states that Armstrong has to work for Hubbard, and, in fact, there is a document which essentially so states.

Mr. Armstrong considers himself right at the outset of this project the agent of L. Ron Hubbard, not the agent of the Church of Scientology and there are extensive documents which support this theory of the defendant’s case.


Now, Mr, Armstrong initially collects probably what turned out to be a relatively small number of documents in terms of what was actually saved from the shredder because, as the court is going to find out, these documents come from probably at least six or seven different sources and they also involve documents which were collected by Mr. Garrison which have nothing to do with origins of or ownership of or possession in either L. Ron Hubbard, Mary Sue Hubbard or the Church of Scientology.

Over a period of a year and a half Armstrong collects all these documents, turning them over to Garrison and Garrison begins to analyze them to write the book and starts writing the book.

In the contract that Garrison has with Hubbard, there is no provision of any nature or description as to what Garrison can do with the documents. The only protective, covenant or protective or restrictive provision in the contract is that Hubbard has to give final approval to the ultimate biography.

Well, Garrison begins doing this biography and he realizes that the representations that were made by L. Ron Hubbard right from his birth right up to the present time, which is the whole thrust of the book, are false, and the representations cover, and I won’t bother to go into them all right now but ust for an example, he’s held out as a nuclear physicist and a medical doctor with doctorates and degrees from universities and all kinds of things which, as it turns out, are all fallacious. So Garrison realizes


that he can’t write what Hubbard wanted him to write. In fact, if he follows any journalistic ethics, he’s got to write just precisely the opposite.

Now, Armstrong, in working with Garrison, realizes this and writes a letter to the organisation. Writes a letter which we submit should come into evidence to a person named Sara Shriven, and in the letter he states that everything that is being said about Hubbard is false. We have grossly mischaracteriaed his background and, in fact, we have got to correct it.

So, as then the agent of L. Ron Hubbard, he is acting in Hubbard’s behalf to correct the lies, and in the documentary evidence, one month before Mr. Armstrong leaves the church, proves that.

He then is called in by the church to be security checked because he is saying bad things about Mr. Hubbard and that is not tolerated. He then has the choice of either undergoing that procedure or leaving, and at the same time he is told to sign a nondisclosure and release bond, and under this nondisclosure and release bond, one of which he had previously signed, he can be held liable for $10,000 temporal, not spiritual, temporal damages in a court of law if he discloses the contents of anything he’s ever learned in the Church of Scientology.

Well, that bond has been found by a number of courts to be not worth the paper it is printed on, but in any event, he leaves the church and he begins working independently with Garrison. Now the key fact for the court


to understand is that Garrison is in rightful possession of the documents. Hubbard is hiding. Mary Sue Hubbard is on her way to prison, and Garrison rightfully, pursuant to the contract, has the documents.

Armstrong has no documents at this point. He’s turned them all over to Garrison. For the next five to six months he works intermittently with Garrison on the biography project because they are now going to write their own, and he also works in a law firm part time, subsequently full time.

Thereafter the church begins to harass Mr. Armstrong because they realize, and at this point in time — Mr. Armstrong has never come to me. They begin to harass him. They do a number of things. For one thing, they make him an enemy. They issue what they call an S.P. Declare, a written document where they make him an enemy of the church, which we will show the court when we get into the argument, subject him to the Fair Game Doctrine.

They steal photographs from him. Photographs have nothing to do with any of these archive materials. They are his own private materials which he actually received from a third party named Jim Dincalci who will testify in this court.

They steal other materials from him which have nothing to do with the collection of documents when he was working for Hubbard. He has a meeting with them and they tell him to go get a lawyer because they are going to sue him.


At the same time in light of a lot of harassive acts, he’s got very paranoid. He’s seen what the Church of Scientology over the last decade has done to other people. He knows what they did in the criminal cases and he is fearful pursuant to the Fair Game Doctrine, which calls for the destruction of enemies, that they are going to kill him and he gets on an airplane and in late May 1982 he flies to Clearwater, Florida, and for the first time he sees me, and I can only describe to the court that he was in a state of total fear because he thought the organization was not only to kill him but they were going to sue him.

He then goes back to Garrison and tells Garrison what is happening, and Garrison then gives him the documents, and this will be the testimony of Mr. Garrison, to defend himself because he’s now been threatened by the church, et cetera, told he is going to be sued.

So, he goes to a lawyer; namely, me, and the reason he came to me is because he thought that there were very few lawyers in the United States who were willing to litigate against the organization because of what they do. That is the reason he came to me.

Garrison then gives him back documents which he copies with his own money. So, now, you have got in issue whether Garrison is in rightful possession. Armstrong copies Garrison’s documents with his own money, so we submit that those pieces of paper, aside from the privacy issues which we will get into, but just on the conversion issue, those pieces of paper actually now belong to Mr. Armstrong.


Mr. Garrison is in the position more so of like, of being the employees in the Pearson versus Dodd case. Mr. Litt cited extensively from Pearson versus Dodd and said the case was inapplicable because the court assumed that the employees would have been held liable for conversion in that case. However, Mr. Litt did not read the rest of the opinion after it made that assumption where it said:

"Where the claim is that private information concerning plaintiff has been published" — assuming the publication is to me or assuming even that Garrison made the publication to Armstrong — "has been published, the question of whether that information is genuinely private or is of public interest
should not turn on the manner in which it was obtained."

Which goes to the intrusion allegedly by Armstrong, but as the facts show, in fact, Armstrong never even intruded because the documents were given by Garrison back to Armstrong, and I believe all of the testimony from the beginning to the end of this case will bear those facts out.

So, in any event, if anyone is in the position of being the so-called Dodd employee, it is Garrison at this point because he is in rightful possession. The contract is silent on what he can do with the documents, and he gives them to Gerald Armstrong to defend himself, who gives them to his lawyer.

Garrison, for the next year thereafter, continues


to prepare the biography and, in fact, comes up with a publisher. Approximately one month after Mr. Garrison comes up with a publisher for the true biography of L. Ron Hubbard he is approached by the Church of Scientology, attorneys for Mr. Hubbard, and they basically make a deal with Mr. Garrison. He will give them back every document he has. He will not disseminate the information. He will give them back the manuscript that he has done based upon the documents, and he will be paid some, I understand, $240,000 or something in that range, although we have never seen a settled agreement because they won’t produce it in discovery, although we submit on the conversion count it is relevant for purposes of this case. But in any event, that took place in the summer of 1983.

Now, at that time for the first time someone other than Garrison has the right to possess the documents. Hubbard is not around. He has never come in and asserted his property rights, let alone his privacy rights which are purely personal. Hubbard is not around, so the documents go back to the control of a lawyer who represents L. Ron Hubbard. That is essentially what happened.

The case is already one year in process. They have the burden of proving that there has been — they have a right to possession at the time of the alleged conversion.

Well, the time of the alleged conversion, since Garrison was in rightful possession, could only have taken place, we submit, since conversion only deals with the right to possession, the time for the conversion could only arise


when Garrison is out of the picture, even if it legally can arise at all, which I really doubt, which is why I think we are entitled to a motion for directed verdict at the close of the opening.

But in any event, Garrison in the summer of 1983, one year after the case is brought, is out of the picture. But the documents have already been under seal for almost a year, so if the conversion took place at that point in time, there has been no deprivation from then, the summer of 1983 to the present by Mr. Armstrong. He doesn’t even have the documents. The court has the documents.

So, we submit that as the facts evolve, it is going to become very, very clear that there has been no conversion by Mr. Armstrong because he received the documents rightfully from Mr. Garrison, and Mr. Garrison at all points in time, at least until he made the arrangements with Mr. Lenske on behalf of Mr. Hubbard, had the right to possess the documents.

Now, those issues essentially raise many issues relating to the conversion count. Who had the right to possession. What documents. When, and what damages, which they have the burden of proving flowed from the alleged conversion.

Now, first of all, if they pursue their conversion count, as Pearson versus Dodd states, conversion is essentially a forced sale of the documents. Mr. Armstrong, if he is found liable by a jury for conversion of the documents, will have to pay damages. Conversion does not give them the


documents back. He will have to pay damages to them and he keeps the documents, which I am sure is not what this case is about.

So even if they prevail on their conversion count, they would not get the documents back. The essential issue comes down to whether or not the court under its equitable jurisdiction and/or under the claim of Mary Sue Hubbard on her personal property claim under the California Code of Civil Procedure can get the documents back.

Now, with regard to Mary Sue Hubbard, the evidence will be that most of the documents have nothing to do with Mary Sue Hubbard, were never under her possession or control. In fact, she was stripped of her possession or control when she was convicted and removed from her post by her husband through another individual who took over the Church of Scientology named William Franks, who will testify in this courtroom. Mr. Franks will testify that he removed Mary Sue Hubbard from her post on the order of her husband so that she had no right to possess the documents. So, even to this date, we submit, the evidence will be that Mary Sue Hubbard has no claim to possession.

With regard to the admissibility of the documents, in light of the facts I have laid out to the court, as I submit the evidence will be, the admissibility of the documents on solely the conversion count, which is the property count, the court is confronted, as I see it, with somewhat of a dilemma and the dilemma has nothing to do with all the First Amendment arguments and some of the other arguments that


were raised with regard to the Ballard case which I happen to be very familiar with.

I don’t know if Mr. Litt read both Supreme Court opinions, but the bottom line in the Ballard case is that the Ballards went to jail for fraud, and the bottom line in the Ballard case is that the court did adjudicate the good faith and the truth or falsity of some of the representations and the good faith of the others, and the Ballards went to jail. The representations by Mr. Litt as to what the Ballard case stands for, I submit to the court, are simply inaccurate.

But in any event, the narrow question of on the conversion count what documents are admissible, if Mr. Litt introduces evidence that only categories of documents were taken, assuming he can even prove that all the facts I have given to the court are false but that Armstrong just took the documents, and he introduces evidence as to just general categories, then the question is going to become for the court, as Mr. Armstrong will testify, who owns or has the right to possess what documents?

When this case started, when they got their preliminary injunction, they filed an affidavit under the name of a fellow by the name of Andrew Lenarcic, and I won’t bother to read it to the court now, but we intend to introduce it into evidence. The affidavit states that the Church of Scientology owns the documents and has the right to possess them, and on that basis they got the preliminary injunction.

Well, a few months later, Mary Sue Hubbard, who


has had a lot of conflict with the church, intervenes and she says, "That is wrong. I own and have the right to possess them because I as the wife of L. Ron Hubbard."

She files an affidavit and states under oath in her deposition what I have just informed the court.

The organization then comes back and says, "Well, we gave them to Mr. Armstrong and we didn’t do so with Mary Sue Hubbard’s permission, but we gave them to him because we thought that Mr. Garrison needed them."

So, now, the church is in the position of being an agent of someone, probably Hubbard, saying we gave them to Garrison and didn’t have authority to do so, so the Church of Scientology of California may be, the plaintiff in this action, arguably could be a wrongdoer on their own affidavit presently filed in the court.

Mary Sue Hubbard then comes back and says, "I have a present right to possession."

We then uncover documents; namely, to CSW, the petitioner that initially went to Mr. Hubbard in which Mary ue Hubbard’s handwriting appears on it approving Mr. Armstrong getting the documents. So, now, Mary Sue Hubbard is in the possession, having stated under oath before this court that she had never given Mr. Armstrong permission. She is in the position of stating something contrary to what the facts
will show.

Eventually, L. Ron Hubbard, through a letter to the court, who is supposedly in seclusion, which I submit to the court is just a nice word for a fact that he is


concealing himself, Mr. Hubbard writes a letter to the court. Doesn’t even mention Mary Sue Hubbard and says give the documents to an organization called the Church of Scientology, International which isn’t even before the court.

If, on the admissibility of these documents, Mr. Litt tries to prove through interrogatories what documents are owned or who had the right to possess them, we have the right to defend on the issue of they didn’t own or have the right to possess them. In fact, as this court is going to see, many of these documents have nothing to do with either L. Ron or Mary Sue Hubbard. They have to do with an organization called the Guardian’s Office and potential criminal involvement of that agency with regard to concealing facts from the United States Government.

Those documents and in the category that I just told the court about didn’t even go through Mr. Armstrong. They were collected by another person who is going to testify on the witness stand, and given directly to Mr. Garrison as part of the biography project.

Now, subsequently Mr. Garrison gave some of those documents to Mr. Armstrong, but, in fact, Mr. Armstrong never even collected some of the documents, so on the issue of these supposed categories of documents, we are going to be able to show the court that they didn’t even come from the people who are now claiming they have a right to possess them. So on the issue of who has the right to possess, which is the underlying issue in this case, we submit that we should be able to admit into evidence the documents to prove that


neither one of these parties has the right to own then or possess them.

If the court solely dealt with categories without getting into content on strictly the conversion issue now, I submit you are going to end up in an intractable dilemma because one document could be brought up as falling within a particular category.

Mr. Armstrong is going to testify that document doesn’t fall into that category. It falls into this category. It didn’t cone from Mr. Hubbard’s archives here or the Hubbard archives there. It came from a meeting, subsequently came from a person named Vaughn Young and was again directed to Mr. Garrison.

The court is going to say then let me see the document. The best evidence may be the document itself. If that is the case, the court and the jury is almost going to have to look at the contents to decide the origin of the documents, so in that respect on just the conversion count, aside from all the problems on the invasion of privacy and breach of fiduciary duty counts, the documents as a practical matter have to come into evidence. There is a practical solution which we submit to save the time of the court.

What Mr. Armstrong can do is he can collect the documents from downstairs where apparently they presently are, and under an order of the court bring them up here and categorize them along with categories that I am just informing the court about, and he can tell the court where they come from, either by stipulation or by me making a proffer as


to what the evidence will be.

There are some five or six thousand pages of documents down there. We can limit the number of documents we need to prove the defense of these various counts, so if we could take probably 40 or 50 documents, and some of them are multipage documents, but 40 or 50 specific documents, we could prove that with regard to those documents, they don’t have the right to possess them, that they never came from Mr. Armstrong when he was a member of the church, and that, in itself, would defeat, at least with regard to those documents, the conversion count.

If Mr. Litt wanted to pursue his case with the rest of the thousands of documents, then he is right. We would be constrained to have to go through the documents to try to prove the origin of them and who has the ownership or the right to possess them. But as I indicate to the court, I submit that isn’t even what this case is about because that wouldn’t even give them the relief that they need. This case is not about commercial instruments that have value, literary works that have value, something that, as our trial brief indicates, their cause of action would be more appropriately for copyright infringement if they didn’t want Mr. Armstrong to gain an economic advantage from the document. The case has to do with the contents and this is really what the Pearson versus Dodd case is about.

THE COURT: We will stop right there and take a recess. Reconvene at 1:30.

(A recess was taken until 1:30 p.m. of the same day.)




THE COURT: All right, we are back in session. You may continue, Mr. Flynn.

MR. FLYNN: I spent a great deal of time on the facts. I am going to try to narrowly focus a little bit and try to wrap this up.

One of the issues that’s been raised is whether the documents are private, and it is our view that the documents, notwithstanding Mr. Litt’s representation that Mr. Armstrong testified that they are private — as Your Honor is going to find out, he testified that they were private until they were given to Garrison — we feel that is a major issue in this case.

If Senator Dodd had given his documents to Drew Pearson for the purposes of publication, then obviously there would be absolutely no case called Pearson versus Dodd. Now, maybe Senator Dodd was there at the tine and in control of his documents, so he vas willing to do so.

In this case Mr. Hubbard, because he had fleed, was not around and in control of his documents, so he was not really sure, I give him this credit, he probably doesn’t know to this date what is in those documents.

We feel that there is powerful evidence, including court holdings, including evidence as I have indicated to he court that he is a fugitive from justice, the French authorities are after him. There is a penal investigation


in Toronto. I believe Mr. Hubbard is going to be indicted in Canada.

I don’t think that he knew, even though he approved the petition, exactly what he was giving to Mr. Armstrong, to be perfectly candid with the court, but that is Mr. Hubbard’s problem and Mr. Hubbard is not a party to this lawsuit, and these are for the most part his documents which I think, in itself, is a serious defect in the plaintiff’s case which I am going to get into.

But in any event, if Senator Dodd had given those documents to Drew Pearson, there would be no lawsuit. In effect, what has happened here is Mr. Hubbard has given these documents to Omar Garrison pursuant to a contract that is totally silent on what Garrison can do with the documents, so that our view is that once you give documents to a journalist to write a book based on the documents, you have given whatever privacy, aside from all the public interest and public figure issues, and whether there was information already in the public records, aside from all that, if you gave your private documents to a journalist to write a book, then you lose your right of privacy in those documents. That is basically what has happened because Mr. Garrison, as he will testify, is a journalist. So, therefore, the question of whether these documents are private, we think we should be entitled to a directed verdict on that point alone.

Let’s suppose that Garrison went ahead and wrote the book and the book was a true reflection of what is in


these documents, and Mr. Litt is accusing me of making mischaracterizations or defamatory characterizations of Mr. Hubbard, so I won’t even go into the details which are plentiful, but in any event, let’s assume that Garrison wrote the book and published this material, that they hadn’t entered into the contract that they did in the summer of 1983; clearly there would be no cause of action for invasion of privacy. There would be no cause of action for defamation if the contents of the documents — if the story as predicated on the contents of the documents is accurate. There certainly would be no cause of action for conversion, and that is basically what the Pearson versus Dodd case ended up saying. What really protects this type of situation is a defamation in libel and slander type of lawsuit. That is really the rights that are being protected here, and if there is no libel and slander, then there is no cause of action. So, if Mr. Garrison had published the book, I submit to the court that there would be no cause of action and Mr. Armstrong certainly is in no worse position as the receiver of documents than Mr. Garrison who was rightfully in possession of than Mr. Garrison would have been. In fact, if Mr. Armstrong went out and wrote a book now based on what is in the documents, then our First Amendment of the United States and the California Constitution would entitle him to write what he wrote.

That is the basis of this case, This case involves information. It doesn’t really revolve around any inherent value in the documents themselves.


Now, when Mr. Armstrong came to me, and I am not sure I made this clear this morning, but it is a very important fact. This what they call Suppressive Person Declare, which is a written document which will be introduced into evidence, accused Armstrong of stealing the documents. So at this point in time on April 22, 1982, Armstrong had never spoken to Michael Flynn, and he gets accused and it is disseminated across the United States because these Declares are sent out all over the country. He is accused of stealing documents from the church.

At that point in time all he’s done is do what Hubbard authorized him to do and continued to work with Garrison. He hasn’t disseminated any documents to anyone, and yet he is accused of theft of the documents.

In effect, by now coming into court and claiming he stole the documents in this conversion count, they have only reiterated what they said on April 22nd, so on April 22nd, Gerald Armstrong, having been accused of theft in a public document was entitled to get a lawyer and the lawyer he chose was Michael Flynn. That goes to our legal justification argument, in part.

Mr. Litt got into this public policy argument which I really have not understood, but the legal justification argument is that Armstrong in the circumstances under which possession was being moved around was entitled to hire a lawyer. He had a contractual defense because he had contracted with the Hubbards as Hubbards’ agent to give the documents to Garrison.


For the organization to attack him on the grounds that he stole them when under the circumstances as I outlined this morning he dealt with the documents he did, I submit to the court would show that he dealt with the documents in the manner of an ordinary and reasonably prudent man. He did what any ordinarily reasonably prudent man would do. Having been accused of theft of them, he then hired a lawyer and showed his lawyer what he was accused of stealing, and I submit that that in itself is going to be a defense on the conversion count and he is going to be entitled to show the jury what he’s been accused of stealing, the contents of the documents.

Now, narrowing myself simply to the issue of relevancy on the conversion counts and their admissibility, in addition to those two, the reasons I brought up earlier; namely, who, what, when and where. Who owns the documents? What are the documents? When were they taken?

We should be able to show what documents were dealt with at what point in time on the issue of who owned them, on the issue of legal justification of privilege, we should be able to show, since he’s been accused of theft, what he’s been accused of stealing, and we should also be entitled to show that since he is the contractual defendant on the underlying possession issue, what documents related to the contract; namely, the biography.

Since the documents we contend having been given to a journalist aren’t even private documents and under Pearson versus Dodd theories and other cases that are cited in a


memo relating to what the nature of conversion is, when you deal with documents, they have the burden, we submit, of showing either that they have some type of intrinsic value or that they are literary works or that they are commercial instruments.

We are entitled to go into the documents to show that they fall into none of those categories, but really what we are talking about here is simply information, information that for the most part is on pieces of paper that are owned by Gerald Armstrong because he paid for the cost of copying them with a few exceptions of originals that are currently under seal, and with regard to those originals, they have never been deprived of dominion or control over the contents because they have had copies of them from the outset, from the time that Mr. Armstrong left the church there were always copies maintained in the church.

So, our basic argument on the conversion counts with regard to their relevancy and admissibility is one, they are not private. They are not literary. They are not commercial instruments. We can show the jury that they are none of those things.

Two, they are the types of documents that the law of conversion doesn’t even really protect because all they are is information.

Three, he had the legal justification to defend this case that he stole documents which, in fact, he was accused of stealing and then simply went to a lawyer and showed his lawyer what he allegedly stole.


With regard to the invasion of privacy counts, I think the issue is obvious. If they are going to contend that materials have been either intruded upon, which I submit under the facts that I outlined to the court, there hasn’t even been an intrusion because the documents were given by Mr. Garrison to Mr. Armstrong, but even assuming an intrusion and assuming even further a publication to his lawyer to defend himself on a charge of theft, they have the burden of proving that the materials intruded upon and/or published are offensive to the sensibilities of the ordinary prudent person.

That is the burden on an invasion of privacy count. They have to show the jury exactly what the contents are that have been published or intruded upon. That entitles us to show first that the information is already in the public record, and I have this 200 page report to the City of Clearwater with me which I can submit to the court which lays out in some 30 or 40 pages, a year before Armstrong ever left the church, a lot of, probably 80 to 90 percent of what is in the documents with regard to Hubbard’s biographical data which is really what they want to conceal because most of it is in Hubbard’s own handwriting.

So, therefore, the information about a lot of these items was already in the public record, and we believe we are going to be able to make an overwhelming showing to that effect.

Even if it weren’t in the public record, the issue becomes is it a matter of public interest? Did L. Ron


Hubbard and Mary Sue Hubbard thrust themselves into the public arena on issues; namely, their personal lives or any other issues in which the public has a right to know and Gerald Armstrong has a right to defend an invasion of privacy count by showing that they are public figures and/or that the matters in the documents are of public interest, even if they weren’t previously in the public records, and I submit to the court that if L. Ron Hubbard had been making the false representations, which we laid out in our memoranda, for the 20 years that we can conclusively prove he made — we have book jackets here in which all these misrepresentations have been made. If we can show that he has earned millions of dollars, which we will be able to prove — in fact, if this case gets litigated to the real narrow details; namely, has L. Ron Hubbard as a public figure taken moneys from the Church of Scientology, if need be, we have a witness we can put on the witness stand who will testify that L. Ron Hubbard has taken over $350 million and put it into Lichtenstein bank accounts underneath the table and that the public and the Church of Scientology and the citizens of California and the citizens of the United States have been victimized by a monstrous fraud, of which they have no knowledge, that issue alone, the issue of what Hubbard has done, what representations he has made, which is what justified Armstrong to do what he has done, is a public interest issue, and on the invasion of privacy count, it is not a public policy defense. It is a defense to a private right that is being asserted by a private individual.


The Dietemann case which is cited by Mr. Litt, I submit to the court, has no relevance. It was an electronic eavesdropping case on a private individual in his home, and the court took the time to specify that the plaintiff had no listing and his home had no sign of any kind. He did not advertise nor did he have a telephone. He made no charges when he attempted to diagnose or prescribe herbs and minerals. He did accept contributions.

In the present case, we will prove that Mr. Hubbard has himself held himself out as the leading public figure of our time. That is in his own publications as the greatest man who ever lived. Aside from all the representations which he has made about his scientific background, his academic credentials, his Naval background, all of those issues have generated millions of dollars of income for Mr. bubbard. The public has relied on very concrete items, not items like whether or not if you believe that L. Ron Hubbard is the new Messiah, you are going to go to heaven, but L. Ron Hubbard has a doctorate from Princeton or is a graduate in nuclear physics from George Washington University. If you pay $500 to take one of his courses, then you are guaranteed the following results, and we could put 30 people on the witness stand, very short witnesses, who each one would say, "I relied on all those things. I paid that money. Had nothing to do with religious conviction. They told me it had nothing to do with religion and I relied on those representations and paid the money and now find out that it is all false."


That is the essence of what is in these documents, and that is the essence of where they are claiming Mr. Hubbard’s privacy is invaded.

Now, they admit that the great bulk of the documents — they didn’t do this at the outset because, as I have indicated to the court, they initially claimed that the church owned the documents. They now admit, as they have to if the court looks at the documents and you will see why, because most of them are Hubbard’s handwriting of any significance, that Hubbard owns the documents. But the invasion of privacy, the law is very clear, is a personal right. It has got to be asserted by the person whose privacy has been invaded. Mr. Hubbard isn’t even here.

The County of Los Angeles and the State of California are taking the time to litigate this case and potentially spend thousands of dollars to litigate it on invasion of privacy issues and the principal, the one who’s perpetrated this entire scheme, has sent a letter to the court saying what he thinks should be done with the documents while all of us sit here and litigate it. I submit to the court that an invasion of privacy count is a private count and for Mr. Hubbard, where even the plaintiffs now and the intervenor now admit the documents belong to him, to assert an invasion of privacy from afar through his current agent is preposterous.

On the breach of fiduciary duty count, the law is very clear that they have to prove what duty Mr. Armstrong owed to the principal and in what way he breached it and


damages. Well, the state of mind, and there is a case directly on point, the state of mind of Mr. Armstrong with regard to his dealings with his principal is a fundamental issue under only the breach of fiduciary duty count.

Mr. Armstrong, as the evidence will show, wrote that letter to Shriven. When he found out that all these documents proved that there had been 30 years of lies, he wrote to Shriven saying, "We have got to correct the lies to protect Hubbard."

Then when he left because they refused to do it, he gets accused of theft by Hubbard’s agents and now is confronted with defending himself against Hubbard through his agents now for breaching a fiduciary duty that related to fraud in the first place, and that goes directly to Willig versus Gold. We submit that the law is that an agent is under no legal duty not to disclose dishonest acts of his principal, particularly as the Willig versus Gold court noted where the principal turns around and sues him and accuses him of stealing documents when at this point he has done absolutely nothing. So we submit that the specific documents on the breach of fiduciary duty count come into evidence on the issue not only of Armstrong’s state of mind, but on the issue of whether or not he was justified. Based on the Restatement of Agency and the Willig versus Gold case, he was justified in doing what he did.

Lastly on the equitable issues in the case, in our memoranda we cited the De Garmo case which basically says that if facts are brought to the attention of the court


which indicate that there’s been acts against public policy, crimes, fraud, then the court is at least compelled to listen in terms of whether to apply the doctrine of unclean hands.

Mr. Litt says there is no evidence of a crime here. Section 135 of the Penal Code of California, and now the new Smith case on the spoliation of documents holds, and the statute says that destruction of evidence during the pendency of judicial proceedings is a misdemeanor.

Well, we are prepared to show on the equitable side of the case that there was a then pending grand jury in New York. There was a then pending criminal investigation in Washington, D.C. Three federal statutes are violated by the destruction of documents when the people know there is going to be an FBI raid to get the documents.

I intend to put the former executive director of the Church of Scientology on the witness stand who was in charge at the time, who headed up the responsibility for destroying these documents so the federal government wouldn’t get them. That is a direct violation of Section 135 of the California Penal Code, aside from all the civil cases that were then pending which related to what was in the documents. Even aside from that direct commission of a crime, and incidentally the Smith case which is attached to the cases we have given to the court involved the destruction of evidence before the suit was even brought, and that is somewhat akin to the situation we have here.

The court would be in the rather remarkable position of returning these documents under the equitable


theories to the defendant and consummating the following transactions: Garrison was going to write a book about L. Ron Hubbard. The very heart of this case is these documents in this book.

Garrison, the author, realizes that if he writes the book based on what the plaintiff and the intervenor want, it will all be false, a monstrous fraud will continue to be perpetrated on the public and people will be buying the book believing it is true. He will, as an author, be making statements that he knows are false. His alternative is to write a true book based on the documents. If he did that and got sued for defamation and the documents had been destroyed or subsequently stolen, and Mr. Armstrong will testify they stole photographs from him during the pendency or just prior to these proceedings, then the court would be giving its aid to consummating the fraud, not only the fraud with regard to the biography but the 30 years which goes directly to the heart of this case and brings the unclean hands doctrine into specific application to this case, but it would be consummating the fraud of destruction of the documents. It would aid in the commission of the crime.

If Your Honor takes some time to read some of the documents which we can categorize, Your Honor will realize what this case is about. Some of these documents, as we have previously said, are earth shattering in terms of the knowing fraud by both Hubbard and the Church of Scientology, and I mean knowing fraud about very specific things. Going to the Veterans Administration examination, knowing he is


lying to the VA where he is talking in his own writing about lying to the VA to get a disability, and then walking out and saying he will laugh at the fools if they gave him a disability; documents of that type.

MR. LITT: If Mr. Flynn intends to discuss prior to a ruling on the admission of any documents the contents of the documents, then I am going to ask for a closed hearing on it.

MR. FLYNN: I will refrain from discussing it further.

In any event, on the equitable side, the point I am trying to make is for the court to determine what it should do with regard to the equitable considerations in the case, it has to look at the documents and the documents have to be admitted into evidence on the equitable side of the case in order to resolve these equitable issues.

So, on every aspect of this case, this is what this case is about. The case is not about literary properties. The case is about contents of documents. To hold in the context of this case that the contents are inadmissible before the case even begins, I submit, Your Honor, would totally deprive Mr. Armstrong of a defense. In effect, what Mr. Litt wants to do is simply tell the jury that Armstrong has got them. He took them wrongfully and Armstrong can’t say anything further in return.

It is somewhat akin, to use a sample analysis if the minister of a congregation told the congregation that he wanted to go out and buy a $10,000 gold chalice and for the congregation to come up with $10,000 so he could go buy


it, which they did, and then the next Sunday the minister walks in and says, "Here is the gold chalice." And the congregation says, "Well, okay, that’s what we spent our $10,000 on," and then one of the members of the congregation is entrusted to clean the gold chalice. So he goes out and he starts cleaning it and he finds out that it is made of lead and it is gold plated.

Now, the minister has said, "You can only take the gold chalice to go clean it"; the cleaner being a member of the congregation realizes that we have just paid $10,000 for a piece of lead. So he takes the gold chalice and he goes back to the congregation and he says, "We have just been victimized by a monstrous fraud. This is just a piece of lead."

The congregation then seizes the gold chalice in order to perhaps sue the minister, but before the minister could even be sued, the minister sues the member of the congregation, claiming that the gold chalice has been converted by him and that he is the rightful possessor of it because he is the minister of the congregation.

That is essentially what has happened in this case. For the court to rule that the gold chalice shouldn’t even be looked at to see whether it is a piece of lead but simply be returned to the minister and that the minister of the congregation should be found liable in damages for doing what he did under those circumstances is simply preposterous.

So we submit, Your Honor, that the documents


are relevant on each and every count. The case realistically can’t be tried without looking at what is in the documents. If Your Honor tries the equitable side of the case first, as you have mentioned, then Your Honor would have to look at the documents. They’d have to be marked in some way for an Appellate Court to review, to determine whether Your Honor’s rulings are correct or incorrect, whether they are marked for identification or marked as an exhibit. If it was purely an equitable hearing outside the scope of the jury would almost become irrelevant at that point, we submit, in terms of the disclosure of the contents.

If Your Honor held that type of hearing in private so that no one could hear what was in the documents, then I submit, Your Honor, you would, in effect, if what we are saying is true, that these documents prove the fraud that we allege that they do, what Your Honor, in effect, would be doing is perpetrating the same misrepresentations that drove Mr. Armstrong from the church and eventually caused the church to write this Suppressive Person Declare and accuse him of stealing the documents. The court would be, in effect, perpetuating the wrongs that have gone on that were discovered by Mr. Armstrong.

Thank you, Your Honor,

THE COURT: Well, you mentioned or you did mention the religious First Amendment problems. Did you want to discuss that at all or how that affects the situation?

MR. FLYNN: I will address that briefly, Your Honor.

As I said initially, the Ballard case was totally


mischaracterized by Mr. Litt. The Ballards in that case went to prison for representations of the type, and I will get a copy of the case, the type of representations which we will admit were religious, and I don’t remember exactly what they are, but they have to do with whether or not Guy Ballard was a particular type of prophet from a particular saint. I remember that language is in there and even on that representation the courts held that that is the type of thing that could go to the jury as to whether or not it was made in good faith, In other words, whether the type of representation which is not capable of exact certitude could still go to the jury on whether it was made in good faith and whether Mr, Ballard sincerely believed at the time he made the representation that it was true.

If the government, as it did, could prove that Ballard really didn’t believe that he was a descendant of a particular angel or a particular saint, then they could find him liable in fraud and that is precisely what happened.

The other allegations where the information or the representation is capable of being proffered with exact certitude; namely, whether or not he went to a particular university, whether he, as Mr. Litt indicated, was responsible for doing away with three German submarines or whatever, those are the types of things that have got nothing to do with spiritual doctrine, in other words, and we have argued this in court all over the United States, In other words, if a priest, a member of the Catholic Church, was on the street corner down at Wilshire with his clerical garb and


he says, "I am a member of the Catholic Church" to someone walking up to him. He says, "I am going to sell you confession for $50. You could go to confession. You give me $50, and here is what you are going to get. I am going to guarantee to you I am going to raise your I.Q., cure your arthritis, improve your grades in school, guarantee it." This is what this U.S. versus Article or Device case is all about which we have submitted to the court, and the person says, "Well, are you a member of the Catholic Church. Is this some type of religious thing?"

And the priest says, "No. I am a priest, but this has got nothing to do with that. You just give me the $50 and I will guarantee you that I will cure your arthritis." The U.S. versus Article or Device is very clear and the Founding Church case written by Judge Wright is very clear with regard to whether that is the type of representation made in a nonreligious context; in a religious way but a nonreligious subject which is capable of being sued for in fraud because that type of guarantee, if there is a motive solely to get money in a religious context, is denied by the person who is receiving the money, and the representation; namely, the guarantee, whether those types of things can be guaranteed or not, which is susceptible of exact proof, is the type of thing that a temporal jury can resolve.

But we don’t even have those issues in this case. Those are some of the issues perhaps in other litigation, but that isn’t even what is at stake here. Mr. Hubbard, as the evidence will show, sold Dianetics, not as part of


a religious organization, but sold Dianetics during the period of time that is involved with these documents as a secular thing for which he earned money.

Well, the proof in the documents is, among other things, that the whole basis of Dianetics namely, his 30 years of research, his physics background, his doctorate is all false. All of those items; namely, whether he did 30 years of research, whether or not he went to a particular university, whether he was crippled and blinded from war wounds — Mr. Armstrong will testify that he told many people in a nonsecular manner, reporters, people who were investigating Hubbard, that Hubbard had been crippled and blinded in World War II from war wounds — well, these documents prove that not only was he not crippled and blinded, he was never in combat. He was disqualified from duty in the United States on three different occasions for a variety of different reasons and ended up in a hospital at the end of the war.

Whether he was crippled and blinded is something that is susceptible to exact proof. Whether or not people believed in that representation in a nonsecular context and paid money for it, which is what our evidence will be, is an issue that has got nothing to do with a religious connotation or religious doctrine or the truth or falsity of religious doctrine.

In fact, if Mr. Litt attempts to introduce evidence of the truth or falsity in a religious context, we will object because we only intend to introduce evidence of these


representations made in a nonreligious context, in a purely secular context and the people who relied on them in a secular context.

In every case, and I can give the court a hundred page memorandum that we submitted to other courts on these points, every single precedent in the United States has uniformly held; the Federal District Court in Los Angeles, the Supreme Court of Oregon, the State and Federal District Court in Massachusetts, the Federal District Court in Florida, the State Court in Florida have all uniformly held that if you make a representation in a wholly secular context, it is actionable even if it is not susceptible to proof within an exact certitude.

Here the evidence will be only on items that relate to exact proof. Whether Hubbard did, in fact, do those things.

The religious issue, Your Honor, is being injected into the case, and Your Honor will note that this memo that was filed a couple of days ago which we just received on the First Amendment issue was filed at the eleventh hour in the case, and the reason it was filed, I submit to the court, was to lead the court astray into believing that there is somehow a religious issue before this court.

If the court were to find that any religious organization could make any representation it chose in the twentieth century, and these arguments about what happened two thousand years ago, I submit to the court in light of modern day jurisprudence, without saying more, is simply


ridiculous. But if this court were to rule that a church, for example, on the Fair Game Doctrine could go out and sue someone pursuant to a written policy of the church to sue to harass, and then do what it has done to Mr. Armstrong; namely, sue him pursuant to that policy, thrust themselves into the legal arena and then when they get in the legal arena, when Mr. Armstrong tries to defend himself, say, oh, when we say sue, we don’t mean legally. We meant spiritually or ecclesiastically. That is an ecclesiastical doctrine and what we mean is within the confines of the Church of Scientology.

I submit, Your Honor, that this court is compelled under those circumstances to determine when they say sue and bring a lawsuit, to determine whether or not that is spiritual or religious.

Similarly for the representations about Hubbard to be excluded on the grounds that they are religious doctrine as to whether he went to George Washington, Princeton, suffered war wounds or whatever, to be excluded on the grounds that they are religious doctrine would make the First Amendment free exercise of religion a weapon for every person, and there are many cases on this point, for every person to go out and simply say, well, I am a minister and do whatever they wanted to get money when the representations have nothing to do with truth or falsity of something that is not susceptible of exact proof, and that is not what the evidence will be.

The evidence will be very concrete that


Mr. Armstrong for years traveling around the world told people that he was not part of the Church of Scientology. That was the representations that they made. There could be 15 witnesses that we could bring on who would support that type of evidence.

So, for the argument to be asserted in this court that because Hubbard is a religious figure and, in fact, on that point Mr. Armstrong tells me that there is a policy in which Hubbard, in fact, there is a document under seal in this court written in Hubbard’s handwriting which says that Hubbard is not a religious figure and not a religious leader and wants to be known as a scientist. So, for Mr. Litt to argue that Hubbard is a religious leader and because people believe that he was either reincarnated or whatever, therefore, everything he says and does is to be removed from the secular arena or from the legal arena is simply preposterous when Mr. Hubbard in his own documentation now under seal in this case says he is not a religious leader.

In addition to that, the Church of Scientology, and the resignation is under seal in this court, has held out since 1966 that Mr. Hubbard has nothing to do with the church. Of course, the facts, as is also set forth in the documents with regard to control and money issues, particularly the fact that he has taken $250 million and put it in Lichtenstein bank accounts shows that that representation in itself; namely, that he’s had nothing to do with the church since 1966 is also false.

The documents are replete with proving that he’s


had total control of all kinds of secular activities that have nothing to do with religion, They have got to do with money, property, attacking people, putting people on enemies’ lists.

For example, in the Allard case tried in 1970, ‘69-’70, the church had taken the position in that case that the Fair Game Doctrine was cancelled, and Charles O’Reilly, who tried that case, who has told me or someone from his office has told me that the First Amendment issue was litigated from day one to the end of the case, so whether the Fair Game Doctrine was a religious doctrine came up every day, every minute of the trial.

The church took the position in that trial that the Fair Game Doctrine was cancelled. In fact, there is a footnote that says that the judge gave the defendant church the opportunity throughout the trial to show that they had cancelled the Fair Game Doctrine. Well, they never did it because the evidence, if they had taken that route, the evidence of what they have done subsequently would be overwhelming as to how they have applied the Fair Game Doctrine. But in any event, that is what they were telling the court.

There is a document in Hubbard’s handwriting under seal in this court dated in 1967 or ‘68 right after this alleged cancellation in which a person writes to them and says — well, a lawyer, his own lawyer writes to him and –

MR. LITT: Your Honor, if we are going — now, we


not only have private documents being discussed. We have correspondence with a lawyer being discussed, which is a reflection of the problem in this case. I raised it before. Mr. Flynn said he was not going to refer to the contents of the documents. Some of the documents are privileged. These are private documents, and it is not proper, especially when the court is making a determination of how to handle the issue to undermine it.

THE COURT: Well, I suppose there is a possibility of attorney-client privilege on this. You mentioned something here you were about to say?

MR. FLYNN: It was waived. They gave it to a journalist. The law is very clear if you give it to a third party, the attorney-client privilege is waived.

THE COURT: I realize that. If the journalist had it, why is it such a secret in this case?

MR. FLYNN: Because they paid the journalist off so he wouldn’t reveal it.

THE COURT: You mean Garrison?

MR. FLYNN: They paid Garrison $240,000 so he wouldn’t reveal it, but in any event, the document says, "No, I am not cancelling the Fair Game Doctrine. I am modifying it basically so people won’t know I am going to use it in a different way." That is, in essence, what the document says.

The point is that the bulk of these documents have nothing to do with religiosity. They have got nothing to do with the free exercise of religion in terms of the truth or falsity of religious documentation or religious



Since we only received this memorandum on the First Amendment several days ago, I could have a memo prepared and to the court by this coming Monday about the full scope of the protection that the free exercise clause would afford this plaintiff and this intervenor. But in any event, Your Honor, we would submit to the court that we don’t intend to introduce any evidence as to the truth or falsity of religious doctrine.

With regard to Hubbard’s involvement with the Church of Scientology, they have been saying since 1966 that he is not part of the church. Of course, these documents and secular things prove that he is part of the church, so for them to come in now before the court and claim that Mr. Hubbard is a religious leader of the church and therefore the free exercise clause would prevent this evidence from coming in is simply 180 degrees contrary to what they have been saying since 1966, and we could introduce evidence to prove that.

But in any event, with respect to the First Amendment issue, I’d like to be given an opportunity to provide further memoranda to the court.

THE COURT: Well, first you mentioned a couple of cases apparently that you have given me that I haven’t read.

MR. FLYNN: U.S. versus Article or Device.

THE COURT: Is that in the collection of federal cases?

MR. FLYNN: It is. Apparently it isn’t — it is, No. 40, which is in 333 F.Supp. 357, No. 40 in our collection


of cases. And then the Founding Church case which I will go down and have a copy made.

THE COURT: Is that a California case?

MR. FLYNN: No, it is the District of Columbia Circuit Court of Appeals.

What basically happened is the U.S. versus Article and Device case was tried before a jury. A jury convicted the Church of Scientology for mislabeling under the Food and Drug Act. The case went up on appeal. Judge Wright wrote an opinion, reversed it and remanded it because of the jury instructions, claiming that the jury was improperly instructed.

THE COURT: I think I read that.

MR. LITT: We submitted it.

THE COURT: I did go through it.

MR. FLYNN: It went back to the district court. It was retried, convicted again and the U.S. versus Article or Device case was, the final result of the case they then did appeal it again but the District Court of Columbia Circuit Court of Appeals merely affirmed the judgment of the Federal District Court.

The Christofferson case, which I will also give to the court if I have not already done so, held basically as I stated, that the good faith of representations made if made in a wholly secular context, even if they are not susceptible of exact certitude, can be the foundation for a civil fraud action.

Secondly, the case held it was for the jury to


determine it, which has recently been upheld by the Federal District Court here in Los Angeles, Judge Marshall.

Thirdly, the case held that proof of a sole motive to get money by making the representation is evidence of a secular context. So, that is the Supreme Court of Oregon.

But in any event, the court, since it is not dealing with the church and church representations in this case, it is dealing with Hubbard and representations about Hubbard, an individual, which, of course, that is the convoluted problem of the whole case. They are trying to get his documents back and assert his interests in privacy and he isn’t even here to litigate.

So the status of L. Ron Hubbard in this litigation with regard to these documents, particularly with regard to the breach of fiduciary duty and invasion of privacy counts is a serious issue for this court with regard to a motion for directed verdict because it is a private right and Mr. Hubbard isn’t here. If they assert that Mary Sue Hubbard and the Church of Scientology of California have privacy rights, then we will make a very strong showing that both of those entities or individuals are public figures.

Mary Sue Hubbard has been in the news since 1977 on almost a monthly basis. Virtually every news, every major broadcasting company in the United States; "20/20," "60 Minutes" has had extensive programs about her relationship to the church, the criminal activities that she was involved in. Time Magazine, Newsweek, all the major newspapers across the country have carried extensive articles about Mary Sue


Hubbard and this what is called Operation Snow White to break in and burglarize from 126 state and federal agencies, which was conducted from a ship. She signed a statement of evidence admitting basically six years of nonstop harassment of private organizations, public and state agencies that has been disseminated all over the United States. If she claims a privacy right and claims that her rights of a particular type as a convicted felon have been invaded, I submit that the McNally case, which we set forth in our memo, clearly establishes that under the circumstances of this case, there is no privacy interests that she could legitimately set forth.

With regard to the Church of Scientology of California, there has been a plethora of publicity about the Church of Scientology of California as a religious organization and as a secular organization which almost defies description. It is probably even greater than L. Ron Hubbard. I probably have four legal packets of probably four to five inches thick of newspaper articles just in the last four years about the Church of Scientology of California and the litigation that has been involved in it.

The Church of Scientology of California has brought probably in excess of 100 lawsuits to attack and harass people in the last decade.

It’s been found to have brought malicious prosecution actions. Cases have been dismissed that it has brought. Eight cases that it’s brought against me have been dismissed, one case, the McLean case in the Federal District Court. The Cazares case in the Federal District Court in


Tampa awarded some $42,000 of attorneys fees on a suit brought for the Church of Scientology in California by finding about, just on that suit, that it was brought frivolously and maliciously, and now there is a new suit brought by Cazares against the church.

The church has thrust itself into litigation all over the United States pursuant to a policy of the Church of Scientology relating to the law and I happen to have that policy with me, but I can almost dictate it off the top of my head, and it is written and copyrighted by L. Ron Hubbard as the policy of the church, and it says:

"The law can be used very easily to harass. The purpose of the law is to harass and discourage rather than win. Enough harassment on someone is enough to destroy them utterly."

The church has basically followed that policy in hundreds of cases across the country. It has thrust itself into the legal arena and, in fact, in the case of  United States versus Siegelman, the Federal District Court in New York City found that where the church was alleging that it had been defamed on issues that were arguably religious, the church found itself in the peculiar position of claiming that it had been defamed and the court threw the case out on the grounds that, well, on the areas of a claimed defamation, they were arguably religious. So the church couldn’t even assert them. So, the church has found itself in the curious position in cases across the country of suing


people, as it has sued Mr. Armstrong here. They are walking into the court and basically claiming everything is protected and trying to handcuff defendants from putting up any defense, as was the situation in the Allard case, from putting up any defense on the ground that they are a religious organization.

I submit, Your Honor, that the First Amendment, and I will submit a memorandum on the subject, simply cannot be used as a weapon to prevent someone like Mr. Armstrong from one, defending himself, and we haven’t even addressed the issue of his counter claim. His counter claim goes to all of the issues relating to the biographical fraud of L. Ron Hubbard, reliance on it and all of those issues, where none of them, in fact the people at the top of this organization call it a company, call it The Organization. They used to laugh about the fact that people thought it was a church. They used to joke about it.

There was one policy they called the Minister’s Mockup where they would go out and pretend to be a church and the people at the top who drafted it laughed about it.

So, without even reaching the question of Mr. Armstrong’s counter claim and how he is entitled to use
those documents in his counter claim, he is entitled clearly to use the documents to defend himself in this lawsuit. As long as the counter claim is existent and all those issues have been asserted, then we submit to the court he is entitled to use the documents to prove his counter claim.

If the court ever gave these documents back to


these people, they are forever gone. The church would then turn around and sue Mr. Armstrong if he said anything for defamation, and he’d be deprived of the right to defend himself with the documents.

Every judge that has been involved, Judge Cole initially, Judge Shimer, Judge Cole specifically stated when he issued the preliminary injunction that he was impressed by the argument, and that is a quote, that he was impressed by the argument that Mr. Armstrong saved these documents from the shredder.

Judge Shimer specifically brought up the fact that Mary Sue Hubbard had fled the United States in the 1950’s, had been involved in obstruction of justice and that further these documents had been involved in a shredding operation in 1980.

If this court were to return the documents to these people, they would never see the light of day again
because they are devastating to the representations that have been made about Mr. Hubbard. So, we submit, Your Honor, their First Amendment issues in this case are really just simply not there. We don’t certainly intend to inject them. We intend to focus on Hubbard and Hubbard’s activities. We are not going to introduce any evidence with regard to the truth or falsity of any religious doctrine.

The two issues we seek to have come into evidence are the Suppressive Person Declare and the Fair Game Doctrine.

The Suppressive Person Declare said that he stole documents. That has been issued all over the United States.


That has been thrust into the temporal and legal arena and has been made an issue in the lawsuit.

We submit the First Amendment has got nothing to do with the case.

THE COURT: Did you want anything further, Mr. Litt?

MR. LITT: Yes, I would, Your Honor.

I find it a bit difficult because what I expected would happen, has happened. Mr. Flynn has one, distorted the record and two, put forward a hope that the reality of what he is putting forward will not be clearly understood.

The basic proposition that you can steal from someone if you don’t like them and you think they are a wrongdoer, that is their defense. When it is stripped away, that is what all of the legerdemain, all of the statements — Mr. Flynn, I could spend three days because after all, it is easy to make an allegation. Then to respond to it requires explaining what the person is talking about and explaining
that no, this isn’t true and no, this is true.

I will give the court just one example in the probate case that I talked about before. Allegations
Mr. Hubbard transferred $85 million — I am sorry — the church stole $85 million from Mr. Hubbard, Proof? Zero. Zero.

It was an allegation as to part of the fact that Mr. Hubbard’s estate was in need of preservation and care that Mr. Flynn was so generously putting forward to protect his estate, and so he had to make allegations about mismanagement of his estate, and he made the allegation that


$85 million had been stolen. There was not a shred of evidence, In the summary judgment motion there was not a shred.

We spent months –

THE COURT: I hope that word is not a Freudian slip.

MR. LITT: We spent months responding in that one case to allegations that had no basis, and there was a summary judgment ultimately granted.

But what we are dealing with in this court is the desire of the defendant to justify criminal conduct,
if you strip it right down. If you want to take the theft that Mr. Flynn argues, even if it was a theft, if you want to strip it down, then he is trying to argue that a thief can steal from some people.

The Dietemann case that we cited is directly on point. The facts of the case, the facts of what we are dealing with here are so far from what Mr. Flynn has put forward.

Let me take this shredding issue which seems to be made sufficiently a big deal of, and I will assume for purposes of my argument that all of Mr. Armstrong’s testimony is 100 percent accurate and I will rely solely on what he has had to say. He said documents were being shredded in the fear that there was going to be a raid. That is his testimony. Not these documents, none of these documents.

He says that in the course of that activity about other documents, somebody came to him with a box, a single


box of documents that turned out to be from the storage materials of Mr. Hubbard and says, "Well, what should happen to these?"

He said, "Well, they should not be shredded."

He took them to his organizational senior. He was a Scientology church staff member. He has testified that he could have been removed by seniors within the Scientology organization. He took them to his post senior and said, "What should be done with them?" The post senior said they should be kept.

Now this occurred in February, according to him, or January 1980. Well, what happens? He, according to him, realizes that these are important documents to the church. He petitions to Mr. Hubbard, with copies to his organizational seniors, would be on the organizational lines within the church, saying, "These materials have been discovered."

He is appointed to be archivist to gather them.

Quote, it was my job to preserve, protect and maintain the materials. That was his function. That is his testimony, and yet somehow, somehow we walk into this court and Mr. Armstrong has saved these documents.

Mr. Armstrong says, "I had to get them for my defense." Where in the law, where in any case does it say that if someone says, ‘I am going to sue you," you can go out and take things that aren’t yours for part of your defense. That is unheard of. It is incredible that it is being put forward as a defense, but more importantly, I am concerned because the very nature, the very inflammatory nature of


the charges that get made, of the sweep of them, of the character of them. Mrs. Hubbard has admitted to six years of criminal conduct, which is totally false. It would take me 15 minutes to explain why, but it is totally false. It is one example.

What is going on here? What is going on in this courtroom today and what will go on in the trial of this case if it is permitted that a justification defense can be put forward? That sweeping claims of every imaginable sort will be made before this court.

Mr. Flynn says that none of these have anything to do with the First Amendment. He says well, I can show that Mr. Hubbard made a statement in the 1950’s.

Well, let me just give you an example. Under Scientology teaching, Dianetics was the precursor to Scientology, a religious philosophy. Dianetics did not begin as a religion. Scientology doesn’t claim that Dianetics began as a religion. It involved no religion. In the case of Malnek versus Yogi on transcendental meditation, the people involved in meditation said they were not a religion. They were teaching in the schools and the issue was whether they could do that. The court said, "We don’t care what you call it. We care what it is. It is a religion."

That is just one example to show the problem that exists with the theory that is being put forward.

Mr. Flynn says I just want to show that certain statements have been made, but then he said Mr. Hubbard has been promoted as the leading personage in the country.


Well, in the Catholic Church there is a doctrine of the infallible pope. The pope is never wrong in the
Catholic Church. That is a doctrine.

Now, I have no doubt that I could prove that the pope is wrong many times. I have no doubt that I could
prove that he has made statements on secular subjects that are wrong, inaccurate, incorrect, misleading, whatever it may be because that is the nature of people. I think you can prove that infallibility is, from a scientific perspective, wrong and the terms in which we are dealing, but you can’t get into it.

Mr. Flynn says that Mr. Armstrong took the documents. He was the subject of Fair Game. I am still deserving the Fair Game issues because it really comes in as a separate motion, although I can address it if the court wants.

THE COURT: No, no, let’s try to finish this aspect.

MR. LITT: He says that Mr. Hubbard has said he is not a religious leader, he is a scientist. I don’t know what documents he is referring to.

What I do know is that it poses the precise problem. How is it that a court is going to take the life of a man and the development of a religion and put it on trial. That is what is being asked of the court. Make no mistake. That is what is being asked of the court to put on trial the life of L. Ron Hubbard, his role in Scientology, the development of Scientology, and Mr. Flynn slides into it because it is so inherent in his theory that even though


he is trying to make it quote secular, he cannot avoid the problem.

So he says, well, we will show that the money was given to the Church of Scientology, mind you where people bought services for what is called auditing, which is the central practice, religious practice of Scientology, that they bought it because of their belief in L. Ron Hubbard and it was a fraud.

Well, the idea that you can sort this out is inconceivable. Mr. Flynn says we have won this issue all over the country. That is simply wrong. What has occurred so far is that the court has said that the two courts that have dealt with it have said that summary judgment will not resolve this issue.

However, in the case in the United States District Court in Massachusetts in which Mr. Flynn was the counsel, District Judge Garrity, on a motion to dismiss, which had fraud allegations in it, ruled that some things couldn’t be dealt with on a straight motion to dismiss, but it was the court’s function to make the determination and it would hold an evidentiary hearing in which the plaintiff, in that case the plaintiff, Mr. Flynn’s client, had the burden of showing that these matters had arisen in a wholly secular context. Mr. Flynn then dropped those allegations before the court held it. In all consolidated cases in Massachusetts on May 11th then: will be a hearing before Judge Garrity of the Boston Circuit Court, I believe it is called, in which this very issue of whether or not any of these supposed


allegations can be heard at all will be resolved in a hearing, evidentiary hearing before the court.

THE COURT: Assuming we finish this case.

MR. LITT: Yes.

Now, I will leave for the moment the First Amendment theories and I will leave some of the particular
issues of, for instance, whether any documents are necessary for damages or whatever, but there is a general point that runs through the way in which Mr. Flynn frames the issues.

He tries to posit Mr. Armstrong in the position of a reporter, but I think the court may not be fully aware of circumstances of these documents and this again I am relying and everything that I say solely on the testimony, of Mr. Armstrong or in some particulars of Mr. Garrison who is a good friend, by his own testimony, of Mr. Armstrong.

Mr. Garrison says, "I considered the documents confidential. I treated them confidentially.

"I had a ten year working relationship with the church.

"Yes, I intended to return the documents. Yes, they were given solely to me for use on the biography. Yes, the biography could not be published without approval.

"There was a buy out clause. "No private information in that biographay could be disseminated without approval. The biography was subject to review and it had to be approved."

It had to be approved by Mr. Hubbard, according to Mr. Armstrong. It had to be approved by Mrs. Hubbard.


Now, that is not a journalist case. That is not giving it to a journalist and waiving one’s privacy. Mr. Garrison said he was given it solely for the biography. Mr. Armstrong said he didn’t give it to him for any other purpose.

When I asked him, "Could it be used for any other purpose?" He said, "I couldn’t imagine it at the time. What happened later is a wholly different picture." That is a quote.

So that the privacy of these materials, of these documents was maintained throughout without question based on the undisputed testimony in this case.

Now, Mr. Flynn argued that in reality Mr. Armstrong is not like the employees in Pearson versus Dodd since the court says that the employees couldn’t do what they did. He is like Drew Pearson.

Well, the facts are that he went to Mr. Garrison and induced him to give the documents that he knew were private, that he knew were confidential, that he knew were not to be used for any other purpose, that he knew he was not authorized to take.

I said to him, "Do you contend or do you believe that Mr. or Mrs. Hubbard ever would have authorized you to do what you did by sending these documents to Mr. Flynn?

"Absolutely not."

THE COURT: We are getting into things that go beyond the problems here because we are not trying the case. We are here to determine, assuming his side of the presentation,


what his offer is, whether these documents are going to be permitted to go into evidence.

MR. LITT: His argument here, Your Honor, is that somehow there’s been a waiver of the privacy interests in the documents and, therefore, there is no privacy in the documents so they can be introduced, That is why the testimony demonstrating that the privacy was maintained is important and that is why it is important for the court to note that that testimony is based upon uncontradicted testimony. That is not our allegation. That is Mr. Armstrong’s testimony.

The case of the United States versus Hubbard, which I talked about earlier, clearly demonstrates that even where the government has taken documents on a lawful search, not where a rampant, lawless individual has taken them for an improper purpose, that the privacy in documents taken remains on a constitutional basis, and that when they are in a court, the court when it is dealing with private documents, and it was alleged that these documents contained extraordinary evidence of crime, and it has been alleged that throughout that the privacy interest in the documents remains. The court is required to use the standard that I set out before.

At some point in this case if this theory or some of these theories are going to be allowed to be developed, we are going to have to specify what the issues are. I hope that the court can get a sense of the virtual impossibility of dealing with this case in the way that the defendant, not the plaintiff, frames it.


The plaintiff frames the case quite simply.

The defendant frames the case so that the allegations and claims that have to be responded to are so numerous, and Mr. Flynn in the course of his argument talks about what has happened to him and what has happened to Mrs. Hubbard, and he claims that Mr. Hubbard is a fugitive and he talks about grand juries here.

Now, I can assure the court that I am perfectly prepared, if necessary, to demonstrate that much of what he says is false, other of what he says is distorted, other of what he says are conclusions.

Even without evidence, to do so would take more time than we certainly have today, but what has to be
determined in this case is whether the court is going to allow this kind of an approach to a simple, straightforward case. The court must resolve preliminarily whether or not on the theory that is put forward, which is directly contrary to the case of Dietemann versus Time, the theory that the defendant puts forward that it is a defense to take documents either one, because the person is a public figure about whom you want to expose information, or two, you are afraid you are going to be sued and therefore want to take the documents of evidence of I don’t know what.

The irony is that Mr. Armstrong has been sued because he took them. It flies in the very face of their
allegation of fair play. Mr. Armstrong wasn’t sued in April. Mr. Armstrong was sued after it came to light that he had been taking all of these documents and sending them to


Mr. Flynn, which by his own admission in a request to admit, was for use in other cases, so that this justification is an Alice in Wonderland theory. It is a theory that says it is okay to engage in crimes when you determine that it is in your interests to do so or when you determine that it is in someone else’s interests to do so.

There is no such defense and we will never deal with the issues in this case until this court resolves this, and in resolving it, I can only emphasize, because it is not going to go through. I have so many notes of statements that I could respond to and I am not going to do that, but I cannot emphasize to the court enough the importance of the court’s realizing that what is going on here is a whirling dirvish of allegations that cannot help but have a prejudicial impact on a court, on anyone else that is dealing with it, and cannot help but resolve that instead of a determination of whether or not certain property was ours and whether it was confidential and whether Mr. Armstrong took material that wasn’t his, which was private, that we end up in this never, never land of wild charges and claims about Mr. Hubbard which can never, ever be separated from the claims about the church itself and the issue of fraud.

Mr. Flynn has indicated he wants to submit a supplemental memorandum, and we will discuss, I suppose,
the issue more at that point and I can deal more clearly with it.

The Ballard case, Your Honor, stands for the proposition that I stated. Some of the facts that I stated


are not in the opinion, We went back to the Supreme Court record and took it, but what I have said in each respect is accurate, and if the court wants it, I can go and have copies made from the Supreme Court record to demonstrate it.


MR. LITT: Guy Ballard –

THE COURT: The opinion is here, I have read the opinion again.

MR. LITT: It is important that the court read — I summarized the things from the record because some of the representations that were permitted to be litigated are not stated in the opinion, but it was the trial court’s ruling, which was upheld by the Supreme Court, and it was discussed in the briefs and in the record. It was not reflected in the opinion, but that is the actual circumstances.

Mr. Flynn says that Ballard permits sincerity. Yes, Ballard permits sincerity. Cases since Ballard have amply demonstrated that essentially a sincere determination must be very truncated, must be based on extrinsic evidence and must essentially be shown to be a sham, and basically since he is alleging, in reality, that the  church is insincere, after all, these publications he is talking about in which some statement was made. That is a book jacket written by some church member, published by a church publishing company. He is going to have to argue that the church is insincere, and he is going to have to establish, which he cannot do and which no court has done, that, in fact, Scientology itself


is not a religion.

That is their theory in reality. He keeps trying to frame it in terms of Mr. Hubbard, but it keeps coming back it is really a money-making scheme. You go and buy these things, but it is really to make money.

The only point I want the court to understand is if the court is going to get into that, which it shouldn’t do, which I believe it is not permitted to do, and which in any event it is not necessary to do given the reasons that are being advanced, then the court is going to have to take on the whole question of having a full evidentiary hearing, which frankly could be longer than the projected trial in this case in which it is determined whether or not these supposed representations that he is talking about were made in a wholly secular context.

We will bring in experts to speak to the issue.

We will bring in church members. We will trace the history of church doctrines at issue, but that is what will have to occur if the court is going to entertain it, and I am very concerned that there not be a short-circuiting of these issues based on generalized claims or efforts to paint Mr. Hubbard in a certain way by putting a secular label on it. That cannot be done.

THE COURT: I am going to take a 15 minute recess and look at a couple of these other cases.


THE COURT: Well, anything either side want: to submit on this issue that we are talking about now? Not hearing


any, I will go ahead.

I think we are all generally familiar with the Bill of Rights, the First Amendment. Sometimes when we get into dealing with some of these specific cases that have been tried over the years involving that amendment, dealing in these types of cases from day to day, it is not easy to keep track of various ramifications of the rights.

I think that we all generally think in terms of the rights in the sense of a shield, a shield that protects our exercise of our rights in a certain fashion. It is of note, of course, that this case did not involve directly the situation where plaintiff is exerting the rights as a shield, but instead is seeking to use them in a sense as a sword.

Plaintiff is here seeking monetary damages in tort in addition to its equitable issues, but I think that the primary considerations that we are dealing with now have to do with the problems relating to the admissibility of the evidence in a civil proceeding or tort, money damages. So, I think that that has to be borne in mind, the extent to which that becomes a factor in the case.

Plaintiff is seeking damages. He is suing upon specific theories of law, torts, and certainly the general rule is the defendant is entitled to a fair trial, whether it be a civil case or criminal case, and is entitled to present evidence in defense of that action so long as it is relevant and material and doesn’t conflict with some other overriding principle.


In this case the plaintiffs have asserted directly and as a representative to rights relative to some of these exhibits.

It seems to me that on balance that the right to defend oneself has to have more significance than the right of privacy that might, in general, attach to some exhibits or else there is no way to defend oneself against what may or may not be proper accusations.

Of course, we are not dealing with the exlusionary clause, the concepts involved in the Fourth Amendment directly. Obviously the right of privacy has its foundation in the Fourth Amendment.

At the same time, the law is very clear that the proscription against using illegally seized evidence deals only with the use by government, the state, district attorney, attorney general, city attorney in criminal and quasi-criminal prosecutions.

Even there, where the property is obtained through the wrongful conduct of a lay person, a nonpolice officer, that evidence can be used by the government authority because the law enforcement has not violated the constitutional rights of the individual for use by the court. Under those circumstances, therefore, it doesn’t violate the constitutional rights of the person who is the proprietary person relative to the evidence.

The problem, of course, in this case is assuming that is so, what is relevant to the defense of this case and, of course, it gets into discussion of these different


issues that we have talked about. We are dealing with specific torts on behalf of the church here. The church is suing on breach of fiduciary relationship, breach of confidence, aside from the equitable issues, and conversion; and Mrs. Hubbard is suing on theories of breach of fiduciary duty, breach of confidence and conversion, and also invasion of her privacy. She purports to be acting in this behalf as a representative of her husband.

Now, the defense has indicated that it has essentially as to the conversion, that they have received the documents with the consent of the people or the people that the defendant was dealing with, and that there is no literary value in these and that essentially there’s been no interference with the rights of the plaintiffs to use these because the substance of the contents are still available, either in the possession of the court or subject to their use if that is something that is required in the trial of this lawsuit or some other lawsuit.

Turning over the exhibits to counsel in the context of which the defendant has set forth in his offer of proof seems to me to be a proper use of the exhibits.

Been harassed and threatened physically and with lawsuits. I am not saying whether he can prove that or not. Certainly the solicitation of counsel and turning over the exhibits, it seems to me to be reasonable, assuming it is reasonably done in good faith for those purposes.

So far as the matter of public interest, private persons and public persons, it is clear under Pearson versus


Dodd that the public character of the individuals would not be a defense to a cause of action based upon the common law intrusion concept, and under this Porten case which has been cited to me at 64 Ca1.App.3d, it would appear that the mere turning over of the information to one person would not constitute a publication. It must be turned over to the public or substantial group of public for the publication aspect of the tort of breach of privacy to be involved.

Of course, it is a demurrer case. It is not a judgment for trial. The court didn’t really talk about intrusion. They found that there was a cause of action stated upon the constitutional principle as adopted by the electorate back in whatever it was, 1971, ‘72, and they also relied upon some statutory provisions in the Education Code.

The court did say that the allegations of plaintiff’s complaint or appellant’s complaint, "Which for present purposes must be deemed true, state a prima facie violation of the state constitutional right of privacy. At  trial, of course, the university may contest any of the allegations of the complaint as well as show some compelling public interest justifying the transmittal of the Columbia transcript to the commission."

So it would appear to me that there is a justification defense to this cause of action based upon this constitutional provision dealing with public interests which would justify the transmittal of the information to the third party.

So, it seems to me that we have to be concerned,


I suppose, with the reasons which the defendant has asserted to why he turned these documents over to third parties or a third party, and it seems to me that he had a reasonable good faith belief that this is evidence of a crime or criminal conduct, that he would be justified in turning it over to a third person.

Well, to put it another way, when a search warrant can be issued. It used to be thought that a search warrant could not be issued for mere evidence. It could only be obtained for the fruits of the crime, contraband, things which would be illegal to possess such as narcotics, burglary tools and things of that nature. But certainly the law now is that a search warrant can issue or a police officer can seize evidence which appears, reasonably appears to be evidence of a crime.

So it seems to me that by analogy, whether a crime could be prosecuted, whether or not a criminal
prosecution could be successful isn’t the sole test here. It seems to ne that the issue really has to be on this matter of justification as to whether Mr. Armstrong reasonably and in good faith believed, and from an objective standard also that this evidence was evidence which was indicative of criminality, would tend to prove criminality.

So, it seems to me that under the constitutional cause of action, if that is what it is, that there would be this justification defense or the right of the public to know about people who are in the public eye, and so far as the common law idea of intrusion, it would seem to me


that while there may be evidence of justification, still if he testifies that there wasn’t any illicit activities, everything was given to him, that there can’t be any intrusion under common law, concept of invasion of privacy.

Of course, on the breach of fiduciary duty, these things are subject to whose agent was he. Also, of course, which would be developed I assume here in the trial and also to some extent the privilege given under — set forth in the Restatement of Agency, I think that the privilege goes to a higher duty to himself or to some third party or other interests, superior interests. This again becomes a rather
amorphous subject.

They use an example, of course, which deals with the duty of a lawyer in the attorney-client privilege which is probably the most hallowed privilege, the most zealously protected privilege in the law. That is a lawyer cannot, of course, disclose what his client tells his about his past misdeeds, but if he tells him about things he is going to commit or do, he has not only a privilege, he has a duty to disclose that information.

So, I don’t really think that particular analogy in relating to the distinction between past offenses and future really is definitive. It is an illustration, but it seems to me that if the reasonably good faith belief that these things were things that had happened in the past were going to continue in the future, as it might relate to a variety of possible criminality, it seems to me that he would have the privilege to act as he did.


So, I realize this presents problems and the court would certainly be willing to scrutinize any of these exhibits, not that it particularly wants to, but because it has an obligation to do so to be sure that they would bear reasonably upon these possible defenses that may be raised in this lawsuit. So, I don’t propose to limit or exclude the use of any documents that are contained in these four boxes in general. That doesn’t mean that everything becomes admissible. The court will have to deal with each individual exhibit and will have to deal with it probably before we ever get started with the trial so we don’t unduly take up the time of the jury on these things.

Coming back to the First Amendment, of course, the cases do seem to indicate that if we are dealing with things which deal with the doctrines or tenets of the church being a bona fide church, of course we have no business becoming involved in the right or wrong, truth or falsity. But, of course, I have no way of knowing at this point. I am not conversant with some of these things, but certainly from reading some of these Scientology cases that have been submitted to me, there are activities which they have engaged in which are secular as distinguished from religious, assuming that it is a religion, and apparently most cases that have dealt with it have concluded, at least, there’s been a prima facie case established and nobody has attempted to establish that it wasn’t a religion, so that may also, of course, bear upon the issue of some of the problems we have to deal with.

Again, I think where the church here is using


the forum of the court as a sword, not as a shield, that the rights of the defendant to defend himself are very significant and outweigh some of the considerations that might be involved so far as Mrs. Hubbard is concerned or the church as it relates to some of these writings.

Well, I am kind of tired. I suppose you are, too, from talking. Maybe we should recess until 9:00 tomorrow and take up the next motion.

MR. LITT: That is fine, Your Honor.

Can I make a suggestion in the context of the court’s ruling? It seems to me that in order to even know what we are dealing with at this point in light of the indicated ruling, that the defendant should now specify the particular items, documents which he wishes to introduce into evidence, along with a statement of what their relevance is.

We cited to the court the case of United States versus Hubbard, which in a somewhat different context, but I think it is applicable, talks about the need for a document by document analysis, and the court also indicated that would be the procedure necessary. I think he’s already put forth some of the documents which he intends to rely upon which are included in these exhibits; am I not correct on that?

MR. FLYNN: That is correct, Your Honor.

THE COURT: I don’t really want to get involved with that at this point. We have so many other motions to deal with here. Once we get all the other motions out of the way, then we can deal with evidence.


MR. LITT: Oh, I understand, Your Honor. I was just suggesting so that when we reach it we have a procedure set. I know in their opposition they have specified, I am not sure whether I can identify, but they make some particularized reference. I don’t know whether that is an exhaustive list.

THE COURT: You mean he made that when he was tired?

MR. LITT: What I am suggesting is just that we know the terrain we are on so if there are other documents other than that, and I am not saying we should deal with that tomorrow because I, for one, would need to look at then if I am going to have to deal with the particulars of them. That is why I would like to have some advance notice.

THE COURT: I think it is a good idea.

MR. FLYNN: We will try to give as such particularization by Monday as we are able to, Your Honor.

THE COURT: Okay, then, we will recess until 9:00.

(At 3:45 p.m., an adjournment was taken until Friday, April 20, 1984, at 9:00 a.m.)





NO. C 420153

)   ss

I, Nancy L. Harris, Official Reporter of the Superior Court of the State of California, for the County of Los Angeles, do hereby certify that the foregoing pages 1 through 134, comprise a full, true, and correct transcript of the proceedings held in the above-entitled matter on Thursday, April 19, 1984.

Dated this 24th day April, 1984. /s/ Nancy L. Harris, CSR #644
Official Reporter