Scientology Crime Syndicate

Daniel A. Leipold, State Bar No. 77159
Cathy L. Shipe, State Bar No. 156453
960-A West Seventeenth Street
Santa Ana, CA 92706
Telephone:  (714) 796-1555
Facsimile:  (714) 796-1550

Craig J. Stein, State Bar No. 98041 GARTENBERG JAFFE GELFAND & STEIN LLP 11755 Wilshire Boulevard, Ste. 1230 Los Angeles, CA 90025-1518 Telephone: (310) 479-0044

Ford Greene, State Bar No. 107601 HUB LAW OFFICES 711 Sir Francis Drake Blvd. San Anselmo, CA 94960 Telephone: (415) 258-0360




1. PRELIMINARY NOTE. At the outset, plaintiff and moving party, Lawrence Wollersheim, acknowledges the unusual length of this reply brief and apologizes for any inconvenience it may cause. However, inasmuch as the lion's share of it is devoted to meeting the constitution-based arguments advanced by Religious Technology Center -- arguments that demand comprehensive treatment -- plaintiff submits that the length is unavoidable.

2. SUMMARY OF THE FUNDAMENTAL FALLACIES OF RTC'S OPPOSITION. In an elaborate effort at distraction, RTC invites this Court to chase myriad red herrings. Initially, RTC does this by listing various facts that bear not at all on the viability of the motion to amend, such as that RTC "did not exist at the time of the alleged tortious acts in this case." (RTC Opp., p. 1.) In no reported opinion is such a factor held to be dispositive of anything.

Nonetheless, respondent remarks at length about this and other irrelevant points, faulting Mr. Wollersheim for "mak[ing] no real effort to prove these essential legal elements of an alter ego relationship." (Ibid.) The problem with this argument is that RTC is simply wrong about what it claims are "essential legal elements." For instance, that "RTC never assumed the assets, liabilities or functions of CSC" (Ibid.), even if true, is indicative of exactly nothing where the present motion is concerned.

The fact is, there is no litmus test for use in determining when the corporate veil may appropriately be pierced to amend a judgment. The cases are legion that the result depends on the circumstances of each particular case. (See, i.e., Mid-Century Insurance Co. v. Gardner (1992) 9 Cal.App.4th 1205, 1212.) Indeed,

"It is a fundamental rule that the 'conditions under which the corporate entity may be disregarded... necessarily vary according to the circumstances of each case inasmuch as the doctrine is essentially an equitable one and for that reason is particularly within the province of the trial court. Only general rules may be laid down for guidance.'" (Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 836-837; citations omitted; emphasis added.)

As a different court put it:

"When considering the application of the alter ego doctrine to a particular situation, it must be remembered that it is an equitable doctrine and, though courts have justified its application through consideration of many factors, their basic motivation is to assure a just and equitable result." (Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 48; emphasis added.)

Importantly, plaintiff is not bound to prove that RTC and CSC are alter egos of CSC for all purposes, but only for purposes of this case (see, i.e., Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conference Center Board (1996) 41 Cal.App.4th 1551, 1555). Thus, several courts have upheld amended judgments where as little as three facts pointed to the alter ego status of the new judgment debtor. (See, i.e., Thomson v. L. C. Roney & Co. (1952) 112 Cal.App.2d 420 (four factors); Mirabito v. San Francisco Dairy Co. (1935) 8 Cal.App.2d 54 (three factors); Jack Farenbaugh & Son v. Belmont Construction (1987) 194 Cal.App.3d 1023 (three factors).) RTC's effort to render this process unduly complex finds no support in the case law.

Equally misplaced is RTC's constitution-based religious liberty argument, by which respondent urges the Court not to tread on its "ecclesiastical" territory. RTC claims that to even consider whether the Sea Org indeed rules all of Scientology would be to trample on Scientology's first amendment freedoms. Like the rest of what RTC puts before the Court, this argument is the legal equivalent of cotton candy: it has substance only from a distance and is shown on examination to be so much spun air.

Aside from the fallacies of RTC's legal arguments, there are its tortuous factual claims. As noted, they are largely irrelevant. But, even the arguably relevant evidence -- that which addresses the supposed integrity of the corporate structure -- consists wholly of hearsay and a host of self-serving declarations. It does not undermine Mr. Wollersheim's submissions showing retaliatory acts accomplished through RTC against him as punishment for bringing this lawsuit. Nor does it impair the evidence showing the intimate involvement of RTC officials in shaping CSC's defense.

This reply, then, will focus on revealing the deceptions rife in RTC's factual assertions, and on debunking RTC's erroneous legal arguments. 3. RTC'S FACTUAL ASSERTIONS ARE CONTRARY TO THE EVIDENCE.

A. Among RTC's Most Odious And Incorrect Contentions Is That "No Evidence Of Bad Faith" Supports The Motion To Amend The Judgment.

Mr. Wollersheim begins by addressing RTC's extraordinary -- and utterly inaccurate -- statement that "[i]n this case, there is no showing of bad faith to justify disregarding the corporate structure." (RTC Opp., p. 17.) To convince the Court of its uprightness, RTC hopes to paint the picture of heeded corporate boundaries. But RTC's sweeping declarations fail. The bad faith tactics, implemented largely by Scientology boss David Miscavige through respondents' officials and trustees, began in at least 1985, when RTC and CSI filed the Wollersheim II case. The Honorable James Kolts, acting as special master, recommended dismissal upon finding that the lawsuit's purpose was to punish the prosecution of this case: "The plaintiffs' case... borders on the frivolous and malicious, boiling down to penalizing an attorney simply for conducting necessary discovery to represent his or her client's case." (Plaintiff's Exhibit "GG" to original motion.)

Of course, that collateral lawsuit was followed by others, including Wollersheim V, filed by RTC. There, RTC's lawyers, ostensibly seeking evidence that Mr. Wollersheim had made unauthorized copies of Scientology-owned documents, inexplicably searched his computer for documents containing such "keywords" as "Swearinger" and "O'Reilly" (the trial judge and plaintiff's attorney in this case) -- which quite obviously had relevance only to CSC, and only to this lawsuit. (Plaintiff's Exhibit "DD" to original motion.)

RTC is curiously silent about these established facts.

Indeed, though RTC questions some of Mr. Wollersheim's evidence, most of it simply goes unaddressed; for instance, RTC says nothing about former Scientology Attorney Joseph Yanny's declaration, submitted with plaintiff's original motion. In it, among other things, Mr. Yanny acknowledged having attended meetings at which RTC officials, including Marty Rathbun, strategized about blackmailing Mr. Wollersheim's lawyer in this case against CSC, Charles O'Reilly. Tellingly, Rathbun's present declaration does not deny relaying the message from David Miscavige to blackmail Mr. Wollersheim's then counsel with medical records to be stolen from the Betty Ford Center. (Yanny Decl., 21(a).)

Similarly, the present declarations of RTC's Warren McShane and Marty Rathbun are silent about Mr. Yanny's statement that they were ordered in his presence -- by another of respondents' present declarants, and CSC's original lawyer herein, Attorney Earle Cooley -- to destroy documents relevant to this case. (Yanny Decl., 18.)

B. RTC's Own Prior Veneration of Jesse Prince's Expertise Means The Current Effort to Discredit Him Fails.

Although both respondents rail against Mr. Prince ad nauseum, they cannot defeat his expert status, chiefly because they have previously acknowledged it themselves. Initially, this is shown in a document respondents submit, the March 10, 1994 interview of Mr. Prince by Attorney Earle Cooley. (Respondents' Exh. 24, attachment B.) There, Cooley, who has represented CSC and RTC against Mr. Wollersheim, implicitly acknowledges the intimate role Mr. Prince played in Scientology litigation, especially Wollersheim II (referred to as "that RICO trial" by Mr. Prince): ECC: Would you consider any of that litigation, or any other litigation, for example, the one in San Diego involving Larry West, to be frivolous or harassing litigation?

JP: No sirree! ....

ECC: The Larry West case -- how did that come out?

JP: That one came out good.

ECC: You win that one?

JP: Yes.

ECC: Did that case settle or did that try to a court conclusion?

JP: You know, I'm not sure. I'm not sure.

ECC: In any way it came out favorably?

JP: Yes, it came out favorably and it was done. We were happy with it. Things that I remember specifically about cases are stellar -- a stellar result. Like that Christofferson -- I remember a lot about that and that RICO trial. Boy, I could tell you every little detail about that.

ECC: Boy, we lived that one together, didn't we Jess?

JP: We certainly did."

(Respondents' Exhibit 24, attachment B, pp. 13-14; emphasis added.) Beyond Mr. Cooley's acknowledgement, Scientology officials also once demonstrated high regard for Mr. Prince's expertise about Wollersheim-related litigation. As seen in the newly-received video evidence accompanying this Reply (see, Exhibits "XX-99" and "III-99"), in December 1986 a uniformed Captain David Miscavige of the Sea Org introduced fellow officer and RTC official, Commander Jesse Prince, to an audience of Scientologists. Mr. Prince then expounded knowledgeably about Scientology litigation, including the Scott/Wollersheim II matter. (Exhibit "XX-99" and Second Supplemental Decl. of J. Prince, 2.)

Especially when viewed in light of their onetime reverence of Mr. Prince's insight, respondents' current focus on semantics is impotent. Whether the use in Mr. Prince's declaration of the phrase "in charge" (to describe his accountability for Scientology litigation during his tenure at RTC) was strictly accurate, the demonstrable fact is that RTC afforded Mr. Prince much responsibility for monitoring litigation, including the Wollersheim matters. In fact, RTC and CSI were so enamored of Mr. Prince that they nominated him as their expert in Wollersheim II. (Supp. Prince Decl., 28.)

C. RTC Fails To Overcome The Evidence Demonstrating Its Integral Role In The Management Of CSC's Defense.

RTC's protestations that it was uninvolved with CSC's defense are perhaps most notable for what they do not contain. As noted, RTC ignores vast portions of Mr. Wollersheim's evidentiary base; although his submissions before now have totalled more than 60 items (see, indices of declarations and exhibits submitted with original motion and evidence accompanying renewed motion), RTC comically characterizes it all as "a few bits and pieces..." (RTC Opp., p. 8.)

Rather than meeting the weight of Mr. Wollersheim's supporting evidence head on, RTC rests on its own submissions which, it insists, constitute "unequivocal evidence that it exercised no control over CSC's defense of this case at trial..." (RTC Opp., p. 19; emphasis added.)

RTC's statement is a demonstrable illusion. The events of the pre-trial period alone undermine RTC's claim of disinterest. For instance, Attorney John Peterson, who defended CSC in this case, also represented RTC in Wollersheim II. On November 5, 1985, the same day RTC and CSI obtained a temporary restraining order against the Wollersheim II defendants, Mr. Peterson signed a writ application for CSC in this case, attempting to prevent the materials targeted in Wollersheim II from being entered in evidence here. (Second Declaration of Leta Schlosser, 5-7 and Exhibit "MM-99" submitted herewith.) Though unsuccessful, Mr. Peterson would march back to the court at least two more times in an effort to obtain the same relief; his requests were repeatedly denied. (Second Schlosser Decl., 7-8 and Exhibits "NN-99" and "OO-99.") Clearly, Wollersheim II was filed -- by one of CSC's attorneys -- as an integral part of the strategy to defend CSC against Mr. Wollersheim's claims.

D. The Competent Evidence Continues To Show That, As Puppets Of The Sea Org And Its Leader, David Miscavige, Respondents Were Intimately Involved In Determining CSC's Defense.

While obviously unhappy about Mr. Wollersheim's demonstration that the Sea Org and its leader, David Miscavige, run all of Scientology ultra vires of the various corporate lines, RTC offers no competent evidence to contradict it.

Instead, RTC thrusts volumes of hyperbole at the Court, apparently hoping to divert the Court's attention. The current proclamations of, inter alia, David Miscavige, insisting that Scientology "corporate responsibilities and boundaries are distinct and firm" and that suggestions about the Sea Org's status as the true power hub in Scientology are "ludicrous" (Miscavige Decl., 11, 12) are certainly expedient. Unfortunately for respondents, they are also contrary to every independent and credible bit of evidence.

The persistent denials that David Miscavige controls the Scientology empire by virtue of his preeminent Sea Org post are refuted by an ocean of evidence to the contrary. Some of it is already in the record. Some of it, in direct contravention of respondents' present declarations, is presented with this Reply and more fully explained in the accompanying Declaration of Robert Vaughn Young:

Exhibit "L-99": This publication from approximately 1982, The Sea Organization Expansion News, shows a stern Commander David Miscavige "declaring a former Mission Holder suppressive." Also depicted are Sea Org officers "demonstrat[ing] the get-tough attitude of the 'new blood in management'" and illustrating the "powerful Sea Org activity that strikes swiftly to wipe out any attempt to rip off the Church or its parishioners in their quest for a brighter future."

Exhibit "HH-99": This excerpt from Sea Org magazine Highwinds (Issue 19 (1996)) lists Sea Org achievements for the 1995-96 year, including one from March 1996: "over 100 Sea Org officers fire out from International Management Headquarters to take command in every continental zone."

Exhibit "EE-99": In this February 1969 policy letter, Scientology founder L. Ron Hubbard announced that "The Sea Org sends its officers to individual orgs with unlimited powers to handle Ethics[,] Tech[, and] Admin" As these exhibits suggest, one need look no further than to Scientology's own documents for proof of the Sea Org's status as Scientology's power hub -- and David Miscavige's control of the Sea Org. RTC's portrayal of the Sea Org as an "honorary religious order" that "plays no role in the administration of individual Scientology churches" -- indeed, as a group that "does nothing" at all (RTC Opp., p. 13) -- is shattered by the words of Scientology's own "scripture."

The cited documents further demonstrate that, corporate lines notwithstanding, Sea Org officers are authorized to seize control of organizations, usurping the power of their non-Sea Org officers and directors whenever it suits Scientology. (R. Young Decl., 31-36.) The proof provided by Mr. Young also discredits other of respondents' assertions. For instance, the claim that the Sea Org has no money (RTC Opp., p. 13) is a fiction, as additional Scientology documents show. (R. Young Decl., 33; see also, Supplemental Decl. of J. Prince, 2-3.) Such evidence dovetails with the United States Claims Court's 1992 opinion, which exhaustively examined Scientology's "nominal corporate structure." (Church of Spiritual Technology v. U.S., supra, 26 Cl.Ct. 713.) In that court's determination, Scientology's corporate scheme is a deception. "Real control is exercised less formally, but more tangibly, through an unincorporated association, the Sea Organization..." (Id. at p. 718.)

As for the notion that "hatred" propels Mr. Wollersheim's assertion that David Miscavige controls Scientology as the Sea Org's undisputed leader, it is a fantasy (and an irrelevant one). Though not targeted for status as a judgment debtor himself, David Miscavige's status as Sea Org boss (and, accordingly, Scientology's leader) is clearly established by independent, previously-submitted evidence, which respondents eschew. For instance:

On July 18, 1990, Vicki J. Aznaran, a Sea Org member from 1978, and RTC Inspector General pursuant to an appointment by David Miscavige from 1984 to 1987 (First Aznaran Decl. at 1:17-19, 2:4-9; Plaintiff's Exh. "T" to original motion, 45:9-11), testified that in 1984 and 1985, while he was Chairman of the Board of Author Services, Inc., David Miscavige "represented Hubbard in all aspects of controlling Scientology. He attended regular meetings with myself and other top officials of Scientology organizations to review the status of all Scientology's activities, including its litigation and dirty tricks campaigns against Scientology's enemies." (First Aznaran Decl., at 3:8-18, submitted with original motion) In Wollersheim II, Ms. Aznaran testified that Miscavige exercised "ultimate control over Church of Scientology finances." (Plaintiff's Exh. "T" to original motion at 46:8-23.) She said the decision to bring Wollersheim II was made by David Miscavige and others, including RTC's Marty Rathbun, and Jesse Prince, in addition to Ms. Aznaran herself. (Id., at 684:1-685:21) She also testified that while Jesse Prince and Warren McShane worked for her at RTC, David Miscavige ordered her to destroy documents concerning the finance and control of Scientology. (Plaintiff's Exh. "S" to original motion at 215:1-22; 332:6-333:1.)

Further, Mr. Miscavige ordered the destruction of confidential counseling ("auditing") folders "of every person who was in litigation with the church;" some of these were subject to requests for production. (Id., at 332:6-333:23.) In particular, he ordered Mr. Wollersheim's auditing folders destroyed, a mission that was carried out by Jesse Prince and Rick Aznaran. (See also, original Prince Decl., submitted with Renewed Motion, 14-16.)

Finally, his denials notwithstanding, Mr. Miscavige did attend several of the trial proceedings in Wollersheim I. Contrary to Mr. Miscavige's present assertions, these appearances had nothing whatsoever to do with "protecting" L. Ron Hubbard. (Plaintiff's Exh. "K" to original motion; Supplemental Decl. of Leta Schlosser at 16(a)-(e), 17.) / / /


RTC argues that any inquiry by this Court into the nature of Scientology's power structure would violate the religious liberty guarantees of the first amendment. For support, RTC begins by importing snippets of constitutional doctrine describing the courts' compelled abstention from passing on ecclesiastical controversies. Respondent then juxtaposes that ostensible authority with pretextual statements about the nature of the Sea Organization and David Miscavige's relationship to it, hoping the Court will be warned off.

Indeed, in RTC's view, the Court cannot even question the truth of respondents' own assertions about the Sea Org, because to do so would be an ecclesiastical determination violative of the establishment clause. RTC's arguments fail on at least two counts. First, the fraud and collusion rampant throughout the litigation between Scientology and plaintiff precludes respondents' hoped-for constitutional protection, blanket or otherwise.

Yet, even assuming arguendo no fraud or collusion exists to remove constitutional protection, the first amendment does not compel the Court's deference to RTC's assertions. There is no intra-church controversy about doctrine or power here, the resolution of which would cause the Court to favor one warring faction's particular sectarian preference over another's. Instead of an intra-church ecclesiastical controversy, the matter before the Court simply involves a plaintiff seeking to enforce a lawfully entered judgment.

Ironically, it is Mr. Wollersheim whose constitutional rights have been trampled. While draping themselves in the cloaks of "RTC" and "CSI," Scientology's powerful have done everything to deny Mr. Wollersheim his constitutionally-protected redress. As the Second District Court of Appeal, commenting on this case, held,

"[A]n examination of the history of the underlying litigation reveals... a pattern of conduct by the Church to employ every means, regardless of merit, to frustrate or undermine Wollersheim's petition activity.... [A]cts which are designed to discourage the bringing of a lawsuit are no more oppressive than acts which seek to prolong the litigation to a point where it is economically impracticable to maintain and pursue it to a final conclusion. When one party to a lawsuit continuously and unsuccessfully uses the litigation process to bludgeon the opponent into submission, those actions must be closely scrutinized for constitutional implications." (Church of Scientology of California v. Wollersheim (1996) 42 Cal.App.4th 628, 649.) Now, once again, Scientology throws religion up as an obfuscatory ploy. The resistance of RTC's Miscavige and his Sea Org to submit to this Court's authority to enforce a lawfully approved multi-million dollar judgment resorts to spurious sectarian contentions that simply boil down to a dodge of responsibility.

A. The Doctrine Of Ecclesiastical Abstention Does Not Preclude Imposition Of Alter Ego Liability On Religious Liberty Grounds.

The Supreme Court has recognized two primary constitutional considerations favoring judicial noninvolvement in ecclesiastical disputes. The first is the extent to which judicial resolution of the particular controversy would involve deciding issues of religious doctrine or beliefs. Second, where religious organizations establish rules for internal discipline and governance, and tribunals for adjudicating disputes over such matters, "the Constitution requires that civil courts accept their decisions as binding upon them." (Serbian Orthodox Diocese v. Milivojevich (1976) 426 U.S. 696, 725.)

The rule requiring deference to decisions of ecclesiastical bodies on matters of internal church governance was first articulated in Gonzalez v. Roman Catholic Archbishop (1929) 280 U.S. 1. At issue there was the ability of a civil court to pass on questions about the qualifications of potential chaplains. The Supreme Court held that "[i]n the absence of fraud, collusion, or arbitrariness, the decisions of the proper church tribunals on matters purely ecclesiastical, although affecting civil rights, are accepted in litigation before civil courts as conclusive, because the parties in interest made them so by contract or otherwise." (280 U.S. at p. 16.)

Kedroff v. St. Nicholas Cathedral (1952) 344 U.S. 94 and Serbian Orthodox Diocese v. Milivojevich, supra, make clear that the principle of deference to church authorities applies to disputes concerning matters of internal church governance. In Kedroff, the Court held that a state could not dictate which of two factions within the Russian Orthodox Church had the power to appoint the ruling hierarchy for their churches in America. According to the Court, state legislation regulating matters of church administration was contrary to the first amendment because, in the absence of fraud, collusion, or arbitrariness, matters of church governance are for the church to decide free from state interference. (344 U.S. at pp. 107-108, 116.)

Balanced against these two first amendment considerations favoring civil court noninvolvement are state interests in resolving disputes about civil rights and individual interests in adjudicating before a civil forum. Even where church property is involved, the state has a strong interest in rapid resolution of disputes concerning ownership rights. (See, e.g., Jones v. Wolf (1979) 443 U.S. 595, 602 ("The state has an obvious and legitimate interest in the peaceful resolution of property disputes, and in providing a civil forum where the ownership of church property can be determined conclusively."); Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Presbyterian Church (1969) 393 U.S. 440, 445 ("It is of course true that the State has a legitimate interest in resolving property disputes, and that a civil court is a proper forum for that resolution."); Kedroff v. St. Nicholas Cathedral, supra, 344 U.S. 94, 120 ("There are occasions when civil courts must draw lines between the responsibilities of the church and state for the disposition and use of property.")

Thus, the Jones court, over dissent, refused to adopt a rule of compulsory deference to the authoritative decisions of church bodies. (Jones v. Wolf, supra, 443 U.S. at p. 605.) Instead, the "state is constitutionally entitled to adopt neutral principles of law as a means of adjudicating a church property dispute." (Id. at p. 604.) What plaintiff seeks here -- the imposition of alter ego liability on RTC and CSI -- is fully in accord with Jones.

B. There Exist At Least Three Separate Bases For Rejecting RTC's Effort To Assert A Religious Liberty Deference Defense To Trump Alter Ego Liability.

1. Lack Of Standing: Respondents Cannot Rely On The Ecclesiastical Defense Because They Claim The Sea Org Possesses No Ecclesiastical Or Corporate Authority.

According to CSI's representation to the IRS when it sought tax exempt status for itself and other Scientology corporations:

"The Sea Org is not an organization in any usual sense of the term. The Sea organization is not incorporated, nor is it an unincorporated association, and it has no formal or informal ecclesiastical or other structure. It has no income, disbursements, assets or liabilities. [] The Sea Org has no organizational existence apart from the corporate and ecclesiastical hierarchy of the Scientology religion. . . . The Sea Org exists as a spiritual commitment to the transcendent goals and purposes of the Scientology religion." (Plaintiff's Exhibit "B," submitted with original motion, p. 150161.)

As CSI further explained to the IRS, David Miscavige, RTC's Chairman, "holds the highest ecclesiastical position within the Scientology religion." (Ibid.)

In his present declaration, Mr. Miscavige swears that the Sea Org "confers no corporate or ecclesiastical authority. Sea Org members are staff in many churches of Scientology across the globe. Any authority they have in the church entity that employs them derives from their position in that church structure and not their honorary status in the Sea Organization." (Respondents' Exhibit 34, at 6:19-22)

Quite clearly, respondents' unequivocal assertions that the Sea Org exercises no ecclesiastical authority leaves them with no standing to claim the protection, if any, offered by the constitutional principle of ecclesiastical abstention.

2. Respondents' Fraud And Collusion Precludes Them From Invoking The Protection, If Any, Offered By The Ecclesiastical Abstention Doctrine.

As noted, the ecclesiastical abstention doctrine does not preclude scrutiny of the fraudulent and collusive deeds of church tribunals acting in bad faith for secular purposes, notwithstanding that they are ecclesiastical by nature. (Gonzalez, supra, 280 U.S. at p. 16; Milivojevich, supra, 426 U.S. at p. 713.) As Kedroff teaches, government "power to punish subversive action cannot be doubted. If such action should actually be attempted by a cleric, neither his robe nor his pulpit would be a defense." (Kedroff, 344 U.S. at p. 109.)

Accordingly, when purportedly ecclesiastical conduct is, in fact, fraudulent and collusive, the civil court is not constitutionally bound to defer to religion's altar. (Kedroff, 344 U.S. at p. 116, fn. 23; Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, supra, 393 U.S. at 447, 451.)

When the full record is examined, it becomes crystal clear why RTC scrambles so feverishly to label its maneuvers as "ecclesiastical" decisions entitled to immunity from judicial scrutiny. The only thing that becomes clearer is the reason why those decisions scream to see the light of day. Because of the vast fraud and collusion involved in this case, which results in the ongoing unabashed violation of Mr. Wollersheim's civil rights, the decisions of RTC -- whether sectarian or secular -- merit no constitutional protection. Indeed, the appellate panel initially considering arguments in this case held that

"the law of this jurisdiction... would not support a constitutional shield for Scientology's retribution program.... Scientology leaders made the deliberate decision to ruin Wollersheim economically and psychologically... he was bankrupted by a campaign his former religionists carefully designed with the specific intent to bankrupt him.... Nothing... even implies a religion is entitled to constitutional protection for a campaign deliberately designed to financially ruin anyone - whether a member or a non-member of that religion. Nor have we found any cases suggesting the free exercise clause can justify a refusal to honor financial obligations the state considers binding and legally enforceable. One can only imagine the utter chaos that could overtake our economy if people who owed money to others were entitled to assert a freedom of religion defense to repayment of those debts. It is not unlikely the courts would soon be flooded with debtors who claimed their religion prohibited them from paying money they owed to others." (Wollersheim v. Church of Scientology (1989) 212 Cal.App.3d 872, 890; emphasis added.)

Likewise, one can only imagine the utter chaos that would overtake our justice system if people who violate others' rights were entitled to assert a religious liberty defense to avoid facing evidence that they had destroyed evidence, violated court orders and acted as a "single monolithic whole" masquerading in the guise of a religious corporation. Such conduct is clearly within the scope of the appellate court's holding that the abusive litigation tactics leveled at Mr. Wollersheim "must be closely scrutinized for constitutional implications" (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 649) and obviates RTC's claim of religious immunity.

Given the criminal or quasi-criminal nature of the acts Mr. Wollersheim has proven, there can be no mistake about why RTC (or, more precisely, the Sea Org and its leader, David Miscavige) hope to hide behind the shield of ecclesiastical deference. Yet, "[t]he absolute protection afforded belief by the first amendment suggests that a court should be cautious in expanding the scope of that protection since to do so might leave government powerless to vindicate compelling state interests." (McDaniel v. Paty (1978) 435 U.S. 618, 627.)

In the end, if RTC's effort to shield its acts from scrutiny succeeds, it will only serve as a wrongful trump of Mr. Wollersheim's first amendment right to redress.

a. Ascribing The Fraud And Collusion To Respondents By Way Of Their Sea Org Connection Finds Authority In Published Case Law.

The fraud/collusion exception should be applied to respondents in this case. As shown, the fraudulent tactics that make the alter ego doctrine applicable here were orchestrated through Scientology's power elite in the Sea Org. To accurately scrutinize and understand the role played by the Sea Org, it is proper to view it "in the context of Scientology as a whole." (Church of Spiritual Technology v. United States, supra, 26 Cl.Ct. at p. 715.) As the Claims Court recognized after its comprehensive excursion through Scientology's corporations -- which journey resulted in the Church of Spiritual Technology v. United States opinion quoted herein -- CSC underwent "almost constant corporate metamorphosis since its creation," resulting in the corporate reorganization whereby its total control of Scientology was supplanted by CSI and RTC. (Id. at pp. 715-717.) And, both CSI and RTC are "management churches" that, according to Scientology's own scriptures, "are staffed with Sea Org members." (Id. at p. 717.)

Plainly, though Mr. Miscavige et. al. maintain that "[a]llegations concerning 'unity of control,' 'violation of corporate boundaries,' and 'control through the Sea Organization' have been made repeatedly over the years... and every one of them has already been disproved" (Respondents' Exh. 34, p. 13:6-11), the established facts show otherwise. As plaintiff has conclusively demonstrated, those facts have been found not only here but in countless other courts, and they have invariably been upheld on appeal. In light of these facts and the record, not to mention Scientology's litigation history, Mr. Miscavige's view recalls "the familiar pose of not seeing, hearing, or knowing any evil" which, unfortunately for him and his cohorts, leaves much to be desired in the credibility department. (See, Exh. "JJ" to plaintiff's original motion, 9:25-10:1.)

In addition to the findings of other courts, of course, the trial court in this case has already reviewed submissions of the parties herein to determine:

"Proof has shown that Scientology as an overall entity is comprised of numerous operating entities, including defendant, and that they are all inter-related, being parts of a monolithic whole. Transfers of assets and functions from one entity to other entities are more pro forma than actual. In the case of the transfers in question here, they are seen as mere 'jiggery pokery.' The power to transfer out to a sister entity is the power to transfer back 'when the heat is off,' so to speak." (Plaintiff's Exh. "Q" to original motion.)

3. The Absence Of An Intra-Sectarian Controversy Means There Is No Risk Of An Improper Judicial Determination And No Basis To Abstain From Deciding This Controversy.

Crucially, the establishment clause does not prevent the government from making a threshold inquiry into whether a given practice is a religious one entitled to first amendment protection. (See, i.e., Wisconsin v. Yoder (1972) 406 U.S. 205, 209?213; International Society for Krishna Consciousness, Inc. v. Barber (2d Cir. 1981) 650 F.2d 430, 433; Jones v. Bradley (9th Cir. 1979) 590 F.2d 294, 295.)

The establishment clause precludes government from acting to "aid one religion, aid all religions, or prefer one religion over another." (Everson v. Board of Education (1947) 330 U.S. 1, 15.) The purpose of the clause is "to prevent, as far as possible the intrusion of either [the church or the state] into the precincts of the other." (Lemon v. Kurtzman (1971) 403 U.S. 602, 614.)

However, "total separation is not possible in an absolute sense. Some relationship between government and religious organizations is inevitable." (Ibid.) As the United States Supreme Court has frequently observed, total separation would foster a "callous indifference" by government toward religion, something that was never intended by the establishment clause. (See, Zorach v. Clauson (1952) 343 U.S. 306, 314.) For this reason, it has never been considered either possible or desirable to enforce a regime of total separation. (Committee for Public Education & Religious Liberty v. Nyquist (1973) 413 U.S. 756, 760.)

Instead, the establishment clause requires "accommodation" between the interests of church and state. (Zorach, supra, 343 U.S. at p. 314.) Thus, the Court has "uniformly rejected" an absolutist approach in applying the establishment clause. (Lynch v. Donnelly (1984) 465 U.S. 668, 678.) In each case, the inquiry requires a line-drawing process which recognizes that the division between permissible connections and those barred by the establishment clause is not "straight and unwavering." (Id. at pp. 679-680.) As the Lemon Court put it, the establishment clause erects a "blurred, indistinct, variable barrier depending on all of the circumstances of a particular relationship." (Lemon v. Kurtzman, supra, 403 U.S. at p. 614.)

To aid tribunals in executing this line-drawing process, the Supreme Court has suggested a three-part test: (1) whether the challenged law or conduct has a secular purpose, (2) whether its principal or primary effect is to advance or inhibit religion, and (3) whether the conduct creates an excessive entanglement of government with religion. (Ibid.) Nonetheless, the Court has repeatedly emphasized its "unwillingness to be confined to any single test or criterion in this sensitive area." (Lynch v. Donnelly, supra, 465 U.S. at p. 680.) Instead, the challenged activity must be considered in light of the first amendment's purpose and the "reality" of the particular interrelationship between church and state. (Id., 465 U.S. at p. 678.)

In the present case, RTC argues "[p]laintiff would have this Court violate the[] principles [prohibiting excessive entanglement] by interpreting Mr. Miscavige's ecclesiastical role within the Scientology religion as giving him temporal authority contrary to the governing structure established by the Scientology churches." (RTC Opp., p. 25 l. 25-27; emphasis in original.) In other words, according to RTC, an alter ego finding by this Court would constitute an impermissible interpretation of whether Scientology properly applies its own religious principles.

RTC misapprehends the law. Plaintiff does not seek to alter, modify, or adjust RTC's internal relationship with itself or with Scientology's adherents. He does not aim to instruct Scientology about how to handle its intra-church affairs. Rather, plaintiff seeks only to hold RTC and CSI accountable for the consequences of their conduct toward, and their interaction with, him, by assigning accountability to those entities through which CSC's defense was conducted.

To be sure, a court may not define or limit matters of ecclesiastical choice as those sectarian decisions impact religious self-governance. But the constitutional protection that gives religious groups the freedom to tend to their own internal affairs does not necessarily furnish immunization from liability for the external consequences of their agents' conduct. Accordingly, the Court is not absolutely precluded from examining RTC's proclaimed "ecclesiastical" actions as they impact Mr. Wollersheim's civil and constitutional rights. This is the central and critical distinction between the case authority upon which RTC relies and the situation confronting the Court here.

The cases RTC cites do not support its hoped-for expansion of the rule, by which RTC would receive an undeserved immunity from accountability not only for the consequences of its conduct but also for the statements its representatives have made under oath. In all of RTC's argument, nowhere is found a case that says that a religion is immune from paying a judgment awarded to redress the heinous harm it has caused.

Indeed, for example, RTC cites Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, supra, 393 U.S. 440, in suggesting that "the Court must defer to the Church itself" because "[p]laintiff's motion [impermissibly] asks this Court to impose its own judgment over who controls Scientology churches..." (RTC Opp., pp. 24-25.)

The Presbyterian Church case does not assist RTC in this regard. There, the Court examined a church property dispute. After the withdrawal of two local churches from a hierarchical general church organization, the general church had taken control of the real property of the local churches. The local churches, in turn, sought injunctive relief prohibiting the general church from trespassing.

The local churches had withdrawn because they believed certain actions and pronouncements of the general church violated that organization's constitution and departed from prescribed doctrine and practice. The case was submitted to the jury with instructions to determine whether the actions of the general church

"amount to a fundamental or substantial abandonment or the original tenets and doctrines of the [general church], so that the new tenets and doctrines are utterly variant from the purposes for which the [general church] was founded." (Presbyterian Church, supra, 393 U.S. at pp. 441-444.) In those circumstances, the Supreme Court held that submitting the case to the jury "jeopardized" first amendment values. Contrary to the sweeping proposition for which RTC cites the Presbyterian Church case, the Court's pronouncement was narrow and specific: "[W]hen church property litigation is made to turn on the resolution by civil courts of controversies over religious doctrine and practice," the first amendment is offended. (Id. at p. 449.)

So it is with other of RTC's cited cases. In Serbian Orthodox Diocese v. Milivojevich, supra, 426 U.S. 696, the issue concerned the defrocking of a Serbian Orthodox Church bishop. The Supreme Court held that the trial court's intervention in the internal church dispute unconstitutionally interfered with the church's province to manage its own affairs. The Court cited "the constitutional mandate that civil courts are bound to accept the decisions of the highest judicatories of a religious organization of hierarchical polity on matters of discipline, faith, internal organization, or ecclesiastical rule, custom or law." (Id., 426 U.S. at 713.) In Simpson v. Wells Lamont Corporation (1974) 494 F.2d 490, a pastor sued after having been removed from his church position and evicted from the parsonage because his sermons contained his racial opinions. Relying on the Kedroff line of cases, the court upheld the case's dismissal since the "interaction between the church and the pastor [was] an integral part of church government." (Id., 494 F.2d at p. 493.)

In Natal v. Christian and Missionary Alliance (1989) 878 F.2d 1575, another pastor sued his church for discharging him in contravention of its own internal rules and regulations, depriving him of sectarian "due process." Because a court cannot be "called upon to probe into a religious body's selection and retention of clergymen," dismissal of the case was affirmed. (878 F.2d at p. 1577.)

In Schmidt v. Bishop (1991) 779 F. Supp. 321, the 41-year-old plaintiff had allegedly been the victim of sexual abuse by a clergyman when the plaintiff was a minor. Claims of negligent hiring, supervision and retention against the clergyman's religious organization were dismissed on statute of limitations grounds. (Id., 779 F. Supp at pp. 331-332.) Next, having looked at the case as one of "clergy malpractice," the court determined -- on the basis of the existence of myriad religions and doctrines -- that imposing duty of care standards in a religious context would foster excessive entanglement because the court would have to make judgments about the "proper practice" of a religion. (Id. at pp. 327-328, 332.) RTC further errs in citing Byrd v. Faber (1991) 565 N.E.2d 584 because that case holds, as it should, that liability may be imposed on a religious organization. In Byrd, the Ohio Supreme Court considered the issue of negligent hiring in the context of a clergy sexual exploitation case. The court was particularly addressed to the appropriateness of respondeat superior liability on the church that had employed the miscreant. RTC's characterization aside, Byrd does not hold that churches facing such allegations may invariably escape scot-free, but rather that if the facts are bad enough, the church may permissibly be held liable. In Church of Scientology of California v. Commissioner, 83 T.C. 381, Scientology contended the IRS, aided by Church policy letters, made an impermissibly entangling inquiry into Scientology's management, corporate structure, and dissemination practices. The tax court rejected this argument, saying

"The establishment clause does not cloak a church in utter secrecy, nor does it immunize a church from all governmental authority. The thrust of the entanglement component of the establishment clause is to keep government out of the business of umpiring matters involving religious belief and practice. [Citations omitted.]" (Id. at p. 462)

Moreover, as the Tax Court further noted, "civil authorities are not barred from settling disputes implicating the secular side of church affairs as long as they rely on neutral principles of law." (Ibid.) Accordingly, Judge Sterrett held:

"[The respondent tax commissioner] did not rely on Church policy letters to establish basic facts about the Church. A nine?volume encyclopedia of Scientology policy called the OEC series was placed in evidence. Some of the policy letters in these volumes contain instructions on religious practices. The majority contain information about Church administration. An expert witness for the Church compared the OEC series to the constitution of the Presbyterian Church. Respondent relied on scattered policy letters in the OEC volumes to question witnesses about the Church's dissemination practices, its corporate structure and its management functions. In making his inquiry, respondent skirted matters of religious doctrine except at the threshold level of inquiry. We have also used Church policy letters to make findings on these topics and others including the Church's Franchise Programme and pricing policies. However, we have not had to resolve doctrinal matters to make our findings. The Church's documents speak for themselves. We, therefore, find that the use of Church policy letters in this case is consistent with the rule laid down in Jones v. Wolf, supra, which allows the state to examine Church documents, including the constitution of a church, provided the documents are scrutinized in purely secular terms and the facts determined are not attendant on the resolution of doctrinal issues. [Jones v. Wolf] 443 U.S. at 604. See also, Maryland and Virginia Eldership of the Churches of God v. Church of God at Sharpsburg, Inc., supra at 368." (83 T.C. at p. 483; emphasis added.) Likewise here, the Court is not called upon to resolve any doctrinal matter. Indeed, both Mr. Wollersheim and the state have multiple and compelling interests, not the least of which is the integrity of the judiciary. The state has a profound interest in the enforcement of lawful judgments -- particularly those that, like Mr. Wollersheim's, are, by the inclusion of significant elements of punitive damages totaling millions of dollars, designed to deter misconduct.

Just as "[r]eligious belief cannot be used as a magic wand to transform tax avoidance into a tax exemption" (Church of Spiritual Technology v. United States, supra, 26 Cl. Ct. at p. 738), it unquestionably cannot be used to transform liability for misconduct into an immunity for all purposes.


As shown, both the factual assertions and legal arguments offered by RTC come up far short. The preponderance of creditable evidence weighs distinctly in favor of Plaintiff Wollersheim, showing that RTC and CSC were certainly alter egos of one another under applicable case law and that officials of RTC were closely involved in guiding CSC's defense herein.

Moreover, under the facts and circumstances of this case, the balance of constitutional interests fails to tip in favor of a religiously conferred immunity.

Accordingly, Lawrence Wollersheim respectfully submits that his motion to amend the judgment to name Religious Technology Center as an additional judgment debtor must, in equity and all propriety, be granted.


By_______________________ DANIEL A. LEIPOLD Attorneys for Plaintiff LAWRENCE WOLLERSHEIM


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