Biased Journalism V2no16 Inside FACTNet (Keith Henson has fun!) 1996/08/22

**Biased Journalism** : a net magazine designed to compensate for the shortcomings of the professional news media.

Mail, articles and comment may be directed to <sthomson@netcom.com>. Netiquette will be observed with all communication, except for the following: harassing or threatening mail will be posted to the net immediately.

**Biased Journalism** Volume 2, issue 16 August 22, 1996.

Contents:  Dipping at the Well of Justice:  August 2, 1996;
           Inside FACTNet; The Devil in the Details [Words of Art];
           Xenu on Tour [ARSCC field report]; September picket
           information [end of Xenu file]; Rodent Report
           [a gossip column]

Read at your own risk. This is **Biased Journalism**!

Late News: Tom Klemesrud, sysop of support.com, has settled with RTC for $50,000. The settlement, which was mediated by his insurance company, includes no admission of liability. Netcom, sued along with Klemesrud, recently settled upon undisclosed terms. This leaves Dennis Erlich standing alone.

1. Dipping at the Well of Justice: San Jose, August 2, 1996

A mild morning promised a hot day. The lemon colored mist rose up on the hills. A ghost moon hung in the sky. Lemming lines of commuters thronged the freeways, going nowhere.

By 9:15 in the morning Judge Whyte was already deep into a class action case. The dramatis personae of the RTC/Bridge Publications [church of scientology] vs. the net were already present. The RTC group had changed their normally dark suits for an array of light gray and taupe colors. We noticed Warren McShane in dark gray, however.

Judge Whyte works away at the class action case. It dealt with apartment occupancy limitations vs. the Fair Housing Act. We surmised that a luckless family with children had been denied housing and had sued. Judge Whyte wants to say no to the lawyer: he resists certifying the class action, but postpones his decision.

The next lawyer has bright golden hair falling down her back almost to her waist. From the rear she looks strikingly like Alice in Wonderland, or perhaps Goldilocks. The Judge, a dignified man who is normally considerate of his litigants, seems to thaw at the edges. In this instance we have the impression that he doesn't have to work at it.

[When the lawyer turns around we see that she resembles Gabrielle, sidekick to the immortal Xena, Warrior Princess.]

The Judge agrees to sign an order and asks her to prepare it. She leaves, looking happy. The male lawyers swivel their necks to observe her exit. Nobody says anything for a second.

The next case is a contempt case. The clerk announces it in an indistinct mutter, as if she is chewing gum. The action is brought by the IRS, whose attorney, a tall white male in a dark gray suit, exerts a commanding presence. The defendant is a black male, impeccably dressed in L.L. Bean casuals. His posture before the Judge has a military correctness. He is obviously an educated man, deferential to the court but unafraid of the process.

Having never seen the IRS in court before, we paid heed. Judge Whyte says that he read the defendant's letter last night. The letter apparently states that the defendant is not in possession of any records or documents regarding income. [We gather that this is an instance of the fabled tax protest actions, endemic among middle class citizens tired of being picked clean by federal tax collectors. These actions are based upon little-known legal facts, including the precise definition of income. We had never expected to see one in court, but here it is.]

Judge Whyte asks the U.S. attorney to clarify the defendant's letter. A three-way discussion ensues in which first the IRS attorney and then the Judge grills the defendant: who explains that he does odd jobs, has no bank account and keeps no records at all.

The Judge turns to the U.S. Attorney. "Mr. Moore, what is your position if he [the defendant] were to say that under oath?"

The attorney responds that "we have 1099's;" the defendant has received distributions from the Oppenheimer mutual fund and from Tenali Construction Company. Now he says he has no records of anything: "what is the source of the funds so that he can live?" Having said "live" in a way that suggests he would eagerly suck out the lifeblood of the defendant, the IRS attorney has lost the PR battle. He goes on to complain that two summons have been issued, and in February there was an order to show cause.

The defendant calmly replies that he doesn't own a car. He doesn't have information about his brother. He has answered all the questions which have been asked of him. If the attorney has other questions he is here.

Judge Whyte seizes the moment. "Let's do it now." He instructs the IRS attorney, who looks unhappy, to find a court reporter and and ask his questions. This is not what the IRS attorney wanted. He wanted the defendant put in prison until he confessed/ coughed up his missing assets, or his brother's missing assets (an elusive thread in the discussion). But it will have to do.

The next attorney wants a court order. He draws a deep breath and starts in on his reasons. Judge Whyte cuts him off. "Do you want to make some eloquent argument, or do you want to submit it?" "Er, submit it," the lawyer says, startled. Everyone laughs. "Hand it up," the Judge says, and reads. Is the other party present? No? The lawyer walks out with his dissmissal, looking dazed but pleased.

RTC presence has thickened in the public seats. We notice an RTC helper with glasses and a balding forehead whom we have seen before. He sports a dark gray suit, well-worn cowboy boots and a devious vibe. OSA, we inferred.

In another part of the courtroom the dark-haired man with the sallow face and hawk nose, whom we have seen at all of these hearings, is identified for us as Mike Sutter. We first saw him sitting next to Jeff Quiros, who no longer comes to these events. Sutter, reputed to be David Miscavige's right hand man, was a participant in the abortive settlement conference with Grady Ward. Rumors posted to the net said that the church attempted to intimidate Ward, taking his agreement to attend the conference as a sign of surrender. (Ward, however, thought that the church's invitation to talk meant that the church was about to surrender.) The netizen was allegedly pressured to sign a document accusing Ron Newman, Dave Touretzky and Dennis Erlich of being the perpetrators of SCAMIZDAT. Ward responds poorly to intimidation. He refused. The case now appears headed for a jury trial. [Ward has posted a request to the net for used law texts to help him prepare. He may be contacted at <grady@northcoast.com>]

[Note: at this moment we did not know that Netcom had concluded a secret settlement with the church, but in retrospect it is obvious to us that the plaintiffs knew it. Their tension was palpably lessened. For details of the settlement, see our previous issue.]

The next issue is complex. The Judge favors a motion to strike a jury trial. The issue is wrongful termination; the attorney charges that the company decided to terminate older employees and spent a year building a record against his client. A woman, she took medical leave [we sensed that the work environment contributed to this] and was then terminated. The lawyer wants to assert federal court claims.

The company attorney, a woman with an abrasive manner, replies that the plaintiff is making another "backdoor attempt to get a jury trial."

The Judge and the attorneys engage in a prolonged natter about rules of procedure. The suit was brought in Santa Cruz, where when a jury demand is made, a jury trial is automatically offered. Did you cite this? Judge Whyte asks. The attorney says he did and provides a copy. The defense attorney replies that California requires an "express demand" before a jury is granted. If the plaintiff is filing in this court, he is obligated to be aware of the rules of this court. Judge Whyte withholds a decision. We sense that the issue is not cut and dried.

Meanwhile, H. Keith Henson has arrived in a classy navy blue suit and taken up a position on the right side of the public seats. A couple of rows behind we notice Grady Ward, looking uncommonly spiffy in a nicely tailored blue tweed jacket. Ward is wearing his Mona Lisa smile.

The anxious bickering of attorneys calls our attention. It appears that the defense attorney, a young man who is trying to represent several clients, filed an appearance on behalf of the entire group (11 individuals and entities) but has only been able to make an arrangement with 7 of them. The plaintiff's attorney, an attractive woman, seems to enjoy his predicament. She refuses to dismiss anyone from the suit. "You're stuck with it until you file a motion," Judge Whyte says to him. They leave: he looks embarrassed and she looks delighted.

The next case is a patent action. The issues are obscure, but we suddenly notice Judge Whyte saying "...while his argument is somewhat technical and frankly somewhat stupid..." The Judge suddenly sounds tired. [It's those goddamn intellectual property thetans again! no! no!]

"...patent infringement claim..." the words hang in the air. We happen to glance at the left side of the courtroom, rear row, and notice that the row is occupied by Milgrim, his partner Hart and Warren McShane. They are *riveted*. [It occurs to us that one can patent a process. We have a momentary bad sense of deja vu.]

In the front row, the OSA dude in the gray suit is psyching the Judge. He nods approvingly when Whyte speaks. His Tony Lamas show lots of wear.

The case rolls on. To sour looks from the opposing attorneys, a gray-haired woman lawyer with queenly composure is asking for a writ of attachment. What case says a court can issue a writ of attachment when the court doesn't have venue? Judge Whyte asks quizzically. "No case says you can't," she rejoins. Under Rule 64 all a court has to have is jurisdiction. You can issue the writ. We need immediate relief. California statutes and Rule 64 read together: the writ should issue.

This goes on for a bit. It develops that the attorney is trying to get the writ of attachment against a partner of the company which [we infer] had been successfully sued earlier for patent infringement. The case was filed in San Francisco but was assigned to San Jose. Sounding wistful, Judge Whyte asks the attorney if she knows why. "Perhaps the assignment clerk thought that a patent case should go to Judge Whyte," she says archly. Everyone laughs. Whyte remarks that at that time cases were assigned district-wide, and "my number was up."

The relationship between the company and its infringing partner is explored. The plaintiff attorney asserts that the relationship is a continuing one. Opposing lawyers bristle. When they get their turn they argue that there has been only incidental contact between the companies; nothing in the record establishes contacts within this district. There was no transshipment of equipment...

We think she got the order, but our attention flagged at the critical moment. The abrasive female lawyer from an earlier case sits down next to another woman lawyer in the audience. "He's still on an earlier calendar? Jeezus!"

Then Grady Ward's case is called.

The parties introduce themselves. "Grady Ward in pro per."

Tom Hogan and Helena Kobrin stand for the plaintiff. Hogan introduces Roger Milgrim and James Kennedy, whom he wishes to attach to both Ward and Henson cases.

Judge Whyte agrees--it is merely a formality--and then says: "The number of attorneys is starting to get out of hand and I'm starting to get concerned about it. Particularly when you have a pro per I am starting to have some intimidation concerns." Standing with his back to us, Grady Ward somehow looks brave and alone.

With respect to the counterclaim in conspiracy, section 244, to violate rights, doesn't create a private right of action. Our view suggests that Mr. Ward is complaining about a malicious prosecution. Trespass is a state claim. The Judge is dismissing Ward's countersuit. He is not passing judgment on Ward's claims, he states, but this is not the right court.

With respect to whether the injunction should be modified or dissolved, the question turns on the trade secret issue. Judge Whyte "is not prepared to give a final decision on that but will do so shortly." "I have concern regarding whether there is an arguable trade secret claim," the Judge says.

He proceeds to a tentative ruling. He is going to dismiss Ward's counterclaims without prejudice (except the section 241 claim) and submit the issue with respect to the dismissal or modification of the Preliminary Injunction and motion to amend counterclaim. He wants a new counterclaim.

Grady Ward says that he will relinquish his current counterclaim and amend it as a RICO action. Judge Whyte gives him some procedural advice: he has to file a motion to amend with the specific counterclaim attached to it. Ward says he will.

Roger Milgrim wants to be heard for the Plaintiff. The copyright issue is fully resolved by Mr. Ward's position, he says in an oily fashion. While many of the analytic matters are common (in Ward and Henson cases)- he is prepared to go on at length.

Judge Whyte stops him. What's been published is different in the two cases, he says.

Milgrim alludes to the posting of NOTS on the net for 3 separate days - then they were discovered on a "nonindexed site." The injunction has copyright components and should not be altered with reference to any decision about trade secrets.

"In very general terms, I agree" says Judge Whyte.

"I am only under injunction with regard to unpublished NOTS," Grady Ward says.

"That is not correct," Whyte replies. The NOTS documents that were published were removed from the trade secret part of the injunction that prohibits any use, but remain in the paragraph dealing with fair use.

Ward: "I have no problem with fair use."

Whyte then says something we wrote down but had trouble decoding afterward. We think he is telling Ward that trade secrets aside, Ward could not publish the entirety of the unpublished NOTS on the net.

Milgrim tried again. There is in this particular case an added issue - probability -likelihood - possiblity. [of future posting of secret documents by copyright terrorist Ward]

Judge Whyte turns to Ward. "If evidence shows that you did the posting, you can't benefit from it," he says seriously.

Ward: "Ok, but there is no evidence."

A case management conference is ordained, and the scene suddenly dissolves into chaos. Whyte magically vanishes from the bench. Everyone talks to everyone.

Then it is Henson's turn.

Judge Whyte: with respect to the counterclaims, you can't base a civil act on Section 241 of Title 18. And your other claims- in essence, plaintiffs have been conducting a malicious prosecution and some things that go beyond. You have to wait for a favorable decision in this case. The Judge mutters his way through "infliction of emotional distress and other state claims."

The issues in this case are: is RTC entitled to copyright protection? Is RTC entitled to trade scecret protection? Have you violated them?

Henson responds by asserting wire fraud. A RICO action, in federal court. [there is a palpable chill from the RTC section of the audience]

Judge Whyte: with reference to criminality, the only one you have referred to is NOTS 34. They natter for a bit, and the Judge says "you are allowed to make fair use of NOTS 34."

Henson: can I take it to the FDA?

Judge Whyte: I can't give legal advice. [He then goes into a smooth circumlocution in which it becomes crystal clear that he is definitely not saying no to Henson's question.]

The issue of NOTS 34 does not die quite so easily. The NOTS document was not in existence at the time of Judge Gesell's decision, the Judge points out. A court order should prevent them from doing things in the future, Henson says. JW: Gesell's decision was specific. KH: It also dealt with claims that they were forbidden to make.

Judge Whyte gives up. You can file an Amicus Curiae brief, he informs Henson, but it must be in the case that it is in. Submit the brief in that case. [He means, the brief must be filed in the FDA case.]

The Judge is not through. "Let me say again that I get mail by volume on this. I cannot consider mail in this case. If I am going to consider anything, it must be properly filed."

Henson wants the last word. If I file the letter and NOTS 34, would it be better done under seal?

Judge: yes. "With reference to trade secrets, I will be making an order in your and Ward's case. And Dennis Erlich." Referring to Milgrim's earlier statements, Whyte quickly says that "there are some differences between cases, but also some issues in common," deftly depriving Milgrim of the opportunity to launch a filibuster.

Henson: uh, can I make fair use of NOTS 34?

Whyte: yes. Fair use. A modification of the Preliminary Injunction is not necessary. [<phew>, the observer intuits. A prolonged horrid hassle over the PI has been avoided. For an instant the Judge looks so grateful that we wonder how he really feels about Roger Milgrim.]

Henson: at least two other NOTS make medical claims. (He goes on to say that he hasn't read them but has seen posted discussion of their contents. He can't read and report these NOTS [to the FDA] under the trade secrets provision, or can he?

The Judge ducks the issue without effort. "Nothing prevents you from going to an agency and saying something like 'I haven't seen this, but my understanding is...'"

Henson (unhappily): I see.

Milgrim (who does not use complete sentences, apparently going on the theory that people only hear *certain words* anyway):

"...beguiling simplicity of lodging information with a federal agency where it is publicly available...you described a way he could do this.

Judge Whyte: I didn't describe any way.

Milgrim: NOTS 34. Trade secrets. You preliminary ruled that it is not a trade secret but we maintain that it is. Improper to disclose it by indirection. The lodging of a document in a public file [invites transgressions].

Judge Whyte: under fair use, the information could be conveyed "in a proper way." I wouldn't know how to tell someone how to do that. [trans.: it's up to the judge's discretion] "In a proper way makes logical sense," Whyte says earnestly.

Milgrim: "were the document in its entirety lodged.." He switches to "Judge Gesell's opinion held...a religious matter is beyond the scrutiny of a secular authority." He turns to accuse Henson of trying to make the document available for publicy copying. "We would consider that a flagrant violation."

Henson (indicating the RTC lawyers, at that moment bunched angrily around their table): I would be glad to take advice from this squad of lawyers.

Milgrim (suppressively): We'll work with him.

A recess is declared.

Everyone gets up and talks, but our observer is fascinated by the display in the front of the room. Judge Whyte is long gone-- again we wonder how he does that; is there a trapdoor under the bench?--and Roger Milgrim is talking to Keith Henson. The distance between them is just a fraction wider than a good punch would carry. Milgrim makes warding motions with his hands, then folds them in prayer, looking like a large penguin. We take note of Helena Kobrin, who is wearing a long white cotton dress with a black jacket and black trim: it has a subtle sailor suit presence. Warren McShane and a burly gray-haired man natter on the sidelines. Tom Hogan is in a rumpled gray suit looking disinterested. In the audience netizens chatter about several different NOTS packs floating around the net and the new NOTS Scholars Research Page. [http://www.cs.cmu/~dst/NOTs]

The Judge is back. The clerk calls Grady Ward, definitely mumbling this time.

Whyte announces his decision: to continue the conference for 60 days, during which pleadings will be finalized and disclosures made. Discovery can continue. Then we will know the aspect of the thing and we can schedule the case.

A telephonic conference is arranged for Grady Ward; this does not preclude Ward from attending hearings in person, the Judge notes.

Tom Hogan gets into the act. "It is of great concern" what Grady Ward puts in the court file. He has made references to Madame Kobrin... [he can't bring himself to mention her nickname] would you please advise Grady Ward to treat us with respect?

Whyte: he's been polite to me.

Hogan (complaining): We get filings off the net before we are served! And there are references on the net to settlement discussions, which should be confidential.

Judge Whyte (dryly): comment to apply to both sides. Now a discussion with respect to settlement should not appear in pleadings. Under Magistrate Judge Infante's rules, settlement discussions should be filed under seal. They should not be filed in court. Any document subject to the injunction should be filed under seal.

Whyte lectures the parties briefly, with reference to treating each other professionally. He is concerned with documents filed in court. What is said privately or in an article, is their option and their risk depending on what they say.

[In a subtle way this is a rebuke to RTC for Hogan's handling of the deposition and the behavior of the plaintiffs during the settlement talks. The Judge has basically said that in matters outside the courtroom Ward can say whatever he wants provided he stays away from the material covered by the injunction.]

Keith Henson's case is called. Hogan gives Henson a wary look.

Judge Whyte announces that he wants to do the same thing in Henson's case as he did in Ward's: a 60 day continuance, etc.

Henson: I can commence discovery. Thanks very much. [For this he gets a dirty look from Hogan]

Hogan: Henson has proposed discovery beyond the bounds of legitimate discovery. Hogan wants to schedule a discovery conference before Magistrate Judge Infante.

Henson: I agree to that.

Judge Whyte: I will order a discovery conference. Go and get a date. And don't suggest to him that I said he'd see you today.

And the hearing is done.

In front of the courtroom (the Judge is gone) RTC converges on Keith Henson. They loom over him--Henson is wide rather than tall, with an athletic bearlike build--and the netizen turns toward them in an animated way. He _wants_ to confront them. From a distance the effect is comical. They recoil in disarray as if he had stamped his foot and shouted "boo!" Henson settles on Warren McShane. He has raised his voice a little bit, and we can hear him demanding to know how McShane feels about being sec checked? How long has it been since McShane had a sec check? Do you know how they start the sec check? : "I am not auditing you." McShane looks dismayed and flinches away. Henson turns in search of other victims.

Meanwhile, someone is talking urgently in our other ear. An anonymous attorney has left a message for someone connected with the defense. The defense should investigate the top 100 copyright attorneys in the USA. Each of them recently received a box of documents from RTC marked "Confidential" and a letter implying that RTC might be interested in hiring the attorney. The hiring offer never came, but these attorneys now are barred from representing defendants against RTC because they received the "Confidential" documents!

It's clever, and dirty. We are awed.

A FIRST for **Biased Journalism**: we have photographs to go with this story. Look for them on Ron Newman's web page at http://www.cybercom.net/~rnewman/scientology/media/

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2. Inside FACTNet

On Monday, August 19 Arnie Lerma posted a public notice:

"Re: Civil Action 95-1107-A RTC vs Lerma

"As of the morning of Tuesday, August 20th, Arnaldo Lerma hereby dismisses Faegre & Benson, LLP and Ross DIxon & Masback, LLP as counsel.

"Both firms have been notified of my decision this morning.

"Lerma is proceeding Pro-Se , until new counsel is determined.

For more than a year there have been severe strains behind the scenes at FACTNet. Board members have been removed one after another, inevitably after a personality conflict with Lawrence Wollersheim. Jon Atack, Kim Baker and Jan Merril left or were dismissed without replacement. As of August 10, the board numbered only three: Lawrence Wollersheim, Arnie Lerma and Bob Penny.

Lerma's attorneys Faegre & Benson were brought into the Colorado case to save money and simplify the problem of defending against several lawsuits. However, Lerma was disenchanted with the firm's performance in his case--racking up huge fees, but failing to secure a jury trial--and Wollersheim wanted to use the Colorado case as a platform for a broad-band attack on the church. Both men were fiercely impatient with the slow pace of legal proceedings.

Bob Penny maintained that the case should be handled as a copyright case. He opposed widening the issue. Faegre and Benson preferred Penny's approach. Wollersheim became increasingly impatient with Penny. Interpersonal difficulties developed between F&B and Wollersheim. Eventually Jeff Reiman was hired to act as a mediator between Wollersheim and Tom Kelly (the lead attorney with F&B).

Every free-for-all needs a catalyst: in this case, money. FACTNet's first million dollars of legal insurance was expended fighting the Lerma case, which they lost. Coregis, the insurance provider, had committed to a second million dollars but refused to provide it. [The reasons for this are not yet available to us.] FACTNet sued Coregis and won. Coregis prepared to hand over the check, in the amount of $925,000.

Unhappily, there were strings. Coregis wanted to pay the various pre-existing claims on the money and set aside a portion for Penny. Jeff Reiman, who was also owed money, proposed that the funds be placed in a trust account in his care for disbursement. This was the last straw for Wollershiem, who fired him on the spot, in front of the magistrate judge who was in charge of the insurance settlement talks. Wollersheim wanted the entire check turned over to FACTNet.

Coregis was not willing to do this, and negotiations collapsed. As of this writing we believe they are still on hold.

Faegre and Benson conferred on the subject, and quickly returned a decision to Wollersheim: they were leaving. They filed a sealed brief with the court. In an unusual move, the judge allowed them to withdraw. This took place only two weeks before the FACTNet defendants were required to file an answer to a Motion for Summary Judgment by the church.

The next day, August 12, Bob Penny received a telephone call from Lawrence Wollersheim stating that there would be an emergency board meeting by phone in ten minutes. The telephone call was very brief. Penny listened silently as Wollersheim told him that he and Lerma were voting him off the board.

The reason given in the meeting was that Penny disagreed with Wollersheim's views of how the copyright case should be argued.

On the following day, August 13, Arnie Lerma joined an irc session on #scientology and imparted the news that Bob Penny had been removed from the FACTNet board because his loss of mental capability due to his illness [multiple sclerosis] placed FACTNet in jeopardy. Fellow directors can be held liable for his actions, if he has any impairment that would interfere with his duties, Lerma said. We sorta had no choice.

Natives of the channel asked pertinent questions. How did Penny feel about leaving? [Lerma ignored this question] What about the insurance coverage? "It doesn't affect insurance coverage in any way...for alleged acts or omissions during his tenure." Doesn't this sort of abandon Bob to the wolves, legally speaking? [exact quote from a prominent netizen] "Just stop that speculation right now," Lerma said.

Lerma: "well I suppose i'm in for lots o flak on this one, but I assure you it was brought to our attention by our corporate counsel that there was a risk...that should be avoided... due to his health, we didnt want it..."

Net: i'm just worried about the future of Bob's legal case. I don't want to see him forced into a settlement in his condition.

Lerma: it doesnt affect his coverage in any way...

Net: it may not affect his insurance coverage, but what about his representation by F&B?

Net: what about his financial status? Was he receiving any compensation from factnet?

[Lerma did not respond.]

As to whether evicting Penny from the board was suggested by their corporate counsel, we doubt that the advice came from Faegre and Benson. Bob Penny agreed with F&B on case strategy. But by this time, inspired by the prospect of Coregis funds, Wollersheim had already invited other attorneys (notably Graham Berry) to participate in FACTNet litigation. We surmise that someone other than F&B suggested that things might go better without Bob Penny on the board.

Bob Penny's ouster did not affect the size of the recovery from Coregis. Penny was covered for acts and omissions during his tenure, as Lerma correctly said. Instead it deprived him of any authority over how the Coregis funds would be spent. His removal also made him a potential target of lawsuits by the remaining board members.

Sources state that Wollersheim has now accused Penny of performing the actions that brought on the copyright lawsuit without the consent of the rest of the board. [This includes putting copyrighted materials on FACTNet CDs and so forth.] The accusation surfaced in an acrimonious conference involving Wollersheim, Lerma, Penny, Faegre & Benson lawyers and Graham Berry (acting for Wollersheim). We understand that the idea of suing Faegre and Benson for malpractice was brought up at this conference. (Faegre and Benson withdrew immediately after this meeting.) During this conference Penny, under instructions from Wollersheim, said nothing. A short time later he was removed from the board.

Will FACTNet sue Penny? We think it may. An effort to palm off all liability onto Penny might not succeed in the copyright case, but it might have the virtue of giving FACTNet an excuse not to pay out any of the Coregis check for Penny's legal expenses. In best case, FACTNet could wind up with all the money and Bob Penny could wind up with all the liability.

Similarly, suing Faegre and Benson might provide a means to withhold payment of their claimed legal fees and prevent Coregis from paying part of the settlement directly to F&B.

Bob Penny was concerned about the conduct of the copyright case. He asked Faegre and Benson whether they would continue to represent him. They refused, citing their previous representation of the board as a whole. They were too deeply involved with all parties to represent either side in a conflict. This was a blow to Penny, who now must start looking for new attorneys for the copyright case and worry about the potential lawsuit from FACTNet.

On August 19 Steve Fishman made a post to ars in which he revealed that he had had dinner with Bob Penny and friends. During this dinner we believe he was told the true state of affairs, but the post conveyed a quite different impression:

"By the way, this week I visited with Margery Wakefield and Bob Penny in Colorado, putting the final touches on my motion to permanently unseal the upper level materials, and working with F.A.C.T.net officials. Bob Penny, as many of you know, is one of the Founding Board of Directors of F.A.C.T.net, and Margery Wakefield is the author of the Road to Xenu. We had a great time out there in the Denver rockies and got a lot accomplished."

In reality, we believe that Fishman had been promised some funds from the Coregis settlement and was in Colorado to close the deal. The discovery that Penny was off the board and Coregis had not handed over the check could not have been welcome news. We imagine that Fishman quickly decided to seek an accommodation with Wollersheim.

On Monday Arnie Lerma announced that he had dismissed Faegre and Benson, LLP and Ross Dixon and Masback, LLP as his attorneys. He is acting pro se for the time being. The decks are cleared for a new set of lawyers and a new wave of lawsuits.

We await further developments with interest.

Summary:

FACTNet is in disarray. In the most likely scenario, based on what we know, FACTNet will sue Bob Penny and refuse to pay some or all of Penny's legal expenses. Bob Penny will have to find lawyers to defend himself against both the church and FACTNet. FACTNet has will probably file a malpractice suit against Faegre and Benson. Presumably F&B will countersue for payment of their fees. Meanwhile Wollersheim and Lerma will assemble a new legal team headed by Graham Berry and undertake a complete change of strategy. New lawsuits will be filed as soon as Coregis funds are available. We do not expect Arnie Lerma's pro per status to last long; we infer that it is an interim measure pending a reorganization of FACTNet's legal resources. The Coregis funds, when released, will be spent at the sole discretion of Lawrence Wollersheim.

Short summary:

Two words. Foot bullet.

[Note: this analysis was written on the basis of information supplied to us by anonymous sources. We apologize for errors and omissions, and will be happy to review the matter based upon additional information.]

Our misgivings concern the apparent injustice to Bob Penny and the doubtful wisdom of changing lawyers in midstream. After this performance FACTnet may have difficulty finding persons to sit on its board. With respect to Bob Penny, the possibility that he might actually be sued by FACTNet is one we would gladly see laid to rest.

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3. The Devil in the Details: Motion to Dismiss vs. Summary Judgment

A reader offered to help word clear some legal terms for us. Here is his letter:

"I appreciate the candor with which you preface your non- lawyer's legal analysis. Too many lawyers need to do the same thing ;)

"...just so that you understand something about federal procedure and Judge Whyte's dilemma:

"A motion to dismiss a case can be granted only if there is no possible set of facts consistent with the complaint that will allow the plaintiff to obtain relief from the court. Under the federal rules, the complaint only needs to provide notice, not detailed statements of fact, except that a little bit more detail is required for fraud. For example, the Clams would "state a cause of action" (lawyerese for "immune from dismissal") if some hypothetical set of facts would prove that, say, Grady Ward was indeed Scamizdat. Grady's protests to the contrary are totally irrelevant on a motion to dismiss. The clams can claim the existence of a conspiracy to raise the entheta levels of all U.S. government officials by fluoridating drinking water, and it can't be dismissed.

"Summary judgment, on the other hand, happens AFTER THE FACTS HAVE BEEN FOUND. It is granted on a much lower standard: that no reasonable trier of fact (juror) could come to a different conclusion based upon the evidence presented. The judge looks at all the evidence and decides whether the jury needs to be called. For example, if there was no evidence available to the clams that there was a conspiracy, the defendants are entitled to summary judgment, because a reasonable juror could not conclude that there was such a conspiracy without evidence. In Grady's case, this is where he gets to protest "I'm not Scamizdat, and you can't prove it anyway."

--T. Rex ---------

4. ARSCC Field Report -- found folded around a trout in the mailbox

FIRST PUBLIC APPEARANCE IN 75 MILLION YEARS:

Xenu Kicks Off World Tour in Michigan

ANN ARBOR - July 27 (SP Straightwire). On the first stop of his Grand Tour of the Planet, Lord Xenu, former head of the Galactic Federation and star of the Scientology document "OT III", made a public appearance at the Ann Arbor Art Fair. Escorted by a four-person PR team from ARSCC Dissem Div/Great Lakes Section, Lord Xenu was most pleased by the public acclaim that greeted his Second Coming to Teegeeack (Earth).

The art fair is an annual event that attracts thousands of people from around the country: artists, craftsmen, and a sprinkling of musicians and political activists. There is a special "non-profit section" with booths espousing all sorts of philosophies: socialism, libertarianism, the Hillary Clinton fan club, a group opposed to circumcision, a group opposed to abortion, Planned Parenthood, Amnesty International, Muslims, Krishnas, Eckists, and of course, the Hubbard Dianetics Foundation. The following is part of a report to ARSCC filed by the Dissem Div's Art Fair I/C:

================================================================

ARSCC knew from prior intelligence that Scientology would be trolling for raw meat at the art fair. It then became apparent that this would be the ideal first venue for Xenu to get out and meet his public.

Xenu's head was a rubber space alien mask with huge, bulbous, almond- shaped eyes, deep purple in color. The mask had a silver mesh back so the wearer's entire head was concealed. He looked quite disturbing as he waved to the crowd, even though he was wearing a friendly nametag that said "Hi! I'm Xenu". Xenu wore a blue robe, a space-alien collar of blue metallic material with a conical neck, a chest-piece with a silver star, a ray-gun with holster, silver elbow- length gloves, and soft black leather shoes. (His combat boots were at the cleaners.) Xenu did not speak; he merely waved at people, fired his raygun (which made great sound effects), and stopped to shake hands with every little kid who crossed his path, just like Mickey Mouse at Disneyland.

Five ARSCC members participated in this event. The role of Xenu was played by M, who had previous experience working in an animal costume for a local business in Ann Arbor. The original plan had called for a mime, but none could be located; M's performance, however, was first rate. The second team member, J, had the role of Xenu's bodyguard, because we were a little worried about being hassled (or even assaulted) by the clams. J is 6'3" and wore dark sunglasses; he did his job very well. He stayed close to M all the time, which made M feel safe enough to concentrate on playing Xenu with maximum enthusiasm.

The third and fourth members of the entourage were R and S, who handed out flyers to anyone who looked interested in this bit of street theater. Our fifth person, B, was the cameraman. He carried a camcorder which was to be used to document any harassment that might occur. He also took lots of crowd reaction shots, which were fun to review later. Xenu would be in this huge stream of people going one way, and folks walking the other way would catch a glimpse in passing and do these hilarious double takes. R and S, who were trailing behind, would catch these reactions and immediately offer the person a pair of flyers.

An orange flyer told Xenu's story---quoted straight from OT III---and gave some highlights of the weird beliefs of Scientology. (Body thetans; Christ was an implant; etc.) The flip side had an answer key to the OCA (the free personality test), and a list of web sites starting with Ron Newman's. Since this was Ann Arbor, we called special attention to Margery Wakefield's book "The Road to Xenu" being available on the web; she was recruited right there in town.

The blue flyer, headed "Scientology: End the Harassment", had the more serious stuff: quotes from the Reader's Digest and TIME Magazine articles, the "lawsuit is to harass" quote, some bits about harassment of Paulette Cooper and Margery Wakfield, the "fair game" order, and a mention of the cult's current raids and lawsuits against critics on the Internet, with a list of URLs. We handed out the flyers in pairs to everyone who'd take one. Copies will be available on a web page soon.

J, R, S, and B were wearing identical gray t-shirts with the 1991 TIME Magazine cover ("Scientology: the Cult of Greed") on the front, and "DIANETICS CULT SCAM" on the back. Because they kept close to M, this created the impression that there was a crowd around the space alien, which made him more interesting to passersby. Also, a lot of folks read the t-shirts and got a laugh out of them. In some cases they walked up and asked for flyers.

Unlike the other nonprofit groups, the Scientologists didn't have an actual booth at the fair, just a table. Hence the boys from the org had to work in bright sunlight while the rest of the pitchmen relaxed in the shade. The evening before, three team members briefly visited the table right around closing time. The Scientologists had been demonstrating their e-meter and handing out tickets to a free screening of their latest propaganda film, "Orientation". The team spoke with a young clam who tried to sell them a Dianetics starter kit. He was a typical org staffer: young (mid 20s), hadn't gone clear himself yet, but was convinced that Dianetics was wonderful stuff and assured us it worked 100% of the time. He gave J, S, and B free tickets to see Orientation back at the org, which they gladly accepted. When he saw their interest in his wares, he even offered to unpack his e-meter, which he had just put away, to give them a demo, but they said they didn't want to put him to any trouble; they'd come back tomorrow. And they did....

The next day, as the team of five was making its way through the art fair crowd, entertaining people and distributing flyers, we ran into our salesclam, who was heading in the opposite direction distributing tickets to his film. R took one. M, who hadn't been present the night before, walked right up to him in full costume and was handed a ticket. Then Mr. salesclam recognized J and S, who had spoken with him the previous evening, and greeted them warmly. A few seconds later the t-shirts registered, and perhaps he saw the "Hi! I'm Xenu" nametag on M's chest. He got this confused look on his face and snatched Xenu's ticket back! He also took back the ticket he had given to R. Then he said to S, "What are you doing? This is not good." S said something noncommittal, R chimed in with a remark about Scientology being a religious cult, and Mr. Clam got really agitated. He started shouting "Dianetics works! Scientology is the fastest growing religion in the world; how can it be a cult?"

This made for great theater; all the parents who had been watching Xenu entertain their kids now saw their friendly space alien being hassled by an outraged Scientologist. Where would *your* sympathies lie?

S offered the clam a copy of the flyers, which he refused to take. Since Xenu was moving on, S moved to keep up, and Mr. Clam loudly complained "Why are you running away? Why won't you talk to me?" Whereupon S said with honest enthusiasm, "It's okay. You can come with us!" (S really wanted the guy to keep on ranting; he was putting on a great show.) But Mr. Clam thought better of the offer and decided to go his own way. He did, however, give R another ticket to the movie, perhaps hoping to save one of these sorry suppressives in spite of themselves.

Finally we made our way to the nonprofits section, where we met the most clueless clam we had ever seen. Xenu walked right up and waved to him, even whispered a few words to him, and this clam had no idea what he was looking at. He was busy touting Dianetics to a somewhat skeptical couple. Xenu caught the male customer's eye, pointed to the clam, then made a circle beside his own head with his finger, the Earth-man's sign for "nut case". The guy laughed; the clam kept up his sales pitch. Then Xenu spun S around so the guy could read the back of S's t-shirt, and he laughed again. He happily accepted a pair of flyers and was delighted when S pointed out the answer key to the Dianetics personality test on the back ("Your Guide to Instance Mental Health"). With all five of us crowding up to watch the clam's sales spiel, passersby could see nothing but a wall of t-shirt backs saying "DIANETICS CULT SCAM". So we moved on. We did not want to be guilty of harassing the clams, or of blocking access to their table.

We spent about two hours working the crowd and handing out close to 200 pairs offlyers. We made one more pass by the Dianetics table but not much happened; the clueless clam still had no idea what we were doing. The original spokesclam had returned as well, and he grudgingly acknowledged our presence. He began speaking loudly about how Dianetics was a best-selling book. S decided to be helpful and asked, "How long was it on the bestseller list? About a year, wasn't it?" The clam was taken aback by this preclear origination, but agreed that S was probably correct. As we were about to move on, the spokesclam insisted that S acknowledge that Dianetics works. S was happy to oblige. "Yes, it works", which elicited an abrupt and stern "Thank you!" Wow, that TR 2 nearly took S's head off! (S reflects that of course Dianetics works. It made Hubbard a very rich man. That was what it was designed to do, wasn't it?) We left the clams to their table. We weren't there to be drawn into a fight.

Near the end of our sojurn, a man in the crowd noticed B's shirt and said "You aren't a Scientologist, are you?" B assured him that he was not; we were Scientology critics. Thus reassured, the man started telling B about how his brother had gotten on a CoS mailing list twenty years ago, and even though he had moved away many years since, he was STILL getting mail from them. This guy had tried writing to the org, explaining that his brother no longer lived there and that he did not want all these magazines and ads filling up his tiny mailbox, but to no avail. He couldn't get off the damned list. S walked up and joined the discussion, and suggested that the man write to the org and tell them he's a declared SP. Communication with an SP is a crime in Scientology, so they'd have to stop. He was very grateful for this advice and said he'd give it a try. S also advised him to include one of our orange flyers with his letter, so he took an extra one for that purpose.

After leaving the fair, we took time out for refreshments and a review of the videotape before moving on to the victory lap: we drove up to the org on West Stadium Boulevard and posed for group pictures in front of the big blue "Hubbard Dianetics Foundation" sign. Xenu and his band of SPs waved happily for the camera, then we giggled all the way back to the house. Afterwards we had a great barbecue and told our compatriots about our adventure. Pictures (and perhaps a video clip) will be on a web page soon. This was the first stop in Xenu's world tour, and it was a resounding success.

The next day we got a report that Xenu's appearance and the misdeeds of Scientology had been discussed on the University of Michigan campus radio station. My, those flyers do get around.

Lord Xenu's own explanation for this dissemenation action was brief and to the point: "We are intending to make Our full story clear to all Public on the planet." Look for further appearances by Xenu on his World Tour soon. He's quickly becoming a popular guy.

................

Lessons Learned:

+ This was street theater, not a protest action. We tried to entertain people and greet them with good humor. In order to get them to take a flyer, we couldn't assault them with heavy stuff about cult harassment. They were there to have fun, and we had to play to that. So we offered them a good laugh or two (M was quite funny in costume, especially when playing up to little kids or dancing to some of the bands we passed), and we followed up by offering copies of "Xenu's biography". The heavy stuff would sink in later.

+ The t-shirts were a major win. A lot of folks recognized the front (who can miss a TIME Magazine cover?) or read the back when they passed us and turned around to see the space alien and his weird entourage. We will put the graphic up on a web page so anyone can print it out on a color printer, take it to the local mall, and give it to a t-shirt shop with a scanner.

+ Get the media involved. We were unable to pre-arrange press coverage, but we did drop off flyers at both radio stations that were running booths at the fair, and spoke with some of the staff there.

+ With two other persons at his side distributing flyers, Xenu was free to spend his time waving at the crowd and shaking hands with little kids. It sometimes took people a few seconds to process this weird scene. By the time Xenu had passed and they'd done their double take, they were in a receptive mood and were happy to take a flyer.

- The mask restricts vision a bit. Xenu really does need a bodyguard. This made M feel safe enough to play the role effectively. In a protest situation, with hostile Sea Org milling about, a bodyguard would have been even more important. A camcorder is also a good device for inhibiting people's more aggressive reactions. One mistake we made was having the cameraman also distribute some flyers; this took his attention off the camera work and caused him to miss the start of the clam confrontation.

- This was conceived and executed as a team event. A group of 5 is big enough to attract notice, yet small enough to be manageable. Everyone had an assigned job, and we reviewed our respective roles and strategy before setting out for the fair. This turned out to be quite helpful.

- The key point to emphasize is ATTITUDE: we designed this action as a lark. We weren't out to hassle anyone. We weren't mad at the clams; we felt sorry for their delusions. (Xenu did lose it when the spokesclam started raving at us; Xenu called him an asshole. But it was only a momentary loss of temper; J moved in to calm M down and S got between Xenu and the clam to refocus the clam's attention on himself.) Of course, these were just junior clams, not arrogant OTs or Sea Org nazis, but we would have tried to be charitable towards these as well.

--Dispatch breaks off here--

Next Stop for Xenu

There is a well founded rumor that Xenu will appear in San Francisco on one or both days of the next ARSCC coordinated picket action, which will take place on September 6-7. See Jeff Jacobsen's web page for details: http://www.primenet.com/~cultxpt/

For the Xenu World Tour official web site, see:

http://www.cedar.net/users/dvanhorn/xenu

----------

5. Rodent Report: Unreported Activities

A certain passionate lady has recently been visited in her country abode by one of the most engaging men in cyberspace. The two spent a number of hours together. We can assure the reader that absolutely no impropriety occurred. Nevertheless, let this serve as a warning to gentlemen on ars not to take ladies' affections for granted.

--Arlene Fortiori

The End

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