Motion of defendants FACTNet and Lawrence Wollersheim to reopen discovery

[December 11, 1998]

 

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 95-K-2143

BRIDGE PUBLICATIONS, a California non-profit corporation,

    Plaintiffs,

V.

F.A.C.T.NET, INC., a Colorado nonprofit corporation; LAWRENCE WOLLERSHEIM, an individual; and ROBERT PENNY, an individual,

    Defendants.


MOTION OF DEFENDANTS F.A.C.T.NET AND LAWRENCE WOLLERSHEIM TO REOPEN DISCOVERY (F.R.C.P. ) (WITH INCORPORATED D.C. COLO L.R. 7.1A  CERTIFICATE OF COMPLIANCE)


I.    INTRODUCTION

    In light of newly-obtained evidence pointing to a pattern of fraud by Church of Scientology entities in the registration of fabricated copyrights, Defendants F.A.C.T.Net, Inc. and Lawrence Wollersheim move this Court for permission to reopen discovery.

    At the outset, Defendants acknowledge having previously moved for a continuance of the hearing on BPI's summary judgment motion under F.R.Civ.P. 56(f) and an attendant motion under F.R.Civ.P. 16(b) to take additional discovery, including the depositions of persons whose names appear as desired deponents in the present motion.1 That request was advanced primarily upon the suspicion -- however well-founded -- that the discovery sought would uncover evidence of fraud in the ownership, transfer and assertion of BPI's copyrights.

   In ruling to deny most of the Rule 16(b) motion on May 11, 1998, 2 the Special Master, Magistrate Judge Abram, determined the discovery sought was not sufficiently related to BPI's then-pending motion for summary judgment to warrant reopening discovery to the extent requested. (Order by Magistrate Judge Abram, p. 3.) Importantly, Judge Abram's decision was apparently premised in large part upon the supposition that the copyright registration certificates submitted by BPI would be afforded a presumption of validity, and that discovery directed to their legitimacy would thus have no bearing on the summary judgment motion. (See, i.e., Order at p. 4.) Subsequently, of course, Judge Kane has decided that no such presumption obtains in this case.

   Judge Abram's denial of most of the requested discovery was also partially based on his determination that the asserted need for it was too speculative:

   Defendants have failed to specify any copyrights registered prior to the death of L. Ron Hubbard which they believe are invalid or why they believe them to be invalid. (Order, p. 4.)

   Since that time, the landscape of this case has changed rather dramatically, as described below. In applying again for permission to depose some of the witnesses who were the subject of that earlier motion, Defendants fully appreciate that the request to reopen discovery, particularly at this juncture, is not one to be made irreverently or without substantial basis. Moreover, Defendants have been neither dilatory nor insouciant regarding the investigation of information that serves as the foundation of this motion.

II.    FACTUAL BASIS FOR THIS MOTION

   Beginning very recently, Defendants have received -- from previously unknown sources and witnesses -- crucial information and documents pointing unequivocally to an astonishing layer of fraud that, if Defendants are permitted to further substantiate it, will almost certainly lay waste to a great number -- perhaps even all -- of BPI's copyright claims. Thus, unlike the previous request, the present motion is not based primarily on conjecture. Rather, it is based on actual, solid evidence which has just come to Defendants' attention, and which goes directly to the heart of Plaintiff's claimed copyrights.

   Specifically, Defendants have uncovered proof that some of the purportedly copyrighted documents BPI cites are, in fact, in the public domain. This is true because, although pre-1978 "originals" filed with the Copyright Office (documents to which the 1909 Copyright Act, and its requirement that published material contain notice of copyright in order to be protected, apply; see Section III, post) contain the requisite copyright notice, the actual originals do not.3 The evidence thus discloses that the copyright notice was belatedly placed on these documents after their original publication -- an impotent effort to salvage copyrights for documents that were, by then, squarely in the public domain. (See, Memorandum Opinion and Order on Further Pending Motions by Judge Kane, filed November 4, 1998, at p. 15.)

   Concurrently with the filing of this motion, Defendants submit 28 blue folders containing evidence of this chicanery.4 In each of them is found the copy of an individual "L. Ron Hubbard Original," and the corresponding copyright registration certificate, submitted by BPI in support of its summary judgment motion. Also in each folder is a copy of the original document recently located by Defendants.

   The first folder, for example, contains, on the right-hand side, what BPI submitted to the Court as Exhibit B-4, a document first published in June 1959, according to the accompanying registration certificate. This "L. Ron Hubbard Original" -- which was submitted with the registration certificate to both the Court and the Copyright Office -- contains a notice of copyright in the lower lefthand corner. Yet, as Defendants' original shows, the document as originally published contained no notice of copyright at all.5 As to those documents which BPI claims to have been unpublished until their inclusion in compilations published and registered for copyright protection in, for example, 1983, they were, in many or all cases, published years before. This is seen in the fact that Defendants have obtained copies of some of those documents as originally published -- back in the 1950s, 1960s and beyond. Because many or most of those pre-1978 documents (again, documents governed by the 1909 Copyright Act) contained no notice of copyright when originally published, they, too, are in the public domain.

    This extraordinary new evidence is reinforced by the testimony of Jesse Prince , a former high-ranking Scientology official who came forward in July of 1998, and whose testimony Judge Kane has now ruled admissible. Based on the new documentary evidence, and the testimony of Mr. Prince as set forth below, Defendants now seek permission to take the following additional discovery:

    1.    The Deposition of David Miscavige. Miscavige is the acknowledged "ecclesiastical" leader of the corporations and other entities collectively known as the Church of Scientology, whose documents BPI publishes. In previously moving the Court for permission to depose Miscavige, Defendants cited his daily contact with L. Ron Hubbard prior to Hubbard's death, as well as Miscavige's having notarized documents that purported to assign copyrights. Defendants, via former counsel, Graham Berry, paid especial attention in the supporting declaration to events surrounding the death of L. Ron Hubbard and the validity of Miscavige's actions during that time. (See, Exhibit "E," Declaration of Graham Berry, submitted in conjunction with Defendants' Rule 56(f) Motion of February 7, 1997, pp. 4-6.)

   Judge Abram determined that those circumstances were insufficient to warrant taking the deposition of David Miscavige. (Order, p. 4.) Whatever the validity of Mr. Berry's earlier desire to depose Miscavige regarding events near the time of L. Ron Hubbard's death, that is not the subject of the desired inquiry at this stage. Instead, the recent testimony of Jesse Prince points to a solid link between Miscavige and fraudulent activity bearing directly on the validity of BPI's claimed copyrights, providing a substantial basis for the testimony sought. According to Mr. Prince, Miscavige held a meeting in 1983 at which he ordered the registration of copyrights despite having been advised that, among other problems, the documents had already fallen into the public domain. (See, Exhibit "F," Declaration of Jesse Prince , ¶¶19-20.)

   While Miscavige's role in the registration of fraudulent copyrights was cited in Defendants' prior motion, Defendants did not then possess actual documentary evidence of the sham, as described ante. At this point, there is solid evidence that, on the command of its ringleader, David Miscavige, Scientology has perpetrated a fraud on the Copyright Office, and that BPI endeavors to advance that fraud in this lawsuit.

    2.    The Deposition of Vicki Aznaran. According to the same admissible testimony of Mr. Prince, Ms. Aznaran -- a former high-ranking leader of this case's original plaintiff, Religious Technology Center ("RTC"), the Scientology corporation charged with protecting Scientology's copyrighted "technology" -- participated in the above-described meeting led by David Miscavige. Ms. Aznaran has given testimony in other cases concerning document tampering efforts led by, among others, Norman Starkey6 -- the same individual who signed many of the copyright registration certificates presented by BPI herein, and who has already testified to a lack of knowledge about the information his signature purports to certify.7

    3.    The Deposition of Patricia Brice. The recent testimony of witness Jesse Prince further establishes that Ms. Brice (a personal secretary to Scientology founder L. Ron Hubbard) was also at the 1983 meeting over which David Miscavige presided. As the Plaintiff's evidence shows, Ms. Brice signed a great number of the registration certificates for the copyrights at issue; she did so in 1983, consistent with the testimony of Mr. Prince about a massive push to register defective copyrights pursuant to Miscavige's order.8

    4.    The Deposition of the Custodian of Records of the Church of Spiritual Technology. According to documents filed with the Internal Revenue Service in or about 1991, which eventually led to the granting of tax-exempt status pursuant to Internal Revenue Code Section 501(c)(3) for numerous Scientology corporations, including Plaintiff BPI and the Church of Spiritual Technology ("CST"), CST embarked on a massive, multi-million dollar project to recover and preserve original documents authored by L. Ron Hubbard. This project, which was worldwide in scope, consumed more than 40,000 man hours and resulted in the recovery of 500,000 pages of original documents, all of which are maintained by CST in individual acid-free folders and stored in specially-constructed vaults to stave off contamination or destruction. (See, Leipold Decl., ¶18, and Exhibit "J.")

   This comprehensive cache of documents must certainly contain the true originals of the documents claimed by BPI in this litigation to be the subject of valid copyrights. In light of Defendants' new evidence as set forth below, which discloses that many of the subject documents were originally published without the requisite copyright notice (notwithstanding BPI's submission of copies of those documents suggesting otherwise), it will be crucial to allow for the examination of the true originals with the assistance of a qualified questioned document examiner, to determine whether they were altered in any fashion after their initial publication, including by the belated placement of copyright notices on them. The newly-obtained documentary evidence disclosing a pattern of registering false copyrights means Defendants' desire to depose those on their short list of additional witnesses regarding their knowledge of the scheme is wholly justified. To rule otherwise would be to sanction BPI's clear assertion of fraudulent copyright claims in this litigation.

III.    ARGUMENT

    The significance of the failure of L. Ron Hubbard to place notice of copyright on documents he published9 before 1978 cannot be understated. As Judge Kane himself wrote in his Memorandum Opinion and Order of November 4, 1998:

   Once a work enters the public domain, it remains there irrevocably. The 1909 Copyright Act required, inter alia, that the copyright owner of a published document affix proper notice to each publicly distributed copy of the work. Non-compliance with the notice requirement could inject the work into the public domain.

    (Memorandum Opinion and Order at p. 15.) Indeed, The Copyright Act of 1909 contained a very strict notice requirement. A work published without a valid copyright notice was automatically injected into the public domain. 17 U.S.C. §§10, 19 et. seq. (1909 Act); New Era Publications International, APS v. Carol Pub. Group, 904 F.2d 152, 161 (2d Cir.), cert. denied, 111 S. Ct. 297 (1990).

    Here, there is now evidence that documents purportedly having copyright notice affixed upon first publication did not. Further, there is evidence that a number of people knew this, knew the significance of it, and nevertheless set about to hoodwink the Copyright Office and the rest of the world. The evidence Defendants may uncover by deposing those people will bear directly on the claims BPI is making in this lawsuit and which are the subject of the findings to be made under Judge Kane's November 4, 1998 Order of reference.

    The case of SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990) sets forth the criteria normally considered in this Circuit when entertaining a motion to reopen discovery: 1) whether trial is imminent; 2) whether the request is opposed; 3) whether the non-moving party would be prejudiced; 4) whether the moving party was diligent in obtaining discovery within the guidelines established by the court; 5) the foreseeability of the need for additional discovery in light of the time allowed for discovery by the district court; and 6) the likelihood that discovery will lead to relevant evidence.

    Here, although trial of the limited issues pursuant to Judge Kane's Order of reference is upcoming, the first sessions are not scheduled to begin for nearly four months. Moreover, despite the fact that the instant request will most certainly be opposed, there are sound and undeniably compelling reasons for granting Defendants' request to take limited additional discovery. The plaintiff has controlled nearly everything about the documentary evidence in this case -- what documents would be submitted to the Copyright Office and what documents would be submitted to this Court. Defendants, not having had access to the true originals, were left to struggle with suspicions they were powerless to substantiate, until now. Now, for reasons having nothing to do with Defendants' diligence, they have been provided access to documents very damaging to BPI's case. BPI may, and in all likelihood will, claim to be prejudiced by these new developments, but the evidence discloses that it was by its own fraud (and that of its predecessor and sister corporations) that there were even purported copyrights over which to wrangle in the first place. BPI can hardly claim to be prejudiced by having to face the consequences of its own unclean hands.

    Furthermore, in his May 11, 1998 ruling, Judge Abram himself noted the inapplicability of the possible preclusions to further discovery, in view of the nature of this case:

...the Court notes that the preparation of Defendants' case may have been frustrated by the withdrawal of Defendants' attorneys and substitution of new counsel, which occurred twice. Regarding the fifth factor, although the discovery deadline passed long ago, it was foreseeable that additional discovery would be requested, given the nature of this case, the parties, and the history of the litigation. Finally, bearing in mind that most of the factors weigh against reopening discovery, most important in this inquiry is the sixth factor, whether the requested discovery is relevant or will lead to the discovery of relevant evidence.

   (Order of May 11, 1998 at p. 3.) There is no denying the relevance of information bearing directly on the deceitful nature of the copyrights this Court has been charged with adjudicating. Nor is it through any fault or delinquency of Defendants that this information has only now come to light. Indeed, if Defendants are not permitted to take discovery bearing on Scientology's campaign of copyright fraud, it is plausible to suppose that BPI will be rewarded for those efforts by getting away with the use of documents and testimony it knows to be false.

IV.    CONCLUSION

    For the foregoing reasons, Defendants respectfully request that they be permitted to depose David Miscavige, Vicki Aznaran, and Patricia Brice and to depose and seek records from the Custodian of Records for the Church of Spiritual Technology.

DATED: _____________

                        BEEM & MANN

                (signed)   CLIFFORD BEEM


NOTES 1 The protracted history of this case includes dozens of motions made to the Court by all parties on various issues. Among them are motions made by Defendants which were subsequently withdrawn in light of developments occurring after their filing. Although Plaintiff's counsel, Samuel Rosen, averred at the November 16, 1998 hearing that Defendants had previously made four motions to reopen discovery, a review of the file maintained by counsel for Defendant Wollersheim (which comprises more than 37 volumes of pleadings alone) reveals two previous requests by Defendants to take additional discovery.

2 For the Court's convenience, Defendants append as Exhibit "D" Magistrate Judge Abram's ruling.

3 See the Declarations of Mark Plummer, Robert Vaughn Young and Daniel Leipold, and the documents in blue folders accompanying them, which correspond to BPI's Exhibits B-4, B-5, B-199, B-322, B-323, B-326, B-332, B-333, B-336, B-340, B-344, B-350, B-374, B-375, B-378, B-384, B-388, B-391, B-392, B-1292, B-1305, B-1347, B-1415, B-1417, C-4, C-36, C-118 and C-148.

4 The 28 examples located thus far are apparently only the tip of the iceberg. Within the week prior to the filing of this motion, Defendants have been advised of an archive of thousands of original Scientology documents, and they have only received access to them within recent days. (See, Decl. of Daniel Leipold, ¶¶9-12.)

5 In order to highlight the deficiency, Defendants have placed the phrase "No Copyright Notice" on the document where it would otherwise be if the true original were as submitted by BPI to the Court and the Copyright Office.

6 As Ms. Aznaran has testified (See, Exhibit "G," the document destruction efforts with which she was involved included parts of a file demanded by Defendant Wollersheim in his original lawsuit against the Church of Scientology of California -- documents the court in that case had ordered Scientology to produce.

7 Mr. Starkey's testimony establishes that he relied on information from Ryland Hawkins of Author Services, Inc. ("ASI") (another Scientology corporation) in signing most or all of the certificates. (See, Exhibit "H," excerpt from Deposition of Norman Starkey, p. 96.) However, although Mr. Starkey signed many of them in or before 1983, Mr. Hawkins has testified he did not arrive at ASI until 1984. (See, Exhibit "I," excerpt from the Deposition of Ryland Hawkins, 8:13-17).

8 Although Ms. Brice was also the subject of Defendants' previous request to depose additional witnesses, the extent of her involvement in the fraudulent scheme was not then clear. In the motion, Defendants urged that Ms. Brice was "personally involved in the copyright registration process" (Berry Decl., pp. 6-7), an assertion Judge Abram found insufficient to warrant the taking of her deposition. Yet, as Mr. Prince's recent testimony and the newly-obtained evidence suggests, Ms. Brice signed registration certificates for documents she knew had fallen into the public domain. The validity of the registrations bears directly on Plaintiff's burden of proof under the Order of reference; thus, Ms. Brice's testimony is crucial.

9 As shown, in some cases there is no dispute about the date of first publication; as to these documents, they are acknowledged to have been published before January 1, 1978 in their copyright registration certificates. As for those documents claimed to have been published after January 1, 1978 (when lack of copyright notice could be cured under the 1976 Copyright Act) despite having been authored years before, the fact that Defendants have obtained copies of those documents as originally distributed in the 1950s, 1960s and early 1970s demonstrates their publication before 1978. Further, that the Church of Scientology acknowledges a narrow definition of "publication" is seen in its own policy matter, affixed hereto. (See, Leipold Declaration ¶28 .)