1 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, ET AL. v. CULT AWARENESS NETWORK 

97-1006 

SUPREME COURT OF THE UNITED STATES 

523 U.S. 1020; 118 S. Ct. 1300; 1998 U.S. LEXIS 1853; 140 L. Ed. 2d 466; 66 U.S.L.W. 3620 

March 23, 1998, Decided 

PRIOR HISTORY:
 [*1]  Reported below: 1997 Ill. LEXIS 427, 177 Ill.2d 267, 685 N.E.2d 1347. 

JUDGES:
Rehnquist, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg, Breyer.  

OPINION:

Petition for writ of certiorari to the Supreme Court of Illinois denied.  

2 of 133 DOCUMENTS 

SCHWARZ, BARBARA v. CHURCH OF SCIENTOLOGY INTERNATIONAL, ET AL.  

94-8959 

SUPREME COURT OF THE UNITED STATES 

515 U.S. 1180; 116 S. Ct. 24; 1995 U.S. LEXIS 5025; 132 L. Ed. 2d 907; 64 U.S.L.W. 3143 

August 11, 1995, Decided 

JUDGES:
 [*1]  Rehnquist, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg, Breyer.  

OPINION:

The petition for rehearing is denied.  

3 of 133 DOCUMENTS 

SCHWARZ, BARBARA v. CHURCH OF SCIENTOLOGY INTERNATIONAL, ET AL.  

94-8959 

SUPREME COURT OF THE UNITED STATES 

515 U.S. 1146; 115 S. Ct. 2587; 1995 U.S. LEXIS 4159; 132 L. Ed. 2d 835; 63 U.S.L.W. 3890 

June 19, 1995, Decided 

PRIOR HISTORY:
 [*1]  
United States Court of Appeals for the Tenth Circuit.  

JUDGES:
Rehnquist, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg, Breyer.  

OPINION:

The petition for writ of certiorari is denied.  

4 of 133 DOCUMENTS 

CLEARWATER, FL, ET AL. V. SCIENTOLOGY FLAG SERV.; CLEARWATER, FL, ET AL. V. SCIENTOLOGY FLAG SERV.  

93-1603, 93-1604 

SUPREME COURT OF THE UNITED STATES 

513 U.S. 807; 115 S. Ct. 54; 1994 U.S. LEXIS 5416; 130 L. Ed. 2d 13; 63 U.S.L.W. 3257 

October 3, 1994, Decided 

PRIOR HISTORY:
U.S.C.A. 11th Cir.  

DISPOSITION:
Certiorari Denied 

JUDGES:
 [*1]  Rehnquist, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg, Breyer.  

OPINION:

The petitions for writs of certiorari are denied.  

5 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, PETITIONER V. WOLLERSHEIM, LARRY 

93-743 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 1176; 114 S. Ct. 1216; 1994 U.S. LEXIS 2054; 127 L. Ed. 2d 562; 62 U.S.L.W. 3588 

March 7, 1994 

PRIOR HISTORY:
 [*1]  
ON PETITION FOR WRIT OF CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT.  

JUDGES:
Rehnquist, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg.  

OPINION:

The petition for writ of certiorari is denied.  

6 of 133 DOCUMENTS 

SCHWARZ, BARBARA, PETITIONER V. CHURCH OF SCIENTOLOGY 

93-7033 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 1123; 114 S. Ct. 1082; 1994 U.S. LEXIS 1603; 127 L. Ed. 2d 398; 62 U.S.L.W. 3552 

February 22, 1994 

PRIOR HISTORY:
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.  

JUDGES:
 [*1]  Rehnquist, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg.  

OPINION:

The petition for writ of certiorari is denied.  

7 of 133 DOCUMENTS 

SCHWARZ, BARBARA, PETITIONER V. CHURCH OF SCIENTOLOGY 

93-5512 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 920; 114 S. Ct. 316; 1993 U.S. LEXIS 6428; 126 L. Ed. 2d 263; 62 U.S.L.W. 3273 

 October 12, 1993 

PRIOR HISTORY:
 [*1]  ON PETITION FOR WRIT OF CERTIORARI TO THE SUPREME COURT OF UTAH 

JUDGES:
Rehnquist, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg.  

OPINION:

The petition for writ of certiorari is denied.  

8 of 133 DOCUMENTS 

SCHWARZ, BARBARA, PETITIONER V. CHURCH OF SCIENTOLOGY INTL.  

93-5734 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 924; 114 S. Ct. 326; 1993 U.S. LEXIS 6484; 126 L. Ed. 2d 271; 62 U.S.L.W. 3273 

 October 12, 1993 

PRIOR HISTORY:
 [*1]  PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

JUDGES:
Rehnquist, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg.  

OPINION:

 [**271]  The petition for writ [**272]  of certiorari is denied.  

9 of 133 DOCUMENTS 

Church of Scientology Western United States, et al. v. United States 

No. 92-2002, R46-001 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 910; 114 S. Ct. 297; 1993 U.S. LEXIS 6307; 126 L. Ed. 2d 245; 62 U.S.L.W. 3275 

October 6, 1993 

OPINION:

 [*1]  
The petition for a writ of certiorari in the above-entitled case was dismissed today pursuant to Rule 46 of this Court.  

10 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, PETITIONER V. DANIELS, MITCHELL 

93-206 

SUPREME COURT OF THE UNITED STATES 

510 U.S. 869; 114 S. Ct. 195; 1993 U.S. LEXIS 5737; 126 L. Ed. 2d 153; 62 U.S.L.W. 3249 

 October 4, 1993 

PRIOR HISTORY:
 [*1]  
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT.  

JUDGES:
Rehnquist, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas, Ginsburg.  

OPINION:

The petition for writ of certiorari is denied.  

11 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY CALIFORNIA, PETITIONER V. UNITED STATES AND Frank S. Zolin.  

91-1766 

SUPREME COURT OF THE UNITED STATES 

506 U.S. 994; 113 S. Ct. 589; 1992 U.S. LEXIS 7451; 121 L. Ed. 2d 527; 61 U.S.L.W. 3399 

 November 30, 1992 

PRIOR HISTORY:
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.  

JUDGES:
 [*1]  Rehnquist, White, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas.  

OPINION:

The petition for a writ of certiorari is granted. 
The judgment is vacated and the case is remanded to the United States Court of Appeals for the Ninth Circuit for further consideration in light of Church of Scientology v. United States, 506 U.S.     (1992).  

12 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, PETITIONER v. UNITED STATES AND FRANK S. ZOLIN 

No. 91-946

SUPREME COURT OF THE UNITED STATES 

506 U.S. 9; 113 S. Ct. 447; 1992 U.S. LEXIS 7197; 121 L. Ed. 2d 313; 61 U.S.L.W. 4003; 92-2 U.S. Tax Cas. (CCH) P50,562; 70 A.F.T.R.2d (RIA) 6055; 92 Cal. Daily Op. Service 9213; 92 Daily Journal DAR 15326; 6 Fla. Law W. Fed. S 753 

October 6, 1992, Argued   
November 16, 1992, Decided 

PRIOR HISTORY:
 [***1]  ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.  

DISPOSITION:
Vacated and remanded.  

DECISION:
Church's appeal from federal court order enforcing IRS summons regarding taped conversations between church officials and attorneys held not rendered moot by delivery of copies of tapes to IRS.  

SUMMARY:
A California state-court proceeding involving a church resulted in the court clerk's obtaining custody of various documents, including two tapes recording conversations between church officials and their attorneys. As part of an effort by the Criminal Investigation Division of the Internal Revenue Service (IRS) to investigate the tax returns of the church's founder, the IRS, pursuant to 26 USCS 7603, served a document-production summons on the clerk. The church obtained a temporary restraining order from the United States District Court for the Central District of California. In turn, the IRS filed a petition in the District Court to enforce the summons pursuant to 26 USCS 7402(b) and 7604(a), and the church intervened to oppose production on grounds including attorney-client privilege. After protracted proceedings--including a decision by the United States Supreme Court that the District Court could, under certain circumstances, conduct an in camera review of the tapes in order to determine whether they fell within a future-crime exception to the attorney-client privilege (491 US 554, 105 L Ed 2d 469, 109 S Ct 2619)--the District Court entered an order enforcing compliance with the summons. The church filed a timely notice of appeal and unsuccessfully sought a stay of that order. While the appeal was pending, copies of the tapes were delivered to the IRS, and the United States Court of Appeals for the Ninth Circuit consequently determined that no present controversy existed and dismissed the appeal as moot.
On certiorari, the United States Supreme Court vacated the judgment of the Court of Appeals and remanded the case for further proceedings. In an opinion by Stevens, J., expressing the unanimous view of the court, it was held that the church's appeal was not rendered moot by the delivery of the tapes to the IRS, because (1) the church still had a stake in the outcome of the proceeding for which effective relief could be provided, since, although the Court of Appeals could not restore the pre-existing situation by withdrawing all knowledge or information that IRS agents might have acquired by examining the tapes, it could effectuate a partial remedy for the violation of the church's possessory interest in the tapes by ordering the IRS to destroy or return any and all copies of the tapes which the IRS might have in its possession; (2) regardless of whether the District Court's jurisdiction under 7402(b) and 7604(a) was limited to determining whether the court ought to compel production of the information requested by the summons, and thus ended when that question was decided and compliance occurred, this issue was irrelevant to the question of the Court of Appeals' jurisdiction to review the allegedly unlawful enforcement order; and (3) although several Courts of Appeals had accepted the government's mootness argument in IRS enforcement proceedings, the force of that authority was matched by a contrary nondistinguishable line of authority in proceedings to enforce Federal Trade Commission discovery requests.  

SYLLABUS:

Pursuant to its jurisdiction under 26 U.S. C. § §  7402(b) and 7604(a), the District Court ordered a state-court Clerk to comply with a summons issued by the Internal Revenue Service (IRS) for the production of, inter alia, two tapes in the Clerk's custody recording conversations between officials of petitioner Church of Scientology (Church) and their attorneys. Although the Church filed a timely notice of appeal, its request for a stay of the summons enforcement order was unsuccessful, and copies of the tapes were delivered to the IRS while the appeal was pending. The Court of Appeals dismissed the appeal as moot, ruling that no controversy existed because the tapes had already been turned over to the IRS.

Held: Compliance with the summons enforcement order did not moot the Church's appeal.  [***2]  Delivery of the tapes to the IRS did not mandate dismissal by making it impossible for the Court of Appeals to grant the Church "any effectual relief." See Mills v. Green, 159 U.S. 651, 653, 40 L. Ed. 293, 16 S. Ct. 132. Although it is now too late to prevent, or to provide a fully satisfactory remedy for, the invasion of privacy that occurred when the IRS obtained the information on the tapes, the Court of Appeals does have power to effectuate a partial remedy by ordering the Government to return or destroy any copies of the tapes that it may possess. Even if the Government is right that under § §  7402(b) and 7604(a) the jurisdiction of the district court is limited to those matters directly related to whether or not the summons should be enforced, the question presented here is whether there was jurisdiction in the appellate court to review the allegedly unlawful summons enforcement order. There is nothing in the Internal Revenue Code to suggest that Congress sought to preclude such review, and, indeed, this Court has expressly held that IRS summons enforcement orders are subject to appellate review. See Reisman v. Caplin, 375 U.S. 440, 449, 11 L. Ed. 2d 459, 84 S. Ct. 508. Although several Courts of Appeals have  [***3]  accepted the Government's argument in IRS enforcement proceedings, the force of that line of authority is matched by a similar array of decisions reaching a contrary conclusion in proceedings enforcing Federal Trade Commission discovery requests. There is no significant difference between the governing statutes that can explain the divergent interpretations, nor any reason to conclude that production of records relevant to a tax investigation should have mootness consequences that production of other business records does not have. Pp. 12-18.  

COUNSEL:
Eric M. Lieberman argued the cause for petitioner. With him on the briefs were David B. Goldstein, Hillary Richard, and Michael Lee Hertzberg.

Deputy Solicitor General Wallace argued the cause for the respondents. With him on the brief were Solicitor General Starr, Acting Assistant Attorney General Griffin, Kent L. Jones, Charles E. Brookhart, and John A. Dudeck, Jr.  

JUDGES:
JUSTICE STEVENS delivered the opinion of the Court.  

OPINIONBY:
JUSTICE STEVENS 

OPINION:

 [*10]   [**448]   JUSTICE STEVENS delivered the opinion of the Court. 

 Two tapes recording conversations between officials of the Church of Scientology (Church) and their attorneys in July 1980 have been the principal bone of contention in this, and two earlier, legal proceedings.
In an action filed in the Los Angeles County Superior Court, n1 the Church contended that the defendant had unlawfully acquired possession of the tapes. Pending resolution of that action, the state court ordered its Clerk to take custody of the tapes and certain other documents.

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n1 Church of Scientology of California v. Armstrong, No. C420 153.

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 [***4]  In 1984, in connection with an investigation of the tax returns of L. Ron Hubbard, founder of the Church of Scientology, the Internal Revenue Service (IRS) sought access to the Church documents in the state-court Clerk's possession. n2  [*11]  After the Clerk  [**449]  was served with an IRS summons, he permitted IRS agents to examine and make copies of the tapes. Thereafter, in a federal action initiated by the Church in the Central District of California, the District Court entered a temporary restraining order directing the IRS to file its copies of the tapes, and all related notes, with the federal court. n3 Those copies were subsequently returned to the Clerk of the state court.

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n2 The Commissioner of Internal Revenue, as the delegate of the Secretary of the Treasury, has broad authority to examine the accuracy of federal tax returns. See generally Donaldson v. United States, 400 U.S. 517, 523-525, 27 L. Ed. 2d 580, 91 S. Ct. 534 (1971). Section 7602(a) of the Internal Revenue Code authorizes the Secretary to summon any person to provide documents relevant to such an examination:
"For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized --
"(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry." 26 U.S. C. §  7602(a).
n3 Church of Scientology v. Armstrong, No. CV 84-9003-HLH (CD Cal., Nov. 27, 1984).

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 [***5]  On January 18, 1985, the IRS commenced this proceeding by filing a petition to enforce the summons that had previously been served on the state-court Clerk. n4 The Church intervened and opposed production  of the tapes on the ground that they were protected by the attorney-client privilege. After protracted proceedings, including review in this Court, see United States v. Zolin, 491 U.S. 554, 105 L. Ed. 2d 469, 109 S. Ct. 2619 (1989), on April 15, 1991, the District Court entered an order enforcing compliance with the summons. The Church filed a timely notice of appeal and unsuccessfully sought a stay of that order. While the appeal was pending, copies of the tapes were delivered to the IRS. Thereafter, the Court of Appeals ordered the Church to show cause why its appeal  [*12]  should not be dismissed as moot. After briefing on the mootness issue, the court dismissed the appeal. It explained:
"Because it is undisputed that the tapes have been turned over to the IRS in compliance with the summons enforcement order, no controversy exists presently  [***6]  and this appeal is moot." United States v. Zolin, No. 91-55506 (CA9, Sept. 10, 1991).

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n4 Sections 7402(b) and 7604(a) confer jurisdiction on the federal district courts to enforce a summons issued by the IRS. Title 26 U.S. C. §  7402(b) provides:
"If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, or other data, the district court of the United States for the district in which such person resides or may be found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data."
Section 7604(a) is virtually identical to §  7402(b) except that the word "records" appears in §  7604(a).

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We granted the Church's petition for certiorari to consider the narrow question whether the appeal was properly dismissed as moot. 503 U.S. 905 (1992).
I

  It has long been settled that a federal court has no authority "to give opinions upon moot questions or abstract propositions, or to declare principles  [***7]  or rules of law which cannot affect the matter in issue in the case before it." Mills v. Green, 159 U.S. 651, 653, 40 L. Ed. 293, 16 S. Ct. 132 (1895). See also Preiser v. Newkirk, 422 U.S. 395, 401, 45 L. Ed. 2d 272, 95 S. Ct. 2330 (1975); North Carolina v. Rice, 404 U.S. 244, 246, 30 L. Ed. 2d 413, 92 S. Ct. 402 (1971). For that reason, if an event occurs while a case is pending on appeal that makes it impossible for the court to grant "any effectual relief whatever" to a prevailing party, the appeal must be dismissed.  Mills, 159 U.S. at 653. In this case, after the Church took its appeal from the April 15 order, in compliance with that order copies of the tapes were delivered to the IRS. The Government contends that it was thereafter impossible for the Court of Appeals to grant the Church any effectual relief. We disagree.
 [**450]  

  While a court may not be able to return the parties to the status quo ante -- there is nothing a court can do to withdraw all knowledge or information that IRS agents may have acquired by examination of the tapes -- a court can fashion some form of meaningful relief in circumstances such as  [*13]  these. Taxpayers have an obvious possessory interest in their records. When the Government has obtained such materials as a result  [***8]  of an unlawful summons, that interest is violated and a court can effectuate relief by ordering the Government to return the records. Moreover, even if the Government retains only copies of the disputed materials, a taxpayer still suffers injury by the Government's continued possession of those materials, namely, the affront to the  taxpayer's privacy. A person's interest in maintaining the privacy of his "papers and effects" is of sufficient importance to merit constitutional protection. n5 Indeed, that the Church considers the information contained on the disputed tapes important is demonstrated by the long, contentious history of this litigation. Even though it is now too late to prevent, or to provide a fully satisfactory remedy for, the invasion of privacy that occurred when the IRS obtained the information on the tapes, a court does have power to effectuate a partial remedy by ordering the Government to destroy or return any and all copies it may have in its possession. The availability of this possible remedy is sufficient to prevent this case from being moot. n6

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n5 The Fourth Amendment provides:
"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."
n6 Petitioner also argues that a court can effectuate further relief by ordering the IRS to refrain from any future use of the information that it has derived from the tapes. Such an order would obviously go further towards returning the parties to the status quo ante than merely requiring the IRS to return the tapes and all copies thereof. However, as there is no guarantee that the IRS will in fact use the information gleaned from the tapes, it could be argued that such an order would be an impermissible advisory opinion. Cf.  G. M. Leasing Corp. v. United States, 429 U.S. 338, 359, 50 L. Ed. 2d 530, 97 S. Ct. 619 (1977) (suppression of fruits of illegal IRS search "premature" as issue can be considered "if and when proceedings arise in which the Government seeks to use the documents or information obtained from them"). But see FTC v. Gibson Products of San Antonio, Inc., 569 F.2d 900, 903 (CA5 1978) (court can effectuate relief, despite compliance with FTC subpoena, by requiring FTC to return subpoenaed documents and forbidding FTC to use materials in adjudicatory hearing). Because we are concerned only with the question whether any relief can be ordered, we leave the "future use" question for another day. For now, we need only hold that this case is not moot because a court has power to order the IRS to return or destroy any copies of the tapes that it may have in its possession.

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 [*14]   [***9]   [***10]  The Government argues, however, that these basic principles are inapplicable in IRS summons enforcement proceedings because of the particular nature of the statute governing such proceedings. Reasoning from the premise that federal courts are empowered to consider only those matters within their jurisdiction, the Government argues that in IRS summons enforcement proceedings the subject-matter jurisdiction of the district court is limited to determining only whether the court should "compel . . . production of" the information requested by the summons. 26 U.S. C. § §  7402(b), 7604(a). See n. 4, supra. Once the court has answered that question and compliance has occurred, there is nothing more for the district court to decide and the jurisdiction of the district court evaporates. 

 We think the Government misconceives the inquiry in this case. The Government may or may not be right that under § §  7402(b) and 7604(a) the jurisdiction of the district court is limited to those matters directly related to whether or not the summons should be enforced. Indeed, the scope of the district court's jurisdiction under those provisions was the issue over which  [**451]  this Court deadlocked in United  [***11]  States v. Zolin, 491 U.S. 554, 105 L. Ed. 2d 469,  109 S. Ct. 2619 (1989). n7 The question presented in the  [*15]  current incarnation of this case is whether there was jurisdiction in the appellate court to review the allegedly unlawful summons enforcement order. On that question, the Government's elaborate statutory argument is largely irrelevant. There is nothing in the statute to suggest that Congress sought to preclude appellate review of district court enforcement orders. To the contrary, we have expressly held that IRS summons enforcement orders are subject to appellate review. See Reisman v. Caplin, 375 U.S. 440, 449, 11 L. Ed. 2d 459, 84 S. Ct. 508 (1964). Thus, whether or not there is jurisdiction in the appellate court to review the District Court's order turns not on the subject matter of Congress' jurisdictional grant to the district courts, but on traditional principles of justiciability, namely, whether an intervening event has rendered the controversy moot. And, as we have already explained, this case is not moot because if the summons were improperly issued or enforced a court could order that the IRS' copies of the tapes be either returned or destroyed.

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n7 In Zolin, the District Court enforced the IRS summons, but placed restrictions on the IRS' ability to disclose the summoned materials to any other government agency. The Ninth Circuit affirmed, United States v. Zolin, 809 F.2d 1411, 1416-1417 (1987), and we granted certiorari in part to consider whether the District Court, in conditioning its enforcement of the IRS summons, exceeded its jurisdiction under § §  7402(b) and 7604(a).  Zolin, 491 U.S. at 556. We were evenly divided on that question and therefore affirmed the Ninth Circuit.  Id., at 561. The issue still divides the lower courts. Compare United States v. Zolin, 809 F.2d at 1416-1417, and United States v. Author Services, Inc., 804 F.2d 1520, 1525-1526 (CA9 1986) (district court has "considerable" discretion to set terms of enforcement order), opinion amended, 811 F.2d 1264 (1987), with United States v. Barrett, 837 F.2d 1341 (CA5 1988) (en banc) (district court lacks authority to "conditionally enforce" IRS summons; inquiry limited to single question of whether summons should be enforced), cert. denied, 492 U.S. 926, 106 L. Ed. 2d 609, 109 S. Ct. 3264 (1989).

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 [***12]  II

 We recognize that several Courts of Appeals have accepted the Government's argument in IRS enforcement proceedings, n8 but the force of that line of authority is matched  [*16]  by a similar array of decisions reaching a contrary conclusion in proceedings enforcing Federal Trade Commission (FTC) discovery requests. n9 There is no significant  [**452]  difference between the governing statutes that can explain  the divergent interpretations. n10 Nor is there any reason to conclude that  [*17]  production of records relevant to a tax investigation should have mootness consequences that production of other business records does not have. Moreover, in construing these provisions of the Internal Revenue Code, the Court has considered it appropriate to rely on its earlier cases involving other statutes, including the Federal Trade Commission Act. See United States v. Powell, 379 U.S. 48, 57, 13 L. Ed. 2d 112, 85 S. Ct. 248 (1964) (citing United States v. Morton Salt Co., 338 U.S. 632, 642-643, 94 L. Ed. 401, 70 S. Ct. 357 (1950)).

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n8 United States v. Kersting, 891 F.2d 1407, 1410, n. 8 (CA9 1989), cert. denied, 498 U.S. 812, 112 L. Ed. 2d 25, 111 S. Ct. 49 (1990); Hintze v. IRS, 879 F.2d 121, 124-125 (CA4 1989); United States v. Church of World Peace, 878 F.2d 1281 (CA10 1989); United States v. Sherlock, 756 F.2d 1145, 1146-1147 (CA5 1985); United States v. First Family Mortgage Corp., 739 F.2d 1275, 1278-1279 (CA7 1984); United States v. Kis, 658 F.2d 526, 533 (CA7 1981), cert. denied, 455 U.S. 1018 (1982); United States v. Equity Farmers Elevator, 652 F.2d 752 (CA8 1981); United States v. Silva & Silva Accountancy Corp., 641 F.2d 710, 711 (CA9 1981); United States v. Deak-Perera Int'l Banking Corp., 610 F.2d 89 (CA2 1979); Kurshan v. Riley, 484 F.2d 952 (CA4 1973); United States v. Lyons, 442 F.2d 1144, 1145 (CA1 1971). But see Gluck v. United States, 771 F.2d 750 (CA3 1985).
n9 See FTC v. Gibson Products of San Antonio, Inc., 569 F.2d at 903 (compliance with district court order enforcing FTC subpoena does not moot appeal; court can effectuate relief by requiring FTC to return subpoenaed documents and forbidding FTC from using materials in adjudicatory hearing); FTC v. Ernstthal, 197 U.S. App. D.C. 174, 175, 607 F.2d 488, 489 (1979) (compliance with FTC subpoena does not moot appeal where court can order FTC to return subpoenaed documents); Atlantic Richfield Co. v. FTC, 546 F.2d 646, 650 (CA5 1977) (same); FTC v. Browning, 140 U.S. App. D.C. 292, 293-294, n. 1, 435 F.2d 96, 97-98, n. 1 (1970) (same). Cf.  FTC v. Invention Submission Corp., 296 U.S. App. D.C. 124, 127, n. 1, 965 F.2d 1086, 1089, n. 1 (1992) (compliance with district court order enforcing FTC civil investigative demand pursuant to 15 U.S. C. §  57b-1(e) does not moot appeal as court could order FTC "to return responsive materials and to destroy any records derived from them"); Casey v. FTC, 578 F.2d 793 (CA9 1978) (action seeking to enjoin FTC investigation presents live controversy despite parties' compliance with FTC subpoena as appellate court can order FTC to return wrongfully subpoenaed records). See also Government of Territory of Guam v. Sea-Land Service, Inc., 294 U.S. App. D.C. 292, 295, 958 F.2d 1150, 1153 (1992) (compliance with district court order enforcing Federal Maritime Commission discovery order does not moot appeal where party seeks return of discovered materials).
There is no merit to the Government's contention that the FTC cases are distinguishable in that they involve adjudicative, as opposed to investigative, subpoenas. While Gibson Products involved an adjudicative subpoena, Invention Submission, Casey, and Atlantic Richfield all involved investigative subpoenas.
n10 In fact, the summons enforcement provisions of the Internal Revenue Code "closely parallel" the corresponding provisions of the Federal Trade Commission Act. See Handler, Recent Antitrust Developments -- 1964, 63 Mich. L. Rev. 59, 90 (1964). Section 9 of the FTC Act provides, in pertinent part:
"Any of the district courts of the United States . . . may, in case of contumacy or refusal to obey a subpoena issued to any person, partnership, or corporation issue an order requiring such person, partnership, or corporation . . . to produce documentary evidence if so ordered . . . ." 38 Stat. 722, as amended, 15 U.S. C. §  49.
In the words of Professor Handler:
"Section 7602 of the Internal Revenue Code authorizes the Secretary of the Treasury or his delegate to summon taxpayers or other witnesses to testify and to produce relevant and material documents. Section 9 of the FTC Act grants the same power to the Commission. Should a recipient of a summons or subpoena refuse to comply, both statutes afford the same enforcement procedures. In neither case is the administrative subpoena self-executing: obedience can be obtained only by court order. In addition, both statutes, which are in pari materia, make it a criminal offense to 'neglect' to appear or to produce subpoenaed documents." 63 Mich. L. Rev., at 91 (footnotes omitted).

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 [***13]   [***14]   [***15]  

   We therefore conclude that the appeal was improperly dismissed as moot. In so concluding we express no opinion on the merits of the Church's argument that the Government did not establish an adequate evidentiary basis to support the District Court's determination that the tapes fell within the crime-fraud exception to the attorney-client privilege. Nor do we express any opinion about the res judicata contention advanced in the Government's brief in opposition to the petition for certiorari. Brief for United States in Opposition  [*18]  13-14. We simply hold that compliance with the summons enforcement order did not moot the Church's appeal. n11 

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n11 In reaching this conclusion, we reject petitioner's "fall back" argument that even if compliance with a summons enforcement order by the subject of the IRS investigation moots an appeal, compliance by a disinterested third party -- here, the Clerk of the Los Angeles Superior Court -- does not. Brief for Petitioner 25-34; Reply Brief for Petitioner 16-18. We agree with the Government that a "difference in the method of compliance does not create a distinction for the purpose of the constitutional case or controversy requirement." Brief for United States 30. This case presents a justiciable controversy not because a third party complied with the summons enforcement order, but because petitioner has a stake in the outcome of the proceeding and a federal court can effectuate relief should petitioner prevail on the merits. 

  There is a distinction in the law between the enforcement of discovery orders directed at parties and the enforcement of discovery orders directed at disinterested third parties, but that distinction derives from concerns regarding finality, not mootness. As a general rule, a district court's order enforcing a discovery request is not a "final order" subject to appellate review. A party that seeks to present an objection to a discovery order immediately to a court of appeals must refuse compliance, be held in contempt, and then appeal the contempt order. See United States v. Ryan, 402 U.S. 530, 29 L. Ed. 2d 85, 91 S. Ct. 1580 (1971). However, under the so-called Perlman doctrine, see Perlman v. United States, 247 U.S. 7, 62 L. Ed. 950, 38 S. Ct. 417 (1918), a discovery order directed at a disinterested third party is treated as an immediately appealable final order because the third party presumably lacks a sufficient stake in the proceeding to risk contempt by refusing compliance. Ibid. See generally 15B C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure §  3914.23, pp. 156-167 (2d ed. 1992). This distinction has no bearing on this case because a district court order enforcing an IRS summons is an appealable final order. See Reisman v. Caplin, 375 U.S. 440, 11 L. Ed. 2d 459, 84 S. Ct. 508 (1964). There is no "third-party exception" because there is no general rule barring immediate appeal of IRS summons enforcement orders.

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  [**453]  The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
 [***16]  It is so ordered.  

13 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, ET AL., PETITIONERS V. USDC CD CALIFORNIA (VICKI J. AZNARAN, ET AL., REAL PARTIES IN INTEREST) 

91-1376 

SUPREME COURT OF THE UNITED STATES 

504 U.S. 940; 112 S. Ct. 2273; 1992 U.S. LEXIS 3146; 119 L. Ed. 2d 200; 60 U.S.L.W. 3798 

 May 26, 1992, Decided 

PRIOR HISTORY:
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.  

JUDGES:
 [*1]  Rehnquist, White, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas.  

OPINION:

The petition for writ of certiorari is denied.  

14 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY V. UNITED STATES, ET AL.  

91-946 

SUPREME COURT OF THE UNITED STATES 

503 U.S. 934; 112 S. Ct. 1471; 1992 U.S. LEXIS 1701; 117 L. Ed. 2d 615; 60 U.S.L.W. 3652 

 March 23, 1992, Decided 

JUDGES:
 [*1]  Rehnquist, White, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas.  

OPINION:

The motions of petitioners to dispense with printing the joint appendix are granted.  

15 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY V. UNITED STATES, ET AL.  

91-946 

SUPREME COURT OF THE UNITED STATES 

503 U.S. 905; 112 S. Ct. 1261; 1992 U.S. LEXIS 1397; 117 L. Ed. 2d 490; 60 U.S.L.W. 3598 

March 2, 1992, Decided 

JUDGES:
 [*1]  Rehnquist, White, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter, Thomas.  

OPINION:

The petition for writ of certiorari is granted.  

16 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, PETITIONER v. UNITED STATES AND SANDRA B. BAKER 

No. 90-1467 

SUPREME COURT OF THE UNITED STATES 

500 U.S. 952; 111 S. Ct. 2258; 1991 U.S. LEXIS 3312; 114 L. Ed. 2d 711; 59 U.S.L.W. 3810 

June 3, 1991 

PRIOR HISTORY:
 [*1]  
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.  

JUDGES:
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter.  

OPINION:

The petition for writ of certiorari is denied.  

17 of 133 DOCUMENTS 

CH. OF SCIENTOLOGY OF CALIFORNIA, PETITIONER v. WOLLERSHEIM, LARRY 

No. 89-1361 

SUPREME COURT OF THE UNITED STATES 

499 U.S. 914; 111 S. Ct. 1298; 1991 U.S. LEXIS 1701; 113 L. Ed. 2d 234; 59 U.S.L.W. 3635 

March 18, 1991 

PRIOR HISTORY:
 [*1]  ON PETITION FOR WRIT OF CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT.  

JUDGES:
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter.  

OPINION:

The petition for a writ of certiorari is granted. The judgment is vacated and the case is remanded to the Court of Appeal of California, Second Appellate District, for further consideration in light of Pacific Mutual Life Insurance Company v. Haslip, 499 U.S.    (1991).  

18 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Petitioner v. UNITED STATES, et al.  

No. 90-987 

SUPREME COURT OF THE UNITED STATES 

499 U.S. 920; 111 S. Ct. 1309; 1991 U.S. LEXIS 1615; 113 L. Ed. 2d 244; 59 U.S.L.W. 3636 

March 18, 1991 

PRIOR HISTORY:
 [*1]  PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.  

JUDGES:
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy, Souter.  

OPINION:

The petition for writ of certiorari is denied.  

19 of 133 DOCUMENTS 

WOLLERSHEIM, LARRY, PETITIONER v. CH. OF SCIENTOLOGY OF CALIFORNIA 

No. 89-1367 

SUPREME COURT OF THE UNITED STATES 

495 U.S. 910; 110 S. Ct. 1937; 1990 U.S. LEXIS 2113; 109 L. Ed. 2d 300; 58 U.S.L.W. 3678 

April 23, 1990 

PRIOR HISTORY:
 [*1]  
ON PETITION FOR WRIT OF CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT. Reported below: 212 Cal. app. 2d 872, 260 Cal. Rptr. 331. 

DISPOSITION:
Certiorari granted.  

JUDGES:
 
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy 

OPINION:

The petition for a writ of certiorari is denied. Justice Brennan took no part in the consideration or decision of this petition.  

20 of 133 DOCUMENTS 

CH. OF SCIENTOLOGY OF CALIFORNIA, PETITIONER v. WOLLERSHEIM, LARRY 

No. 89-1361 

SUPREME COURT OF THE UNITED STATES 

495 U.S. 902; 110 S. Ct. 1920; 1990 U.S. LEXIS 2175; 109 L. Ed. 2d 284; 58 U.S.L.W. 3677 

April 23, 1990 

PRIOR HISTORY:
Ct. App. Cal., 2d App. Dist.  

DISPOSITION:
Motion granted.  

JUDGES:
 [*1]  
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy 

OPINION:

The motion of National Council of Churches of Christ in the U.S.A., et al. for leave to file a brief as amici curiae is granted. Justice Brennan took no part in the consideration or decision of this motion.  

21 of 133 DOCUMENTS 

Church of Scientology of California v. CIR 

No. 87-1377 

SUPREME COURT OF THE UNITED STATES 

486 U.S. 1015; 108 S. Ct. 1752; 1988 U.S. LEXIS 2087; 100 L. Ed. 2d 214; 56 U.S.L.W. 3790 

May 16, 1988 

PRIOR HISTORY:
C.A. 9th Cir.; Reported below: 823 F. 2d 1310. 

DISPOSITION:
Certiorari denied.  

JUDGES:
 [*1]  
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia, Kennedy 

OPINION:

The petition for a writ of certiorari is denied. Justice Brennan took no part in the consideration or decision of this petition.  

22 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA v. INTERNAL REVENUE SERVICE 

No. 86-472 

SUPREME COURT OF THE UNITED STATES 

484 U.S. 9; 108 S. Ct. 271; 1987 U.S. LEXIS 4689; 98 L. Ed. 2d 228; 56 U.S.L.W. 4003; 87-2 U.S. Tax Cas. (CCH) P9604; 60 A.F.T.R.2d (RIA) 5832 

Argued October 5, 1987   
November 10, 1987 

PRIOR HISTORY:
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT 

DECISION:
Removal of material identifying particular taxpayer held not to deprive federal tax "return information" of confidentiality protection under 6103 of Internal Revenue Code (26 USCS 6103). 

SUMMARY:
The Freedom of Information Act (FOIA) (5 USCS 552) generally permits disclosure of federal agency records, but 552(b)(3) provides an exception for materials specifically exempted from disclosure by other statutes of a type described in 552(b)(3). In turn, 6103 of the Internal Revenue Code (26 USCS 6103) generally protects the confidentiality of federal tax "return information," as the term is defined in 6103(b)(2), but a portion of 6103(b)(2), added by the 1976 Haskell amendment, provides that the term "return information" does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer. A church filed an FOIA request with the Internal Revenue Service (IRS), and then, dissatisfied with the response, filed suit against the IRS in the United States District Court for the District of Columbia to compel the release of material. The District Court, after an in-chambers review of representative documents, held that the IRS had reasonably and correctly limited its search for, and disclosure of, materials requested by the church (569 F Supp 1165). On appeal, both parties agreed that 6103 was the sort of exemption statute referred to in 552(b)(3), but the church contended that the Haskell amendment excepted from the definition of "return information" all material in the files of the IRS which could be redacted to delete those parts which would identify a particular taxpayer. The United States Court of Appeals for the District of Columbia Circuit, sitting en banc, ruled that (1) the mere deletion of a taxpayer's name or other identifying data from "return information" materials was not enough of a reformulation by the Federal Government to remove the materials, under the Haskell amendment, from the confidentiality protection of 6103; and (2) the application of this holding to the facts of the case at hand, and the other issues presented by the case, would be left to the disposition of a panel of the Court of Appeals (253 App DC 85, 792 F2d 153).
On certiorari, the United States Supreme Court affirmed. In an opinion by Rehnquist, Ch. J., expressing the unanimous view of the six participating members of the court, it was held that (1) as with a federal tax return itself, the removal by the IRS of material identifying a particular taxpayer does not, despite the provisions of the Haskell amendment, deprive federal tax "return information" of its confidentiality protection under 6103; and (2) since the proposed deletion would not make otherwise protected return information disclosable, the IRS had no duty under FOIA to undertake such redaction.
Brennan and Scalia, JJ., did not participate.  

SYLLABUS:

 [***1]  
Section 6103(a) of the Internal Revenue Code provides that tax returns and "return information" shall be confidential and shall not be disclosed except as authorized.  "Return information" is defined in §  6103(b)(2) to include a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, tax payments, or any other data with respect to a return or to the determination of the existence or amount of liability.  However, §  6103(b)(2) also contains the proviso, known as the Haskell amendment, that "return information" does not include data "in a form" which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.  Upon the Internal Revenue Service's slow response to petitioner's Freedom of Information Act (FOIA) request for the production of numerous records containing information relating to it, petitioner filed suit in Federal District Court to compel release of the materials.  The court held that the IRS had correctly limited its search for and disclosure of the requested materials, and the Court [***2]  of Appeals affirmed, holding that the Haskell amendment's "in a form" phrase contemplates agency reformulation of return information into a statistical study or some other composite product and not merely the deletion of the taxpayer's name and other identifying data. 
Held: The Haskell amendment does not exempt from §  6103(b)(2)'s definition of confidential "return information" material in IRS files which can be redacted to delete those parts which would identify a particular taxpayer.  If the mere removal of identifying details sufficed to put the information "in a form" envisioned by the amendment, the remainder of the protected categories of information included in §  6103(b)(2) would often be irrelevant, and the "in a form" phrase would itself be extremely awkward, confusing, and unnecessary.  Petitioner's contrary construction of the amendment is likewise belied by other provisions of §  6103 which set forth various exceptions to the general rule of confidentiality and recognize that "return information" remains such even when it does not identify a particular taxpayer.  Moreover, the legislative history also refutes petitioner's construction, since allowing the disclosure [***3]  of otherwise confidential return information merely by the redaction of identifying details would undercut §  6103's primary purpose of limiting access to tax filings.  In fact, the amendment was simply intended to permit continuation of the IRS's practice of releasing statistical studies and compilations that do not identify particular taxpayers.  Thus, since deletion of identifying data would not make otherwise protected return information discloseable, there is no merit to petitioner's contention that respondent has an FOIA duty to undertake such redaction. Pp. 14-18. 
 253 U.S. App. D.C. 85, 792 F. 2d 153, affirmed. 
REHNQUIST, C.J., delivered the opinion of the Court, in which all other Members joined, except BRENNAN and SCALIA, JJ., who took no part in the consideration or decision of the case.  

COUNSEL:
Michael Lee Hertzberg argued the cause for petitioner.  With him on the briefs were Eric M. Lieberman and Ellen J. Winner. 
Deputy Solicitor General Lauber [***4]  argued the cause for respondent.  With him on the brief were Solicitor General Fried, Acting Assistant Attorney General Mann, and Alan I. Horowitz. * 

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* David C. Vladeck and Alan B. Morrison filed a brief for Professor John L. Neufeld et al. as amici curiae urging reversal. 
John A. Powell, Stephen K. Strong, and David F. Stobaugh filed a brief for the American Civil Liberties Union et al. as amici curiae.

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JUDGES:
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor; Brennan and Scalia took no part in the consideration or decision of the case.  

OPINIONBY:
REHNQUIST 

OPINION:

 [*10]    [**272]  CHIEF JUSTICE REHNQUIST delivered the opinion of the Court. 

  Section 6103 of the Internal Revenue Code, 26 U.S.C. §  6103, lays down a general rule that "returns" and "return information" as defined therein shall be confidential. "Return information" is elaborately defined in §  6103(b)(2); immediately after that definition appears the following proviso, known as the Haskell amendment: 

"[B]ut such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." 

Petitioner Church of [***5]  Scientology of California, seeking disclosure under the Freedom of Information Act, contends that  [*11]  the Haskell amendment excepts from the definition of "return information" all material in the files of the Internal Revenue Service (IRS) which can be redacted to delete those parts which would identify a particular taxpayer.  Respondent IRS  in opposition argues that the mere redaction of identifying data will not, by virtue of the Haskell amendment, take the material out of the definition of "return information." We agree with the IRS. 
Petitioner filed a request with respondent of Information Act (FOIA), 5 U.S.C. §  552, for the production of numerous documents.  Among the materials sought by petitioner were "[c]opies of all information relating to or containing the names of, Scientology, Church of Scientology, any specific Scientology church or entity identified by containing the words Scientology, Hubbard and/or Dianetics in their names, L. Ron Hubbard or Mary Sue Hubbard in the form of written record, correspondence, document, memorandum, form, computor [sic] tape, computor [sic] program  [**273]  or microfilm, which is contained in" an extensive list of respondent's case files [***6]  and data systems.  FOIA Request Dated May 16, 1980, App. 20a-27a.  Petitioner also requested similar information from the offices and personal areas of a number of respondent's officials. 

 Dissatisfied by the slow response to its request, petitioner filed suit in the United States District Court for the District of Columbia to compel release of the materials.  In the District Court the parties agreed -- as they continue to agree here -- that §  6103 of the Internal Revenue Code is the sort of statute referred to by the FOIA in 5 U.S.C. §  552(b)(3) relating to matters that are "specifically exempted from disclosure by statute . . ."; thus, if §  6103 forbids the disclosure of material, it may not be produced in response to a request under the FOIA.  Respondent argued that many of the records were protected as "returns" or "return information" under §  6103.  Section 6103(a) provides that "[r]eturns and return information shall be confidential" and shall not be  [*12]  disclosed "except as authorized by this title." A "return" is defined in §  6103(b)(1) as "any tax or information return, declaration of estimated tax, or claim for refund" including supporting schedules, attachments, and [***7]  lists.  Section 6103(b)(2) then supplies a more extensive definition of "return information," which includes: 

"[A] taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense. . . ." 

After providing this detailed explanation of confidential "return information," §  6103(b)(2), as previously noted, continues: "but such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." This last clause -- the Haskell amendment -- was proposed as a floor amendment  by Senator Haskell [***8]  of Colorado and was adopted by a voice vote during the debate on the 1976 amendments to the Internal Revenue Code. 
The District Court, after an in camera review of representative documents, held that respondent had correctly limited its search for and disclosure of materials requested by petitioner.  See 569 F. Supp. 1165 (DC 1983). Petitioner appealed that decision to the United States Court of Appeals for the District of Columbia Circuit.  Following briefing and argument before a three-judge panel, the Court of Appeals  [*13]  sua sponte undertook en banc review of the meaning of the Haskell amendment and the modification it works upon §  6103(b)(2).  The Court of Appeals concluded that, by using the words "in a form," Congress contemplated "not merely the deletion of an identifying name or symbol on a document that contains return information, but agency reformulation of the return information into a statistical study or some other composite product . . . ." 253 U.S. App. D.C. 85, 92, 792 F. 2d 153, 160 (196) (en banc) (emphasis in original).  Thus, the court held, before respondent may produce documents otherwise protected, the Haskell amendment requires that some [***9]  modification have occurred in the form of the data contained in the documents.  "[M]ere deletion of the taxpayer's name or other identifying data is not enough, since that would render the reformulation requirement entirely duplicative of the nonidentification requirement." n1 Id., at 95, 792 F. 2d, at 163. 

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n1 The decision of the District of Columbia Circuit was thus in substantial agreement with the Seventh Circuit's opinion in King v. IRS, 688 F. 2d 488 (1982), and the Eleventh Circuit's determination in Currie v. IRS, 704 F. 2d 523 (1983). The Seventh Circuit concluded in King that §  6103 "protects from disclosure all nonamalgamated items listed in subsection (b)(2)(A), and that the Haskell Amendment provides only for the disclosure of statistical tabulations which are not associated with or do not identify particular taxpayers." 688 F. 2d, at 493. Similarly, in Currie the Eleventh Circuit held that the Haskell amendment does not obligate the IRS, in a suit under the FOIA, to delete identifying material from documents and release what would otherwise be return information. 704 F.2d, at 531-532. 
The Ninth Circuit, however, reached a different result in Long v. IRS, 596 F. 2d 362 (1979), cert. denied, 446 U.S. 917 (1980). In Long, the court found that the Haskell amendment removes from the category of protected return information any documents that do not identify a particular taxpayer once names, addresses, and similar details are deleted.  See 596 F. 2d, at 367-369.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [***10]  
 [**274]  We granted certiorari, 479 U.S. 1063 (1987), to consider the scope of the Haskell amendment and its relation to the  [*14]  confidentiality provisions of § §  6103(a) and (b). n2 Petitioner believes that the Haskell amendment makes significantly greater inroads on the definition of "return information" than did the Court of Appeals.  It makes two interrelated contentions: first, that the Haskell amendment  removes from the classification of "return information" all data which do not identify a particular taxpayer, and, second, that 5 U.S.C. §  552(b) -- requiring that "[a]ny reasonably segregable portion" of a record be provided to a requestor after deletion of the portions which are exempt -- compels respondent to redact "return information" in its files where possible so as to bring that material within the terms of the Haskell amendment.  We reject both of these arguments. 

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n2 The original panel applied the en banc decision to the search and disclosure undertaken by respondent.  See 253 U.S. App. D.C. 78, 792 F. 2d 146 (1986). Although many of the requested documents were protected as "return information," the panel found that the District Court had erred in accepting respondent's blanket assertion that all information responsive to petitioner's request in files unrelated to petitioner's California branch was exempt from disclosure. The panel remanded the case to District Court with instructions that respondent conduct a new search for information about the third parties identified by petitioner and justify any withholding of the information under the FOIA or §  6103.  See id., at 84-85, 792 F. 2d, at 152-153.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [***11]  
We are told by the IRS that, as a practical matter, "return information" might include the report of an audit examination, internal IRS correspondence concerning a taxpayer's claim, or a notice of deficiency issued by the IRS proposing an increase in the taxpayer's assessment.  Tr. of Oral Arg. 24-25.  Petitioner asserts that the segregation requirement of the FOIA, §  552(b), directs respondent to remove the identifiers from such documents as these and that, once the materials are purged of such identifiers, they must be disclosed because they no longer constitute return information described in §  6103(b)(2). 

 We find no support for petitioner's arguments in either the language of §  6103 or in its legislative history. In addition to  [*15]  the returns themselves, which are protected from disclosure by §  6103(b)(1), §  6103(b)(2) contains an elaborate description of the sorts of information related to returns that respondent is compelled to keep confidential. If the mere removal of identifying details from return information sufficed to put the information "in a form" envisioned by the Haskell amendment, the remainder of the categories included in §  6103(b)(2) would often be irrelevant.  [***12]  The entire section could have been prefaced by the simple instruction to respondent that the elimination of identifiers would shift related tax data outside the realm of protected return information. Respondent would then first determine whether the information could be redacted so as not to identify a taxpayer; only if it could not would the extensive list of materials that constitute "return information" become pertinent.  And if petitioner correctly interprets the intent of the Haskell amendment, Congress' drafting was awkward in the extreme.  The amendment exempts "data  [**275]  in a form" that cannot be associated with or otherwise identify a particular taxpayer.  A much more natural phrasing would omit the confusing and unnecessary words "in a form" and refer simply to data. 
Other provisions of §  6103 likewise belie petitioner's construction of the Haskell amendment.  Subsections (c) through (o) of §  6103 set forth various exceptions to the general rule that returns and return information are confidential and not to be disclosed.  These subsections provide that in some circumstances, and with special safeguards, returns and return information can be made available to congressional [***13]  committees, the President, state tax officials, and other federal agencies.  The subsections also recognize that "return information" remains such even when it does not identify a particular taxpayer.  Subsections 6103(f)(1), (2), and (4), for example, allow the release of returns and return information to congressional committees, but distinguish between return information that identifies a taxpayer and return information that does not.  Subsection (f) is thus  inconsistent with petitioner's  [*16]  theory that nonidentifying data cease to be return information at all. 
The legislative history of the Tax Reform Act of 1976, Pub. L. 94-455, 90 Stat. 1520, of which the amendments to §  6103 are a part, also indicates that Congress did not intend the statute to allow the disclosure of otherwise confidential return information merely by the redaction of identifying details.  One of the major purposes in revising §  6103 was to tighten the restrictions on the use of return information by entities other than respondent.  See S. Rep. No. 94-938, p. 318 (1976) ("[R]eturns and return information should generally be treated as confidential and not subject to disclosure except in those limited [***14]  situations delineated in the newly amended section 6103").  Petitioner's suggestion that the Haskell amendment was intended to modify the restrictions of §  6103 by making all nonidentifying return information eligible for disclosure would mean that the amendment was designed to undercut the legislation's primary purpose of limiting access to tax filings. 
The circumstances under which the Haskell amendment was adopted make us reluctant to credit it with this expansive purpose.  During debate on the Senate floor, Senator Haskell proposed that §  6103(b)(2) be amended to make clear that return information "does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." He then added this explanation of his proposal: 
"[T]he purpose of this amendment is to insure that statistical studies and other compilations of data now prepared by the Internal Revenue Service and disclosed by it to outside parties will continue to be subject to disclosure to the extent allowed under present law.  Thus the Internal Revenue Service can continue to release for research purposes statistical studies and compilations of data, such as [***15]  the tax model, which do not identify individual taxpayers. 
 [*17]  "The definition of 'return information' was intended to neither enhance nor diminish access now obtainable under the Freedom of Information Act to statistical studies and compilations of data by the Internal Revenue Service.  Thus, the addition by the Internal Revenue Service of easily deletable identifying information to the type of statistical study or compilation of data which, under its current practice, has [sic] been subject to disclosure, will not prevent disclosure of such study or compilation under the newly amended §  6103.  In such an instance, the identifying information would be deleted and disclosure of the statistical study or compilation of data be made." 122 Cong. Rec. 24012 (1976). 

After these remarks, the floor manager of the legislation, Senator Long, added that he would "be happy to take this amendment to  [**276]  conference.  It might not be entirely necessary, but it might serve a good purpose." The Haskell amendment was then passed by voice vote in the Senate and became part of the conference bill. 
We find it difficult to believe that Congress in this manner adopted an amendment which would  [***16]  work such an alteration to the basic thrust of  the draft bill amending §  6103.  The Senate's purpose in revising §  6103 was, as we have noted, to impose greater restrictions on the disclosure of tax data; a change in the proposed draft permitting disclosure of all return information after deletion of material identifying a particular taxpayer would have, it seems to us, at a minimum engendered some debate in the Senate and resulted in a rollcall vote.  More importantly, Senator Haskell's remarks clearly indicate that he did not mean to revise §  6103(b)(2) in this fashion.  He refers only to statistical studies and compilations, and gives no intimation that his amendment would require respondent to remove identifying details from material as it exists in its files in order to comply with its requirement.  All in all, we think this is a case where common sense suggests, by analogy to Sir Arthur Conan Doyle's "dog that  [*18]  didn't bark," that an amendment having the effect petitioner ascribes to it would have been differently described by its sponsor, and not nearly as readily accepted by the floor manager of the bill. 

  We thus hold that, as with a return itself, removal of identification [***17]  from return information would not deprive it of protection under §  6103(b).  Since such deletion would not make otherwise protected return information discloseable, respondent has no duty under the FOIA to undertake such redaction. The judgment of the Court of Appeals is accordingly 
Affirmed. 
JUSTICES BRENNAN and SCALIA took no part in the consideration or decision of this case.  

23 of 133 DOCUMENTS 

Founding Church of Scientology of Washington, D. C., Petitioner v. Director, Federal Bureau of Investigation, et al.  

No. 86-1733 

SUPREME COURT OF THE UNITED STATES 

484 U.S. 871; 108 S. Ct. 199; 1987 U.S. LEXIS 3846; 98 L. Ed. 2d 150; 56 U.S.L.W. 3247 

October 5, 1987 

PRIOR HISTORY:
C.A. D.C. Cir.
Reported below: 256 U.S. App. D.C. 54, 802 F.2d 1448 

DISPOSITION:
Certiorari denied.  

JUDGES:
 [*1]  
Rehnquist, White, Marshall, Blackmun, Stevens, O'Connor, Scalia 

OPINION:

The petition for a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit is denied.
Justice Brennan took no part in the consideration or decision of this petition.  

24 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, PETITIONER v. WOLLERSHEIM, LARRY 

No. 86-1082 

SUPREME COURT OF THE UNITED STATES 

481 U.S. 1023; 107 S. Ct. 1910; 1987 U.S. LEXIS 1771; 95 L. Ed. 2d 516; 55 U.S.L.W. 3713 

April 20, 1987 

PRIOR HISTORY:
Ct. App. Cal., 2d App. Dist.  

OPINION:

 [*1]  
Motions of National Association for the Advancement of Colored People and National Council of Churches of Christ in the U.S.A. for leave to file briefs as amicus curiae granted.  Certiorari denied.  JUSTICE BRENNAN took no part in the consideration or decision of these motions and this petition.  

25 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY V. IRS 

86-472 

SUPREME COURT OF THE UNITED STATES 

479 U.S. 1063; 107 S. Ct. 947; 1987 U.S. LEXIS 440; 93 L. Ed. 2d 996; 55 U.S.L.W. 3512 

January 27, 1987 

PRIOR HISTORY:
C.A.D.C. Cir. 
Reported below: 253 U.S. App. D. C. 85, 792 F. 2d 153. 

OPINION:

 [*1]  
Certiorari granted. JUSTICE BRENNAN and JUSTICE SCALIA took no part in the consideration or decision of this petition.  

26 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA v. WOLLERSHEIM.  

No. A-271.  

SUPREME COURT OF THE UNITED STATES 

479 U.S. 926; 107 S. Ct. 392; 1986 U.S. LEXIS 4453; 93 L. Ed. 2d 346; 55 U.S.L.W. 3315 

November 3, 1986 

OPINION:

 [*1]  
Application for stay, presented to JUSTICE O'CONNOR, and by her referred to the Court, is granted and the order entered by JUSTICE O'CONNOR on October 8, 1986, is continued pending the timely filing  [**347]  and disposition of a petition for writ of certiorari.  JUSTICE BRENNAN took no part in the consideration or decision of this order.  

27 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY FLAG SERVICE ORGANIZATION, INC. v. CITY OF CLEARWATER ET AL.  

No. 85-1553.  

SUPREME COURT OF THE UNITED STATES 

476 U.S. 1116; 106 S. Ct. 1973; 1986 U.S. LEXIS 3058; 90 L. Ed. 2d 656; 54 U.S.L.W. 3761 

May 19, 1986 

PRIOR HISTORY:
 [*1]  
C.A. 11th Cir. 
Reported below: 777 F. 2d 598. 

OPINION:

Certiorari denied.  

28 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA ET AL. v. SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES.  

No. 84-908.  

SUPREME COURT OF THE UNITED STATES 

469 U.S. 1211; 105 S. Ct. 1181; 1985 U.S. LEXIS 904; 84 L. Ed. 2d 329; 53 U.S.L.W. 3597 

February 19, 1985 *   
* JUSTICE POWELL took no part in the consideration or decision of the orders announced on this date. 

PRIOR HISTORY:
 [*1]  
C.A. 9th Cir.  

OPINION:

Certiorari denied.  

29 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF PORTLAND ET AL. v. RUDIE ET AL.  

No. 82-1882.  

SUPREME COURT OF THE UNITED STATES 

464 U.S. 932; 104 S. Ct. 335; 1983 U.S. LEXIS 2074; 78 L. Ed. 2d 305; 52 U.S.L.W. 3342 

October 31, 1983 

PRIOR HISTORY:
 [*1]  
Ct. App. Ore. 
Reported below: 59 Ore. App. 409, 650 P. 2d 191. 

OPINION:

Certiorari denied.  

30 of 133 DOCUMENTS 

CHRISTOFFERSON v. CHURCH OF SCIENTOLOGY MISSION OF DAVIS ET AL.  

No. 82-1036.  

SUPREME COURT OF THE UNITED STATES 

459 U.S. 1206; 103 S. Ct. 1196; 1983 U.S. LEXIS 3417; 75 L. Ed. 2d 439; 51 U.S.L.W. 3611 

February 22, 1983 

PRIOR HISTORY:
 [*1]  
Ct. App. Ore. 
Reported below: 57 Ore. App. 203, 644 P. 2d 577. 

OPINION:

Certiorari denied.  

31 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY MISSION OF DAVIS ET AL. v. CHRISTOFFERSON.  

No. 82-1025.  

SUPREME COURT OF THE UNITED STATES 

459 U.S. 1227; 103 S. Ct. 1234; 1983 U.S. LEXIS 3626; 75 L. Ed. 2d 468; 51 U.S.L.W. 3613 

February 22, 1983 

PRIOR HISTORY:
 [*1]  
Ct. App. Ore. 
Reported below: 57 Ore. App. 203, 644 P. 2d 577. 

OPINION:

Motion of Churches for Fairness for leave to file a brief as amicus curiae granted.  Certiorari denied.  

32 of 133 DOCUMENTS 

FOUNDING CHURCH OF SCIENTOLOGY OF WASHINGTON, D.C., INC. v. REGAN, SECRETARY OF THE TREASURY, ET AL.  

No. 81-1812.  

SUPREME COURT OF THE UNITED STATES 

456 U.S. 976; 102 S. Ct. 2242; 1982 U.S. LEXIS 2120; 72 L. Ed. 2d 851; 50 U.S.L.W. 3916 

May 17, 1982 

PRIOR HISTORY:
 [*1]  
C.A.D.C. Cir.  
Reported below: 216 U.S. App. D.C. 339, 670 F.2d 1158. 

OPINION:

Certiorari denied.  

33 of 133 DOCUMENTS 

FOUNDING CHURCH OF SCIENTOLOGY v. UNITED STATES.  

No. 81-1275.  

SUPREME COURT OF THE UNITED STATES 

456 U.S. 926; 102 S. Ct. 1971; 1982 U.S. LEXIS 1707; 72 L. Ed. 2d 441; 50 U.S.L.W. 3838 

April 19, 1982 

PRIOR HISTORY:
 [*1]  
C.A.D.C. Cir.  
Reported below: 215 U.S. App. D.C. 74, 667 F.2d 117. 

OPINION:

Certiorari denied.  

34 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA v. FOLEY ET AL.  

No. 80-1693.  

SUPREME COURT OF THE UNITED STATES 

452 U.S. 961; 101 S. Ct. 3110; 1981 U.S. LEXIS 2510; 69 L. Ed. 2d 972; 49 U.S.L.W. 3954 

June 22, 1981 

PRIOR HISTORY:
 [*1]  
C.A.D.C. Cir.  
Reported below: 205 U.S. App. D.C. 364, 640 F.2d 1335. 

OPINION:

Certiorari denied.  

35 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA v. UNITED STATES.  

No. 79-529.  

SUPREME COURT OF THE UNITED STATES 

444 U.S. 1043; 100 S. Ct. 729; 1980 U.S. LEXIS 524; 62 L. Ed. 2d 729 

January 21, 1980 

PRIOR HISTORY:
 [*1]  
C.A. 9th Cir.  
Reported below: 591 F. 2d 533. 

OPINION:

Certiorari denied.  

36 of 133 DOCUMENTS 

No. 78-1166.  CHURCH OF SCIENTOLOGY OF CALIFORNIA ET AL. v. BLUMENTHAL, SECRETARY OF THE TREASURY, ET AL.  

SUPREME COURT OF THE UNITED STATES 

441 U.S. 938; 99 S. Ct. 2153; 1979 U.S. LEXIS 1787; 60 L. Ed. 2d 1040 

May 14, 1979 

PRIOR HISTORY:
 [*1]  
Reported below: 460 F. Supp. 56. 

OPINION:

Affirmed on appeal from D.C.C.D. Cal.  MR. JUSTICE BLACKMUN and MR. JUSTICE STEVENS would note probable jurisdiction and set case for oral argument.  

37 of 133 DOCUMENTS 

No. 77-1568.  MISSOURI CHURCH OF SCIENTOLOGY v. STATE TAX COMMISSION OF MISSOURI ET AL.  

SUPREME COURT OF THE UNITED STATES 

439 U.S. 803; 99 S. Ct. 57; 1978 U.S. LEXIS 2470; 58 L. Ed. 2d 95 

October 2, 1978 

PRIOR HISTORY:
 [*1]  
Reported below: 560 S.W. 2d 837. 

OPINION:

Appeal from Sup. Ct. Mo. dismissed for want of substantial federal question.  MR. JUSTICE STEVENS would note probable jurisdiction and set case for oral argument.  

38 of 133 DOCUMENTS 

No. 77-1090.  FOUNDING CHURCH OF SCIENTOLOGY v. UNITED STATES.  

SUPREME COURT OF THE UNITED STATES 

435 U.S. 925; 98 S. Ct. 1491; 1978 U.S. LEXIS 1127; 55 L. Ed. 2d 519 

March 20, 1978 

PRIOR HISTORY:
 [*1]  
C.A. D.C. Cir.  
Reported below:     U.S. App. D.C.    , 572 F. 2d 321. 

OPINION:

Certiorari denied.  

39 of 133 DOCUMENTS 

No. 76-523.  CHURCH OF SCIENTOLOGY OF CALIFORNIA v. ALLARD.  

SUPREME COURT OF THE UNITED STATES 

429 U.S. 1091; 97 S. Ct. 1101; 1977 U.S. LEXIS 656; 51 L. Ed. 2d 537 

February 22, 1977 

PRIOR HISTORY:
 [*1]  
Ct. App. Cal., 2d App. Dist.  
Reported below: 58 Cal. App. 3d 439, 129 Cal. Rptr. 797. 

OPINION:

Certiorari denied.  

40 of 133 DOCUMENTS 

No. 51, Orig.  FOUNDING CHURCH OF SCIENTOLOGY v. CROMER ET AL.  

SUPREME COURT OF THE UNITED STATES 

404 U.S. 933; 92 S. Ct. 266; 1971 U.S. LEXIS 499; 30 L. Ed. 2d 246 

Nov. 9, 1971.  

OPINION:

 [*1]  
Motion for leave to file bill of complaint denied.  

41 of 133 DOCUMENTS 

No. 1175.  FOUNDING CHURCH OF SCIENTOLOGY v. UNITED STATES.  

SUPREME COURT OF THE UNITED STATES 

397 U.S. 1009; 90 S. Ct. 1237; 1970 U.S. LEXIS 2380; 25 L. Ed. 2d 422 

Mar. 30, 1970.  

PRIOR HISTORY:
 [*1]  
Ct. Cl.  Reported below: 188 Ct. Cl. 490, 412 F. 2d 1197. 

COUNSEL:
Leonard J. Linden for petitioner.  Solicitor General Griswold, Assistant Attorney General Walters, and Meyer Rothwacks for the United States.  

OPINION:

Certiorari denied.  

42 of 133 DOCUMENTS 

No. 598.  FOUNDING CHURCH OF SCIENTOLOGY OF WASHINGTON, D.C., ET AL. v. UNITED STATES.  

SUPREME COURT OF THE UNITED STATES 

396 U.S. 963; 90 S. Ct. 434; 1969 U.S. LEXIS 154; 24 L. Ed. 2d 427 

Dec. 8, 1969.  

PRIOR HISTORY:
 [*1]  
C.A. D.C. Cir.  Reported below: 133 U.S. App. D.C. 229, 409 F. 2d 1146. 

COUNSEL:
Morris J. Levin and Robert F. Sagle for petitioners.  Solicitor General Griswold, Assistant Attorney General Wilson, and Jerome M. Feit for the United States.  

OPINION:

Certiorari denied.  MR. JUSTICE DOUGLAS is of the opinion that certiorari should be granted.  

43 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation, Plaintiff-Counter-Defendant-Appellee, v. GRADY WARD, an individual, Defendant-counter-claimant-Appellant, and CHURCH OF SCIENTOLOGY INTERNATIONAL; HELENA KOBRIN; WARREN MCSHANE; EUGENE MARTIN INGRAM; DAVID MISCAVIGE; VERA WALLACE; THIERRY DUCHAUNAC; THOMAS R. HOGAN; ANDREW H. WILSON, Counter-defendants-Appellees.  

No. 98-16994 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1999 U.S. App. LEXIS 19937; Copy. L. Rep. (CCH) P27,963 

August 10, 1999 n2, Submitted

n2 The panel unanimously finds this case suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Accordingly, we deny Ward's request for oral argument. 

August 19, 1999, Filed 

NOTICE:
 [*1]  RULES OF THE NINTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

SUBSEQUENT HISTORY:
Reported in Table Case Format at: 1999 U.S. App. LEXIS 28701. 

PRIOR HISTORY:
Appeal from the United States District Court for the Northern District of California. D.C. No. CV-96-20207-RMW. Jeremy Fogel, District Judge, Presiding.  

DISPOSITION:
AFFIRMED.  

COUNSEL:
For RELIGIOUS TECHNOLOGY CENTER, Plaintiff - Appellee: Eric M. Lieberman, Esq., RABINOWITZ, BOUDIN, STANDARD, KRINSKY & LIEBERMAN, William M. Hart, PAUL, HASTINGS, JANOFSKY & WALKER, New York, NY.

For RELIGIOUS TECHNOLOGY CENTER, Plaintiff - Appellee: Helena K. Kobrin, Esq., MOXIN & KOBRIN, Los Angeles, CA.

GRADY WARD, Defendant-counter-claimant - Appellant, Pro se, Arcata, CA.

For RELIGIOUS TECHNOLOGY CENTER, Counter-defendant - Appellee: Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, William M. Hart, PAUL, HASTINGS, JANOFSKY & WALKER, New York, NY.

For RELIGIOUS TECHNOLOGY CENTER, Counter-defendant - Appellee: Thomas R. Hogan, Esq., Law Offices of Thomas R. Hogan, San Jose, CA.

For RELIGIOUS TECHNOLOGY CENTER, Counter-defendant - Appellee: Helena K. Kobrin, Esq., MOXIN & KOBRIN, Los Angeles, CA.  [*2]  

For CHURCH OF SCIENTOLOGY INTERNATIONAL, HELENA KOBRIN, WARREN MCSHANE, EUGENE MARTIN INGRAM, DAVID MISCAVIGE, VERA WALLACE, THIERRY DUCHAUNAC, THOMAS R. HOGAN, ANDREW H. WILSON, Counter-defendants - Appellees: No Appearance.  

JUDGES:
Before: BROWNING, SCHROEDER, and PREGERSON, Circuit Judges.  

OPINION:

MEMORANDUM n1

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as may be provided by 9th Cir. R. 36-3.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
Grady Ward appeals pro se the district court's order, final judgment and permanent injunction in a copyright infringement action brought against him by Religious Technology Center ("RTC"). We have jurisdiction pursuant to 28 U.S.C. §  1291. We review a district court's decision regarding the enforceability of a settlement agreement for an abuse of discretion. See Maynard v. City of San Jose, 37 F.3d 1396, 1401 (9th Cir. 1994). We affirm.
Because the parties agreed to allow the district court to reduce the [*3]  material terms of their settlement agreement to writing, and because no provision was made for Ward's final approval of the form of RTC's copyright notice, the district court's decision memorializing the settlement agreement was proper. See id. n3

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n3 Ward's remaining contentions lack merit.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
AFFIRMED. 

44 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation, Plaintiff-Counter-Defendant-Appellee, v. GRADY WARD, an individual, Defendant-counter-claimant-Appellant, and CHURCH OF SCIENTOLOGY INTERNATIONAL; HELENA KOBRIN; WARREN MCSHANE; EUGENE MARTIN INGRAM; DAVID MISCAVIGE; VERA WALLACE; THIERRY DUCHAUNAC; THOMAS R. HOGAN; ANDREW H. WILSON, Counter-defendants-Appellees.  

No. 98-16994 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

188 F.3d 514; 1999 U.S. App. LEXIS 28701 

August 10, 1999 n2, Submitted

n2 The panel unanimously finds this case suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). Accordingly, we deny Ward's request for oral argument. 

August 19, 1999, Filed 

NOTICE:
 [*1]  DECISION WITHOUT PUBLISHED OPINION 

PRIOR HISTORY:
Appeal from the United States District Court for the Northern District of California. D.C. No. CV-96-20207-RMW. Jeremy Fogel, District Judge, Presiding.  

Reported in Full-Text Format at: 1999 U.S. App. LEXIS 19937. 

OPINION:

AFFIRMED.  

45 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious Organization, Plaintiff-Appellant, v. STEVE FISHMAN; UWE GEERTZ, Defendants-Appellees.  

No. 94-55780 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1996 U.S. App. LEXIS 17676 

November 14, 1995, Argued and Submitted, Pasadena, California 

July 11, 1996, FILED 

NOTICE:
 [*1]  RULES OF THE NINTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

SUBSEQUENT HISTORY:
Reported in Table Case Format at: 91 F.3d 151, 1996 U.S. App. LEXIS 36569. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. D.C. No. CV-91-064260-HLH (Tx). Harry L. Hupp, District Judge, Presiding.  

DISPOSITION:
Case DISMISSED 

COUNSEL:
For CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious Organization, Plaintiff - Appellant: William T. Drescher, Esq., Calabasas, CA. Timothy Bowles, Esq., Kendrick L. Moxon, Esq., BOWLES & HAYES, Los Angeles, CA.

For STEVEN FISHMAN, Defendant - Appellee: Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, New York, NY. Steven Fishman, Pro se, Ft. Lauderdale, FL.

For UWE W. GEERTZ, Defendant - Appellee: Ford Greene, Esq., San Anselmo, CA. Uwe Geertz, Pro se, Fort Lauderdale, FL.  

JUDGES:
Before: HALL and NOONAN, Circuit Judges, SHUBB, ** District Judge.

** Hon. William B. Shubb, United States District Judge for the Eastern District of California, sitting by designation. 

OPINION:

MEMORANDUM *

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
* This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [*2]  
Plaintiff-Appellant the Church of Scientology International, ("Church"), appeals from the district court's orders denying their motions to seal, or in the alternative, strike parts of the record below. We dismiss for lack of jurisdiction.
I.
This appeal arises from a series of post-judgment motions to seal, or in the alternative strike, parts of the record filed below. Although the chronology of the case is somewhat complex and torturous, a brief summation is relevant for the disposition of this appeal.
A. Motions to Seal, or in the Alternative Strike, Parts of the Record
On January 31, 1994, the Church filed a motion to strike, or in the alternative seal, declarations filed by Steve Fishman and Graham Berry. Pls.' Mot. to Strike or Seal dated Jan. 31, 1994. (Docket # 491). A minute order filed February 28, 1994 states that the matter was heard and taken under submission by the court. Minute Order of Feb. 28, 1994 (Docket # 545).
On March 10, 1994, the Church filed a second motion to strike or seal-- this time requesting the court to seal re-created versions of the Church's confidential upper level scriptures that were included in various pleadings, declarations [*3]  and exhibits submitted by defendants in the underlying action. Pls.' Mot. to Strike or Seal dated Mar. 10, 1994 (Docket # 580). In all, the Church delineated over 150 documents which it believed should be struck or sealed. (Exh. A to Mot.) A hearing on the motion was set for April 4, 1994.
Also on March 10, 1994, defendants filed a motion for costs, attorney's fees and Rule 11 sanctions against the Church. Appended to defendants' motion were a number of declarations and affidavits executed by defendants and other individuals. Defts' Mot. for Costs (Docket # 575).
On March 21, 1994, the Church filed opposition papers to defendants' motion for costs. Pls.' Opp. to Mot. for Costs (Docket # 597). In the text of the opposition papers, the Church argued that defendants had filed "5,000 pages of irrelevant, scandalous, false and largely hearsay materials in support of their motion for [fees and costs]." Id. at 2. The Church contended that "it therefore is necessary for the Court once again to strike the defendants' massive and improper filing, and to sanction defendants for it." Id. at 3. The Church did not file a separate motion to strike defendants' supporting materials; it [*4]  merely included its request in the body of its opposition papers.
On April 4, 1994, the district court issued an order granting in part and denying in part the motion for costs, attorney's fees and other litigation expenses. The order concludes with the following ruling: "Plaintiff's motion for continuation of confidentiality order and for sealing is denied. Insufficient justification is shown for the mass sealing order requested." Order of April 4, 1994 at 2. No specific references to any of the motions or requests to seal-- i.e. the January 31 motion to seal, the March 10 motion to seal or the March 21 request to seal that was embodied in the Church's opposition brief-- are included in the court's order.
B. Motions for Reconsideration and Notices of Appeal
The next day, April 5, 1994, the Church filed a motion for reconsideration of the court's April 4 order. Specifically, the Church requested reconsideration of its request to strike or seal twenty declarations appended to defendants' motion for attorneys' fees and costs. Mot. for Reconsideration dated Apr. 5, 1994 (Docket # 646, ER 125). A hearing date was set for May 2, 1994.
On April 11, 1994, the Church filed two [*5]  additional pleadings: a second motion for reconsideration and an ex parte application. In this second reconsideration motion, the Church argued that the court should reverse its April 4, 1994 order regarding the church's motion to strike recreated versions of the church's upper-level scriptures. Mot. for Reconsideration dated Apr. 11, 1994 (Docket # 649). The ex parte application requested that the court seal the twenty declarations appended to defendants' pleadings until the May 2, 1994 hearing date. Ex Parte Application dated Apr. 11, 1994 (ER 208).
On April 12, 1994, the court issued a minute order denying the ex parte application to seal certain documents and denying the motion for reconsideration of the order denying sealing of various documents. Minute Order dated Apr. 12, 1994 (Docket # 703/705?) On April 13, 1994, the Church filed a notice of appeal. The notice challenges:
that portion of the Court's order entered April 4, 1994 which denied CSI's motion to seal re-created versions of plaintiff's confidential upper level scriptures and from the court's order dated April 12, 1994 denying the Church's motion for reconsideration of that portion of the April 4, 1994 order concerning [*6]  the scriptures.

Not. of Appeal dated Apr. 13, 1994. The notice goes on to state that
This appeal is so limited and is not taken from any other order of this Court, including that other portion of the order entered April 4, 1994 that denied CSI's motion to strike or seal twenty of defendants' declarations in the court's file, said other portion of that order currently being subject to CSI's motion for reconsideration scheduled to be heard May 2, 1994.

Id. n1

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 On May 4, 1994, the Church submitted a motion to expedite this appeal, designated as No. 94-55443. The motion was granted and on August 30, 1994, the panel in that appeal issued a memorandum disposition remanding the matter so the district court could make factual findings as to why it decided not to seal the record. Church of Scientology, Inc. v. Fishman, 1994 U.S. App. LEXIS 23848 (9th Cir. 1994).

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
On April 18, 1994, the court issued a second order again denying the ex parte application to seal documents and also denying the motion [*7]  for reconsideration. In its order, the court mentioned only one reconsideration motion; it did not specify whether it was denying the April 5 reconsideration motion regarding the twenty declarations or the April 11 reconsideration motion regarding the motion to seal substantial portions of the court file.
The following day, on April 19, 1994, the court denied the Church's January 31, 1994 motion to strike certain declarations filed by defendants.
Finally, on May 18, 1994, the Church filed a second notice of appeal which challenged:
(a) the Court's order entered April 4, 1994 regarding denial of CSI's request to seal twenty (20) specified declarations in the Court's record and the Court's order entered April 18, 1994 which denied CSI's motion for reconsideration to alter the April 4, 1994 order, and to seal those 20 specified declarations in the Court's record and (b) the Court's April 19, 1994 order denying CSI's motion to strike or in the alternative to seal declarations of Steve Fishman and Graham Berry and denying CSI's motion to strike or in the alternative to seal declarations of Robert and Stacy Young.

That appeal, No. 94-55780, is currently before this court.  [*8]  
II.
Following oral argument, the court requested that parties submit letter briefs discussing the question of whether the court had jurisdiction over the second appeal, No. 94-55780.
In its brief, the Church argues that it was appealing from two separate, final orders: (1) the April 12, 1994 order denying the Church's motion for reconsideration of that section of the court's April 4, 1994 order denying the motion to seal the recreated versions of upper level scriptures, and (2) the April 18, 1994 order denying the Church's motion for reconsideration of that section of the court's April 4, 1994 order denying the request to seal the twenty declarations appended to defendants' motion for costs. This second appeal also includes an appeal of the April 19, 1994 order denying the motion to strike or seal Berry's and Fishman's declarations.
However, we find that the Church's notice of appeal was defective and therefore bars jurisdiction in this matter. Pursuant to Fed. R. App. P. 4(a)(4), a notice of appeal which is filed after entry of judgment, but before disposition of a motion for reconsideration pursuant to Rule 59 or Rule 60, is ineffective until the entry of the order disposing [*9]  of "the last such motion outstanding." Id.
The rule goes on to state that: "Appellate review of an order disposing of any of the above motions requires the party, in compliance with Appellate Rule 3(c), to amend a previously filed notice of appeal." Id. (emphasis added).
Here, the Church filed two notices of appeal. The first on April 5, 1994 and the second on May 18, 1994. At the time the Church filed the April 5, 1994 notice of appeal, its motion for reconsideration was still pending. Thus, the notice of appeal was ineffective. If the Church wished to have appellate review of the April 18, 1994 order denying its motion for reconsideration, as well as review of the April 19, 1994 order, the Church should have amended its previously filed notice of appeal. Fed. R. App. P. 4(a)(4). That is, the Church should have amended its April 5, 1994 notice of appeal to include the matters that it seeks to pursue in this second appeal.
We have found no reference in the record to suggest that the Church amended its notice of appeal in conformance with Rule 4(a)(4). Absent this amendment, we read Federal Rule of Appellate Procedure 4 as precluding this second appeal; the language of [*10]  the rule clearly states that appellate review "requires" amendment of a prematurely filed notice of appeal to include orders disposing of pending Rule 60 or Rule 59 motions. Moreover, it is well-established in this circuit that where a party fails to file a notice of appeal in conformance with FRAP 3(a) and FRAP 4, the court lacks jurisdiction over the appeal. Larez v. City of Los Angeles, 946 F.2d 630, 636 (9th Cir. 1991); Bird v. Reese, 875 F.2d 256, 257 (9th Cir. 1989).
The policy reasons supporting such a dismissal are analogous to those behind the concepts of res judicata and finality. Res judicata bars parties from relitigating issues that could have been raised in a prior proceeding. See In Re Jenson, 980 F.2d 1254, 1256 (9th Cir. 1992). Here, if the Church had amended its notice of appeal properly, the first panel could have considered these issues all at once thus avoiding piecemeal appeals.
The finality doctrine, as codified by 28 U.S.C. §  1291, also prevents parsing appeals. As the Supreme Court noted in its discussion of finality, "permitting piecemeal appeals would undermine the independence of the district judge, as well as the special role that individual [*11]  plays in our judicial system." Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374, 66 L. Ed. 2d 571, 101 S. Ct. 669 (1980). Such a rule also prevents "the obstruction to just claims that would come from permitting the harassment and cost of a succession of separate appeals from the various rulings to which a litigation may give rise, from its initiation to entry of judgment." Id.
By pursuing two separate appeals the Church attempts to get two bites at the apple. We believe that such tactics fly in the face of Federal Rule of Appellate Procedure 4. Accordingly, because the Church failed to amend properly its first notice of appeal, we DISMISS this case for lack of jurisdiction and ORDER the mandate to be spread immediately.  

46 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious Organization, Plaintiff-Appellant, v. STEVE FISHMAN; UWE GEERTZ, Defendants-Appellees.  

No. 94-55780 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

91 F.3d 151; 1996 U.S. App. LEXIS 36569 

November 14, 1995, Argued and Submitted, Pasadena, California 

July 11, 1996, FILED 

NOTICE:
 [*1]  RULES OF THE NINTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. D.C. No. CV-91-064260-HLH (Tx). Harry L. Hupp, District Judge, Presiding.

Reported in Full-Text Format at: 1996 U.S. App. LEXIS 17676. 

OPINION:

Case DISMISSED 

47 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellees v. ROBIN SCOTT, Defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellants, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant-Appellee. RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellants, v. ROBIN SCOTT, Defendant, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellees 

No. 94-55781, No. 94-55920 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1996 U.S. App. LEXIS 16398 

July 5, 1996, FILED 

NOTICE:
 [*1]  RULES OF THE NINTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

PRIOR HISTORY:
DC No. CV-85-00711-AWT(Bx).

Amended Opinion of April 11, 1996, Reported at: 1996 U.S. App. LEXIS 8954. 

DISPOSITION:
Petition for rehearing DENIED and suggestion for rehearing en banc REJECTED.  

COUNSEL:
For RELIGIOUS TECHNOLOGY CENTER, Plaintiff-counter-defendant - Appellee: Helena K. Kobrin, Esq., BOWLES & MOXON, Hollywood, CA. William T. Drescher, Esq., Calabasas, CA. Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, New York, NY. Earle C. Cooley, Esq., COOLEY, MANION, MOORE & JONES P C, Boston, MA. For CHURCH OF SCIENTOLOGY OF CALIFORNIA, CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants - Appellees: Helena K. Kobrin, Esq., (See above). William T. Drescher, Esq., (See above). Earle C. Cooley, Esq., (See above). 

For CHURCH OF THE NEW CIVILIZATION, Defendant-counter-claimant - Appellant: Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, New York, NY. Jerold Fagelbaum, Esq., Los Angeles, CA. Gary M. Bright, Esq., BRIGHT & POWELL, Carpinteria, CA. For DAVID MAYO, Defendant-counter-claimant - Appellant: Jerold Fagelbaum, Esq., (See above). Gary M. Bright, Esq., (See above). 

For CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant - Appellee: Lawrence E. Heller, Esq., HELLER & EDWARDS, Beverly Hills, CA.  

JUDGES:
Before: HALL and NOONAN, Circuit Judges. SHUBB, * District Judge. Dissent by Judge NOONAN.

 * The Honorable William B. Shubb, United States District Judge for the Eastern District of California, sitting by designation. 

OPINION:

ORDER
The memorandum disposition filed on April 11, 1996, is amended in accordance with the attached disposition. With this amendment, Judges Hall and Shubb have voted to deny appellant's petition for rehearing. Judge Hall has voted to reject the suggestion for rehearing en banc and Judge Shubb recommends rejection.
The full court has been advised of the suggestion for rehearing en banc and no active judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.
The petition for rehearing is DENIED and the suggestion for rehearing en banc is REJECTED.  

DISSENTBY:
NOONAN 

DISSENT:

NOONAN,  [*2]  dissenting:
I would grant an evidentiary hearing on the existence or nonexistence of the documents RTC was charged with producing. I do not find that any district judge actually adopted Magistrate Kolts' work-for-hire ruling. Accordingly I vote to grant the petition for rehearing.  

48 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellees v. ROBIN SCOTT, Defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellants, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant-Appellee. RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellants, v. ROBIN SCOTT, Defendant, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellees 

No. 94-55781, No. 94-55920 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1996 U.S. App. LEXIS 8954 

November 14, 1995, Argued and Submitted 

April 11, 1996, Filed 

NOTICE:
 [*1]  RULES OF THE FEDERAL CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

SUBSEQUENT HISTORY:
As Amended July 5, 1996. Rehearing Denied and Suggestion for Rehearing En Banc Rejected July 5, 1996, Reported at: 1996 U.S. App. LEXIS 16398.

Reported in Table Case Format at: 82 F.3d 423, 1996 U.S. App. LEXIS 31855. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. DC No. CV-85-00711-AWT(Bx). A. Wallace Tashima, District Judge, Presiding.  

DISPOSITION:
AFFIRMED in part, REVERSED in part, and REMANDED.  

COUNSEL:
For RELIGIOUS TECHNOLOGY CENTER, Plaintiff-counter-defendant - Appellee: Helena K. Kobrin, Esq., BOWLES & MOXON, Hollywood, CA. William T. Drescher, Esq., Calabasas, CA. Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, New York, NY. Earle C. Cooley, Esq., COOLEY, MANION, MOORE & JONES P C, Boston, MA. For CHURCH OF SCIENTOLOGY OF CALIFORNIA, CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants - Appellees: Helena K. Kobrin, Esq., (See above). William T. Drescher, Esq., (See above). Earle C. Cooley, Esq., (See above). 

For CHURCH OF THE NEW CIVILIZATION, Defendant-counter-claimant - Appellant: Eric M. Lieberman, Rabionowitz, Boudin, Standard, Krinsky & Lieberman, New York, NY. Jerold Fagelbaum, Esq., Los Angeles, CA. Gary M. Bright, Esq., BRIGHT & POWELL, Carpinteria, CA. For DAVID MAYO, Defendant-counter-claimant - Appellant: Jerold Fagelbaum, Esq., (See above). Gary M. Bright, Esq., (See above). 

For CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant - Appellee: Lawrence E. Heller, Esq., HELLER & EDWARDS, Beverly Hills, CA.  

JUDGES:
Before: HALL and NOONAN, Circuit Judges. SHUBB *, District Judge.

 * The Honorable William B. Shubb, United States District Judge for the Eastern District of California, sitting by designation. 

OPINION:

AMENDED MEMORANDUM *

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* This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3.

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Religious Technology Center (RTC), a California corporation, appeals from judgment and imposition of attorneys fees entered against it in two cases it brought against David Mayo (Mayo) and other related defendants. Mayo [*2]  cross-appeals judgment entered against him on his counterclaims. We affirm the judgment and award of attorneys fees against RTC. We affirm the dismissal of Mayo's emotional distress and false designation of origin counterclaims, but reverse and remand the judgment against Mayo on his remaining counterclaims.
PROCEEDINGS
In January 1985 RTC sued Mayo and other persons connected with the Church of the New Civilization, a splinter group of the official Church of Scientology, contending that they were making unauthorized use of stolen documents relating to the religion of Scientology. RTC stated that it was "the protector" of the religion of Scientology, its philosophy and its technology "including the Advanced Technology" consisting of "confidential and proprietary information regarding counseling and training," and was the owner of various trademarks registered with the U.S. Patent and Trademark Office protecting the Advanced Technology. The coplaintiffs with RTC were the Church of Scientology International, Inc. and the Church of Scientology of California, Inc., both nonprofit California corporations which RTC stated were authorized by it to use the Advanced Technology in accordance [*3]  with certain terms and conditions in conjunction with the marks it owns. Thirty-one marks were identified in RTC's complaint, in addition to which there were a number of other marks for which registration was pending or marks owned by RTC but as yet unregistered. RTC sought an injunction against the use of this material by the defendants. In November 1985 RTC filed a second suit, ultimately consolidated with the first.
Mayo counter-sued for false designation of origin of the documents and for unfair competition in violation of the Lanham Act, for libel, and for intentional infliction of emotional distress. After 1,825 docket entries and nine years of pretrial litigation involving three discovery magistrates, a special master, the recusal of two district court judges, the denial of five petitions for writ of mandamus, three appeals (Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986) cert. denied, 479 U.S. 1103, 107 S. Ct. 1336, 94 L. Ed. 2d 187 (1987); Religious Technology Center et al. v. Scott, 869 F.2d 1306 (9th Cir. 1989); Religious Technology Center v. Wollersheim, 971 F.2d 364 (9th Cir. 1992), and three denials of certiorari by the Supreme [*4]  Court, the third district judge, A. Wallace Tashima, entered Final Judgment. We set out and respond to the issues now raised on these appeals.

I. Recusal of Judge Ideman
RTC first appeals District Judge Letts' denial of its October 1991 motion to recuse Judge Ideman, the district judge assigned to this case after Judge Pfaelzer had recused herself. In denying RTC's petition for writ of mandamus this court in an unpublished order expressly determined that Judge Letts' denial was "not clearly erroneous." This order is the law of the case, to which subsequent panels should defer unless new evidence or law has been presented or unless the first panel's ruling was clearly erroneous. See Merritt v. Mackey, 932 F.2d 1317, 1320 (9th Cir. 1991). We find that none of Merritt's exceptions apply in this case. n1

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n1 Even if Judge Letts mistakenly applied a subjective standard under §  544, so that the law of the case doctrine only applies to the first panel's conclusion that Judge Ideman was not subjectively biased, we independently conclude that Judge Ideman's recusal was also not mandated under §  544(a)'s objective test.

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II. Rule 37 Dismissal
RTC mounts two attacks on Judge Ideman's dismissal of its claims as a discovery sanction under Rule 37; it argues: (1) that Judge Ideman simply rubber stamped the special master's recommendation to dismiss without conducting an independent review; and (2) that the dismissal order itself was improper under Rule 37. We will discuss these arguments in turn.
A. Rubber Stamping
When the case was referred to District Judge Ideman, it was still in a pretrial stage after four years of litigation. Taking note of the complexity of the litigation (which involved the Copyright Act, the Federal Trademark and Patent Infringement Act), the number of parties to the litigation, the large number of motions and motions for reconsideration already characteristic of the litigation, and the need to reduce to manageable proportions what was estimated to be three months' trial time, Judge Ideman referred the consolidated cases to a retired state judge to act as special master to supervise discovery and law and motions practice.
On this appeal, RTC objects to the way the district court treated the special master's recommendations. n2 In other contexts, we have recognized [*6]  that while a special master should not be given authority to conduct a full trial, he may be given

broad authority to supervise and conduct pretrial matters, including discovery activity, the production and the range of exhibits and stipulations of fact, the power to hear motions for summary judgment or dismissal and to make recommendations thereto.

Burlington Northern R.R. Co. v. Department of Revenue, 934 F.2d 1064, 1073 (9th Cir. 1991) (quoting In re Armco, Inc., 770 F.2d 103, 105 (8th Cir. 1985)). At the same time we have observed that a district court's rubber-stamping of a special master's order is unacceptable -- even on pretrial matters: "The district court's rubber stamp of the master's order is an inexcusable abdication of judicial responsibility and a violation of article III of the Constitution." Burlington, 934 F.2d at 1072.

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n2 RTC does not in this appeal challenge Judge Ideman's initial reference of this litigation's pretrial matters to the special master. RTC's two previous attempts to do so failed and we are given no reason to abandon our prior decisions.

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RTC contends that the district court rubber-stamped the dismissal of RTC's claims as a discovery sanction for noncompliance with court orders. To the contrary, the district court took the position that the special master had no power to order dismissal of the case. In the course of responding to RTC's second petition for mandamus Judge Ideman, on June 21, 1993, filed a declaration with the court ruling in relevant part as follows:
3. The past 8 years have consisted mainly of a prolonged, and ultimately unsuccessful, attempt to persuade or compel the plaintiff to comply with lawful discovery. These efforts have been fiercely resisted by plaintiffs. They have utilized every device that we on the District Court have ever heard of to avoid such compliance, and some that are new to us.
4. This noncompliance has consisted of evasions, misrepresentations, broken promises and lies, but ultimately with refusal. As part of this scheme to not comply, the plaintiffs have undertaken a massive campaign of filing every conceivable motion (and some inconceivable) to disguise the true issue in these pretrial proceedings. Apparently viewing litigation as war, plaintiffs by this tactic have had [*8]  the effect of massively increasing the costs to the other parties, and, for a while, to the Court. The appointment of the Special Master 4 years ago has considerably relieved the burden to this Court. The scope of plaintiff's efforts have to be seen to be believed. (See Exhibit "A", photo of clerk with filings, and Exhibit "B", copy of clerk's docket with 81 pages and 1,737 filings.)
5. Yet it is all puffery -- motions without merit or substance. Notwithstanding this, I have carefully monitored the Special Master's handling of these motions. I saw no need to try to improve on the Special Master's writings if I agreed with the reasons and the results. However, with respect to the major ruling that I have made during these proceedings, the dismissal of the plaintiff's claims, the following occurred:
6. The Special Master, after years of efforts to compel compliance with discovery, purported to order a dismissal of plaintiff's claims. Although the action was probably long overdue, the Special Master did not have the authority to make such a dispositive order. In reviewing his order, as I did with all of his actions, I saw what he had done and did not approve it.  [*9]  I treated the Special Master's "order" as a recommendation and gave notice to the parties that they could have a hearing and invited briefs. Only after considering fully the briefs of the parties did I give approval to the dismissal. It is true that I adopted the language chosen by the Special Master, but that was because I fully agreed with his reasoning and saw no need to write further.
Judge Ideman's pointed and pungent review of the record is the reverse of a rubber stamp. It is the judge's own heartfelt appraisal of the plaintiffs' actions as meriting dismissal. RTC's claim of violation of the Constitution by unconstitutional delegation fails.
B. Propriety of Dismissal
Dismissals under Fed.R.Civ.P. 37 are reviewed for abuse of discretion. Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F.3d 337, 348 (9th Cir. 1995). An appellate court should reverse "only if [it has] a definite and firm conviction that [the sanction] was clearly outside the acceptable range of sanctions." Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 1987), cert. denied sub nom. Malone v. Frank, 488 U.S. 819, 102 L. Ed. 2d 37, 109 S. Ct. 59 (1988).
Rule [*10]  37(b)(2)(C) gives the district court discretion to dismiss a party's claims as a sanction for noncooperation in discovery matters. Fed. R. Civ. P. 37(b)(2)(C). Dismissal is warranted only if the party facing sanctions acted in bad faith. Anheuser-Busch, 69 F.3d at 348. The district court must also weigh several other factors before imposing the "harsh sanction of dismissal":

(1) the public's interest in expeditious resolution of litigation; (2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions.

Id. (citation omitted). If the district court makes explicit findings as to these factors, as it did in this case, we need not review the record independently to determine if there was an abuse of discretion. Cf. Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990). Notwithstanding our ability to rely on the district court's findings, RTC argues that the dismissal was improper because (1) the district court wrongly denied RTC an evidentiary hearing; and (2) the district court's dismissal [*11]  was unwarranted because RTC acted in good faith.
As to the evidentiary hearing claim, RTC asserts that it did not have certain documents required by discovery so that its compliance was impossible; it contends that it needed an evidentiary hearing to show the nonexistence of the documents. This Circuit has, in dicta, noted that an evidentiary hearing on the matter for which a party is sanctioned might be required before dismissal if the party had sought "to show that it was impossible for them to comply with the discovery orders United States v. Westinghouse Elec. Corp., 648 F.2d 642, 652 (9th Cir. 1981); see also Wyle v. R.J. Reynolds Industries. Inc., 709 F.2d 585, 592 (9th Cir. 1983) ("When necessary, the district court may hold an evidentiary hearing on a motion for sanctions. Indeed, that method best determines the appropriate sanctions while protecting a party's due process rights."). No court, however, has said that evidentiary hearings are absolutely required prior to a Rule 37 dismissal; thus, the decision whether to hold an evidentiary hearing is well within the court's discretion.
The district court in this case did not abuse its discretion because RTC was [*12]  given full opportunity to demonstrate the nonexistence of the documents. When RTC was notified of the special master's declared intent to impose a Rule 37 dismissal sanction, it moved for an evidentiary hearing. In its supporting papers, RTC argued that a hearing was necessary because Mayo/CNC's witnesses lacked credibility and because the documents subject to production did not exist. We do not find the credibility of Mayo/CNC's witnesses relevant to the sanctions issue, except insofar as it bears on whether the documents RTC refused to produced actually existed. Special Master Kolts, however, had already found that RTC did "not proffer any declarations or other evidence which truly supports [its] suggestion that none of the requested documents exist or existed at the inception of this litigation this would seem to foreclose RTC's contention that an evidentiary dispute warranting a hearing existed. Even if we decided not to give the special master's finding the full weight it deserves, Wyle does not make an evidentiary hearing an absolute prerequisite to a dismissal sanction, even when issues are in dispute. See Wyle, 709 F.2d at 592 ("When necessary, the district court [*13]  may hold an evidentiary hearing on a motion for sanctions.") (emphasis added). Thus, we do not find that the special master or Judge Ideman abused their discretion in denying a hearing on either the credibility or document-existence issues.
Nor did the district court err in rejecting RTC's alternative claim that it acted in good faith and was therefore not deserving of sanctions. RTC claims that it believed that the discovery order it disobeyed was stayed pending a ruling on a related summary judgment motion that would have mooted the discovery order. This claim is not supported by the facts of this case. On July 25, 1990, the district court issued an order requiring discovery of certain documents related to RTC's antitrust claim. On August 8, 1990, RTC filed a motion for review of the district court's July 25 order. RTC then moved for summary judgment on its antitrust claim. On October 31, 1990, the district court continued its consideration of the August 8 review order pending the master's resolution of RTC's summary judgment motion; the continuance lasted until January 7, 1991. On April 26, 1991, the master reordered discovery (and did not mention the district court's October [*14]  31 order). On August 12, 1991, the district court ordered RTC to comply with the discovery order. On April 17, 1992, the master dismissed RTC's claims for violation of the August 12, 1991 and other discovery orders.
RTC claims that it believed it did not have to comply with the July 25, 1990 discovery order because of the district court's October 31, 1990 continuance. Even if that were true, the continuance ended on January 7, 1991 -- and RTC was reminded of its obligation to follow the order on April 26. Thus, RTC's confusion should have been dispelled.
RTC further argues that the master's April 17, 1992 dismissal order was tainted because it rested on the August 12, 1991 order; the August 12 order, RTC contends, was wrong because it ignored the earlier October 31 order. As we find the August 12, 1991 order proper, the April 17, 1992 dismissal is affirmed.

III. Attorneys Fees
RTC also challenges the district court's order awarding Mayo almost $ 2.9 million in attorneys fee on two grounds: (1) that the order was a mere rubber stamp of the special master's ruling; and (2) that the district court abused its discretion in awarding fees at all. 

A. Rubber Stamping [*15]  
The facts are as follows: On January 20, 1993, the special master awarded attorneys fees, first under the Lanham Act finding the case exceptional because the plaintiffs "have abused the federal court system by using it, inter alia, to destroy their opponents, rather than to resolve an actual dispute over trademark law or any other legal matter." The master also awarded fees pursuant to the Copyright Act, 17 U.S.C. §  505, finding that the plaintiffs' complaints had been brought "in bad faith" to harass the individual defendants and destroy the church through massive over-litigation and other highly questionable litigation tactics." The master also awarded fees pursuant to the court's inherent authority to award fees when the losing party has acted in bad faith. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258, 44 L. Ed. 2d 141, 95 S. Ct. 1612 (1975). Finally, the master declined to base the attorneys fees award on California contract law because "California contract law might collide with the first amendment in this particular context."
The master made a succinct statement as to the fees requested, noting that "many attorneys worked many, many hours on [*16]  this case"; that the hours were reasonable "given the plethora of constitutional issues, discovery stand-offs, appeals, and, most importantly, plaintiffs' practice of endlessly litigating issues"; and that the hourly rates were reasonable for federal civil practice within the Central District of California. The master recommended an award of $ 2.9 million.
The plaintiffs appealed to the district court, which denied their appeal on February 24, 1993. The district court stated that it had reviewed the extensive record and found among other things evidence of the plaintiffs' destruction and concealment of documents, refusal to comply with many court orders, needless delay and multiplication of the proceedings by the plaintiffs, and their filing of frivolous motions and of offensive and unreasonable motions. As a result of these findings the court concluded that the plaintiffs should be assessed fees under the Lanham Act and the Copyright Act. The court ignored the master's recommendation as to California contract law and awarded the defendants fees "as the prevailing parties pursuant to contract." The court also concluded that RTC should be assessed attorneys fees for their bad faith [*17]  litigation conduct. Comparing the district court's rulings of law with the recommendations of the special master, we note that the district court disagreed with the special master on one issue and agreed with the special master on three issues.
The district court also stated that it had reviewed the declarations and exhibits supporting the amount and reasonableness of the attorneys fees; that it considered "the novelty and complexity of the issues" involving the RICO, Lanham and copyright issues and pendent state questions, including breach of contract and trade secrets, the multiple requests for injunctive relief, the several appeals to the circuit court and the volume of the issues producing a court file "well in excess of 100 volumes." The court found that defense counsel had acted reasonably in response to a case in which they were confronted by claims for $ 2 million plus punitive damages and a request for permanent injunctive relief against their clients; counsel had secured for their clients a dismissal of all the plaintiffs' claims in their entirety. Only after this review did the district court substantially adopt the recommendation of the special master as the amount of [*18]  fees to be awarded. The district court's action cannot fairly be characterized as rubber-stamping. n3 

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n3 We also reject RTC's argument that Judge Ideman adopted in toto the Findings of Fact and Conclusions of Law proposed by defense counsel (with the exception of striking the word "Proposed" that preceded "Findings"). . While we have observed that such a practice is "regrettable" and might therefore warrant reversal, see Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1385 n.3 (9th Cir. 1984), this is not such a case. Although the order which Judge Ideman ultimately signed was submitted by the victorious defense attorneys, the Findings of Fact incorporated therein as to the reasonableness of the hours spent and the $ 2.9 million fee award were made by the Special Master -- and not Mayo's attorneys. Thus, Sealy's rule of reversal does not apply.
We find RTC's other claims of rubber-stamping equally meritless.

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B. Propriety of Fee Award
To uphold a fee award, we must find a concise but clear [*19]  explanation of the fee award, which will allow us to determine whether or not the court below abused its discretion in awarding fees. Cunningham v. City of Los Angeles, 879 F.2d 481, 485 (9th Cir. 1988); D'Emanuele v. Montgomery Ward & Co., Inc., 904 F.2d 1379, 1386 (9th Cir. 1990). This explanation must: (1) set out the reasonable hourly rate and reasonable number of hours spent on the matter, and explain those numbers (this is the "lodestar" amount, and is presumed reasonable; see D'Emanuele, 904 F.2d at 1383); (2) discuss any relevant Kerr factors used to adjust the "lodestar" amount, although all the factors need not be addressed (these factors come from Kerr v. Screen Actors Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975)); and (3) if detailed records submitted by the winning attorney are rejected, explain the reasons for the rejection. D'Emanuele, 904 F.2d at 1386. n4

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n4 Because the district court in this case was not rejecting detailed and accurate time sheet records submitted by winning counsel, we need not address this last factor.

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The record shows that the explanation of the fee award satisfies all of these requirements. At the special master's level, the lodestar amount was properly calculated and specifically explained in light of the Kerr factors. In making the lodestar calculation, the special master explicitly reached the following conclusions: that the number of hours submitted by the defendants (totalling at least 22,155.71 attorneys' hours) was reasonable taking into consideration the number of attorneys working on the case, the number of issues involved, the appeals, the discovery standoffs, and RTC's practice of repeatedly litigating issues, including up to ten petitions to stay the attorneys fee ruling; and that the hourly rate was reasonable as well, given the rates normally charged by attorneys practicing in the Central District of California ($ 90 to $ 185 per hour for associates, $ 150 to $ 300 per hour for partners, $ 50 per hour for paralegals and law clerks).
The materials submitted to support Mayo/CNC's fee request included detailed declarations of counsel. These declarations referenced hundreds of pages of contemporaneously prepared and filed time records reflecting work actually and [*21]  necessarily performed and billed, as well as affidavits and other evidence. The records submitted by RTC contested the validity of Mayo/CNC's submissions and referenced numerous attached exhibits purporting to document discrepancies in Mayo/CNC's billing records. n5 The district judge readdressed these concerns and also took into account other Kerr factors, such as the fact that the litigation involved a large amount of money, including potential punitive and injunctive relief, and the fact that Mayo/CNC's attorneys were successful in all the matters for which they were seeking fee reimbursement. We therefore conclude that the district court did not abuse its discretion in awarding fees. n6 

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n5 Because both parties submitted numerous affidavits and briefs, the district court had a sufficient factual basis upon which to rest its fee award. An evidentiary hearing was therefore unnecessary. See Sablan v. Department of Finance of N. Mariana Islands, 856 F.2d 1317, 1322 (9th Cir. 1988) (noting that an evidentiary hearing is not necessary where the "record and supporting affidavits are sufficiently detailed to provide an adequate basis for calculating an award."); D'Emanuele v. Montgomery Ward & Co., Inc., 904 F.2d 1379, 1389 (9th Cir. 1990) (same). [*22]   
n6 We also reject RTC's argument that the district court erred in awarding fees under the American rule without making a finding that RTC's claims were objectively frivolous. In this Circuit, a court awarding fees under the American rule need only find that a litigant acted in "bad faith." See Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 175 (9th Cir. 1989) ("[A] court may assess attorneys fees when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons.") (citations and internal quotations omitted); Association of Flight Attendance v. Horizon Air Indus. Inc., 976 F.2d 541, 548 (9th Cir. 1992) (setting down American rule for attorneys fees without mentioning a frivolity requirement); Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1064-65 (9th Cir. 1991) (same); cf. Martel v. County of Los Angeles, 34 F.3d 731, 739 (9th Cir. 1994), withdrawn in part on reh'g by, 56 F.3d 993 (9th Cir.), cert. denied, 116 S. Ct. 381, 133 L. Ed. 2d 304 (1995) (requiring a finding of objective frivolousness for fees on appeal under Federal Rule of Appellate Procedure 38 and 42 U.S.C. §  1988).
That Mayo himself did not pay his attorneys fees is irrelevant where, as here, the fees are not awarded under the Equal Access to Justice Act. See Grason Elec. Co. v. NLRB, 951 F.2d 1100, 1106 (9th Cir. 1991) (not permitting fees to be awarded under EAJA when a third party footed the bill) cf. Pickering v. Holman, 459 F.2d 403, 407-08 (9th Cir. 1972) (awarding fees to a party in patent litigation even though his litigation was paid for by another party).

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IV. Mayo's Counterclaims.
a) Libel
Mayo's libel counterclaim is based on statements in a publication titled "Squirrels" allegedly circulated by RTC in Scientology and CNC circles. The publication identifies Mayo and other CNC officials has having offered "false testimony to the IRS" and having attempted to "shift attention from . . . their crimes." Mayo contends that the statement is false and that the publication was intended to reach Scientologists and nonScientologists. RTC does admit this statement is "an accusation of criminal acts" but that it was intended only for Scientologists. Based on these contradictory assertions alone, material facts are in dispute and summary judgment was improper.
Summary judgment was also improper because Mayo can establish a prima facie case of libel. Mayo has made a showing of damages from the alleged libel, having testified that at least two people terminated economic relationships with Mayo and CNC based on the statements in "Squirrels," although he did not identify a specific amount of damages related to those terminations. Moreover, even if Mayo had shown no damages, RTC's publication of a written statement attributing [*24]  criminal activity to Mayo is libel per se for which no special damages need be proved. Barnes-Hind, Inc. v. Superior Court, 181 Cal. App. 3d 377, 382, 226 Cal. Rptr. 354, 356 (Cal. Ct. App. 1986).
b) Emotional Distress
The district court dismissed Mayo's August 1985 emotional distress claim as untimely under California's one-year statute of limitations. Mayo maintains his cause of action was timely because (1) it was a compulsory counterclaim under Fed. R. Civ. P. 13(a) that related back to RTC's January 1985 complaint; and (2) it was the product of a civil conspiracy whose last act occurred within the year before Mayo filed his emotional distress claim.
While it is true that a compulsory counterclaim relates back to the filing of the original complaint, Employers Ins. v. Wausau v. United States, 764 F.2d 1572, 1576 (Fed. Cir. 1985), we do not find Mayo's emotional distress claim compulsory. FRCP 13(a) defines a compulsory counterclaim as one "arising out of the same transaction or occurrence that is the subject matter of the opposing party's claim." Fed. R. Civ. P. 13(a). Courts making this determination ask whether the "essential facts" of the claims are "logically [*25]  connected"; this often involves asking whether the resolution of the first claim would moot the counterclaim. Pochiro v. Prudential Ins. Co. of America, 827 F.2d 1246, 1249-51 (9th Cir. 1987). In our case, RTC originally asserted claims for trade secret appropriation, unfair competition, false designation, as well as for RICO and trademark violations. Mayo and CNC asserted counterclaims for unfair competition false designation, libel, and emotional distress. On the one hand, all of the litigation stems from the same factual scenario -- the theft and subsequent use of RTC's scriptures. Even so, Mayo's emotional distress claim involves other facts as well (e.g. harassment). Moreover, while RTC's victory on its unfair competition and false designation claims might moot Mayo's mirror claims, resolving RTC's claims would not resolve Mayo's emotional distress claim -- which does not deal with who owned the scriptures. Despite the broad definition of "same transaction," Pochiro, 827 F.2d at 1252, we cannot conclude that Mayo's emotional distress claim was compulsory.
Mayo alternatively argues that his emotional distress injuries were inflicted as part of a civil conspiracy by [*26]  RTC so that the limitations period was tolled until the last overt act was completed. "When a civil conspiracy is properly alleged and proved, the statute of limitations does not begin to run on any part of the plaintiff's claims until the 'last overt act' pursuant to the conspiracy has been completed." Wyatt v. Union Mortg. Co., 24 Cal. 3d 773, 786, 157 Cal. Rptr. 392, 400, 598 P.2d 45 (Cal. 1979). Although Judge Pfaelzer concluded that Mayo had properly alleged a conspiracy, she also concluded that he had not properly proved one; Mayo has offered no further proof of the conspiracy. We must therefore affirm the district court's dismissal of Mayo's emotional distress counterclaim.
c) Unfair Competition and False Designation of Origin
RTC argued that Mayo's unfair competition and false designation of origin claims were not justiciable under the First Amendment because they would require the court to entangle itself in underlying questions of religious doctrine. n7 See Jones v. Wolf, 443 U.S. 595, 61 L. Ed. 2d 775, 99 S. Ct. 3020 (1979); Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 725, 49 L. Ed. 2d 151, 96 S. Ct. 2372 (1976); Presbyterian Church  [*27]   v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 449, 21 L. Ed. 2d 658, 89 S. Ct. 601 (1969). The district court agreed, finding that it was Scientology doctrine that L. Ron Hubbard was the "source" of all "Advanced Technology" and that adjudication of the Technology's authorship would undermine this religious doctrine. We do not reach the issue of justiciability, however, because we find RTC estopped from raising the non-justiciability defense.

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n7 RTC also argues that Mayo's unfair competition counterclaim rests solely on Cal. Bus. & Prof. Code § §  17200 et seq. which precludes an action for damages. Because RTC raises this issue for the first time on appeal, we decline to consider it. E.W. French & Sons, Inc. v. General Portland, Inc., 885 F.2d 1392, 1402 (9th Cir. 1989).

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The doctrine of judicial estoppel is invoked to "prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process."  [*28]  United States v. Nix, 21 F.3d 347 (9th Cir. 1994) (quoting Russell v. Rolfs, 893 F.2d 1033 (9th Cir. 1990), cert. denied, 501 S. Ct. 1260 (1991)). The Ninth Circuit has not yet decided on the conditions under which estoppel applies:

Under the majority view, judicial estoppel does not apply unless the assertion inconsistent with the claim made in the subsequent litigation "was adopted in some manner by the court in the prior litigation." Under the minority view, judicial estoppel can apply even when a party was unsuccessful in asserting its position in the prior judicial proceeding, "if the court determines that the alleged offending party engaged in 'fast and loose' behavior which undermined the integrity of the court."

United States v. Garcia, 37 F.3d 1359, 1367 (9th Cir. 1994), cert. denied, 514 U.S. 1067, 131 L. Ed. 2d 562, 115 S. Ct. 1699 (1995) (quoting Britton v. Co-op Banking Group, 4 F.3d 742, 744 (9th Cir. 1993) (quoting In re Corey, 892 F.3d 829, 836 (9th Cir. 1989), cert. denied sub nom. Kulalani Ltd. v. Corey, 498 U.S. 815, 112 L. Ed. 2d 31, 111 S. Ct. 56 (1990))).
We need not resolve this issue because RTC is estopped under either standard.  [*29]  The pertinent preceding proceedings to examine under the majority rule are stated in RTC v. Scott, supra:
The district court granted the Church a TRO and later extended it to a preliminary injunction, prohibiting the New Church from "using, distributing, exhibiting or in any way publicly revealing" the scriptures. RTC v. Wollersheim, 796 F.2d at 1079. The preliminary injunction was based on the district court's finding that the scriptures were trade secrets and entitled to protection under both RICO and California law.
On appeal, we vacated the preliminary injunction. We held that the scriptures did not qualify as trade secrets under California law because of the failure of the Church to claim that the scriptures had any commercial value. We rejected the Church's argument that the scriptures qualified as trade secrets because of their spiritual value. Id. at 1090-91.
The Church returned to the district court and filed a second Ex Parte Application for Temporary Restraining Order and Order to Show Cause, again asking the court to restrain the New Church from using the scriptural materials. This time, the Church argued that the scriptures qualified as trade secrets [*30]  because they had economic value. Specifically, the Church contended that if the New Church was not enjoined from using the scriptures, "plaintiffs will be forever at a loss to protect the confidential nature and resultant economic value of these materials. Defendant will obtain an economic advantage that they would not otherwise possess which will be used to divert parishioners, the value and goodwill of which cannot be monetarily measured for plaintiffs." Excerpt of Record ("E.R."), Vol. 1:347 at 29. (Emphasis added.) After a hearing, the district court denied the application "solely based upon the Ninth Circuit's . . . decision [in Wollersheim].

869 F.2d at 1308. On appeal to this court we held that the district court had interpreted the first opinion too narrowly and remanded the case to the district court to consider whether the Church had an economic interest in its scriptures. Id. at 1310. Consequently, RTC obtained a judicial ruling in its favor by asserting that the status of the scriptures was an economic matter justiciable in the courts. Because the ruling on remand adopted RTC's prior position that it had a justiciable, economic interest in the Advanced [*31]  Technology, RTC is estopped under the majority view.
Moreover, there is little doubt that RTC is playing "fast and loose" with the judicial system as required in the minority view of estoppel. To first assert that its unfair competition and false designation of origin claims are justiciable and at the same time assert that Mayo's identical claims are not is at best questionable; in light of RTC's documented history of vexatious behavior, RTC's actions are indefensible.
While we will not affirm the dismissal of either counterclaim on First Amendment grounds, we will affirm the dismissal of Mayo's false designation of origin counterclaim. It is well established that a party who created a document under a work-for-hire basis cannot entertain an action for false designation of origin. See Cleary v. News Corp., 30 F.3d 1255, 1259-60 (9th Cir. 1994). In his order dismissing Mayo's counterclaims, Judge Tashima found that "the prior work-for-hire doctrine ruling effectively foreclosed any rights on Mayo's part to make any claims of authorship or ownership regarding the NOT materials." This finding forecloses Mayo's false designation of origin counterclaim.
Accordingly, the judgment [*32]  of dismissal of RTC's case and the award of attorneys fees are AFFIRMED, the judgment against Mayo on his emotional distress and false designation of origin counterclaims is AFFIRMED, and the judgment against Mayo on the remaining counterclaims is REVERSED and the case REMANDED. 

49 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellees v. ROBIN SCOTT, Defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellants, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant-Appellee. RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellants, v. ROBIN SCOTT, Defendant, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant, and CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Defendants-counter-claimants-Appellees 

No. 94-55781, No. 94-55920 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

82 F.3d 423; 1996 U.S. App. LEXIS 31855 

November 14, 1995, Argued and Submitted 

April 11, 1996, Filed 

NOTICE:
 [*1]  
RULES OF THE NINTH CIRCUIT COURT OF APPEALS MAY LIMIT CITATION TO UNPUBLISHED OPINIONS. PLEASE REFER TO THE RULES OF THE UNITED STATES COURT OF APPEALS FOR THIS CIRCUIT.  

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. DC No. CV-85-00711-AWT(Bx). A. Wallace Tashima, District Judge, Presiding.

Reported in Full-Text Format at: 1996 U.S. App. LEXIS 8954. 

OPINION:

AFFIRMED in part, REVERSED in part, and REMANDED.  

50 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious Organization, Plaintiff/Appellant, v. STEVEN FISHMAN; UWE W. GEERTZ, Defendants/Appellees.  

No. 94-55443 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1994 U.S. App. LEXIS 23848 

August 2, 1994, Argued, Submitted, Pasadena, California 

August 30, 1994, Filed 

NOTICE:
 [*1]   THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R.  36-3.  

SUBSEQUENT HISTORY:
Reported in Table Case Format at: 35 F.3d 570, 1994 U.S. App. LEXIS 32321. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. DC No. CV-91-6426 HLH-T. Harry L. Hupp, District Judge, Presiding 

DISPOSITION:
REVERSED and REMANDED 

JUDGES:
Before: BROWNING, FARRIS and LEAVY, Circuit Judges 

OPINION:

MEMORANDUM *

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 * This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3.

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The Church of Scientology International appeals the district court's denial of its motion to seal or return certain documents in the district court's case file. We have jurisdiction pursuant to 28 U.S.C. §  1291. We review for abuse of discretion. See Nixon v. Warner Communications, Inc., 435 U.S. 589, 55 L. Ed. 2d 570, 98 S. Ct. 1306 (1978). We conclude that resolution of the issue before  [*2]  the court requires that the district court make factual findings regarding whether the disputed documents (1) contain trade secrets or (2) were relevant to any defenses that defendants might have raised, or were merely surplusage filed for motives not pertinent to this case.

I. Public access to judicial records
We reject defendants' argument that the district court lacked authority to seal or return the disputed documents. We have held that there is a "strong presumption" in favor of the public's right of access to judicial records. Valley Broadcasting Co. v. United States Dist. Ct., 798 F.2d 1289, 1294 (9th Cir. 1986). However, that right is not absolute:

Every court has supervisory power over its own records and files, and access has been denied where court files might have become a vehicle for improper purposes. For example, the common-law right of inspection has bowed before the power of a court to insure that its records are not "used to gratify private spite or promote public scandal" through the publication of "the painful and sometimes disgusting details of a divorce case." Similarly, courts have refused to permit their files to serve [*3]  as reservoirs for libelous statements for press consumption, or as sources of business information that might harm a litigant's competitive standing.

Nixon, 435 U.S. at 598 (citations omitted); see also Valley Broadcasting, 798 F.2d at 1294 (citing Nixon).
Defendants' reliance on Seattle Times Co. v. Rhinehart, 467 U.S. 20, 81 L. Ed. 2d 17, 104 S. Ct. 2199 (1984) for the proposition that the First Amendment prohibits a court from sealing any materials a party obtains from means other than discovery is misplaced. In Seattle Times, the Court ruled that upon a showing of good cause, courts could issue protective orders limiting a party's right to disseminate information obtained through discovery so long as such orders do "not restrict the dissemination of the information if gained from other sources." Id. at 37. Thus, Seattle Times might prohibit the district court from issuing an order preventing the defendants from disseminating the disputed documents [*4]  since those documents were not obtained through discovery. Seattle Times does not, however, prevent the district court from sealing or returning documents contained in its files.
For similar reasons, defendants' argument that sealing the documents would constitute an impermissible prior restraint on speech is without merit. In Rodgers v. United States Steel Corp., 536 F.2d 1001, 1005 n.8 (3d Cir. 1976), the district court had ordered that "counsel for the Plaintiffs shall not disclose or disseminate the content of any information or matters contained in" a certain deposition. The Third Circuit held that because the protective order prohibited plaintiffs' counsel from disclosing information obtained through means other than discovery, it constituted a prior restraint on speech. Id. at 1007-1008. Here, Scientology has specifically represented to this court that it is not seeking an order preventing defendants from disseminating information which they obtained through means other than discovery. See Opening Brief at 19 ("CSI has not requested any relief which is directed to the [defendants'] future conduct with regard [*5]  to the Advanced Technology materials.")
Thus, the district court had the authority to issue a protective order sealing or returning the disputed documents.

II. The Establishment and Free Exercise Clauses
We also reject Scientology's argument that the district court's failure to seal or return the documents violated the Establishment and Free Exercise Clauses of the First Amendment. The district court did not "overrule" Scientology's ecclesiastical judgment on a matter of faith and doctrine. Compare Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 709, 49 L. Ed. 2d 151, 96 S. Ct. 2372 (1976). The district court did not in any way rely on or interpret Scientology's religious doctrines. Scientology has pointed to no record evidence that its religion played any role in the district court's decision. Milivojevich and the other cases cited by Scientology are inapplicable.
Scientology's argument that the district court's denial of its motion to seal constituted a non-neutral governmental action that impinged on the free exercise of religion is also without merit. It relies on Church of Lukumi Babalu Aye v. Hialeah, 124 L. Ed. 2d 472, 113 S. Ct. 2217 (1993). [*6]  In Hialeah, the Court overturned an ordinance prohibiting animal sacrifices because (1) the purpose of the ordinance was to suppress elements of the Santeria worship service and (2) it was not justified by a compelling state interest. Like Hialeah, Scientology argues that the district court's action was non-neutral because the district court's "revelation" of upper level materials affects only one group: the Church of Scientology and its parishioners. The district court did not "reveal" upper level materials to anyone. Further, Scientology has pointed to no evidence indicating that the district court's actions were motivated by its desire to affect the exercise of the Scientology religion. Compare Hialeah, 113 S. Ct. at 2227 ("The record in this case compels the conclusion that suppression of the central element of the Santeria worship service was the object of the ordinances.").

III. Failure to Make Factual Findings
Scientology urges that the disputed documents be sealed or returned to the defendants because they contain trade secrets and are irrelevant to any defenses that might have been raised in the underlying libel  [*7]  suit. In determining whether to grant or deny the protective order sought, district courts must balance the parties' and the public's respective interests. See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.), cert. denied, 121 L. Ed. 2d 141, 113 S. Ct. 198 (1992); Valley Broadcasting, 798 F.2d at 1294; see also Federal Open Mkt. Comm. of Fed. Reserve Sys. v. Merrill, 443 U.S. 340, 363, 61 L. Ed. 2d 587, 99 S. Ct. 2800 (1979). The absence of factual findings regarding whether the disputed documents contained trade secrets or were relevant to any potential defenses precludes proper balancing.

IV. Considerations on Remand
A. Trade Secrets
On remand the district court should first consider whether the disputed documents contain trade secrets of the Church of Scientology. Under California law, a trade secret is defined as

information . . . that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or [*8]  use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Cal. Civ. Code §  3426.1(d).
Contrary to defendants' assertion, we have not held that upper level materials can never be entitled to trade secret protection. In Religious Technology Center v. Scott, 869 F.2d 1306, 1309-10 (9th Cir. 1989), we held that Scientology's upper level materials might be protectable as trade secrets if Scientology could prove it obtained "actual economic advantage over competitors" (in addition to the other elements of a trade secret) through the use of the upper level materials. Since our decision in Scott, at least one court has held that the upper level materials constitute trade secrets. Bridge Publications, Inc. v. Vien, 827 F. Supp. 629 (S.D.Cal. 1993).
The district court may conduct whatever additional inquiry is necessary to determine whether the disputed documents contain trade secrets. It may wish to take into consideration some of the observations we have made while reviewing the record. Many of the documents Scientology seeks to seal contain specific information regarding [*9]  upper levels OT-I through OT-VIII. Defendants filed the declarations of Matthew D. Berger and Gordon J. Calhoun in the district court (C.R. 717 and 603) to support their argument that Scientology upper level materials are widely publicized and therefore not entitled to trade secret protection. Our review of those declarations indicates that materials for upper levels OT-I, OT-II and OT-III have been widely publicized. However, only one of the approximately one-hundred press articles in those declarations (Exhibit 10 of the Berger Declaration) contains any specific information about upper levels OT-IV, OT-V and OT-VI, and this information is very limited. None of the exhibits contain specific information about upper levels OT-VII and OT-VIII.
B. Relevance of disputed documents to possible defendants
Defendants have failed to explain how the inclusion of the upper level materials as exhibits to various court filings could have helped them in their defense to the underlying libel suit. On remand, the district court should consider and make findings regarding whether the upper level materials were relevant to any defenses defendants might have raised. Fed. R. Civ. P. 12(f).
C. Circumstances  [*10]   Warranting a Protective Order
The district court should order that the documents be sealed or returned to the defendants if, on remand, Scientology can establish that the disputed documents (1) contain trade secrets and (2) are irrelevant to any defenses. In such case, the failure to issue a protective order would allow the defendants to use the district court's files as a "vehicle for an improper purpose," i.e. misappropriation of trade secrets.
If the district court determines that the disputed documents contain trade secrets, but were relevant to potential defenses, then the district court should weigh Scientology's "claim to privacy against the need for disclosure." Merrill, 443 U.S. at 362. We note, however, that unlike most cases involving requests for protective orders, the alleged trade secrets are in the possession of the party seeking their disclosure, i.e. the defendants. Their interest in disclosure is therefore minimal. Thus, the district court should balance Scientology's interest in keeping trade secrets confidential only against the public's interest in obtaining access to judicial records.
The district [*11]  court may, of course, order the documents sealed or returned if it determines that the defendants were intentionally abusing the judicial process.
CONCLUSION
We remand for the district court to make factual findings regarding the trade secret status and relevance of the disputed documents. The district court's review should be limited to the documents listed in the excerpts of record filed with this court at pages 358-362. To assist the district court in locating those documents, Scientology is ordered to provide the district court with the docket entry number of each document.
Our review of the voluminous record convinces us that both parties have filed numerous frivolous motions and documents with the district court. On remand, the parties should limit their court filings to the narrow issue now before the court. If either party continues to file frivolous materials relating to this or any other issue, the district court, of course, recognizes its broad discretion to impose sanctions.

REVERSED and REMANDED 

51 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious Organization, Plaintiff/Appellant, v. STEVEN FISHMAN; UWE W. GEERTZ, Defendants/Appellees.  

No. 94-55443 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

35 F.3d 570; 1994 U.S. App. LEXIS 32321 

August 2, 1994, Argued, Submitted, Pasadena, California   
August 30, 1994, Filed 

NOTICE:
 [*1]    THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R.  36-3.  

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. DC No. CV-91-6426 HLH-T. Harry L. Hupp, District Judge, Presiding

Reported in Full-Text Format at: 1994 U.S. App. LEXIS 23848. 

OPINION:

REVERSED and REMANDED 

52 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF SAN FRANCISCO; CHURCH OF SCIENTOLOGY OF CALIFORNIA, et al., Plaintiffs-Appellants, v. INTERNAL REVENUE SERVICE, Defendant-Appellee. CHURCH OF SCIENTOLOGY OF SAN FRANCISCO, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE, Defendant-Appellee.  

No. 91-15730, No. 91-15734 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

30 F.3d 101; 1994 U.S. App. LEXIS 17146; 94 Cal. Daily Op. Service 5416; 94 Daily Journal DAR 9913 

July 14, 1994, Filed 

PRIOR HISTORY:
 [*1]  D.C. No. CV-90-1279-CAL. D.C. No. CV-90-02008-CAL.

Original Opinion of April 16, 1993, Reported at: 1993 U.S. App. LEXIS 7872. 

JUDGES:
Before: Robert R. Beezer, Alex Kozinski, and Andrew J. Kleinfeld, Circuit Judges.  

OPINION:

ORDER
It appears to the court that an opinion was filed in these cases on April 16, 1993 and thereafter appellee, Internal Revenue Service filed a petition for rehearing. Prior to the court acting on the petition for rehearing, the parties acting jointly moved to vacate the "judgment filed April 16, 1993, which remanded the case for further specified proceedings, [and] to remand the cases to the district court so that the district court can take action on the parties' stipulations to dismiss the district court cases, and to deny the Internal Revenue Service's petition for rehearing as moot." The parties have also filed with the clerk of this court signed original forms of stipulation of dismissal and stipulation and order of dismissal with prejudice, which are captioned for filing in the district court.
An examination of the docket maintained by the clerk of this court discloses that the mandates in the above cases have not issued.
After considering [*2]  the papers and representations of the parties, it is
ORDERED as follows:
(1) that we vacate that portion of the judgment we entered in these consolidated cases on April 16, 1993, which remanded the cases for further specified proceedings;
(2) that we grant the parties' motion for a general remand to the district court so that the court may effectuate the parties' agreement to settle these cases by dismissing the district court actions;
(3) that the petition for rehearing filed by the Internal Revenue Service is denied;
(4) that neither party shall recover costs in this court, and
(5) that the clerk of this court is directed to issue the mandate forthwith.
REMANDED.  

53 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff-Appellee, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellant. CHURCH OF SCIENTOLOGY INTL., Plaintiff-Appellee, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellant. CHURCH OF SCIENTOLOGY, Plaintiff-Appellee, v. UNITED STATES INTERNAL REVENUE SERVICE, Defendant-Appellant.  

No. 92-55817, No. 92-55828, No. 92-55831 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

995 F.2d 916; 1993 U.S. App. LEXIS 13401; 72 A.F.T.R.2d (RIA) 5139; 93 Cal. Daily Op. Service 4209; 93 Daily Journal DAR 7241 

April 8, 1993, Argued, Submitted, Pasadena, California   
June 9, 1993, Filed 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California. D.C. No. CV-89-4502-CBM. D.C. No. CV-91-1120-CBM. D.C. No. CV-91-1048-CBM. Consuelo B. Marshall, District Judge, Presiding.  

COUNSEL:
Jonathan S. Cohen, Gary R. Allen, Murray S. Horwitz, Assistant Attorneys General, Washington, D.C., for the defendant-appellant.

Kendrick L. Moxon, Bowles & Moxon, Hollywood, California, for the plaintiff-appellee.  

JUDGES:
Before: Cynthia Holcomb Hall, Charles Wiggins, Stephen S. Trott, Circuit Judges.

Opinion by Judge Wiggins.  

OPINIONBY:
WIGGINS 

OPINION:

 [*917]  OPINION

WIGGINS, Circuit Judge:
This case is a consolidation of three cases arising in the Central District of California. In each case, the Church of Scientology International ("Church") requested that the Exempt Organization division ("EO") of the Internal Revenue Service ("IRS") disclose certain documents pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. §  552 (1988). The IRS responded to each request by disclosing some documents and claiming that others were exempt from disclosure under 5 U.S.C. §  552(b). The Church challenged the IRS's exemption claims in district [**2]  court, and the district court ordered the disclosure of hundreds of documents claimed to be exempt. The IRS appeals. The district court had jurisdiction pursuant to 5 U.S.C. §  552(a)(4)(B) and 28 U.S.C. §  1331. We have jurisdiction over this timely appeal pursuant  [*918]  to 28 U.S.C. §  1291. We reverse in part, vacate in part, and remand.
FACTS 
This case deals with three separate requests by the Church for documents under the FOIA. The facts surrounding each request are summarized below.

Request No. 1
On August 17, 1988, the Church submitted a FOIA request, seeking access to information about the Church and related entities Religious Technology Center ("RTC") and Church of Spiritual Technology ("CST") located in the Los Angeles Exempt Organization office from 1986 to "the present." By letter dated August 30, 1988, the IRS advised the Church that the request could not be processed because the Church had not submitted a valid taxpayer authorization for release of tax return information. On September 9, 1988, the Church responded, supplying releases for itself, RTC, and CST.  [**3]  A month later, the IRS informed the Church that its request had been sent to the National Office of Exempt Organizations in Washington, D.C., for processing. Thereafter, the Church modified its request to include information contained in the national office.
On April 17 and 20, 1989, the Church received form letter responses from the IRS, indicating that some or all of the records requested would not be released. The Church filed an administrative appeal from the IRS's decision to withhold documents, but never received a response to its appeal from the IRS. After the statutory time for the IRS to answer had passed, the Church filed an action in the district court.
The IRS disclosed 79 documents in full pursuant to the request. The IRS also identified 16,000 other documents as responsive to the request, but took the position that these documents were exempt from disclosure. On a motion for summary judgment, the district court ordered the release of all documents for which the IRS claimed an exemption under 5 U.S.C. §  552(b)(7) because the documents were not compiled for law enforcement purposes.

Requests Nos. 2 and 3
On September 16, 1990, the [**4]  Church submitted a FOIA request for "a copy of all files . . . relating to or concerning [the Church], maintained in a locked three drawer file cabinet under the control of Roderick Darling." In another letter of the same date, the Church also requested "all files, records, documents, [and] notes . . . relating to [the Church] maintained or temporarily residing in the office of Marvin Friedlander."
The IRS disclosed an unspecified number of documents pursuant to these requests. As before, the IRS claimed that other responsive documents were exempt from disclosure - the IRS withheld 219 pages of documents pursuant to the request made of Darling and 330 pages of documents pursuant to the request made of Friedlander. After the time had run for the IRS to respond to the Church's requests, the Church filed actions in the district court.
In both cases, the district court ruled that the EO had no law enforcement purpose and ordered the release of any documents compiled in connection with the Church's application for tax exempt status. The district court determined that the EO had no law enforcement function and that therefore the documents were not compiled for law enforcement purposes.  [**5]  
The court also ordered the IRS to produce documents containing the handwriting of seven named agents. The IRS had claimed that the documents were exempt under 5 U.S.C. §  552(b)(7)(C). The court concluded that the IRS could not withhold these records on privacy grounds because the individuals had indicated that they did not object to the Church having documents containing their handwriting. The IRS appeals.
STANDARD OF REVIEW

Our review of a judgment or order under the FOIA is a two-part inquiry. First, we must determine whether the district court had an adequate factual basis for its decision. Bowen v. United States FDA, 925 F.2d 1225, 1226-27 (9th Cir. 1991); Church of Scientology v. United States Dep't of the Army, 611 F.2d 738, 742 (9th Cir. 1979). If an adequate factual basis  [*919]  supports the district court's decision, we should review the decision under the clearly erroneous standard. Bowen, 925 F.2d at 1227; Church, 611 F.2d at 742.
DISCUSSION
The FOIA embodies a strong federal policy in favor of full agency disclosure [**6]  of government documents. See John Doe Agency v. John Doe Corp., 493 U.S. 146, 151-52, 107 L. Ed. 2d 462, 110 S. Ct. 471 (1989); Bowen, 925 F.2d at 1226. Any inquiry under the Act, then, begins with a "strong presumption in favor of disclosure." United States Dep't of State v. Ray, 116 L. Ed. 2d 526, 112 S. Ct. 541, 547 (1991). Thus, while there are specific exemptions from disclosure set forth in the Act, these exemptions are limited and must be narrowly construed with doubts resolved in favor of disclosure. John Doe, 493 U.S. at 152; Federal Labor Relations Authority v. United States Dep't of the Navy, 958 F.2d 1490, 1494 (9th Cir. 1992). The agency bears the burden of showing that requested documents are exempt from disclosure. John Doe, 493 U.S. at 152; Federal Labor Relations Authority, 958 F.2d at 1494; Bowen, 925 F.2d at 1226; Lewis v. IRS, 823 F.2d 375, 378 (9th Cir. 1987).

I. Exemption 7 - "compiled for law enforcement purposes"
Section 552(b)(7)  [**7]  exempts from disclosure "records or information compiled for law enforcement purposes, but only to the extent that" disclosure will result in one of six enumerated harms. In determining whether exemption 7 applies, we must first decide whether the records requested by the Church were "compiled for law enforcement purposes."
This court has indicated that this determination requires "an examination of the agency itself to determine whether the agency may exercise a law enforcement function." Church, 611 F.2d at 748. The district court concluded that the EO has no law enforcement function and ruled, therefore, that the requested documents were not compiled for law enforcement purposes. We disagree.
This court has clearly held that the IRS has the "requisite law enforcement mandate" to qualify as a law enforcement agency. Lewis, 823 F.2d at 379. Moreover, we are convinced that the EO performs a law enforcement function by enforcing the provisions of the federal tax code that relate to qualification for tax exempt status. This conclusion is consistent with Lewis and bolstered by the decision of the D.C. Circuit in Center for Nat'l Policy Review on Race & Urban Issues v. Weinberger, 163 U.S. App. D.C. 368, 502 F.2d 370 (D.C. Cir. 1974). [**8]  n1 The Weinberger court "endorsed the view propounded in the legislative history that civil as well as criminal law enforcement activities are within the purview of the exemption." Id. at 373 (footnote omitted). The court stated:

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n1 Weinberger was decided under an earlier version of the statute that we consider here. We recognize that amendments to the statute have superceded portions of the Weinberger case. See Local 30, United Slate, Tile, and Composition Roofers v. NLRB, 408 F. Supp. 520, 524 & n.1 (E.D. Pa. 1976). However, no amendments to the statute have affected the portion of the opinion construing the phrase "law enforcement purpose" that we find persuasive here.

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While an administrative determination of ineligibility for [a] governmental benefit is not attended by the same safeguards and procedures as a judicial determination in a criminal or civil proceeding, it is a governmental action that must be accompanied by due procedure. We [**9]  think it has the salient characteristics of "law enforcement" contemplated by the wording of exemption 7. . . .
. . . Where an agency, like HEW, has both voluntary compliance and formal determination functions . . . the pertinent files are "compiled for law enforcement purposes." 

Id. (footnote omitted).
The EO, like the agency in Weinberger, performs both voluntary compliance and formal determination functions. Moreover, the EO's role in determining eligibility for the governmental benefit of tax exempt status also "has the salient characteristics of law enforcement." See id. Thus, we find the reasoning of Weinberger persuasive and its  [*920]  application appropriate here. We hold that Lewis and Weinberger compel the conclusion that the EO has the requisite law enforcement function for purposes of the statute. n2 Accordingly, the district court's conclusion that the EO has no law enforcement purpose is clearly erroneous, and we reverse its order that the IRS disclose all documents or portions of documents protected only by an exemption 7 claim or compiled in connection with an application for tax exempt status. We instruct the district court to determine whether [**10]  the particular documents withheld were compiled for law enforcement purposes n3 and whether the government can establish that disclosure of the documents threatens one of the harms specified in 5 U.S.C. §  552(b)(7)(A-F).

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n2 The Church would have us distinguish Lewis because it involved a document request from the IRS's criminal investigation division, a division whose law enforcement mandate is more obvious than that of the EO. We have considered the distinction and expressly reject it on the strength of Weinberger's rationale.
n3 We point out that the documents need not have been gathered originally for law enforcement purposes. The government must show only that the records and information had been compiled for law enforcement purposes "when the response to the FOIA request [was] made." John Doe, 493 U.S. at 155; see also id. at 155 n.6 (suggesting that an agency cannot compile records for law enforcement purposes so as to avoid disclosure). Thus with regard to the IRS's argument that the documents were incorporated into Church audit files, the district court must determine whether the government has borne its burden of establishing a compilation for law enforcement purposes. Id. 

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 [**11]  

II. Applicability of Exemption 7(C)
The IRS also contends that the district court erred when it ordered the production of documents containing the handwriting of various IRS agents. The IRS claims that the documents are exempt from disclosure under 5 U.S.C. §  552(b)(7)(C).
Section 552(b)(7)(C) "permits the government to withhold documents and portions of documents 'compiled for law enforcement purposes, but only to the extent that the production of such records would . . . constitute an unwarranted invasion of personal privacy.'" Wiener v. FBI, 943 F.2d 972, 983-84 (9th Cir. 1991) (quoting 5 U.S.C. §  552(b)(7)(C) (1988)), cert. denied, 120 L. Ed. 2d 886, 112 S. Ct. 3013 (1992). To determine whether production of a particular document would constitute an unwarranted invasion of personal privacy, a court must determine whether the public interest in disclosure outweighs the individual privacy interests that would suffer from disclosure. See United States Dep't of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 762, 776, 103 L. Ed. 2d 774, 109 S. Ct. 1468 (1989); [**12]  Wiener, 943 F.2d at 984.
The district court concluded that all documents compiled for law enforcement purposes and containing the handwriting of IRS agents should be exempt from disclosure because there existed "little public interest" in the disclosure of employee handwriting; the history of antagonism between the parties justified protection of IRS employee identities; and the IRS had no duty to alter information so as to make it discloseable. n4

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n4 The Church offered to pay to have the withheld documents typed so as to eliminate the risk of discovering agent identities through handwriting.

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Nonetheless, the court ordered the disclosure of any documents withheld under exemption 7(C) that contained the handwriting of seven named agents who had indicated in depositions that they did not object to the Church having samples of their handwriting. The court concluded that the "IRS cannot assert an unwarranted invasion of privacy on behalf of individual employees who have no objection to the [**13]  disclosure of their handwriting." The court acknowledged that the named employees might have claimed a privacy interest "if they knew exactly what information would be revealed" but ordered the documents released because the IRS objected only to the release of the agents' handwriting and not the information in the documents. We conclude that the district court erred by failing properly to determine whether the public interest in disclosure outweighed privacy concerns.
 [*921]  First, we note that courts have long frowned upon the release of government compiled documents by individual consent. See Rural Housing Alliance v. United States Dep't of Agric., 162 U.S. App. D.C. 122, 498 F.2d 73, 82-83, opinion supplemented by 167 U.S. App. D.C. 345, 511 F.2d 1347 (D.C. Cir. 1974). Second, we find the agents' alleged waivers of their privacy interests insufficient to compel disclosure. The agents did not consent to the release of any specific documents or set of documents. Instead, they simply indicated that they did not object to the Church having documents containing their handwriting in the abstract. Given our reluctance to compel the disclosure of government compiled documents on [**14]  the basis of individual consent, we find the agents' deposition testimony alone an inadequate factual basis on which to conclude that the public interest in disclosure outweighed the privacy interests. The agents' testimony may indicate that the privacy concerns here are not particularly weighty, but it does not relieve the court of its duty to balance the interests. See Reporters Comm., 489 U.S. at 762, 776.
Finally, the district court failed to address the public interest in disclosure of the documents containing the handwriting of the seven named agents. Moreover, the court did not indicate the nature of any of the documents so as to permit us to evaluate the public interest in disclosure. Thus, it is impossible for us to determine whether the public interest outweighs the privacy concerns in this case as the law requires. See Reporters Comm., 489 U.S. at 762, 776; Wiener, 943 F.2d at 984; see also Nix v. United States, 572 F.2d 998, 1006 (4th Cir. 1978) (holding that certain documents were exempt from disclosure even though the privacy rights implicated were [**15]  minimal because the public interest in disclosure was even less). This court has indicated that a "'reviewing court should not be required to speculate on the precise relationship between each exemption claim and the contents of the specific documents.'" Wiener, 943 F.2d at 988 (citation omitted). However, that is exactly what we are being asked to do in this case. Accordingly, we vacate the district court's order to disclose the documents containing the handwriting of the seven named agents and remand this matter with the instruction that the court apply the balancing test outlined above to the specific documents ordered produced. n5 Only then will this court be able properly to review the district court's decision.

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n5 We note that the district court need not apply the balancing test to each specific document if the court determines that the documents can be considered "categorically" rather than on an ad hoc basis. See Reporters Comm., 489 U.S. at 776-79. 

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 [**16]  

III. Page 427
The IRS's final claim of error involves the district court's ruling that page 427 was not exempt from disclosure under the attorney-client privilege contained in exemption 5. The IRS suggests, and the Church agrees, that this order is not presently appealable because the court did not order production of the document. The court simply ruled in conjunction with deciding the motion for summary judgment that the document was not exempt from disclosure under exemption 5. This court's decision in In re Steele, 799 F.2d 461, 464-65 (9th Cir. 1986), supports the parties' conclusion that the order is not appealable. The Steele court held that a final decision in a FOIA case consists of "'an order by the District Court requiring release of documents by the Government to the plaintiff, or order denying the plaintiff's right to such release.'" Id. at 464 (quoting Green v. Dep't of Commerce, 199 U.S. App. D.C. 352, 618 F.2d 836, 841 (D.C. Cir. 1980)). Because the district court never ordered the government to produce page 427, we conclude that there is no final appealable order as required for this court [**17]  to exercise jurisdiction under 28 U.S.C. §  1291.
REVERSED in part, VACATED in part, and REMANDED.  

54 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee. CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee.  

No. 92-55188, No. 92-55437 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1993 U.S. App. LEXIS 14551 

April 8, 1993, Argued, Submitted, Pasadena, California 

June 9, 1993, Filed 

NOTICE:
 [*1]   THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R.  36-3.  

SUBSEQUENT HISTORY:
Reported as Table Case at: 995 F.2d 230, 1993 U.S. App. LEXIS 21286. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California. D.C. No. CV-91-5344-WDK, D.C. No. CV-91-5343-WDK. William D. Keller, District Judge, Presiding 

DISPOSITION:
AFFIRMED.  

JUDGES:
Before: HALL, WIGGINS, and TROTT, Circuit Judges 

OPINION:

MEMORANDUM DISPOSITION
 OVERVIEW 
The district court denied motions by the Church of Scientology International and the Church of Scientology Western United States ("Churches") for fees and costs under 26 U.S.C. §  7430 in connection with the quashing of three summonses. The district court concluded that the Churches had failed to establish that the position of the United States was not substantially justified. The Churches appeal, claiming error in the district court's interpretation of the statute.  The district court had jurisdiction pursuant to 26 U.S.C. §  7609(h).  Our jurisdiction derives from 26 U.S.C. §  7609(h) and 28 U.S.C. §  1291. We affirm.  [*2]  
FACTS 
On September 26, 1991, the Internal Revenue Service issued three summonses to Joseph Yanny, former counsel to the Churches.  The summonses demanded the production of information that the Churches claim was obtained during Yanny's lengthy tenure as the Churches' attorney.  The summonses indicated that October 8, 1991, was the date for compliance, but a letter accompanying the summonses instructed Yanny that the IRS expected compliance by October 3.  The letter also indicated that Yanny need not notify the Churches that the summonses had been served. 
The Churches learned of the summonses on October 1, 1991, at about 5:00 p.m., when Yanny's attorney called the Churches' attorney.  Concerned that any challenge to the validity of the summonses would be mooted by Yanny's compliance with them on October 3rd, counsel for the Churches worked through the night to bring petitions to quash the summonses. 
Early in the morning of October 2nd, the Churches' counsel attempted to resolve the matter by contacting an Assistant United States Attorney, who was representing the IRS in another pending summons enforcement action between the Churches and the IRS.  The Churches maintain, and  [*3]  the IRS does not refute, that the IRS's attorney refused to withdraw the summonses. As a result, the Churches were compelled to complete work on the petitions to quash and filed them in the district court on the afternoon of October 2nd.  The petitions sought to quash the summonses temporarily to prevent any breach of attorney-client confidences, which the Churches feared would occur if Yanny complied with the summonses. 
Late in the afternoon of October 3rd an order was entered enjoining the IRS from conducting its examination of Yanny until further action by the court determined that the examination was appropriate.  Thereafter, the IRS indicated that it would not attempt to enforce the summonses pending final resolution of the petitions to quash.  In response to the Churches' petitions, the IRS withdrew all of the summonses and asked the district court to dismiss the petitions as moot in light of the withdrawals.  The court dismissed all three petitions. 
Subsequently, the Churches filed motions for fees and costs, seeking to recover the expenses incurred in bringing the petitions.  The district court denied the motions, and the Churches appeal. 
STANDARD OF REVIEW 
We review [*4]  the district court's interpretation of 26 U.S.C. §  7430 de novo.  Huffman v. Commissioner, 978 F.2d 1139, 1143 (9th Cir. 1992). The district court's determination as to whether the position of the United States was substantially justified is reviewed for an abuse of discretion.  Huffman, 978 F.2d at 1143; Estate of Merchant v. Commissioner, 947 F.2d 1390, 1392-93 (9th Cir. 1991); Bertolino v. Commissioner, 930 F.2d 759, 761 (9th Cir. 1991). 
DISCUSSION 
To recover costs and attorney's fees under §  7430, the Churches must show that they are prevailing parties and that they have exhausted their administrative remedies. See 26 U.S.C. §  7430 (1988).  The IRS concedes that the Churches have exhausted their administrative remedies and does not argue here that any of the restrictions placed on recovery of attorney's fees under §  7430(b) apply in this case.  Thus, the question before us is whether the Churches are prevailing parties within the meaning of the statute. 
Section 7430 [*5]  (c)(4) provides that "the term 'prevailing party' means any party . . . (i) which establishes that the position of the United States in the proceeding was not substantially justified, (ii) which . . .  (II) has substantially prevailed with respect to the most significant issue . . . , and (iii) which meets the requirements of the 1st sentence of section 2412(d)(1)(B) of title 28 . . . ." The parties agree that the Churches have substantially prevailed with respect to the most significant issue and that the Churches' request for fees meets the requirements of §  2412(d)(1)(B).  The only issue remaining is whether the position of the United States was substantially justified. 

Section 7430(c)(7) states: 

The term "position of the United States" means-- A) the position taken by the United States in a judicial proceeding . . . and (B) the position taken in an administrative proceeding . . . as of the earlier of (i) the date of the receipt by the taxpayer of the notice of the decision of the Internal Revenue Service Office of Appeals, or (ii) the date of the notice of deficiency. 

Id. (emphasis added).  The IRS contends that this section precludes consideration of any  [*6]  conduct prior to the initiation of litigation in determining whether the position of the United States was substantially justified because there was no notice of deficiency or notice of decision from the IRS Office of Appeals in these cases.  The Churches concede that there was neither a deficiency notice nor an Office of Appeals notice of decision involved here.  Nevertheless, they contend that the district court should have considered the IRS's prelitigation conduct in determining whether the position of the United States was substantially justified. The district court agreed with the IRS, and the law compels us to affirm. 
Section 7430 is a waiver of sovereign immunity.  See Campbell v. United States, 835 F.2d 193, 195 (9th Cir. 1987) ("Except to the extent it has waived its immunity, the federal government is immune from claims for attorneys' fees."); In re Graham, 981 F.2d 1135, 1138-39 (10th Cir. 1992). As such, we must construe it strictly in favor of the government, and we should not find a waiver absent clear congressional intent. United States v. Washington, 872 F.2d 874, 877 (9th Cir. 1989); [*7]  Campbell, 835 F.2d at 195. 
Because neither a notice of deficiency nor a notice of decision from the Office of Appeals ever issued here, §  7430 permits the consideration only of the IRS's position "in a judicial proceeding." Nonetheless, the Churches contend that §  7430 should not be read to preclude consideration of the IRS's conduct prior to the filing of the petitions to quash in determining whether the position of the United States was substantially justified in the judicial proceeding. Unfortunately, they fail to cite any authority for such a reading. n1 They argue that their interpretation is consistent with congressional intent and prevents circumvention of the attorneys fees provision by the IRS.  They also argue that the IRS should not be permitted to take indefensible positions prior to the initiation of litigation and then avoid paying attorney's fees by acting circumspectly once a petition or complaint is filed.  While we find the Churches' arguments persuasive, they are inconsistent with the express provisions of the statute, and we are wholly without authority to rewrite the statute. Congressional intent to waive the sovereign immunity  [*8]  of the federal government "'cannot be implied but must be unequivocally expressed.'" United States v. Mitchell, 445 U.S. 535, 538 (1980) (quoting United States v. King, 395 U.S. 1, 4 (1969)); see also Washington. 872 F.2d at 877; cf. Barnes v. United States, No. S90-1592-WBS/GGH, 1991 WL 323001, at *4 (E.D. Cal. Nov. 26, 1991) ("It is not the province of the courts, but rather that of Congress to remedy this apparent loophole in the statute [ §  7430]."). 

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 n1 The Churches do cite Kenagy v. United States, 942 F.2d 459 (8th Cir. 1991), to support their position.  Considering the same version of the statute at issue here, the Kenagy court stated that "the position of the United States is the legal and factual position asserted by it during the administrative and court proceedings, regardless of whether the position originated before or after the proceedings began." Id. at 464. We note, however, that a notice of decision from the Office of Appeals had issued in Kenagy. In addition, Kenagy can be read to support the district court's position as easily as it can be read to advance the Churches' argument.  The opinion states that a court should only consider the position of the United States during court proceedings in a case like this one.  Thus, we find the Churches' citation to the Kenagy language defining "position of the United States" unpersuasive and wholly inapposite to the resolution of this case.

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Few courts have considered the question now before us. Those that have uniformly have held that when there is neither a notice of deficiency nor a notice of decision from the IRS Office of Appeals, "the express terms of the statute . . . limit [a court's] assessment of the United States' position . . . to the position taken as of the initiation of the judicial proceeding." Nathaniel v. United States, No. S91-0056-WBS/GGH, 1991 WL 323002, at *2 (E.D. Cal. Nov. 26, 1991) (emphasis added); see also Nunn v. Commissioner, 63 Tax Ct. Mem. Dec. (CCH) 3060 (1992); Estate of Holmes v. United States, No. 89-2581, 1990 WL 10062, at *2-3 (E.D. Pa. Feb. 5, 1990).  Moreover, this court unequivocally stated in Huffman that "case law holds that if the Government concedes the petitioner's case in its answer, its conduct is reasonable." n2 978 F.2d at 1148; see also Bertolino, 930 F.2d at 761 (indicating that if the IRS settles a case with reasonable dispatch once a triggering event occurs, its conduct is substantially justified); cf. Hanson v. Commissioner, 975 F.2d 1150, 1156 n.4 (5th Cir. 1992) [*10]  (court left open the question whether the government should have to pay fees when it surrenders at the very outset of litigation but indicated that at that point a "plaintiff's cost will be very small, perhaps de minimis," suggesting that such a surrender may preclude the recovery of attorney's fees under §  7430). 

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 n2 Under earlier versions of the statute the standard was reasonable not substantially justified. The change, however, is little more than semantic.  Subsequent cases have indicated that the substantially justified standard is basically the same as the former reasonable standard.  See Huffman, 978 F.2d at 1147 n.8 ("'substantially justified' means 'justified to a degree that could satisfy a reasonable person'") (quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988)); Kenagy, 942 F.2d at 464 ("the government's position is not substantially justified where it is unreasonable").

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More importantly, the plain language [*11]  of the statute indicates that the relevant position of the United States is its position in a judicial proceeding. It is axiomatic that the United States can have no position in a judicial proceeding until a judicial proceeding actually has been initiated. A judicial proceeding is initiated only upon the filing of a petition or complaint.  See Huffman, 978 F.2d at 1145 ("Courts have held that actions taken . . . by the IRS prior to initiation of litigation in the Tax Court or the district court are 'non-judicial in nature.'"); see also United States v. Baggot, 463 U.S. 476, 479 (1983) (indicating that an IRS audit and its internal appeal component are not judicial proceedings).  Thus, while conduct prior to the initiation of litigation may color a court's determination as to whether the position of the United States was substantially justified, see Huffman, 978 F.2d at 1148 ("Congressional intent behind section 7430 is not served by looking only to the answer to determine whether the government's position in the judicial proceeding was 'substantially justified.'"); Hanson, 975 F.2d at 1152 n.2 [*12]  (indicating that the court could review the government's position in the judicial proceeding against the backdrop of administrative actions to determine if the position in litigation was substantially justified), the government's position in the judicial proceeding must be determined with reference only to actions taken after a complaint or petition has been filed. 
Here, the parties agree that the only action taken by the IRS following the Churches filing of the petitions was to withdraw the subpoenas.  Thus, we must conclude that the position of the United States in the judicial proceeding was substantially justified and that the district court's interpretation of the statute was correct. 
AFFIRMED.  

55 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee. CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff-Appellant, v. UNITED STATES OF AMERICA, Defendant-Appellee.  

No. 92-55188, No. 92-55437 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

995 F.2d 230; 1993 U.S. App. LEXIS 21286 

April 8, 1993, Argued, Submitted, Pasadena, California   
June 9, 1993, Filed 

NOTICE:
 [*1]    THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R.  36-3.  

OPINION:

AFFIRMED
[EDITOR'S NOTE: Full-Text Slip Opinion Reported at 1993 U.S. App. LEXIS 14551]. 

56 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF SAN FRANCISCO; CHURCH OF SCIENTOLOGY OF CALIFORNIA et al., Plaintiffs-Appellants, v. INTERNAL REVENUE SERVICE, Defendant-Appellee. CHURCH OF SCIENTOLOGY OF SAN FRANCISCO, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE, Defendant-Appellee.  

No. 91-15730, No. 91-15734 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

991 F.2d 560; 1993 U.S. App. LEXIS 7872; 71 A.F.T.R.2d (RIA) 1536; 25 Fed. R. Serv. 3d (Callaghan) 777; 93 Cal. Daily Op. Service 2760; 93 Daily Journal DAR 4783 

November 5, 1992, Argued, Submitted, Pasadena, California   
April 16, 1993, Filed 

SUBSEQUENT HISTORY:
Rehearing Denied July 14, 1994, Reported at: 1994 U.S. App. LEXIS 17146. 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Northern District of California. D.C. No. CV-90-1279-CAL, No. CV-90-02008-CAL. Charles A. Legge, District Judge, Presiding.  

COUNSEL:
Kendrick L. Moxon, Bowles & Moxon, Los Angeles, California, for the plaintiffs-appellants.

Shirley D. Peterson, Assistant Attorney General, Washington, D.C., for the defendant-appellee.  

JUDGES:
Before: Robert R. Beezer, Alex Kozinski, and Andrew J. Kleinfeld, Circuit Judges.

Opinion by Judge Beezer.  

OPINIONBY:
BEEZER 

OPINION:

 [*561]  OPINION

BEEZER, Circuit Judge:
We consider a plaintiff's right to conduct discovery prior to summary judgment in an action brought against the government under the Freedom of Information Act, 5 U.S.C. §  552 (1982) ("FOIA").
In two consolidated appeals, member Churches of Scientology challenge the district court's grant of summary judgment in favor of the Internal Revenue Service ("IRS"). We must determine whether the district court erred in denying the Churches the opportunity to conduct discovery regarding the adequacy of the IRS's response to the Churches' FOIA requests. We reverse and remand the judgments of the district court.  [**2]  
I

A. Appeal No. 91-15730
In virtually identical letters, the Church of Scientology of San Francisco, the Church of Scientology of Orange County and the Church of Scientology of California ("Churches") requested, pursuant to FOIA, access to records of the IRS relating to the designation or inclusion of each of the Churches or their parishioners in a so-called "tax shelter litigation project." Each letter asked the IRS to conduct a thorough search of all record and file systems that may contain responsive information, including project files, tax shelter branch files, Regional Shelter Coordination Files, as well as various data bases.
The IRS denied the requests on the grounds that all of the documents were exempt from disclosure under FOIA "Exemption 3," 5 U.S.C. §  552(b)(3), in conjunction with Section 6103 of the Internal Revenue Code, 26 U.S.C. §  6103 (1986), and FOIA "Exemption 5," 5 U.S.C. §  552(b)(5). n1

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n1 5 U.S.C. §  552(b)(3) exempts matters

specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld.
5 U.S.C. §  552(b)(5) exempts "inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency."

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The Churches subsequently filed administrative appeals to which the IRS did not respond. The Churches then filed suit in district court to compel disclosure. In its answer, the IRS again claimed the documents at issue were exempt from disclosure.
In response to the Churches' attempt to take depositions of IRS officials, the IRS filed a motion for a protective order to preclude all discovery prior to its motion for summary judgment. The district court granted the IRS's motion for a protective order, agreeing with the IRS that discovery was, at this point, "very premature" and that the dispute was a "case management," not a legal, problem.
The court then ordered the IRS to produce a "Vaughn Index," n2 of the withheld documents and informed the Churches that the court would consider permitting discovery only after the IRS had filed its summary judgment motion if the Churches then came forward and identified factually disputed issues.

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n2 See Vaughn v. Rosen, 157 U.S. App. D.C. 340, 484 F.2d 820 (D.C. Cir. 1973). cert. denied, 415 U.S. 977, 39 L. Ed. 2d 873, 94 S. Ct. 1564 (1974).

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The IRS subsequently filed a Vaughn Index and asserted that only 12 pages of records were responsive to the FOIA request. Shortly thereafter, the IRS filed its motion for summary judgment. In support of its motion, the IRS submitted a memorandum and declarations of IRS employees regarding the nature and adequacy of the search. The Churches opposed the motion, and moved for a continuance pursuant to Federal Rule of Civil Procedure 56(f) and leave to take discovery.
In a hearing on the motion, the district court expressed dissatisfaction with the declarations regarding the scope of the agency's search for records and gave the IRS 30 days to "beef up" its declarations. The IRS subsequently filed a single supplemental declaration.
 [*562]  The Churches filed a supplemental opposition to the motion for summary judgment, contending that without discovery they could not "fully and reasonably oppose" the motion for summary judgment and that the declarations concerning the searches were defective and insufficient. The court took the matter under submission, eventually ruling that the "declarations meet the standards required of the IRS by section 552(a)(3)(A), Truitt, and Miller." n3

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n3 Truitt v. Dept. of State, 283 U.S. App. D.C. 86, 897 F.2d 540, 542 (D.C. Cir. 1990) and Miller v. United States Dept. of State, 779 F.2d 1378, 1383 (8th Cir. 1985) both hold that the adequacy of a search under the Freedom of Information Act is judged by a standard of reasonableness.

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 [**5]  

B. Appeal No. 91-15734
In a separate case, the Church of Scientology of San Francisco requested access to IRS records maintained in the IRS Fresno Service Center concerning the Church and which related to the establishment and inclusion of the Church and its members in an "illegal tax protestor program."
Repeating the pattern described in the first appeal, the IRS claimed exemption from FOIA and ignored the Church's administrative appeal. The Church's attempt to depose the IRS was again challenged by an IRS motion for a protective order requesting the court to stay discovery until the IRS had prepared and filed its motion for summary judgment. As in the first appeal, the Church opposed the motion, arguing that discovery was necessary in order to permit the Church competently to oppose any future summary judgment order by the IRS. The district court granted the motion staying discovery.
The IRS subsequently moved for summary judgment, submitting declarations by IRS employees in support of the motion. Arguing that it was impossible for the Church to make a determination as to the completeness of the search, the Church opposed the motion and requested reasonable discovery under  [**6]  Rule 56(f). On the same day it decided case No. 91-15730, and for the same reasons, the district court granted summary judgment in favor of the IRS.
II
A denial of a Rule 56(f) application is reviewed under the abuse of discretion standard. VISA Int'l Serv. v. Bankcard Holders of Am., 784 F.2d 1472, 1475 (9th Cir. 1986). The adequacy of a search under the Freedom of Information Act is judged by a standard of reasonableness. Zemansky v. United States EPA, 767 F.2d 569, 571 (9th Cir. 1985). We review a district court's grant of summary judgment de novo. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n., 809 F.2d 626, 629 (9th Cir. 1987).
Rule 56(f) of the Federal Rules of Civil Procedure gives the trial court discretion to allow discovery prior to the grant of summary judgment where "it appears from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition."
In general, a denial of a Rule 56(f) application is disfavored where the party opposing summary judgment makes a timely application [**7]  which specifically identifies relevant information, and where there is some basis for believing that the information sought actually exists. Visa, 784 F.2d at 1475. On the other hand, courts have denied a Rule 56(f) application where the evidence sought "was almost certainly nonexistent or was the object of pure speculation." Id. (citations omitted). We have not previously addressed whether it is an abuse of discretion to deny any discovery prior to hearing a motion for summary judgment in a FOIA case.
On its face, Rule 56(f) leaves the decision to grant discovery wholly within the discretion of the district judge. n4 In determining whether the district court abused its discretion in the cases before us, we must first  [*563]  consider the peculiar disadvantages facing a FOIA plaintiff.

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n4 See Fed. R. Civ. P. 56(f) ("The court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.") (emphasis added).

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**8]  
In a FOIA case, the government agency has control of the information. This creates a situation where "the court is deprived of the benefit of informed advocacy to draw its attention to the weaknesses in the withholding agency's arguments." Wiener v. FBI, 943 F.2d 972, 977 (9th Cir. 1991), cert. denied, 120 L. Ed. 2d 886, 112 S. Ct. 3013 (1992). It is "unreasonable to expect a trial judge to do as thorough a job of illumination and characterization as would a party interested in the case." Id. (quotation omitted); see also Washington Post Co. v. U.S. DHHS, 275 U.S. App. D.C. 101, 865 F.2d 320, 325 (D.C. Cir. 1989) ("The integrity of a court's de novo [FOIA] judgment rests upon an adversarial system of testing for truth when critical adjudicative facts are subjects of a contest.") (quotation omitted).
The IRS cites cases from the Fourth and District of Columbia Circuits for the proposition that courts "normally" do not allow discovery in a FOIA case prior to the government's motion for summary judgment. See Simmons v. United States Dept. of Justice, 796 F.2d 709 (4th Cir. 1986); Goland v. CIA, 197 U.S. App. D.C. 25, 607 F.2d 339 (D.C. Cir. 1978), [**9]  cert. denied, 445 U.S. 927, 63 L. Ed. 2d 759, 100 S. Ct. 1312 (1980).
Unlike Simmons and Goland, the case before us does not threaten the disclosure of sensitive government information. See Miller v. United States Dept. of State, 779 F.2d 1378, 1383 (8th Cir. 1985) (noting the special considerations that come into play in a FOIA case that involves issues of national security). Moreover, the D.C. Circuit itself has, since Goland, recognized the need of a party to use discovery to establish whether an adequate FOIA search has taken place. See Weisberg v. Webster, 242 U.S. App. D.C. 186, 749 F.2d 864, 868 (D.C. Cir. 1984) ("the government should be able to use the discovery rules in FOIA suits like any other litigant, to uncover facts which will enable it to meet its burden of proving . . . the adequacy of its search.") (emphasis added).
We make no broad statement today regarding the general discretion of a district court to grant or deny a Rule 56(f) motion; the special disadvantages facing this FOIA plaintiff make for a special case. Considering the questionable sufficiency of the Vaughn index, the apparent evasiveness of the IRS [**10]  responses, the slim showing of a need for as extensive a cloak of secrecy as the Government claimed, and the absence of any opportunity for the Churches to conduct discovery on the adequacy of the Vaughn index and completeness and truthfulness of the Government declarations, it was an abuse of discretion entirely to bar discovery by the plaintiffs prior to the granting of summary judgment against them. On remand, the district court is directed to provide the plaintiffs in both appeals reasonable opportunity to conduct discovery relevant to applicability of the FOIA exemptions or accuracy and completeness of the Vaughn index and declarations.
The judgments of the district court are REVERSED and REMANDED.  

57 of 133 DOCUMENTS 

UNITED STATES OF AMERICA, Petitioner-Appellee, v. FRANK ZOLIN, COUNTY CLERK, COUNTY OF LOS ANGELES, Respondent, and CHURCH OF SCIENTOLOGY OF CALIFORNIA, Intervenor-Appellant.  

No. 91-55506 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

984 F.2d 988; 1993 U.S. App. LEXIS 865; 71 A.F.T.R.2d (RIA) 1993; 93 Cal. Daily Op. Service 424; 93 Daily Journal DAR 884 

January 21, 1993, Filed 

PRIOR HISTORY:
 [*1]  On Remand from the United States Supreme Court. D.C. No. CV-85-0440-HLH.  

JUDGES:
Before: Joseph T. Sneed, Mary M. Schroeder and William C. Canby, Jr., Circuit Judges.  

OPINION:

 ORDER
On November 16, 1992, the Supreme Court vacated this court's September 10, 1991 order which had dismissed this appeal as moot and remanded the case for further proceedings. Church of Scientology of California v. United States, ___ U.S. ___, 121 L. Ed. 2d 313, 113 S. Ct. 447, 453 (1992). The Court held that compliance with the Internal Revenue Service summons enforcement order did not render the appeal moot because this court can still fashion an effectual partial remedy by directing the government to return or destroy all copies of the tapes in its possession. Id. at 450-51. In accordance with the Supreme Court's decision, the May 30, 1991 order to show cause is hereby discharged. The Clerk shall reset the remaining briefing schedule.  

58 of 133 DOCUMENTS 

UNITED STATES OF AMERICA, Plaintiff-Appellant/ CrossAppellee, v. CHURCH OF SCIENTOLOGY WESTERN UNITED STATES and CAL COLE, PRESIDENT, Defendants-Appellees/ Cross-Appellants. UNITED STATES OF AMERICA, Plaintiff-Appellant/ CrossAppellee, v. CHURCH OF SCIENTOLOGY International and Lynn Farny, Secretary, Defendants-Appellees/ Cross-Appellants.  

Nos. 91-55479/55481, Nos. 91-55489/55491 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

973 F.2d 715; 1992 U.S. App. LEXIS 19119; 92-2 U.S. Tax Cas. (CCH) P50,441; 70 A.F.T.R.2d (RIA) 5574; 92 Cal. Daily Op. Service 7123; 92 Daily Journal DAR 11503 

May 6, 1992, Argued and Submitted, Pasadena, California   
August 19, 1992, Filed 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California. (Central California). (Central California). D.C. No. CV-90-3390-HLH. D.C. No. CV-90-3690-HLH. Harry L. Hupp, District Judge, Presiding.  

COUNSEL:
John A. Dudeck, Jr., Esq., Department of Justice, Washington, D.C., for the defendant-appellant.

Eric M. Lieberman, Esq., Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C.; and Michael Lee Hertzberg, New York, New York, for the plaintiff-appellee.  

JUDGES:
Before: Thomas Tang, Mary M. Schroeder and Robert R. Beezer, Circuit Judges.

Opinion by Judge Schroeder.  

OPINIONBY:
SCHROEDER 

OPINION:

 [*716]  OPINION

SCHROEDER, Circuit Judge:
I. Introduction
These consolidated appeals represent the latest round in the Internal Revenue Service's legal struggle to determine the tax status and tax liability of the various entities which comprise the Church of Scientology. The struggle has a long history in the federal courts. n1 This matter arises out  [*717]  of parallel cases involving two separate Scientology organizations: the Church of Scientology Western United States (CSWUS) and the Church of Scientology International (CSI). The district court treated the CSWUS case as the lead case and the CSI case as related.  [**2]  Since most of the issues and much of the relevant background are identical, we will do likewise.

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n1 See, e.g., Hernandez v. Commissioner, 490 U.S. 680, 104 L. Ed. 2d 766 , 109 S. Ct. 2136 , 63 A.F.T.R.2d 1395 (1989) (payments made for spiritual evaluation and training services provided by Scientology not deductible as contributions or gifts within the meaning of 26 U.S.C. §  170); Church of Scientology of California v. IRS, 484 U.S. 9, 98 L. Ed. 2d 228 , 108 S. Ct. 271 , 60 A.F.T.R.2d 5832 (1987) (district court properly refused church's extensive FOIA request to produce all tax returns which mention the church); United States v. Church of Scientology of Boston, Inc., 933 F.2d 1074, 67 A.F.T.R.2d 1095 (1st Cir. 1991) (addressing issues nearly identical to those raised by this appeal); United States v. Zolin, 905 F.2d 1344, 66 A.F.T.R.2d 5965 (9th Cir. 1990) (conditional enforcement of IRS request seeking materials in the possession of Los Angeles County Superior Court for use in tax investigation affirmed on the grounds that material evidenced an intent to defraud IRS and, therefore, came within the crime-fraud exception to the attorney-client privilege), cert. denied, 111 S. Ct. 1309 (1991); Church of Scientology of California v. Commissioner, 823 F.2d 1310, 60 A.F.T.R.2d 5386 (9th Cir. 1987) (IRS properly denied church tax deductible status under 26 U.S.C. §  501(c)(3)), cert. denied, 486 U.S. 1015, 100 L. Ed. 2d 214 , 108 S. Ct. 1752 (1988); Founding Church of Scientology v. United States, 188 Ct. Cl. 490, 412 F.2d 1197, 24 A.F.T.R.2d 5187 (Ct. Cl. 1969) (tax-exempt status of Scientology entity revoked), cert. denied, 397 U.S. 1009, 25 L. Ed. 2d 422 , 90 S. Ct. 1237 (1970); Church of Spiritual Technology v. United States, No. 581-88T, 1992 U.S. Cl. Ct. LEXIS 282 (Cl. Ct. June 29, 1992) (denying tax-exempt status to entity organized to archive collected writings of L. Ron Hubbard on grounds that it served the non-tax-exempt purposes of related Scientology entities).
The conflict has also occasionally involved other branches of the government. See, e.g., Founding Church of Scientology of Washington, D.C., Inc. v. Webster, 802 F.2d 1448 (D.C. Cir. 1986) (church's action against the FBI alleging an "extensive campaign of government harassment" dismissed for failure to comply with a discovery order), cert. denied, 484 U.S. 871, 98 L. Ed. 2d 150 , 108 S. Ct. 199 (1987); Church of Scientology of California v. Foley, 640 F.2d 1335 (D.C. Cir.) (per curiam) (en banc) (statute of limitations barred case seeking civil damages against employees of the Department of Labor, IRS and Department of State for allegedly disseminating false information in connection with the visa applications of foreign church members), cert. denied, 452 U.S. 961, 69 L. Ed. 2d 972 , 101 S. Ct. 3110 (1981). 

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**3]  
In this appeal, we are called upon to look for the first time in this circuit at the provisions of the statute enacted in 1984 setting forth the procedures the government must follow and the standards it must meet when conducting tax inquiries and examinations of churches. The Church Audit Procedures Act (CAPA), section 1033 of the Tax Reform Act of 1984, Pub. L. No. 98-369, 98 Stat. 1034, codified at 26 U.S.C. §  7611, provides that before the IRS may begin an inquiry into the tax status of any organization claiming to be a church, the Service must satisfy certain prerequisites. Among other things, it must articulate a reasonable belief in the need for an investigation and provide special notice to the church. See 26 U.S.C. §  7611(a)(1). Further, the statute circumscribes the scope of examinations, allowing the IRS to demand documents only "to the extent necessary" to determine tax liability or tax-exempt status. See 26 U.S.C. § §  7611(b)(1)(A)&(B).
The principal legal issue in this case is the correct interpretation and application of this "to the extent necessary" restriction. Before the district court the IRS contended that, properly interpreted, this provision places no [**4]  greater burden upon it in a church summons enforcement proceeding than the burden imposed in a run-of-the-mill summons enforcement under United States v. Powell, 379 U.S. 48, 57, 13 L. Ed. 2d 112 , 85 S. Ct. 248 , 14 A.F.T.R.2d 5942 (1964) (IRS need only allege documents "may be relevant" to a legitimate purpose). The defendant churches argued that section 7611 imposes upon the IRS the burden of showing actual necessity for the documents it seeks, not merely alleging relevance as required under Powell. As to the application of the standard in these specific cases, the churches contended that the IRS had failed with respect to each and every document category sought in the summonses to discharge this higher burden. They also argued that bad faith on the part of the IRS constituted a complete defense to the summons actions.
The district court held that there was no IRS bad faith but agreed with the churches that the statute requires more than a mere allegation that the documents the IRS seeks to examine are relevant to an appropriate IRS inquiry. Concluding that some but not all of the document categories sought by the IRS were necessary to its inquiries, the district court ordered partial enforcement of the summonses.  [**5]  The IRS appealed the district court's decisions and the churches cross-appealed.
We affirm the district court in every particular. It properly held that, to give the statutory language full effect, something more than the mere allegation of relevance must be required of the IRS. This outcome accords with that reached by the only other circuit to confront the question of CAPA's proper interpretation (not coincidently in a case involving another Scientology entity). See United States v. Church of Scientology of Boston, Inc., 933 F.2d 1074, 1076-79, 67 A.F.T.R.2d 1095 (1st Cir. 1991). We also affirm the district court's conclusion that these IRS inquiries have an appropriate purpose and are not the product of bad faith. Finally, we hold that the court properly applied the higher standard required by section 7611 when it determined that the IRS was entitled to only partial enforcement of the summonses.
II. Background of the CSWUS case
A certain amount of historical detail is required to appreciate the full flavor of this  [*718]  litigation and the nature of the issues presented to the district court and to this court. Our principal focus is on CSWUS and throughout this opinion, the term "the [**6]  Church" will refer to CSWUS. Since the material facts of the two cases addressed in this appeal are almost identical, however, this background discussion is relevant to the CSI case as well.
CSWUS was granted tax-exempt status in 1980. At the time, it was known as the Church of Scientology of San Diego and was one of several entities subordinate to the former umbrella organization of Scientology, the Church of Scientology of California. The IRS alleges that, following the 1984 decision of the Tax Court to deny tax-exempt status to the so-called "mother church," see Church of Scientology of California v. Commissioner, 83 T.C. 381 (1984), aff'd, 823 F.2d 1310, 60 A.F.T.R.2d 5386 (9th Cir. 1987), cert. denied, 486 U.S. 1015, 100 L. Ed. 2d 214 , 108 S. Ct. 1752 (1988), many of the functions and operating units of that umbrella organization were moved into the Church of Scientology of San Diego, which ultimately became CSWUS. Following the 1988 denial of tax-exempt status to three other Scientology entities (including CSI), the IRS turned its attention upon CSWUS to determine whether changes in church organization had affected CSWUS's tax-exempt status.
On November 23, 1988, pursuant [**7]  to the requirements of section 7611, the IRS sent CSWUS a Church Tax Inquiry Letter, seeking answers to questions of concern to the Service. The Church submitted written responses to these questions which apparently failed to allay the IRS's concerns. Consequently, the IRS sent CSWUS a Notice of Church Examination. Included in the Notice was an invitation to representatives of CSWUS to come into IRS offices for a conference in hopes that a full-fledged church tax examination might be avoided. The statute requires such an invitation. 26 U.S.C. §  7611(b)(3)(A)(iii). The Church initially requested the conference. When it learned which examining agents the IRS had assigned to the case, however, it said it would not participate in the conference unless the agents were replaced. When the IRS declined to reassign the agents, the Church refused to attend the conference.
After the date for the conference had passed, the IRS informed CSWUS that it still believed an examination was necessary and requested CSWUS to produce voluntarily certain documents for inspection. The Church notified the IRS that it would not produce any of the requested documents because the IRS had "failed to comply with [**8]  the substantive and procedural requirements of 26 U.S.C. §  7611," and because CSWUS officials believed that the Church would not receive fair and objective treatment from the agents assigned to the examination.
On December 20, 1989, the IRS issued the summons which is the subject of this case, ordering the Church to produce documents in 47 categories for the years 1985 through 1987. The Church again refused and the IRS petitioned the district court to enforce the summons, submitting declarations which asserted, in conclusory fashion, that the elements required under United States v. Powell had been met and that the summoned documents were "relevant and necessary" to the examination of the Church and determination of whether it was entitled to tax-exempt status.
During an initial show cause hearing on the merits of the summons, the district court confronted two sets of issues. First, the court addressed Church allegations that improper prejudice and bad faith tainted the entire inquiry. Following a brief evidentiary hearing, the district court found that the process had not been infected by an improper animus. The court concluded that, 

after hearing the testimony of [the responsible [**9]  IRS agent], the court finds that there is no prejudice which would affect the proper carrying out of his duties. In short, the problem of the alleged "prejudice" of the IRS agents is a molehill which has been made into a mountain.
The second issue addressed at that hearing was whether IRS declarations that the documents sought were relevant and necessary met the requirements for enforcement  [*719]  of the summons. The court ruled that section 7611 imposes a higher burden upon the IRS than Powell alone and that the affidavits offered in support of the summons were insufficient to meet the necessity standard: 

In this court's opinion, 26 U.S.C. §  7611 requires more than a showing of relevance, as was the standard under Powell . . . and its line of cases for non-church IRS investigations. . . . The need for the investigation may put limits on the breadth of what could be considered "necessary", but there would still need to be shown why particular categories of documents are "necessary" to carry out a particular investigation. The IRS, apparently believing that such a showing is not a prerequisite for an order enforcing a summons, has not attempted to make such a showing here. Thus,  [**10]  the continuance [granted today] is to allow such a showing to be made.
In the several months the court granted the IRS to expand on the showing of necessity, the IRS prepared and submitted a supplemental declaration which addressed, category-by-category, the documents the IRS sought and the general rationale behind each request. The supplemental declaration urged the court to conclude that each category was necessary. The Church continued to maintain that "absolutely nothing" the IRS sought was necessary for the purposes of its inquiry.
After reviewing these submissions, the district court opined that, "the additional declarations and briefing has not been of great aid to the court." The IRS, the court observed, "is neither accustomed [to] nor comfortable" with the idea of showing necessity when, "in all other areas of their work, they are entitled to see anything remotely relevant." The district court found the Church's extreme position to be equally unilluminating. The district court therefore undertook its own analysis which it described as follows:
The court has examined each description of the category of documents and measured the same against the purposes of the examination [**11]  [i.e., whether the Church has a substantial nonexempt commercial purpose and whether net earnings of the church inure improperly to the benefit of individuals]. . . . The court believes that "necessity" means that something more than relevancy must be present. While the documents must be relevant, there must be some showing that they contain the type of information which has a relation to the purposes of the examination set forth.
Applying these criteria, the court found certain categories of documents to be "necessary to the permissible scope of the examination" and therefore ordered these document categories to be produced. The court denied enforcement as to the balance of the categories.
From this order the IRS appealed, alleging that the district court erred in demanding too great a showing of "necessity," that the court misapplied the accepted burden of proof rules, and that, even under the court's own standard, the summons should have been fully enforced. The Church cross-appealed, challenging the district court's finding that the tax inquiry was being conducted for a proper purpose, alleging that it was entitled to a full evidentiary hearing on its charges of bad faith and  [**12]  that the summons, under the standard articulated by the district court, should have been denied in its entirety.
III. The IRS's Appeal in the CSWUS case
The IRS's interpretation of section 7611 would require us to read out of the church audit provisions the special protections which were the obvious intent of Congress. The Code provides that a church examination may be made only 

(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and 

(B) in the case of religious activities, to the extent necessary to determine whether an organization claiming to be a church is a church for any period. 

26 U.S.C. §  7611(b)(1).
The government contends that the term "to the extent necessary" here should be  [*720]  defined to mean "appropriate and helpful," or "possibly relevant" in accordance with the interpretation of the word "necessary" as used in other sections of the Internal Revenue Code. See Commissioner v. Tellier, 383 U.S. 687, 689, 16 L. Ed. 2d 185 , 86 S. Ct. 1118 , 17 A.F.T.R.2d 633 (1966) (a "necessary" expense for purposes of §  162 is one that is "appropriate and helpful"); Powell, 379 U.S. at 53 (requirement under [**13]  §  7605 that taxpayer be notified in writing that additional audit is "necessary" imposes no duty to demonstrate "probable cause" or other similar showing). It is clear, however, that the meaning of "necessary" in this context is something more than "possibly relevant." The government's argument ignores the fact that the only purpose of section 7611(b)(1) is to articulate a restriction upon the scope of the government's inquiry. "It is our duty 'to give effect, if possible, to every clause and word of a statute,' " United States v. Menasche, 348 U.S. 528, 538-39, 99 L. Ed. 615 , 75 S. Ct. 513 (1955) (quoting Montclair v. Ramsdell, 107 U.S. 147, 152, 27 L. Ed. 431 , 2 S. Ct. 391 (1883)). To read section 7611(b)(1) as imposing no special duty would reduce the provision to a nullity. Our observation about the intent of the statute is further bolstered by the legislative history which shows that the provisions were specially enacted to add protections for churches from possibly unfounded or overly intrusive tax examinations. See 130 Cong. Rec. S4486 (April 12, 1984) (comments of bill author Senator Grassley) (CAPA was "drafted to be certain churches are protected from unfounded examinations"). We therefore [**14]  agree with the First Circuit that the IRS has failed to overcome the "formidable obstacles" which stand in the way of our accepting the Service's "counter intuitive" interpretation of the word "necessary." Church of Scientology of Boston, 933 F.2d at 1076-77.
The government also argues that the district court misplaced established burdens of proof when it determined that the IRS failed to demonstrate that certain categories of documents were not necessary to its investigation. The government's contention amounts to a restatement of its position that it fully satisfied its initial burden by merely alleging necessity of the documents and that the Church, for its part, failed to sustain the burden of proving that the documents were neither "appropriate" nor "helpful." Under Powell, the government's allegation that a document may be useful shifts the burden to the taxpayer to show otherwise. The IRS argues that the adoption of a stricter requirement under section 7611 will cripple its investigative abilities because, so interpreted, the statute would require the IRS "to show with swearing certainty, before receiving documents, that the summoned documents would [**15]  significantly help the investigation." The government overdramatizes the burden. As the outcome of this case demonstrates, a court can reasonably discern that some documents are necessary to the investigation of certain ends while others are not. We conclude that Congress intended to limit the summons power in cases involving churches to those necessary documents. Thus, under section 7611, the government is required to make a greater showing in order to establish its prima facie case. Our interpretation does not change the burden scheme, it merely heightens the initial showing required of the IRS.
Finally, the government argues that, if we disagree with its principal legal contentions on the interpretation of the statute, we must nevertheless hold that the district court erred in denying enforcement of the summons with respect to certain categories of documents which, the IRS contends, would have been relevant to legitimate avenues of investigation. In order to assess the validity of the government's position that the documents sought were "necessary," we must look to the scope of that investigation. But first, we turn briefly to the appropriate standard for our review of the district [**16]  court order.
In Ponsford v. United States, 771 F.2d 1305, 56 A.F.T.R.2d 5888 (9th Cir. 1985), this court held that the questions before the district court in the standard summons enforcement proceeding - "whether there is a relationship  [*721]  between the material sought and the investigation, and whether the IRS already has the material that it is seeking in its possession" - are factual inquires which we must review for clear error. Id. at 1308. Though the criteria by which the district court must evaluate a tax summons directed at a church are stricter than required of a standard tax summons, the nature of the district court's inquiry is the same, i.e., to determine the relationship of the information sought to the purpose of the investigation. We will therefore apply the same standard of review and decide whether the district court has committed clear error in its determination that a document or category of documents is "necessary" within the meaning of 26 U.S.C. §  7611(b)(1).
In its order partially enforcing the summons, the district court analyzed the documents sought by the IRS with reference to the aims set out by the IRS in its contacts with the Church. To initiate [**17]  a church tax inquiry, the IRS is required to send a Church Tax Inquiry Letter which, among other things, must explain the concerns which give rise to the inquiry and set out its general subject matter. 26 U.S.C. §  7611(a)(3)(B)(i)(I) & (II). In his Church Tax Inquiry Letter of November 23, 1988 to CSWUS, the IRS Regional Commissioner set out the following concerns: 

1. You are operated for a substantial nonexempt commercial purpose because your activities assist other organizations to maximize sales of goods and services associated with the practice of Scientology; and 2. You are operated for the benefit of private individuals and your net earnings inure to the benefit of private individuals.
As we noted in Church of Scientology of California v. Commissioner, 823 F.2d 1310, 60 A.F.T.R.2d 5386 (9th Cir. 1987), cert. denied, 486 U.S. 1015, 100 L. Ed. 2d 214 , 108 S. Ct. 1752 (1988), churches are tax exempt under 26 U.S.C. §  501(c)(3) only if their purposes are religious (as opposed, for example, to commercial) and "no part of their net earnings inure to the benefit of private individuals. . . . The sole beneficiary of the church's activities must be the public at large." Id. at 1316. [**18]  The IRS's inquiry into the Church's possible commercial purposes and whether profits inure to the benefit of individuals is, thus, plainly for a proper purpose.
Although the district court did not explain, category-by-category, its reasons for excluding certain categories of documents from enforcement, even a cursory review of the order reveals that the material sought by the IRS in those categories for which enforcement was denied contained documents beyond the stated scope of investigation, or documents which duplicated information which the district court had already ordered produced. The district court denied enforcement, for example, of categories which the IRS sought in order to trace the flow of funds within the Church or to discover the identity of sources of Scientology income. These were not relevant to inurement, which entails removing funds from the Church to individuals. To the extent these categories may have been relevant to discerning a commercial purpose, they duplicated information available to the IRS in other documents (such as those detailing the sale of all goods and services).
The scope of the investigation as envisioned by the district court was proper. The [**19]  district court did not err when it declined to enforce the summons with respect to categories which did not fall directly and logically within this proper scope.
IV. The Church's Cross-Appeal
The issues raised by the cross-appeal of CSWUS are similarly without merit. The Church charges that the district court erred in ruling that the IRS is conducting its examination for a legitimate purpose. The Church argues that it should have been granted discovery and was entitled to a full evidentiary hearing on IRS methods and motives. Finally, the Church also takes exception to the various categories for which the district court granted enforcement of the summons, arguing that none of the categories granted should have been enforced.
 [*722]  The district court examined each aspect of the process followed by the IRS pursuant to section 7611 and found nothing to suggest bad faith. The district court heard testimony from IRS officials, including the District Commissioner, regarding the purpose of the IRS's investigation. Properly relying on the procedure for investigating the Church's allegations of bad faith which had been upheld by the Ninth Circuit on two prior occasions, see United States v. Author Servs., Inc., 804 F.2d 1520 (9th Cir. 1986), [**20]  amended, 811 F.2d 1264 (9th Cir. 1987), and United States v. Zolin, 809 F.2d 1411, 1416, 59 A.F.T.R.2d 596 (9th Cir. 1987), aff'd in relevant part, 491 U.S. 554 (1989), the district court reviewed the evidence and denied the Church's motion for discovery and an extended hearing. The district court found that the evidence which, according to the Church, proves the existence of a "nationwide offensive against Scientology organizations and individuals" in fact demonstrates nothing more than a nationally coordinated effort to correctly characterize the Scientology entities and verify their tax liability. The district court's findings were not clearly erroneous.
In addition to challenging the scope of and motive behind the entire tax inquiry, the Church also complains that the IRS did not properly fulfill the conference duty imposed by the Code because, although it offered to confer, it refused to accede to the Church's demands that it replace the agents assigned to the case. With respect to this matter, we agree with the district court's observation that: 

the church could no more have a veto on who does IRS's work for it than the IRS could veto [**21]  the participation of church people because it believes that such people are prejudiced against the IRS.
Finally, applying the standard articulated above to the district court's factual determination of necessity, we find no clear error in the decision to allow enforcement of certain document categories. In its order, the district court granted enforcement with respect to documents which could logically be expected to give the IRS an overview of the flow of money into and out of the organization. Specifically, to shed light on possible commercial purposes, the court granted access to documents detailing the range of goods and services offered by the Church, how they are priced and to whom provided. In addition, to expose possible methods of removing profit from the Church, the court granted enforcement with respect to documents that would allow the IRS to track and characterize all funds leaving the organization, whether identified as costs, charges, fees, salaries, rentals, leases or otherwise and regardless of whether the amounts were paid to another Scientology entity, to Scientology-related individuals or to someone outside of Scientology.
In conclusion, neither party argues persuasively [**22]  that the district court erred in its partial enforcement of the summons in this case. In fact, the district court admirably balanced the competing concerns of disclosure to facilitate proper IRS investigations on the one hand and protection of churches in their special status under CAPA on the other.
V. Companion Case: Church of Scientology International
In the appeals from the district court's decision in the CSI case, the positions of the parties on the issues of statutory interpretation are the same as in the CSWUS case and our resolution is the same. Factually, CSI's situation differs in that CSI is not a tax-exempt organization. The specific concerns addressed by the Regional Commissioner in his Church Tax Inquiry Letter to CSI are thus slightly different:
The [IRS's] information supports a reasonable belief that: 1. You are operated for a substantial commercial purpose because your activities assist other organizations to maximize sale of goods and services associated with the practice of Scientology; and 2. Your earnings from these activities may not be fully reported.
Based on these concerns, the district court granted enforcement of the summons only for documents likely [**23]  to reveal relevant  [*723]  information unavailable from other sources. The district court required CSI to produce documents broadly aimed at characterizing "all funds received" to allow the IRS to verify CSI's earnings, but denied documents calculated to reveal how CSI distributes its profits. Such documents are irrelevant since inurement is not an issue for a non-tax-exempt organization. As with the CSWUS summons, the district court was particularly careful to deny highly intrusive requests for sensitive internal documents when less sensitive documents could provide the same information. As with the CSWUS summons, we see no error in the district court's enforcement of the CSI summons.
VI. Conclusion
We reject the contentions of the appellants and the cross-appellants in both of the cases under consideration here. The disposition of the district court in each is AFFIRMED.  

59 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-Appellants, v. LARRY WOLLERSHEIM; LETA SCHLOSSER; RICHARD OFSHE; MARGARET SINGER, et al.; CHARLES B. O'REILLY, Defendants-Appellees.  

No. 90-56104 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

971 F.2d 364; 1992 U.S. App. LEXIS 17204; Copy. L. Rep. (CCH) P26,958; 92 Cal. Daily Op. Service 6573; 92 Daily Journal DAR 10528 

October 8, 1991, Argued and Submitted; October 23, 1991, Submission Vacated; July 20, 1992, Resubmitted, Pasadena, California   
July 29, 1992, Filed 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California. D.C. No. CV-85-7197-JMI. James M. Ideman, District Judge, Presiding.  

CASE SUMMARY
 
PROCEDURAL POSTURE: Plaintiff sought review of a decision of the United States District Court for the Central District of California which affirmed the dismissal of defendants in suit alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.S. §  1962; the Copyright Act, 17 U.S.C.S. §  501(b); and state tort law.
 
OVERVIEW: Plaintiffs filed suit alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. §  1962; the Copyright Act, 17 U.S.C.S. §  501(b); and state tort law. The complaint arose after defendants' attorneys allegedly obtained copies of stolen religious scriptures from plaintiffs and threatened to disclose their contents. An Order to Show Cause why the RICO and pendant state claims should not be dismissed was issued and defendants were subsequently dismissed. The court affirmed the dismissal finding that plaintiffs failed to establish a pattern of racketeering activity where they satisfied the "relatedness" requirement, but did not satisfy the "continuity" requirement. The court found the alleged copyright infringement to be a permissible fair use, and found no abuse of discretion in the dismissal of the pendant state claims.
 
OUTCOME: The court affirmed the dismissal of defendants, finding that plaintiffs failed as a matter of law to allege a pattern of racketeering activity, that the alleged copyright infringement was a permissible fair use, and that dismissal of the pendant state claims was not an abuse of discretion.

COUNSEL:
William T. Drescher, Calabasas, California, for the plaintiffs-appellants.

Michael L. Goldberg, Mandell, Lewis & Goldberg, McLean, Virginia, for the defendants-appellees.

Leta Schlosser, Pro per, Encino, California, for the defendant-appellee.

Charles B. O'Reilly, Pro per, Hollywood, California, for the defendant-appellee.  

JUDGES:
Before: James R. Browning, Arthur L. Alarcon and Thomas G. Nelson, Circuit Judges.  

OPINIONBY:
PER CURIAM 

OPINION:

 [*365]  OPINION

PER CURIAM:
I

Plaintiffs Religious Technology Center and Church of Scientology International (CSI) [hereinafter collectively RTC] brought two suits against numerous defendants alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §  1962; the Copyright Act, 17 U.S.C. §  501(b); and state tort law. The cases were consolidated and referred to a Special Master who recommended dismissal of the so-called "Greene defendants." The district judge issued an order adopting the Report and Recommendations of the Special Master. RTC appeals. We affirm.
II
The facts are briefly [**2]  set out below. Additional background can be found in the opinion in an earlier appeal, Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1077-79 (9th Cir. 1986).
Defendant Wollersheim was the plaintiff in a state tort action against the Church of Scientology California (CSC), an entity not a party to this appeal, for intentional infliction of emotional distress. The suit was ultimately successful. Defendant law firm of Greene, O'Reilly, Broilet, Paul, Simon, McMillian, Wheeler and Rosenberg, p.c., and individual defendants Leta Schlosser and Charles B. O'Reilly, were Wollersheim's attorneys. Defendants Richard Ofshe and Margaret Singer were expert witnesses who testified on Wollersheim's behalf. These are the "Greene defendants."
RTC, a Scientology affiliate, and CSI then filed this suit alleging that, during the prosecution of the state court action, Wollersheim's attorneys obtained copies of stolen religious scriptures from former members of the Scientology Church and gave them to Wollersheim's expert witnesses. RTC also alleged the defendants planned to reveal the contents of these scriptures, which are kept highly confidential by the Church of Scientology,  [**3]  to blackmail CSC into settling the Wollersheim state case. In addition, RTC alleged defendant O'Reilly sent an extortionate letter to CSC, a related corporation, threatening to disclose the contents of the scriptures unless he was paid $ 10 million.
This case was consolidated with an earlier suit filed against the persons who allegedly stole the religious scriptures. In due course, the district court issued an Order to Show Cause why the RICO and pendant state claims should not be dismissed and referred the case to a Special Master. Based upon the allegations of the complaint supplemented with RTC's detailed statement of the facts they relied upon in response to the order to show cause, the Special Master recommended, inter alia, that the Greene defendants be dismissed. The court adopted the Special Master's recommendation and entered final judgment in favor of the Greene defendants pursuant to Rule 54(b). n1

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n1 Appellee Schlosser asserts that RTC is precluded from bringing this appeal because it did not object to the Order adopting the Special Master's report. Since the order was final, RTC acted appropriately in seeking Rule 54(b) certification. 

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III

A. RICO CLAIM
The Special Master recommended judgment for the Greene defendants on RTC's RICO claim n2 because RTC failed to allege: (1)an "enterprise"; (2) two predicate acts; or (3) a "pattern of racketeering activity." We do not reach the first two grounds of dismissal. We agree with the Special Master  [*366]  that appellants failed as a matter of law to allege a "pattern of racketeering activity" by the Greene defendants. n3

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n2 18 U.S.C. §  1962(c) provides: 

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. 
n3 The parties disagree whether the district court's ruling was based on Rule 12(b) or Rule 56. The dispute is not relevant to our decision. RTC does not contend any relevant facts were not before the district court or that there were any conflicts as to facts relied upon by the district court in disposing of the issue we decide. We have accepted RTC's allegations as true and have reviewed their adequacy de novo.
The Special Master concluded the plaintiffs had failed to allege a violation under 18 U.S.C. §  1962(a). Report and Recommendation at 28. The appellants claim not to have sought relief under that section. Appellant's Brief at 20. We therefore assume plaintiffs do not appeal dismissal of this cause of action.

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In H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989), the Supreme Court held that to establish a "pattern of racketeering activity," plaintiff's allegations must show both that "the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." Id. at 239 (emphasis in original).
An allegation of two isolated criminal acts is insufficient to satisfy the relatedness requirement, id.; the predicate offenses are related if they have "the same or similar purposes, results, participants, victims or methods of commission." Id. at 240 (citation omitted).
RTC alleged that the Greene defendants obtained the religious materials to prosecute the state court case, and threatened to reveal this confidential information for litigation leverage. All of the predicate acts alleged were directed to these ends. They therefore satisfied the "relatedness" requirement.
However, the conduct alleged did not satisfy the "continuity" requirement. The Supreme Court has held that continuity can be demonstrated by proving either "a series of related predicates extending over a substantial [**6]  period of time" or "past conduct that by its nature projects into the future with a threat of repetition." Id. at 241-42.
Since the only goal of the Greene defendants was the successful prosecution of the Wollersheim state tort suit, there was no threat of activity continuing beyond the conclusion of that suit. See Medallion Television Enter., Inc. v. SelecTV of California, Inc., 833 F.2d 1360, 1364 (9th Cir. 1987) (where fraud was a joint venture to obtain broadcast rights, once the rights were obtained the threat ended).
RTC also failed to allege a series of related predicates extending over a "substantial" period of time. See 492 U.S. at 242. n4 The first predicate offense alleged was the receipt of the documents by Schlosser in the spring of 1985. n5 The last predicate act was defendant Singer's attempt to introduce the scriptures into evidence in the state tort suit in October of 1985. Thus the alleged activity continued for six months at most. n6

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n4 RTC alleges that the racketeering activity began in 1980 with the sending of the extortionate letter. The letter was, however, sent to CSC, not RTC or CSI. Since CSC is not a party to this case, it does not have standing to assert the wrongs done to another party. The Supreme Court has held that, under 18 U.S.C. §  1962(c), "the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation. . . . nor is the defendant liable to those who have not been injured." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-97, 87 L. Ed. 2d 346, 105 S. Ct. 3275 (1985) (citation omitted). [**7]  
n5 As noted above, we do not reach the issue of whether RTC has sufficiently alleged predicate acts under RICO; we only assume for purposes of discussion that they have.
n6 In its reply brief, RTC argues that the Greene defendants should be held responsible as co-conspirators for the later actions of other defendants. There is no evidence this theory was raised in the district court, and we deem it waived. See Winebrenner v. United States, 924 F.2d 851, 856 n.7 (9th Cir. 1991).

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The Supreme Court in H.J., Inc. held that "predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this [continuity] requirement." 492 U.S. at 242. We have found no case in which a court has held the requirement to be satisfied by a pattern of activity  [*367]  lasting less than a year. n7 A pattern of activity lasting only a few months does not reflect the "long term criminal conduct" to which RICO was intended to apply. See 492 U.S. at 242; see also Feinstein v. Resolution Trust Corp., 942 F.2d 34, 45-46 (1st Cir. 1991) [**8]  (span of 3-4 months, absent a threat of future criminal activity, is too short to support claim of long term criminal conduct at which RICO is aimed); Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1418 (3d Cir. 1991) (fraudulent scheme lasting 8 months directed at a single entity did not meet the continuity test); Parcoil Corp. v. Nowsco Well Serv., Ltd., 887 F.2d 502, 504 (4th Cir. 1989) (four months is insufficient to make out continuity); Sutherland v. O'Malley, 882 F.2d 1196, 1205 (7th Cir. 1989) (five month period is insufficient). n8

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n7 See, e.g., Dana Corp. v. Blue Cross & Blue Shield Mutual of Northern Ohio, 900 F.2d 882, 887 (6th Cir. 1990) (seventeen years); Fleet Credit Corp. v. Sion, 893 F.2d 441, 447 (1st Cir. 1990) (four and a half years); Walk v. Baltimore and Ohio R.R., 890 F.2d 688, 690 (4th Cir. 1989) (ten years); Jacobson v. Cooper, 882 F.2d 717, 720 (2d Cir. 1989) ("matter of years").
n8 RTC's second cause of action alleges a conspiracy to violate RICO, 18 U.S.C. §  1962(d), which makes it "unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section." Because we find that RTC has failed to allege the requisite substantive elements of RICO, the conspiracy cause of action cannot stand.

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 [**9]  

B. COPYRIGHT CLAIM n9

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n9 The Special Master made no express finding with regard to RTC's claim of copyright infringement, nor did the district judge. Nonetheless, we may affirm if there is evidence in the record to support the dismissal.  Jackson v. Southern California Gas Co., 881 F.2d 638, 643 (9th Cir. 1989). 

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The complaint alleges the defendants copied RTC's work, made unauthorized revisions in the work, and distributed materials that are substantially similar to it. Complaint Par. 71. However, the only specific factual allegation implicating the Greene defendants is found in Par. 22, which alleges Leta Schlosser, one of Wollersheim's attorneys, copied and transferred the stolen documents to Singer and Ofshe, Wollersheim's expert witnesses.
Defendants' answer admitted Schlosser and O'Reilly provided the documents to the expert witnesses for the purpose of preparing their testimony in the state tort litigation. RTC does not contend the Greene defendants used the documents for any other purpose.  [**10]  Moreover, RTC has not contested Leta Schlosser's assertion that the documents were sealed, marked "Confidential" and never offered into evidence.
In these circumstances, use of the documents was "Fair use" under 17 U.S.C. §  107, and not an infringement of RTC's copyright. n10 See Jartech, Inc. v. Clancy, 666 F.2d 403, 406-07 (9th Cir. 1982) (copying of allegedly obscene film to be used as evidence in a nuisance abatement action was "fair use"); 3 Nimmer on Copyright §  13.05[D] at 13-91 (1991) ("works are customarily reproduced in various types of judicial proceedings, including obscenity and defamation actions . . . and it seems inconceivable that any court would hold such reproduction to constitute infringement either by the government or by the individual parties responsible for offering the work in evidence"); see also Hustler Magazine, Inc. v. Moral Majority Inc., 796 F.2d 1148, 1155 (9th Cir. 1986) (" 'use that has no demonstrable effect upon the market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create' ") (quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 450, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984)). [**11]  

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n10 Defendant Schlosser also argues the suit is barred by a California litigation privilege. See California Civil Code §  47(2). However, the federal courts will recognize state privileges only in cases in which "state law supplies the rule of decision." Fed. R. Evid. 501. In federal question cases, the law of privilege is governed by "the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." Id. Schlosser cites no cases, and we have found none, indicating such a privilege has been recognized as a matter of federal common law.

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C. PENDANT STATE CLAIMS
Dismissal of the pendant state claims was not an abuse of discretion. "When  [*368]  federal claims are dismissed before trial . . . pendant state claims also should be dismissed." Jones v. Community Redev. Agency, 733 F.2d 646, 651 (9th Cir. 1984).
AFFIRMED. n11

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n11 We deny appellee Schlosser's request for damages under Fed. R. App. P. 38. This appeal was not wholly frivolous.

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60 of 133 DOCUMENTS 

VICKI J. AZNARAN; RICHARD N. AZNARAN, Plaintiffs-counter-defendants-Appellees, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, INC., Defendant, and CHURCH OF SPIRITUAL TECHNOLOGY, INC.; RELIGIOUS TECHNOLOGY CENTER, INC.; AUTHOR SERVICES, INC.; CHURCH OF SCIENTOLOGY INTERNATIONAL, INC., Defendants-counter-claimants-Appellants 

No. 90-55288 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1991 U.S. App. LEXIS 15775 

May 8, 1991, Argued and Submitted 

July 11, 1991, Filed 

NOTICE:
 [*1]  

THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY 9TH CIR. R. 36-3.  

SUBSEQUENT HISTORY:
Reported as Table case at 937 F.2d 611, 1991 U.S. App. LEXIS 20982. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California; James M. Ideman, District Judge, Presiding; D.C. No. CV-88-1786-JMI.  

JUDGES:
Tang, Reinhardt and Wiggins, Circuit Judges.  

OPINION:

MEMORANDUM 
Vicki and Richard Aznaran are former high-ranking members of the Church of Scientology ("Scientology").  They left the church under circumstances that they describe as involving duress.  They filed a complaint against Scientology alleging false imprisonment, intentional infliction of emotional distress and other tortious conduct.  Scientology brought a motion for summary judgment alleging that the Aznarans had signed releases relieving Scientology of any further liability when they left Scientology.  The district court denied that motion and a subsequent motion for reconsideration on the basis that there were factual questions as to the validity of the releases. 
Scientology then brought the instant motion for a preliminary injunction to prohibit: (1) the continuation of this lawsuit; (2) dissemination of information about the [*2]  workings of Scientology; and (3) voluntary assistance of the Aznarans to third parties contemplating litigation against Scientology.  Scientology argued that various provisions of the releases entitled it to this relief.  The district court declined to grant the preliminary injunction. Scientology appealed.  We affirm. 
STANDARD OF REVIEW 
"'Review of a ruling on a motion for a preliminary injunction is "very limited"'".  Diamontiney v. Borg, 918 F.2d 793, 795 (9th Cir. 1990) (quoting Oakland Tribune, Inc. v. Chronicle Publishing Co., 762 F.2d 1374, 1376 (9th Cir. 1985)). "A grant of a preliminary injunction will be reversed only where the district court abused its discretion or based its decision on an erroneous legal standard or clearly erroneous factual findings." Diamontiney, 918 F.2d at 795. 
DISCUSSION 
We first address Scientology's contention that the district court should have preliminarily enjoined the litigation.  Although the parties have raised a number of issues regarding the first amendment's protection of the free exercise of religion and its prohibition against the establishment of religion, as  [*3]  well as issues relating to the enforceability of the waiver, there is a basic flaw in Scientology's position which makes it unnecessary for us to reach these issues.  A preliminary injunction is temporary relief.  If granted, it remains in effect only until the district court renders judgment on the merits of the case after trial.  Sports Form, Inc. v. United Press Int'l, 686 F.2d 750, 753 (9th Cir. 1982). Here, however, Scientology seeks to enjoin the case from proceeding to trial.  If such relief were granted it would necessarily be permanent relief because it would remain in effect until the trial is completed -- and of course the trial could never be completed because it would be enjoined from ever taking place.  Since Scientology has not demonstrated that it is entitled to permanent relief, the district court did not err by denying its motion to enjoin the litigation. n1 

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n1 We do not suggest that such relief could in any event be obtained through the vehicle of a preliminary injunction. The appropriate procedure for terminating litigation before trial is a summary judgment motion.  Scientology brought such a motion but the district court denied it, and subsequently denied Scientology's motion for reconsideration of its decision.  Neither the original decision nor the denial of the reconsideration motion may be reviewed on an interlocutory appeal.

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We next address Scientology's claim that it was entitled to a preliminary injunction enforcing the confidentiality and non-assistance provisions of the releases.  "At a minimum, a [party] seeking preliminary injunctive relief must demonstrate that it will be exposed to irreparable harm." Caribbean Marine Servs. Co. v. Baldridge, 844 F.2d 668, 674 (1988); see also Los Angeles Memorial Coliseum Comm'n, 634 F.2d 1197, 1203 (9th Cir. 1980). 
Scientology argues that in the absence of a preliminary injunction enforcing the confidentiality and non-assistance provisions of the releases, there is a possibility that it will suffer irreparable injury. However, the releases which it prepared provide liquidated damages for violation of these provisions.  Thus, under the agreement it drafted, any injury that would result from a breach would be compensable. Purely monetary injuries are not considered irreparable. See Lydo Enterprises, Inc. v. City of Las Vegas, 745 F.2d 1211, 1213 (9th Cir. 1984); Sampson v. Murray, 415 U.S. 61, 90 (1974) ("'Mere injuries, however substantial, in terms of money, time and energy necessarily [*5]  expended . . . are not enough'" to constitute irreparable injury) (quoting Virginia Petroleum Jobbers Ass'n v. Federal Power Comm'n, 259 F.2d 921, 925 (D.C. Cir. 1958)). 
Nonetheless, according to Scientology, the Aznarans are judgment-proof, and as a result will be unable to provide monetary compensation for a breach.  Thus, Scientology argues, this case provides an exception to the general rule that injuries which are compensable in money are not irreparable. We note initially that even if the Aznarans were judgment-proof, that would not necessarily entitle Scientology to relief in this case, at least in the absence of some showing that their financial status had changed since the waivers were prepared and signed.  Scientology was apparently aware of the Aznarans' financial situation when it agreed to the liquidated damages clauses in the waivers it drafted and now invokes. 
Moreover, the district court made a factual finding that the Aznarans are not judgment-proof. Scientology contests this finding by pointing out that the Aznarans could not afford to hire an attorney.  However, that is not necessarily inconsistent with their ability to pay whatever judgment [*6]  might ultimately be rendered against them.  The finding that the Aznarans are not judgment-proof is not clearly erroneous, and the determination that Scientology has not met its burden with respect to the irreparable harm issue was not an abuse of discretion. 
Finally, the Aznarans argue that we should impose sanctions against Scientology because this appeal is frivolous. Fed. R. App. P. 38.  Scientology has presented many strong arguments.  While these arguments were unsuccessful, they are not frivolous. The request for sanctions is denied. 
The judgment of the district court is 
AFFIRMED.  

61 of 133 DOCUMENTS 

VICKI J. AZNARAN; RICHARD N. AZNARAN, Plaintiffs-counter-defendants-Appellees, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, INC., Defendant, and CHURCH OF SPIRITUAL TECHNOLOGY, INC.; RELIGIOUS TECHNOLOGY CENTER, INC.; AUTHOR SERVICES, INC.; CHURCH OF SCIENTOLOGY INTERNATIONAL, INC., Defendants-counter-claimants-Appellants 

No. 90-55288 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

937 F.2d 611; 1991 U.S. App. LEXIS 20982 

May 8, 1991, Argued and Submitted 

July 11, 1991, Filed 

NOTICE:
 [*1]  

THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY 9TH CIR. R. 36-3.  

OPINION:

AFFIRMED
[EDITOR'S NOTE: Full-Text Slip Opinion Reported at 1991 U.S. App. LEXIS 15775.] 

62 of 133 DOCUMENTS 

JOSEPH A. YANNY, an individual; JOSEPH A. YANNY, a professional corporation, Plaintiffs-Appellants, v. CHURCH OF SCIENTOLOGY INTERNATIONAL, a California corporation; RELIGIOUS TECHNOLOGY CENTER, a California corporation; CHURCH OF SCIENTOLOGY OF CALIFORNIA, a California corporation; AUTHOR SERVICES INCORPORATED, a California corporation; BRIDGE PUBLICATIONS, INC., a California corporation; CHURCH OF SPIRITUAL TECHNOLOGY, a California corporation; and DOES 1 through 50, inclusive, Defendants-Appellees 

C. A. No. 90-55211 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

1991 U.S. App. LEXIS 10166 

April 2, 1991, Argued and Submitted, Pasadena, California 

May 13, 1991, Filed 

NOTICE:
 [*1]  

THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R. 36-3.  

SUBSEQUENT HISTORY:
Reported as Table Case at 933 F.2d 1018, 1991 U.S. App. LEXIS 22871. 

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California; D. C. No. CV89-2621 R(Jrx); Manuel L. Real, District Judge, Presiding.  

JUDGES:
Schroeder and Reinhardt, Circuit Judges, and Samuel P. King, ** District Judge.
** Samuel P. King, Senior United States District Judge for the District of Hawaii, sitting by designation. 

OPINION:

MEMORANDUM
Reviewing de novo the dismissal of appellant's federal action under Fed.R.Civ.P. 12(b)6, we agree with the district court that the claims asserted in the federal action should have been brought as compulsory counterclaims in an earlier state action.
Whether the claims asserted in a federal complaint should have been brought as a compulsory counterclaim in an earlier state court action is a question of state law. Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246, 1249 (9th Cir. 1987). We review de novo district court rulings on questions of state law. Id.
Cal. Code Civ. Pro. §  426.30(a) states:

Except as otherwise provided by statute,  [*2]  if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any cause of action assert against the plaintiff the related cause of action not pleaded.
The term "related cause of action" is to be read broadly in favor of finding a cause of action to be related. Currie Medical Specialties, Inc. v. Bowen, 136 Cal.App.3d 774, 186 Cal. Rptr. 543 (1982). The factual or legal issues need not be identical, but only logically related. Id. at 774, 186 Cal. Rptr. at 543.
Yanny's federal claim is a "related cause of action" to defendants' state claim because both claims arise out of the same transaction or occurrence. The gravamen of the defendants' state complaint is that when Yanny served as defendants Religious Technology Center ("RTC"), Church of Scientology International ("CSI"), and Church of Scientology of California's ("CSC") legal counsel, Yanny committed fraud, breached his fiduciary duty to them, and has continued to wrong them because [*3]  of their prior relationship. The gravamen of Yanny's federal complaint is that after serving for a number of years as defendants RTC, CSI, CSC, Church of Spiritual Technology ("CST"), Bridge Publications, Inc. ("BPI"), and Author Service, Inc.'s ("ASI") counsel, the relationship soured, and as a result, the defendants engaged in a pattern of behavior that injured Yanny, and defendants perpetrated these wrongs upon him because of the prior relationship. Both the state claim and the federal claim arise out of the same occurrence: Yanny's representation of the defendants.
To be a required counterclaim under §  426.30(a), the parties in both actions must be identical. See Russo v. Scrambler Motorcycles, 56 Cal. App. 3d 112, 118, 127 Cal. Rptr. 913 (1976). Yanny argues that his federal suit should be barred only as to the three defendants (RTC, CSI, and CSC) who were parties to the state action. We need not address this issue, because Yanny failed to raise it below. Jovanovich v. United States, 813 F.2d 1035, 1037 (9th Cir. 1987). However, we point out that Yanny himself admits that RTC, CSI, CSC, CST, BPI, and ASI constitute a single  [*4]  larger entity. Therefore, §  426.30(a)'s requirement that the parties in both actions be identical is met.
AFFIRMED.  

63 of 133 DOCUMENTS 

JOSEPH A. YANNY, an individual; JOSEPH A. YANNY, a professional corporation, Plaintiffs-Appellants, v. CHURCH OF SCIENTOLOGY INTERNATIONAL, a California corporation; RELIGIOUS TECHNOLOGY CENTER, a California corporation; CHURCH OF SCIENTOLOGY OF CALIFORNIA, a California corporation; AUTHOR SERVICES INCORPORATED, a California corporation; BRIDGE PUBLICATIONS, INC., a California corporation; CHURCH OF SPIRITUAL TECHNOLOGY, a California corporation; and DOES 1 through 50, inclusive, Defendants-Appellees 

C. A. No. 90-55211 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

933 F.2d 1018; 1991 U.S. App. LEXIS 22871 

April 2, 1991, Argued and Submitted, Pasadena, California 

May 13, 1991, Filed 

NOTICE:
 [*1]  

THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY THE 9TH CIR. R. 36-3.  

OPINION:

AFFIRMED
[EDITOR'S NOTE: Full-Text Slip Opinion Reported at 1991 U.S. App. LEXIS 10166.] 

64 of 133 DOCUMENTS 

Church of Scientology of California, Plaintiff-Appellant, v. United States of America and Sandra Baker, Revenue Officer, Defendants-Appellees 

No. 90-55514 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

920 F.2d 1481; 1990 U.S. App. LEXIS 21419; 91-1 U.S. Tax Cas. (CCH) P50,004; 67 A.F.T.R.2d (RIA) 303; 90 Cal. Daily Op. Service 9006; 90 Daily Journal DAR 14054; Unemployment Ins. Rep. (CCH) P15,812A 

October 5, 1990, Argued and Submitted, Pasadena, California 

December 12, 1990, Filed 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California; James M. Ideman, District Judge, Presiding; D.C. No. CV 90-2042 JMI.  

DISPOSITION:
Affirmed.  

COUNSEL:
William T. Drescher, Calabasas, California, and Kendrick L. Moxon, Bowles & Moxon, Hollywood, California, for the Plaintiff-Appellant. 
Shirley D. Peterson, Assistant Attorney General, Gary R. Allen, William A. Whitledge, and Teresa E. McLaughlin, Tax Division, United States Department of Justice, Washington, District of Columbia, for the Defendants-Appellees.  

JUDGES:
 Alarcon and Norris, Circuit Judges, and George, * District Judge. Opinion by Judge Arthur L. Alarcon. 
* Honorable Lloyd D. George, United States district Judge for the District of Nevada, sitting by designation. 

OPINIONBY:
ALARCON 

OPINION:

 [*1483]  ALARCON, Circuit Judge: 
The Church of Scientology of California (Church) appeals from the denial of its request for a preliminary injunction against the Internal Revenue Service (IRS). The district court concluded it lacked subject matter jurisdiction and, therefore, was precluded from granting this relief by the Anti-Injunction Act, 26 U.S.C. §  7421. The Church contends that the record demonstrates that the district court has the jurisdiction  [**2]  to grant equitable relief pursuant to the judicial exception to the Anti-Injunction Act. We disagree and affirm. 
I 
This case arises from an action filed by the Church against the IRS in which it alleged: 
1.  Wrongful disclosure of taxpayer information under 26 U.S.C. §  6103 by improperly issuing bank levies and individual assessments. 
2.  Violation of the First Amendment of the United States Constitution by engaging in unlawful and arbitrary actions against the Church motivated "by an impermissible hostility to the Scientology religion." 
3.  Violation of the due process clause of the Fifth Amendment by treating the Church and its parishioners differently from other religions. 
4.  Violation of the due process clause by failing to follow established IRS policy. 
5.  Violation of the "Taxpayers Bill of Rights" by improperly assessing the bank levies and individual assessments. 
The Church presented the following version of the facts in its complaint and supporting declarations: On March 9, 1989 the IRS issued a notice of proposed adjustment of Federal Insurance Contribution Act (FICA) and Federal Unemployment Tax Act (FUTA) taxes for the tax years of 1976-1986 based upon a disallowance of the  [**3]  Church's tax exempt status. n1 On April 7, 1989, the Church filed a protest with the IRS challenging each proposed adjustment. The IRS rejected the protest. A supplemental protest filed on May 22, 1989, was also rejected. 

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n1 In 1987, in Church of Scientology of California v. Commissioner of Internal Revenue, 823 F.2d 1310 (9th Cir. 1987), cert. denied, 486 U.S. 1015, 100 L. Ed. 2d 214, 108 S. Ct. 1752 (1988), we upheld a revocation of the Church's tax exempt status for the years 1970-1972. Among the factual findings in that case were that significant sums of Church money had inured to the benefit of the Church's founder L. Ron Hubbard and his family during the years in question. These benefits included the transfer of several million dollars in Church funds to a sham corporation controlled by Hubbard and a plan by which 10% of the gross income of all Scientology congregations, franchises and organizations were to be paid directly to Hubbard as "debt repayments." Id. at 1318-19. 

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Assessments were made by the IRS in July and August of 1989. Thereafter,  [**4]  the Church entered into discussions with Stanley Kong, IRS Examinations Branch Chief. Kong told the Church that if it made a token payment of the FICA and FUTA taxes for one employee for the period in question and submitted claims for refund and abatement the IRS would forbear attempting  [*1484]  to collect the balance of the assessment while such claims were being considered. On September 22, 1989, the Church made payment of the FICA and FUTA taxes for one employee for the period in question and submitted claims for refund and abatement. 
On October 23, 1989, Revenue Officer Sandra Baker contacted Church representatives in order to commence collection of the claimed deficiency. The Church alleges that Baker agreed that pursuant to IRS policy P-5-16, as set forth in the Internal Revenue Manual, she would forbear from attempting to collect additional funds while the administrative refund claims were pending. On January 5, 1990, Baker wrote the Church's counsel and requested a list of the Church's officers so that the IRS could make assessments for the asserted tax deficiencies directly against the responsible Church officials as authorized by 26 U.S.C. §  6672. n2 The Church informed Baker that [**5]  it challenged both the legitimacy of the individual assessments, and the appropriateness of any other tax collection activities while its refund claim was under consideration. 

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n2 "Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect any such tax, . . . or willfully attempts in any manner to evade or defeat any such tax or payment thereof, shall . . . be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over." 

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On April 4, 1990, Baker served seven notices of levy to selected banks. On April 6, 1990, the IRS mailed assessments against twenty-four individuals, including the late L. Ron Hubbard, for the purported tax deficiencies. The Church requested that the IRS release the levies. The IRS refused to do so. 
On April 24, 1990, the Church filed this action in the district court. On the same date, the district court granted the Church's ex parte request and issued a temporary restraining [**6]  order (TRO) to maintain the status quo of the parties and an order to show cause (OSC). On May 5, 1990, the Government filed its response to the OSC. The Government asserted that the district court lacked subject matter jurisdiction to grant injunctive relief under the Anti-Injunction Act, 26 U.S.C. §  7421. In support of its claim the Government submitted a declaration signed by Baker. Baker declared that all applicable IRS regulations were complied with in making the assessment against the Church. She also declared that the Church was challenging only a part of the asserted deficiency. She declared further that the Church did not dispute that it owed $ 6,500,000 in taxes and interest to the Government. Baker's declaration also sets forth the factual basis for levying on each bank and how the identities of the individuals to be assessed were determined. The declaration did not include any discussion of Baker's representations to the Church concerning forbearance. The district court denied the Church's request for injunctive relief before the date set for filing of the Church's reply to the IRS's response to the OSC. 
II 
The Church contends that the Anti-Injunction Act does not apply [**7]  when the record shows an unlawful or unconstitutional levy and extraordinary circumstances. The Church also asserts that it has met the judicial exception to the Anti-Injunction Act. 
The Anti-Injunction Act, 26 U.S.C. §  7421(a) provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." The Anti-Injunction Act sets forth specific exceptions which, if present, will support the granting of equitable relief. The Church does not contend that the statutory exceptions are applicable to this case. 
The Supreme Court has explained that the principal purpose of the Anti-Injunction Act is to preserve the Government's ability to assess and collect taxes expeditiously with "a minimum of preenforcement judicial interference" and "to require that the legal right to the disputed sums be  [*1485]  determined in a suit for refund." Bob Jones Univ. v. Simon, 416 U.S. 725, 736, 40 L. Ed. 2d 496, 94 S. Ct. 2038 (1974) (citing, Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962)). 
We review de novo the denial of a motion for preliminary injunction for lack of subject [**8]  matter jurisdiction. Elias v. Connett, 908 F.2d 521, 523 (9th Cir. 1990) (citing Jensen v. IRS, 835 F.2d 196, 198 (9th Cir. 1987). The district court's factual findings on jurisdictional issues must be accepted unless clearly erroneous. Id. 
The Church relies upon Singleton v. Mathis, 284 F.2d 616, 618-19 (8th Cir. 1960), Lassoff v. Gray, 266 F.2d 745, 747 (6th Cir. 1959), and Monge v. Smyth, 229 F.2d 361, 366 (9th Cir.), cert. denied, 351 U.S. 976, 76 S. Ct. 1055, 100 L. Ed. 1493 (1956) in support of the proposition that an injunction may be ordered if the court finds that an unlawful or unconstitutional levy has been issued and if extraordinary circumstances are shown. The Church's reliance on the continued vitality of these decisions is misplaced. Each of these cases was decided prior to the 1962 Supreme Court decision in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962). Rather than providing a separate and independent exception to the Anti-Injunction Act, the Supreme Court has instructed that these decisions are part of an earlier generation of dissonant case law which was harmonized in the Williams Packing decision. In Bob Jones University, the Supreme Court [**9]  stated that: 

the Court's unanimous opinion in Williams Packing indicates that the case was meant to be the capstone to the judicial construction of the Act. It spells an end to a cyclical pattern of allegiance to the plain meaning of the Act, followed by periods of uncertainty caused by a judicial departure from that meaning, and followed in turn by the Court's rediscovery of the Act's purpose.

 416 U.S. at 742. The Court's decision in Bob Jones forecloses any reliance on the pre-Williams Packing decisions cited by the Church. In 1964, the Sixth Circuit disavowed its decision in Lassoff v. Gray as being in conflict with the Williams Packing test.  Vuin v. Burton, 327 F.2d 967, 970 (6th Cir. 1964). Similarly, in United States v. Dema, 544 F.2d 1373, 1376 (7th Cir. 1976), cert. denied, 429 U.S. 1093, 97 S. Ct. 1106, 51 L. Ed. 2d 539 (1977), the Singleton case was only cited within the context of requirements of the Williams Packing test. We have not applied that portion of the Monge decision that recognized an exception to the Anti-Injunction Act based on unusual and extraordinary circumstances since the Williams Packing decision was published. n3 

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n3 In Monge, we followed the line of cases which stated that an injunction may be granted where "unusual and extraordinary circumstances appear." 229 F.2d at 366. While Monge has been cited four times by this court since Williams Packing, it has never been for that proposition. See, Whitney v. United States, 826 F.2d 896, 897 (9th Cir. 1987) (whether Form 870-AD standing alone estops taxpayer from seeking a refund); Meridian Wood Prod. Co. v. United States, 725 F.2d 1183, 1186 (9th Cir. 1984) (waiver obviated need for sending formal deficiency notice); Wood v. Sargeant, 694 F.2d 1159, 1161 (9th Cir. 1982) (inability to pay tax is not a basis for invoking equity jurisdiction); Richmond v. Weiner, 353 F.2d 41, 45 (9th Cir. 1965) (court cannot consider issue concerning pleadings that had not been raised in district court), cert. denied, 384 U.S. 928, 86 S. Ct. 1447, 16 L. Ed. 2d 531 (1966). 

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The Supreme Court now recognizes a single, narrow judicial exception to the Anti-Injunction Act. 

An injunction may be obtained against the collection of any tax if (1) it is "clear that under no circumstances could the government ultimately prevail" and (2) "equity jurisdiction" otherwise exists, i. e., the taxpayer shows that he would otherwise suffer irreparable injury.

 Commissioner v. Shapiro, 424 U.S. 614, 627, 47 L. Ed. 2d 278, 96 S. Ct. 1062 (1976) (quoting Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962)). 
Under the first prong of the Williams Packing test, the district court must determine the possibility of success of the Government's assessment based upon the information available to the court  [*1486]  at the time of the filing of the action. "Only if it is then manifest, under the most liberal view of the law and the facts, that the government cannot prove its claim" is the first part of the test satisfied.  Thrower v. Miller, 440 F.2d 1186, 1187 (9th Cir. 1971). The burden of showing that the Government's claim is baseless is on the taxpayer.  Schildcrout v. McKeever, 580 F.2d 994, 997 (9th Cir. 1978) (citing Shapiro, 424 U.S. at 627-29.) 
To meet the second prong of the [**11]  Williams Packing test, the taxpayer must demonstrate that it is entitled to equitable relief. "The taxpayer must show that he has no adequate remedy at law and that the denial of injunctive relief would cause him immediate, irreparable harm." Jensen v. IRS, 835 F.2d 196, 198 (9th Cir. 1987) (citing Cool Fuel, Inc. v. Connett, 685 F.2d 309, 313-14 (9th Cir. 1982)). Both prongs of the test must be met or a suit for injunctive relief must be dismissed. Alexander v. "Americans United" Inc., 416 U.S. 752, 758, 94 S. Ct. 2053, 40 L. Ed. 2d 518 (1974). 
The limitations imposed by the Anti-Injunction Act also apply to the Church's attempt to enjoin "wrongful disclosures" in the form of the bank levies and individual assessments claimed to be made in violation of 26 U.S.C. §  6103. n4 In Blech v. United States, 595 F.2d 462 (9th Cir. 1979), we stated that where the underlying action was one to enjoin assessment and collection activities, it fell within the scope of the Anti-Injunction Act's prohibitions.  Id. at 466.  [**12]  

To hold otherwise would enable ingenious counsel to so frame complaints as to frustrate the policy or purpose behind the Anti-Injunction Statute. . . . Likewise, this statutory ban against judicial interference with the assessment and collection of taxes "is equally applicable to activities which are intended to or may culminate in the assessment or collection of taxes."

Id. (quoting United States v. Dema, 544 F.2d 1373, 1376 (7th Cir. 1976), cert. denied, 429 U.S. 1093, 97 S. Ct. 1106, 51 L. Ed. 2d 539 (1977)). Accord, Lowrie v. United States, 824 F.2d 827, 830 (10th Cir. 1987). The Fifth Circuit has also held that an injunction sought under §  6103 was barred by the Anti-Injunction Act.  Kemlon Products & Development Co. v. United States, 638 F.2d 1315, 1320 (5th Cir.), modified, 646 F.2d 223 (5th Cir.), cert. denied, 454 U.S. 863, 70 L. Ed. 2d 162, 102 S. Ct. 320 (1981). 

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n4 Section 6103(a) states that returns and return information are confidential, "and except as authorized by this title-(1) no officer or employee of the United States, . . . shall disclose any return or return information." It is not disputed that "return information" can include the fact that a taxpayer's liability is or has been under investigation. 

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The Church relies on Husby v. United States, 672 F. Supp. 442 (N.D. Cal. 1987) for the proposition that an injunction may issue to prevent further disclosure of tax return information through collection activities. In Husby however, the Government agreed with the taxpayer that no taxes were in fact owing. The Government further admitted in court,  [**13]  prior to the issuance of the injunction, that the assessment and all collection activity pursuant to it were due to computer error.  Id. at 444. No challenge under the Anti-Injunction Act was made, and the court expressly stated that "the case at hand presents no problem as to collateral attack of a levy or assessment." Id. at 445. The only issue before the district court was whether the statutory remedies of 26 U.S.C. §  7431 applied to the erroneous levy. Id. at 442. 
To avoid the bar of the Anti-Injunction Act, the Church has the burden of establishing that "under the most liberal view of the law and the facts, the United States cannot establish its claim. . . ." Schildcrout v. McKeever, 580 F.2d 994, 998 (9th Cir. 1978) (quoting Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962)). As noted above, the declaration of Baker is in conflict with that relied upon by the Church concerning the appropriateness of the levy, and whether wrongful disclosures were made, as well as the circumstances surrounding the issuance of the individual  [*1487]  assessments. Baker declared that since $ 6,500,000 in assessed taxes were not challenged by the Church, it was determined [**14]  that efforts to collect the amount were thought to be appropriate. 
Where the record presents "material issues of disputed fact" the district court lacks jurisdiction to grant an injunction. Kaestner v. Schmidt, 473 F.2d 1294, 1296 (9th Cir. 1973) (Anti-Injunction Act bars jurisdiction where evidence in Government affidavits established material issues of disputed fact.) Accord, Thrower v. Miller, 440 F.2d 1186, 1187-88 (9th Cir. 1971) (Anti-Injunction Act barred relief where affidavits of appellee and his attorney conflicted with affidavit of IRS officer.) 
The Church asserts that because the IRS represented that it would forbear collecting the asserted deficiencies pending IRS determination of the Church's refund claim, the Government's attempts to levy an assessment thereafter constituted "fraudulent coercion" or "fraudulent representations" as a means of tax collection. This contention cannot be supported under the most liberal view of the record in favor of the Government. 
The cases cited by the Church in which injunctive relief was granted based on proof of coercion or fraud are distinguishable from the facts in the record before us. In Mitsukiyo Yoshimura v. Alsup, [**15]  167 F.2d 104 (9th Cir. 1948) the taxpayer was coerced into signing incriminating documents and falsely threatened with internment.  Id. at 105. No showing of similar misconduct appears in the record. The Church has not demonstrated how the representation that the IRS would temporarily forbear collecting the disputed deficiencies coerced or defrauded the Church in any manner. 
In Miller v. Standard Nut Margarine Co., 284 U.S. 498, 76 L. Ed. 422, 52 S. Ct. 260 (1932), the taxpayer commenced its business acting in reliance upon assurances from the Commissioner of Internal Revenue of the nontaxable nature of its product.  Id. at 510. No showing has been made that the IRS assured the Church that no taxes were owing. Likewise, there has been no showing that the Church relied on the claimed assurance to its detriment. Viewing the facts and law in the most liberal light as required by Williams Packing, the Church has failed to demonstrate that the Government cannot succeed on its claim on the basis of the cited authority. 
The Church next argues that it has met the first prong of the Williams Packing test because the Government has conceded that it could not prevail on the merits regarding the alleged  [**16]  violations of the rule set forth in United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 98 L. Ed. 681, 74 S. Ct. 499 (1954). We find no such concession by the Government in its brief before this court or in the record of the proceedings before the district court. 
Pursuant to the Accardi doctrine, an administrative agency is required to adhere to its own internal operating procedures.  Id. at 268. The Church alleges that the IRS violated Policy Statement P-5-16, Policies of the IRS Handbook, reprinted in 1 Administration Internal Revenue Manual (CCH) at 1305-11, which states that when a taxpayer raises a question or presents information creating reasonable doubt about the accuracy or validity of an assessment "reasonable forbearance will be exercised with respect to collection provided (1) adjustment of the taxpayers claim is within the control of the service, and (2) the interests of the Government will not be jeopardized." Id. 
The Church argues that United States v. Heffner, 420 F.2d 809 (4th Cir. 1969) provides that when the IRS publicizes a policy that it has promulgated for the express benefit of taxpayers, the Government must act in compliance with that policy. The Church's reliance [**17]  on Heffner is misplaced. Heffner is a criminal case. It does not involve an application of the Anti-Injunction Act.  Id. at 810. The IRS regulation applied in Heffner concerned the requirement that Miranda warnings be given to suspects in criminal tax fraud investigations.  Id. at 811. The remedy invoked in Heffner was reversal of the criminal conviction.  Id. at 814. 
 [*1488]  The Church asserts that it is undisputed that IRS Policy Statement P-5-16, is a "procedural safeguard" which bars any collection activities until its claims for refund are resolved. The Government argues that P-5-16 indicates on its face that collection will be made if it is in the Government's interest. Accordingly, the policy was not promulgated for the express benefit of taxpayers. The Government further argues that it has not violated the forbearance policy. It is the Government's position that IRS Policy Statement P-5-16 does not require it to forbear collection of approximately $ 6,500,000 as to which there is no dispute. These conflicting contentions readily demonstrate that the Church's representation that the Government has made a concession concerning the application of the  [**18]  Accardi doctrine is without merit. 
Viewing this conflict of law in the most liberal light, it cannot be said that there is no possibility that the Government will prevail on this issue. Thus, the Church has failed to demonstrate that it has met the burden imposed by the Williams Packing test. 
III 
The Church argues that the levies violate the establishment clause of the First Amendment and the due process clause of the Fifth Amendment, and that therefore irreparable injury to the Church is presumed as a matter of law. 
The Church relies on Elrod v. Burns, 427 U.S. 347, 49 L. Ed. 2d 547, 96 S. Ct. 2673 (1976) in support of this argument. In Elrod, the Supreme Court stated that the "loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury." Id. at 373. Elrod did not involve an attempt to restrain tax assessments. Instead, the court was concerned with the free speech rights of public employees threatened with discharge because of political party affiliation.  Id. at 349. A more important distinction, however, is the different standard that is applicable in granting injunctive relief in cases where that remedy is not barred by the Anti-Injunction [**19]  Act. The test applicable in Elrod was "probability of success on the merits." Id. at 374. As noted above, under Williams Packing, a person seeking injunctive relief must demonstrate "under the most liberal view of the law and the facts, [that] the United States cannot establish its claim." Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 8 L. Ed. 2d 292, 82 S. Ct. 1125 (1962). 
The Church also argues that it has established violations of the due process clause of the Fifth Amendment. The Church asserts that when "an alleged deprivation of a constitutional right is involved, most courts hold that no further showing of irreparable injury is necessary." Mitchell v. Cuomo, 748 F.2d 804, 806 (2nd Cir. 1984). 
In Mitchell, in affirming an order granting an injunction preventing a prison closure, the Second Circuit stated: "given the evidence of increasing overcrowding . . . which constitutes the alleged threat to plaintiffs' eighth amendment rights, the district judge's finding of irreparable harm is not clearly erroneous." Id. at 806. The issuance of an injunction to prevent the closure of a prison is not expressly barred by the Anti-Injunction Act. Furthermore, the Second Circuit  [**20]  concluded an award of damages would be inadequate to remedy the harm that would flow from the closure of a 1000-bed facility and the transfer of its 475 inmates to other over-crowded prisons. Id. at 805. As discussed below, the Church has adequate remedies at law for all of its tax related claims. 
In Bob Jones University v. Simon, 416 U.S. 725, 40 L. Ed. 2d 496, 94 S. Ct. 2038 (1974), the Supreme Court stated that the Williams-Packing test was applicable to First Amendment and Due Process claims raised by the taxpayer.  Id. at 749. The Court held that the taxpayer had an adequate remedy at law in an action for a refund. Id. at 746. No special consideration is granted to injunctions against tax collection sought on constitutional grounds. "Decisions of  [*1489]  this Court make it unmistakably clear that the constitutional nature of a taxpayer's claim, as distinct from its probability of success, is of no consequence under the Anti-Injunction Act." Alexander v. "Americans United" Inc., 416 U.S. 752, 759, 94 S. Ct. 2053, 40 L. Ed. 2d 518 (1974) (claim that statutory prohibition against lobbying by tax exempt organization is unconstitutional); accord, United States v. American Friends Serv. Comm., 419 U.S. 7, 11, 42 L. Ed. 2d 7, 95 S. Ct. 13 (1974) (claim that withholding [**21]  tax interfered with Quaker's free exercise of religion). 
The Church also argues that the fact that the assessment exceeds $9,000,000 demonstrates irreparable harm. Mere allegations of financial hardship are insufficient to support a finding of irreparable harm. Bob Jones Univ., 416 U.S. at 745. See, Cool Fuel, Inc. v. Connett, 685 F.2d 309, 314 (9th Cir. 1981). 
The Church further argues that the levies and assessments constitute injuries to the Church's privacy and reputational interests. The only case cited in support of this proposition is Husby v. United States, 672 F. Supp. 442 (N.D. Cal. 1987). As discussed above, the applicability of the Anti-Injunction Act was not an issue in Husby. The district court stated in Husby that the "sole question" before it was whether the statutory remedies of 26 U.S.C. §  7431 applied to the erroneous levy. Id. at 442. 
In Kemlon Products & Development Co. v. United States, 638 F.2d 1315 (5th Cir.), modified, 646 F.2d 223 (5th Cir.), cert. denied, 454 U.S. 863, 70 L. Ed. 2d 162, 102 S. Ct. 320 (1981), the taxpayer also claimed that an injunction should issue because, without that remedy, it would suffer a "loss of business reputation." Id. at 1318.  [**22]  The Fifth Circuit rejected the taxpayer's argument that a mere conclusory allegation of reputational harm demonstrates irreparable harm. Id. at 1322-23. The same result was reached in Church of Scientology Celebrity Centre v. Egger, 539 F. Supp. 491 (D.D.C. 1982). "As is well settled in the tax field, irreparable injury cannot be established by an allegation of injury to reputation. . . . To establish irreparable injury, plaintiffs must allege that the financial penalties likely would cause Scientology ministers, churches or members financial ruin or other serious consequences." Id. at 496 (citations omitted). 
The courts have repeatedly held that the opportunity to sue for a refund is an adequate remedy at law which bars the granting of an injunction. 

Petitioner may pay income taxes, or, in the their absence, an installment of FICA or FUTA taxes, exhaust the Service's internal refund procedures, and then bring suit for a refund. These review procedures offer petitioner a full, albeit delayed, opportunity to litigate the legality of the Service's revocation of tax-exempt status and withdrawal of advance assurance of deductibility.

 Bob Jones Univ., 416 U.S. at 746;  [**23]  see also Americans United, 416 U.S. at 762 (taxpayer has adequate remedy in a refund suit following FUTA payment); American Friend Serv. Comm., 419 U.S. at 11 (full opportunity to litigate tax liability in a refund suit bars equitable relief); Zimmer v. Connett, 640 F.2d 208, 210 (9th Cir. 1981) ("Tax assessments must be contested . . . in an action for a refund in the Federal District Courts. . . . Absent a clear and explicit congressional mandate, we shall not depart from these well marked pathways.") (citations omitted); Cool Fuel, Inc. v. Connett, 685 F.2d 309, 314 (9th Cir. 1981) ("Since the Supreme Court decision in Bailey v. George, 259 U.S. 16, 42 S. Ct. 419, 66 L. Ed. 816 (1922), it has been established law that payment of the tax followed by a suit for refund constitutes an adequate remedy at law.") 
The Government challenges the Church's standing to seek relief for the Church officials who have been assessed under 26 U.S.C. §  6672. The Church argues that the section 6672 claims are derivative from the Government's main claim against the Church for the FICA and FUTA taxes since the Government may only satisfy the tax liability once.  Wollman v. United  [**24]  States, 571 F. Supp. 824, 826 (S.D. Fla. 1983).  [*1490]  The Church further asserts that, since the individuals assessed can seek indemnity from the Church, standing exists.  Reid v. United States, 558 F. Supp. 686, 688-89 (N.D. Miss. 1983). Inasmuch as one of the injuries claimed by the Church is the wrongful disclosure of taxpayer information to the third parties who received the assessments, the Church has asserted a direct injury from the issuance of the assessments. Likewise, to the extent that an individual who pays a penalty assessment may be indemnified by the Church, the Church has standing to challenge the validity of the claim because it will be injured economically, albeit indirectly. However, as discussed supra, the fact that the Church or the individuals may challenge the correctness of the assessment in a court action for refund provides an adequate remedy as a matter of law.  Bob Jones Univ. v. Simon, 416 U.S. at 746; Cool Fuel, 685 F.2d at 314. 
Remedies at law for wrongful disclosure in violation of 26 U.S.C. §  6103 are found in 26 U.S.C. §  7431(a). Section 7431(a) provides for damages for knowing or negligent disclosure of tax return information. We have previously [**25]  stated our "reluctance to imply a judicial remedy for violations of §  6103 given Congress' explicit provision of a remedy." United State v. Michaelian, 803 F.2d 1042, 1049 (9th Cir. 1986). See also, South Carolina v. Regan, 465 U.S. 367, 374, 79 L. Ed. 2d 372, 104 S. Ct. 1107 (1984) (the Anti-Injunction Act prohibits injunctions in the context of a statutory scheme which provides an alternative remedy). 
The Church has not met its burden under Williams Packing to demonstrate that it will suffer irreparable injury unless an injunction is issued. Thus, neither prong of the Williams Packing test has been satisfied. 
IV 
The Church argues that the district court violated its right to due process of law by dissolving the TRO and denying the preliminary injunction before the Church had the opportunity to file its reply to the Government's response as permitted by the local rules. The Government argues that there was no violation of due process as the district court must dismiss an action sua sponte if it lacks subject matter jurisdiction, even if the parties do not raise the issue.  Bender v. Williamsport Area School Dist., 475 U.S. 534, 541, 89 L. Ed. 2d 501, 106 S. Ct. 1326 (1986). 
The district court granted the Church's request for  [**26]  a TRO on April 24, 1990 and issued a minute order setting a hearing date for the OSC for May 21, 1990. The parties were directed to follow the local rules regarding the timely filing of their documents. Simultaneously, the district court ordered that no appearance would be necessary. The Church alleges, and the Government does not contest, that the briefing schedule established by these dates under Local Rule 7 required that the Government file its response to the OSC by May 7, 1990. The Church's reply was due on May 14, 1990. The district court received the Government's response to the Order to Show Cause on May 7, 1990. Prior to the filing of the Church's reply, the district court issued its order on May 10, 1990, vacating the TRO and dismissing the request for a preliminary injunction. 
Whether the district court had subject matter jurisdiction is a question of law which this court considers de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, 496 U.S. 937, 110 L. Ed. 2d 664, 110 S. Ct. 3217 (1990). The Church has had a full opportunity to present its legal arguments in the briefs filed in this court. The Church does not contend that it was denied the  [**27]  opportunity to present facts showing that the court had subject matter jurisdiction under the Williams Packing test, but rather that, to "the extent that the District Court's denial of the preliminary injunction was based on 'the reasons and legal authorities cited in the Government's response to OSC,' it relied upon erroneous legal premises." Appellants Op. Br. at 20. 
Assuming arguendo that the district court erred in not allowing the Church an opportunity to file a reply to the Government's response to the OSC, the Church must show that it has been prejudiced.  Patel v. I.N.S., 790 F.2d 786, 789 (9th Cir. 1986) ("Because the petitioners can demonstrate  [*1491]  no prejudice, we reject their due process claim.") The Church presented its contention that the Anti-Injunction Act was inapplicable in its Memorandum of Points and Authorities in Support of Application for Temporary Restraining Order and Order to Show Cause Re Preliminary Injunction. It does not claim before this court that a remand is required so that it may present additional facts in response to the issues raised by the Government. Because the district court was correct in ruling that it lacked subject matter jurisdiction,  [**28]  the rights of the Church were not prejudiced by the dismissal of the action without permitting it to file its reply to the Government's response to the OSC. 
CONCLUSION 
The Anti-Injunction Act precludes the granting of an injunctive relief unless the requirements of the Williams Packing test are met. The Church has not demonstrated that under no circumstances could the Government prevail. The Church has also failed to establish that it will suffer irreparable harm unless an injunction is issued. Thus, the district court correctly determined that it lacked subject matter jurisdiction to restrain the tax assessments in issue. 
AFFIRMED.  

65 of 133 DOCUMENTS 

United States of America, Petitioner/Appellee/Cross-Appellant, v. Frank S. Zolin, Respondent/Appellee, and Church of Scientology of California and Mary Sue Hubbard, Intervenors/Appellants/Cross-Appellees 

Nos. 85-6065, 85-6105 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

905 F.2d 1344; 1990 U.S. App. LEXIS 9838; 91-1 U.S. Tax Cas. (CCH) P50,147; 66 A.F.T.R.2d (RIA) 5965; 30 Fed. R. Evid. Serv. (Callaghan) 44 

June 20, 1990, Filed 

PRIOR HISTORY:
 [**1]  

 On Remand from the United States Supreme Court; D.C. No. CV 85-440-HLH.  

CASE SUMMARY
 
PROCEDURAL POSTURE: The United States Supreme Court remanded for a determination of whether tapes of meetings were admissible under the crime-fraud exception to the attorney-client privilege in an underlying criminal case.
 
OVERVIEW: The United States Supreme Court remanded for a determination as to the admissibility of allegedly privileged taped communications in an underlying criminal case. In light of the Supreme Court decision that partial transcripts of the tapes, although not independent evidence, could be used not only in pursuing in camera review, but also to provide an evidentiary basis to show the application of the crime-fraud exception, the court reversed and remanded a ruling that the government did not make a prima facie case of intended illegality. The transcripts demonstrated that past criminal wrong-doing was being covered up, and the tapes contained admissions of attempts to confuse and defraud the government. The transcripts, along with the other independent evidence, substantially showed an intended illegality to which the crime-fraud exception applied, and the tapes could not be protected under attorney-client privilege.
 
OUTCOME: The court reversed the district court's ruling that the government did not make out a case of intended illegality and remanded with the instruction to admit the tapes into evidence because the Supreme Court held that the tapes themselves could be examined for proof that would establish the crime-fraud exception.

COUNSEL:
Gary R. Allen, Tax Division, Department of Justice, Washington, District of Columbia, for the Petitioner/Appellee/Cross-Appellant. 
Eric M. Lieberman, Rabinowitz, Boudin, Standard, Kninsky & Lieberman, New York, New York, for the Intervenors/Appellants/Cross-Appellees. 
Frederick Bennett, County Counsel, Los Angeles, California, for the Respondent/Appellee.  

JUDGES:
 Alfred T. Goodwin, Chief Judge, James R. Browning and Jerome Farris, Circuit Judges.  

OPINIONBY:
FARRIS 

OPINION:

 [*1345]  FARRIS, Circuit Judge. 
The facts of this case are set forth in our previous opinion, United States v. Zolin, 809 F.2d 1411 (9th Cir. 1987), aff'd in part and vacated in part, 491 U.S. 554, 109 S. Ct. 2619, 105 L. Ed. 2d 469 (1989). We now resolve whether tapes of two meetings of the Mission Corporate Category Sortout project are admissible under the crime-fraud exception to the attorney-client privilege in light of the Supreme Court's ruling in United States v. Zolin, 491 U.S. 554, 109 S. Ct. 2619, 105 L. Ed. 2d 469 (1989). We hold that the tapes are admissible. [**2]  
"To invoke the [crime-fraud] exception successfully the party seeking disclosure . . . must make out a prima facie case that the attorney was retained in order to promote intended or continuing criminal or fraudulent activity." United States v. Hodge & Zweig, 548 F.2d 1347, 1353, 1354 (9th Cir. 1977). The Government has presented the following evidence of intended illegality: (1) Agent Petersell's Supplemental Declaration of March 8, 1985, (2) Petersell's Supplemental Declaration of March 15, 1985, and (3) partial transcripts of the tapes themselves. n1 

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n1 The Government has also attempted to present the declaration of Agent Philip Xanthos as evidence, but we have already denied the Government permission to present this declaration and will not consider it here. See March 3, 1987 Order. 

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In our first Zolin opinion we examined only the independent evidence presented -- items one and two [**3]  above -- and held that "while not altogether insubstantial, [this evidence] is not sufficient to make out the requisite prima facie showing of intended illegality." 809 F.2d at 1419. In its decision, the Supreme Court held that 

evidence that is not "independent" of the contents of allegedly privileged communications -- like the partial transcripts in this case -- may be used not only in the pursuit of in camera review, but also may provide the evidentiary basis for the ultimate showing that the crime-fraud exception applies.

 Zolin, 109 S. Ct. at 2632 n. 12. We must therefore examine the transcripts and determine whether they, along with the independent evidence already reviewed, demonstrate sufficient evidence of intended illegality to establish that the tapes are within the crime-fraud exception. We hold that they do. 
The partial transcripts demonstrate that the purpose of the MCCS project was to cover up past criminal wrong-doing. The MCCS project involved the discussion and planning for future frauds against the IRS, in violation [**4]  of 18 U.S.C. §  371. See, e.g., United States v. Carruth, 699 F.2d 1017, 1021 (9th Cir. 1983), cert. denied, 464 U.S. 1038, 104 S. Ct. 698, 79 L. Ed. 2d 164 (1984). The figures involved in MCCS admit on the tapes that they are attempting to confuse and defraud the U.S. Government. The purpose of the crime-fraud exception is to exclude such transactions from the protection of the attorney-client privilege. 
 [*1346]  We therefore reject the district court's holding that the Government did not make out a case of intended illegality. In light of the Supreme Court's holding that the tapes themselves can be examined for proof that would establish the crime-fraud exception, the transcripts can be examined, and they appear to make out the Government's case on intended illegality. On remand the district court should admit the MCCS tapes into evidence, subject to any objections the parties might make at that time. n2 

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n2 The issue of the potential illegality of the transcripts, mentioned by the Supreme Court, see Zolin, 109 S. Ct. at 2624 n. 5, is not properly before this court. The Church did not raise this issue in its original appeal, and we will not consider it on a later remand. See Nilsson, Robbins, et al. v. Louisiana Hydrolec., 854 F.2d 1538, 1547-48 (9th Cir. 1988). 

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REVERSED AND REMANDED.  

66 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER, CHURCH OF SCIENTOLOGY INTERNATIONAL, INC., et al., Plaintiffs-Appellants, v. ROBIN SCOTT, et al., Defendants-Appellees 

No. 87-5766 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

869 F.2d 1306; 1989 U.S. App. LEXIS 2990; 10 U.S.P.Q.2D (BNA) 1379 

September 16, 1988, Argued and Submitted 

March 10, 1989, Filed 

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California, D.C. No. CV 85-0711-MRP, Mariana R. Pfaelzer, District Judge, Presiding.  

CASE SUMMARY
 
PROCEDURAL POSTURE: Plaintiff church appealed from the judgment of the United States District Court for the Central District of California denying its second application for interlocutory relief in an action to enjoin defendant, also a church, from using plaintiff's scriptural material.
 
OVERVIEW: Plaintiff church filed a second application for interlocutory relief to restrain defendant, another church, from using plaintiff's scriptural materials claiming that defendant was violating racketeering, trademark infringement, and unfair competition laws. The trial court denied plaintiff's application relying on the previous decision of the appellate court in which the preliminary injunction granted in plaintiff's first application for interlocutory relief was vacated. On this appeal, the court found that the trial court had erroneously interpreted the previous appeal as holding that the religious scriptures could not qualify as trade secrets under California law, regardless of any allegations of commercial value. The court clarified that its previous holding turned on plaintiff's failure to claim that the scriptures gave it economic advantage over its competitors. Since plaintiff offered evidence that the scriptures had economic value in its second application for interlocutory relief, the court reversed and remanded for further proceedings.
 
OUTCOME: Reversed and remanded because plaintiff offered for the first time evidence that its religious scriptures conferred on it an economic advantage necessary to qualify as a trade secret.

COUNSEL:
Earle C. Cooley, Cooley, Manion, Moore & Jones, Boston, Massachusetts, for the Plaintiffs-Appellants. 
Jerold Fagelbaum, Shea & Gould, Los Angeles, California and Gary M. Bright, Bright & Powell, Carpinteria, California, for the Defendants-Appellees.  

JUDGES:
 William A. Norris, Cynthia Holcomb Hall and Alex Kozinski, Circuit Judges.  Cynthia Holcomb Hall, Circuit Judge, dissenting.  

OPINIONBY:
NORRIS 

OPINION:

 [*1307]  NORRIS, Circuit Judge. 
This appeal arises out of litigation initiated by the Church of Scientology n1 ("Church") against the Church of the New Civilization n2 ("New Church"). The focus of the litigation is certain scriptural material allegedly stolen from the Church by the New Church. n3 Early in the litigation, the district court granted the Church a preliminary injunction restraining the New Church from using the disputed scriptures. That injunction was vacated on appeal.  Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1084, 1089-91 (9th Cir. 1986), ("Wollersheim"), cert. denied, 479 U.S. 1103, 94 L. Ed. 2d 187, 107 S. Ct. 1336 (1987). The Church then filed a second application for interlocutory relief,  [**2]  which was denied by the district court on the ground that it was foreclosed by Wollersheim. The Church now appeals that denial. We reverse and remand to the district court for further proceedings in light of this opinion. 

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n1 Formally, the plaintiffs and appellants are Religious Technology Center, Church of Scientology International, Inc. and Church of Scientology California, which are related entities constituting the Church of Scientology founded by L. Ron Hubbard. For convenience, we refer to the plaintiffs/appellants collectively as the Church. 
n2 Defendants and appellees are the Church of the New Civilization and various individuals involved with the Church of the New Civilization. For convenience, we refer to the defendants/appellees collectively as the New Church. 
n3 See generally, Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1077-79 (9th Cir. 1986), cert. denied, 479 U.S. 1103, 94 L. Ed. 2d 187, 107 S. Ct. 1336 (1987) for discussion of the underlying facts in this litigation. 

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I 
BACKGROUND 
In its complaint, the Church stated claims against the New Church for racketeering under the Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. §  1962(c)) ("RICO"), trademark infringement [**3]  under federal and common law, unfair competition, receipt of stolen property, and various other state law claims. The Church sought damages as well as injunctive relief to prevent the New Church from disseminating the contents of scriptural materials which the Church claimed had been stolen from its Denmark offices by adherents of the New Church. 
In an Ex Parte Application for Temporary Restraining Order ("TRO") and Order to Show Cause ("OSC"), the Church sought interlocutory relief on the ground that its scriptures were trade secrets and that it would suffer irreparable harm if its trade secrets were disseminated by another organization such as the New Church. The Church did not characterize the alleged harm as commercial or economic, but rather characterized it as "spiritual" harm. Essentially, the Church argued that its adherents  [*1308]  would suffer irreparable spiritual injury if the New Church were free to disseminate the disputed materials. See Wollersheim, 796 F.2d at 1079. 
The district court granted the Church a TRO and later extended it to a preliminary injunction, prohibiting the New Church from "using, distributing, exhibiting or in any way publicly revealing" the scriptures.  [**4]  Id. The preliminary injunction was based on the district court's finding that the scriptures were trade secrets and entitled to protection under both RICO and California law. 
On appeal, we vacated the preliminary injunction. We held that the scriptures did not qualify as trade secrets under California law because of the failure of the Church to claim that the scriptures had any commercial value. We rejected the Church's argument that the scriptures qualified as trade secrets because of their spiritual value.  Id. at 1090-91. n4 

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n4 In Wollersheim, we also held that the Church's RICO claim could not provide the basis for injunctive relief. Id. at 1077. 

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The Church returned to the district court and filed a second Ex Parte Application for Temporary Restraining Order and Order to Show Cause, again asking the court to restrain the New Church from using the scriptural materials. This time, the Church argued that the scriptures qualified as trade secrets because they had economic value. Specifically, the Church contended that if the New Church was not enjoined from using the scriptures, "plaintiffs will be forever at a loss to protect the confidential nature and resultant [**5]  economic value of these materials. Defendant will obtain an economic advantage that they would not otherwise possess which will be used to divert parishioners, the value and goodwill of which cannot be monetarily measured for plaintiffs." Excerpt of Record ("E.R."), Vol. 1:347 at 29. (Emphasis added.) After a hearing, the district court denied the application "solely based upon the Ninth Circuit's . . . decision [in Wollersheim]." Id. Vol. 3:421 at 2. 
II 
JURISDICTION 
This court may hear appeals from interlocutory orders of the district court which grant, continue, modify, refuse or dissolve injunctions. 28 U.S.C. §  1292(a)(1). n5 Ordinarily, an appeal does not lie from the denial of an application for a temporary restraining order; such appeals are considered premature and are disallowed "in the interests of avoiding uneconomical piecemeal appellate review." Kimball v. Commandant Twelfth Naval District, 423 F.2d 88, 89 (9th Cir. 1970). 

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n5  28 U.S.C. §  1292(a)(1) provides: 

 "The courts of appeals shall have jurisdiction of appeals from: (1) Interlocutory orders of the district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court; . . ."

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We have recognized, however, that a denial of a TRO may be appealed if the circumstances render the denial "tantamount to the denial of a preliminary injunction." Environmental Defense Fund, Inc. v. Andrus, 625 F.2d 861, 862 (9th Cir. 1980). See also Kimball, 423 F.2d at 89. In Andrus we held the denial of the TRO was tantamount to the denial of a preliminary injunction because of the presence of two factors: the denial of the TRO followed a "full adversary hearing" and "in the absence of review, the appellants would be effectively foreclosed from pursuing further interlocutory relief." Id. 
The rationale of Andrus applies with equal force to this appeal. Here the district court denied the Church's renewed application for a TRO and an OSC following a hearing at which all parties were represented. The transcript of the hearing and the court's written order denying the application make it unmistakably clear that the order was tantamount to a denial of a preliminary injunction. During the hearing, the district judge was emphatic in her  [*1309]  view that our decision in Wollersheim foreclosed any interlocutory relief on the grounds advanced in the Church's new application:  [**7]  "I don't believe that the appellate court feels that in this case an injunction is appropriate. . . . I would say that we don't have anything much to talk about." Supp. E.R. at 6-7. In her written order she denied the application "solely based upon the Ninth Circuit's August 1986 decision. . . ." E.R. Vol. 3:421 at 2. The futility of any further hearing was thus patent; there was nothing left to talk about. In these circumstances, we hold, as we did in Andrus, that the denial of the TRO and the OSC was "tantamount to the denial of a preliminary injunction." 625 F.2d at 862. Accordingly, the district court's order is appealable under 28 U.S.C. §  1292(a)(1). n6 

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n6 Arguably, one could read Andrus as laying down a black-letter rule that "a full adversary hearing" is a necessary, if not a sufficient, condition to the appealability of a denial of a TRO. We reject this wooden reading of Andrus. The teaching of Andrus is that a denial of a TRO is appealable if the circumstances make it unmistakably clear that the denial "is tantamount to the denial of a preliminary injunction." There the circumstances included "a full adversary hearing," which presumably means an evidentiary hearing; here the circumstances included a non-evidentiary adversary hearing at which all parties were represented. The record below makes it clear that an evidentiary hearing would have been pointless; in light of the district judge's ruling that Wollersheim barred all interlocutory relief, it would have been a waste of party and judicial resources to have conducted an evidentiary hearing. 
The New Church argues that Granny Goose Foods, Inc. v. Brotherhood of Teamsters, 415 U.S. 423, 433 n.7, 39 L. Ed. 2d 435, 94 S. Ct. 1113 (1974) forecloses our treating this as an appeal from an order denying a preliminary injunction. We disagree. Granny Goose is simply inapposite. That case had nothing to do with the appealability of a denial of a TRO or any other question of appellate jurisdiction. It stands for the unremarkable proposition that a TRO issued by a state court remains in effect after removal to federal court only so long as it would under state law, notwithstanding the literal requirement of 28 U.S.C. §  1450 that all orders issued prior to removal remain in effect "until dissolved or modified by the district court." We fail to see how the holding of Granny Goose has any bearing on the issue of the appealability of the denial of the TRO in this case. However, we do agree with the New Church's apparent concern that we could not enjoin the use of the scriptures without giving the New Church a meaningful opportunity to file opposing papers and present evidence in a full adversary hearing. Whether this court may grant certain relief, however, is quite a different question from whether we have jurisdiction in the first place to review a TRO that is tantamount to a denial of a preliminary injunction. 

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III 
LAW OF THE CASE 
The denial of a preliminary injunction is subject to a limited standard of review.  Colorado River Indian Tribes v. Town of Parker, 776 F.2d 846, 849 (9th Cir. 1985). We reverse the denial only when the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Id. In the instant case, the district judge explained that she was basing her decision to deny the application for TRO and OSC -- which we treat as the denial of a preliminary injunction -- solely on our decision in Wollersheim. She interpreted Wollersheim as foreclosing interlocutory relief on any of the grounds raised by the Church in its second application, even though the Church advanced new state law theories and for the first time offered evidence that the scriptures in fact had economic value. Of particular importance to the instant appeal, the district court apparently interpreted Wollersheim as holding that the religious scriptures could not qualify as trade secrets under California law, regardless of whether they had commercial value. 
With all respect, we believe that the district court read more into Wollersheim [**9]  than we intended. Putting aside that part of the opinion which addressed the Church's claim to injunctive relief under RICO, the remainder of the opinion was fairly narrowly drawn. The only question before the court was whether a religious scripture could qualify as a trade secret under California law if it conferred a spiritual, as opposed to an economic, advantage on its owner. We determined that California law did not recognize information as a trade secret unless it conferred on its owner an actual economic advantage over competitors.  796 F.2d at 1091.  [*1310]  Because the Church made no claim that the scriptures gave it a commercial advantage over its competitors, we held that the scriptures did not qualify as trade secrets under California law. Wollersheim turned, therefore, on the absence of any claim of economic advantage at the preliminary injunction stage. While we expressed doubts about whether the Church could allege the competitive market advantage required without "rais[ing] grave doubts about its claim as a religion and a not-for-profit corporation," id., we did not decide one way or another whether the scriptures could qualify as trade secrets should the Church allege [**10]  and prove economic advantage. Nor did we express any opinion as to whether the Church could be entitled to a preliminary injunction under any of the other state law theories advanced in its first application for interlocutory relief. Thus, Wollersheim did not establish the law of the case on either of these questions. 
Accordingly, we REVERSE the district court's order denying the TRO and OSC and REMAND to the district court for further proceedings in light of this opinion. In so doing, we express no view as to whether the district court should exercise its discretion and decline to consider this second application for interlocutory relief on grounds that the Church is needlessly burdening the courts with repetitive applications for the same relief.  

DISSENTBY:
HALL 

DISSENT:

CYNTHIA HOLCOMB HALL, Circuit Judge, dissenting: 
I agree that we have jurisdiction to hear this appeal and that the district court erred in construing our decision in Wollersheim I so broadly. I cannot join the majority opinion, however, because a remand to the district court for further evaluation of the appropriateness of preliminary relief constitutes an enormous waste of judicial resources. 
In Wollersheim I, the Church [**11]  of Scientology (the "Church") sought and obtained a preliminary injunction, based in part on its claim that the Church of the New Civilization (the "New Church") stole its protected trade secrets. The Church alleged that New Church adherents took certain scriptural materials from the Church when they left to form the New Church. The Church, however, did not characterize the alleged harm as commercial or economic. Instead, the Church alleged only that its followers would suffer spiritual injury if the New Church was permitted to retain and use the scriptures. On appeal, we held that the Church's failure to allege or offer proof that the scriptures had economic value meant that the scriptures did not qualify as trade secrets under California law. 
Following our decision, the Church returned to the district court to again seek an injunction against the New Church's use and distribution of the disputed scriptures. This time, however, the Church alleged that the scriptures had economic value: "Plaintiffs will be forever at a loss to protect the confidential nature and resultant economic value of these materials. Defendant will obtain an economic advantage that they would not otherwise possess [**12]  which will be used to divert parishioners, the value and goodwill of which cannot be monetarily measured by plaintiffs." The district court denied this second request for preliminary injunctive relief, construing our decision in Wollersheim I as precluding an injunction before a final hearing on the merits. 
The Church made a tactical choice not to allege in its original application that the scriptures had an economic value. The Church cannot now avoid the consequences of that choice by burdening the district court with a second application for preliminary relief, and this court with a second interlocutory appeal. Where the Church easily could have alleged in its initial application that the scriptures had an economic value, we should hold that it is estopped from appealing the denial of its subsequent application for preliminary relief under California trade secrets law. n1 

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n1 The Church alleged several other state law theories of recovery in this and its prior application for preliminary injunctive relief. We did not specifically analyze these other claims in Wollersheim I. During oral argument in the present case, however, counsel for the Church, with commendable candor, acknowledged that the only argument made before this court to support the first injunction was that the scriptures conferred a spiritual advantage on the Church and its followers. The courts need not be at the Church's beck and call to now analyze the relevance, if any, of the Church's new allegations of commercial advantage to these other state law theories. 

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 [*1311]  The doctrine of judicial estoppel, sometimes referred to as the doctrine of preclusion of inconsistent positions, is invoked to prevent a party from changing its position over the course of judicial proceedings when such positional changes have an adverse impact on the judicial process. See 1B Moore's Federal Practice P.405[8], at 238-42 (2d Ed. 1988). "The policies underlying preclusion of inconsistent positions are 'general consideration[s] of the orderly administration of justice and regard for the dignity of judicial proceedings.'" Arizona v. Shamrock Foods Co., 729 F.2d 1208, 1215 (9th Cir. 1984), cert. denied, 469 U.S. 1197, 83 L. Ed. 2d 982, 105 S. Ct. 980 (1985) (citations omitted). Judicial estoppel is "intended to protect against a litigant playing 'fast and loose with the courts.'" Rockwell International Corp. v. Hanford Atomic Metal Trades Council, 851 F.2d 1208, 1210 (9th Cir. 1988) (citations omitted). Because it is intended to protect the integrity of the judicial process, it is an equitable doctrine invoked by a court at its discretion. 
I recognize that this is not the prototypical case for invoking judicial estoppel. Judicial estoppel is most commonly applied to bar a party from [**14]  making a factual assertion in a legal proceeding which directly contradicts an earlier assertion made in the same proceeding or a prior one. See generally Note, Judicial Estoppel: The Refurbishing of a Judicial Shield, 55 Geo. Wash. L. Rev. 409, 410-412 (1987); Comment, Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 NW.U.L.Rev. 1244 (1986). n2 Nevertheless, I find the policies underlying the doctrine of judicial estoppel to make this an equally appropriate case for its application. 

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n2 Finley v. Kesling, 105 Ill. App. 3d 1, 433 N.E.2d 1112, 60 Ill. Dec. 874 (1982), is cited by the latter article as a paradigmatic case for the invocation of judicial estoppel. In Finley, a declaratory action filed by the former owner of the Oakland Athletics baseball team to resolve ownership interests in the family corporation, the plaintiff asserted that he was the beneficial owner of 71 % of the stock. The court estopped him from taking that position because, in a divorce action eight years before, he had testified under oath that he owned only 31% of the stock and that his wife and children owned the rest.  Finley, 105 Ill. App. 3d at 10, 433 N.E.2d at 1119. 

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Considerable [**15]  judicial resources were expended in resolving the novel question of state law presented by the Church's original argument that information could be a trade secret if it conferred a spiritual advantage on its creator. But instead of laying the question of interlocutory relief to rest, our decision in Wollersheim I that California law protects trade secrets only if they have commercial value, simply prompted the Church to start the process all over again by arguing in a new application for a TRO that the scriptures did have commercial value after all. As a result of the Church's actions in pursuing two successive applications for injunctive relief, instead of a single application based upon alternative theories of spiritual and commercial value, there is no question but that the courts as well as the defendants have been needlessly burdened. 
The integrity of the judicial process would be seriously undermined if every litigant could compel the courts to hear and decide repetitive requests for the identical relief. The Church should not be permitted to use the courts as a laboratory in which to experiment. The doctrine of judicial estoppel was fashioned to prevent just this sort of [**16]  litigation strategy which plays fast and loose with the judicial process. 

67 of 133 DOCUMENTS 

UNITED STATES OF AMERICA, Petitioner/Appellee/Cross-Appellant, v. FRANK S. ZOLIN, Respondent/Appellee, and CHURCH OF SCIENTOLOGY OF CALIFORNIA AND MARY SUE HUBBARD, Intervenors/Appellants/Cross-Appellees.  

Nos. 85-6065; 85-6105 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

850 F.2d 610; 1988 U.S. App. LEXIS 19474 

July 5, 1988, Filed 

PRIOR HISTORY:
 [*1]  D.C. No. CV85-440-HLH 

JUDGES:
Before: Browning, Tang, Pregerson, Alarcon, Norris, Reinhardt, Beezer, Brunetti, Thompson, and Leavy, Circuit Judges.  

OPINIONBY:
BROWNING 

OPINION:

ORDER 
ORDER 
The opinion published at 842 F.2d 1135 is amended to include the following concurrence: 

CONCURBY:
NORRIS 

CONCUR:

CONCURRENCE 

NORRIS, Circuit Judge, concurring in the result: 
I write separately to make it clear that I believe the independent evidence rule has been and should continue to be the law of the circuit. See United States v. Shewfelt, 455 F.2d 836 (9th Cir.), cert. denied, 406 U.S. 944, 32 L. Ed. 2d 331, 92 S. Ct. 2042 (1972). However, I cannot join the court's order because the majority has failed to make clear whether the order is a disposition on the merits, i.e., whether it constitutes en banc authority that the Shewfelt independent evidence rule is the law of the circuit. If the order is intended to be a disposition on the merits, it is internally inconsistent because an en banc panel cannot both decide a case on the merits and vacate as improvidently granted the order of the full court authorizing [*2]  it to decide the case.  

68 of 133 DOCUMENTS 

United States of America, Petitioner/Appellee/Cross-Appellant, v. Frank S. Zolin, Respondent/Appellee, and Church of Scientology of California and Mary Sue Hubbard, Intervenors/Appellants/Cross-Appellees 

Nos. 85-6065, 85-6105 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

842 F.2d 1135; 1988 U.S. App. LEXIS 6081 

March 28, 1988, Filed 

SUBSEQUENT HISTORY:
 [**1]  
 As Amended, July 5, 1988.  

PRIOR HISTORY:
 D.C. No. CV85-440-HLH.  

JUDGES:
Browning, Chief Judge, Anderson, Tang, Pregerson, Alarcon, Norris, Reinhardt, Beezer, Brunetti, Thompson and Leavy, Circuit Judges.  Beezer, Circuit Judge, with whom Anderson and Thompson, Circuit Judges, join, dissenting.  

OPINION:

 [*1136]  ORDER 
En banc review was ordered in this matter under the mistaken assumption that United States v. Shewfelt, 455 F.2d 836 (9th Cir. 1972) and United States v. Friedman, 445 F.2d 1076 (9th Cir. 1971) were in conflict on the question whether "the government must first establish a prima facie case of fraud independently of the said [attorney-client] communications," Shewfelt, 455 F.2d at 840, before "the privileged status of these communications can be lifted." Id. There is no conflict. In United States v. Friedman, we did not discuss the showing that the government must make before the trial court can examine attorney-client communications to determine whether "the thrust of these . . . conversations was to effectuate a plan of fraud." Shewfelt, 455 F.2d at 840. In Shewfelt we [**2]  did, and concluded that the government must make a prima facie showing, independent of the communications involved, that the attorney-client communications were in furtherance of an intended or present illegality. Id.  Shewfelt is the law of the circuit. 
The dictum in United States v. King, 536 F. Supp. 253 (C.D.Cal. 1982) suggesting that Shewfelt "does not now appear to be the law in the Ninth Circuit," id. at 262, is disapproved. That portion of the three-judge panel opinion in United States v. Zolin, 809 F.2d 1411 (9th Cir. 1987), beginning with the first full paragraph on page 1418 to and including the last full paragraph in the second column on the same page, is ordered withdrawn. The opinion of the three-judge panel will stand in all other respects. 
The order dated November 6, 1987, that this matter be reheard en banc, is vacated as improvidently granted.  

DISSENTBY:
BEEZER 

DISSENT:

BEEZER, Circuit Judge, with whom ANDERSON and THOMPSON, Circuit Judges, join, dissenting: 
The order that this matter be reheard en banc was not improvidently granted. I dissent. 
According to Ninth Circuit Rule 35-1, our order to rehear [**3]  the matter en banc was entirely appropriate. n1 The independent evidence requirement is a procedure for invoking the crime-fraud exception to the attorney-client privilege. We adopted this procedure, in a conclusory way, in United States v. Shewfelt, 455 F.2d 836 (9th Cir.  1972). This procedure has not been endorsed by any other circuit court of appeals. The order filed today thus perpetuates a maverick version of the attorney-client privilege -- a rule of national application. In addition, the attorney-client privilege, as a rule of evidence for the federal courts, has an overriding need for national uniformity. Considering that this circuit's position clashes with that of a majority of other circuits, our order that we rehear this matter en banc was most providently granted. 

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n1 Ninth Circuit Rule 35-1 states, "When the opinion of a panel directly conflicts with an existing opinion by another court of appeals and substantially affects a rule of national application in which there is an overriding need for national uniformity, the existence of such conflict is an appropriate ground for suggesting a rehearing en banc." 

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I 
The crime-fraud exception defeats the attorney-client privilege. To invoke the exception,  [*1137]  the government must make a prima facie showing that an otherwise privileged communication is in furtherance of fraud or crime. In this circuit the government has had to make the prima facie showing by the use of independent evidence -- evidence other than the suspect communication itself. Elsewhere the government has been able to make the prima facie showing by the court's in camera inspection of the suspect communication. The substantive issue in this en banc case is: should we overrule Shewfelt, eliminate the independent evidence requirement, and allow in camera inspection of suspect communications?  We should. 
II 
Every circuit to face the situation this case presents has allowed in camera inspection. In reverse chronological order, they are the Sixth, Second, D.C., Eighth, Third, and Fourth Circuits. n2 Following is a sample of the cases. 
Sixth: In Re Antitrust Grand Jury, 805 F.2d 155, 168-169 (6th Cir. 1986). 
Second: In Re Grand Jury Subpoena Duces Tecum, 798 F.2d 32 (2d Cir. 1986); In Re John Doe Corp., 675 F.2d 482, 486 and 490 (2d Cir. 1982). [**5]  
D.C.: In Re Sealed Case, 244 U.S. App. D.C. 11, 754 F.2d 395, 399-401 (D.C.Cir. 1985) (IRS case closely resembling case now before us); In Re Sealed Case, 219 U.S. App. D.C. 195, 676 F.2d 793, 815 (D.C.Cir. 1982). 
Eighth: Pritchard-Keang Nam Corp. v. Jaworski, 751 F.2d 277, 280 (8th Cir. 1984); In Re Berkley & Co., 629 F.2d 548, 553 (8th Cir. 1980); In Re Murphy, 560 F.2d 326, 331 and 338 n. 23 (8th Cir. 1977); Pfizer Inc. v. Lord, 456 F.2d 545, 551 (8th Cir. 1972) (per curiam). 
Third: In Re Grand Jury Proceedings (FMC Corp.), 604 F.2d 798, 800 (3d Cir. 1979). 
Fourth: Union Camp Corp. v. Lewis, 385 F.2d 143, 144 (4th Cir. 1967). 

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n2 The Church of Scientology fails to distinguish these cases in any principled way. The Church does point out, correctly, that one of the D.C. cases only represents the views of one member of that court. See In Re Sealed Case, 219 U.S. App. D.C. 195, 676 F.2d 793, 815 (D.C.Cir. 1982) (J. Skelly Wright). 

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III 
Other circuits have not always addressed the underlying policy question in allowing in camera review for purposes of the crime-fraud exception. As an en banc panel establishing the law of this circuit, however, we are obligated to address the policy question. 
In particular, we are charged with evaluating the tradeoff between maintaining confidentiality and prosecuting crimes. In addressing this policy question, the Second Circuit considered an additional factor, grand jury secrecy. Grand jury secrecy would rest on the scale alongside maintaining confidentiality, weighing against in camera inspection; still the Second Circuit found that the balance tipped in favor of in camera inspection. In Re John Doe Corp., 675 F.2d at 490. 
The need to prosecute crimes strongly supports in camera inspection. The attorney-client privilege was not designed to protect communications in furtherance of fraud or crime. When a communication, otherwise within the privilege, itself furthers fraud or crime, independent evidence of that fact rarely will be available. In such cases the independent evidence requirement would simply insulate dishonest parties from prosecution.  [**7]  See United States v. King, 536 F. Supp. 253, 262 (C.D.Cal. 1982) (declining to follow Shewfelt's independent evidence requirement). 
Church of Scientology suggests that in camera inspection would undermine several important policies. First, inspection would allow the crime-fraud exception to eviscerate the attorney-client privilege. According to the Church, the possibility of inspection could "chill open attorney-client discussions." The fact that the inspections take place in camera, however, mitigates any chilling effect. A judge is not a prosecutor and will not expose discussions that are unrelated to the fraud or crime alleged. 
Second, according to the Church, inspection would force courts to review "any and  [*1138]  all attorney-client communications upon the mere allegation by a party . . . that the crime-fraud exception applies." The fear of disclosure of even innocent communications could give prosecutors an unfair litigation advantage, and courts would incur the intolerable burden of reviewing file after file of communications. 
In fact, the fear of disclosure of innocent communications would be reduced if the Ninth Circuit eliminated the independent [**8]  evidence rule. In camera inspection would allow a district court more precisely to determine which communications further crime or fraud and which do not. Compare In Re Antitrust Grand Jury, 805 F.2d 155, 168 (6th Cir. 1986). 
In any case, the predicate for the Church's conclusions is incorrect: in camera inspection need not force courts to review any and all documents alleged to fall within the crime-fraud exception. I would set out a rule that gives district courts discretion. Besides helping to prevent prosecutorial fishing expeditions, a rule affording discretion to district courts would allow those courts to regulate their burden of in camera review. 
A district court, faced with an argument that the crime-fraud exception applies, would decide for itself whether a given case warrants in camera review. A district court would exercise its discretion to conduct in camera review according to the circumstances -- including the presence or absence of circumstantial and other independent evidence. In a proper case, a district court might reject the crime-fraud exception without in camera review: without inspecting all documents alleged to evidence crime or fraud,  [**9]  or even without inspecting any documents -- without hearing all conversations alleged to evidence crime or fraud, or even without hearing any conversations. 
For additional protection of privileged documents -- to avoid disclosure of innocent documents -- I would also set out a rule that requires district courts to allow the crime-fraud exception only in relation to communications that the court individually has inspected in camera. This approach would be in line with the Sixth Circuit's position. In In Re Antitrust Grand Jury, 805 F.2d 155, 168 (6th Cir. 1986), the Sixth Circuit required the district court to review documents in camera before ordering them produced: 

Not only do we believe in camera review is mandated to determine the scope of the order, in camera review of the documents could have assisted the court in determining whether a prima facie violation had been made.

Church of Scientology hints that inspection would undermine another policy, that of supporting adversarial argument. In endorsing in camera review, the Second Circuit decided that limitations on adversarial argument are outweighed by the need to resolve [**10]  an evidentiary question while preserving confidentiality. 675 F.2d at 490. In any case, the independent evidence rule itself does not support adversarial argument insofar as the subject of the argument -- the communication alleged to be in furtherance of crime or fraud -- is available to one party and not the other. At best a distorted form of adversarial argument can occur. 
Finally, according to the Church, Federal Rule of Evidence 104(a) and Bourjaily v. United States, 483 U.S. 171, 107 S. Ct. 2775, 97 L. Ed. 2d 144 (1987), indicate that a court making preliminary inquiries about a privilege must abide by preexisting evidence rules such as the independent evidence requirement. Rule 104(a), however, is not on point. The rule deals with questions about the existence of a privilege, not about an exception to a privilege: 

Preliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court, subject to the provisions of subdivision (b). In making its determination it is not bound by the rules of evidence except those with respect to privileges.  [**11]  

Church of Scientology gains no support for the independent evidence requirement by analogy to Rule 104(a). In the Ninth Circuit the rules of evidence with respect to  [*1139]  privileges do allow for in camera review: a court undertakes in camera review of documents to decide whether the attorney-client privilege even exists with respect to those documents.  In Re Grand Jury Witness, 695 F.2d 359, 362 (9th Cir. 1982). 
Church of Scientology garners no support from Bourjaily. In that case the Supreme Court held that a showing to admit a co-conspirator's statement under Rule 801(d)(2) need not rely on independent evidence, but may rely on the statement itself. If anything Bourjaily suggests that a court may indeed examine suspect communications when considering the crime-fraud exception. Compare 107 S. Ct. at 2780. 
Accordingly, I would overrule Shewfelt, eliminate the independent evidence requirement, and allow in camera inspection of suspect communications. The way I would formulate the rule, however, would dictate that we affirm the district court in this case. 
IV 
The government argues that the district court abused [**12]  its discretion by rejecting the crime-fraud exception without inspecting all the tape recorded communications known to the government. According to the rule I have described, a district court would be within its discretion to reject the exception without inspecting all suspect communications or even any communications. In this case the government submitted only a partial transcript of material to the district court. When the government submitted that partial transcript, the government was aware of the entire contents of the tapes. See Government's Brief at 12 (discussing Xanthos Declaration submitted to district court on motion for reconsideration). The district court was entitled to rely on the government to highlight, to the best of its ability, those parts of the tapes that might fall within the crime-fraud exception. 
On appeal the government asks us to order the district court to inspect those parts of the tapes that were not within the partial transcript. In the district court, however, the government did not indicate that a partial transcript was an inadequate basis for a ruling on the crime-fraud exception. See Denial of Motion for Reconsideration, Government's [**13]  Supplemental Excerpt of Record at Tab 80. The government never explained why it had failed to include the other parts of the tapes in the partial transcript in the first place. Id. The district court was well within its discretion to consider only the partial transcript, and the district court did not abuse its discretion in rejecting the crime-fraud exception. 
V 
We should overrule Shewfelt and eliminate the independent evidence requirement. An appropriate rule would make in camera review discretionary for the district court to reject the crime-fraud exception, mandatory for the district court to allow the exception and order disclosure. In this case the district court did not abuse its discretion by rejecting the exception without a complete review.  

69 of 133 DOCUMENTS 

United States of America, Petitioner/Appellee Cross-Appellant, v. Frank S. Zolin, Respondent/Appellee, and Church of Scientology of California and Mary Sue Hubbard, Intervenors/Appellants/Cross-Appellees 

Nos. 85-6065, 85-6105 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

832 F.2d 127; 1987 U.S. App. LEXIS 14814 

November 6, 1987, Filed; VACATED; PETITION FOR REHEARING EN BANC GRANTED MARCH 28, 1988 

PRIOR HISTORY:
 [*1]  
DC No. CV85-440-HLH 

OPINION:

ORDER
Before: BROWNING, Chief Judge, GOODWIN, WALLACE, KENNEDY, ANDERSON, HUG, TANG, SCHRODER, FLETCHER, FARRIS, PREGERSON, ALARCON, POOLE, NELSON, CANBY, NORRIS, REINHARDT, BEEZER, HALL, WIGGINS, BRUNETTI, KOZINSKI, NOONAN, THOMPSON, O'SCANNLAIN, and LEAVY, Circuit Judges.
Upon the vote of a majority of the nonrecused regular active judges of this court, it is ordered that this case be reheard by the en banc court pursuant to Circuit Rule 35-3. The previous three-judge panel assignment is withdrawn.  

70 of 133 DOCUMENTS 

Church of Scientology of California, Petitioner-Appellant, v. Commissioner of Internal Revenue, Respondent-Appellee 

No. 85-7324 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

823 F.2d 1310; 1987 U.S. App. LEXIS 9962; 87-2 U.S. Tax Cas. (CCH) P9446; 60 A.F.T.R.2d (RIA) 5386; 92 A.L.R. Fed. 231 

August 8, 1986, Argued and Submitted 

July 28, 1987, Filed 

PRIOR HISTORY:
 [**1]  Appeal from a Decision of the Tax Court of the United States. Tax Ct. No. 3352-78.  

COUNSEL:
Christopher Cobb, Richard Riley, and Eric Lieberman, for the Petitioner-Appellant. 
Steven Frahm and John Dudack, for the Respondent-Appellee. 
Lee Boothby, and Gerald McNally, Jr., for the Amicus-Curiae.  

JUDGES:
 Thomas Tang and Melvin Brunetti, Circuit Judges, and William J. Jameson, * District Judge. 
* Honorable William J. Jameson, Senior United States District Judge, District of Montana, sitting by designation. 

OPINIONBY:
TANG 

OPINION:

 [*1312]  TANG, Circuit Judge: 
The Church of Scientology (Church) appeals a judgment of the Tax Court which affirmed the Commissioner's assessment of tax deficiencies and late filing penalties against the Church for the years 1970, 1971 and 1972. At issue is whether the Commissioner properly revoked the Church's tax exempt status. 
I. 
The Church was incorporated as a nonprofit corporation in the State of California in 1954. In 1957, the Commissioner recognized it as a tax exempt organization under §  501(c)(3) of the Internal Revenue Code of 1954. n1 The Commissioner revoked the Church's tax exempt status in 1967. The letter of revocation stated that the Church was "engaged  [**2]  in a business for profit," and was "operated in manner whereby a portion of [its] earnings inure[d] to the benefit of a private individual," and was "serving a private, rather than a public interest." The letter instructed the Church to file federal income tax returns. The IRS subsequently published a notice of revocation in the Internal Revenue Service bulletin, and removed the Church from the Service's official roster of organizations eligible to receive tax deductible charitable donations. The Church did not file income tax returns for the years 1970 through 1972, instead, it submitted Form 990, information returns. On December 28, 1977, after auditing the Church's records, the IRS sent a Notice of Deficiency for the years 1970, 1971, and 1972. The IRS calculated the deficiency to be $1,150,458.87 and imposed an additional $287,614.71 in late filing penalties. n2 

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n1 Codified as amended at 26 U.S.C. §  501(c)(3)(1982). 
n2 The IRS may impose a penalty in addition to the tax for failure to file tax returns under 26 U.S.C. §  6651(a). 

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On March 28, 1978, the Church filed suit in United States Tax Court challenging the Commissioner's determination of tax deficiency. In an extensive  [**3]  opinion, the Tax Court substantially upheld the determination of the Commissioner. 83 T.C. 381 (1984). It held that the Church did not qualify for exemption from taxation under § §  501(a) & 501(c)(3) because: (1) the Church was operated for a substantial commercial purpose; (2) its earnings inured to  [*1313]  the benefit of L. Ron Hubbard, his family, and OTC, a private non-charitable corporation controlled by key Scientology officials; and (3) it violated well defined standards of public policy by conspiring to prevent the IRS from assessing and collecting taxes owed by the Church. The Court also upheld the validity of the Notice of Deficiency. n3 Finally, the Court upheld the penalties for failure to file tax returns. 

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n3 However, the Court found that the IRS erred in including payments from the United Kingdom Church in the Church's income because it found that the United Kingdom Church was a branch of the Church, and that the payments were internal transfers of funds. 

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II. 
During the years in question, the Church of Scientology of California was the "Mother Church" of the many Scientology churches around the country. The Church propagated the Scientology faith,  [**4]  a religion founded by L. Ron Hubbard, through such means as the indoctrination of laity, training and ordination of ministers, creation of congregations, and provision of support to affiliated organizations. 
Scientology teaches that the individual is a spiritual being having a mind and body. Part of the mind, called the "reactive mind" is unconscious and filled with mental images that are frequently the source of irrational behavior. Through the administration of a process known as "auditing" a parishioner, called a "pre-clear," is helped to erase his or her reactive mind and gain spiritual awareness. Auditing is administered individually by a trained "auditor." The auditor poses questions to the pre-clear and measures the latter's response with an electronic device call an "E-Meter" that is attached to the skin. The E-Meter assists in the identification of spiritual difficulty. Scientology teaches that spiritual awareness is achieved in stages. A disciple achieves different levels of awareness through additional auditing. The religion also offers courses to train auditors. 
Scientology teaches that people should pay for whatever of value they receive. This is called the "Doctrine of  [**5]  Exchange." Toward the realization of this doctrine, branch churches exacted a "fixed donation" for training and auditing. Fixed donations were not based on ability to pay and with few exceptions, services were not given for free. 
Scientology is an international religion with numerous churches around the world. In the 1970's these churches were organized along hierarchical lines according to the level of services they were authorized to provide. Churches that delivered services at the lowest levels were called "franchises" and later "missions." "Class IV orgs" delivered auditing through "grade IV" and training through "level IV." "St. Hill organizations" and "advanced organizations" offered intermediate and higher level services. The branch known as "Flag" offered the highest level of training and auditing. 
The California Church consisted of several divisions. The San Francisco Organization and the Los Angeles Organization were both class IV organizations. The American St. Hill Organization was located in Los Angeles and offered intermediate auditing and training. The Advanced Organization of Los Angeles provided high levels of auditing and training to persons who had completed services  [**6]  at a class IV organization. The Flag Operations Liaison Office, located in Los Angeles, was an administrative unit of the California Church. 
In addition to auditing and training, the Church provided assistance to prisoners, ex-offenders, the elderly, the mentally ill and drug addicts. On occasion the Church assisted the poor and the sick. The Church performed christenings, funerals and wedding ceremonies free of charge, and conducted regular Sunday services. The Church's chaplain provided marriage and family counseling free of charge. The Church also provided free, a specialized form of auditing geared to help people in crisis. 
Flag was the highest division of the California Church. It provided spiritual leadership. It also acted as the Church's administrative center. The Flag division was headquartered aboard the ship Apollo,  [*1314]  which cruised the Mediterranean Sea and docked in various countries along its shores. L. Ron Hubbard, his wife, Mary Sue, and their family lived aboard the Apollo with other members of the ship's crew and staff. Besides performing the highest levels of auditing and training, Flag staff members performed a variety of management functions. The Church's  [**7]  other divisions and other Scientology churches sent reports on a regular basis to Flag. These reports supplied information, often in statistical form, about the organization's operations. Flag staff, on the basis of the review of these reports, issued policy letters, directives, and other kinds of administrative advice geared to improving local church operations. Flag personnel also researched and developed programs for improving the administration of local churches. Flag sent teams of specialists to help other units or churches experiencing management difficulties. 
The Church derived income from four sources: (1) auditing and training; (2) sales of Scientology literature, recordings and E-meters; (3) franchise operations; and (4) management services. Franchise operators were required to remit ten percent of gross income to the Church. The Church offered its managerial services to branch organizations around the world for a fixed fee. 
One of the policy directives of the Church was to "MAKE MONEY". The Church frequently engaged in aggressive promotion of its products and services. This promotion included market surveys and advertisements. In addition, the Church trained staff members  [**8]  in salesmanship techniques. 
L. Ron Hubbard officially resigned his position as executive head of the California and other Scientology churches in 1966. Despite his official resignation, the Tax Court found that he continued to exert significant control over the Church by making policy statements, directives, and orders. In addition, his approval was required for all financial planning. He was the sole trustee of a major Scientology trust fund into which the Church made substantial payments. He or Mary Sue Hubbard were signatories on many Church bank accounts. 
During the tax years at issue, L. Ron Hubbard and Mary Sue Hubbard received salaries from the California Church and its affiliate, the United Kingdom Church, in the following amounts: 
	1970	1971	1972	
California Church	
L. Ron Hubbard	$ 4,932	$ 9,368	$ 35,000	
Mary Sue Hubbard	$ 3,017	$ 2,430	$ 25,000	
	
United Kingdom Church	
L. Ron & Mary Sue	
  Hubbard Combined	$ 12,300	$ 37,850	$ 55,680	
TOTAL	$ 20,249	$ 49,648	$ 115,680	
 [**9]  
During these years, L. Ron Hubbard, Mary Sue Hubbard and their four children resided for the most part aboard the Apollo. While aboard ship, the Church provided the Hubbards with free lodging, food, laundry, medical services and vitamins. 
The Church made royalty payments to L. Ron Hubbard for sales of his books, tapes and E-meters. The royalties amounted to ten percent of the retail price. The Church, for example, made $104,618.27 in royalty payments to Hubbard in 1972. Additionally, Church policy required that all work pertaining to Scientology and Dianetics be copyrighted to L. Ron Hubbard. As the result of this policy, a number of publications copyrighted by L. Ron Hubbard were actually written by others. For example, Ruth Mitchell wrote the book Know Your People and Peter Gillum wrote the book How to be Successful. Additionally, a series of books called the OEC series contained policy letters, some written by L. Ron Hubbard and others written by paid employees of the Church. L. Ron Hubbard received royalty payments on the sale of all of these publications. 
During the 1960's, Scientology organizations around the world were required to pay directly to L. Ron Hubbard, ten percent  [**10]  of their income. These payments were termed "debt repayments" because they were designed to compensate Hubbard for his work in originating the Scientology religion. The Tax Court concluded  [*1315]  that during 1971-1972 the Church continued to make debt repayments to Hubbard. 
In 1968, L. Ron Hubbard, Mary Sue Hubbard, and Leon Steinberg incorporated a Panamanian corporation called Operation Transport Corp., Ltd. (OTC). OTC was a for-profit corporation. Shortly after the corporation's formation, Hubbard, Mary Sue Hubbard and Steinberg resigned and were replaced by three Flag employees. During the years in question, the new directors performed only one function. In the summer of 1972, they approved L. Ron Hubbard's decision to transfer approximately two million dollars from an OTC bank account in Switzerland to the Apollo. The money was stored in a locked file cabinet to which Mary Sue Hubbard had the only set of keys. 
Between 1971 and 1972, the Church made payments in excess of three and a half million dollars to OTC. During these years, the Church also made payments totaling nearly $ 175,000 to the Central Defense and Dissemination Fund. According to the Church, these payments were  [**11]  placed in the United States Church of Scientology Trust of which L. Ron Hubbard was the sole trustee. The trust funds were deposited in several Swiss bank accounts. L. Ron Hubbard and Mary Sue Hubbard were signatories of the accounts and L. Ron Hubbard kept the trust checkbooks. 
III. 

A.  Tax Exemption 
 Internal Revenue Code §  501 exempts certain organizations from taxation. Section 501(c)(3) exempts: 

corporations and any community chest, fund, or foundation, organized and operated exclusively for religious . . . purposes, . . . no part of the net earnings of which inures to the benefit of any private shareholder or individual. . . .

To qualify for exemption, a church must show that it is (1) organized, and (2) operated, exclusively for religious or charitable purposes.  Hall v. Commissioner, 729 F.2d 632, 634 (9th Cir. 1984). 
The Church strenuously argues that the trial court failed to recognize it as a bona fide religion. This argument goes to whether the Church meets the organizational test. Neither the Commissioner, nor the Tax Court, nor this court questions that the Church of Scientology of California was organized for a bona fide religious purpose. The only  [**12]  question before the court, is whether the Church met the second requirement for tax exempt status, the operational test. 
Four elements compose the operational test. First, the organization must engage primarily in activities which accomplish one or more of the exempt purposes specified in §  501(c)(3).  Treas. Reg. §  1.501(c)(3)-1(c)(1); Church by Mail, Inc. v. Commissioner, 765 F.2d 1387, 1391 (9th Cir. 1985). Second, the organization's net earnings may not inure to the benefit of private shareholders or individuals.  Treas. Reg. §  1.501(c)(3)-1(c)(2); Church by Mail, 765 F.2d at 1391. Third, the organization must not expend a substantial part of its resources attempting to influence legislation or political campaigns.  Treas. Reg. §  1.501(c)(3)-1(c)(3); Church by Mail, 765 F.2d at 1391. Courts have imposed a fourth element. Organizations seeking exemption from taxes must serve a valid public purpose and confer a public benefit.  Bob Jones University v. United States, 461 U.S. 574, 585-92, 76 L. Ed. 2d 157, 103 S. Ct. 2017 (1983). If an organization fails to comply with any one of these four elements,  [**13]  it will fail the operational test and lose its eligibility for tax exempt status. Harding Hospital, Inc.  v. United States, 505 F.2d 1068, 1072 (6th Cir. 1974). 
We conclude that the Church failed to establish that "no part of the net earnings . . . inures to the benefit of any private shareholder or individual. . . ." 26 U.S.C. §  501(c)(3). Because we may affirm the Tax Court on this ground, we do not reach the questions of whether the Church operated for a substantial commercial purpose or whether it violated public policy. 

B.  Inurement 
Congress conferred tax exemption on churches and other organizations in recognition  [*1316]  of the benefit society derives from the activities of these organizations.  Harding Hospital, 505 F.2d at 1071; Founding Church of Scientology v. United States, 188 Ct. Cl. 490, 412 F.2d 1197, 1199 (1969), cert. denied, 397 U.S. 1009, 90 S. Ct. 1237, 25 L. Ed. 2d 422 (1970). The government leaves funds in the hands of charitable organizations rather than taxing them and spending the funds on public projects. Implicit in this purpose is that charities  [**14]  must promote the public good to qualify for tax exemption. Presbyterian and Reformed Publishing Co. v. Commissioner, 743 F.2d 148, 153 (3d Cir. 1984). 
Section 501(c)(3) embodies this policy. Churches are eligible for tax exempt status only if no part of their net earnings inure to the benefit of private individuals. Each phrase of the statute has significance. The term "no part" is absolute. The organization loses tax exempt status if even a small percentage of income inures to a private individual.  Founding Church, 412 F.2d at 1200; Spokane Motorcycle Club v. United States, 222 F. Supp. 151, 153 (E.D. Wash. 1963). The sole beneficiary of the church's activities must be the public at large.  Founding Church, 412 F.2d at 1199. 
Courts have construed broadly the term "net earnings".  Hall, 729 F.2d at 634. "Net earnings" includes more than gross receipts minus disbursements as shown on the books of the organization.  Harding Hospital, 505 F.2d at 1072. Only those ordinary expenses necessary to the operation of the church are not included in net earnings. Founding Church, 412 F.2d at 1200.  [**15]  
The heart of §  501(c)(3) tax exempt status is the phrase "inures to the benefit." Payment of reasonable salaries to church officials does not constitute inurement. Bubbling Well Church of Universal Love v. Commissioner, 670 F.2d 104, 105 (9th Cir. 1981). However, payment of excessive salaries will result in a finding of inurement. Id. Inurement can also result from distributions other than the payment of excessive salaries. See Founding Church, 412 F.2d at 1200 (ten percent of gross income of affiliated Scientology organizations paid to L. Ron Hubbard); General Contractors' Ass'n of Milwaukee v. United States, 202 F.2d 633 (7th Cir. 1953) (reports and surveys furnished to members); Spokane Motorcycle Club, 222 F. Supp. 151 (goods, services, and refreshments given to members). Unaccounted for diversions of a charitable organization's resources by one who has complete and unfettered control can constitute inurement. Parker v. Commissioner, 365 F.2d 792, 799 (8th Cir. 1966), cert. denied, 385 U.S. 1026, 87 S. Ct. 752, 17 L. Ed. 2d 674 (1967); Kenner v. Commissioner, 318 F.2d 632 (7th Cir. 1963).  [**16]  
Finally, the regulations define "private shareholder or individual" broadly as any person "having a personal and private interest in the activities of the organization." 26 C.F.R. 1.501(a)-1(c). 
While we remain solicitous of Congress' intent to confer tax exempt status on religious organizations, this court has previously affirmed the denial of tax exemption where church income inures to private individuals. In Church by Mail, the Commissioner denied the Church's application for tax exempt status. Two individuals, Reverend Ewing and Reverend McElrath, ran a church that mailed printed sermons to several million homes. They also owned Twentieth Century Advertising Agency which provided the Church's printing and mailing services. We found that the salaries paid to Reverend Ewing and Reverend McElrath by the Church and Twentieth Century were excessive. We rejected the Church's argument that the income paid by Twentieth Century should not be included because Twentieth Century, a for-profit company, simply funneled church income to Reverends Ewing and McElrath. 765 F.2d at 1393. Similarly, in Hall, we held that William and Lorna Hall were not entitled to a charitable donation  [**17]  deduction for money donated to the Church of the United Brotherhood (CUB). CUB failed to qualify as a charitable organization because its major purpose was to funnel rental income to the Halls. 729 F.2d at 634. In Bubbling Well Church, we upheld the Tax Court's denial of the Church's application  [*1317]  for tax exempt status. Three members of one family were the sole employees and voting directors of the Church. The Church paid a substantial portion of its income to the three family members. We held that the Church failed to carry its burden to prove that the salary and benefits paid to the family members were reasonable.  670 F.2d at 106. These cases emphasize that excessive compensation and potential for abuse, even absent a showing of actual abuse, will constitute inurement. n4 

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n4 We recognize that not every instance in which payments are made to private individuals will result in inurement. See e.g., Presbyterian and Reformed Publishing Co. v. Commissioner, 743 F.2d 148 (3d Cir. 1984). In Presbyterian and Reformed Publishing, the Third Circuit reversed the Tax Court's denial of tax exempt status because the publishing company paid nothing more than reasonable salaries to the founder's family and employees. 

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The finding of the Tax Court that a portion of the Church's net earnings inured to the benefit of L. Ron Hubbard, his family, and OTC, a private for-profit corporation, is a factual finding. See Bubbling Well Church, 670 F.2d at 106; cf.  Church By Mail, 765 F.2d at 1390 (whether Church is operated for a non-exempt purpose is a factual finding). We review this finding for clear error.  Bubbling Well Church, 670 F.2d at 106. 
The taxpayer has the burden to demonstrate that it is entitled to tax exempt status. Church by Mail, 765 F.2d at 1391. This is especially true in situations where there is a great potential for abuse created by one individual's control of the church. See Bubbling Well Church, 670 F.2d at 105. The Church must come forward with candid disclosure of the facts bearing on the exemption application. Id. Doubts will be resolved in favor of the government.  Harding Hospital, 505 F.2d at 1071. 
In finding that a portion of the Church's net earnings inured to the benefit of L. Ron Hubbard, his family and OTC, the court isolated two indicia of inurement, overt and covert. The overt  [**19]  indicia included salaries, living expenses, and royalties. The covert indicia included "debt repayments" and L. Ron Hubbard's unfettered control over millions of dollars of Church assets. The court concluded that these indicia, when viewed in light of the self-dealing associated with them, coupled with the Church's failure to carry its burden of proof and to disclose the facts candidly, proved conclusively that the Church was operated for the benefit of L. Ron Hubbard and his family. 
The Church challenges the overt indicia of inurement on the ground that the salaries, expenses and royalties, were reasonable. It notes that the court did not find them unreasonable, considered separately. The Church questions the logic of the finding that several reasonable payments add up to inurement. 
The Church paid L. Ron Hubbard and Mary Sue Hubbard combined salaries of $20,249 in 1970, $49,648 in 1971 and $115,680 in 1972. We cannot say that these salaries were excessive. 
In addition to Hubbard's salary, the Church paid for all of the Hubbards' living and medical expenses aboard the cruise ship Apollo. These expenses amounted to about $30,000 per year. Because it is unnecessary to our decision,  [**20]  we express no opinion on whether supporting a Church's founder and his family aboard a yacht cruising the Mediterranean constitutes a reasonable Church expense. 
The Church also paid substantial royalties to L. Ron Hubbard for his books, recordings and E-meters. Churches, especially less established ones, rely on the distribution of church literature to propagate their beliefs. Financing church operations through the sale of religious literature does not necessarily violate the requirements for tax exemption. See Presbyterian and Reformed Publishing Co., 743 F.2d at 158-59. Furthermore, a church may pay the author reasonable compensation in the form of royalties for his literary works. However, the payments in this case, cross the line between reasonable and excessive. Here, the evidence indicates that Hubbard used the Church to generate copyrighted literature and market his products. Scientology policy mandated that  [*1318]  any book on Dianetics and Scientology be copyrighted in the name of L. Ron Hubbard. Pursuant to this policy, a number of publications copyrighted by L. Ron Hubbard were actually written by Church employees. Furthermore, the Church encouraged its  [**21]  staff members to market aggressively his products. We agree with the Tax Court that the royalty payments support a finding of inurement. 
The Church argues that the evidence does not support the Tax Court's finding of covert inurement. However, the record reveals that L. Ron Hubbard had unfettered control over millions of dollars in Church assets. The Church transferred several million dollars to OTC during 1970-72. These payments were designated as "charter mission expenses." L. Ron Hubbard and Mary Sue Hubbard controlled OTC funds. Sometime during 1972, OTC transferred approximately two million dollars from OTC bank accounts in Switzerland to the Apollo. The finding that OTC was a sham corporation is sustained. During the tax years in question OTC funneled millions of dollars of Church assets to L. Ron Hubbard. See Church by Mail, Inc., 765 F.2d at 1393; Hall, 729 F.2d at 634. 
The record also supports the Tax Court's conclusion that L. Ron Hubbard had unfettered control over Church of Scientology Trust Fund assets. The Church deducted payments of $28,930.34 in 1970, $67,892.40 in 1971, and $77,986.62 in 1972 to the Central Defense and Dissemination Fund. According to the Church, these payments were made to the United  [**22]  States Church of Scientology Trust. L. Ron Hubbard was the sole trustee of the Trust during the years in question. Trust funds were deposited in several Swiss bank accounts. L. Ron Hubbard and Mary Sue Hubbard were two of the three signatories on the Trust accounts. L. Ron Hubbard kept the Trust checkbooks. In 1972, over a million dollars was withdrawn from the Trust accounts in Switzerland and brought aboard the Apollo where it was kept in a locked file cabinet. Mary Sue Hubbard had the only keys to the cabinet. 
The Church disputes that control over assets compels a finding of inurement. It argues that every Sunday morning pastors all over America collect money from parishioners and hold that money for Church uses. It asserts that OTC funds were used for expenses associated with operation of the Apollo and in providing banking services for Flag. Witnesses testified that the Church used Trust monies to defend Scientology against attack and to propagate the religion. Finally, the Church argues that the three million dollars brought aboard the Apollo from the OTC and Trust accounts remained on the Apollo during the years in question. It cites the testimony of a Trust accountant who  [**23]  counted the cash aboard the Apollo and testified that none of it was missing. 
We find these arguments unpersuasive. Unlike the typical Saturday or Sunday when parishioners donate their money to the church, here the Church transferred millions of dollars to bank accounts controlled by a private individual who had no official responsibility for managing church assets. Although witnesses testified that the money was used for Church purposes, the Church presented little documentation to show that the majority of Trust or OTC money was actually spent on bona-fide Church activities. Finally, the self-serving testimony of a Church employee that the three million dollars remained in the Apollo safe proves nothing. The fact that there were three million dollars in the safe on the day the Church accountant checked, is not inconsistent with the Tax Court's finding that L. Ron Hubbard had unfettered control over millions of dollars in money that originated with the Church. The Church failed to come forward with testimony from key individuals such as L. Ron Hubbard and Mary Sue Hubbard and failed to present the documentation necessary to trace the source and use of OTC and Trust monies. In sum,  [**24]  the Church failed to carry its burden of proof in a situation where "the potential for abuse created by the [founder's] control of the Church required open and candid disclosure of facts bearing on the exemption application." Bubbling Well Church, 670 F.2d at 105. 
 [*1319]  The Tax Court found that Church income inured to the benefit of L. Ron Hubbard in a "grand scale" in the form of "debt repayments." During the 1950's, Hubbard was paid a portion of the gross income of Scientology congregations, franchises and organizations.  Founding Church, 412 F.2d at 1199. This compensation scheme was called the "proportional pay plan." During the 1960's these tithes became known as "Founding Debt Payments" (sometimes also called "LRH RR" or "LRH 10%s"). 
Although the form changed, the payments continued through the years at issue in this case. Church records indicate that between October 9, 1972 and December 28, 1972, it made debt repayments totaling $19,324.41. A policy letter dated September 7, 1972 entitled "Repayment or Due Money Collected for LRH Personally" set out a program to reimburse Hubbard for past use of Hubbard's personal income and capital;  [**25]  research and development of the technology of Dianetics and Scientology; and the use of Hubbard's goodwill and high credit rating. The letter establishes the post of "LRH accounts officer" to monitor collection of debt repayments. 
The Church argues that the Tax Court's finding of continued debt repayments is clearly erroneous. The policy letter establishing the post of "LRH accounts officer" was canceled two days after it was promulgated. According to the Church, the only credible evidence of payments were the checks issued between October and December 1972. It contends that these payments, even though invoiced in the Church's records as "Per HCO Policy Letter 7 Sept. 72", "LRH Repayments," and "Founding Debt Payment," were actually deposited in an OTC bank account for the benefit of the Church. Finally, even if the evidence is believed, argues the Church, it accounts for only a four-month period and is insufficient to support revocation of tax exemption for all three years. 
These arguments are unavailing. Even though the payments were called debt repayments, the Church produced no evidence of bona fide indebtedness. The typical indicia of a debt are a sum certain payable over a specific  [**26]  period of time at a stipulated rate of interest. Here, the evidence indicates a continuing obligation to make uncertain payments based on a percentage of the Church's total receipts. In enforcing federal tax laws, courts look to the substance of a transaction rather than its form.  Commissioner v. Court Holding Co., 324 U.S. 331, 334, 89 L. Ed. 981, 65 S. Ct. 707 (1945). These payments more closely resemble tithes to L. Ron Hubbard than debt repayments. It makes no difference whether the $19,000 was the tip of the iceberg, as the Tax Court concluded, or the total of all debt repayments made by the Church. No part of the Church's income could inure to L. Ron Hubbard if it was to maintain tax exempt status. Founding Church, 412 F.2d at 1200. Even if the money went into an OTC account, it inured to the benefit of L. Ron Hubbard because he had unrestrained and unaccounted for access to that account. See Parker, 365 F.2d at 799. The Church failed to come forward with credible proof that the funds were actually spent on behalf of the Church. Bubbling Well Church, 670 F.2d at 106. 
In sum,  [**27]  we hold that significant sums of Church money inured to the benefit of L. Ron Hubbard and his family during the tax years 1970, 1971 and 1972. Although neither the salaries nor the living expenses necessarily constituted evidence of inurement, the cumulative effect of Hubbard's use of the Church to promote royalty income, Hubbard's unfettered control over millions of dollars of church assets, and his receipt of untold thousands of dollars worth of "debt repayments" strongly demonstrate inurement. We find no clear error. 

C.  Validity of Notice of Deficiency 
The Church mounts two attacks on the notice of deficiency. First, it alleges that the notice was void because the 1967 revocation letter was unconstitutional. Second, it contends that the notice was void or voidable due to administrative defects. 
 [*1320]  1.  Constitutional Challenge 
The Church asserts that the IRS was motivated by hostility towards Scientology as a religion in issuing the 1967 letter revoking the Church's tax exempt status. The first amendment imposes an obligation of neutrality on the government in its dealings with religious organizations. See Sherbert v. Verner, 374 U.S. 398, 402, 10 L. Ed. 2d 965, 83 S. Ct. 1790 (1963).  [**28]  The question of whether the Commissioner was motivated by religious animus turns on subjective intent. Normally, the determination of a party's "actual motive" is the type of mixed question of law and fact which we review for clear error.  United States v. McConney, 728 F.2d 1195, 1203 (9th Cir.) (en banc), cert. denied, 469 U.S. 824, 105 S. Ct. 101, 83 L. Ed. 2d 46 (1984). However, when questions of motive implicate constitutional rights, we review de novo. See Standard Oil Co. of California v. Arizona, 738 F.2d 1021, 1023 (9th Cir. 1984), cert. denied, 469 U.S. 1132, 83 L. Ed. 2d 807, 105 S. Ct. 815 (1985); McConney, 728 F.2d at 1203. 
As proof of the Commissioner's enmity, the Church cites a record of harassment dating back to 1958. Essentially, the Church contends that it was singled out for revocation. In 1959, the IRS revoked the tax exempt status of the Founding Church. In 1963, Food and Drug Administration agents raided the Founding Church and seized E-meters and Scientology literature on the grounds of "false or misleading labeling." Founding Church of Scientology v. United States, 133 U.S. App. D.C. 229, 409 F.2d 1146, 1148 (D.C. Cir. 1969).  [**29]  The Church alleged that in the mid-60's the Department of Justice targeted all Scientology churches for revocation of tax exempt status. Memoranda and correspondence in IRS files contained statements antagonistic to the Church. IRS agents called Scientology a "medical quackery," a "threat to the community, medically, morally and socially," a "prey on the public pocketbook," and similar epithets. Between 1969 and 1975 the IRS established three special intelligence units to collect information about taxpayers and to monitor their compliance with tax laws. All three units collected information on the Church and other groups such as the Black United Front, the New Left Movement and the Welfare Rights Organization. 
Despite these facts, the record bears out the trial court's conclusion that the IRS revoked the Church's exemption based upon legitimate agency concerns. The IRS examined the Church's records in 1965 and again in 1966. On July 29, 1966, the IRS sent a letter to the Church stating that it was considering revocation of its tax exempt status because: (1) the Church's income inured to the benefit of Scientology practitioners; (2) the Church's activities were commercial; and (3)  [**30]  the Church was serving the private interest of L. Ron Hubbard and Scientology practitioners. The agency then held two protest conferences and finally issued a formal letter of revocation on July 18, 1967 stating the same three grounds of revocation. During 1969 and 1970, the IRS examined the Church's records for the taxable years 1964-67 and, in a second audit, the years 1968 and 1969. In 1974, the IRS mailed a notice of deficiency to the Church for the taxable years 1965 through 1967. The Church filed the petition in the Tax Court for the 1965 deficiency and in late 1976 the IRS settled the case by conceding the petitioners' tax exempt status for that year without prejudice to any other year. In 1975 and 1976 the IRS audited the California Church for the taxable years 1971 through 1974. The agents examined between 200 and 300 cartons of records containing approximately two million documents. Based on the findings of that audit, the parties attempted settlement negotiations. Finally, in December of 1977, the IRS issued a notice of deficiency for the tax years 1970, 1971, and 1972. 
Even examining the IRS's actions under the selective prosecution standard -- a standard which is arguably too  [**31]  stringent for review of a mere revocation of tax exempt status -- we cannot hold that there is any impropriety in this revocation. See Karme v. Commissioner, 673 F.2d 1062, 1064 (9th Cir. 1982). The standard we apply in cases of alleged discriminatory prosecution is:  [*1321]  
(1) That others are generally not prosecuted for the same conduct; 
(2) The decision to prosecute this defendant was based upon impermissible grounds such as race, religion or the exercise of constitutional rights.

Id. 
The Church has not shown discriminatory selection even under the stringent criminal standard. The IRS has revoked the tax exempt status of many other churches. See e.g., Presbyterian and Reformed Publishing Co., 743 F.2d 148 (reversing the IRS's revocation); Bethel Conservative Mennonite Church v. Commissioner, 746 F.2d 388 (7th Cir. 1984) (reversing IRS's revocation); Church of Gospel Ministry, Inc. v. United States, 640 F. Supp. 96 (D. D.C. 1986) (upholding the IRS's revocation). Nor has the Church proven the second prong. Although there is evidence of religious animus, the overwhelming weight of the evidence indicates that  [**32]  the IRS concluded that the Church did not conform to the requirements of section 501(c)(3) based upon exhaustive and responsible investigation. Accordingly, we reject the Church's argument that the notice of deficiency was unconstitutional. 
2.  Administrative Defects 
The IRS revoked the Church's tax exempt status by letter dated July 18, 1967. After fruitless negotiations, the IRS issued a notice of deficiency to the Church on June 7, 1974 covering the years 1965 through 1967. The Church argues that, because the IRS settled the case by stipulating that the Church owed no deficiency for 1965, the revocation letter was constructively revoked. Thus, argues the Church, the 1977 notice of deficiency, relating to the years 1970 through 1972, was void because the Church was still a recognized tax exempt organization. The Church cites A. Duda & Sons Cooperative Ass'n v. United States, 504 F.2d 970 (5th Cir. 1974). 
We disagree with the Church's analysis. Although the IRS abandoned its attempt to collect taxes for the years 1965 through 1967, it never abandoned its 1967 determination that the Church was no longer eligible for tax exempt status. In fact, the stipulation expressly  [**33]  stated that the concession was "without prejudice to [the Church] or [the Commissioner] with respect to any other taxable year. . . ." A. Duda & Sons is inapposite. In that case, the Commissioner expressly conceded that the grounds for revocation were erroneous.  504 F.2d at 975. In this case, the Commissioner never made such a concession; in fact today we hold that one of the stated grounds, inurement, was valid. In sum, we hold that the 1967 revocation letter was not constructively revoked. 

D.  Validity of Late Filing Penalties 
The Commissioner imposed an additional penalty on the Church in the amount of $287,615 for failing to file a corporate tax return for the years in question.  Internal Revenue Code §  6651(a)(1) reads in pertinent part: 

In case of failure . . . to file any return . . . on the date prescribed therefor . . ., unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof during which  [**34]  such failure continues, not exceeding 25 percent in the aggregate. . . . (emphasis added)

The regulations provide that, to demonstrate reasonable cause a taxpayer must show that it "exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time. . . ." 26 C.F.R. §  301.6651-1(c)(1). What elements constitute reasonable cause is a question of law which we review de novo.  United States v. Boyle, 469 U.S. 241, 105 S. Ct. 687, 692 n.8, 83 L. Ed. 2d 622 (1985). 
The Church argues that the IRS waived its right to impose the penalty because it accepted the Church's Form 990 and even extended the time for filing. This waiver, argues the Church, constitutes  [*1322]  "reasonable cause" for failing to file corporate returns. The taxpayer carries the burden to show reasonable cause for failing to file the required return.  Funk v. Commissioner, 687 F.2d 264, 266 (8th Cir. 1982). The IRS expressly revoked the Church's tax exempt status in the July 18, 1967 letter which instructed the Church thereafter to file federal tax returns. We agree with the Tax Court that "[the Church's] unilateral  [**35]  doubts about [the revocation letter's] effectiveness are not 'reasonable cause' for its failure to file a proper return." 83 T.C. at 526. 
Secondly, the Church argues that its reliance on the advice of tax professionals that the Form 990 would be acceptable, constitutes reasonable cause. The Supreme Court recently held that a taxpayer's failure to file a timely return, in reliance upon an attorney's advice did not constitute "reasonable cause" under §  6651(a)(1).  Boyle, 105 S. Ct. at 693-94. Likewise, we hold that a taxpayer's failure to file the proper form, in reliance upon an attorney's advice is not "reasonable cause" where the IRS has expressly instructed the taxpayer to file a tax return. 
IV. 
We affirm the Tax Court decision upholding the Commissioner's revocation of the Church of Scientology of California's tax exempt status on the ground that a portion of its income inured to the benefit of L. Ron Hubbard and others. We reject the Church's argument that the notice of deficiency was constitutionally and administratively defective. Finally, we uphold the Commissioner's imposition of a penalty on the Church for failure  [**36]  to file the proper returns.  

71 of 133 DOCUMENTS 

Church of Scientology of California, Plaintiff-Appellant, v. Michael J. Flynn, Defendant-Appellee 

No. 85-6305 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

823 F.2d 1552; 1987 U.S. App. LEXIS 10081 

July 27, 1987, Filed 

NOTICE:
THIS DISPOSITION IS NOT APPROPRIATE FOR PUBLICATION AND MAY NOT BE CITED TO OR BY THE COURTS OF THIS CIRCUIT EXCEPT AS PROVIDED BY 9TH CIR. R. 21.  

PRIOR HISTORY:
 
Appeal from the United States District Court for the Central District of California, D.C. No. CV 83-5052-R, Manuel L. Real, District Judge, Presiding.  

OPINION:

AFFIRMED.  

72 of 133 DOCUMENTS 

UNITED STATES OF AMERICA, Petitioner/Appellee/Cross-Appellant, v. FRANK S. ZOLIN, Resondent/Appellee, and CHURCH OF SCIENTOLOGY OF CALIFORNIA and MARY SUE HUBBARD, Intervenors/Appellants/Cross-Appellees 

Nos. 85-6065, 85-6105 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

809 F.2d 1411; 1987 U.S. App. LEXIS 1977; 87-1 U.S. Tax Cas. (CCH) P9234; 59 A.F.T.R.2d (RIA) 596; 22 Fed. R. Evid. Serv. (Callaghan) 763 

November 6, 1986, Argued and Submitted 

February 9, 1987 

February 9, 1987, Filed 

SUBSEQUENT HISTORY:
 Withdrawn November 6, 1987.  

PRIOR HISTORY:
 [**1]  Appeal from the United States District Court for the Central District of California, D.C. No. CV85-440-HLH, Harry L. Hupp, District Judge, Presiding.  

COUNSEL:
Eric M. Lieberman and Edward Copeland, Michael Lee Hertzberg, Donald C. Randolph, for Intervenors/Appellants/Cross-Appellees. 
Frederick Bennett, County Counsel, for Defendant/Appellee. 
John A. Dudeck, Jr., Tax Division, Department of Justice, Charles H. Magnuson, Assistant United States Attorney, for Petitioner/Appellee/Cross-Appellant.  

JUDGES:
 James R. Browning, Chief Judge, Alfred T. Goodwin and Jerome Farris, Circuit Judges.  

OPINIONBY:
FARRIS 

OPINION:

 [*1413]  FARRIS, Circuit Judge: 
In July 1984, the Criminal Investigation Division of the IRS (Los Angeles District) began investigating L. Ron Hubbard's tax returns for the tax years 1979 through 1983. In October, the IRS served an administrative summons on the Clerk of the Los Angeles County Superior Court and requested that he produce certain documents relating to Hubbard's potential tax liability. (The Superior Court had obtained the documents in connection with an unrelated proceeding brought by the Church against a former member of the Church.) The Clerk willingly produced a number of documents, but [**2]  refused to produce thirteen documents which had been ordered sealed by the Superior Court. 
In January 1985, the Government initiated this action in an effort to compel the Clerk to produce the thirteen sealed documents. Shortly thereafter, the district court granted the motions to intervene which were brought by the Church and Mary Sue Hubbard. The Intervenors contended that each of the thirteen documents was either privileged, irrelevant, or both. They also argued that the summons was unenforceable because it was not issued pursuant to a "good faith" tax investigation. 
Hearings were held in March and April. On April 30, 1985, the district court ruled  [*1414]  that eight of the documents -- exhibits 4-D, 4-E, 4-F, 4-G, 5-C, 5-G, 5-I, and 6-B -- were irrelevant, privileged, or both, and did not need to be produced. It ruled that five documents -- exhibits 5-K, 5-L, 5-O, 5-P, and 6-O -- should be produced, but prohibited the IRS from disclosing them to another governmental agency except in connection with a criminal tax prosecution or with the court's approval. The court further ruled that the Intervenors had failed to prove that the summons was not issued in "good faith." 
The Intervenors filed [**3]  timely notice of appeal on July 1, 1985. The Government filed timely notice of cross-appeal on July 15, 1985. The order appealed from is a final order which disposes of all claims of all parties. We have jurisdiction under 28 U.S.C. §  1291. 
 DISCUSSION 
A.  Mootness 
On January 24, 1986, during the pendency of this appeal, L. Ron Hubbard died. The Intervenors argue that because Hubbard's death has foreclosed the possibility of any further investigation of Hubbard's potential criminal tax liability, this proceeding has become moot. We reject the argument for the reason stated in United States v. Author Services, 804 F.2d 1520, 1522 n.1 (9th Cir. 1986). 
B.  Relevance of Exhibits 5-O, 5-P, and 6-O 
The IRS' power to examine records in connection with tax investigations is broadly construed. See Liberty Financial Services v. United States, 778 F.2d 1390, 1392 (9th Cir. 1985); De Masters v. Arend, 313 F.2d 79, 87 (9th Cir. 1963). The relevance of such evidence depends on whether it might throw light on the correctness of a taxpayer's returns.  United States v. Goldman, 637 F.2d 664, 667 (9th Cir. 1980). The Government must demonstrate a "realistic expectation" of [**4]  relevance, rather than an "idle hope" of relevance. Id. (quoting United States v. Harrington, 388 F.2d 520, 524 (2d Cir. 1968). 
The Government bases its claim that the three exhibits are relevant on the declaration of Agent Petersell, in which Petersell stated: 

I have read the Petition to Enforce Internal Revenue Service Summons. Each of the items listed . . . is relevant to the investigation of L. Ron Hubbard in one or more of the following respects: 
A.  Determining the extent to which income from the Church of Scientology inured to the benefit of L. Ron Hubbard. 
B.  Determining whether L. Ron Hubbard conspired with others to impair and impede the Internal Revenue Service in the administration of the tax laws. 
C.  Determining whether any violations of the Internal Revenue laws were done willfully with intent to evade tax.

The Government's other evidence of relevancy consists of three terse descriptions of the documents' contents in the petition for enforcement of the summons: 
OOOOO (5-O)	LRH note regarding the Mayor	
	of Clearwater, Florida, 22	
	March 1978.	
PPPPP (5-P)	LRH Statement regarding	
	money from Scientology, 16	
	Feb. 1978.	
OOOOOO (6-O)	LRH handwritten note	
	regarding the Fair Game	
	policy.	
 [**5]  
The record does not indicate the Government's sources for this information. 
While the Government might have made a better showing, the district court did not clearly err in concluding that Petersell's declaration, when coupled with the general descriptions of the documents in the petition to enforce the summons, was sufficient to establish the relevance of the documents. We do not ignore our statement in Goldman: 

The Government's burden, while not great, is also not non-existent. The Government appears to argue that the mere assertion of relevance by [an IRS agent] satisfied that burden. Even to the extent this might be true for records concerning the tax years being examined,  [*1415]  relevance is not so clear when records for other years are sought.

 637 F.2d at 667. Notwithstanding the fact that exhibits 5-O, 5-P, and 6-O all relate to years other than the tax years under investigation, we are satisfied that the district court, after balancing the indicia of relevancy against the impossibility of fully knowing the documents' contents before an actual review, did not clearly err in determining that the documents "might throw light" on the correctness of L. Ron Hubbard's [**6]  return information. 
C.  Waiver of Privilege As to Exhibits 5-K and 5-L 
The Intervenors do not contest on appeal the relevance of exhibits 5-K and 5-L. Instead, they contend that the district court erred in ruling that privileges which might otherwise have applied to the two documents were waived by a voluntary delivery of the documents to Gerald Armstrong. In addition, they argue that the district court erred when it concluded that exhibit 5-L would not be protected by the attorney-client privilege even in the absence of waiver because the affidavit of Hubbard's former attorney was too vague and conclusory to validly assert the privilege. 
The attorney-client privilege is to be strictly construed.  Weil v. Investment/Indicators, Research & Management, Inc., 647 F.2d 18, 24 (9th Cir. 1981). See 8 J. Wigmore, Evidence §  2291 at 554 (McNaughton rev. 1961). The logic behind the strict construction of the attorney-client privilege applies with equal force to the marital communications privilege: like the attorney-client privilege, the marital communications privilege is "an obstacle to the investigation of the truth. . . . [that] ought to be strictly confined within the narrowest [**7]  possible limits consistent with the logic of its principle." Id. The burden of demonstrating the existence of an evidentiary privilege rests on the party asserting the privilege. See United States v. Gann, 732 F.2d 714, 723 (9th Cir. 1984) (attorney-client privilege); Weil, 647 F.2d at 25 (evidentiary privileges generally). In order to establish the applicability of the attorney-client privilege to a given communication, the party asserting the privilege must affirmatively demonstrate non-waiver. See id.; United States v. Landof, 591 F.2d 36, 38 (9th Cir. 1978). 
The voluntary delivery of a privileged communication by a holder of the privilege to someone not a party to the privilege waives the privilege. See Clady v. County of Los Angeles, 770 F.2d 1421, 1433 (9th Cir. 1985) (the voluntary disclosure of a privileged attorney-client communication constitutes waiver); United States v. McCown, 711 F.2d 1441, 1452-53 (9th Cir. 1983) (the marital communications privilege is inapplicable to communications not intended to remain confidential); Weil, 647 F.2d at 24 (the voluntary disclosure of a privileged attorney-client communication constitutes waiver). Moreover,  [**8]  when the disclosure of a privileged communication reaches a certain point, the privilege may become extinguished even in the absence of a wholly voluntary delivery. See In re Sealed Case, 219 U.S. App. D.C. 195, 676 F.2d 793, 818 (D.C. Cir. 1982) ("Any disclosure inconsistent with maintaining the confidential nature of the attorney-client relationship waives the privilege."). Whether the circumstances of the delivery of exhibits 5-K and 5-L to Armstrong gave rise to a waiver of the otherwise applicable privileges is a mixed question of law and fact that we review de novo. See United States v. McConney, 728 F.2d 1195, 1199-1204 (9th Cir. 1984) (en banc). 
The district court held that all privileges potentially applicable to exhibits 5-K and 5-L were waived by a voluntary delivery of the documents to Gerald Armstrong. We agree. The Intervenors argue that the delivery could not have been voluntary since the correspondence between Armstrong and Hubbard contains no express indication that Armstrong intended to, or had Hubbard's permission to collect communications between Hubbard and his wife or between Hubbard and his attorneys. 
Although Hubbard did not explicitly grant Armstrong access to attorney-client [**9]   [*1416]  or marital communications, Hubbard did, in a memorandum to Armstrong, grant Armstrong general permission to collect documents relevant to the proposed biography of Hubbard. The Intervenors' only argument in support of non-waiver is that Hubbard did not specifically grant Armstrong access to attorney-client and marital communications. More is required. 
Since the attorney-client privilege which might otherwise have attached to exhibit 5-L was waived, we need not consider whether the attorney-client privilege was validly asserted by Hubbard's former attorney. 
D.  Limited Evidentiary Hearing 
We review for abuse of discretion. See United States v. Stuckey, 646 F.2d 1369, 1373 (9th Cir. 1981). See generally Rae v. Union Bank, 725 F.2d 478, 481 (9th Cir. 1984) (a district court's decisions relating to discovery matters are reviewed for abuse of discretion). 
The purpose of the limited evidentiary hearing was to determine whether the summons enforcement proceeding was legitimate and in "good faith," rather than merely camouflage for an ulterior non-tax motive. The "good faith" standard seeks to prevent the IRS from becoming an information-gathering agency for other governmental  [**10]  agencies. See United States v. LaSalle National Bank, 437 U.S. 298, 317, 57 L. Ed. 2d 221, 98 S. Ct. 2357 (1978); Stuckey, 646 F.2d at 1373. The task is to identify "'those rare cases where bald allegations of harassment or improper purpose can be substantiated.'" Author Services, 804 F.2d at 1523 (quoting United States v. Church of Scientology of California, 520 F.2d 818, 824 (9th Cir. 1975)). The focal issue is whether an IRS investigation is motivated by legitimate tax purposes. See United States v. Powell, 379 U.S. 48, 57-58, 13 L. Ed. 2d 112, 85 S. Ct. 248 (1964). The district court may properly limit evidentiary hearings on the "good faith" issue to prevent a frustration of legitimate Government objectives.  Church of Scientology, 520 F.2d at 823-25. 
The Intervenors argue that the district court improperly limited its inquiry to the issue of whether the summons itself was issued in "good faith," and ignored the larger issue of whether the overall investigation was in "good faith." We reject this argument. At the hearing, C. Phillip Xanthos, the Branch Chief of the IRS Criminal Investigation Division (Los Angeles District), specifically testified to the legitimate tax-determination objectives of the investigation. This [**11]  and other testimony was sufficient to support the district court's finding that the summons was issued in "good faith." See LaSalle National Bank, 437 U.S. at 317. See also Stuckey, 646 F.2d at 1376; United States v. Zack, 521 F.2d 1366, 1368-69 (9th Cir. 1975). 
E.  Restrictions on IRS Disclosure of the Summoned Documents 
The district court ordered that "the documents produced in response to the summons shall not be delivered to any other government agency by the IRS unless criminal tax prosecution is sought or an Order of Court is obtained." We review the district court's order for abuse of discretion. See United States v. Columbia Broadcasting System, 666 F.2d 364, 368 (9th Cir. 1982). 
The Government argues that the district court's order conflicts with the disclosure provisions of 26 U.S.C. §  6103. Those provisions, the Government suggests, are the exclusive limitations upon IRS disclosure of return information. In addition, the Government argues that the order represents an improper attempt to enjoin the IRS from obeying a duly enacted federal law. 
We recently rejected this argument in Author Services, and held that a district court's order restricting [**12]  the IRS' ability to disclose summoned materials to other governmental agencies, "rather than being an abuse of discretion, . . . [could] be a wise exercise of control." Author Services, 804 F.2d at 1526. The district  [*1417]  court's order in this case created a mechanism whereby the district court could monitor the IRS' use of the summoned documents. This is an appropriate exercise of the district court's discretion: "It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused." Powell, 379 U.S. at 58. See S.E.C. v. ESM Government Securities, Inc., 645 F.2d 310, 316-17 (5th Cir. 1981). A district court may, when appropriate, condition enforcement of a summons on the IRS' agreeing to abide by disclosure restrictions.  Author Services, 804 F.2d at 1525 (citing United States v. Texas Heart Institute, 755 F.2d 469, 481 (5th Cir. 1985)). 
The Intervenors also argue that the district court's order violates 26 U.S.C. §  7421(a) (the "Anti-Injunction Act"), because it has the effect of enjoining the IRS from disclosing the summoned tax information. We reject the argument for the reasons stated in Author Services,  [**13]  804 F.2d at 1526. 
F.  Exhibit 5-C ("the Tapes") 
The district court's rulings on the scope of the attorney-client privilege involve mixed questions of law and fact, and are reviewable de novo. See McConney, 728 F.2d at 1202. Where the relevant scope of the attorney-client privilege is clear and the decision that the district court must make is essentially factual, however, the district court's rulings as to the privilege are reviewed for clear error.  Id. at 1200. 
The Government contends that the district court erred in finding that the "common interest" rule covered the tapes. The "common interest" rule protects communications made when a nonparty sharing the client's interests is present at a confidential communication between attorney and client. The paradigm case is where two or more persons subject to possible indictment arising from the same transaction make confidential statements that are exchanged among their attorneys. See Hunydee v. United States, 355 F.2d 183, 185 (9th Cir. 1965). 
The Government is incorrect, however, in arguing that the "common interest" rule is limited to such a case. Even where the non-party who is privy to the attorney-client communications [**14]  has never been sued on the matter of common interest and faces no immediate liability, it can still be found to have a common interest with the party seeking to protect the communications. See Burlington Industries v. Exxon Corp., 65 F.R.D. 26, 44-45 (D. Md. 1974); Stanley Works v. Haeger Potteries, Inc., 35 F.R.D. 551, 554-55 (N.D. Ill. 1964). 
The district court found that the parties present at the meetings recorded on the tapes "had a common interest" in sorting out the respective affairs of the Church and Mr. Hubbard. We agree. All of the non-lawyers present at the meeting were employees of the Church. 
The Government also challenges the district court's finding that the Church did not waive its attorney-client privilege when it inadvertently delivered the tapes to Armstrong. (Hubbard's personal secretary gave Armstrong the tapes under the mistaken impression that they were blank.) In Transamerica Computer Co., Inc. v. International Business Machines, Corp., 573 F.2d 646 (9th Cir. 1978), we held that whereas a waiver of the attorney-client privilege occurs when a holder of the privilege voluntarily discloses the privileged matter, no waiver occurs if the holder has  [**15]  no opportunity to claim the privilege or if the holder was erroneously compelled to disclose the privileged matter. Id. at 651. The secretary's delivery of the tapes to Armstrong was sufficiently involuntary and inadvertent as to be inconsistent with a theory of waiver. 
The Government challenges the district court's ruling that the "crime-fraud" exception to the attorney-client privilege did not apply to the tapes. The attorney-client privilege does not protect communications that further a crime or fraud. See United States v. Hodge and Zweig, 548 F.2d 1347, 1354  [*1418]  (9th Cir. 1977). The Government had the burden of making a prima facie showing that the attorney-client communications recorded on the tapes were in furtherance of an intended or present illegality. Id. We agree with the district court's conclusion that the Government failed to satisfy this burden. 
The Intervenors argue that the Government's evidence of crime or fraud must come from sources independent of the attorney-client communications recorded on the tapes. In support of this argument, the cite United States v. Shewfelt, 455 F.2d 836 (9th Cir. 1972). In Shewfelt, we said that "before the privileged  [**16]  status of [attorney-client] communications can be lifted, the government must first establish a prima facie case of fraud independently of said communications." Id. at 840 (emphasis added). Notwithstanding Shewfelt, the Government argues that in assessing the applicability of the "crime-fraud" exception to the tapes the district court should have considered evidence of the contents of the tapes which the Government presented to the court. 
Shewfelt's independent evidence requirement has been strongly criticized. In In re Berkley and Co., Inc., 629 F.2d 548, 553 n.9 (8th Cir. 1980), the Eighth Circuit observed that the two cases cited in Shewfelt, assertedly in support of the independent evidence requirement, in fact simply state that a party seeking disclosure under the "crime-fraud" exception must make a prima facie showing of crime or fraud in order to shift the burden of showing the inapplicability of the exception to the party resisting disclosure. 
In the fourteen years that have passed since Shewfelt was decided, only one court has cited it as authority for the independent evidence requirement. See Kockums Industries Limited v. Salem Equipment, Inc, [**17]  561 F. Supp. 168, 171 (D. Or. 1983). By contrast, a number of courts have rejected the Shewfelt position. See, e.g., In re Sealed Case, 676 F.2d at 815; In re Special September 1978 Grand Jury, 640 F.2d 49, 59 (7th Cir. 1980); In re Berkley, 629 F.2d at 553 n.9; Coleman v. American Broadcasting Companies, Inc., 106 F.R.D. 201, 207 n.9 (D. D.C. 1985); United States v. King, 536 F. Supp. 253, 262 (C.D. Cal. 1982). 
In Hodge and Zweig, we discussed the "crime-fraud" exception at length without ever referring to Shewfelt. 548 F.2d at 1354-55. Instead, we cite repeatedly to United States v. Friedman, 445 F.2d 1076 (9th Cir. 1971), a decision which implicitly recognized that a district court may examine the disputed communications themselves in order to determine the applicability of the "crime-fraud" exception. Id. at 1354. 
In this case, the communications recorded on the tapes appear to be the Government's best evidence establishing the applicability of the "crime-fraud" exception. This is not surprising, since the illegal advice allegedly given by Church attorneys to Church officials is an integral part of the intended illegality that the Government [**18]  seeks to establish. In this connection, the court's observation in King is pertinent: "Since the illegal advice is usually given in the attorney-client setting, applying Shewfelt to such cases would, in most instances, simply serve to insulate dishonest attorneys from prosecution for obstruction of justice." King, 536 F. Supp. at 262. 
In King, the court speculated that "the independence test set forth in Shewfelt does not appear to be the law in the Ninth Circuit." Id. We cannot agree. Whatever the merits of the criticisms that have been leveled against Shewfelt's independent evidence requirement, we are bound to adhere to our holding in Shewfelt unless and until it is reversed by an en banc panel of this court. See United States v. Spilotro, 800 F.2d 959, 967 (9th Cir. 1986); Atonio v. Wards Cove Packing Co., Inc., 768 F.2d 1120, 1132 n.6 (9th Cir. 1985). 
The Government's independent evidence of intended illegality consists primarily of: 1) Agent Petersell's Supplemental Declaration of March 8, 1985, in which Petersell stated that his discussions with Gerald Armstrong had given him reason to believe  [*1419]  that the communications recorded on [**19]  the tapes focused generally on the intentional violation of the tax laws; and 2) Petersell's Supplemental Declaration of March 15, 1985, in which Petersell stated that his discussions with three other former Church employees had given him reason to believe that the communications recorded on the tapes specifically focused on i) a proposed scheme whereby the Church's cash transfers to Hubbard would be disguised as payments for services rendered (allegedly to insulate Hubbard from tax liability and to protect the Church's tax-exempt status), and ii) a proposed scheme whereby Hubbard would be able to control royalty income derived from the "Trademark Trust" (a trust that was created to manage Hubbard's various Scientology-related and other trademarks) without that control being traceable to him. 
We agree with the district court that this evidence, while not altogether insubstantial, is not sufficient to make out the requisite prima facie showing of intended illegality. 
AFFIRMED.  

73 of 133 DOCUMENTS 

RELIGIOUS TECHNOLOGY CENTER and CHURCH OF SCIENTOLOGY INTERNATIONAL, INC., Plaintiffs-Appellees, v. LARRY WOLLERSHEIM, et al., Defendants, and CHURCH OF THE NEW CIVILIZATION, HARVEY HABER, DEDE REISDORF, JON ZEGEL and DAVID MAYO, Defendants-Appellants 

No. 85-6547 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

796 F.2d 1076; 1986 U.S. App. LEXIS 27912 

March 5, 1986, Argued and Submitted 

August 8, 1986, Filed 

PRIOR HISTORY:
 [**1]  

An Appeal from the United States District Court for the Central District of California, Hon. Mariana R. Pfaelzer, Judge Presiding. 
D.C. No. CV 85-7197-MRP.  

CASE SUMMARY
 
PROCEDURAL POSTURE: Defendant appealed an order from the United States District Court for the Central District of California granting a preliminary injunction to desist from using or disseminating allegedly stolen materials in an action under the Racketeer Influenced and Corrupt Organizations Act and state law.
 
OVERVIEW: Defendant church was a splinter group from plaintiff church. Plaintiff claimed that defendant was using certain scriptural materials which were copies of materials stolen from plaintiff. The court reversed the order granting an injunction prohibiting use and dissemination of the materials that the plaintiff had sought under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.S. § §  1961-1968 and state trade secret law. The court held that while RICO allows private enforcement actions, the statute does not allow for injunctive relief, and the court declined to add the remedy of injunction in a civil RICO claim as it was not set forth in the statute. The court also determined injunctive relief was not available under a state law trade secrets claim because the religious scriptures did not have commercial value, which was required for the materials to be a trade secret.
 
OUTCOME: Order reversed and injunction dissolved because injunctive relief was not available in a civil RICO claim and religious materials did not have the necessary commercial value to be "trade secrets" under state law.

COUNSEL:
Attorney for Appellee: Joseph Yanny, Esq., Herzig & Yanny, Earle C. Cooley. 
Attorney for Appellant: Michael J. Treman, Esq., Richard C. Brautigam.  

JUDGES:
Pregerson, Poole, and Thompson, Circuit Judges.  

OPINIONBY:
PREGERSON 

OPINION:

 [*1077]  PREGERSON, Circuit Judge. 
The Church of the New Civilization ("new church") is a splinter from the Church of Scientology ("Church"). The Church alleged that certain scriptural materials offered by the new church were copies of materials stolen from the Church. Recognizing federal jurisdiction under the Racketeer Influenced and Corrupt Organization Act ("RICO"), the district court held that the Church's materials constituted a trade secret and granted the Church a preliminary injunction ordering the new church to desist from using or disseminating the disputed materials. 
We reverse the district court's order granting a preliminary injunction. Pursuant to this court's order, the district court advised that it issued its preliminary injunction "on both the plaintiffs' 18 U.S.C. § §  1861 [**2]  -1968 [1961-1968] ("RICO") claim and on plaintiffs' state law trade secrets claim." We resolve the appeal, therefore, under both these theories. We hold that injunctive relief is not available to a private plaintiff in a civil RICO action. Additionally, we hold that the California courts would conclude that sacred scriptures do not meet the definition of a trade secret under California law. 
FACTS 
The Church of Scientology teaches that a person's behavior and well-being are improved by removing "engrams" from the unconscious mind. Engrams are impressions recorded by the unconscious mind in times of trauma in this life or in previous lives. Engrams return in moments of similar stress to the detriment of the person's behavior. Removing engrams from the unconscious permits the person's analytical mind to function unhindered. 
Engrams are located and purged through "auditing." Auditing uses the "technology" and "advanced technology" of the Church. An "auditor" directs a set of structured questions and drills ("rundowns") at the Church adherent. The adherent's responses are measured on a "Hubbard E-meter" which reflects changes in "skin voltage." The auditor's aim is to detect the [**3]  "buttons" which indicate a conscious or subconscious response to the rundown and enable the adherent to identify his or her engrams. The adherent must proceed through a series of increasingly sophisticated technologies of closely structured questions and answers to reach "a higher spiritual existence." 
The Church asserts that the unsupervised, premature exposure of an adherent to these materials will produce a spiritually harmful effect. n1 The Church keeps the  [*1078]  higher level materials in secure places, and makes the materials available only to adherents who agree in writing to maintain their confidentiality. The Church stated to the district court that it does "not safeguard these materials from any commercial consideration." 

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n1 The new church, which follows essentially identical religious precepts and practices to those of the Church, does not dispute this assertion. 

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Defendant David Mayo was apparently at one time a close associate of Church founder L. Ron Hubbard, and assisted in the preparation [**4]  of the Church's higher level materials. n2 Following an acrimonious dispute between Mayo and other senior Church officers, Mayo left the Church and, in July 1983, established the Church of the New Civilization. The new church embraces beliefs and provides counseling and training to its adherents which are essentially identical to those offered by the Church. 

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N2 The new church asserts that Mayo authored the disputed higher level materials. The Church vigorously disputes this, maintaining that Hubbard created all Church materials. 
Hubbard apparently assigned the materials, together with other materials forming the technology and advanced technology of "Scientology" and "Dianetics," to the Religious Technology Center. See Church of Scientology International v. The Elmira Mission of the Church of Scientology, 794 F.2d 38, slip op. at 14 (2d Cir. 1986) (Hubbard validly assigned his rights in all Scientology materials to Religious Technology Center). Hubbard apparently intended the Center to be the "trustee of the scriptures" of Scientology. The Center makes available the higher level materials of the advanced technology to Church offices around the world in the form of "packs." Apparently the advanced technology packs at issue here are only available at six Church offices in the world. 
Many lower level materials are copyrighted, and these copyrights apparently passed to the Religious Technology Center in Hubbard's will. The trademarks "Dianetics" and "Scientology" are now similarly held by the Center. The higher level materials at issue in this suit have neither copyright nor trademark protection. 

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In December 1983, Robin Scott, and two others (all of whom are unrelated to this action) stole certain higher level materials from Church offices in Copenhagen, Denmark. Danish authorities subsequently convicted Scott of burglary. While the stolen materials were returned, the Church maintains that copies were made and that the new church later acquired these copies. The district court found that the higher level materials offered to its adherents by the new church are "essentially identical" to the stolen Church materials. n3 

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n3 The new church states that it began using its higher level materials in August 1983, before the Scott theft. It claims that Mayo, as the principal original author of the Church's materials, wrote the new church's materials from memory. It also asserts that the new church's materials differ from the Church's materials because they reflect "improvements" recently added by Mayo. The district court rejected Mayo's testimony as not credible. "The court does not believe that anyone, even Mr. Mayo, could have reproduced from memory materials substantially identical to those stolen in Denmark from the church. The documents are too voluminous, too detailed and too nearly identical in substance and wording to have been created by Mr. Mayo without reference to the stolen documents." 
The new church asserts that there is no evidence to link the new church to the Scott theft. The Church offered evidence to the district court of international phone calls by new church members around the time of the theft, and produced a handwritten memorandum in which defendant Harvey Haber, then a new church officer, referred to a conversation with a person alleged to be Ron Lawley, a colleague of Scott. The memo then records what appears to be a continuing series of negotiations involving an offer and counteroffer. The memo does not refer to any agreement between the negotiating parties. The Church's complaint alleges that the new church obtained the materials from Scott's colleagues in February 1984. 
Because we dissolve the injunction on jurisdictional grounds, we express no view whether the new church's materials are copies of the Church materials stolen by Scott. 

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The present suit was filed on November 4, 1985. The Church states that, in late October 1985, it learned that the new church intended to disseminate the contents of the materials stolen by Scott "in a non-confidential setting." Counsel for defendant Larry Wollersheim, a former Church adherent who has a pending California state tort action against the Church, had obtained copies of the higher level materials during the deposition of defendants Margaret Singer and Richard Ofshe. Singer  [*1079]  had obtained the materials from defendant Leta Schlosser. Schlosser testified that she had received the materials from an adherent of the new church. On November 1, 1985, the Los Angeles Superior Court hearing Wollersheim's suit against the Church refused a Church request to seal its records including the Church's higher level materials. Three days later, the Church brought this suit in federal court against the new church, its principal officers, Wollersheim, his counsel, and those allegedly involved in passing the materials to Wollersheim's counsel. The suit based jurisdiction on the RICO claim and stated six pendent California state law claims including misappropriation of trade secrets. [**7]  
The district court first granted a temporary restraining order preventing the state court plaintiff and the new church from disclosing the confidential materials. The court then conducted an evidentiary hearing lasting two days, and, on November 23, 1985, granted the Church the preliminary injunction that prompted this appeal. 
The injunction prohibited the new church, its officers "and those persons in active concert or participation with them or who are acting at their request or insistence . . . from using, distributing, exhibiting or in any way publicly revealing" any version of certain enumerated higher level Church materials. The enjoined parties were required to return all such material in their possession to the court under seal. The court also required the Church to post a bond of $100,000. 
In supplementary findings of fact, the district court stated that it "views this as a stolen document case." The court recognized that both parties accepted that adherents must be exposed to the materials in strict progression. On this basis, the court concluded that Church adherents may suffer irreparable harm from the unsupervised dissemination of the materials, thus justifying preliminary [**8]  injunctive relief. In additional comments from the bench, the district court held the materials to constitute a misappropriated trade secret but noted that the Church was not arguing commercial disadvantage as an injury. The court also recognized its jurisdiction under RICO "based on the idea that the documents were stolen and that they found their way into their present use." 
The new church filed a timely appeal. We denied the new church a stay pending appeal, but heard the appeal on an expedited schedule. We have jurisdiction under 28 U.S.C. §  1292(a)(1). 
STANDARD OF REVIEW 
Determining whether a private remedy should be afforded for violation of duties mandated by a statute that does not expressly create a suitable private remedy causes the concepts of "standing," "subject matter jurisdiction," and "implication of a private cause of action" to "overlap . . . even more than they ordinarily would." National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 455-56, 38 L. Ed. 2d 646, 94 S. Ct. 690 (1974). The issue is best described as falling within the generic problem of "federal jurisdiction" without [**9]  attempting to characterize it with greater specificity. See generally 13 C. Wright, A. Miller, and E. Cooper, Federal Practice and Procedure §  3531.6 at 494-506 (2d ed. 1984). We are obligated to raise a jurisdictional issue sua sponte as a threshold question before considering a matter on its merits. See Solano v. Beilby, 761 F.2d 1369, 1370 (9th Cir. 1985); Othman v. Globe Indemnity Co., 759 F.2d 1458, 1462-63 (9th Cir. 1985). Interpretation of the statute under which an injunction has been issued is a question of law, which we review de novo. California ex rel. Van de Kamp v. Tahoe Regional Planning Agency, 766 F.2d 1308, 1312 (9th Cir. 1985). We review matters of state law de novo. In re McLinn, 739 F.2d 1395, 1403 (9th Cir. 1984) (en banc). 

 [*1080]  I.  Is Injunctive Relief Available to a Private Party in a Civil  [**10]   RICO action? 
A. 
The Church's basis for federal jurisdiction is 18 U.S.C. §  1964 ("civil RICO"). n4 Civil RICO permits both the government and private plaintiffs to sue for violations of substantive provisions of the Racketeer Influenced and Corrupt Organizations Act, which formed Title IX of the Organized Crime Control Act of 1970, Pub. L. 91-452, 84 Stat.  941 (1970), as amended, codified as 18 U.S.C. § §  1961-1968. Neither party questioned before the district court, nor in briefs before this court, whether injunctive relief is available under civil RICO. We ordered the parties to submit supplemental briefs on this issue. 

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n4 The Church's complaint alleges federal jurisdiction under RICO, 18 U.S.C. §  1964. The complaint also alleges jurisdiction under 28 U.S.C. § §  1332 and 1339, covering diversity, patent, trademark, and copyright matters, and pendent jurisdiction over several state claims. The parties are not diverse, both being California corporations. The complaint makes no substantive allegations of patent, copyright, or trademark infringement. Thus, RICO provides the only basis for federal court jurisdiction over the Church's complaint. 

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Civil RICO is directed at "racketeering activity," which it defines as any act "chargeable" under several generically described state criminal laws; any act "indictable" under numerous specific federal criminal provisions, including mail and wire fraud; and any "offense" involving narcotics or bankruptcy or securities fraud "punishable" under federal law.  18 U.S.C. §  1961(1). Civil RICO prohibits the use of income derived from a "pattern of racketeering activity" in relation to an "enterprise" engaged in or affecting interstate commerce.  18 U.S.C. §  1962(a). A "pattern" of racketeering activity "requires at least two acts of racketeering activity." 18 U.S.C. §  1961(5). Broad criminal penalties are provided for RICO violations. See 18 U.S.C. §  1963. In addition, Congress provided for a civil enforcement scheme, including private treble damages actions. See 18 U.S.C. §  1964. 
Despite repeated efforts by courts to limit the reach of civil RICO private damages [**12]  actions, it is clear that suits alleging the requisite predicate acts are entitled to federal court jurisdiction, even if the acts are of a common-garden variety far removed from what is normally regarded as "organized crime" activity. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S. Ct. 3275, 3284-85, 87 L. Ed. 2d 346 (1985) (civil RICO suit may be based on commercial contract dispute involving two allegations of mail and wire fraud; civil RICO jurisdiction requires no prior criminal convictions for predicate acts nor any showing of "racketeering injury.") The Church's complaint alleges that the higher level materials are the Church's trade secret which the new church misappropriated through several acts of mail or wire fraud constituting a pattern of racketeering activity. n5 The complaint characterizes the contacts between the new church and Wollersheim and his counsel as a conspiracy within RICO's definition of "enterprise." The Church's complaint also includes a claim for money damages under RICO. Thus, the Church apparently satisfies the federal jurisdictional requirements for a civil RICO damages action. n6 

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n5 The new church characterizes the predicate acts as the Copenhagen burglary and the receipt of the stolen materials. It argues that since the theft was not punishable in the United States, it cannot be a predicate act, and thus the Church has not demonstrated a pattern of racketeering. Even if the Danish theft falls outside RICO, the Church alleges sufficient telephone and mail contacts between the new church and Scott's group to satisfy the pattern requirement through several predicate acts of mail and wire fraud. [**13]  
n6 While the complaint states a claim for money damages, at the hearing on the motion for the preliminary injunction, the Church denied that it had suffered financially from the new church's behavior. Rather, the Church characterized its injury as the harm caused to its adherents from premature, unsupervised exposure to the higher level materials. It is not clear whether such an injury is sufficient to allow the Church to press even a civil RICO damages action. 
In Sedima, the Supreme Court stated that "the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the violation. . . . Where the plaintiff alleges each element of the violation, the compensable injury necessarily is the harm caused by predicate acts sufficiently related to constitute a pattern, for the essence of the violation is the commission of those acts in connection with the conduct of an enterprise." 105 S. Ct. at 3285-86. The district court found such a "nexus" between the Scott theft and the new church. The court did not expressly find a further nexus between the new church's actions via the predicate acts and the injury to the Church adherents. Sedima apparently requires such a nexus for civil RICO damages "standing." 
Assuming that this nexus can be established, the injury alleged by the Church may not be compensable under civil RICO. In a footnote in Sedima, the Court explains that civil RICO damages "include, but are not limited to . . . competitive injury." 105 S. Ct. at 3286 n.15. In disagreeing with the dissent's attempt to limit civil RICO standing, Sedima apparently embraces the notion that "harm proximately caused by the forbidden conduct" is compensable. Id. The court gives no indication whether nonfinancial proximate harm, such as the emotional-type injury alleged by the Church, is compensable under civil RICO. Since we are reviewing only the injunctive relief granted to the Church, we need not decide this issue. However, if the action proceeds to trial on the Church's damages claim, the district court will then be obliged to confront the problem. 

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 [*1081]  B. 
No appellate court has expressly determined whether civil RICO permits a private party to secure injunctive relief. The Fourth Circuit has implied that injunctive relief is not available to a private civil RICO plaintiff, but reserved ultimate judgment on the matter. See Dan River, Inc. v. Icahn, 701 F.2d 278, 290 (4th Cir. 1983) ("While we do not undertake to resolve the question . . . in light of the most recent indications from the Supreme Court, Dan River's action for equitable relief under RICO might well fail to state a claim."). In dictum in a moot appeal in Trane Co. v. O'Connor Securities, 718 F.2d 26, 28 (2d Cir. 1983) the Second Circuit stated: "We have the same (serious) doubts [as courts such as the Fourth Circuit in Dan River] as to the propriety of private party injunctive relief. . . ." More recently, in Sedima, S.P.R.L. v. Imrex Co., 741 F.2d 482, 489 n.20 (2d Cir. 1984), rev'd, 473 U.S. 479, 105 S. Ct. 3275, 87 L. Ed. 2d 346 (1985), the Second Circuit observed that "it thus seems altogether likely that §  1964(c) as it now stands was not intended to provide private [**15]  parties injunctive relief." However, the precedential value of this conclusion, itself somewhat equivocal, is thrown into considerable doubt by the Supreme Court's total rejection of the conclusions drawn by the Second Circuit from its historical analysis of the RICO statute. See 473 U.S. 479, 105 S. Ct. 3275, 87 L. Ed. 2d 346. 
In contrast, the Eighth Circuit, expressly without resolving the issue, has hinted that injunctive relief may be available either under civil RICO or under a court's general equitable powers. See Bennett v. Berg, 685 F.2d 1053, 1064 (8th Cir. 1982) (citing a law review article which supports the availability of injunctive relief), aff'd on rehearing, 710 F.2d 1361 (8th Cir.) (en banc), cert. denied, 464 U.S. 1008, 78 L. Ed. 2d 710, 104 S. Ct. 527 (1983). n7 See als USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94, 97-98 (6th Cir. 1982) (affirming grant of injunctive relief to private plaintiff on pendent state claims where RICO provided federal jurisdiction base). 

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n7 The Eighth Circuit panel cited Blakey and Gettings, Racketeer Influenced and Corrupt Organizations (RICO): Basic Concepts -- Criminal and Civil Remedies, 53 Temple L.Q. 1014, 1038 nn. 132-33 (1980) (statutory language provides for equitable relief).  685 F.2d at 1064. 

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A similar disunity of views exists among those district courts that have confronted the issue. The only three published decisions explicitly to hold that injunctive relief is not available to a civil RICO plaintiff are all from the Northern District of Illinois. See Miller v. Affiliated Financial Corp., 600 F. Supp. 987, 994 (N.D. Ill. 1984); DeMent v. Abbott Capital Corp., 589 F. Supp. 1378, 1382-83 (N.D. Ill. 1984); and Kaushal v. State Bank of India, 556 F. Supp. 576, 581-84 (N.D. Ill. 1983). See also Ashland Oil, Inc. v. Gleave, 540 F. Supp. 81, 85-86 (W.D.N.Y. 1982) (statutory attachment not available to private civil RICO plaintiff). 
Two district courts have held that injunctive relief is available to a private civil RICO plaintiff. See Aetna Casualty and Surety Co. v. Liebowitz, 570 F. Supp. 908, 910-11 (E.D.N.Y. 1983), aff'd on other grounds, 730 F.2d 905 (2d Cir. 1984); and Chambers Development Co. v. Browning-Ferris Industries, 590 F. Supp. 1528, 1540-41  [*1082]  (W.D. Pa. 1984). Additionally, several district courts have simply assumed [**17]  the availability of injunctive relief to civil RICO plaintiffs. See USACO Coal Co. v. Carbomin  Energy, Inc., 539 F. Supp. 807, 814-16 (W.D. Ky.), aff'd on other grounds, 689 F.2d 94 (6th Cir. 1982); Marshall Field & Co. v. Icahn, 537 F. Supp. 413, 420 (S.D.N.Y. 1982); Vietnamese Fishermen's Association v. Knights of the Ku Klux Klan, 518 F. Supp. 993, 1014 (S.D. Tex. 1981). 
Still other district courts have raised, but managed to avoid deciding the issue. See McLendon v. Continental Group, Inc., 602 F. Supp. 1492, 1518-19 (D.N.J. 1985) ("The law [in this area] is in great flux."); Kaufman v. Chase Manhattan Bank, N.A., 581 F. Supp. 350, 359 (S.D.N.Y. 1984). 
Thus, we must decide essentially as a matter of first impression for an appellate court whether injunctive relief may be granted to a private plaintiff under civil RICO. When interpreting a statute, the plain meaning of the words used is controlling absent "a clearly expressed legislative intent to the contrary." United States v. Turkette, 452 U.S. 576, 580, 69 L. Ed. 2d 246, 101 S. Ct. 2524 (1981) [**18]  (quoting Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 64 L. Ed. 2d 766, 100 S. Ct. 2051 (1980)); Powell v. Tucson Air Museum Foundation of Pima County, 771 F.2d 1309, 1311 (9th Cir. 1985). When the language of a statute is ambiguous, we construe the statute in the light of Congress's purpose in enacting it as expressed in the legislative history. See Train v. Colorado Public Interest Research Group, Inc., 426 U.S. 1, 9-10, 48 L. Ed. 2d 434, 96 S. Ct. 1938 (1976). 
C. 
Section 1964 has four parts. n8 Part (c) was added late in RICO's legislative passage through Congress. The bill passed by the Senate included only the present parts (a), (b), and (d). See infra slip op. pages 19-20; Sedima, 105 S. Ct. at 3280-81. 

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n8  18 U.S.C. §  1964 states: 

(a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons. 
(b) The Attorney General may institute proceedings under this section. In any action brought by the United States under this section, the court shall proceed as soon as practicable to the hearing and determination thereof. Pending final determination thereof, the court may at any time enter such restraining orders or prohibitions, or take such other actions, including the acceptance of satisfactory performance bonds, as it shall deem proper. 
(c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee. 
(d) A final judgment or decree rendered in favor of the United States in any criminal proceeding brought by the United States under this chapter shall estop the defendant from denying the essential allegations of the criminal offense in any subsequent civil proceeding brought by the United States.

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Part (a) is a broad grant of equitable jurisdiction to the federal courts. Part (b) permits the government to bring actions for equitable relief. Part (d) grants collateral estoppel effect to a criminal conviction in a subsequent civil action by the government. Part (c), the private civil RICO provision, states that a private plaintiff may recover treble damages, costs and attorney's fees. In contrast to part (b), there is no express authority to private plaintiffs to seek the equitable relief available under part (a). 
Admittedly, part (c) also does not expressly limit private plaintiffs "only" to the enumerated remedies, nor does part (a) expressly limit the availability of the illustrative  [*1083]  equitable remedies to the government. See Strafer, Massumi, and Skolnick, Civil RICO in the Public Interest: "Everybody's Darling," 19 Am. Crim. L. Rev. 655, 710 (1982). However, the inclusion of a single statutory reference to private plaintiffs, and the identification of a damages and fees remedy for such plaintiffs in part (c), logically carries the negative [**20]  implication that no other remedy was intended to be conferred on private plaintiffs. 
As the Supreme Court has emphasized, Congress expressly admonished that RICO "be liberally construed to effectuate its remedial purposes," and that "the statute's 'remedial purposes' are nowhere more evident than in the provision of a private action for those injured by racketeering activity." Sedima, 105 S. Ct. at 3286; see also, Turkette, 452 U.S. at 587. In this spirit, those sympathetic to a private equitable remedy under civil RICO have suggested two other readings of the statute. The Church urges us to adopt either or both of these constructions of section 1964. 
First, the Church suggests that it is significant that the treble damage clause of section 1964(c) is preceded by "and" rather than "to." Thus, it is suggested, all appropriate relief, including the equitable remedies of part (a), are available to private plaintiffs because there is no clear statutory limitation. Moreover, the Church argues, there is no good reason for Congress denying victims equitable relief while permitting them damages relief. See Blakey, The RICO Civil Fraud Action  [**21]   in Context: Reflections on Bennett v. Berg, 58 Notre Dame L. Rev. 237, 332 (1982); Blakey and Gettings, Racketeer Influenced and  Corrupt Organizations (RICO): Basic Concepts -- Criminal and Civil Remedies, 53 Temple L.Q. 1014, 1038 n.133 (1980). No court has accepted this reading. Indeed, two courts have been vehement in their rejection of this analysis. See Sedima, 741 F.2d at 489 n.20 ("rather remarkable argument"); Kaushal, 556 F. Supp. at 582 ("bizarre and wholly unconvincing as a matter of plain English and the normal use of language."). See also infra note 11. 
Second, the Church asserts that the variation in language used in parts (a) and (b) of section 1964 indicate that Congress did not intend to limit the inherent powers of federal courts to grant equitable relief in suitable cases. The argument is made that because part (b) grants the Attorney General the express power to seek temporary equitable relief, other parties are permitted to seek permanent equitable relief. Moreover, the Church contends, if the availability of equitable relief under section 1964 were determined solely by part [**22]  (b), part (a) would become superfluous. See J. Fricano, Civil RICO -- An Antitrust Plaintiff's Considerations, in 1 Current Problems in Federal Civil Practice 827-28 (PLI, 1983); Chambers, 590 F. Supp. at 1540. 
The Church develops this textual argument with particular vigor. It argues that part (a), alone of the subparts of section 1964, is general in theme and apparently unrestricted in application. Its plain words place no limit on the class or category of litigants who might avail themselves of the remedies it makes available under RICO. While the other subparts of section 1964 provide for specific relief to specific parties, the Church observes that they give no indication that part (a) is anything other than a simple and broad grant of jurisdiction. See Belgard, Private Civil RICO Plaintiffs Are Entitled to Equitable Relief under §  1964(a), 2 RICO Law Rep. 537, 537-38 (1985). The Church reads section 1964(b) as permission for the government to secure injunctive relief without satisfying the traditional equity tests of irreparable harm and inadequacy of alternative remedy at law. See United States v. Cappetto, 502 F.2d 1351, 1358-59 (7th Cir. 1974), [**23]  cert. denied, 420 U.S. 925, 95 S. Ct. 1121, 43 L. Ed. 2d 395 (1975). Thus, the Church asserts, part (b) does not restrict RICO injunctive relief to the government, but merely sets aside for civil RICO cases the traditional rule that only a victim may enjoin a crime. See In re Debs, 158 U.S. 564, 582-84, 15 S. Ct. 900, 39 L. Ed. 1092 (1895). Thus, the Church would have us read part (a) as sufficient for a  [*1084]  federal court to grant an injunction to a private RICO plaintiff even if part (c) had never been added to section 1964. 
This latter construction of section 1964 is certainly a plausible reading of the statutory language. However, our review of Congress' intent in enacting civil RICO convinces us that the Church is incorrect. The legislative history mandates us to hold that injunctive relief is not available to a private party in a civil RICO action. The Supreme Court's apparent endorsement of the conclusion that we reach here reinforces this reading of the statute. See Sedima, 105 S. Ct. at 3280 ("The civil remedies in [**24]  the bill passed by the Senate, S. 30, were limited to injunctive actions by the United States and became § §  1964(a), (b), and (d)."). 
D. 
RICO has a long legislative lineage. The Organized Crime Control Act of 1970 was derived from S. 30, 91st Cong., 1st Sess., 115 Cong. Rec. 769 (1969). Title IX of the Act, RICO, was added to S. 30 by the Senate. The substance of Title IX was contained in an earlier Senate bill, S. 1861, 91st Cong., 1st Sess., 115 Cong. Rec. 9,568-71 (1969). See also 116 Cong. Rec. 591 (remarks of Sen. McClellan). Neither S. 1861 nor S. 30 contained a private civil cause of action. An earlier predecessor of RICO, S. 1623, 91st Cong. 1st Sess., 115 Cong. Rec. 6,995-96 (1969), did contain a private civil cause of action based closely on the Clayton Act, providing explicitly for injunctive relief as well as for treble damages. S. 1623 § §  3(c), 4(a). That bill was itself patterned on two earlier Senate bills, S. 2048 and S. 2049, 90th Cong. 1st Sess. (1967), both of which provided for private civil action similar to that in S. 1623. See generally, Belgard, 2 RICO Law Rep. at 538 (quoting relevant provisions of these bills). 
The Senate Subcommittee on Criminal [**25]  Laws and Procedures of the Senate Committee on the Judiciary replaced S. 1623 with S. 1861 apparently in part because S. 1861 provided broader governmental civil relief, such as the investigative demand, and was in other ways a more comprehensive bill. See Hearings on Measures Relating to Organized Crime Before the Subcommittee  on Criminal Laws and Procedures of the Senate Committee on the Judiciary, 91st Cong., 1st Sess. 387-88, 407-08 (1969). 
There were also a number of House predecessors to RICO which paralleled S. 30. See H.R. 19215, 91st Cong. 2d Sess. 116 Cong. Rec. 31,914 (1970). H.R. 19215 included a more complete private cause of action section than that eventually inserted by the House, and explicitly allowed for private party injunctive relief. 
While the Act for the most part originated in the Senate, the civil RICO provision permitting suit by private persons, 18 U.S.C §  1964(c), originated in the House. See Sedima, 105 S. Ct. at 3280. During hearings on S. 30 before the House Judiciary Committee, Representative Steiger proposed the addition of a private treble damages action "similar to the private damage remedy [**26]  found in the antitrust laws. . . . Those who have been wronged by organized crime should at least be given access to a legal remedy. In addition, the availability of such a remedy would enhance the effectiveness of title IX's prohibitions." Organized Crime Control: Hearings on S. 30, and related proposals, before Subcommittee No. 5 of the House Committee on the Judiciary , 91st Cong., 2d Sess. 520 (1970) ("House Hearings"). The American Bar Association also proposed an amendment "based upon the concept of Section 4 of the Clayton Act." Id. at 543-44, 548, 559; see 116 Cong. Rec. 25,190-91 (1970); Sedima, 105 S. Ct. at 3280-81. 
Significantly, Representative Steiger's proposal, like those in the rejected Senate bills, provided explicitly for a private injunctive remedy under section 1964(a). House Hearings at 521 (subsection (c) of proposal of Rep. Steiger). The legislative history is silent as to why the subcommittee rejected this language and explicitly created only the private action for treble damages which was eventually enacted as section 1964(c). See 116 Cong. Rec. 25,190 (remarks of Sen. McClellan welcoming  [*1085]   [**27]  House addition of private treble damages remedy). The adopted statutory language was drawn from H.R. 19586, 91st Cong., 2d Sess. 56 (1970), one of the two House bills that paralleled S. 30. In choosing H.R. 19586 over H.R. 19215, the House apparently explicitly rejected a private injunctive relief provision. 
E. 
The Church's argument rests on the assertion that the private treble damages remedy provided by section 1964(c) is additional to the equitable RICO remedies made available to private plaintiffs by section 1964(a). The legislative history offers some support for this thesis. Introducing the bill during House debate, the House sponsor, Representative Poff, stated: 

Courts are given broad powers under the title to proceed civilly, using essentially their equitable powers, to reform corrupted organizations, for example, by prohibiting the racketeers to participate any longer in the enterprise, by ordering divestitures, and even by ordering dissolution or reorganization of the enterprise. In addition, at the suggestion of the gentleman from Arizona (Mr. Steiger) and also the American Bar Association and others, the committee has provided that private persons injured [**28]  by reason of a violation of the title may recover treble damages in Federal courts -- another example of the antitrust remedy being adapted for use against organized criminality.

116 Cong. Rec. 35,295 (1970) (emphasis added). Earlier, during Senate floor debate on the bill before the addition of the present section 1964(c), Senator McClellan, the bill's principal Senate sponsor, described the value of civil RICO thus: 

Since enactment of the Sherman Antitrust Act in 1890, the courts have used several equitable remedies . . . to implement the language of 15 U.S.C. sections 1 and 2. I believe, and numerous others have expressed a similar belief, that these equitable devices can prove effective in cleaning up organizations corrupted by the forces of organized crime.

Id. at 592. 
However, two separate episodes from the history of civil RICO's legislative passage convince us that the conclusions the Church would have us draw from these congressional statements do not reflect Congress' intent in section 1964. First, the House rejected an amendment, described as "an additional civil remedy," which would expressly permit private parties [**29]  to sue for injunctive relief under section 1964(a). Second, in the very next year after RICO's enactment, Congress refused to enact a bill to amend section 1964 and give private plaintiffs injunctive relief. 
During debate on the House floor, Representative Steiger offered an amendment that would have allowed private injunctive actions, fixed a statute of limitations, and clarified venue and process requirements.  116 Cong. Rec. at 35,346; see also id. at 35,227-28. n9 The proposal was greeted with some hostility because it had not been reviewed  [*1086]  in committee, and Representative Steiger withdrew it without a vote being taken. Id. at 35,346-47. Representative Steiger's withdrawal was in response to remarks by the bill's House sponsor. Representative Poff stated: 

Mr. Chairman, I want to pay special tribute to the gentleman in the well for having raised the issue which his amendment defines. It does offer an additional civil remedy which I think properly might be suited to the special mechanism fashioned in title IX. Indeed, I am an author of an almost identical amendment. It has its counterpart almost in haec verba in the antitrust statutes, [**30]  and yet I suggest to the gentleman that prudence would dictate that the Judiciary Committee very carefully explore the potential consequences that this new remedy might have in all the ramifications which this legislation contains and for that reason, I would hope that the gentleman might agree to ask unanimous consent to withdraw his amendment from consideration with the understanding that it might properly be considered by the Judiciary Committee when the Congress reconvenes following the elections or some other appropriate time.

Id. at 35,346 (emphasis added). The House then passed the bill, with the treble damages provision in the form recommended by the Committee. Id. at 35,363-64. The Senate did not seek a conference and adopted the bill as amended in the House. Id. at 36,296. 

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n9 Representative Steiger's amendment was very specific. The present section 1964(c), the private treble damages remedy, which the House had already agreed to add to the bill, and the present part (d), concerning collateral estoppel, would become parts (e) and (g) respectively of section 1964. 116 Cong. Rec. at 35,346. The new part (c) proposed by Representative Steiger read: 

(c) Any person may institute proceedings under subsection (a) of this section. In any proceeding brought by any person under subsection (a) of this section, relief shall be granted in conformity with the principles which govern the granting of injunctive relief from threatened loss or damages in other cases. Upon the execution of proper bond against damages from an injunction improvidently granted and a showing of immediate danger of irreparable loss or damage, a preliminary injunction may be issued in any action before a determination thereof upon its merits.

Id. A new part (d) would permit the government to sue for damages; proposed part (f) would allow government intervention in private suits of "general public importance"; and proposed part (h) provided for a five year statute of limitations tollable during the pendency of a government or private suit on a similar matter. Id. 

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In the next term of the Senate, the same amendment as that offered by Representative Steiger on the House floor during debate on the RICO bill, see supra note 9, was proposed as a bill to amend the now enacted legislation. S. 16, 92nd Cong., 1st Sess. (1971). See Victims of Crime, Hearing before the Subcommittee on Criminal Laws and Procedures of the Senate Committee of the Judiciary, 92nd Cong., 1st Sess. 3 (1972). The new bill "would expand the available civil remedies" since "now only the United States can institute injunctive proceedings." Id. at 158. (Statement of Richard Velde, Associate Administrator, Law Enforcement Assistance Administration) (emphasis added). n10 

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n10 While post-enactment legislative history is not by any means conclusive, it cannot merely be ignored.  North Haven Board of Education v. Bell, 456 U.S. 512, 530-35, 72 L. Ed. 2d 299, 102 S. Ct. 1912 (1982). 

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The Senate Judiciary Committee reported favorably on S. 16, 92d Cong., 2d Sess., 118 Cong. Rec.  [**32]  29,368-69 (1972).  The committee report noted that RICO as enacted, provided for private treble damages actions, and that the new bill would supplement this and "authorize private injunctive relief from racketeering activity." S. Rep. No. 1070, 92d Cong., 2d Sess. 10 (1972) (emphasis added). During Senate floor debates on S. 16, Senator McClellan observed that the bill would add to existing private RICO remedies by "authorizing private injunctive relief from racketeering activity." 118 Cong. Rec. 29,370 (1972). See also id. (remarks of Senator Hruska). Although the Senate passed S. 16, the bill never passed the House, and its substance never became law. 
The clear message from the legislative history is that, in considering civil RICO, Congress was repeatedly presented with the opportunity expressly to include a provision permitting private plaintiffs to secure injunctive relief. On each occasion, Congress rejected the addition of any such provision. 
F. 
This clear message is reinforced by recalling that civil RICO was intended to provide a private cause of action modeled on the analogous provision of the antitrust laws. See 116 Cong. Rec. 592 (remarks of [**33]  Sen. McClellan); id. at 602 (remarks of Sen. Hruska) (RICO's civil provisions employ "time-tested antitrust remedies"); S. Rep. No. 617, 80-82, 125, 160 (1969); 116 Cong. Rec. 35,295 (Private treble damages provision is "another example of the antitrust remedy being adapted for use  [*1087]  against organized criminality.") (remarks of Rep. Poff); House Hearings at 543-44 (testimony of ABA President Wright); Sedima, 105 S. Ct. at 3282 ("The clearest current in [the legislative] history is the reliance on the Clayton Act model. . . ."). 
The language of the treble damages antitrust remedy, section four of the Clayton Act, 15 U.S.C. §  15(a), is similar to that of civil RICO. n11 The Supreme Court has explicitly held that the language of section 4 precludes private injunctive relief. See Paine Lumber Co. v. Neal, 244 U.S. 459, 471, 61 L. Ed. 1256, 37 S. Ct. 718 (1917). Cf.  Minnesota v. Northern Securities Co., 194 U.S. 48, 70-71, 48 L. Ed. 870, 24 S. Ct. 598 (1904) (no private right to injunctive relief under section 4 of Sherman Act). Private antitrust plaintiffs can, however,  [**34]  secure injunctive relief only by virtue of a separate section of the Clayton Act which expressly provides for private equitable actions. See Section 16 codified at 15 U.S.C. §  26. n12 RICO contains no parallel provision to section 16's grant of a private right to injunctive relief. 

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n11 15 U.S.C. §  15(a) provides in pertinent part: 

 "(A)ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." (Emphasis added.)

It should be noted that this provision includes the word "and" before stating the remedy. It was the inclusion of this word in civil RICO that prompted the Church and some commentators to conclude that civil RICO permitted private injunctive relief. See supra [Slip Op.] page 18. The fact that the Clayton Act treble damages provision does not extend to private injunctive relief, even with the "and" included, surely undermines the argument that its inclusion in section 1964(c) indicates that injunctive relief is not precluded by that section. [**35]  
n12 15 U.S.C. §  26 provides in pertinent part: 
Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including sections 13, 14, 18, and 19 of this title, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings, and upon the execution of proper bond against damages for an injunction improvidently granted and a showing that the danger of irreparable loss or damage is immediate, a preliminary injunction may issue.

A proviso to this section prevents an equitable suit against a common carrier. 

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Presumably, had it desired to do so, Congress could have completed the analogy between civil RICO and the antitrust laws by including in civil RICO a private equitable relief remedy like section sixteen of the Clayton Act. That it did [**36]  not do so, despite the repeated efforts of several members of Congress, strongly suggests that Congress did not intend to give private civil RICO plaintiffs access to equitable remedies. n13 

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n13 The Church argues that comparisons with section 16 of the Clayton Act are inappropriate because the Clayton Act also includes a provision, section 15, 15 U.S.C. §  25, expressly limiting injunctive relief to the government and thus the statutes -- RICO and the Clayton Act -- are not similar. See Belgard 2 RICO Law Rep. at 541, n.13. See also Fricano, Civil RICO at 828-29. This argument is to no avail. The legislative history shows that Congress recognized and accepted the validity of the comparison during the passage of RICO. 
In his remarks on the House floor which prompted Representative Steiger to withdraw his late amendment specifically providing injunctive relief to a private RICO plaintiff, Representative Poff stated that Representative Steiger's amendment "has its counterpart almost in haec verba in the antitrust statutes." 116 Cong. Rec. 35,346. See supra page 1086. Representative Poff must have been comparing Representative Steiger's abortive private injunctive relief provision to section 16 of the Clayton Act, the private antitrust injunctive relief provision. Thus, Congress was well aware that civil RICO was not symmetrical with the antitrust laws with respect to private injunctive relief. Congress' rejection of Representative Steiger's amendment is additional proof that Congress deliberately and knowingly excluded private injunctive relief from the arsenal of remedies created by RICO. 

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G. 
Further support for the conclusion that injunctive relief is not available under civil  [*1088]  RICO is found in the Supreme Court doctrine that sharply limits the implication of causes of action or remedies not expressly provided by statute. 

It is an elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.

 Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19, 62 L. Ed. 2d 146, 100 S. Ct. 242 (1979); see also Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 61 L. Ed. 2d 82, 99 S. Ct. 2479 (1979). 
Where a statute provides an elaborate enforcement scheme that confers authority to sue on both government officials and private citizens, "it cannot be assumed that Congress intended to authorize by implication additional judicial remedies for private citizens." Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 14, 69 L. Ed. 2d 435, 101 S. Ct. 2615 (1981). [**38]  "In the absence of strong indicia of a contrary congressional intent, we are compelled to conclude that Congress provided precisely the remedies it considered appropriate." Id. at 15. Compare Sea Clammers (no private right of action implied in federal environmental statutes) with Herman & MacLean v. Huddleston, 459 U.S. 375, 380-87, 74 L. Ed. 2d 548, 103 S. Ct. 683 (1983) (implied remedy under securities law available because of congressional intent even where cumulative to express remedies). 
For civil RICO, there are strong indicia of congressional intent against any implied injunctive relief remedy. Similarly, there is no indication in the language of section 1964 that civil RICO was not intended, as its plain wording states, to limit private plaintiffs only to damages, costs, and fees. Taken together, the legislative history and statutory language suggest overwhelmingly that no private equitable action should be implied under civil RICO. n14 

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n14 The Church argues that a more appropriate test whether civil RICO implies a private right is that articulated in Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975). See Belgard, 2 RICO Law Rep. at 539. Cort posed four "relevant" questions to assist in determining "whether a private remedy is implicit in a statute not expressly providing one." Cort, 422 U.S. at 78. We see no conflict between Cort and the more recent line of Supreme Court cases upon which we rely. Applying the Cort factors still produces a ruling adverse to the Church. First, the Church is not "one of the class for whose especial benefit the statute was enacted." Id. (emphasis in original). RICO was aimed principally at protecting the public from organized crime front enterprises, not at enabling a religious organization to prevent the dissemination of doctrinal materials by a rival religious organization. Second, as we have discussed supra, there is substantial "indication of legislative intent, explicit and implicit" against an implied private remedy. Id. Third, while implying an injunctive remedy may be consistent generally with RICO's purpose, in this particular case, we doubt whether this is so. Id. Fourth, to the extent that the dispute here concerns trade secrets misappropriation, "it would be inappropriate to infer a cause of action based solely on federal law." Id. 

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H. 
Thus we conclude that Congress did not intend to give private RICO plaintiffs any right to injunctive relief. In reaching this conclusion, we recognize that strong policy arguments can be made to support a right to injunctive relief for private RICO plaintiffs. 
It may be that in drawing the line between private equitable relief and private damages, Congress wished to preclude federal courts from interfering with the day-to-day running of businesses at the behest of what might be only a disgruntled competitor. However, this same concern about anticompetitive litigation has been frequently leveled at RICO's treble damages provision. The Supreme Court, despite expressing sympathy for this concern, has rejected it as not consistent with the statute's wording and history. See Sedima, 105 S. Ct. at 3277-78. 
In contrast, we recognize the force of the Church's argument that a private injunctive remedy would permit an injured party to put an immediate stop to racketeering behavior that threatens his or her business  [*1089]  with economic destruction before the business has been brought to its knees. While the treble damages remedy is a potent weapon, it necessarily [**40]  assumes that economic injury has occurred. The preventive effect of injunctive relief is often a more just remedy. Although civil RICO empowers the government to bring an injunctive suit to protect a threatened enterprise, we recognize that the resources of the United States Attorney's office are limited. Civil RICO deliberately created dual avenues of enforcement -- private and public. We recognize that precluding enforcing parties from employing the weapon of equitable relief partially hamstrings the statute's effect. "Private attorney general provisions such as §  1964(c) are in part designed to fill prosecutorial gaps," Sedima, 105 S. Ct. at 3284, and use of equitable remedies by private parties would frequently result in substantial benefits to society generally. These broad social benefits, such as the dismantling of an illegitimate enterprise, would generally exceed the gain to the private plaintiff from this action, especially where the individual's injury has been ameliorated by treble damages. 
Even so, while, on balance, it may well have been desirable for Congress [**41]  to have extended to private parties the right to injunctive relief under civil RICO, we are convinced that Congress chose not to do so, and we must respect and follow that judgment. n15 

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n15 Since the remedy granted to the Church by the district court was beyond the jurisdiction of the court, it is not necessary for our resolution of this appeal to reach the additional jurisdictional questions whether the Church had standing to assert its adherents' "religious injury" caused by the new church's alleged conduct and whether the dispute was ripe for resolution by the court. See Liberty National Insurance Holding Co. v. Charter Co., 734 F.2d 545, 553 n.19 (11th Cir. 1984); Raypath, Inc. v. City of Anchorage, 544 F.2d 1019, 1021 (9th Cir. 1976) (per curiam) (if no cause of action can exist, the case should be dismissed before reaching the issue of standing). 
By resolving this appeal on jurisdictional grounds we avoid deciding the significant first amendment issues raised by the district court's injunction. For example, the effect of the injunction's prohibition on the use of any of the higher level materials is to curtail the religious practice of the new church's adherents. See Sherbert v. Verner, 374 U.S. 398, 10 L. Ed. 2d 965, 83 S. Ct. 1790 (1963). Similarly, the court's review of the Church's stolen materials and the new church's documents to determine whether essential elements have been appropriated raises the potential for impermissible entanglement in matters of religious doctrine. See Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 96 S. Ct. 2372, 49 L. Ed. 2d 151 (1976). Further, the court's recognition of "religious injury" from premature unsupervised exposure to Church materials as irreparable harm justifying an injunction prompts worrisome establishment concerns. See Lemon v. Kurtzman, 403 U.S. 602, 29 L. Ed. 2d 745, 91 S. Ct. 2105 (1971). 

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II.  Can Religious Materials Constitute a Protectible Trade Secret? 
The Church's complaint included several pendent California state law claims, including misappropriation of trade secrets. Even though the Church is not entitled to injunctive relief under RICO, we must also decide whether it is entitled to the same relief under state law. See USACO, 689 F.2d at 97-98 (affirming on state law grounds an injunction which district court had issued where RICO provided the jurisdictional base). 
"The maintenance of standards of commercial ethics and the encouragement of invention are the broadly stated policies behind trade secret law." Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 481, 40 L. Ed. 2d 315, 94 S. Ct. 1879 (1974); Chicago Lock Co. v. Fanberg, 676 F.2d 400, 404-05 (9th Cir. 1982). States may regulate trade secrets only to the extent that state law does not conflict with federal copyright and patent laws.  Kewanee, 416 U.S. at 479. We review matters of state law de novo. McLinn, 739 F.2d at 1403. [**43]  
Before 1985, California trade secrets law was based on Restatement of Torts §  757, comment (b) (1939). The leading California case prior to the present legislation adopted verbatim the Restatement's definition of trade secret: 

It is now settled that a trade secret may consist of any formula, pattern, devise or  [*1090]  compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.

 Sinclair v. Aquarius Electronics, Inc., 42 Cal. App. 3d 216, 221, 116 Cal. Rptr. 654, 658 (1974) (emphasis omitted); see also Chicago Lock, 676 F.2d at 404; 7 B. Witkin, Summary of California Law, Equity §  82 (8th ed. 1974 and Supp. 1984). The Restatement (Second) of Torts omitted section 757 and any reference to trade secrets. In response, a Uniform Trade Secrets Act was drafted. California adopted this uniform Act, with minor changes, in 1985. See 14 U.L.A. 537, 538-40 (1980 and 1985 Supp.); M. Jager, Trade Secrets Law, §  3.04 [**44]  (1985); 3 R. Milgrim, Milgrim on Trade Secrets App. AA (1985). n16 

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n16 Because the new church's alleged trade secrets' misappropriation spanned the effective date of the California statute, both old and new law must be applicable to sustain the injunction. See Cal. Civ. Code §  3426.10. 

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California law now defines a trade secret as: 

information, including a formula, pattern, compilation, program, devise, method, technique, or process, that: 
(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and 
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Cal. Civ. Code §  3426.1(d) (West Supp. 1986). 
The district court held that the Church's higher level materials were a trade secret. The court relied heavily on [**45]  the Church's concededly elaborate efforts to maintain the secrecy of its materials. However, the Church's contention that the disputed materials are "religious scripture" was not reconciled with the California statute's reference to "economic value" as an element of a protectible trade secret. 
To be protectible as a trade secret under either Restatement section 757 or the new California statute, the confidential material must convey an actual or potential commercial advantage, presumably measurable in dollar terms. We do not accept that a trade secret can be based on the spiritual advantage the Church believes its adherents acquire over non-adherents by using the materials in the prescribed manner. Former Restatement §  757 defines trade secrets as information which is "used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." (Emphasis added). See also 1 Milgrim §  2.02 ("An element common to the definitions [of trade secret] is actual use of the secret in a trade or business.") (emphasis added);  [**46]  Klitzke, Trade Secrets: Important Quasi-Property Rights, 41 Bus. Lawyer 555, 559 (1986) ("Information that can have no commercial value cannot be the subject of trade secret protection."); Commissioners' Comment to §  1 of Uniform Act, 14 U.L.A. at 543 ("The definition includes information that has commercial value from a negative viewpoint. . . . (A) trade secret need not be exclusive to confer a competitive advantage. . . .") (emphasis added). 
No published California decision has yet construed Civ. Code §  3426.1(d)'s definition of trade secret. In the only significant effort by any state court to construe the Uniform Act's definitional reference to "independent economic value," the Minnesota Supreme Court stated: "This statutory element carries forward the common law requirement of competitive advantage. . . . This does not mean . . . that the owner of the trade secret must be the only one in the market. . . . If an outsider would obtain a valuable share of the market by gaining certain information, then that information may be a trade secret if [**47]  it is not known or readily ascertainable." Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 900 (Minn. 1983) (emphasis added). We think it probable that the California courts will follow the Minnesota Supreme Court's view because of the wording of the California criminal law equivalent of Civ. Code §  3426.1(d). Cal. Penal Code §  499c(a)(9) (West Supp. 1986) states:  [*1091]  "'Trade secret' means . . . information . . . which is secret and which is not generally available to the public, and which gives one who uses it an advantage over competitors who do not know of or use the trade secret." (Emphasis added) See People v. Serrata, 62 Cal. App. 3d 9, 22, 133 Cal. Rptr. 144, 152 (1976) ("The phrase 'advantage over competitors' [in Cal. Pen. Code §  499c] refers to any form of commercial advantage." (emphasis added)). 
In its supplementary findings of fact, the district court noted that the new church offers its services to its adherents at a price "substantially less than that charged by the Church." However, the Church alleged [**48]  no competitive market advantage from maintaining the secrecy of its higher level materials. Indeed, to do so would raise grave doubts about its claim as a religion and a not-for-profit corporation. Rather, the Church alleges that its precepts require adherents to be audited in a structured manner with exposure to higher level materials only when the auditor considers the adherent ready. The injury inflicted on the Church by the new church's misappropriation of its "secret" is the "religious harm" that would be suffered by Church adherents from premature unsupervised exposure to the materials. The value of the confidential materials is thus spiritual not commercial, and the materials cannot be said to have the "independent economic value" necessary to qualify as a protectible trade secret. n17 

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n17 The Church relies heavily on language in Purcell v. Summers, 145 F.2d 979, 985 (4th Cir. 1944) which states that unfair competition law applies fully to religious and not-for-profit organizations. That case involved an injunction under South Carolina law for the improper use of a church's name by a splinter church. The Methodist Episcopal Church South had merged with two other churches to form the United Methodist Church. Dissident members who opposed the merger formed their own church using the former name. The Fourth Circuit held that the property and charitable gifts of the merged church would be threatened by the use of its former name by a different church. 
Purcell does not involve trade secrets. Rather, it is an example of "the common law of trademark infringement and unfair competition [which] is replete with cases holding that benevolent, religious, charitable or fraternal organizations are entitled to injunctive relief protecting against the continued use of their name by local chapters which disaffiliate." United States Jaycees v. San Francisco Junior Chamber of Commerce, 354 F. Supp. 61, 71 (N.D. Cal. 1972) (citing numerous cases), aff'd 513 F.2d 1226 (9th Cir. 1975) (per curiam). 

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III.  Conclusion 
The Church was not entitled to an injunction either under civil RICO or under California trade secrets law. We therefore dissolve the injunction forthwith. 
REVERSED.  

74 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff-Appellant, v. MICHAEL J. FLYNN, Defendant-Appellee 

No. 83-6494 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

744 F.2d 694; 1984 U.S. App. LEXIS 18012 

September 7, 1984, Argued and Submitted 

October 3, 1984, Decided 

PRIOR HISTORY:
 [**1]  

Appeal from the United States District Court for the Central District of California. 
Honorable Manuel L. Real, Presiding.  

DISPOSITION:
Reversed and Remanded.  

COUNSEL:
Jonathan Lubell, Esq., c/o Taylor, Roth & Hunt, Los Angeles, California, for Appellant/Petitioner. 
Stephen M. Lans, Esq., Lewis, D'Amato, Brisbois & Biscaard, Los Angeles, California, for Appellee/Respondent.  

JUDGES:
Tuttle, * Senior Circuit Judge, Norris, and Beezer, Circuit Judges. 
* Hon. Elbert Parr Tuttle, Senior Judge, United States Court of Appeals for the Eleventh Circuit, sitting by designation. 

OPINIONBY:
BEEZER 

OPINION:

 [*695]  BEEZER, Circuit Judge: 
This is an action for defamation brought by the Church of Scientology of California ("CSC") against Michael J. Flynn.  The district court dismissed the suit with prejudice for failure to state a claim upon which relief can be granted.  We reverse. 
I 
FACTS AND PROCEEDINGS BELOW 
Flynn is a Massachusetts attorney who frequently represents former Scientologists against CSC.  On June 25, 1983, Flynn allegedly made the following remarks to an audience of eighty persons in Los Angeles: 

Among the things that occurred to me in the four years that [**2]  I have been litigating with an enormous organization that has a few people that control huge amounts of money, to hire armies of lawyers to try to destroy me and my clients and whether you know it or not yet, people like yourself, is what the whole war and game and battle is about. 
In October 1979, shortly after I rejected an offer from the Church of Scientology that is to say whoever that is to get a refund for a client which I'm going to explain to you a little bit about, I was flying up to South Bend, Indiana and my airplane engine quit after an hour and a half in the flight, and for those of you who are pilots, you know that any degree of condensation you pick up on a pre flight examination from your fuel tanks. Well I was an hour and a half into the flight and we lost power entirely and we made an emergency landing and my eleven year old son was in the plane, another lawyer and a college classmate of mine, a Vietnam Veteran, and we drained off quarts of water from my fuel tanks. And as I indicated, it was shortly after I rejected an offer that I'm going to talk to you people about. 
. . . 
And that's when their lawyer showed up and offered me a check for her money plus a little [**3]  bit. And I told the lawyer what he could do with his check and that took place shortly before the plane incident.  Now for a number of years, I dismissed the plane incident as being simply too preposterous to believe that this organization could do it.

CSC brought this action in federal district court, claiming over $10,000 in damages.  Flynn filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6).  The district court granted the motion with prejudice. 
II 
DISCUSSION 
A.  The Standard of Review 
A dismissal under Fed. R. Civ. P. 12(b)(6) is "freely reviewable as a question of law." Compton v. Ide, 732 F.2d 1429, 1429 (9th Cir. 1984). n1 The conditions that must be  [*696]  met before a motion may be granted under Fed. R. Civ. P. 12(b)(6) are quite strict.  "[A] complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); see Rae v. Union Bank, 725 F.2d 478, 479 (9th Cir. 1984). In applying this [**4]  standard, we must treat all of the plaintiff's allegations as true.  See Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 740, 48 L. Ed. 2d 338, 96 S. Ct. 1848 (1976); Experimental Engineering, Inc. v. United Technologies Corp., 614 F.2d 1244, 1245 (9th Cir. 1980). 

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n1 Flynn argues that the court should accord great deference to the district court's opinion because it is an interpretation of the law of the state in which the district court sits.  This circuit, however, has abandoned the deferential standard.  In re Complaint of McLinn, 739 F.2d 1395, 1397 (9th Cir. 1984) (en banc) ("Today we adopt as the law of the circuit the rule that questions of state law are reviewable under the same independent de novo standard as are questions of federal law."). 

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We emphasize the procedural setting of this case.  We are called upon to decide whether CSC's complaint was sufficient to survive a motion to dismiss, not whether Flynn is liable to CSC for [**5]  defamation. 
B.  The Existence of Defamatory Meaning 
Flynn contends that the district court's decision should be upheld because his statements lacked defamatory meaning. The existence of a defamatory meaning is generally a question of fact for the jury.  See Maidman v. Jewish Publications, Inc., 54 Cal. 2d 643, 355 P.2d 265, 269, 7 Cal. Rptr. 617, 621 (1960); Gallagher v. Chavalas, 48 Cal. App. 2d 52, 58, 119 P.2d 408 (1941). This case, however, involves a dismissal on the pleadings. The California Supreme Court recently stated the standard for reviewing a dismissal as follows: n2 

In determining the propriety of the trial court's [dismissal], this court's inquiry is not to determine if the communications may have an innocent meaning but rather to determine if the communication reasonably carries with it a defamatory meaning. . . .  Just as the court must refrain from a "hair-splitting analysis" of what is said in an article to find an innocent meaning, so must it refrain from scrutinizing what is not said to find "a defamatory meaning which the article does not convey to a lay reader."

 Forsher v. Bugliosi, 26 Cal. 3d 792, 803, 608 P.2d 716, 722, 163 Cal. Rptr. 628, 634 (1980) [**6]  (quoting Mullins v. Thieriot, 19 Cal. App. 3d 302, 304, 97 Cal. Rptr. 27, 28 (1971)). Thus, the district court's decision cannot be upheld on this ground if "by reasonable implication a defamatory meaning may be found in the communication." Id. 26 Cal. 3d at 806, 608 P.2d at 723, 163 Cal. Rptr. at 635. 

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n2 Federal law, rather than state law, sets the standard for dismissal under Fed. R. Civ. P. 12(b)(6).  See 5 C. Wright & A. Miller, Federal Practice and Procedure §  1357, at 174 (Supp. 1984).  Since the issue before us is whether the complaint states a cause of action under California law, however, the standard for dismissal in state court is highly relevant. 

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Although Flynn did not specifically accuse CSC of attempting to cause his death, it would be reasonable to imply a defamatory meaning from his remarks. It is well settled that the "arrangement and phrasing of apparently nonlibelous statements" cannot hide the existence of a defamatory meaning. Kapellas v. Kofman, 1 Cal. 3d 20, 33, 459 P.2d 912, 919-20, 81 Cal. Rptr. 360, 367-68 (1969). [**7]  Indeed, the meaning of a statement is often dependent upon its context.  See Mullins v. Brando, 13 Cal. App. 3d 409, 414-15, 91 Cal. Rptr. 796, 798-99 (1970), cert. denied, 403 U.S. 923, 29 L. Ed. 2d 701, 91 S. Ct. 2231 (1971). It would be entirely reasonable for a jury to conclude that Flynn was accusing CSC of attempting to cause his death, rather than merely describing something that had happened to him.  See id.; see also Okun v. Superior Court, 29 Cal. 3d 442, 450, 629 P.2d 1369, 1373, 175 Cal. Rptr. 157, 161 ("[A] writing's susceptibility to innocent meaning does not in itself preclude a finding that an ordinary reader would understand it in a libelous sense."), cert. denied, 454 U.S. 1099, 70 L. Ed. 2d 641, 102 S. Ct. 673 (1981). We conclude that  [*697]  CSC's complaint sufficiently alleges the existence of defamatory meaning. n3 

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n3 Flynn asserts that the remarks contain cautionary words and qualifying phrases that negate any conceivable defamatory meaning. See Forsher, 26 Cal. 3d at 804-05, 608 P.2d at 722-23, 163 Cal. Rptr. at 634-35. In fact, the remarks contain only one such statement: "Now for a number of years, I dismissed the plane incident as being simply too preposterous to believe that this organization could do it." That statement is hardly cautionary; it could be read to mean that Flynn no longer thought the accusation was "too preposterous to believe." 

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C.  Identification of the Plaintiff 
Flynn contends that his statements were not defamatory because they did not adequately identify CSC.  Flynn argues that the statements referred to Scientology as a whole and are therefore subject to the group libel rule. n4 The group libel rule generally bars defamation actions to which it applies.  See Barger v. Playboy Enterprises, Inc., 564 F. Supp. 1151, 1153 (N.D. Cal. 1983) (applying California law); Restatement (Second) of Torts §  564A(a) (1977).  Because "Scientology" refers to over 300 churches, Flynn argues that CSC lacks standing to sue for defamation. 

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n4 California recognizes the group libel rule.  See Smith v. Harnish, 167 Cal. App. 2d 115, 333 P.2d 815, 817 (1959); Noral v. Hearst Publications, Inc., 40 Cal. App. 2d 348, 104 P.2d 860, 862 (1940). See generally Comment, Group Defamation and Individual Actions: A New Look at an Old Rule, 71 Calif. L. Rev. 1532, 1533-36 (1983). 

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We find, however, that the group libel rule does not apply in this case.  The group libel rule applies when a group member brings a defamation suit based on statements made regarding the group.  In contrast, CSC has alleged that Flynn's remarks were reasonably understood to refer specifically to CSC, rather than to Scientology as a whole.  Flynn's remarks support this theory.  Flynn referred to "an enormous organization," "the Church of Scientology," and "this organization." A jury could reasonably find that Flynn was referring to a specific actor, rather than to Scientology as a whole.  If that is the case, the group libel rule would not preclude a finding that Flynn's statements were "of and concerning" CSC. n5 

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n5 CSC's claim would also fall within a well-established exception to the group libel rule that allows a group member to sue upon a showing that "the circumstances of a publication reasonably give rise to the conclusion that there is particular reference to the member." Restatement (Second) of Torts §  564A(b) (1977).  This approach is not analytically different from our conclusion that the group libel rule does not apply.  See Comment, supra, at 1536 (noting that this principle is not really an exception to the group libel rule, but rather "is merely a recognition that one who is individually defamed can sue even if the defamation is disguised as a group slur"). 

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But even though the group libel rule does not apply, CSC still must establish that the remarks were "of and concerning" CSC.  Under California law, "there is no requirement that the person defamed be mentioned by name. . . .  It is sufficient if from the evidence the jury can infer that the defamatory statement applies to the plaintiff . . . [or] if the publication points to the plaintiff by description or circumstance tending to identify him." DiGiorgio Fruit Corp. v. AFL-CIO, 215 Cal. App. 2d 560, 30 Cal. Rptr. 350, 355 (1963); see also Bindrim v. Mitchell, 92 Cal. App. 3d 61, 75-76, 155 Cal. Rptr. 29, 37-38 (upholding a jury finding that the depiction of a fictitious character in a novel defamed the plaintiff even though the description of the character differed from the plaintiff in several respects), cert. denied, 444 U.S. 984, 62 L. Ed. 2d 412, 100 S. Ct. 490 (1979). 
CSC has pleaded several facts that would establish this element.  First, CSC pleaded that Flynn's remarks were "understood by the listening public to be of and concerning Plaintiff." Second, Flynn allegedly referred to the organization "that I have been [**11]  litigating with." By Flynn's admission, that was CSC.  Third, CSC pleaded that Flynn's remarks were made in Los Angeles, which is CSC's principal place of business.  Fourth, CSC pleaded that Flynn intended to refer to CSC. n6 Finally, CSC  [*698]  pleaded that the members of the audience requested over $10,000 in refunds and repayments from CSC.  We conclude that CSC's pleadings are sufficient to survive a motion to dismiss on this element. 

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n6 CSC claims that it can prove this by producing affidavits by Flynn from unrelated litigation.  If CSC proves that Flynn intended to refer to CSC and that his audience actually understood him to refer to CSC, no further proof is required to establish this element.  Restatement (Second) of Torts §  564 comment a (1977). 

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D.  Statement of Opinion 
Because of first amendment concerns, see Gertz v. Robert Welch, Inc., 418 U.S. 323, 339, 41 L. Ed. 2d 789, 94 S. Ct. 2997 (1974), defamation actions may not be based on statements of opinion. [**12]  Lewis v. Time Inc., 710 F.2d 549, 553 (9th Cir. 1983); Underwood v. CBS, Inc., 150 Cal. App. 3d 460, 198 Cal. Rptr. 48, 51 (1984). Flynn contends that his remarks constitute opinion as a matter of law. See Lewis, 710 F.2d at 553; cf.  Good Government Group, Inc. v. Superior Court, 22 Cal. 3d 672, 682, 586 P.2d 572, 576, 150 Cal. Rptr. 258, 262 (1978) (holding that the opinion issue raises a jury question under certain circumstances), cert. denied, 441 U.S. 961, 60 L. Ed. 2d 1066, 99 S. Ct. 2406 (1979). 
It is not always easy to distinguish between fact and opinion. n7 In deciding whether a particular statement is an opinion, 

it is important to keep three factors in mind.  First, it is established that words are not defamatory unless they are understood in a defamatory sense. . . .  A second factor . . . is that even apparent statements of fact may assume the character of statements of opinion, and thus be privileged, when made in public debate, heated labor dispute, or other circumstances. . . .  The final consideration in the fact/opinion analysis is the language of the allegedly defamatory [**13]  statement.

 Information Control Corp. v. Genesis One Computer Corp., 611 F.2d 781, 783-84 (9th Cir. 1980) (applying California law).  With regard to the first factor, CSC has pleaded that the remarks were understood in a defamatory sense.  With regard to the second factor, the circumstances surrounding the statement are not revealed by the record.  Thus, the first two factors do not support Flynn's position. 

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n7 See generally Note, Fact and Opinion After Gertz v. Robert Welch, Inc.: The Evolution of a Privilege, 34 Rutgers L. Rev. 81 (1981) (discussing the alternative methods of distinguishing facts from opinions after Gertz). 

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Flynn focuses on the third factor, arguing that the language of his remarks expresses an opinion.  If Flynn's remarks had been "'cautiously phrased in terms of apparency,'" this factor would favor finding an opinion.  Information Control, 611 F.2d at 784 (quoting Gregory v. McDonnell Douglas Corp., 17 Cal. 3d 596, 603, 552 P.2d 425, 429, 131 Cal. Rptr. 641, 645 (1976)). [**14]  Despite Flynn's assertions, however, his remarks were not phrased as opinions.  If CSC's allegations are correct, Flynn directly accused CSC of attempting to kill him.  This was neither a "broad, unfocused, wholly subjective comment," Lewis, 710 F.2d at 554, nor a statement accompanied by express statements of opinion, see Information Control, 611 F.2d at 784, but rather was a statement of facts that could reasonably be construed as charging CSC with attempted murder, see Fisher v. Larsen, 138 Cal. App. 3d 627, 638, 188 Cal. Rptr. 216, 224-25 (1982). We conclude that the district court's decision cannot be upheld on this ground. 
III 
CONCLUSION 
Flynn has failed to establish that CSC's complaint is insufficient as a matter of law. Accordingly, the decision of the district court is REVERSED and REMANDED.  

75 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a non-profit corporation, Plaintiff-Appellant, v. UNITED STATES POSTAL SERVICE, Benjamin Bailer, Postmaster General, Postal Inspector Service, William J. Cotter, Chief Inspector, Defendant-Appellees 

No. 81-5582 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

700 F.2d 486; 1983 U.S. App. LEXIS 30778 

July 6, 1982, Argued and Submitted 

February 4, 1983, Decided 

SUBSEQUENT HISTORY:
 [**1]  
As Amended on Denial of Rehearing March 31, 1983.  

PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California.  

JUDGES:
Alarcon, Poole, and Boochever, Circuit Judges.  Poole, Circuit Judge, concurring in part.  

OPINIONBY:
ALARCON 

OPINION:

 [*487]  ALARCON, Circuit Judge:
Appellant Church of Scientology of California (hereinafter the Church) appeals from the order of the district court denying attorney's fees to appellant's counsel in an action pursuant to the Freedom of Information Act (FOIA), 5 U.S.C. §  552(a)(4)(E).
Pursuant to the FOIA, attorney's fees may be assessed against the United States in any case in which a complainant has substantially prevailed. The record before us demonstrates that, in denying the Church's request for attorney's fees, the district court failed to resolve the factual dispute concerning the Church's eligibility for attorney's fees.  Consequently, we reverse and remand.

I. FACTS
On March 3, 1975, the Church, pursuant to the Freedom of Information Act, (FOIA), 5 U.S.C. §  552, requested all records and information maintained by the United States Postal Service (USPS) which related  [*488]  to the activities and operations [**2]  of the Church and its founder.
The September, 1975, affidavit of W. Cotter, Chief Postal Inspector, filed on November 17, 1975, with USPS' first motion for summary judgment, discloses that in response to this request the USPS conducted a search for the requested information. The USPS made an initial determination to disclose 391 documents to the Church.  Sometime after June 2, 1975, the USPS concluded that an additional 385 documents would be made available to the Church. n1 USPS denied the Church's request as to the remainder of the documents.

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n1 The government affidavit of W. Cotter indicates, in paragraph 12, that a further review of the files transpired, subsequent to the June 2, 1975 visit of K. Moxen, the Washington representative of the attorney for the Church.  The affidavit does not specifically state on what date an additional 385 documents were identified and made available for inspection by the Church.  Furthermore, the record is unclear as to whether the Church has inspected the documents in question.

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On June 13, 1975, the Church instituted this action to compel disclosure of the remaining documents.  USPS claimed that certain documents were exempt from disclosure. On November 17, 1975, USPS filed a motion for summary judgment. The Church filed a cross-motion for summary judgment on November 26, 1975.  On December 10, 1975, USPS submitted certain documents to the district court for an in camera inspection.  After examining these documents, the district court concluded that they were exempt from disclosure. The court, on December 19, 1975, granted USPS' motion for summary judgment and dismissed the action with prejudice.  The court held that the investigatory files were exempt from disclosure by FOIA, 5 U.S.C. §  552(b)(3), which incorporates the postal exemption, 39 U.S.C. §  410(c)(6).
This ruling was appealed on February 13, 1976.  We reversed and directed the district court to reconsider whether, inter alia, section 410(c)(6) qualified as an exempting statute in light of the amendment to exemption (b)(3).  This exemption had been amended subsequent to the district court's order of December 19, 1975.  If the court so found, then it was to decide whether USPS had complied [**4]  with its own regulation, 39 C.F.R. §  265.6(c).  In the event the district court found that 39 U.S.C. §  410(c)(6) did not qualify as an exempting statute, the district court was to consider whether the documents were properly withheld under FOIA exemptions 5 and 7.  Church of Scientology of California v. United States Postal Service, 593 F.2d 902, 904-05 (9th Cir.1979).
On June 28, 1979, the parties simultaneously filed motions for summary judgment in the district court addressing the issues raised in the remand order.  The district court granted USPS' motion for summary judgment on August 9, 1979, finding as follows: (1) section 410(c)(6) constitutes an exempting statute pursuant to amended FOIA exemption 3; (2) the information was properly withheld from disclosure as material "compiled for law enforcement purposes;" and (3) USPS' regulations are permissive and, therefore, do not require disclosure.
On appeal from this order, we reversed finding that 39 U.S.C. §  410(c)(6) did not qualify as an exempting statute under (b)(3) and, thus, the documents withheld by USPS were not protected from disclosure by this exemption. Church of Scientology of California v. United States  [**5]   Postal Service, 633 F.2d 1327, 1333 (9th Cir.1980). We directed the district court to consider whether the requested information was exempt from disclosure pursuant to FOIA exemptions 5 and 7.
On March 16, 1981, USPS renewed its motion for summary judgment and submitted the March 13, 1981, affidavit of K. Fletcher, Chief Postal Inspector of USPS.  Fletcher asserted that 615 pages of new material, which had been previously withheld pursuant to FOIA exemption (b)(7)(A), had been released in whole or part, or had been made available to the Church for inspection.  [*489]  n2 Fletcher also stated that the reasons for release, which included the passage of time and the closing of investigations, obviated the need to protect the material from disclosure. According to Fletcher, several pages of the documents remained exempt from disclosure pursuant to FOIA (b)(7)(C), (b)(7)(D), (b)(7)(E), and (b)(5).

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n2 The Fletcher affidavit does not specify the date that these 615 pages were made available to the Church.

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On [**6]  April 6, 1981, the district court granted USPS' motion for summary judgment. The Church's complaint was dismissed with prejudice.  In its findings of fact and conclusions of law, entered April 7, 1981, the district court found that the material not disclosed to the Church was properly withheld pursuant to exemptions 5, 7(C), (D) and (E) of FOIA.  The Church did not appeal from this judgment.
The Church subsequently requested attorney's fees; the district court denied this request.  The district court did not issue findings of fact and conclusions of law regarding the issue of whether the Church had substantially prevailed on its FOIA claim.  The court's order simply denied the Church's claim for attorney's fees without explanation.  The Church appeals only from this order.

II. ANALYSIS

A. Substantially Prevailing Party
1. Necessity for Remand
The Freedom of Information Act provides: "The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed." (emphasis added).  5 U.S.C. §  552(a)(4)(E).
If the facts show that the plaintiff [**7]  has substantially prevailed on his or her FOIA action, then such party is eligible for an award of attorney's fees.  Cox v. United States Department of Justice, 195 U.S. App. D.C. 189, 601 F.2d 1, 6 (D.C.Cir.1979). A determination of eligibility does not automatically entitle the plaintiff to attorney's fees.  Id. Entitlement to attorney's fees is left to the discretion of the district court.  Exner v. Federal Bureau of Investigation, 612 F.2d 1202, 1207 (9th Cir.1980) (citing Cox v. United States Department of Justice, 195 U.S. App. D.C. 189, 601 F.2d 1 (D.C.Cir.1979)).
We will first discuss the concept of the substantially prevailing party -- that is, eligibility for attorney's fees.  We will then address the principles applicable to entitlement to such fees.
To be eligible for an award of attorney's fees in a FOIA suit, the plaintiff must present convincing evidence that two threshold conditions have been satisfied.  The plaintiff must show that: (1) the filing of the action could reasonably have been regarded as necessary to obtain the information; and (2) the filing of the action had a substantial causative effect on the delivery of the information.   [**8]  Exner v. Federal Bureau of Investigation, 443 F. Supp. 1349, 1353 (S.D.Cal.1978), aff'd, 612 F.2d 1202 (9th Cir.1980). Whether a party has shown, in a particular case, that the suit was reasonably necessary and that a causal nexus exists between the action and surrender of information -- that is, whether the party has substantially prevailed -- is a factual determination for the district court to resolve.  Cox, 601 F.2d at 6.
This factual issue remains undetermined in the case at bar.  The Church maintains that the record confirms the necessity of this action.  Further, it contends that vigorous litigation, evidenced by two successful appeals was a sine qua non to release of the documents.  Therefore, the Church posits, there has been no indication that these documents would have been released without this litigation.
USPS argues that the Church has not obtained any documents other than those voluntarily released by the agency. In addition, USPS notes that the court ruled against the Church on every disputed exemption and its complaint was dismissed  [*490]  with prejudice.  USPS maintains that the reasons for release of the documents were provided to the Church [**9]  in the affidavit of K. Fletcher, dated March 13, 1981.
The parties also dispute the timing of the release of 385 documents.  The Church claims that these were released after the suit was filed on June 13, 1975, while USPS claims that the documents were released sometime after June 2, 1975.  The government's affidavits do not specifically indicate on what date the documents were made available to the Church.  In addition, the parties are in disagreement over the reasons for release of 615 documents.  The Church contends that these were released in March, 1981 because of the filing of this suit.  USPS argues that the affidavit of K. Fletcher, Chief Postal Inspector, dated March 13, 1981, demonstrates that these documents were released to the Church as a result of USPS' post-remand review completed in March, 1981.  The district court made no finding of fact on these issues which are critical to determining whether the Church was the prevailing party.
Given these factual disputes and the record's uncertainty, the action must be remanded for further proceedings because "on the record before us, we have no indication of . . . . whether [the plaintiff] indeed substantially prevailed in [**10]  [its] action." Cox, 601 F.2d at 7. n3 This court does not have the jurisdictional competence to resolve factual disputes; our function as a court of review does not encompass the assessment of credibility and the weighing of evidence.  Such matters are properly committed to the district court.

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n3 Citing Cox, this court in Exner, affirmed the district court's determination that the plaintiff had substantially prevailed on her FOIA claim.  The district court had made "specific findings that withstood review under Fed.R.Civ.P. 52, to the effect that [plaintiff] 'substantially prevailed' under her FOIA claim." Exner, 612 F.2d at 1207. The record in Exner supported both the findings and the court's conclusions. Id.
Here, unlike Exner, the district court failed to apply the appropriate standard to determine whether or not the Church had substantially prevailed. In the analogous situation in civil rights cases, this court has remanded the action to the district court to apply the appropriate standard.  See, e.g., Bartholomew v. Watson, 665 F.2d 910, 915 (9th Cir.1982).

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On remand, the district court must resolve the factual issues raised by the parties to determine whether the Church substantially prevailed on its claim.  Cox, 601 F.2d at 7. Our decision to remand is consistent with this Circuit's approach to reviewing uncertain records in civil rights cases involving awards of attorney's fees. n4 See, e.g., Bartholomew v. Watson, 665 F.2d 910, 915 (9th Cir.1982) (this court remanded the action because it was not clear from the record what standard the district court had applied in determining a reasonable amount of attorney's fees).

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n4 The Civil Rights Attorney's Fees Awards Act, 42 U.S.C. §  1988 provides: "the court, in its discretion, may allow the prevailing party . . . . a reasonable attorney's fee as part of the costs."

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2. Factors to Determine Eligibility: Necessity of Action and Substantial Causative Effect
On remand, in determining whether the Church is eligible for attorney's fees -- that is, whether it has substantially prevailed -- the district court should [**12]  determine: (1) whether the Church's suit was reasonably necessary to obtain the information; and (2) whether the suit had a substantial causative effect on the release of the documents in question.  Exner, 443 F. Supp. at 1353, aff'd, 612 F.2d 1202 (9th Cir.1980). See also Ginter v. IRS, 648 F.2d 469, 471-73 (8th Cir.1981). The following discussion of Exner, Ginter, and Cox illustrates the application of these principles.
In Exner, the plaintiff filed an action pursuant to the FOIA to compel immediate disclosure of records in the possession of the FBI.  The plaintiff eventually received 86 documents out of a total of 92.  The district court found that plaintiff had fulfilled both of the above requirements, and that she had substantially prevailed on her claim.
 The suit was necessary, in the district court's view, because the plaintiff had a compelling need to bring the lawsuit. Id.  [*491]  at 1353.  During plaintiff's testimony, before a United States Senate select committee on intelligence activities, in 1975, she became aware that the FBI had conducted investigations and had been maintaining files relating to her since 1960.  It was [**13]  plaintiff's belief that the official report published by the Senate Committee contained inaccurate information pertaining to her, and that the committee had leaked to the press inaccurate information from the FBI files.  She believed that the leaked information, which concerned her alleged relationships with organized crime figures, exposed her to serious danger.  The district court found that these concerns were valid and that it was necessary for plaintiff to have the opportunity to review the information in the FBI files as soon as possible.
The district court also determined that the lawsuit had a substantial causative effect on the delivery of the information because it had "no doubt" that the action "was directly responsible for delivery of the documents . . . ." Id. The court noted that when information is delivered may be as important as what information is delivered.  The purpose of this suit was the immediate production of documents and plaintiff accomplished this goal.  Id.
The court found further support for the second requirement in that plaintiff faced formidable opposition by the government at every juncture.  It was unlikely, in the district [**14]  court's view, that the action would have produced such favorable results, without the "dogged determination" of plaintiff.  Id. Another factor militating for the plaintiff was that she had convinced the district court and the Ninth Circuit to require the FBI to give priority to a portion of her request.
The Eighth Circuit, in Ginter, 648 F.2d at 471, has also been called upon to interpret the meaning of "substantially prevailed." In Ginter, the plaintiff filed an FOIA action to recover information from the Internal Revenue Service.  Plaintiff subsequently requested attorney's fees and the court denied the request.
The court concluded that plaintiff's suit was not reasonably necessary, since, at the time plaintiff filed the action, the IRS had been unable to locate the requested information and was in the process of conducting a special search for the material.  Further, the IRS never informed the plaintiff that it would not produce the requested material.  Under these circumstances, the court reasoned plaintiff's suit was premature.
The court additionally determined that plaintiff's lawsuit did not have a substantial causative effect on the production of the [**15]  requested materials.  Plaintiff had only demonstrated that part of the requested information was received after the filing of the suit.  The court further noted that the delay in production of information was due, in part, to plaintiff's vague and broadly drawn request, and to the government's attendant inability to locate the materials.
As noted previously, the court in Cox stated that whether a party has shown that the lawsuit was reasonably necessary and that it had a substantial causative effect on the release of documents is a factual determination that is within the province of the district court to resolve.  601 F.2d at 6. In making this determination, it is appropriate for the district court to consider, among other things, "whether the agency, upon actual and reasonable notice of the request, made a good-faith effort to search out material and to pass on whether it should be disclosed." Id. If either lack of actual notice of a request or an unavoidable delay accompanied by due diligence in the administrative processes, rather than the threat of an adverse court order, was the actual reason for the agency's failure to respond to a request, "then it cannot be [**16]  said that the complainant substantially prevailed." Id. Thus, the court instructed the district court to determine, on remand, the cause of delay.
The Cox court also cautioned that the mere fact that the information sought was not released until after the lawsuit was instituted is insufficient to establish that a complainant has "substantially prevailed."  [*492]  Cox, 601 F.2d at 6. It is equally true that the mere fact that defendants have voluntarily released documents does not preclude an award of attorney's fees to the plaintiff. See Cuneo v. Rumsfeld, 180 U.S. App. D.C. 184, 553 F.2d 1360, 1365 (D.C.Cir.1977); see also Kaye v. Burns, 411 F. Supp. 897, 902 (S.D.N.Y.1976). We note that this view is consistent with the law of our Circuit in cases involving claims for attorney's fees pursuant to the Civil Rights Attorney's Fees Act, 42 U.S.C. §  1988. This court has found in such cases that voluntary compliance by the defendants does not preclude plaintiffs from receiving an award of attorney fees.  Williams v. Alioto, 625 F.2d 845, 847-48 (9th Cir.1980), cert. denied, 450 U.S. 1012, 101 S. Ct. 1723, 68 L. Ed. 2d 213 (1981).
In sum, the district [**17]  court should consider the following factors in determining whether the Church has substantially prevailed: (1) when the documents were released; and (2) what actually triggered the documents' release to the Church; and (3) whether the Church was entitled to the documents at an earlier time in view of the fact that the exemption of 39 U.S.C. §  410(c)(6) was eliminated. n5 

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n5 If the Church was entitled to a substantial number of the 615 pages of documents that were subsequently released, regardless of the Postal Service's eventual decision that the documents were not required for its investigations due to the passage of time, the Church must be considered as having prevailed.

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B. Entitlement to Attorney's Fees
If the district court determines that the Church has substantially prevailed and is thus eligible for attorney's fees, the district court may, in the exercise of its discretion, determine that the Church is entitled to an award of attorney's fees.  The decision to award attorney's fees is left [**18]  to the sound discretion of the trial court.  Exner v. Federal Bureau of Investigation, 612 F.2d 1202, 1207 (9th Cir.1980); Nationwide Building Maintenance, Inc. v. Sampson, 182 U.S. App. D.C. 83, 559 F.2d 704, 716 (D.C.Cir.1977).
In the exercise of this discretion, the court may take into account "whatever factors it deems relevant in determining whether an award of attorney's fees is appropriate." Exner, 443 F. Supp. at 1352, aff'd, 612 F.2d 1202 (9th Cir.1980). Other courts faced with this issue have considered the following four criteria in determining whether attorney's fees and litigation cost should be allowed: (1) the benefit to the public, if any, deriving from the case; (2) the commercial benefit to the complainant; (3) the nature of the complainant's interest in the records sought; and (4) whether the government's withholding of the records sought had a reasonable basis in law.  See, e.g., Lovell v. Alderete, 630 F.2d 428, 431-34 (5th Cir.1980); Cox, 601 F.2d at 7 (D.C.Cir.1979); Exner, 443 F. Supp. at 1352, aff'd, 612 F.2d 1202 (9th Cir.1980).
The legislative history of the FOIA makes it clear that Congress did not intend an award of attorney's [**19]  fees to be automatic; rather, the trial court "must weigh the facts of each case against the criteria of the existing body of law on the award of attorney fees and then exercise its discretion in determining whether an award is appropriate." Cuneo, 553 F.2d at 1367. See also Blue v. Bureau of Prisons, 570 F.2d 529, 534 (5th Cir.1978) (all four criteria are to be weighed as guides to the court's discretion in FOIA attorney's fees awards); Nationwide, 559 F.2d at 714 (courts must be careful not to give any particular criterion dispositive weight).
These four factors are not exhaustive.  Cox, 601 F.2d at 7, cited with approval in Exner, 612 F.2d at 1207. We agree with the D.C. Circuit's observation that the criteria listed in the Senate Judiciary Committee's Report on the Freedom of Information Act should be considered in conjunction with the existing body of law on the award of attorney's fees.  Cuneo, 553 F.2d at 1365 (citing H.R.Rep. No. 1380, 93rd Cong., 2d Sess. 10 (1974), reprinted in 1974 U.S.Code Cong. & Ad.News 6267). n6 

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n6 The Committee suggested that the courts should apply the criteria as follows:
Under the first criterion a court would ordinarily award fees, for example, where a newsman was seeking information to be used in a publication or a public interest group was seeking information to further a project benefitting the general public, but it would not award fees if a business was using the FOIA to obtain data relating to a competitor or as a substitute for discovery in private litigation with the government.
Under the second criterion a court would usually allow recovery of fees where the complainant was indigent or a nonprofit public interest group versus [sic] but would not if it was a large corporate interest (or a representative of such an interest).  For the purposes of applying this criterion, news interests should not be considered commercial interests.
Under the third criterion a court would generally award fees if the complainant's interest in the information sought was scholarly or journalistic or public-interest oriented, but would not do so if his interest was of a frivolous or purely commercial nature.
Finally, under the fourth criterion a court would not award fees where the government's withholding had a colorable basis in law but would ordinarily award them if the withholding appeared to be merely to avoid embarrassment or to frustrate the requester.

S.Rep. No. 93-854, 93rd Cong. 2nd Sess. 19 (1974) (comments of Mr. Kennedy from the Committee on the Judiciary). The conference committee report eliminated the specific listing of these factors.  "The Conference Report makes it clear . . . . that this deletion was made to avoid limiting the court to these four factors and was not intended to make the award of attorney fees automatic or to preclude the courts from considering those factors." Nationwide Building Maintenance, Inc. v. Sampson, 182 U.S. App. D.C. 83, 559 F.2d 704, 711 (D.C.Cir.1977).

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 [*493]  Other courts have applied these factors consistently with the analysis contained in the Senate Judiciary Committee's Report. The following cases illustrate this application.
1. Public Benefit
The public benefit factor was construed in Blue, 570 F.2d at 533-34, Cuneo, 553 F.2d at 1367, Goldstein v. Levi, 415 F. Supp. 303, 305 (D.D.C.1976), and Exner, 443 F. Supp. at 1353. The court in Blue stressed that in weighing the public benefit factor the district court should take into account the degree of dissemination and the likely public impact that might result from disclosure. The court also noted that an award of attorney's fees is not favored when it merely subsidizes a matter of private concern.  The action was remanded because the district court considered only the public benefit factor in denying an award of attorney's fees.
In Goldstein, a producer for a public television station sought to procure FBI files concerning statements made by Ruth and David Greenglass during the investigations of the Rosenberg case.  The district court held that the producer had substantially prevailed and was entitled to attorney's fees because the action benefitted [**21]  the public and was not for his "personal commercial benefit." 415 F. Supp. at 305.
During oral argument the government, relying on Goldstein, contended that there cannot be a public benefit unless the requested information is of interest to the public in general.  We disagree.
A public benefit may result even though the specific document sought is for plaintiff's sole use.  Although the documents procured by plaintiff, in Exner, were for plaintiff's own use, the district court opined that plaintiff, in compelling immediate production of the documents, "established the principle that there are some exceptional cases where the government must specifically process requests for information on a priority basis.  In effect, plaintiff acted as a private attorney general in vindicating an important public policy." 443 F. Supp. at 1353.
We note that in the instant matter, plaintiff has obtained a favorable ruling from the Ninth Circuit that 39 U.S.C. §  410(c)(6) does not qualify as an exempting statute under (b)(3).  While obtaining a favorable legal ruling, standing alone, does not establish the public benefit criterion, the district court may take into consideration the fact [**22]  that the plaintiff has so prevailed when determining entitlement to attorney's fees.  A ruling which establishes that the government may not withhold certain information pursuant to a particular FOIA exemption, in our view, benefits the public.  See Exner, 443 F. Supp. at 1353.
 [*494]  2. Commercial Interest Benefit
In Cuneo the court also discussed the second criterion, commercial interest. There, the attorney seeking a request on behalf of his clients for their business purposes was, in the court's view, suggestive of a private incentive, because he had been litigating this action for many years with full knowledge that the FOIA, at this time, made no provision for attorney's fees. The court reasoned that if the potential for private commercial benefit was sufficient incentive to encourage plaintiff's pursuit of his claim, it would not be improper for the district court to deny his attorney's fees request.  On appeal, after remand, the D.C. Circuit affirmed the district court's denial of attorney's fees because there was little public benefit from the disclosure, enormous commercial benefit, and the government's original withholding of the manual had a reasonable [**23]  basis in law.  Fenster v. Brown, 199 U.S. App. D.C. 158, 617 F.2d 740, 743 (D.C.Cir.1979).
3. Nature of Complainant's Interest
The third factor, relating to the nature of complainant's interest in the records sought, has been construed together with the commercial benefit factor.  See, e.g., Fenster, 617 F.2d at 743-44. The application of this construction is illustrated in Werner-Continental, Inc. v. Farkas, 478 F. Supp. 815, 817 (S.D.Ohio 1979), aff'd, 661 F.2d 935 (6th Cir.1981). In Werner, the district court denied plaintiff's request for attorney's fees because plaintiff sought information for its private interest only and the public interest was not benefitted by release of the information.  The court reasoned that it was logical to read the two criteria together where a private plaintiff has pursued a private interest.  If either commercial benefit will inure to the plaintiff from the information or plaintiff intends to protect a private interest, the court stated, an award of attorney's fees is not recoverable.  On the other hand, where plaintiff is indigent or a nonprofit public interest group, an award of attorney's fees furthers the FOIA policy [**24]  of expanding access to government information.
The third factor also has been construed independently from the commercial benefit factor.  See Lovell, 630 F.2d at 432-34.
4. Reasonable Basis in Law
The Fifth Circuit discussed whether the government's withholding had a reasonable basis in law in Lovell v. Alderete, 630 F.2d at 434. The Lovell court concluded that the government's withholding had a reasonable basis in law because the documents requested by the plaintiff fell within an FOIA exemption. In Kaye, 411 F. Supp. at 904, the district court reached a similar conclusion although the requested letter was not exempt from disclosure pursuant to the FOIA.  The government nevertheless had a reasonable basis for withholding it since it contained matter in an examination report, and was a record "related to" an examination report which was exempt from disclosure.
We caution that we discuss these cases only to illustrate how the factors are to be applied; we do not intend to intimate any view concerning the merits of the Church's claim.  The district court must resolve this issue in the first instance.
III. CONCLUSION
The district court judge who has presided [**25]  over an FOIA action is in a far better position than this court to determine, in the first instance, whether a party has substantially prevailed. When a factual dispute exists as to whether a party has substantially prevailed, it is wise for the district court to conduct a hearing to resolve the conflict.  See Exner, 612 F.2d at 1207. See National Association of Concerned Veterans v. Secretary of Defense, 219 U.S. App. D.C. 94, 675 F.2d 1319, 1329-30 & n. 17 (D.C.Cir. 1982).
We share the view of the Second Circuit that "there is no doubt that, in a case such as this, when there are many vigorous disputes of fact over the elements that comprise the fee award, an evidentiary hearing, complete with cross examination is imperative." City of Detroit v. Grinnell Corp., 495 F.2d 448, 473 (2d Cir.1974) (Grinnell I); see also Lindy Bros. Builders, Inc. v. American  [*495]  Radiator & Standard Sanitary Corp., 487 F.2d 161, 169 (3rd Cir.1973) (Lindy I) ("where the facts to be weighed in light of the judge's expertise are disputed, an evidentiary hearing is required").
Further, after conducting a hearing to resolve relevant factual disputes, the district court should issue [**26]  findings of fact and conclusions of law for the guidance of the parties in determining whether an appeal will be meritorious or successful.  With such written findings and conclusion, this court in turn can make a meaningful review of the district court's action.
In view of the uncertainty and unresolved issue in this record, we are compelled to reverse and remand this matter to the district court with direction that a hearing be conducted consistent with the views expressed in this opinion as to the law governing this case in order to determine whether the Church has substantially prevailed. n7 If the district court finds in favor of the Church on this issue, it shall then determine whether the Church is entitled to an award of attorney's fees.  Following such evidentiary hearing, the district court is further required to issue written findings of fact and conclusions of law. n8 

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n7 We agree with Judge Poole's comment that it is inappropriate for an appellate court to remand a matter to the district court for findings of fact and conclusions of law in an appeal from an order granting a motion for summary judgment. A district court cannot grant summary judgment where material questions of fact are in dispute.
The matter before us, however, does not involve an appeal from the grant of a motion for summary judgment. Rather, this appeal is taken from an order denying the Church attorney's fees pursuant to the FOIA, 5 U.S.C. §  552(a)(4)(E).  A party may recover "reasonable attorney fees" and "other litigation costs reasonably incurred in any case . . . . in which the complainant has substantially prevailed." 5 U.S.C. §  522(a)(4)(E).  Whether a party has substantially prevailed is a factual determination for the district court to resolve.  Cox, 601 F.2d at 6; see also discussion supra, at 490-492.  A party seeking attorney's fees must show that: (1) the FOIA lawsuit was reasonably necessary to obtain the information; and (2) that the filing of the lawsuit had a substantial causative effect on the release of the documents.  Exner, 443 F. Supp. 1349, 1353 (S.D.Cal.1978), aff'd, 612 F.2d 1202 (9th Cir.1980). In the matter sub judice, certain documents were never released to the Church.  The district court held that these documents were properly exempt from disclosure. Hundreds of documents, however, were released "voluntarily" to the Church after this action was filed.
We have concluded that the district court must determine whether the filing of this matter was reasonably necessary and substantially caused the release of the documents.  The mere fact that the postal service maintains that the documents were voluntarily released does not preclude an award of attorney's fees.  See Cuneo v. Rumsfeld, 180 U.S. App. D.C. 184, 553 F.2d 1360, 1365 (D.C.Cir.1977); Kaye v. Burns, 411 F. Supp. 897, 902 (S.D.N.Y.1976); see also discussion supra, at 491, 492.  Similarly, an award of attorney's fees is not precluded by the fact that the district court granted the Postal Service's summary judgment motion after concluding that the postal service had properly withheld certain other documents pursuant to exemptions 5, 7(C), (D) and (E).  That ruling simply does not resolve the factual question as to whether the filing of this action was necessary to obtain the documents and substantially caused the Postal Service to release certain documents. [**27]  
n8 Nothing stated in this opinion should be construed as precluding the district court from entertaining a motion to determine whether attorney's fees should be awarded within the district court's sound discretion, assuming arguendo that the Church substantially prevailed as the result of the filing of this action and accordingly is eligible for such award.

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REVERSED AND REMANDED.  

CONCURBY:
POOLE (In Part) 

CONCUR:

POOLE, Circuit Judge, concurring in part.
I concur generally in the result reached in Judge Alarcon's painstaking exposition.  I have some reservations whether the issue -- that is, did the Church substantially prevail -- is so arcane as to require response to all the litany suggested by the majority opinion.  In any event, given the record as we have it, we are now in as good a position to decide that issue as was the district court, or as we will be after remand, and we should do so.  Much of this might have been avoided altogether if the district judge had ruled whether the 615 pages of new material, previously withheld under exemption (b)(7)(A), but subsequently released, were substantially [**28]  exempt. If so the Church did not prevail.  That to me seems the heart of this matter.
 [*496]  Finally I do not concur in what I believe to be inappropriate directions to the district court that it make findings of fact and conclusions of law in a summary judgment case.  It helps appellate review when the district court articulates its basis for summary judgment; it is inappropriate to require findings be made, as under Rule 52(a) of the Federal Rules of Civil Procedure, since making such findings is the antithesis of summary judgment. We should not so direct.  

76 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff-Appellant, v. UNITED STATES POSTAL SERVICE, et al., Defendant-Appellees 

 No.  79-3655 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

633 F.2d 1327; 1980 U.S. App. LEXIS 11452; 6 Media L. Rep. 2434 

November 5, 1980, Argued and Submitted 

December 15, 1980, Decided 

PRIOR HISTORY:
 [**1]  

Appeal from the United States District Court for the Central District of California.  

COUNSEL:
Barry Leigh Weissman, Weissman & Weinstein, P. C., Beverly Hills, Cal., for plaintiff-appellant. 
Alan L. Ferber, Washington, D. C., argued, for defendants-appellees; Leonard Schaitman, Alan L. Ferber, Dept. of Justice, Washington, D. C., on brief.  

JUDGES:
Before WRIGHT and TANG, Circuit Judges, and HANSON, n* District Judge.
* Honorable William C. Hanson, Senior United States District Judge for the Northern and Southern Districts of Iowa, sitting by designation.

OPINIONBY:
TANG 

OPINION:

  [*1327]  
Church of Scientology (the Church) appeals from the district court's refusal to  [*1328]  order the United States Postal Service to comply with the Church's Freedom of Information Act (FOIA) request.  The district court decision came after this court remanded the case for consideration of the effect of the 1976 FOIA amendments on the Postal Service's claimed exemption. n1 The Church contends that the FOIA fully applies to the Postal Service and that the Postal Reorganization Act's investigatory files exemption, 39 U.S.C. §  410(c)(6), is not an exempting statute within the meaning of the [**2]  amended FOIA, 5 U.S.C. §  552(b)(3).  We agree, and reverse the judgment of the district court.

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n1. See Church of Scientology v. United States Postal Service, 593 F.2d 902 (9th Cir. 1979).

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I.
Facts
The Postal Reorganization Act, 39 U.S.C. § §  101-5604, extended the reach of the FOIA to the newly created Postal Service. In accordance with the FOIA, 5 U.S.C. §  552(a)(3), n2 the Church sought to obtain any records in possession of the Postal Service that concerned the Church.  The Postal Service released numerous documents to the Church, but withheld certain materials, compiled during its investigations of possible criminal offenses.

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n2. Section 552(a)(3) provides in pertinent part:
(a)
(3) ... each agency, upon any request for records which (A) reasonably describes such records and (B) is made in accordance with published rules ... shall make the records promptly available to any person.

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Unconvinced that the documents were properly withheld, the Church brought a district court action to compel disclosure. After an in camera inspection of the documents, the district court concluded that the files had been compiled for law enforcement purposes.  The court granted summary judgment to the Postal Service, holding that the investigatory files were specifically exempted from disclosure by the FOIA, 5 U.S.C. §  552(b)(3) (Exemption 3), n3 which incorporates the postal exemption, 39 U.S.C. §  410(c)(6). n4

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n3. See footnote 7 and accompanying text infra.
n4. Section 410(c)(6), 39 U.S.C., reads as follows:
(c) Subsection (b)(1) of this section (making FOIA §  552 applicable to the Postal Service) shall not require the disclosure of
(6) investigatory files, whether or not considered closed, compiled for law enforcement purposes except to the extent available by law to a party other than the Postal Service.

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On appeal, this court remanded to the district court to determine whether section 410(c)(6)  [**4]  qualified as an exempting statute within the meaning of the amended version of Exemption 3.  593 F.2d at 904. The district court was also instructed that if it determined that section 410(c)(6) was such an exempting statute, it should then decide whether the Postal Service had complied with its own regulation, found at 39 C.F.R. §  265.6(c), n5 and whether the documents were properly withheld under FOIA Exemptions  [*1329]  5 and 7, n6 the alternative grounds claimed by the Postal Service. Id. at 905 n.7.

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n5. Section 265.6(c), 39 C.F.R., provides:
(c) Investigatory records.  (1) Investigatory files compiled for law enforcement purposes, whether or not considered closed, are exempt by statute from mandatory disclosure except to the extent otherwise available by law to a party other than the Postal Service, 39 U.S.C. §  410(c)(6).  As a matter of policy, however, the Postal Service will normally make investigatory records available upon request unless the production of these records would:
(i) Interfere with enforcement proceedings,
(ii) Deprive a person of a right to a fair trial or an impartial adjudication,
(iii) Constitute an unwarranted invasion of personal privacy,
(iv) Disclose the identity of a confidential source, and, in the case of a record compiled by the Postal Inspection Service in the course of a criminal investigation or of a lawful national security intelligence investigation, confidential information furnished only by the confidential source,
(v) Disclose investigative techniques and procedures, or
(vi) Endanger the life or physical safety of law enforcement personnel.
(2) Authority to disclose investigatory records to persons outside the Postal Service must be obtained from the Chief Postal Inspector, United States Postal Service, Washington, D. C. 20260, or his designee. [**5]  
n6. Exemption 5, 5 U.S.C. §  552(b)(5), and Exemption 7, 5 U.S.C. §  552(b)(7), provide as follows:
(b) This section does not apply to matters that are
(5) inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;
(7) investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel ....

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The parties simultaneously filed [**6]  motions for summary judgment in the district court, addressing the issues raised in the remand order, reviving old arguments, and formulating new ones.  The district court granted the Postal Service's motion for summary judgment finding that (1) section 410(c)(6) constitutes an exempting statute under the amended FOIA Exemption 3; (2) the information was properly withheld as material "compiled for law enforcement purposes; " and (3) the Postal Service regulations are permissive and thus do not require disclosure. The Church again appeals.
II.
Section 410(c)(6) as an Exempting Statute
The Church argues that the district court erred in holding that section 410(c) (6) is an exempting statute within the meaning of amended FOIA Exemption 3.  As originally enacted, Exemption 3 simply shielded material "specifically exempted from disclosure by statute." In 1976, Congress narrowed Exemption 3 to cover a statute only if it "(A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld ...." n7

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n7. The amendment was part of the Government in the Sunshine Act, Pub.L. No. 94-409, 90 Stat. 1241, 1247 (1976).

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The legislative purpose of this amendment has been thoroughly discussed elsewhere.  For example, in Irons & Sears v. Dann, 196 U.S. App. D.C. 308, 606 F.2d 1215, 1219-20 (D.C.Cir.1979), cert. denied, Irons & Sears v. Commissioner of Patents & Trademarks, 444 U.S. 1075, 100 S. Ct. 1021, 62 L. Ed. 2d 757 (1980), the court summed up the legislative history by stating:
Congress' goal was to overrule legislatively the Supreme Court's decision in Administrator, FAA v. Robertson, 422 U.S. 255, 95 S. Ct. 2140, 45 L. Ed. 2d 164 (1975), which had given an expansive reading to the version of Exemption 3 then in force.  The amended text and its legislative history make clear that Congress did not want the exemption to be triggered by every statute that in any way gives administrators discretion to withhold documents from the public.  On the contrary, ... (i)t provided that only explicit nondisclosure statutes that evidence a congressional determination that certain materials ought to be kept in confidence will be sufficient to qualify under the exemption (footnotes omitted). n8
8. In Robertson, the Supreme Court held that section 1104 of the Federal Aviation Act of 1958, 49 U.S.C. §  1504, was an exempting statute within the meaning of Exemption 3.  Section 1104 permitted the FAA administrator to withhold certain reports when the administrator determined that disclosure "would adversely affect" the subject of the report and was not "in the interest of the public." The Robertson court reasoned that because there was no indication that Congress intended to exclude any existing nondisclosure statute from Exemption 3. all existing laws permitting confidentiality should stand.

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"Congress did not, however, itself undertake to sort out those nondisclosure statutes  [*1330]  that it comprehended as remaining within the exemption from those that it intended to exclude.  Instead, it left that task for the courts ...." American Jewish Congress v. Kreps, 187 U.S. App. D.C. 413, 574 F.2d 624, 628 (D.C.Cir.1978).
The Postal Service apparently concedes that section 410(c) fails to meet the requirements of subsection (A) of Exemption 3 because it gives the agency complete discretion to grant or withhold investigatory files by providing that the section incorporating the FOIA "shall not require disclosure" in certain cases. n9 It contends, however, that the (c)(6) provision need satisfy only one of the two subsections in order to qualify as an FOIA exempting statute, and that it in fact meets the subsection (B) criteria.

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n9. There is no doubt that the two subsections of Exemption 3 are separate and distinct.  See Irons & Sears, 606 F.2d at 1220; Lee Pharmaceuticals v. Kreps, 577 F.2d 610, at 616 n.8 (9th Cir. 1978); American Jewish Congress, 574 F.2d at 628. "Subsection (A), on its face, is too rigorous to tolerate any decisionmaking on the administrative level.  It embraces only those statutes incorporating a congressional mandate of confidentiality that, however general, is "absolute and without exception' " (footnotes omitted).  American Jewish Congress, 574 F.2d at 628.

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a. The Legal Standard
Subsection (B) necessarily contemplates some exercise of administrative discretion, "but its unmistakable thrust, like that of subsection (A), is to assure that the basic policy decision on governmental secrecy be made by the Legislative rather than the Executive branch." Id.  The Postal Service argues that the "investigatory files compiled for law enforcement purposes" protected by (c)(6), are "particular types of matters to be withheld," and therefore satisfy subsection (B).  It points out that (c)(6) requires no "guesswork" and sets up no "indefinite delineation of categories." Specifying such a concrete category, the Postal Service suggests, is all that subsection (B) requires.
This Postal Service premise, however, rests on too simplistic an analysis of subsection (B) and its judicial gloss.  In American Jewish Congress, the District of Columbia Circuit held that section 7(c) of the Export Administration Act, 50 U.S.C. App. §  2406(c), was not an exempting statute under Exemption 3.  That statute prohibited disclosure of "information ... deemed confidential or with reference to which a request for confidential treatment is made by the person furnishing [**10]  such information," unless the agency decides that withholding the information, "is contrary to the national interest." In determining that the requirements of neither subsection (A) nor (B) were satisfied, the court stated:
Nondisclosure is countenanced by Subsection (B) if, but only if, the enactment is the product of congressional appreciation of the dangers inherent in airing particular data and incorporates a formula whereby the administrator may determine precisely whether disclosure in any instance would pose the hazard that Congress foresaw.

574 F.2d at 628-29.
In other words, the policy that the legislature, not the executive, should make decisions about secrecy is frustrated if a statute includes "within its sweep provisions reflecting no more than a vague apprehension that an agency might someday fall heir to sensitive information." Id. at 628.
The American Jewish Congress court, then, suggests two necessary considerations in deciding whether a given "criterion" or enumerated matter satisfies subsection (B).  First, a court must consider the underlying congressional intent to exempt material from the FOIA.  Somehow Congress must manifest its appreciation of [**11]  the specific dangers of disclosure, and thus its intent to exempt, or subsection (B) goes unsatisfied.  Second, a court must analyze, as it does under subsection (A), the amount of discretion left to the agency.  For, as the court noted, statutes setting forth very general benchmarks for secrecy "in fact delegate to administrators the entire burden of identifying the problems disclosure might generate" and thus "do not satisfy subsection (B)'s requirement that Congress have articulated "particular criteria.' " Id. at 629.
  [*1331]  Contrary to the Postal Service's contention, nothing in the line of cases that find certain provisions are exempting statutes within the meaning of Exemption 3 suggests otherwise.  For example, in Lee Pharmaceuticals v. Kreps, 577 F.2d 610 (9th Cir. 1978), this court examined section 122 of the Patent Act, 35 U.S.C. §  122, in light of FOIA Exemption 3.  Section 122 provides that patent applications must not be released unless the applicant gives authority, release is necessary to carry out other congressional provisions, or the Commissioner determines it is necessary because of "special circumstances." In holding that section 122 is a subsection (B)  [**12]  exempting statute, the court looked to both legislative intent and degree of discretion.  It stressed that nothing in the legislative history supported the view that Congress intended to exclude section 122 from FOIA coverage.  577 F.2d at 617. In fact, it found to hold otherwise would mean "destruction of the patent system." Id.  Accord Irons & Sears v. Dann, 606 F.2d at 1221. Further, although the court recognized that subsection (B) "could provide for limited discretionary disclosure," in quoting Sears v. Gottschalk, 502 F.2d 122, 126-27 (4th Cir. 1974), cert. denied sub nom., Sears v. Dann, 422 U.S. 1056, 95 S. Ct. 2680, 45 L. Ed. 2d 709 (1975), the court suggested that the absence of guidelines for the Commissioner's exercise of discretion "would not be determinative" because "applications for patents" is a narrow enough class of items.  Id. at 616 n.8.
Likewise, in Founding Church of Scientology v. National Security Agency, 197 U.S. App. D.C. 305, 610 F.2d 824 (D.C.Cir.1979), the District of Columbia Circuit held that a provision involving the National Security Agency satisfied subsection (B), but not (A).  In so holding, the court stated that an examination of the statute "and [**13]  its legislative history confirms the view that it manifests a "congressional appreciation of the dangers inherent in airing particular data,' and thus satisfies the strictures of Subsection (B) (footnote omitted)." 610 F.2d at 827-28.
b. Legislative Intent
In first turning to the question whether the legislature intended to exempt Postal Service investigatory files from FOIA disclosure, we do not find that Congress appreciated the dangers inherent in disclosing "investigatory files", thereby formulating criteria "whereby the administrator may determine precisely whether disclosure in any instance would pose the hazard that Congress foresaw." n10 American Jewish Congress, 574 F.2d at 628-29. To the contrary, in amending FOIA Exemption 7, Congress made strong statements about the hazards of agencies withholding, carte blanche, any information thrust into an "investigatory file."

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n10. Moreover, it certainly could not be said, as it was in Lee Pharmaceuticals and Irons & Sears, that the structure of the agency would be jeopardized by not finding that section 410(c)(6) is an exempting statute.

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The legislative history of Exemption 7, then, provides persuasive evidence of the congressional attitude toward exemption of investigatory materials.  As originally enacted, Exemption 7 simply permitted nondisclosure of "investigatory files compiled for law enforcement purposes except to the extent available by law to a private party." 80 Stat. 251 (1966).  The only difference between the original Exemption 7 and the (c)(6) postal exemption is that the latter additionally covers investigatory files, "whether or not considered closed." n11 In 1974, FOIA Exemption 7 was rewritten to permit the nondisclosure of "investigatory records compiled for law enforcement purposes, but only to the extent that producing such records " would involve one of six enumerated dangers (emphasis added). n12

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n11. See footnote 4 supra.
N12. See footnote 6 supra.

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The Supreme Court thoroughly reviewed the legislative history and purpose of Exemption 7 in NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 98 S. Ct. 2311, 57 L. Ed.  [**15]  2d 159. n13 In proposing the amendment,  [*1332]  "Senator Hart emphasized his concern that "material cannot be and ought not be exempted merely because it can be categorized as an investigatory file compiled for law enforcement purposes.' " Id. at 227, 98 S. Ct. at 2319, quoting the Freedom of Information Act Source Book, Sen. Doc. 93-82, Subcommittee on Administrative Practice & Procedure, Senate Judiciary Committee, 93rd Cong., 2d Sess. 332 (1974).  As Congressman Moorehead explained to the House, this concern derived from " "recent court decisions' that had applied the exemptions to investigatory files "even if they ha(d) long since lost any requirement for secrecy.' " Id. at 230, 98 S. Ct. at 2321, quoting H.R.Rep.No.92-1419, 92d Cong., 2d Sess. (1972). n14 Such cases, "in Senator Hart's view, erected a "stone wall' against public access to any material in an investigatory file." Id. at 229, 98 S. Ct. at 2320. n15

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n13. In Robbins, the court held that Exemption 7(A) entitled the NLRB to withhold from disclosure the statements of witnesses the Board intended to call at an unfair labor practice hearing. [**16]  
n14. Senator Hart specifically named four decisions of the D. C. Circuit: Weisberg v. U.S. Dept. of Justice, 160 U.S. App. D.C. 71, 489 F.2d 1195 (1973), cert. denied, 416 U.S. 993, 94 S. Ct. 2405, 40 L. Ed. 2d 772; Aspin v. Department of Defense, 160 U.S. App. D.C. 231, 491 F.2d 24 (1973); Ditlow v. Brinegar, 161 U.S. App. D.C. 154, 494 F.2d 1073, cert. denied, 419 U.S. 974, 95 S. Ct. 238, 42 L. Ed. 2d 188 (1974); and Center for National Policy Review on Race and Urban Issues v. Weinberger, 163 U.S. App. D.C. 368, 502 F.2d 370 (1974). Robbins, 437 U.S. at 227-28, 98 S. Ct. at 2319-2320.
n15. As the Court discussed:
Senator Hart believed that his amendment would rectify these erroneous judicial interpretations and clarify Congress' original intent in two ways.  First, by substituting the word "records" for "files," it would make clear that courts had to consider the nature of the particular document as to which exemption was claimed, in order to avoid the possibility of impermissible "commingling" by an agency placing in an investigatory file material that did not legitimately have to be kept confidential. Second, it would explicitly enumerate the purposes and objectives of the Exemption, and thus require reviewing courts to "look( ) to the reasons" for allowing withholding of investigatory files before making their decisions.  The "wooden( ) and mechanical( )" approach taken by the D. C. Circuit and disapproved by Congress would thereby be eliminated.
Id. at 229-30, 98 S. Ct. at 2320-2321 (citations omitted).

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In originally enacting Exemption 7, then, Congress recognized that "law enforcement agencies had legitimate needs to keep certain records confidential, lest the agencies be hindered in their investigations or placed at a disadvantage when it came time to present their case." Id. at 224, 98 S. Ct. at 2318. The thrust of congressional concern and its purpose in its amendment of Exemption 7, however, "was to indicate that "with passage of time, ... when the investigation is all over and the purpose and point of it has expired, it would no longer be an interference with enforcement proceedings and there ought to be ... disclosure.' " Id. at 232, 98 S. Ct. at 2322.
The Postal Service argues that the congressional concern that led to amendment of Exemption 7 should have no bearing here.  Rather, it suggests that by virtue of its "special relationship to the Federal Government," the Postal Service enjoys the power to preempt the FOIA.  This special relationship, the Postal Service contends, is manifested by section 410(a), 39 U.S.C., which provides:
(a) Except as provided by subsection (b) of this section, and except as otherwise provided in this title or insofar as such laws remain [**18]  in force as rules or regulations of the Postal Service, no Federal law dealing with public or Federal contracts, property, works, officers, employees, budgets, or funds, including the provisions of chapters 5 and 7 of title 5, shall apply to the exercise of the powers of the Postal Service.
The argument is unconvincing.  The Postal Reorganization Act was passed to "eliminate serious handicaps that (were then) imposed on the Postal Service by certain legislative, budgetary, financial, and personnel policies that are outmoded, unnecessary, and inconsistent with the modern management and business practices that must be available if the American public is to enjoy efficient and economical postal service ..." H.R.Rep.No.91-1104, 91st Cong., 2d Sess. 2, reprinted in (1970) U.S.Code  [*1333]  Cong. & Ad. News, pp. 3649, 3650.  In other words, by limiting the applicability of some federal laws, Congress intended to free the service from "shared management" so it could operate its day-to-day affairs in a more "businesslike way." Id. at 5, U.S.Code Cong. & Ad. News at 3653.  In this effort, Congress surely did not mean to place the Postal Service on a pedestal removed from the reaches [**19]  of social policy and legislation.  To the contrary, Congress envisioned that its fundamental postal reform would place responsibility for "managing the system" in a single place, but "with appropriate safeguards against abuse of that responsibility and appropriate assurances of continued congressional surveillance." Id.
The Postal Service cites Zale Corp. v. United States Internal Revenue Service, 481 F. Supp. 486 (D.D.C.1979) as support for its theory of independence from the FOIA.  In that case, the court held that a statute in the Internal Revenue Code governed despite a conflicting FOIA provision.  The case is distinguishable.
In Zale, the court emphasized that Congress passed the IRS statute after the FOIA.  Further, the court found that "the secrecy of tax returns and related information has long been favored in practice, and it is not surprising that Congress would seek to carve out a special protection for this unique and highly sensitive type of information." Id. at 489. Finally, the court noted the elaborate detail of the IRS section, and concluded that no evidence suggested Congress wished to frustrate its "clear purpose and structure." Id.
In the case sub judice, Congress [**20]  passed the FOIA amendment after the postal exemption, not before as in Zale.  And Congress provided a far more detailed structure in Exemption 7 than it had in the (c)(6) postal exemption. Moreover, the express purpose of the IRS statute in Zale stood in "sharp contrast to FOIA's stated preference for disclosure to the general public." Id.  Presumably here the purpose of both statutes is to strike a balance between the public need for information and an agency's legitimate need to preserve confidentiality in its investigations.  In any event, no evidence of a contrary purpose has been suggested, and we are unable to divine one.
c. Amount of Discretion
Not only do we find no congressional intent to exempt the Postal Service from the rigors of the FOIA, but we also conclude that section 410(c)(6) provides insufficient specificity to take it out of the impermissible range of agency discretion to make decisions rightfully belonging to the legislature.  Unlike the exempting statute in Lee Pharmaceuticals v. Kreps, 577 F.2d 610 (9th Cir. 1978), cert. denied, 439 U.S. 1073, 99 S. Ct. 847, 59 L. Ed. 2d 40 (1979), section 410(c) permits the Postal Service total discretion to give or restrict [**21]  any or all of its investigatory files. n16 Thus, it is of no moment that (c)(6) narrows the range of documents to investigatory files "compiled for law enforcement purposes." Moreover, in amending Exemption 7 to read "investigatory records", Congress has already expressly decided that the term "investigatory files" allows too much agency discretion.  Therefore, we hold that section 410(c)(6) is not an Exemption 3 statute. n17

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n16. See also, Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 100 S. Ct. 2051, 2062-63, 64 L. Ed. 2d 766 (1980); Irons & Sears v. Dann, 606 F.2d at 1219-1221 (patent statute); Chamberlain v. Kurtz, 589 F.2d 827 (5th Cir.), cert. denied, 444 U.S. 842, 100 S. Ct. 82, 62 L. Ed. 2d 54 (1979) (tax statute); Marks v. CIA, 191 U.S. App. D.C. 295, 590 F.2d 997 (D.C.Cir.1978); and Seymour v. Barabba, 182 U.S. App. D.C. 185, 559 F.2d 806 (D.C.Cir.1977) (Bureau of Census statute).  Cf. Founding Church of Scientology v. National Security Agency, 610 F.2d at 828-30 (statute allowing considerable agency discretion found to be intended by legislature to exempt under subsection (B)). [**22]  
n17. The Postal Service urges us to follow an unpublished court Memorandum, McCloskey v. United States Department of Justice, No. 77-470 (D.D.C. Nov. 8, 1978), holding that section 410(c) in conjunction with FOIA Exemption 3 affords a statutory exemption to the requested production.  The case, however, lacks precedential value and contains no rationale to support its holding.
Because we find section 410(c)(6) is not an Exemption 3 statute, we do not reach the Church's other arguments that (1) Congress intended Exemption 3 to preserve only those exemptions in existence in 1966 when the FOIA was enacted; (2) the 1974 amendment of Exemption 7 repealed section 410(c)(6) by implication; and (3) the Postal Service has not complied with its own regulation, 39 C.F.R. §  265.6(c).

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  [*1334]  We reverse the judgment of the district court, but remand for a determination of the remaining issues whether the Postal Service failed to meet its statutory burden of proof, n18 and whether the requested information is exempt from disclosure under FOIA Exemptions 5 and 7.

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n18. Section 552(a)(4)(B) of 5 U.S.C. places the burden on the agency "to sustain its action." The Church relies on the guidelines adopted in Ray v. Turner, 190 U.S. App. D.C. 290, 587 F.2d 1187 (D.C.Cir.1978), and Vaughn v. Rosen, 157 U.S. App. D.C. 340, 484 F.2d 820 (D.C.Cir.1973), cert. denied, 415 U.S. 977, 94 S. Ct. 1564, 39 L. Ed. 2d 873 (1974), to support its contention that the Postal Service affidavits failed to provide enough detail for the district court to determine that the Service had met its burden.

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Reversed and remanded.

77 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, A non-profit corporation, Appellant, v. UNITED STATES DEPARTMENT OF JUSTICE, William B. Saxbe, Attorney General of the United States; DRUG ENFORCEMENT ADMINISTRATION, Appellees.  

 No.  76-2506 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

612 F.2d 417; 1979 U.S. App. LEXIS 10610; 59 A.L.R. Fed. 528; 5 Media L. Rep. 2483 

November 8, 1979 

SUBSEQUENT HISTORY:
 [**1]  
Rehearing Denied January 30, 1980.  

PRIOR HISTORY:
Appeal from the United States District Court For the Central District of California.  

COUNSEL:
Joe Thrasher, Cameron, Shervey & Thrasher, Rice Lake, Wis., for plaintiff-appellant. 
Leonard Schaitman, Washington, D. C., on brief; Paul Blankenstein, Washington, D. C., for defendants-appellees.  

JUDGES:
Before BARNES, WALLACE and TANG, Circuit Judges.  

OPINIONBY:
BARNES 

OPINION:

  [*418]  
Church of Scientology of California ("CSC") appeals the district court's upholding of the Drug Enforcement Administration's ("DEA") n1 decision not to disclose certain  [*419]  documents sought by CSC under the Freedom of Information Act ("FOIA"), 5 U.S.C. §  552. The main issue on appeal is the scope of the term "confidential source" as used in the 7(D) exemption of the FOIA, 5 U.S.C. §  552(b)(7)(D). n2

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n1. The DEA was created pursuant to the Reorganization Plan No. 2 of 1973 (eff. July 1, 1973, 38 FR 15932, 87 Stat. 1091, as amended Mar. 16, 1974, Pub.L. 93-253, §  1, 88 Stat. 50) to consolidate the antidrug enforcement activities of the federal government into one agency in the Department of Justice. See President's Message submitted together with the Reorganization Plan cited in (1973) U.S.Code Cong. & Admin.News, pp. 3554, 3555. The DEA's responsibilities include conducting relations with drug law enforcement officials of foreign governments and coordinating joint efforts with state and local law enforcement agencies. Id. [**2]  
n2. The 7(D) exemption of the FOIA, 5 U.S.C. §  552(b)(7)(D), exempts from disclosure:
(7) investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would . . .
(D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source . . . .

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I. FACTS
On May 2, 1974, CSC requested that the DEA make available for copying and inspection all records and information in its possession regarding the activities of "The Church of Scientology of California, Church of Scientology, or Scientology". Initially, the DEA admitted the possession of only four documents relating to the "Church of Scientology". It stated that the information was contained in investigative files compiled for law enforcement purposes and therefore exempt from disclosure under the 7th exemption. n3 Subsequently, the DEA received [**3]  14 further requests for information as to CSC, its related entities and its founder L. Ron Hubbard.

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n3. Prior to the 1974 amendments, the 7th exemption of the FOIA covered: "investigatory files compiled for law enforcement purposes except to the extent available by law to a party other than an agency . . . ."

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After exhausting its administrative remedies, CSC brought this FOIA suit in the federal district court on December 4, 1974. In the meantime, the DEA had canvassed all of its 161 field offices, both foreign and domestic, and had located 126 other documents which were subject to CSC's requests. The majority of those materials were released to CSC. However, the DEA refused to produce fifteen documents in their entirety invoking the 7(C) n4 and 7(D) exemptions as to each of the documents plus other FOIA exemptions with respect to particular items. n5 In addition, portions of nine other documents were not released on the grounds of the 7(C) and 7(D) exemptions. n6 Of these twenty-four documents, eleven contained [**4]  information from non-federal domestic law enforcement authorities, seven had data from foreign law enforcement sources, and the other six contained information supplied by individuals cooperating with the DEA.

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n4.  5 U.S.C. §  552(b)(7)(C) exempts matters that "constitute an unwarranted invasion of personal privacy."
n5. See Church of Scientology v. U. S. Dept. of Justice, 410 F. Supp. 1297, 1299-1300 ns. 3-13 and accompanying text (C.D.Cal.1976).
n6. Id.

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At the hearing, the government presented witnesses who testified that information provided by one law enforcement agency to another is customarily given with the understanding that it will not be revealed to members of the general public without the prior approval of the providing source. n7 Further, it was established that foreign, state and local law enforcement entities would at least be very reluctant, if not prohibited by their own laws, from disclosing confidential information to a federal agency which could not guarantee the continued confidentiality [**5]  of that information.

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n7. Among the government's witnesses were Rocky Pomerance, Chief of Police, Miami Beach, Florida, and immediate past president of the International Association of Chiefs of Police; Vernon J. Calhoun, Chief of the Division of Investigation and Narcotics, Nevada State Police, James Taylor, First Deputy Police Commissioner, New York City Police Department; David C. Dilley, Commander, Metropolitan Police and Intelligence Branch, Scotland Yard, London, England; and Francis Le Moeul, Controller General, French National Police, and Chief, French Bureau of Narcotics.

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After hearing oral arguments from the parties, the district court judge examined the twenty-four contested documents In  [*420]  camera. Thereafter, he ordered a minor portion of that material to be released as he found it to have been improperly withheld. As to the bulk of the 24 documents, the court found that the government was justified in withholding the remaining documents pursuant to the 7(D) exemption. n8 In reaching his decision,  [**6]  the judge concluded that the term "confidential source" in the 7(D) exemption included foreign, state and local law enforcement agencies. Because the 7(D) exemption was found to be applicable to all of the documents still at issue, the judge did not rule on the other FOIA exemptions which the government had proffered to justify its refusal to release the materials.

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n8.  410 F. Supp. at 1300.

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CSC now appeals to this court, attacking both the district court's conclusion as to the scope of the 7(D) exemption and the sufficiency of its findings of fact. We are in substantial agreement with the district court's decision below for the reasons stated in its opinion, and we herein affirm. n9

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n9. Id.

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II. DISCUSSION
A. Interpreting the 7(D) Exemption
From the language of the statute on its face, the 7(D) exemption excludes from mandatory disclosure [**7]  investigatory records compiled for law enforcement purposes in two different situations: first, where the production would "disclose the identity of a confidential source" and, second, "in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation", if the production would disclose "confidential information furnished only by the confidential source." 5 U.S.C. §  552(b)(7) (D). If we were only to look at the language of the 7(D) exemption and give the words utilized therein their plain and ordinary meaning, n10 we would be forced to conclude that the term "confidential source" refers simply to the origin of information, without distinction among the types of originators. Following that reading of the exemption, we would hold that "confidential source" includes foreign, state and local law enforcement agencies in its scope.

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n10. Words used in a statute are to be given their ordinary meaning in the absence of persuasive reasons to the contrary.  Banks v. Chicago Grain Trimmers, 390 U.S. 459, 465, 88 S. Ct. 1140, 20 L. Ed. 2d 30 (1968); Accord Trans Alaska Pipeline Cases, 436 U.S. 631, 643, 98 S. Ct. 2053, 56 L. Ed. 2d 591 (1978).

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All of the cases that we have found which have considered the question, with one exception, have agreed with the above interpretation of the language of the 7(D) exemption. See Nix v. United States, 572 F.2d 998, 1005 (4th Cir. 1978); Lopez Pacheco v. FBI, 470 F. Supp. 1091, 1103 (D.P.R.1979); Varona Pacheco v. FBI, 456 F. Supp. 1024, 1032 (D.P.R.1978); Lesar v. United States, 455 F. Supp. 921, 924 (D.D.C.1978); Cf., Mitsubishu Elec. Corp. v. United States Dep't of Justice, 1977-1 Trade Cases P 61,356 at p. 71,263 (D.D.C.1977) (held that the 7(D) exemption would cover multi-national companies as "confidential sources"); See also Terkel v. Kelly, 599 F.2d 214, 217 (7th Cir. 1979) (Dicta ); Contra Ferguson v. Kelley, 448 F. Supp. 919, 922 (N.D.Ill.1978), Supplemental opinion 448 F. Supp. at 925, On motion for reconsideration 455 F. Supp. 324, 326-27 (N.D.Ill.1978).
However, the sufficiency of a court's reliance solely upon the "plain meaning" of the language of a statute in interpreting its terms has come into question. See generally Murphy, Old Maxims Never Die: The "Plain Meaning Rule" and Statutory Interpretation in the "Modern" Federal Courts, 75 Col.L.Rev. 1299 (1975) ("Murphy").  [**9]  Recent pronouncements by the Supreme Court and this court have been somewhat inconsistent on this point. On the one hand, the Court in Train v. Colorado Pub. Interest Research Group, 426 U.S. 1, 96 S. Ct. 1938, 48 L. Ed. 2d 434 (1976), held that it was error for the court of appeals to exclude reference to the legislative history of the statute in question when the appellate  [*421]  court's reliance on the plain meaning of the words in the statute produced a result which "would have marked a significant alteration of the pervasive regulatory scheme embodied in . . . (another statute)" and when that reliance contributed little to resolving the issue before the court of appeals.  Train, supra, 426 U.S. at 23-24, 96 S. Ct. at 1948. In so deciding the Court held that there was no "rule of law" which forbids the use of extrinsic aids in construing the meaning of statutory language however clear the words may appear on "superficial examination". (Quoting from United States v. American Trucking Assns., 310 U.S. 534, 543-44, 60 S. Ct. 1059, 84 L. Ed. 1345 (1940).) Following the holding of the Train case, this circuit has permitted, on occasion, an expansive approach to the utilization of [**10]  extrinsic aids such as legislative history in statutory interpretation. As stated in Pettis ex rel. United States v. Morrison-Knudsen Co., 577 F.2d 668, 671 (9th Cir. 1978):
We begin by noting that the language of 31 U.S.C. §  232(C) affords no crevice of ambiguity within which to nestle the exception Pettis seeks. It presents a face, smooth, sharp, and unyielding. Nonetheless, we must heed the Supreme Court's recent admonition in Train v. Colorado Public Interest Research Group, 426 U.S. 1, 9-10, 96 S. Ct. 1938, 48 L. Ed. 2d 434 (1976), to examine relevant legislative history in the search for the intent of Congress even when the statute is clear and unambiguous on its face. It is always possible that Congress did not quite mean what it said and did not quite say what it meant.
On the other hand, the Supreme Court recently articulated the opposite position and seemingly reaffirmed the former "plain meaning rule". In Tennessee Valley Authority v. Hill, 437 U.S. 153, 184 n. 29, 98 S. Ct. 2279, 2296 n. 29, 57 L. Ed. 2d 117 (1978), it was stated that: "When confronted with a statute which is plain and unambiguous on its face, we ordinarily do not look to legislative history as [**11]  a guide to its meaning." Likewise, this circuit has also recently breathed new life into the rule. See United States v. Rone, 598 F.2d 564, 569 (1979) ("When no ambiguity is apparent on the face of a statute, an examination of legislative history is inappropriate."); Cf., Adams v. Morton, 581 F.2d 1314, 1320 (9th Cir. 1978), Cert. denied, Gros Ventre Tribe of Fort Belknap Indian Reservation, Montana v. United States, 440 U.S. 958, 99 S. Ct. 1498, 59 L. Ed. 2d 771 (1979).
The plain meaning rule can be viewed as consisting of two propositions. Initially, the rule stands for the notion that if the language of a statute is clear and there is no ambiguity, then there is no need to "interpret" the language by resorting to the legislative history or other extrinsic aids. See e.g.  Packard Motor Car Co. v. NLRB, 330 U.S. 485, 492, 67 S. Ct. 789, 91 L. Ed. 1040 (1947); Caminetti v. United States, 242 U.S. 470, 490, 37 S. Ct. 192, 61 L. Ed. 442 (1917). Secondly, and more importantly, the rule stands for the proposition that in the vast majority of its legislation Congress does mean what it says and thus the statutory language is normally the best evidence of congressional intent. As observed [**12]  by the Court in United States v. Missouri Pac. R.R., 278 U.S. 269, 278, 49 S. Ct. 133, 136, 73 L. Ed. 322 (1929): ". . . where the language of an enactment is clear and construction according to its terms does not lead to absurd or impracticable consequences, the words employed are to be taken as the final expression of the meaning intended." It is the former component of the plain meaning rule which has been called into question by cases such as Train and Pettis, not the latter proposition.
While there may be instances where the language of a statute is so lucid on a particular issue that resorting to legislative history would be inappropriate (the first component of the plain meaning rule), such a rule is normally not applicable where, as here, the court must construe the meaning of an undefined term in a statute when the term used does not consist of words of art. However, even in the latter situation, the second component of the plain meaning rule cannot  [*422]  be ignored. We agree with the Court's language in American Trucking Assns., supra, 310 U.S. at 543-44, 60 S. Ct. at 1063-1064:
There is, of course, no more persuasive evidence of the purpose of a statute than the [**13]  words by which the legislature undertook to give expression to its wishes. Often these words are sufficient in and of themselves to determine the purpose of the legislation. In such cases we have followed their plain meaning. When that meaning has led to absurd or futile results, however, this Court has looked beyond the words to the purpose of the act. Frequently, however, even when the plain meaning did not produce absurd results but merely an unreasonable one "plainly at variance with the policy of the legislation as a whole" this Court has followed that purpose, rather than the literal words. When aid to construction of the meaning of words, as used in the statute, is available, there certainly can be no "rule of law" which forbids its use, however clear the words may appear on "superficial examination." (Footnotes omitted.)
In the present case, we have concluded that the statutory language is clear and unambiguous if we give the words of the 7(D) exemption their ordinary meaning. However, we concede that the term "confidential source" is not a term of art. Moreover, the appellant herein has argued that our interpretation, which was also reached by the district court below,  [**14]  is contrary to the policy of the FOIA act as a whole and the intent of Congress in enacting the 7(D) exemption. For these reasons, we now turn to the legislative history of the 7(D) exemption and examine the congressional intent. Pursuant to our adherence to the applicable portion of the plain meaning rule, we believe that "the plainer the language, the more convincing contrary legislative history must be." United States v. United States Steel Corp., 482 F.2d 439, 444 (7th Cir.), Cert. denied, 414 U.S. 909, 94 S. Ct. 229, 38 L. Ed. 2d 147 (1973). Also, we note that "The proper function of legislative history is to solve, not create, an ambiguity." Rone, supra, 598 F.2d at 569. "In construing a statute, the Court has ruled that legislative materials, if "without probative value, or contradictory, or ambiguous,' should not be permitted to control the customary meaning of words.  United States v. Dickerson, 310 U.S. 554, 562, (60 S. Ct. 1034, 1038, 84 L. Ed. 1356) (1940)." NLRB v. Plasterers' Union, 404 U.S. 116, 129 n. 24, 92 S. Ct. 360, 368 n. 24, 30 L. Ed. 2d 312 (1971).
Prior to the 1974 amendments to the FOIA, 5 U.S.C. §  552(b)(7) exempted from disclosure "investigatory files compiled [**15]  for law enforcement purposes except to the extent available by law to a party other than an agency . . . ." The initial versions of the 1974 House of Representatives and Senate bills to amend the FOIA did not contain any language altering the 7th exemption. Freedom of Information Act and Amendments of 1974 (P.L. 93-502), Source Book: Legislative History, Texts and Other Documents at 133-34 and 192 (Joint Comm. Print 1975) (hereinafter referred to as "Source Book"). On May 30, 1974, Senator Phillip Hart offered Amendment No. 1361 which proposed to change the 7th exemption to read as follows:
Investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication or constitute a clearly unwarranted invasion of personal privacy, (C) disclose the identity of an informer, or (D) disclose investigative techniques and procedures.
Source Book at 112 and 332.

After amending the House measure with its own language, the Senate adopted the amended House bill. On June 6, 1974, the legislation was sent [**16]  to a joint House and Senate conference committee which made substantial changes in the proposed amended 7th exemption. In particular, the term "confidential source" was substituted for the word "informer" in the exemption. The conference later added language also  [*423]  protecting confidential information compiled from a confidential source by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation. Source Book at 115.
In the midst of the conference deliberations, President Ford wrote to Congressman William S. Moorhead, one of the co-sponsors of the legislation, expressing his concern as to various aspects of the proposed amendments, including those pertaining to the 7th exemption. On October 17, 1974, President Ford returned the bill (H.R. 12471) to the House without his approval noting, Inter alia, the problem of the abridgement of confidentiality as to law enforcement records. Source Book at 398. In November 1974, after debate in both the House and the Senate, the veto was overridden and the amendments became effective on February 19, 1975.
After a careful reading of the [**17]  legislative materials, we are in agreement with the district court's conclusion below that the issue of the scope of the term "confidential source" is not "precisely addressed in the legislative history". n11 Admittedly, when Senator Hart initially proposed his amendment to the 7th exemption, he spoke only in terms of "informers" and "concerned citizens". n12 However, even at that time, Senator Hart did not consider his amendment to be a "radical departure" from existing case law under the preamendment FOIA, where "the courts looked to the reasons for the exemption" in making their decisions as to disclosure. Source Book at 334. Indeed, in response to a question as to the FBI's ability to perform its investigatory duties under his proposed amendment, Senator Hart stated that:

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n11.  410 F. Supp. at 1302.
n12. Fourth, the amendment protects without exception and without limitation the identity of informers. It protects both the identity of informers and information which might reasonably be found to lead to such disclosure. These may be paid informers or simply concerned citizens who give information to enforcement agencies and desire their identity to be kept confidential. Source Book at 333-34.

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"However, my amendment would not hinder the Bureau's performance in any way. The Administrative Law Section of the American Bar Association language, which my amendment adopts verbatim, was carefully drawn to preserve every conceivable reason the Bureau might have for resisting disclosure of material in an investigative file:
If informants' anonymity whether paid informers or citizens volunteers would be threatened, there would be no disclosures;
If in any other way the Bureau's ability to conduct such investigations was threatened, there would be no disclosure.
Thus, my amendment more than adequately safeguards against any problem which might be raised for the Bureau.
Source Book at 351.

Thus, despite the limited nature of his initial comments, it is clear that Senator Hart did not intend his amendment to inhibit in any way a federal law enforcement agency's ability to conduct its lawful investigation. Indeed, in his only comments on the exemption after the changes made by the conference committee, Senator Hart uses the word "source" in its literal sense without any special qualification on the term. As he stated on November 21, 1974,  [**19]  in the debate arising from the Senate action and vote on the presidential veto:
The major change in conference was the provision which permits law enforcement agencies to withhold "confidential information furnished only by a confidential source". In other words, the agency not only can withhold information which would disclose the identity of a confidential source but also can provide blanket protection for any information supplied by a confidential source. The President is therefore mistaken in his statement that the FBI must prove that disclosure would reveal an informer's identity; all the FBI has to do is to state that the information was furnished by a confidential  [*424]  source and it is exempt. In fact, this protection was introduced by the conferees in response to the specific request of the President in a letter to Senator Kennedy during the conference.
The fact that the agencies can withhold information furnished by a confidential source relieves it of the burden of showing that disclosure would actually reveal the identity of a confidential source. . . .
Source Book at 451-52

From those statements, Senator Hart does not appear to limit [**20]  the word "source" to only human sources but rather gives an expansive reading of the 7(D) exemption. n13

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n13. Courts look to the statements by the initiators or sponsors of proposed legislation when the meaning of words used in a statute is in doubt.  National Woodwork Mfrs. Assn. v. NLRB, 386 U.S. 612, 640, 87 S. Ct. 1250, 18 L. Ed. 2d 357 (1967).

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In the Joint Explanatory Statement of the Committee of Conference ("Conference Report"), the following reason for the substitution of the term "confidential source" for the word "informer" is given:
The substitution of the term "confidential source" in section 552(b)(7)(D) is to make clear that the identity of a person other than a paid informer may be protected if the person provided information under an express assurance of confidentiality or in circumstances from which such an assurance could be reasonably inferred. Under this category, in every case when the investigatory records sought were compiled for law enforcement purposes either civil or criminal in nature [**21]  the agency can withhold the names, addresses, and other information that would reveal the identity of a confidential source who furnished the information. However, where the records are compiled by a criminal law enforcement authority, All of the information furnished only by a confidential source may be withheld if the information was compiled in the course of a criminal investigation. In addition, where the records are compiled by an agency conducting a lawful national security intelligence investigation, all of the information furnished only by a confidential source may also be withheld.
Source Book at 230.
Likewise, Senator Byrd in his arguments in favor of overriding the presidential veto makes similar remarks:
The Senate-passed version of the bill contained an amendment which would have required disclosure of information from a law enforcement agency unless certain information was specifically exempted by the act. What particularly disturbed me was that while the identity of an informer would be protected, the confidential information which he had given the agency would not have been protected from disclosure. Another matter that disturbed me was the use of the [**22]  word "informer", since that could be construed to mean that only the identity of a paid "informer" was to be protected and not the identity of an unpaid confidential source. I was deeply concerned that without such protection, law enforcement agencies would be faced with a "drying-up" of their sources of information and their criminal investigative work would be seriously impaired.
The bill in the form now presented to the Senate has been significantly changed by the conference on these critical issues. The language of section 552(b)(7) has been changed from protecting from disclosure the identity of an "informer" to protecting the identity of a "confidential source" to assure that the identity of a person other than a paid informer may be protected. The language has also been broadened substantially to protect from disclosure all of the information furnished by a confidential source to a criminal law enforcement agency if the information was compiled in the course of a criminal investigation. Thus, not only is the identity of a confidential source protected but also protected from disclosure is all the information furnished by that source to a law enforcement agency in the [**23]  course of a criminal investigation.
  [*425]  Source Book at 468.

In both statements, it is clear that the congressional intent was to broaden the scope of the proposed exemption to include sources of confidential information other than informers. The use of the word "person" in those contexts appears to be similar to the use of any collective noun. The word "person" in legal terminology is perceived as a general word which normally includes in its scope a variety of entities other than human beings. See e.g.  1 U.S.C. §  1. Had the Conference Report affirmatively stated that the term "confidential source" was limited to or applies only to persons, we would agree with appellant's position herein.
Likewise, a single comment was made by Senator Kennedy in the course of the debates that "we also provided that there be no requirement to reveal not only the identity of a confidential source, but also any information obtained from him in a criminal investigation." Source Book at 459. However, the use of a singular masculine pronoun is often made where the sex, if any, of its antecedent reference is unknown or where it refers to a collective noun which consists of entities [**24]  of more than one sex. Given that the comment was made in the course of the debates on the Senate floor, where grammatical formalities are not always observed, we do not consider that one particular comment to be indicative. Senator Kennedy's other remarks on the 7(D) exemption do not demonstrate any intent to limit the scope of the term "confidential source". If we allowed this determination to be controlled by the mere use of a pronoun, we would be excluding non-human entities such as corporations and partnerships from the protection of the exemption. It is inconceivable that Senator Kennedy would not seek to assure the continued cooperation of non-human entities in law enforcement investigations by granting them confidentiality where necessary.
As with the district court below we are hesitant to rely solely upon "grammatical nuances" in the legislative materials to resolve the important issue involved herein. Reliance instead should be made upon the congressional intent behind the 7(D) exemption which clearly manifests itself in the legislative history.
Congressman Moorhead (co-sponsor of the House Bill), Senator Kennedy (the Senate Conference Committee Chairman) and Senator Hart [**25]  (the initiator of the amendment to the 7th exemption) have all stated that the conference committee "acted affirmatively to satisfy" President Ford's objections to the amended version of the (b)(7) exemptions. Source Book at 381 and 450. One of President Ford's objections had been the potential adverse effect of the 7th exemption, as initially proposed, upon law enforcement if "sources of information or the information itself are disclosed." Source Book at 380. As repeatedly expressed in the debates on the amended version of the 7th exemption by both proponents and opponents of the amendments, Congress was concerned that law enforcement agencies should not be faced with a "drying up" of their sources of information or have their criminal investigative work be seriously impaired. Source Book at 381, 391-92, 451, 468, 473, and 476. In response to that concern, it was continually stressed by members of the conference committee that:
We have been careful to protect . . . law enforcement interests to the utmost in the bill we passed.
We decided in conference, however, as a specific request from the President, to change that to protect confidential sources, which broadened it [**26]  and provided a wider degree of protection.
Then we also provided that there be no requirement to reveal not only the name of a confidential source, but also any information obtained from him in a criminal investigation. (Remarks of Senator Kennedy)
Source Book at 440 and 459. See also remarks of Senator Hart, Source Book at 450-51.

It is obvious from the legislative history that Congress, while seeking to narrow the  [*426]  7th exemption and thereby increase the disclosure of investigatory records when it would be reasonable to do so, intended to reaffirm its protection of confidential sources and confidential information so that law enforcement agencies would not be adversely affected in their lawful investigatory duties.
By giving the term "confidential source" its plain meaning, we will effectuate the stated congressional purpose behind the 7(D) exemption. Congress did not plan to prevent law enforcement agencies from gathering information from sources who would be reluctant to provide such information if their identities or their confidential information were made public. By refusing to accept the plain meaning of the word "source" and excluding foreign,  [**27]  state and local law enforcement agencies from the 7(D) exemption, an impairment to federal law enforcement groups will result which would be contrary to the congressional intent. Foreign, state and local law enforcement agencies are under no obligation to provide information to federal agencies in most instances. n14 There is substantial evidence in the record below that some of those groups would refuse to cooperate with federal agencies if they could not be assured of confidentiality in instances where they thought it was necessary. n15 While CSC argues that Congress intended to limit the scope of the 7(D) exemption to human sources, there is no evidence in the legislative history that the congressional concern was focused on the possibility of physical harm to individuals. Rather, the paramount concern was the loss of sources of confidential information.

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n14. In Ferguson v. Kelley, supra, 448 F. Supp. at 922, the district court found that local law enforcement agencies were not within the 7(D) exemption because: "We are not certain that other law enforcement agencies can reasonably believe that all information which they may supply to a federal agency will be shielded from public disclosure. As public agencies subject to public scrutiny, other law enforcement agencies are in a very different position from that of a private citizen who has no legal duty to volunteer information to law enforcement agencies." As discussed Supra, the district court is simply in error when it assumes that foreign, state and local law enforcement agencies have a duty to volunteer information to federal law enforcement agencies. Consequently, in this context, they are similar to private citizens, which the district court would place within the scope of the exemption. [**28]  
n15. See Lopez Pacheco v. FBI, supra, 470 F. Supp. at 1104 n. 16 and accompanying text (D.P.R.1979) where although the FBI was willing to release certain investigative documents obtained from state police officials in Washington, the state authorities refused to give the FBI permission to do so, stating in a letter that:
The matter to be determined is whether or not once local law enforcement agencies release information to the F.B.I., that information may be released by the federal agencies by virtue of the Freedom of Information Act. It is our position that if information given to the federal agencies is subject to such release without the statutory constraints of the State of Washington being followed, further information of such nature will not be available to Federal Agencies.

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A "plain meaning" interpretation of the 7(D) exemption would not be in conflict with the remainder of the FOIA. While the FOIA "is in favor of disclosure", Department of Air Force v. Rose, 425 U.S. 352, 361, 96 S. Ct. 1592, 1599, 48 L. Ed. 2d 11 (1976), it should be apparent that the subsection (b) exemptions are [**29]  also a part of the FOIA and in their case Congress decided that there were "types of information that the Executive Branch must have the option to keep confidential." Id., quoting EPA v. Mink, 410 U.S. 73, 79-80, 93 S. Ct. 827, 35 L. Ed. 2d 119 (1973); See also FAA Administrator v. Robertson, 422 U.S. 255, 261, 95 S. Ct. 2140, 45 L. Ed. 2d 164 (1975). While one may employ the general purpose of the act as justification to narrowly construe the exemptions where there is an absence of congressional intent on a particular area covered by one of the exemptions, one must remember that the congressional intent in enacting the exemption was to preserve, not destroy, confidentiality in certain necessary situations. Consequently to say, as appellant does here, that one's interpretation of the exemption is consistent with the general purpose of the FOIA is to ignore the congressional intent which caused and required the enactment of the exemptions in the first place.
  [*427]  The purpose of the FOIA is to serve disclosure of federal agency activity, not as a means for private parties to find out what facts or opinions foreign, state or local law enforcement agencies have collected or made [**30]  on them. Cf., S.Rep.No.813, 89th Cong., 1st Sess., 3 (1965), quoted in Department of Air Force, supra, 425 U.S. at 361, 96 S. Ct. 1592; NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 143 n. 10, 95 S. Ct. 1504, 44 L. Ed. 2d 29 (1975). By including foreign, state and local law enforcement agencies in the 7(D) exemption, we would not be preventing any proper disclosure of federal agency action. If we adopt the approach suggested by appellant we would eliminate sources of information which the federal agencies may need without gaining any greater disclosure of the type of information which the FOIA seeks to reveal.
Finally, there is a rule of statutory interpretation that should be mentioned. A statute should not be interpreted so as to produce an absurd result.  Holy Trinity Church v. United States, 143 U.S. 457, 461, 12 S. Ct. 511, 36 L. Ed. 226 (1892). Any inanimate entity, such as a corporation or a foreign law enforcement agency, must act through a human intermediary. If we now interpret "source" as limited only to human sources, there would be an absurd difference between saying that a federal agency received sought-after information from an agent, Mr. X, of a foreign law enforcement [**31]  agency under an expressed or understood assurance of confidentiality and saying that the agency had received the information from the foreign law enforcement agency under the same assurance of confidentiality. Cf., Victoria-Vogue, Inc. v. Valcourt, Inc., 148 F. Supp. 160, 172 (S.D.N.Y.1956). We do not think that Congress intended to impose such a form over substance rule for law enforcement agencies.
Even assuming that the legislative history shows that Congress had only "human" sources in mind when it drafted 7(D), we would reach the same result. There is no direct evidence in the legislative history that Congress specifically sought to exclude law enforcement agencies from the definition of confidential source. In circumstances such as these, where the legislative history is inconclusive, we should not impute to Congress an intent to exclude law enforcement agencies where they are within the plain meaning of the statute.
Although rising in a somewhat different context, the recent case of United States v. Jones, 607 F.2d 269 (9th Cir., 1979), is instructive. In Jones, the issue was whether allegations that the defendants had stolen and damaged Indian artifacts were covered by the [**32]  general theft and malicious mischief statutes, 18 U.S.C. § §  641 and 1361. Finding that the language of the statutes applied to the conduct in question and that there was no affirmative evidence that Congress intended to limit the application of the statutes, we held that the conduct came within the scope of the statutes. "Where the words and purpose of a statute plainly apply to a particular situation, however, the fact that the specific application of the stature never occurred to Congress does not bar us from holding that the situation falls within the statute's coverage." Id. at 273.
In this case, law enforcement agencies fall within the plain meaning of the statutes. Furthermore, their inclusion within 7(D) furthers the statutory purpose of preventing the "drying up" of sources of confidential information. The legislative history does not evidence an intent specifically to exclude law enforcement agencies. In these circumstances, we should give effect to the plain meaning of the statute even if Congress did not contemplate this particular application.
In conclusion, we find that the language of the 7(D) exemption on its face would clearly include foreign, state and local law [**33]  enforcement agencies within its scope. The legislative materials are ambiguous as to an expressed limitation on the meaning of the term "confidential source" and hence do not control the customary meaning of the words.  Plasterers' Union, supra, 404 U.S. at 129 n. 24, 92 S. Ct. at 368 n. 24. More importantly, the evidence of the congressional  [*428]  intent as to the 7(D) exemption in the legislative history strongly supports our interpretation.
B. Sufficiency of the Findings Below
CSC makes two arguments as to the sufficiency of the district court's findings of fact. Both of its contentions stem from language in the reported opinion where the district court stated:
The materials involved are criminal investigatory records compiled for law enforcement purposes given under conditions of confidentiality.

 410 F. Supp. at 1300. First, it is argued that the district court did not find that the non-disclosed documents contained confidential information which had been furnished Only by a confidential source as required by the 7(D) exemption. Second, it is argued that the district court failed to specifically find that the information had been compiled in the course of criminal [**34]  investigations.
If the quoted passage was indeed the sole basis for the district court judge's conclusion that the contested documents were within the 7(D) exemption, we would readily agree with CSC that the judge was in error. However, the quoted passage is merely a part of the general background portion of the opinion. As to this issue, it is more important, not to examine what the judge said, but what he did.
From the record, we are convinced that the district court judge recognized the applicable requirements of the 7(D) exemption and adequately required the government to satisfy its burden of proof as to each document which it claimed was exempted. In particular, after reviewing the Reporter's Transcript of Proceedings In Camera which was submitted to this Court as a sealed exhibit, we note that the district court judge carefully went "through each document step by step" and had the government's attorneys explain the grounds urged in support of the exclusions. During that process, the judge queried the attorneys as to the sources of the information, n16 and the circumstances by which the information was obtained. We are satisfied that the district court judge correctly applied [**35]  the 7(D) exemption herein by requiring, where appropriate, the government to show that the confidential information was only furnished by a confidential source and during the course of a criminal investigation.

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n16. During the questioning as to the first contested document, the government's attorney conceded that, in the case of a document which would not reveal the identity of a confidential source, the government would be obligated to show that the confidential information came Only from a confidential source.

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III. CONCLUSION
The judgment of the district court is AFFIRMED.  

DISSENTBY:
WALLACE 

DISSENT:

WALLACE, Circuit Judge, dissenting:
 
I am in sympathy with the result reached by the majority. The statute is clear enough on its face. It makes eminent sense and I quite frankly wish that it were the law. Unfortunately, however, because the Supreme Court requires us to examine legislative history in construing the meaning of a statutory term such as the one before us, Train v. Colorado Pub. Interest Research Group,  [**36]  426 U.S. 1, 9-10, 96 S. Ct. 1938, 48 L. Ed. 2d 434 (1976), and because the legislative history of the amendment to 5 U.S.C. §  552(b)(7)(D), as I read it, clearly expresses a congressional intent that "confidential source" be limited to human sources, I must respectfully dissent. In concluding that the documents withheld by the DEA are not entitled to protection from disclosure under (b)(7) (D), I would not reach appellant's challenge to the sufficiency of the lower court's findings.
I
The question before us, whether "confidential source" as used in (b)(7)(D) includes foreign, state, and local law enforcement agencies, is a difficult one. If I were looking only to the plain language of the statute, I would agree with the conclusion of my brethren that "source" refers simply to the origin of information, without distinction  [*429]  among types of originators. However, the Supreme Court directed that legislative history should not be ignored when it aids in the resolution of a question of statutory construction, Train v. Colorado Pub. Interest Research Group, supra, 426 U.S. at 9-10, 96 S. Ct. at 1942, 48 L. Ed. 2d at 440-441, and this circuit has demonstrated its willingness to [**37]  heed that admonition "to examine relevant legislative history in the search for the intent of Congress even when the statute is clear and unambiguous on its face." Pettis ex rel. United States v. Morrison-Knudsen Co., 577 F.2d 668, 671 (9th Cir. 1978). See also Hewlett-Packard Co. v. Barnes, 571 F.2d 502, 504 n.4 (9th Cir.), Cert. denied, 439 U.S. 831, 99 S. Ct. 108, 58 L. Ed. 2d 125 (1978).
To be sure, "reliance on legislative history in divining the intent of Congress is, as has often been observed, a step to be taken cautiously." Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 26, 97 S. Ct. 926, 941, 51 L. Ed. 2d 124 (1977). Nonetheless, without additional guidance from the Supreme Court, I believe we are bound by the teaching of Train, and therefore we must take the more thorough approach and examine the legislative history for assistance in construction of the term "source." In doing so I, like my brethren, feel that we should heed the Court's instruction that "legislative materials, if "without probative value, or contradictory, or ambiguous,' should not be permitted to control the customary meaning of words." NLRB v. Plasterers' Local 79, 404 U.S. 116, 129 n.24, 92 S. Ct. 360,  [**38]  368 n.24, 30 L. Ed. 2d 312 (1971) (quoting United States v. Dickerson, 310 U.S. 554, 562, 60 S. Ct. 1034, 84 L. Ed. 1356 (1940)). See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 412 n.29, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971); Pettis ex rel. United States v. Morrison-Knudsen Co., supra, 577 F.2d at 672.
II
The district judge, although aware of passages "suggest(ing) that the legislator's focus was upon human sources," concluded that "assorted grammatical nuances . . . are no substitute for an assessment of what interpretation the legislature would have given the term source if the issue involved here had been presented at the time of passage." Church of Scientology v. United States Dep't of Justice, 410 F. Supp. 1297, 1302 (C.D.Cal.1976). Similarly, the majority relies on the fact that Congress did not "plan" to prevent law enforcement agencies from gathering information. Our determination, however, cannot be based upon subsequent happenings which may demonstrate the illogical position taken, nor upon what Congress would have done had it foreseen the facts of this case. I conclude that at the time of the passage of the statute, the legislative history shows that [**39]  Congress intended the term "source" to mean "person."
As originally proposed by Senator Hart, subsection (b)(7)(D) exempted "investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would . . . disclose the identity of an informer . . . ." See House Comm. on Government Operations & Senate Comm. on the Judiciary, 94th Cong., 1st Sess., Freedom of Information Act and Amendments of 1974 (P.L. 93-502) Source Book: Legislative History, Texts, and Other Documents 332 (Joint Comm. Print 1975) (hereinafter cited as Source Book). At the time of his introduction of the amendment, Senator Hart stated:
Fourth, the amendment protects without exception and without limitation the identity of informers. It protects both the identity of informers and information which might reasonably be found to lead to such disclosure. These may be paid informers or simply concerned citizens who give information to enforcement agencies and desire their identity to be kept confidential.

Source Book, Supra, at 333-34. See also id. at 351 (memorandum letter from Senator Hart).
In response to President Ford's concerns, the Conference Committee [**40]  substituted  [*430]  "confidential source" for "informer." n1 Id. at 367, 378, 450-51, 459 (remarks of Senators Kennedy and Hart and Congressman Moorhead). Its joint explanatory report, which "represents the considered and collective understanding of those (legislators) involved in drafting and studying proposed legislation," Zuber v. Allen, 396 U.S. 168, 186, 90 S. Ct. 314, 325, 24 L. Ed. 2d 345 (1969), said:

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n1. The President wrote that he was:
concerned with any provision which would reduce our ability to effectively deal with crime. This amendment could have that effect if the sources of information or the information itself are disclosed. These sources and the information by which they may be identified must be protected in order not to severely hamper our efforts to combat crime.
Source Book, Supra, at 369-70 (letter from President Ford to Senator Kennedy, Aug. 20, 1974).

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The substitution of the term "confidential source" in section 552(b)(7)(D) is to make clear that the identity of a Person other [**41]  than a paid informer may be protected if the Person provided information under an express assurance of confidentiality or in circumstances from which such an assurance could be reasonably inferred. Under this category, in every case where the investigatory records sought were compiled for law enforcement purposes either civil or criminal in nature the agency can withhold the names, addresses, and other information that would reveal the identity of a confidential source Who furnished the information.

H.R.Rep.No.93-1380 & S.Rep.No.93-1200, 93d Cong., 2d Sess., Reprinted in (1974) U.S.Code Cong. & Ad.News, pp. 6285, 6291, And in Source Book at 230 (emphasis added).
My brethren disregard the clear language of this explanatory report by contending that the Conference Committee used "person" as a collective noun and that the expansive nature of their message precludes any restrictive reading of "confidential source." Not only is it unlikely that the Committee was using the law dictionary definition of person, as my brethren contend, but even if they were, that definition of the term would not include foreign, state, and local law enforcement agencies. See, e.g., 1 U.S.C. §  1. The [**42]  Committee's use of "person" in explaining the change from "informer" plainly reveals that their intent to protect only human sources had not changed. Moreover, the majority's reliance on the expansive intent of the Committee report is misplaced. General intent should not be used to controvert specific language; indeed, the Committee itself chose to express its intent by the term "person."
While floor debates are accorded less weight than committee reports, United States v. International Union UAW, 352 U.S. 567, 585-86, 77 S. Ct. 529, 1 L. Ed. 2d 563 (1957); Accord, International Tel. & Tel. Corp. v. General Tel. & Elec. Corp., 518 F.2d 913, 921 (9th Cir. 1975), the floor discussion in the Senate with respect to this passage supports this view of "source." Statements made both before passage of the amendment in the Senate and following the Conference Committee Report and Presidential veto indicate that Senators Hart and Kennedy, both members of the Conference Committee, and Senator Byrd assumed the exemption referred to persons or individuals. n2 The government argues and the majority  [*431]  agrees that Congress intended to protect law enforcement efforts. I do find throughout [**43]  the legislative debates broad statements by Senators Hart and Kennedy to the effect that law enforcement would in no way be hampered by the amendment of subsection (b)(7). See id. at 351, 365, 440, 459. We should not, however, allow broad statements of assurance made in floor debate to control the clear language of the Committee report, language supported by statements of both senators indicating that they understood that "source" referred to persons or individuals. See id. at 351, 459. I think it is clear that "source" was not meant to include foreign, state, and local law enforcement agencies. Although there was considerable testimony pertaining to law enforcement difficulties that could result from this interpretation, this does not allow us to ignore congressional intent. We are not judging what should have been done but what was done. The law enforcement problem resulting from interpreting "source" as individuals, which undoubtedly is real, should be addressed to the Congress rather than to the courts.

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n2. Senator Hart stated in a letter to each senator that "(i)f informants' anonymity whether paid informers or citizen volunteers would be threatened, there would be no disclosures. . . ." Source Book, Supra, at 351. Following the President's veto he stated:
(t)he major change in conference was the provision which permits law enforcement agencies to withhold "confidential information furnished only by a confidential source." In other words, the agency not only can withhold information which would disclose the identity of a confidential source, but also can provide blanket protection for any information supplied by a confidential source. The President is therefore mistaken in his statement that the FBI must prove that disclosure would reveal an informer's identity; all the FBI has to do is to state that the information was furnished by a confidential source and it is exempt.
Source Book, Supra, at 451. Senator Kennedy stated that "we also provided that there be no requirement to reveal not only the identity of a confidential source, but also any information obtained from Him in a criminal investigation." Id. at 459 (emphasis added). Senator Byrd stated he had been concerned that "informer" could have been construed to mean "paid informer," but said he would vote for the bill, with the (b)(7)(D) amendment, in part because "confidential source" would "assure that the identity of a Person other than a paid informer may be protected." Id. at 468 (emphasis added).
Senators Hruska and Thurmond were members of the Conference Committee but did not sign its report. In opposing the amendment, they expressed fears that reprisals and a loss of sources would result, but were apparently concerned about individuals. See id. at 340-41, 343, 348, 456-57. But these senators' opposition comments are less probative because opposition arising out of a concern for the adequacy of protection of individuals would not necessarily indicate they believed agency sources were not covered by the amendment.

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The government argues that the question whether "source" should include foreign, state, and local law enforcement agencies "simply did not arise." This is not, however, a case of legislative silence, but one in which Congress did speak and specified the scope of the term in question. Especially persuasive is the fact that Congress was creating exceptions to a rule of disclosure. We should be reluctant under these circumstances to view an omission as anything but deliberate. I conclude that in light of Train v. Colorado Pub. Interest Research Group, supra, 426 U.S. at 9-10, 23-24, 96 S. Ct. 1938, we are required to give the term the meaning Congress intended it to have in spite of its facially plain meaning to the contrary.
III
This conclusion is consistent with the purposes of the Act in general. The Supreme Court has emphasized that the " "basic policy' " of the Act "is in favor of disclosure." NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 220, 98 S. Ct. 2311, 57 L. Ed. 2d 159 (1978) (quoting Department of Air Force v. Rose, 425 U.S. 352, 361, 96 S. Ct. 1592, 48 L. Ed. 2d 11 (1976)); Accord, Theriault v. United States, 503 F.2d 390, 392 (9th Cir. 1974). While this consideration [**45]  is not determinative in this case, it is worth pointing out that a restrictive reading limits the meaning of "source" to persons and thus favors disclosure over secrecy.
Finally, my brethren contend that a restrictive reading of "source" could easily be circumvented by agency use of individual agents to convey information, thus rendering the restrictive construction "absurd." Such a position assumes, however, that an agent acting in such a capacity would not be viewed as acting for the agency, a decision we need not make at this juncture.
Because we are required by law to examine legislative history in construing "confidential source," and because that history clearly reveals that Congress intended to protect only human sources from disclosure, I would reverse.  

78 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a nonprofit corporation, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF the ARMY: Howard H. Callaway, Secretary of the Army; U.S. Intelligence Agency; Major Aaron, Assistant Chief of Staff for Army Intelligence, Defendants-Appellees; CHURCH OF SCIENTOLOGY OF CALIFORNIA, a nonprofit corporation, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF DEFENSE; Office of the Secretary of Defense; James R. Schlesinger, Secretary of the Department of Defense; United States Department of the Navy; J. Wm. Middendorf II, Secretary of the Navy; Naval Intelligence Command: Rear Admiral E.F. Rectanus, Director of Naval Intelligence, Defendants-Appellees.  

 Nos.  78-1168, 78-1169 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

611 F.2d 738; 1979 U.S. App. LEXIS 10638 

November 7, 1979 

SUBSEQUENT HISTORY:
 [**1]  
As Amended on Denial of Rehearing April 7, 1980.As Modified.Suggestion for Rehearing En Banc in No. 78-1169 Rejected April 7, 1980.  

PRIOR HISTORY:
On Appeal from the United States District Court for the Central District of California.  

COUNSEL:
Barry Leigh Weissman, Beverly Hills, Cal., for plaintiff-appellant. 
Barbara L. Herwig, Dept. of Justice, Washington, D. C., for defendants-appellees.  

JUDGES:
Before TUTTLE, n* TRASK, and ANDERSON, Circuit Judges.
* The Honorable Elbert Parr Tuttle, Senior Circuit Judge, United States Court of Appeals, Fifth Circuit, sitting by designation.

OPINIONBY:
ANDERSON 

OPINION:

  [*741]  
Plaintiff Church of Scientology of California ("the Church") appeals in these cases, consolidated on appeal for oral argument and disposition, from judgments of the district court pertaining to certain documents requested of the defendants under the Freedom of Information Act, 5 U.S.C. §  552. The judgments upheld the actions of the defendants in releasing certain documents with details excised, and their refusal to release three documents in any form. We affirm in part and reverse in part.
I. JURISDICTION
The district court took jurisdiction pursuant to 5 U.S.C. §  552(a)(4)(B).  [**2]  Our jurisdiction on appeal is based upon our authority to review the final order of a district court, 28 U.S.C. §  1291.
II. THE PROCEEDINGS BELOW
The Church filed requests pursuant to the Freedom of Information Act, 5 U.S.C. §  552, for any documents pertaining to the Church or its founder, L. Ron Hubbard, which were in the possession of defendant Department of Defense ("Defense"), and defendant Department of the Army ("Army"). Both defendants complied with the requests, releasing a number of documents in their entirety, releasing only edited versions of others, and refusing to release any portion of certain documents.
Dissatisfied from some of the defendants' responses, the Church resorted to legal action to compel disclosure. On September 9, 1975, the Church filed a complaint seeking an injunction against withholding of records in Church of Scientology v. United States Department of the Army, No. CV-75-3056-F. On December 4, 1975, the Church filed a similar complaint in Church of Scientology v. United States Department of Defense, No. CV-75-4072-F. On June 2, 1977, the court below granted summary judgment for the defendants in each case.
Numerous documents were involved. The [**3]  Church appeals in each case the court's rulings on specific documents. In Department of Defense, the Church's appeal involves three documents, two of which were released with portions excised, and the other withheld entirely. In Department of the Army, the Church appeals on six documents, four of which were released with portions excised, and the other two withheld entirely. For all but two of the documents, the court below found that release of the excised information was protected by one of several specific exemptions to disclosure under the Freedom of Information Act. The court withheld two documents in Department of the Army because each was the subject of pending litigation in another federal district. Details on specific documents will be developed in the course of this opinion.
III. THE FREEDOM OF INFORMATION ACT
The Freedom of Information Act, 5 U.S.C. §  552, mandates a policy of broad disclosure of government documents when  [*742]  production is properly requested. 552(a)(3) reads:
". . . each agency, upon any request for records which (A) reasonably describes such records and (B) is made in accordance with published rules stating the time, place, fees (if any),  [**4]  and procedures to be followed, shall make the records promptly available to any person."
When a request is made, an agency may withhold a document, or portions thereof, only if the information contained in the document falls within one of nine statutory exemptions to the disclosure requirement contained in §  552(b). Three of the nine section (b) exemptions are relevant to this appeal. (b)(1) exempts from disclosure information specifically authorized by an Executive order to be kept secret "in the interest of national defense or foreign policy" and which is properly classified pursuant to such an order. (b)(6) authorizes the withholding of information which would constitute a "clearly unwarranted invasion of personal privacy" if found in "personnel and medical files and similar files." (b)(7) exempts from disclosure "investigatory records compiled for law enforcement purposes" if disclosure would have one of several specified adverse effects.
The nine exemptions to the Act are to be narrowly construed. See, e. g., Bristol-Meyers Company v. F. T. C., 138 U.S.App.D.C. 22, 424 F.2d 935 (D.C.Cir. 1970), Cert. denied, 400 U.S. 824, 91 S. Ct. 46, 27 L. Ed. 2d 52 (1970).
IV. THE STANDARD [**5]  OF REVIEW
An appellate court has essentially two tasks in reviewing judgments on Freedom of Information Act issues: (1) the court must determine whether the district judge had an adequate factual basis for his or her decision, and (2) if an adequate factual basis was established, the court must determine whether the decision below was clearly erroneous.
A. Factual Basis: Significance of the In Camera Inspection
The burden is placed upon the government agency to establish that a given document is exempt from disclosure. See, e. g., Environmental Protection Agency v. Mink, 410 U.S. 73, 93 S. Ct. 827, 35 L. Ed. 2d 119 (1973); Harvey's Wagon Wheel, Inc. v. N. L. R. B., 550 F.2d 1139, 1141, 1142 (9th Cir. 1976). In meeting its burden of proof, the government may not rely upon "conclusory and generalized allegations of exemptions . . . ." Vaughn v. Rosen, 157 U.S.App.D.C. 340, 346, 484 F.2d 820, 826 (D.C.Cir. 1973). On the other hand, the government need not specify its objections in such detail as to compromise the secrecy of the information. Id.
The government may rely upon detailed affidavits or oral testimony so long as the evidence offered enables the court to make an independent [**6]  assessment of the government's claim of exemption. Harvey's Wagon Wheel, Inc. v. N. L. R. B., 550 F.2d 1139, 1141 (9th Cir. 1976); See also Environmental Protection Agency v. Mink, 410 U.S. 73, 93, 93 S. Ct. 827, 35 L. Ed. 2d 119 (1973). If the agency supplies a reasonably detailed affidavit describing the document and facts sufficient to establish an exemption, then the district court need look no further in determining whether an exemption applies.
If, however, the court finds the affidavits or testimony submitted too generalized to establish eligibility for an exemption, it may, in its discretion, proceed to examine the disputed documents In camera for a first-hand determination of their exempt status. 5 U.S.C. §  552(a)(4)(B). One of the major purposes of the 1974 amendments to the Freedom of Information Act, P.L. 93-502, 88 Stat. 1561 (1974), was to clarify the discretion of the trial court to conduct an In camera inspection of classified  [*743]  government documents. n1 Though the burden remains at all times on the government to establish exempt status, In camera inspection may supplement an otherwise sketchy set of affidavits. By first-hand inspection, the court may determine [**7]  whether the weakness of the affidavits is a result of poor draftsmanship or a flimsy exemption claim.  Irons v. Bell, 596 F.2d 468, 471, n.6 (1st Cir. 1979). Cf.  Mead Data Central, Inc. v. United States Department of the Air Force, 184 U.S.App.D.C. 350, 359, 566 F.2d 242, 251 (D.C.Cir. 1977).

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n1. The Senate Conference Report on P.L. 93-502 commented on the significance of the mandate to conduct In camera review in this manner:
"(w)hile In camera examination need not be automatic, in many situations it will plainly be necessary and appropriate. Before the court orders In camera inspection, the Government should be given the opportunity to establish by means of testimony or detailed affidavits that the documents are clearly exempt from disclosure. The burden remains on the Government under this law." S.Conf.Rep.No. 93-1200, 93rd Conf., 2d Sess. (1974), Reprinted in 1974 U.S.Code Cong. & Admin.News, pp. 6267, 6285, 6287, 6288.

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We cannot stress strongly enough, however, that the district court's inspection prerogative [**8]  is not a substitute for the government's burden of proof, and should not be resorted to lightly. In cases involving requests for hundreds of documents, no trial court can reasonably be expected to wade through a mass of exhibits In camera. We also underscore similar limitations upon In camera inspection at the appellate level.
The Church here has argued that the government failed in either case to present sufficiently detailed affidavits or depositions, and thereby failed to meet its burden of proof. While we agree that some of the affidavits presented were drafted in a somewhat conclusory fashion, we find that the trial court properly undertook an In camera inspection of the disputed documents, and therefore had an adequate factual basis for its decision. The small number of documents requested, and their relative brevity, made these cases appropriate instances for exercise of the district court's inspection prerogative. In viewing both the edited and unedited versions of the documents, the trial court had the opportunity to inspect specific portions which the government claimed to be exempt from disclosure. We stress again, however, that the burden of proof in FOIA cases remains [**9]  squarely on the government, and that In camera inspection is a procedure which the trial court need invoke only where it finds inspection appropriate, in its discretion.
B. The "Clearly Erroneous" Standard
Once we are satisfied that the trial court had an adequate basis to decide, we are guided by the "clearly erroneous" standard in evaluating the substance of that decision. See Mead Data Central, Inc. v. United States Department of the Air Force, 184 U.S.App.D.C. 350, 359, 566 F.2d 242, 251, n. 13 (D.C.Cir. 1977).
V. THE ISSUE OF SEGREGABILITY
Document No. 5 in Department of Defense was withheld in its entirety, and the district court approved the Department's action here on the basis of exemptions (b)(1) and (b)(7)(D).
 5 U.S.C. §  552(b) provides, in part, that:
"Any reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection."

Courts are, therefore, required to segregate exempt portions of documents from those portions which are not exempt.
The court below entered no findings on whether any specific portions of the document might be released without endangering [**10]   [*744]  national security. n2 We find it necessary to remand to the district court for specific findings on the issue of segregability. There is no longer any question that the doctrine of segregability applies to the national security exemption as well as to the exemptions under the Freedom of Information Act. See Founding Church of Scientology of Washington, D. C., Inc. v. Bell, 195 U.S.App.D.C. 363, 603 F.2d 945 (D.C.Cir. 1979). Accordingly, it is error for a district court to simply approve the withholding of an entire document without entering a finding on segregability, or the lack thereof.

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n2. In its memorandum opinion, the district court made the following findings with regard to Document No. 5:
"Document No. 5 is a 2-page naval message from Commander-in-Chief U.S. Naval Forces Europe to U.S. Defense Attache Copenhagen, date-time group 1016442 FEB 71. This message has been entirely withheld by the defendants and the court finds that the withholding is lawful pursuant to the provisions of 5 U.S.C. § §  552(b)(1) and (b)(7)(D) in that it is classified confidential and determination of this classification was made in the interest of national defense under Executive Order No. 11652 of 8 March 1972. The message is an investigatory record compiled for law enforcement purposes, the release of which would disclose the identity of confidential sources by an agency conducting a lawful national security investigation and would disclose confidential information furnished only by confidential sources."

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We remand to the district court for findings on the segregability of any portion of Document No. 5 consistent with the exemptions to the Freedom of Information Act. On remand, the district court should consider again all affidavits and depositions, and perhaps call for additional testimony dealing with any portions of the document which might be revealed without damaging either national security or a criminal investigation. It may well be the case that no portion of Document No. 5 may be revealed without damaging national security. However, we cannot discern from the record whether the court actually considered that issue. n3

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n3. Even though we have been supplied with an unexpurgated copy of Document No. 5, we decline to attempt any judgment on segregability. Not only is our scope of review limited on appeal, but we also find it important that evidence be submitted to the court bearing directly on the issue of segregability. See Founding Church of Scientology of Washington, D. C. v. Bell, 195 U.S.App.D.C. 363, 369, 603 F.2d 945, 951 (D.C.Cir. 1979).

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VI. UNWARRANTED INVASION OF PERSONAL PRIVACY
For each of the remaining documents in both cases, the court below found the exemption for material, the disclosure of which would constitute a "clearly unwarranted invasion of personal privacy," 5 U.S.C. §  552(b)(6) applicable. Each document had been released with portions excised, and the Church essentially challenged the propriety of the excisions. We affirm the court's ruling on the (b)(6) exemption for each document. For the sake of convenience, we adopt the lower court's numbering scheme for each document.
A. The Documents
1.) Department of Defense
Document No. 3 in Department of Defense is a background investigation of a particular individual. Among the information contained in this somewhat lengthy document is the name of the individual under investigation, and various pieces of information which would tend to identify the individual if revealed to the Church. The unexpurgated document reveals details such as employment background, a number of religious affiliations, and other information relating to this individual's personal life. For certain of the excisions, the defendant has claimed exemption (7)(D) only, and these will [**13]  be considered later in this opinion.
Other excisions in Document No. 3 do not deal directly with the individual under investigation, but do reveal affiliations of various other individuals.
  [*745]  Document No. 4 was released with eleven deletions. The document consists of a single-page memorandum regarding an individual who was interviewed by the Naval Investigative Service. The excised portions are either references to the individual's name or to details which would tend to identify the individual if revealed. The unexpurgated document reveals details of the individual's employment history, group affiliations, and personal life.
2.) Department of the Army
Document Nos. 3, 4, 5, and 6 in Department of the Army appear to be related documents involving a security investigation of a particular individual. The (b)(6) exemption claim for each document largely involves material which would tend to identify this individual.
Document No. 3 is a single-page memorandum dealing mainly with an investigation of the Church of Scientology and potential prosecutions of the Church and its leadership. The only information deleted consists of the names of the individuals under investigation,  [**14]  an interviewee, and minor details tending to identify each of them.
Document No. 4 appears to be a general background memorandum dealing with the doctrine of Scientology. The only deletions are references to names of two individuals who were reportedly associated with the Church, and some details tending to identify each of them. As a whole, the unexpurgated document tends to reveal details of those individuals' affiliations, both religious and political, and of their employment background.
Document No. 5 is a report of an interview with the subject of the investigation, consisting of two pages. Large chunks of this document have been deleted, all of it information tending to identify the individual. The information reveals details such as educational background, religious affiliations, employment history, and some allusions to emotional make-up.
Document No. 6 is the full text of the interview referred to in Document No. 5. It largely elaborates on details contained in Document No. 5, and refers to a wide range of information dealing with the subject individual's private life. The bulk of the interview was excised.
B. The Privacy Exemption
The legislative history of 5 U.S.C.  [**15]  §  552(b)(6) is sparse, but instructive. The exemption for "personal and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy" has remained virtually unchanged since the passage of the original version of the Freedom of Information Act in 1966. P.L. 89-487, 80 Stat. 250 (1966). House Report No. 1497 noted that governmental agencies such as the Veterans Administration, the Department of Health, Education, and Welfare, and others had accumulated large quantities of files which contained intimate personal details of people's private lives. The Report explained that:
"The limitation of a "clearly unwarranted invasion of personal privacy' provides a proper balance between the protection of an individual's right of privacy and the preservation of the public's right to Government information by excluding those kinds of files, the disclosure of which might harm the individual."

Reprinted at 1966 U.S.Code Cong. and Admin.News, pp. 2418, 2428.
The concept of a "proper balance" between competing privacy and disclosure has been taken literally by the courts. In Department of the Air Force v. Rose, 425 U.S. 352,  [**16]  96 S. Ct. 1592, 48 L. Ed. 2d 11 (1976), the Supreme Court noted that a "balancing" was what Congress had in mind when it created exemption (b)(6). Lower federal courts have been more explicit in developing a balancing test under (b)(6). In Getman v. N. L. R. B., 146 U.S.App.D.C. 209, 450 F.2d 670 (D.C.Cir. 1971), the court held that, on balance, the names and telephone  [*746]  numbers of persons entitled to vote in a union election were not exempt under (b)(6). The Getman court balanced the public interest in disclosure, the potential harm from disclosure, the minimal nature of the privacy intrusion, and the lack of any alternative means of obtaining the information. See 146 U.S.App.D.C. 209, 213, 214, 215, 450 F.2d 670, 674, 675, 676. The court in Rural Housing Alliance v. United States Department of Agriculture, 162 U.S.App.D.C. 122, 498 F.2d 73 (D.C.Cir. 1974), spelled out the balancing test for exemption (6) in detail:
"(Discussing Getman, supra ) Specifically we suggested that in balancing interests the court should first determine if disclosure would constitute an invasion of privacy, and how severe an invasion. Second, the court should weigh the public interest purpose [**17]  of those seeking disclosure, and whether other sources of information might suffice. Such balancing is unique for exemption 6; normally no inquiry into the use of information is made, and the information is made available to any person."

 162 U.S.App.D.C. 122, 126, 498 F.2d 73, 77.
The weight of the authority among the various circuits is clearly in accord with the "balancing" rationale. See Pacific Molasses Co. v. N. L. R. B., 577 F.2d 1172 (5th Cir. 1978) (union preference cards signed by employees exempt); Committee on Masonic Homes, etc. v. N. L. R. B., 556 F.2d 214 (3d Cir. 1977) (union preference cards exempt since little public interest in disclosure and great potential for "chilling effect" in exercise of union privileges if disclosure takes place); Columbia Packing Co., Inc. v. U. S. Dept. of Agriculture, 563 F.2d 495 (1st Cir. 1977) (privacy interest in personnel files outweighed by public interest in performance of government meat inspectors suspected of accepting bribes); Campbell v. United States Civil Service Commission, 539 F.2d 58 (10th Cir. 1976) (privacy interest in personnel files of government employees who were erroneously classified not outweighed by public [**18]  interest in smooth operation of Civil Service Commission); Wine Hobby, U. S. A. v. United States Internal Revenue Service, 502 F.2d 133 (3d Cir. 1974) (forms filed by persons seeking "family use" exception to alcohol production taxes exempt when balanced against the interest of a private firm in obtaining names of these persons for mailing list advertisement purposes). But see Robles v. E. P. A., 484 F.2d 843 (4th Cir. 1973).
The case law thus identifies four factors to be balanced in weighing a claim of exemption for a "clearly unwarranted invasion of personal privacy": (1) the plaintiff's interest in disclosure; (2) the public interest in disclosure; (3) the degree of the invasion of personal privacy; and (4) the availability of any alternative means of obtaining the requested information. In weighing the factors, we keep in mind that the invasion of privacy must be "clearly" unwarranted.
For the privacy exemption to be applicable, the information must be contained in "personnel (or) medical files (or) similar files." 5 U.S.C. §  552(b)(6). A "similar" file is defined simply as a file which contains information similar to that found in a standard personnel file. See Pacific Molasses [**19]  Co., Inc. v. N. L. R. B., 577 F.2d 1172 (5th Cir. 1978) (information contained on union preference cards signed by employees found to be of a sufficiently "personal" nature to qualify the cards as "similar" files); Rural Housing Alliance v. United States, 162 U.S.App.D.C. 122, 498 F.2d 73 (D.C.Cir. 1974) (government report on housing discrimination found to qualify as a "similar file" because of information concerning marital status, legitimacy of children, medical condition, etc. of individual homeowners).
C. Application of the Exemption
On the threshold issue of whether the documents at issue here qualify as "personnel,  [*747]  " "medical," or "similar" files, we find that each of the documents may be classified as protected files. Each contains a sufficient amount of personal information to merit consideration for exemption (6) status.
Applying the balancing test to the portion of Document Nos. 3 and 4 in Department of Defense for which exemption (6) is claimed, we find no error committed. The Document No. 3 security background information involves various details of employment and personal history of the subject individual. Release of the bulk of the exempt portions of this [**20]  document would tend to identify the individual n4 and to reveal details of this individual's life which are clearly exempt under current case law. Other deleted portions of Document No. 3 would tend to identify certain individuals who are associated with the Church, and various positions which they have held in the Church and affiliated organizations. On balance, we cannot say that the court erred in upholding the government's excision of the information pertaining to Church personnel. A reasonable person would be very likely to find that disclosure of religious affiliations and activities would constitute an invasion of his or her privacy. Additionally, the Church can obtain this information simply by checking its own membership and personnel files. There is no reason in this case to order public disclosure of such information. Disclosure of Document No. 4 would clearly constitute an unwarranted invasion of personal privacy. The deleted information pertains only to the name, address, and employment of a certain individual, and also describes an incident in the individual's life that the individual would apparently prefer not to disclose publicly. There could be no legitimate public [**21]  purpose served by disclosure of this information.

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n4. The Church cites Ferguson v. Kelley, 448 F. Supp. 919 (D.C.D.C.1978), for the proposition that there is no primary interest in disclosure of a name. The case is not merely so broad, however. It merely holds that the names of FBI agents are not barred from disclosure unless some threat to personal safety may be discerned.

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The Church's purpose in seeking the excised information in Document Nos. 3 and 4 can only be surmised, but must be considered under current case law. In all likelihood, the Church's purpose in seeking government files pertaining to its activities is to discover whether it is under any investigation, or what sort of information the government might be accumulating for purposes which the Church may or may not consider legitimate. The Church may harbor some very real fears as to the motives of various agencies in gathering such information. The information which has been released in each of the two Department of Defense cases adequately apprises [**22]  the Church of the type of information gathered. In neither case do we find that any more information than necessary to protect the privacy of the individuals involved has been excised.
Document Nos. 3, 4, 5 and 6 in Department of the Army were also properly excised. The four documents are interrelated as pertinent to the investigation of one individual. In no instance has any more information than is necessary to protect the identity, employment, and private life of the subject individual been excised. The factors considered with regard to the documents in Department of Defense are also relevant here. The Church's legitimate purposes in seeking the information are clearly outweighed by the subject individual's privacy interest.
Document No. 4 in Department of the Army bears special consideration because some of the deleted information does not relate to the subject individual, but to members of the Church. Again, the balance strikes in favor of the privacy interest. There is no purpose to be served by disclosure, and the Church may obtain the information by other means, such as consulting its own records. If any individual members  [*748]  of the Church fear that they have been [**23]  subjected to surveillance, it is they who should seek disclosure, and not the Church.
VII. INVESTIGATORY FILES COMPILED FOR A LAW ENFORCEMENT PURPOSE
Certain portions of Document No. 3 in Department of Defense were excised on the authority of exemption (b)(7)(D), the "law enforcement" exemption to disclosure under the Freedom of Information Act. In its entirety, (b)(7)(D) exempts:
"investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, . . ."

 5 U.S.C. §  552(b)(7)(D).
The threshold issue in any exemption (7) claim is whether the agency involved may properly be classified as a "law enforcement" agency. The term "law enforcement purpose" has been construed to require an examination of the agency itself to determine whether the agency may exercise a law enforcement function.  Irons v. [**24]  Bell, 596 F.2d 468, 474 (1st Cir. 1979). An agency which has a clear law enforcement mandate, such as the FBI, need only establish a "rational nexus" between enforcement of a federal law and the document for which an exemption is claimed.  Id. at 472. However, an agency which has a "mixed" function, encompassing both administrative and law enforcement functions, must demonstrate that it had a purpose falling within its sphere of enforcement authority in compiling the particular document. n5 Id. at 473. See also Weissman v. Central Intelligence Agency, 184 U.S.App.D.C. 117, 565 F.2d 692 (D.C.Cir. 1977).

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n5. The Department of Defense has cited Koch v. Department of Justice, 376 F. Supp. 313 (D.C.D.C.1974), in which files similar to those at issue here were held to have been properly withheld under exemption (7). Koch, however, is not persuasive because the agency involved was the FBI, for whom a separate showing of "law enforcement purpose" is unnecessary. Citation to Koch appears to beg the primary question here, namely, whether the Department of Defense may claim a law enforcement purpose in the first instance.

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In the case of Document No. 3, we do not find sufficient evidence in the record to warrant a finding that the Naval Investigative Service (NIS) of the Office of Naval Intelligence had a law enforcement purpose based upon properly delegated enforcement authority. While the NIS was clearly within its rights to conduct the investigation which produced Document No. 3, there is no showing that the investigation involved the enforcement of any statute or regulation within the authority of the NIS. In determining whether a "law enforcement purpose" is present, courts must look to the purpose behind the compilation of the document.  Rural Housing Alliance v. United States Department of Agriculture, 162 U.S.App.D.C. 122, 129, 130, 498 F.2d 73, 80, 81 (D.C.Cir. 1974). The agency must show that the files " . . . were compiled For adjudicative or enforcement purposes." Id., at 129, 498 F.2d at 80. (Emphasis in the original). Generally, files such as "internal audits" compiled simply to determine whether an agency's internal operations comport with statute or regulation do not qualify.  Id. at 130, 498 F.2d at 81. See also Center for National Policy Review on Race and Urban Issues v. Weinberger,  [**26]  163 U.S.App.D.C. 368, 502 F.2d 370 (D.C.Cir. 1974).
In the case of Document No. 3, exemption (7)(D) only is claimed for a passage which appears approximately halfway down page 1, following an unexcised sentence which reads, " "the HUBBARD ASSOCIATION OF SCIENTOLOGISTS (HASI), where Subject lists attendance, is a black-mailer's  [*749]  paradise.' " Deleted is the sentence immediately following "black-mailer's paradise," and a short phrase preceding the unexcised sentence which identifies the source of the information. The same passage is repeated on page 3, page 6, and again on three supplementary pages which are copies of an investigation request. (7)(D) is also claimed for a passage at the top of page 4, two deletions at the bottom of page 4, two deletions at the top of page 5, and one deletion midway through page 7. In addition, one seven-page set of attachments was deleted in its entirety, and it was not clear whether exemption (b)(7) was claimed for the attachment set. We surmise that (b)(7) was the basis for deletion of the attachment, without implying any judgment on the correctness of such an assertion.
While we find insufficient evidence to justify upholding exemption [**27]  (b)(7) for those portions of Document No. 3 mentioned above, we do not reverse the district court outright on this issue. Much of the deleted information is of a highly sensitive nature, and we believe it appropriate to remand for further findings. On remand, the district court should inquire into questions of NIS' law enforcement authority, and whether the document was compiled for a law enforcement purpose. Any findings on these issues should be as detailed as possible without compromising the secrecy of the information. The court should also give serious consideration to the applicability of any other exemptions. n6

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n6. We have also remanded Document No. 5 in Department of Defense for further consideration on the segregability issue under exemption (b)(1). Should the court rule adversely to the government on that question, it should also consider exemption (b)(7) for Document No. 5. The possibility of revelation of a confidential source was apparently critical for the government in determining that no portion of the document could be segregated. See Affidavit of Rear Admiral B. R. Inman, U. S. Navy, Director of Naval Intelligence and Commander, Naval Intelligence Command, p. 4 (C.R. 222, 225).

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VIII. COMITY
The district court declined to release Document No. 2 in Department of the Army because that document was the subject of pending litigation in federal district court for the District of Columbia, The Founding Church of Scientology of Washington, D.C. v. Edward H. Levy, et al., Civil Action No. 75-1577. That litigation has since progressed considerably. On January 24, 1978, the D.C. district court granted the defendants' motion for summary judgment. On June 25, 1979, the court of appeals for the District of Columbia Circuit handed down its decision in Founding Church of Scientology of Washington, D.C. v. Bell, 195 U.S.App.D.C. 363, 603 F.2d 945, reversing the district court's decision, and remanding for further consideration.
In deferring to the jurisdiction of another district court, the court below invoked the doctrine of federal comity, a discretionary doctrine which permits one district to decline judgment on an issue which is properly before another district. See Kerotest Manufacturing Company v. C-O-Two Fire Equipment Company, 342 U.S. 180, 72 S. Ct. 219, 96 L. Ed. 200 (1952). In its classic formulation, the comity doctrine permits a district court to decline jurisdiction [**29]  over a matter if a complaint has already been filed in another district.  E. g., Great Northern Railway Co. v. National Railroad Adjustment Board, 422 F.2d 1187, 1193 (7th Cir. 1970). The Church's complaint in Department of the Army was filed on September 9, 1975. The complaint in the D.C. litigation was filed on September 26, 1975. Technically, therefore, the comity doctrine is inapplicable and the court below improperly refused to determine the exempt status of Document No. 2.
When considering issues raised by the comity doctrine, however, courts are not bound by technicalities. The Supreme Court in Kerotest Manufacturing Company, supra, noted that the handling of multiple  [*750]  litigation involving the same subject matter does not lend itself to " . . . rigid mechanical solution. . . . " 342 U.S. 180, 183, 72 S. Ct. 219, 221, 96 L. Ed. 200. Citing Kerotest Manufacturing, the Eighth Circuit observed in Florida v. United States, 285 F.2d 596 (8th Cir. 1960) that "(t)here is no rigid or inflexible rule for determining priority of cases pending in federal courts involving the same subject matter."
The purpose of the comity principle is of paramount importance. The doctrine is [**30]  designed to avoid placing an unnecessary burden on the federal judiciary, and to avoid the embarrassment of conflicting judgments.  Great Northern Railway Co. v. National Railroad Adjustment Board, 422 F.2d 1187, 1193 (7th Cir. 1970). Comity works most efficiently where previously-filed litigation is brought promptly to the attention of the district court, and the court defers. In the present case, the litigation in the D.C. Circuit has already progressed to a judgment on the merits, an appeal, and a remand. While judicial economy would have been best served by the district court in D.C. deferring to the Central District of California at the outset, we cannot now say that efficiency demands that we remand to the district court below. Under the circumstances, the goal of judicial efficiency will be best met if we overlook the "first to file" rule, and defer to the litigation in progress in the D.C. Circuit.
The need for fashioning a flexible response to the issue of concurrent jurisdiction has become more pressing in this day of increasingly crowded federal dockets. Our own circuit recently addressed this issue in another context. Speaking in Crawford v. Bell, 599 F.2d 890 (9th Cir.  [**31]  1979), we noted that:
" . . . increasing calendar congestion in the federal courts makes it imperative to avoid concurrent litigation in more than one forum whenever consistent with the rights of the parties. A court may choose not to exercise its jurisdiction when another court having jurisdiction over the same matter has entertained it and can achieve the same result."

 Id. at 893.
We emphasize that the "first to file" rule normally serves the purpose of promoting efficiency well and should not be disregarded lightly. Cf.  Motor Vessels Theresa Ann v. Kreps, 548 F.2d 1383, 1384 (9th Cir. 1977). Circumstances and modern judicial reality, however, may demand that we follow a different approach from time to time, as we do in the present case. n7

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n7. The Church characterized the district court's deference to concurrent litigation on both Documents No. 1 and No. 2 in Department of the Army as an impermissible judicial creation of a new exemption to the Freedom of Information Act's disclosure requirement. We disagree. While it is true that the Act forbids the equitable creation of exemptions which are not specified, Wellman Industries, Inc. v. N. L. R. B., 490 F.2d 427 (4th Cir. 1974), it does not prohibit the application of traditional judicial doctrines to the overall administration of the Act. See Renegotiation Board v. Bannercraft Co., 415 U.S. 1, 94 S. Ct. 1028, 39 L. Ed. 2d 123 (1974). Application of the comity doctrine where the plaintiff is pursuing its rights under the Act in another forum, and where the plaintiff is afforded a full and fair opportunity to be heard in the other forum, is not inconsistent with the purpose of the Act. Cf.  Consumers Union of U. S. v. Consumer Product, etc., 192 U.S.App.D.C. 93, 590 F.2d 1209 (D.C.Cir. 1978); Robertson v. Department of Defense, 402 F. Supp. 1342 (D.C.D.C.1975).

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IX. COLLATERAL ESTOPPEL
With regard to Document No. 1 in Department of the Army, the district court abstained from ruling because the document was the subject of concurrent litigation in the district court for the District of Columbia in Church of Scientology of California v. Department of the Air Force, et al., Civil Action No. 76-1008. On April 12, 1978, the court ruled in Department of the Air Force that Document No. 1 was exempt from disclosure. We conclude that the Church is estopped from raising the issue of the document's exempt status in this litigation.
There really is no question that the same issue was involved in Department of the Air Force, namely, the exempt status of Document  [*751]  No. 1. Nor is there any question that the Church was the plaintiff in both cases. Under such circumstances, the issue of exemption cannot be relitigated. See, e. g., Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S. Ct. 645, 58 L. Ed. 2d 552, 559, n. 5 (1979).
Both cases AFFIRMED in part, and REVERSED and REMANDED in part, for further proceedings consistent with this Opinion.  

79 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a non-profit corporation, Plaintiff-Appellant, v. UNITED STATES POSTAL SERVICE, Benjamin Bailer, Postmaster General, Postal Inspection Service, William J. Cotter, Chief Inspector, Defendants-Appellees.  

 No.  76-1610 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

593 F.2d 902; 1979 U.S. App. LEXIS 15952 

March 26, 1979 

PRIOR HISTORY:
 [**1]  

Appeal from the United States District Court for the Central District of California.  

COUNSEL:
Barry L. Weissman (argued), Beverly Hills, Cal., for plaintiff-appellant. 
Leonard Schaitman of Dept. of Justice, Washington, D. C., Mark N. Mutterperl (argued), of Dept. of Justice, Washington, D. C., for defendants-appellees.  

JUDGES:
Before ELY and TRASK, Circuit Judges, and EAST, n* District Judge.
* Honorable William G. East, Senior District Judge, District of Oregon, sitting by designation.

OPINIONBY:
ELY 

OPINION:

  [*902]  
The Church of Scientology of California (the Church) appeals from a summary judgment entered against it and in favor of the United States Postal Service.  The District Court upheld the refusal of the Postal Service to release to the Church a number of records assertedly gathered during the course of law enforcement investigations of the Church and its members.
  [*903]  I.
The Church filed its Freedom of Information Act (FOIA) request n1 with the Postal Service seeking access to information compiled by the service relating to the Church, any of its affiliated organizations, or its founder, L. Ron Hubbard.  After conducting an extensive search of its [**2]  files, the Postal Service released numerous documents to the requestor.  Not all the information in its files relating to the Church and its activities was disclosed, however.  A number of documents were withheld from disclosure as the alleged fruits of Postal Inspection Service investigations of possible criminal offenses. n2

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n1. The Postal Reorganization Act, 39 U.S.C. §  101 Et seq., extended the reach of the FOIA, 5 U.S.C. §  552, to the newly created Postal Service.  39 U.S.C. §  410(b)(1).  Pursuant thereto, the appellant requested that the Postal Service provide it with certain records, in accordance with 5 U.S.C. §  552(a)(3), which reads in pertinent part:
(a)
(3) . . .  each agency, upon any request for records which (A) reasonably describes such records and (B) is made in accordance with published rules . . .  shall make the records promptly available to any person.
n2. The Postal Service also resisted disclosing an additional fourteen pages of materials, contending that release of the information would constitute a clearly unwarranted invasion of personal privacy within the meaning of 5 U.S.C. §  552(b)(6) (Exemption 6).  At oral argument, the Government's attorney represented to the panel that these materials would be turned over to the Church.  In reliance upon such representations, we hold that the questions raised by the withholding of these fourteen pages are moot; hence, we do not reach the Exemption 6 issue.

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When the refusal to disclose was challenged in the District Court, the Postal Service defended its withholding on the basis of Exemption 3 of the FOIA n3 and the investigatory file exemption of the Postal Reorganization Act, 39 U.S.C. §  410(c)(6). n4 After examining the requested materials In camera, the District Court adopted the Government's characterization of the records as having been compiled during law enforcement investigations.  The District Court also concluded that 39 U.S.C. §  410(c)(6) was a specific exempting statute of the sort described in FOIA Exemption 3; therefore, the Church's request for the Postal Service documents was denied.  Because it concluded that the Postal Reorganization Act's §  410(c)(6) specifically excluded Postal Service investigatory files from FOIA compelled disclosure, the District Court did not reach the Government's alternative grounds for nondisclosure based upon Exemptions 5 and 7. n5

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n3. At the time the District Court entered its judgment, Exemption 3 excepted from the disclosure requirements of the FOIA any information "specifically exempted from disclosure by statute." As discussed Infra, Exemption 3 was subsequently amended to read as follows:
(b) This section does not apply to matters that are
(3) specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld . . . . [**4]  
n4. The investigatory files exemption claimed by the Postal Service, 39 U.S.C. §  410(c)(6), reads as follows:
(c) Subsection (b)(1) of this section shall not require the disclosure of
(6) investigatory files, whether or not considered closed, compiled for law enforcement purposes except to the extent available by law to a party other than the Postal Service.
n5. Exemptions 5 and 7 except from the disclosure requirements of the FOIA inter-agency or intra-agency memorandums and law enforcement investigatory files, respectively.  The exemptions read as follows:
(b) This section does not apply to matters that are
(5) inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency;
(7) investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel . . . .

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  [*904]  We remand to the District Court in order that it may consider the impact of recent amendments to the FOIA as well as pertinent legislative history. Both shed light as to the manner in which the exemptions raised by the Government should be construed.
II.
Since the time of the challenged Order, filed December 19, 1975, Congress amended the FOIA n6 by qualifying Exemption 3 with conditions that a statute must satisfy if it is to be considered as one specifically exempting disclosure. Thus, as amended, Exemption 3 now provides that an exempting statute must either (A) require that information in an agency's possession be withheld from the public in such a manner as to leave No discretion on the issue, or (B) establish particular criteria for withholding information or refer with particularity to the types of matters to be withheld.

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n6. Government In The Sunshine Act, Pub.L. No. 94-409, enacted September 13, 1976 and made effective 180 days thereafter.

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We have recently held that the amended version [**6]  of FOIA Exemption 3 should govern the actions of a government agency, even though the amendment did not become effective until the time of an appeal already pending.  Lee Pharmaceuticals v. Kreps, 577 F.2d 610, 614 (9th Cir. 1978). The legislative history to the amendment clearly evinces Congress' intention to overrule the Supreme Court's expansive interpretation given to the original version of Exemption 3 in Administrator, FAA v. Robertson, 422 U.S. 255, 95 S. Ct. 2140, 45 L. Ed. 2d 164 (1972). Some of the more significant history reads:
Believing that the decision misconceives the intent of exemption (3), the committee recommends that the exemption be amended to exempt only material Required to be withheld from the public by any statute establishing particular criteria or referring to particular types of information.

H.R.Rep.No.94-880, 94th Cong. 2d Sess. (1976), reprinted in 3 U.S.Code Cong. and Admin.News, pp. 2183, 2205.  (Emphasis added.)
The consideration of deference leads us to believe that the District Court should be allowed the first opportunity to consider whether 39 U.S.C. §  410(c) (6) qualifies as an exempting [**7]  statute within the meaning of 5 U.S.C. §  552(b) (3), as amended. n7

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n7. In the event the District Court finds that 39 U.S.C. §  410(c)(6) is a specific exempting statute of the kind referred to in Exemption 3 of the FOIA, as amended, then the District Court must also address the issue of whether the Postal Service has complied with its own regulation, found at 39 C.F.R. §  265.6(c).  General Services Administration v. Benson, 415 F.2d 878, 880 (9th Cir. 1969) ("Regulations reasonably adapted to the administration of a congressional act, and not inconsistent with any statute, have "the force and effect of law.' " (citations omitted).) The Government contends that the regulation invests the Postal Service with discretion either to release to or withhold from a requestor investigatory files.  See 39 C.F.R. §  265.6(c), which reads as follows:
(c) Investigatory records.  (1) Investigatory files compiled for law enforcement purposes, whether or not considered closed, are exempt by statute from mandatory disclosure except to the extent otherwise available by law to a party other than the Postal Service, 39 U.S.C. §  410(c)(6).  As a matter of policy, however, the Postal Service will normally make investigatory records available upon request unless the production of these records would:
(i) Interfere with enforcement proceedings,
(ii) Deprive a person of a right to a fair trial or an impartial adjudication,
(iii) Constitute an unwarranted invasion of personal privacy,
(iv) Disclose the identity of a confidential source, and, in the case of a record compiled by the Postal Inspection Service in the course of a criminal investigation or of a lawful national security intelligence investigation, confidential information furnished only by the confidential source,
(v) Disclose investigative techniques and procedures, or
(vi) Endanger the life or physical safety of law enforcement personnel.
(2) Authority to disclose investigatory records to persons outside the Postal Service must be obtained from the Chief Postal Inspector, United States Postal Service, Washington, D.C. 20260, or his designee.
The initial assumption found within the regulation, that law enforcement files of the Postal Service are unqualifiedly exempt from mandatory disclosure, is, of course, the very issue to be addressed by the District Court on remand.  As a matter of internal policy, the Postal Service has adopted, by means of this regulation, the investigatory records standards imposed upon most other governmental agencies by Exemption 7.  See note 5, Supra.  The Postal Service has argued that by including the word "normally" within the regulation, that the Postal Service has retained discretion to withhold requested information irrespective of whether one of the regulation's enumerated harms exists.  We question whether such an interpretation could be harmonized with Congress' expressed intent when it limited the scope of Exemption 3 of the FOIA by depriving agency administrators of discretion to disclose information under their control.  See Lee Pharmaceuticals v. Kreps, supra, 577 F.2d at 615. We suggest, as an alternative to the Government's interpretation, a reading of the regulation that would require the Postal Service to release investigatory files in the Normal case.  Thus, in accord with this alternative interpretation, only in the exceptional case when the Postal Service demonstrates the existence of one of the six enumerated dangers could the Postal Service justify a denial of a request for disclosure.
In the event the District Court finds that 39 U.S.C. §  410(c)(6) did not survive as a specific statutory exemption following the amendment to Exemption 3 in 1976, the District Court nonetheless should consider whether the documents are properly withheld under Exemptions 5 and 7, the alternative grounds raised by the Postal Service in the District Court.

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REVERSED AND REMANDED.  

80 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.  

 No.  78-2434 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

591 F.2d 533; 1979 U.S. App. LEXIS 16747 

February 22, 1979 

PRIOR HISTORY:
 [**1]  

Appeal from the United States District Court for the Central District of California.  

COUNSEL:
Donald M. Re (argued), Los Angeles, Cal., Leonard B. Boudin (argued), Rabinowitz, Boudin & Standard, New York City, for petitioner-appellant. 
Raymond Banoun, Asst. U. S. Atty. (argued), Washington, D. C., for respondent-appellee.  

JUDGES:
Before DUNIWAY and CHOY, Circuit Judges, and SOLOMON, n* District Judge.
* The Honorable Gus J. Solomon, Senior United States District Judge for the District of Oregon, sitting by designation.

OPINIONBY:
DUNIWAY 

OPINION:

  [*533]  
The Church of Scientology of California appeals from a judgment denying its application under Rule 41(e), F.R.Crim.P., for the return of property seized under certain search warrants and for the suppression of the evidence seized. We conclude that we do not have jurisdiction, and dismiss the appeal.
On July 7, 1977, two search warrants were obtained authorizing search of certain offices of the Church, located in two buildings that it owns in Los Angeles.  A similar warrant was obtained for a search of part of a building owned by the Founding Church of Scientology in Washington, D.C.  The affidavits in support of the [**2]  warrants were substantially identical, and so were the warrants, except for descriptions of the premises to be searched.  There was a separate warrant for each place to be searched.  The warrants were executed simultaneously at 9:00 a. m. Washington time, and at 6:00 a. m. Los Angeles time.  Many files were examined at each place, in an effort to find the papers listed in 161 separate paragraphs of the warrants, and in paragraph 162 of each, which reads:
Any and all fruits, instrumentalities, and evidence (at this time unknown) of the crimes of conspiracy, obstruction of justice and theft of government property in violation of 18 U.S.Code § §  371, 1503 and 641 of which facts recited in the accompanying affidavit make out.
The Church asserts that more than 20,000 documents were seized. Motions to recover the seized documents were filed on July 12,  [*534]  1977, in the District Court for the Central District of California, and on July 15, 1977, in the District Court for the District of Columbia.  In the District of Columbia, the District Court granted the Church's motion.  The Court of Appeals reversed.  See In re Search Warrant dated July 4, 1977, D.D.C., 1977, 436 F. Supp. 689; [**3]  Id., 1977, 187 U.S.App.D.C. 297, 572 F.2d 321, Cert. denied, sub nom.  Founding Church of Scientology v. United States, 435 U.S. 925, 98 S. Ct. 1491, 55 L. Ed. 2d 519 (1978).
Throughout the proceedings in the District Court in the case at bar, the Church has made it clear that the principal reason for its motion has been and is to prevent the use of any of the seized papers for the purpose of obtaining indictments against either the Church or its officials or employees.  A grand jury in the District of Columbia had been considering the offenses mentioned in the affidavits supporting the search warrants conspiracy to steal government property, conspiracy to obstruct justice, theft of government property, and obstruction of justice.  Many of the seized documents have been presented to that grand jury, both before and during the proceedings in this case.  Since this case began, and on August 15, 1978, the District of Columbia grand jury has indicted 11 persons, at least some of them officials or employees of the Church.  So far as we are advised, however, the Church has not been indicted.
Under orders of the District Court, the government has supplied the Church with two [**4]  sets of copies of all documents seized, except for certain ones that, according to the government, are its property and are of a sensitive or confidential character.
Although the matter is not free from doubt, we conclude that the principles applied in DiBella v. United States, 1963, 369 U.S. 121, 82 S. Ct. 654, 7 L. Ed. 2d 614, require that the appeal be dismissed.  There, two persons were involved.  One, DiBella, had been arrested under a warrant, and he was arraigned and released on bail.  Some evidence was seized when he was arrested. He moved to suppress the seized evidence.  While the motion was pending, he was indicted. The motion to suppress was denied, and he appealed.  The other person, Koenig, had been arrested in Florida on the basis of a complaint charging bank robbery in Ohio.  He filed a proceeding in the federal court in Florida, to suppress seized property, while removal proceedings were pending.  Meanwhile, Koenig had been indicted in Ohio.  Thereafter, the Florida District Court granted suppression but denied return of the property.  Koenig appealed from the denial of his motion for return of his property.  The Supreme Court held that neither order [**5]  was appealable.
The Court's holding is stated as follows:
We hold, accordingly, that the mere circumstance of a pre-indictment motion does not transmute the ensuing evidentiary ruling into an independent proceeding begetting finality even for purposes of appealability. Presentations before a United States Commissioner (citation omitted) as well as before a grand jury (citation omitted) are parts of the federal prosecutorial system leading to a criminal trial. Orders granting or denying suppression in the wake of such proceedings are truly interlocutory, for the criminal trial is then fairly in train.  When at the time of ruling there is outstanding a complaint, or a detention or release on bail following arrest, or an arraignment, information, or indictment in each such case the order on a suppression motion must be treated as "but a step in the criminal case preliminary to the trial thereof." (Citation omitted.) Only if the motion is solely for return of property and is in no way tied to a criminal prosecution in esse against the movant can the proceedings be regarded as independent.  Id. at 131-32, 82 S. Ct. at 660 (emphasis added).
The Court also disposed [**6]  of another argument that could be made for appealability in this case, that this case was decided by a District Court in California, where the seizure occurred, while the criminal proceeding is in the District of Columbia.
  [*535]  An alternative ground for appealability in the Koenig case, likewise culled from dicta in some of our decisions, would assign independence to the suppression order because rendered in a different district from that of trial.  Id. at 132, 82 S. Ct. at 661.
Rule 41(e), of course, specifically provides for making of the motion in the district of seizure.  On a summary hearing, however, the ruling there is likely always to be tentative.  We think it accords most satisfactorily with sound administration of the Rules to treat such rulings as interlocutory. Id. at 132-33, 82 S. Ct. at 661.
We recognize that DiBella is not precisely in point.  While the grand jury had been investigating the Church, there has been no complaint, arraignment, information or indictment against it, nor any arrest. In DiBella there was arrest, arraignment, and indictment; in Koenig there was a complaint, an arrest, and an indictment. [**7]  
Later cases, however, carry the DiBella principle a little farther.  In Application of United States, 5 Cir. 1970, 427 F.2d 1140, this was the court's holding, concerning motions to suppress filed before any indictments were returned:
2. The appellants' motions in the court below included a demand for the return of property, but the Court in DiBella held that "(only) if the motion is solely for return of property And is in no way tied to a criminal prosecution in esse against the movant can the proceedings be regarded as independent." (Emphasis supplied.) 369 U.S. at 131, 132, 82 S. Ct. at 660. As regards the appellants Dudley, the three Sklaroffs, Blott and Richmond, who are now under indictment for violations of Title 18, U.S.C., their motion to suppress is an integral part of criminal proceedings In esse the denial of which is nonappealable at this time.  In a like manner, the motion to suppress of appellants Rogers, Wittell and Green is nonappealable for the motion is not solely for the return of property, in conformity to the DiBella rule, but primarily seeks suppression of evidence from grand juries in criminal proceedings.  DiBella v. United States, supra at 131, 132, 82 S. Ct. at 660, 661. [**8]  
Subsequent language in the opinion can be read to indicate that the last three persons mentioned were also indicted. However, in United States v. Glassman, 5 Cir., 1976, 533 F.2d 262, the court tells us that this was not so.
The order (of the district court) denying this motion was dated September 12, 1975; appellant was not indicted until November 13, 1975, and apparently was never detained.  So according to the literal language of DiBella there was no criminal prosecution In esse at the time this appeal was brought.  But in Application of United States . . .  three of the appellants were not indicted by the grand jury, and yet the court found that their Rule 41(e) motion was made primarily to suppress evidence from the anticipated grand jury hearings and therefore was not made "solely for return of property" as DiBella requires.  . . .  Id. at 263.

Both Glassman and Application of United States, and especially the latter, support dismissal of the appeal that is before us.
Our decision in Meier v. Keller, 9 Cir., 1975, 521 F.2d 548, 556, Cert. denied, 424 U.S. 943, 96 S. Ct. 1410, 47 L. Ed. 2d 348 (1976), is [**9]  also persuasive.
The denial of a preindictment motion or comparable relief is an interlocutory nonappealable order unless "the motion is solely for return of property and is in no way tied to a criminal prosecution In esse against the movant." DiBella . . .  Meier's appeal meets neither criterion for appealability. His complaint sought suppression as well as return.  . . .  (T)here was already a criminal prosecution In esse because presentment had already been made to the Nevada grand jury at the time the complaint (for Rule 41(e) relief) was filed (in the Central District of California).  Thus, the appeal should be dismissed for want of jurisdiction in this court.
  [*536]  In Parrish v. United States, 4 Cir., 1967, 376 F.2d 601, the plaintiffs sought, under Rule 41(e) return of records obtained from them by Internal Revenue agents, allegedly by fraud, and their suppression as evidence.  Relief was denied, and they appealed.  At that time, so far as appears, there was no indictment and no other criminal proceeding pending (p. 602).  Later, they were indicted. On the authority of DiBella, supra, the appeal was dismissed.  Judge Boreman would have [**10]  gone further and held the order not appealable even if there had been no indictment (pp. 603-04).
In Smith v. United States, 3 Cir., 1967, 377 F.2d 739, Smith and his wife petitioned for an injunction prohibiting the presentation of certain evidence to a grand jury, prohibiting its use in prosecuting the petitioners, and requiring return of the evidence.  The petitioning husband and wife had produced the records relating to their income at the request of the Internal Revenue Service.  When their action was filed, they had not been indicted. While their petition was under submission, they were indicted for income tax evasion.  Nine days later, their petition was denied.  The court held that the denial was not appealable, citing DiBella, supra, despite the fact that the petitioners had not been indicted when they filed their petition.  The rationale was that the petition was not solely for the return of property; it sought to enjoin use of the evidence looking toward prosecution; it was tied to an incipient criminal proceeding (p. 742).
 Austin v. United States, 4 Cir., 1962, 353 F.2d 512, is similar to Smith v. United States, supra, [**11]  and held, on the authority of DiBella, supra, that an order denying a petition to have suppressed, in advance of indictment, documents that petitioner claimed the I.R.S. had obtained from her by fraud (see Austin v. United States, 4 Cir., 1961, 297 F.2d 356), was not appealable.
Our decision in Goodman v. United States, 9 Cir., 1966, 369 F.2d 166, is different.  There, as we said, "there is, and has been, no criminal case pending in any stage." (p. 168.) Not so in the case at bar.
In Cobbledick v. United States, 1940, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783, the Court held that an order denying a motion to quash a subpoena duces tecum to appear and produce documents before a grand jury is not appealable. Part of the rationale was that it would be undesirable to permit a witness, by appealing, to halt an ongoing criminal proceeding. Thus, he cannot appeal, even though he could not appeal from the final decision in the criminal case because he is not a party to it (p. 326, 309 U.S. 323, 60 S. Ct. 540, 84 L. Ed. 783). See also Alexander v. United States, 1906, 201 U.S. 117, 26 S. Ct. 356, 50 L. Ed. 686. [**12]  
 United States v. Ryan, 1971, 402 U.S. 530, 91 S. Ct. 1580, 29 L. Ed. 2d 85, is similar.  As Mr. Justice Brennan said:
Only in the limited class of cases where denial of immediate review would render impossible any review whatsoever of an individual's claims have we allowed exceptions to this principle.  We have thus indicated that review is available immediately of a denial of a motion for the return of seized property, where there is no criminal prosecution pending against the movant. See DiBella v. United States, supra, (369 U.S.) at 131-132, 82 S. Ct. 654, 7 L. Ed. 2d 614. Denial of review in such circumstances would mean that the Government might indefinitely retain the property without any opportunity for the movant to assert on appeal his right to possession.
The principle that runs through all of these authorities is that an ongoing criminal proceeding is not to be interrupted by an appeal from an order denying suppression of evidence that may be used in that proceeding.  This is such a case.  There was, and so far as the record shows there is, an ongoing proceeding before at least one grand jury, in the District of Columbia.  [**13]  The parties tell us that there is, or was, another proceeding before a Federal grand jury in New York.  There is also a proceeding pending in Great Britain to extradite two of the persons indicted by the District of Columbia grand jury, and some of the seized papers are being used in that proceeding.  
  [*537]  The petition or motion here did not and does not seek only the return of the property.  It expressly seeks suppression of evidence, and is avowedly aimed at suppressing evidence in grand jury, extradition, and other criminal proceedings.
Moreover, suppression in this case is sought by the Church on behalf of its employees as well as on its own behalf.  Some or all of those employees may not have standing to seek suppression. Suppression at the behest of the Church would be an abuse of Rule 41(e), and is an additional reason to deny appealability. Similarly, suppression of evidence that is to be presented to the grand jury is sought, although the government would have the right, under the decision in United States v. Calandra, 1974, 414 U.S. 338, 94 S. Ct. 613, 38 L. Ed. 2d 561, to use the evidence before the grand jury as the basis of questions to a witness,  [**14]  even though the evidence may have been obtained in violation of the Fourth Amendment.  Zurcher v. Stanford Daily, 1978, 436 U.S. 547, 98 S. Ct. 1970, 56 L. Ed. 2d 525, holds that, upon a proper showing of probable cause, a warrant may issue authorizing a search of the premises of an innocent third party for evidence of crime.  Usually, the criminal would have no standing to suppress such evidence.  Yet, if a denial of a motion by the third party for return of the evidence and to suppress it were appealable, presentation of the case against the criminal to a grand jury could be delayed for long periods of time.  Surely, if the evidence can be obtained, it can also be retained during the progress of the criminal proceeding. Yet it is retention that the Church seeks to terminate here.
Our decision that the order appealed from is not appealable is not free from doubt, for the reasons stated by Mr. Justice Brennan in United States v. Ryan, supra. There must, at some time, be a remedy available to the Church for the return of its property, if it has been unlawfully taken.  But the present appeal is not that remedy.  We decide nothing more.
Appeal dismissed.  [**15]  

81 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a Nonprofit California Corporation, Plaintiff, v. James E. ADAMS, Elaine Viets, Pulitzer Publishing Co., Inc., et al., Defendants.  

 No.  75-1954 

UNITED STATES COURT OF APPEALS, NINTH CIRCUIT 

584 F.2d 893; 1978 U.S. App. LEXIS 8256; 4 Media L. Rep. 1986 

October 23, 1978 

PRIOR HISTORY:
 [**1]  

Appeal from the United States District Court for the Central District of California.  

COUNSEL:
Richard M. Coleman (argued), Los Angeles, Cal., for plaintiff. 
Theodore B. Olson (argued), Gibson, Dunn & Cruther, Los Angeles, Cal., for defendants.  

JUDGES:
Before CHOY and KENNEDY, Circuit Judges, and PALMIERI, n* District Judge.
* Honorable Edmund L. Palmieri, Senior United States District Judge for the Southern District of New York, sitting by designation.

OPINIONBY:
KENNEDY 

OPINION:

  [*895]  
The Church of Scientology of California (California Church), a California corporation, appeals from a judgment dismissing its action for libel. The suit is against the Pulitzer Publishing Co., publisher of the St. Louis Post-Dispatch newspaper, and James E. Adams and Elaine Viets, principal authors of the newspaper articles in question. n1 The district court dismissed the action against appellees for lack of personal jurisdiction and ruled, alternatively, that the complaint fails to state a claim upon which relief may be granted.  We hold that the trial court was correct in concluding that it did not have jurisdiction over the appellees, and it is not necessary for us to address the [**2]  district court's alternative ruling.

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n1. Eric, Nancy, and John McLean were also named as defendants, but the action against them was dismissed for lack of prosecution by order of the district court on March 25, 1975, and appellant does not contest that ruling.

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The Post-Dispatch published a series of five articles about Scientology on March 3 through 7, 1974.  The articles discussed Scientology generally and made particular reference to the Church of Scientology of Missouri.  In preparing the articles, Adams and Viets interviewed local leaders of the Missouri Church of Scientology and former members of that Scientology branch as well as former staff members of the Toronto Scientology office.  The articles were written in St. Louis and at no time did the reporters enter California for research or any other purpose.  At the suggestion of a staff member of the Missouri Church, the reporters did interview Emily Watson, who was connected with a national Scientology office located in California, while she was visiting [**3]  in St.  Louis.  No reference to the California Church or any of its individual members was made in the articles.
Two months after the articles were published, the California Church filed this action in a California superior court.  Notwithstanding the lack of any reference to the California Church in the articles, the complaint attempted to establish that they pertained to the appellant.  We summarize the complaint's allegations of libel, which were specific and lengthy, as follows:
(1) that Scientology is not a religion but rather a commercial enterprise and that appellant is a commercial business;
(2) that appellant exploits individuals for money and confers no benefits of a spiritual, religious, or other nature on its members;
  [*896]  (3) that appellant is operated solely for the personal and financial aggrandizement of L. Ron Hubbard, the founder of Scientology, at the financial and emotional expense of its members;
(4) that appellant is operated by "a group of para-militaristic fanatics who motivate and control members by instilling a fear of reprisal, and who drive members insane and harass members" who leave the organization (quoting from [**4]  complaint).

Further, it was alleged that appellant was defamed by reason of untruthful and highly derogatory remarks about Scientology's founder, L. Ron Hubbard.
The appellees filed a motion to dismiss for lack of personal jurisdiction, and the motion was heard in the federal district court to which the action had been removed.  In contesting the motion, the California Church did not dispute the facts adduced by appellees as to their respective contacts with the State of California.  It is thus agreed that Pulitzer makes no attempt to market the Post-Dispatch in California.  Circulation in California to mail subscribers and to a few independent news dealers amounts to 0.04% Of the newspaper's total circulation. Approximately 156 copies of one of the allegedly libelous publications and 121 copies of each of the other articles reached California in this manner.  The Post-Dispatch does not direct any advertising whatsoever to California readers, but California companies do advertise in the paper to reach markets in Missouri and elsewhere.  It is agreed that 2.91% Of the newspaper's general advertising revenue is from this source.  In addition, Pulitzer owns approximately 17% [**5]  Of Million Market Newspapers, Inc., an advertising firm licensed to do business in California, which solicits advertising for Pulitzer and other newspaper publishers by providing potential advertisers with information about the newspapers and their market areas.  Finally, the reporters are residents of St. Louis County, Missouri, and neither has been in the State of California during the last fifteen years.
In ruling on appellees' motion to dismiss for lack of personal jurisdiction, it was correct for the district court to apply California law.  California law permits state courts to exercise personal jurisdiction over nonresident defendants to the full extent permitted by the Constitution.
A court of this state may exercise jurisdiction on any basis not inconsistent with the Constitution of this state or of the United States.

Cal.Civ.Proc.Code §  410.10 (West 1973).  The California courts have ruled that this statute permits state courts to exercise the broadest possible jurisdiction, limited only by constitutional considerations.  Sibley v. Superior Court of Los Angeles County, 16 Cal.3d 442, 128 Cal.Rptr. 34, 546 P.2d 322 (1976), Cert. denied, 429 U.S. 826, 97 S. Ct. 82, 50 L. Ed. 2d 89 (1978). [**6]  "Thus, the usual two-step analysis (in inquiries respecting personal jurisdiction) collapses into a single search for the outer limits of what due process permits." Forsythe v. Overmyer, 576 F.2d 779, 782 (9th Cir. 1978).
The California Church concedes that Pulitzer and the individual appellees do not have such substantial contacts with the forum that they are present there for purposes of defending against all types of actions.  See Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S. Ct. 413, 96 L. Ed. 485 (1952). If a defendant is not present for all purposes in the forum, due process requires that jurisdiction be based on contacts which have some nexus to the cause of action alleged.  Forsythe, 576 F.2d at 782. The Supreme Court has described "the relationship among the defendant, the forum, and the litigation" as "the central concern of the inquiry into personal jurisdiction." Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2580, 53 L. Ed. 2d 683 (1977).
We dispose at the outset of the claim that Pulitzer's revenues from California advertisers are a sufficient basis for jurisdiction in this case.  The [**7]  advertising revenues are unrelated to appellant's action for libel. Pulitzer earned that revenue by giving California  [*897]  advertisers an opportunity to reach persons outside of California.  Those contacts with California companies are not evidence of an intent to publish in California or of an effort to reach readers there.
Pulitzer's relationship to Million Market Newspapers, Inc. is also an insubstantial basis for jurisdiction.  Pulitzer owns only seventeen percent of the stock in the California company and no parent-subsidiary relationship exists.  Even in cases where the contacts of a parent or subsidiary corporation are sufficient to subject it to personal jurisdiction, we recognize that the activities of one related corporation are irrelevant to the issue of jurisdiction over the other, so long as a separation between the corporations has been maintained.  Uston v. Grand Resorts, Inc., 564 F.2d 1217, 1218 (9th Cir. 1977). Nothing in the record indicates that the California advertising corporation is not operated wholly independently of Pulitzer.
The sole contact between appellees and the forum which is relevant to our jurisdictional inquiry is thus the [**8]  distribution in the forum of approximately 150 copies of each allegedly libelous article.
It is the "quality and nature of the defendant's activity," Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283 (1958), in relation to the cause of action alleged which determines whether or not the exercise of personal jurisdiction comports with "fair play and substantial justice," International Shoe Co. v. Washington, 326 U.S. 310, 320, 66 S. Ct. 154, 90 L. Ed. 95 (1945). Where there have been commercial dealings between the parties, jurisdiction in large part depends upon whether consensual activity potentially touched the forum state, as this indicates whether or not there is "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum," Hanson, 357 U.S. at 253, 78 S. Ct. at 1240. See, e. g., Forsythe v. Overmyer, 576 F.2d 779 (9th Cir. 1978). In an action based on tort, however, the inquiry necessarily extends beyond whether there has been submission to the sovereignty of the forum by some consensual act, and it requires an examination of the expected [**9]  consequences of the defendant's conduct.  In such cases we have held that the demands of due process are satisfied when jurisdiction is asserted over a defendant who "purposefully sets his product or his designs into the stream of commerce, knowing or having reason to know that they will reach the forum state and that they create a potential risk of injury." Jones Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136, 1140 (9th Cir. 1971); Accord, Duple Motor Bodies, Ltd. v. Hollingsworth, 417 F.2d 231, 235 (9th Cir. 1969).
In products liability cases, this determination resolves into an inquiry as to whether the defendant could reasonably foresee that his product, when injected into the stream of commerce, would come to rest in the forum.  See, e. g., Duple Motor Bodies, supra; Buckeye Boiler Co. v. Superior Court of Los Angeles County, 71 Cal.2d 893, 80 Cal.Rptr. 113, 458 P.2d 57 (1969) (en banc); Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961). It is assumed in such cases, indeed it is so almost by definition, that the locus of the risk of injury is the situs of the [**10]  product.  Physical presence of the product within the forum state is thus the critical factor in conferring jurisdiction, and the due process inquiry turns in large part on whether it was foreseeable that the defective product would be introduced into the state.  In a libel case, however, we do not think the likelihood that an offending publication will enter a forum is a fair measure of the reasonableness of the exercise of jurisdiction over a publisher. The nature of the press is such that copies of most major newspapers will be located throughout the world, and we do not think it consistent with fairness to subject publishers to personal jurisdiction solely because an insignificant number of copies of their newspapers were circulated in the forum state. In a defamation case, therefore, the appropriate jurisdictional analysis should be to determine whether or not it was foreseeable that a risk of injury by  [*898]  defamation would arise in the forum state. Certain of our other tort cases which do not involve product liability or conduct causing personal injury are consistent with this approach.  Taylor v. Portland Paramount Corp., 383 F.2d 634, 640-44 (9th Cir. 1966); [**11]  Amba Marketing Systems, Inc. v. Jobar International, Inc., 551 F.2d 784 (9th Cir. 1977).
While it was reasonably foreseeable that the allegedly libelous articles would find their way to California, we think it was not reasonably foreseeable that any substantial risk of defamation would arise from their circulation in that state, even assuming the articles to be untrue and maliciously published.  Although Pulitzer did mail the Post-Dispatch To regular subscribers and delivered it to some independent distributors, based on its knowledge that no more than 150 copies of the articles would find their way to California it had little reason to expect a risk of injury from defamation in that state.  Under some circumstances a publisher could be held to a duty to anticipate injury to reputation from distribution of a small number of copies.  For example, in Anselmi v. Denver Post, Inc., 552 F.2d 316 (10th Cir. 1977), Cert. denied, 432 U.S. 911, 97 S. Ct. 2960, 53 L. Ed. 2d 1084 (1977), jurisdiction was predicated on distribution of an even smaller number of newspapers in the State of Wyoming, but jurisdiction was conferred in part by the fact that [**12]  "when the story was written and published it was foreseeable that it would be given substantial attention within the State of Wyoming since there was more reader interest there than in any of the other states." Id. at 325. The action was brought by Wyoming residents who were specifically named in the allegedly libelous article, entitled "U. S. Tries to Close Up "Wide Open' Wyoming," which carried a Wyoming dateline.  Also of substantial significance in the court's analysis was that the article had been written by three reporters dispatched to Wyoming.
In the present appeal, California events were not the topic of the allegedly actionable writings, nor were California readers a principal or secondary target of the articles.  No research was done in California and the articles were not written in that state.  The only mention of a California resident was by way of reference to a person who spoke as a representative of the national Scientology organization.  The California Church is a separate corporation, and it was not mentioned in any of the articles.  The appellant is included in the discussion only to the extent that one article makes reference to "about 300 branches"  [**13]  of the Scientology movement in the context of discussing the St. Louis Scientology office, and to the extent that the articles concern Scientology in general.
We think it is relevant to the jurisdictional ruling, and to the issue of foreseeable risk of defamation injury, that were we to reach the merits of this case a difficult question would arise as to whether the articles were published "of and concerning" the California Church, as they must be before this action for libel will lie. n2 While it is unnecessary to make a final ruling on this  [*899]  substantive issue, we think there is serious doubt that the articles refer to the appellant.  That doubt bears strongly upon the risk of injury by defamation that could have been foreseen by the publisher. The few copies of the articles circulated in California, when considered in relation to the diffuse, nonspecific direction of the writings as to this California plaintiff, suggest that the publisher's relationship to the California forum with respect to this cause of action is too attenuated to support an assertion of jurisdiction over the person.

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n2. In California, as in most other states, an allegedly libelous statement is not actionable unless "published or spoken Concerning the plaintiff." Cal.Civ.Proc.Code §  460 (West 1973) (emphasis supplied); Harris v. Curtis Publishing Co., 49 Cal.App.2d 340, 121 P.2d 761 (1942); See generally New York Times Co. v. Sullivan, 376 U.S. 254, 288, 84 S. Ct. 710, 11 L. Ed. 2d 686 (1964). As a corollary of this requirement, California courts have held that
general language against a class or group of people cannot constitute libel. Where a group is very large and nothing that is said applies in particular to the plaintiff he cannot recover.
 Noral v. Hearst Publications, Inc., 40 Cal.App.2d 348, 351, 104 P.2d 860, 862 (1940). Although recovery may be allowed when suit is brought by a member of a small group where the defamation applied to all members of a group, See, e. g., Neiman-Marcus v. Lait, 107 F. Supp. 96 (S.D.N.Y.1952), this court has stated that "libels against groups consisting of large numbers of persons cannot satisfy the fundamental requirements of the law of libel . . . ." Golden North Airways, Inc. v. Tanana Publishing Co., 218 F.2d 612, 620 (9th Cir. 1954). Cf.  Kentucky Fried Chicken of Bowling Green, Inc. v. Sanders, 563 S.W.2d 8 (Ky.1978) (individual franchisee may not bring action for defamation where Colonel Sanders stated, Inter alia, That franchise gravy was "wallpaper paste.").

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Under the circumstances, the impact in California of publication which appellees could have foreseen was not such as to put them on notice of a risk of injury. Sustaining personal jurisdiction on so tenuous a basis would be inconsistent with the notions of fairness embodied in the concept of due process. n3

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n3. We are mindful that if jurisdiction properly may be exercised in California based on the articles at issue here, appellees equally may be called upon to defend against defamation charges in every state where a Scientology branch is located.  This court has recognized
that lawsuits can be brought on frivolous demands or groundless claims as well as on legitimate ones, and that procedural rules must be designed and appraised in the light of what is fair and just to both sides in the dispute.  Interpretations of basic rights which consider only those of a claimant are not consonant with the fundamental requisites of due process.
 Taylor v. Portland Paramount Corp., 383 F.2d 634, 643 (9th Cir. 1967), Quoting with approval, Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761, 766 (1961). Although "(t)he differences between individuals and corporations may . . .  lead to the conclusion that a given set of circumstances establishes state jurisdiction over one type of defendant but not over the other," Shaffer v. Heitner, 433 U.S. 186, 204 n.19, 97 S. Ct. 2569, 2580, 53 L. Ed. 2d 683 (1977), this does not mean that inconvenience and potential for harassment should not be important considerations even where a corporate defendant is concerned.

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Counsel for both parties gave considerable attention to the argument that by reason of the first amendment a newspaper is entitled to increased protection from imposition of personal jurisdiction. In New York Times Co. v. Connor, 365 F.2d 567 (5th Cir. 1966), the Fifth Circuit held that in order to accommodate first amendment concerns, more contacts than the requisite minimum for other tort actions are required to sustain personal jurisdiction in defamation actions against out-of-state publishers. See also Rebozo v. Washington Post Co., 515 F.2d 1208 (5th Cir. 1975); Edwards v. Associated Press, 512 F.2d 258 (5th Cir. 1975); Curtis Publishing Co. v. Golino, 383 F.2d 586 (5th Cir. 1967); Buckley v. New York Times Co., 338 F.2d 470 (5th Cir. 1964). We do not find it necessary to reach this point in view of our holding above, but we note that the proposition advanced by the appellees is not a factor in our decision and that its soundness is open to question.  The Tenth Circuit has rejected the applicability of first amendment concerns to the jurisdictional inquiry, Anselmi v. Denver Post, Inc., 552 F.2d 316, 324 [**16]  (10th Cir.), Cert. denied, 432 U.S. 911, 97 S. Ct. 2960, 53 L. Ed. 2d 1084 (1977), and the Fifth Circuit itself recently has referred to first amendment considerations as "not so much a rule as . . .  a cautionary note," in the context of a jurisdictional analysis.  Edwards v. Associated Press, 512 F.2d at 266. See also Appleyard v. Transamerican Press, Inc., 539 F.2d 1026 (4th Cir. 1976), Cert. denied, 429 U.S. 1041, 97 S. Ct. 740, 50 L. Ed. 2d 753 (1977) (upholding the exercise of personal jurisdiction over an out-of-state magazine publisher without mention of the first amendment).  We observe that first amendment protections are better developed in the context of substantive defenses on the merits rather than at the initial jurisdictional stage of a defamation proceeding.  See Buckley v. New York Post Corp., 373 F.2d 175 (2d Cir. 1967).
The order of the district court dismissing this action for lack of personal jurisdiction is AFFIRMED.  

82 of 133 DOCUMENTS 

UNITED STATES OF AMERICA, and ROBERT H. CLUBERTON, Internal Revenue Agent, Internal Revenue Service, Petitioners-Appellees, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA and HENNING HELDT, Vice President, Respondents-Appellants 

No. 74-1487 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

520 F.2d 818; 1975 U.S. App. LEXIS 13999; 75-2 U.S. Tax Cas. (CCH) P9584; 36 A.F.T.R.2d (RIA) 5291; 21 Fed. R. Serv. 2d (Callaghan) 833 

June 26, 1975 

PRIOR HISTORY:
 [**1]  

 On Appeal from the United States District Court for the Central District of California.  

DISPOSITION:
Reversed and remanded for further proceedings.  

JUDGES:
Duniway and Ely, Circuit Judges, and William J. Jameson, * District Judge.
 * The Honorable William J. Jameson, Senior United States District Judge for the District of Montana, sitting by designation. [**2]  

OPINIONBY:
DUNIWAY 

OPINION:

 [*820]  DUNIWAY, Circuit Judge:
The Church of Scientology of California appeals from the district court's order enforcing a summons issued by an Internal Revenue Service agent under §  7602 of the Internal Revenue Code of 1954, 26 U.S.C. §  7602, and denying the Church's request for pre-enforcement discovery. We reverse and remand for further proceedings.
I. Facts.
On February 8, 1973, agent Cluberton of the Service's Audit Division issued a summons to Henning Heldt, then vice president of the Church of Scientology of California, requiring Heldt to appear on February 20, 1973, to testify and to produce for examination certain records of the Church bearing on its federal income tax liability for 1968 and 1969. Heldt appeared at the appointed time, apparently willing to testify, but without the required records. Heldt said that he was no longer an officer of the Church and that he had neither control nor possession of the records because he had resigned as director and vice president of the Church four days earlier, on February 16, 1973. The agent noted Heldt's appearance but did not examine him. In the course of two years of [**3]  negotiations preceding the issuance of the summons, Heldt had consistently held himself out to the agent as the representative of the Church in charge of its books and records, and never stated that he was contemplating resigning.
On September 5, 1973, the Service petitioned the district court to enforce the summons against Heldt and the Church under 26 U.S.C. § §  7402(b) and 7604(a), both of which somewhat redundantly gave the district courts jurisdiction "by appropriate process" to compel compliance with such summonses. The district court issued an order requiring Heldt and the Church to show cause why they should not be required to comply with the summons.
Heldt and the Church then filed a notice of taking depositions of agent Cluberton and two other Service officials and a demand for the production of Service files relating to the Church. The Service moved to quash this discovery. Then Heldt and the Church responded to the order to show cause by alleging, inter alia, that the Service had issued the summons for the bad faith purpose of harassing the Church. More specifically, the Church asserted that the instant  [*821]  summons was part of a concerted [**4]  nationwide Service strategy to harass various churches of Scientology, which are in the Church's words "doctrinal cousins" but separate entities.  According to the Church, the Service has followed a pattern of initiating investigations and administrative and judicial proceedings, but nonetheless resisting definitive determination of the tax exempt status of those churches - all, the Church alleges, for the purpose of applying pressure to the churches to settle the issue of their claimed tax exemptions and of eliminating Scientology organizations. The Church sought to take the depositions of Service officials to attempt to uncover evidence to support these allegations.
The district judge held a hearing on the order to show cause and on the Service's motion to quash discovery, listening to oral argument by counsel, but without the presentation of testimony or other evidence other than affidavits already on file. Concluding that the "allegation of harassment is not supported by the record," the judge entered orders (1) quashing the notice of taking of depositions and (2) enforcing the summons against the Church. At the request of the Church, the judge stayed enforcement of the summons [**5]  pending appeal, on the condition that the Church deposit with the court all of the books and records sought by the summons. The Church did so, filling 23 trunks with records, and brought this appeal.
We have jurisdiction under 28 U.S.C. §  1291. Reisman v. Caplin, 1964, 375 U.S. 440, 449, 11 L. Ed. 2d 459, 84 S. Ct. 508; D.I. Operating Co. v. United States, 9 Cir., 1963, 321 F.2d 586.
II. Summons Enforcement Proceedings in General.
We begin with a review of a few basic, settled principles.
An internal revenue summons is "administratively issued but its enforcement is only by federal court authority in 'an adversary proceeding' affording an opportunity for challenge and 'complete protection to the witness.'" Donaldson v. United States, 1971, 400 U.S. 517, 525, 27 L. Ed. 2d 580, 91 S. Ct. 534; Reisman v. Caplin, 1964, 375 U.S. 440, 446, 11 L. Ed. 2d 459, 84 S. Ct. 508. The Federal Rules of Civil Procedure apply to a summons proceeding. Fed. R. Civ. P. 81(a)(3); United States v. Powell, 1964, 379 U.S. 48, 58, 13 L. Ed. 2d 112, 85 S. Ct. 248 n. 18; Martin v. Chandis Securities Co., 9 Cir., 1942, 128 F.2d 731, 734. [**6]  But the Civil Rules are not inflexible; a district court may limit their application in a proceeding to enforce a summons, which is intended to be a summary proceeding, so long as the rights of the party summoned are protected and an adversary hearing, if requested, is made available.  Donaldson, supra, 400 U.S. at 528-29.
The Internal Revenue Service need not meet any standard of probable cause to obtain enforcement of its summons; it must show only (1) that the investigation will be conducted pursuant to a legitimate purpose; (2) that the inquiry may be relevant to the purpose; (3) that the information sought is not already within the Service's possession; and (4) that the administrative steps required by the Internal Revenue Code have been followed.  United States v. Powell, supra, 379 U.S. at 57-58.
However, as the Court explained in Powell, 379 U.S. at 58 (footnotes omitted): 

This does not make meaningless the adversary hearing to which the taxpayer is entitled before enforcement is ordered. At the hearing he "may challenge the summons on any appropriate ground," Reisman v. Caplin, 375 U.S. 440, at 449, [11 L. Ed. 2d 459], [**7]  84 S. Ct. [508]. Nor does our reading of the statutes mean that under no circumstances may the court inquire into the underlying reasons for the examination. It is the court's process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper  [*822]  purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation. The burden of showing an abuse of the court's process is on the taxpayer, and it is not met by a mere showing, as was made in this case, that the statute of limitations for ordinary deficiencies has run or that the records in question have already been once examined.
These principles were reaffirmed by the Court in Donaldson v. United States, 1971, 400 U.S. 517, 526-27, 27 L. Ed. 2d 580, 91 S. Ct. 534, and more recently in United States v. Bisceglia, 1975, 420 U.S. 141, 95 S. Ct. 915, 43 L. Ed. 2d 88, [43 U.S.L.W. 4242, 4243].
III. The Alleged Abuse of Process.
The four criteria [**8]  for enforcement set out in Powell were satisfied in this case. The principal question on appeal is whether the district court erred in enforcing the summons without allowing discovery and without taking evidence on the alleged abuse of the court's process. We conclude that the court should have held a limited pre-enforcement evidentiary hearing.
A. The Allegation of Bad Faith IRS Harassment.
We first consider the Church's allegations and the support for them that appears in the record.
Attached to the Church's memorandum in opposition to enforcement of the summons is a "Summary of Administrative and Judicial Proceedings involving the Church of Scientology and its Parishioners," which the Church says reveals a pattern of bad faith IRS harassment. This summary lists eleven proceedings involving various churches of Scientology. With respect to the California Church, the summary states that the Service retroactively revoked the tax exempt status of the California Church in 1968 and that questions of the Church's tax liability for 1964 through 1967 were pending at the appellate conference level when the summons was issued. Also appended to the memorandum are the affidavit of [**9]  Heldt and certain correspondence between the Church and Service officials in which the Church asked the Service, and the Service refused, to defer the examination for 1968 and 1969 while examinations for earlier years were pending.
The pendency of proposed assessments for the earlier years, however, does not in itself indicate bad faith on the part of the Service. Under §  501(c)(3) of the Code, determination of tax exempt status for a given year depends upon the financial operation of the Church for that year. See Church of Scientology of Hawaii v. United States, 9 Cir., 1973, 485 F.2d 313, 319 (Koelsch, J., dissenting). Moreover, the gross receipts of the California Church for 1968 and 1969 were markedly higher than those for 1964 through 1967. It was not unreasonable for the Service to investigate the different periods separately but simultaneously.
The Church also cites our Church of Scientology of Hawaii case, supra, and another case now pending on appeal to this court, Handeland v. Commissioner, 519 F.2d 327 (1975), as evidence of an alleged bad faith "harass and moot" strategy in which the Service repeatedly imposes assessments on [**10]  churches of Scientology but stops short of litigating the merits of the church's tax exempt status by refunding the taxes paid or conceding non-liability. In the Church of Hawaii case, we held that the taxpayer's suit for a refund was not mooted by the Service's tender of the taxes paid. Handeland involves an action in the Tax Court by ministers of the Church of Scientology of Minnesota in which the government admitted error and the Tax Court entered a judgment without opinion for the ministers. The propriety of this mooting tactic is not now before us. If this mooting tactic is improper, the Church will have its remedy, as it did in the Church of Hawaii case.
For present purposes, we conclude only that the Service's litigative strategy in  [*823]  those cases does not sufficiently evince bad faith to require us or the district court to deny enforcement of the summons. It may be that the Service has capitulated in certain cases because small amounts were in issue or because it has insufficient evidence to sustain its case. We see no reason to bar it from gathering the evidence it deems necessary in this case. We note in passing that the Service has litigated to finality [**11]  and won a case involving the tax exempt status of a Scientology church in Founding Church of Scientology v. United States, 1969, 188 Ct. Cl. 490, 412 F.2d 1197, cert. denied , 397 U.S. 1009, 25 L. Ed. 2d 422, 90 S. Ct. 1237, where the court held that the Church failed to prove that no part of the corporation's net earnings inured to the benefit of private individuals. See 26 U.S.C. §  501(c)(3).
As evidence of purportedly improper Service motives, the Church also relies on a Service "Manual Supplement" dated September 2, 1970. Its stated purpose, as we observed in Church of Scientology of Hawaii, supra, 485 F.2d at 317, is to identify "Church of Scientology type religious organizations" and to provide guidelines for examining returns and processing applications. However, we see no reflection of a nefarious purpose on the face of this document.
The manual supplement is based on the opinion of the Court of Claims in Founding Church of Scientology v. United States, supra. The court discussed both the tenets and the structure of Scientology organizations. After pointing out that the Founding [**12]  Church tithed 10 percent of its gross income to founder L. Ron Hubbard, the court observed, 412 F.2d at 1199: 

Other Scientology congregations, franchises, and organizations also paid Hubbard a portion of their gross income, usually 10 percent.

The Court of Claims explained, 412 F.2d at 1201: 
For purposes of deciding this case, we do not consider the income accruing to Hubbard from the affiliated congregations and organizations as coming from plaintiff. However, under the circumstances here, the fact that Hubbard had income from such closely related sources indicates that Hubbard's compensation from plaintiff was not for full-time service. During the years in issue these other percentages, fees, and commissions, so far as the record shows, were apparently received or receivable by Hubbard for his personal use. Such an arrangement suggests a franchise network for private profit and, in turn, casts doubt upon the propriety of the payments by plaintiff to Hubbard and the members of his family. The fact that Hubbard was the recipient of income from plaintiff in the form of royalties and commissions likewise occasions an inference of personal [**13]  gain.

Given the evidence in that case and the conclusions of the Court of Claims, it was entirely reasonable for the Service, using the characteristics sketched by that court, to identify Scientology organizations and to establish a uniform policy and procedure for examining them.  In fact, we might suspect an improper external influence if, under the circumstances, the Service did not give such organizations careful scrutiny.
In short, we agree with the district court that the allegations of harassment and improper purposes were not supported by the record and standing alone did not require the court to deny enforcement. However, our inquiry does not end here, for it may be that the Church's allegations have more substance than meets the eye. See, e.g., Center on Corporate Responsibility, Inc. v. Schultz, D. D.C., 1973, 368 F. Supp. 863 (evidence of White House use of IRS administrative actions against certain "activist" organizations whose views were offensive to the White House).
B. Denial of Discovery and Evidentiary Hearing.
The Church contends that it was entitled to discovery under Fed. R. Civ. P. 30 and 34 or, failing that, an evidentiary hearing [**14]  to inquire into the motives of the Service in issuing the summons.
 [*824]  Under Fed. R. Civ. P. 81(a)(3) the district court has considerable discretion to restrict or deny discovery. See United States v. Bell, 9 Cir., 1971, 448 F.2d 40, 42; United States v. Ruggeiro, 9 Cir., 1970, 425 F.2d 1069, 1071; United States v. Ahmanson, 9 Cir., 1969, 415 F.2d 785, 787. In contrast to the procedure in ordinary civil cases, discovery in a summary summons enforcement proceeding is the exception rather than the rule. The party resisting enforcement should be required to do more than allege an improper purpose before discovery is granted.  United States v. National State Bank, 7 Cir., 1972, 454 F.2d 1249, 1252; United States v. Salter, 1 Cir., 1970, 432 F.2d 697, 700. Conclusory allegations carefully tailored to the language of Powell, supra, that the Service has issued a summons for an improper purpose such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, are easily made. See Garrett v. United States, 9 Cir., 1975, 511 F.2d 1037 [**15]  [slip op. at 2].
Allowing the Church to take depositions of the examining IRS agent and his superiors and to inspect internal IRS records and memoranda on the basis of such conclusory allegations would place undue burdens on the Service and impede what is supposed to be a summary enforcement procedure.  Accordingly, we reject the Church's argument that it was entitled to pre-enforcement discovery. 
Nonetheless, because, as we have seen, the Church or any other summonee bears the burden of proving bad faith harassment or other abuse, we think that the summonee must be afforded at least some opportunity to substantiate its allegations.
The Church argues that, failing to grant its request for discovery, the district court should at least have held an evidentiary hearing to inquire further into the motives of the Service in issuing the summons. As the Church points out, that was the approach adopted by the First Circuit in United States v. Salter, 1 Cir., 1970, 432 F.2d 697, where the summonee also alleged an improper Service purpose in issuing a summons. There the court said (at 700): 

We agree with the government, however, that respondent should be [**16]  required to do more than allege an improper purpose before discovery is ordered in a proceeding of this type. Some evidence supporting respondent's allegations should be introduced. We approve of the following suggestion offered by the government: 

"The general solution would probably be for the district court to proceed directly to a hearing at which, if desired, the summonee could examine the agent who issued the summons, concerning his purpose. The court could then, by observation and, where necessary, its own questioning of the agent, make its own determination of whether exploration, as by discovery, seemed to be in order."

If, at the end of the hearing, there remains a substantial question in the court's mind regarding the validity of the government's purpose, it may then grant discovery.

The Third Circuit has recently adopted a similar procedure in United States v. McCarthy, 3 Cir., 1975, 514 F.2d 368. We agree with the First and Third Circuits that this solution would accommodate the needs of efficient tax administration and at the same time provide a reasonable opportunity for the summonee to carry the burden imposed by Powell, supra, [**17]  of showing an abuse of the court's process.
In approving the procedure suggested by the First Circuit, we also endorse that court's limiting rationale that the purpose of the evidentiary hearing is to sift out those rare cases where bald allegations of harassment or improper purpose can be substantiated and thereby to avoid dilatory and burdensome discovery procedures. As the First Circuit said in Salter, supra , 432 F.2d at 700-01 (footnote omitted): 
We believe that there are strong reasons of public policy for placing a  [*825]  burden of proof on respondent before allowing discovery in an enforcement proceeding of this type. A broad discovery order puts the Internal Revenue Service under a severe handicap in conducting a civil investigation. Broad discovery can be expected to cause extensive delays and to jeopardize the integrity and effectiveness of the entire investigation. Coupled with these considerations is the fact that taxpayers have been almost uniformly unsuccessful in proving an "improper purpose" defense. Requiring an evidentiary hearing will not preclude a respondent from raising and proving a [sic] "improper purpose," and we of course have [**18]  no intention of precluding him from doing so. But we feel that the hearing requirement will have the salutary effect of eliminating discovery in cases in which it is clear that respondent will not be able to prove his allegations.
Applying these principles to the case at hand, we conclude that the Church's allegations of bad faith harassment by the Service, though thin, raised sufficient doubt about the Service's purposes to require the district court to hold a limited evidentiary hearing to determine whether further inquiry into the Service's purposes by way of discovery is warranted. Although we anticipate that such a hearing would entail, for example, cross-examination of the summoning agent (Cf.  Wild v. United States, 9 Cir., 1966, 362 F.2d 206, 208-09), we do not attempt to define precisely the permissible scope of the evidentiary hearing. We leave that to the discretion of the district court.
In the proceedings below, the Church attempted discovery only by way of taking depositions and requests for IRS documents. Apparently counsel for the Church mistakenly believed that it had a right to discovery before the presentation of any evidence in the summons [**19]  enforcement proceeding. Thus it is arguable that the Church waived any argument that it was entitled to a pre-discovery evidentiary hearing. However, we agree with the Third Circuit, McCarthy, supra, 514 F.2d at 377 n. 11, that to hold under these circumstances that the Church failed to ask the court for the proper sequence of procedures would be unduly harsh. Moreover, in reviewing the record, we note that the Church twice called the district court's attention to the Salter case and the procedure there recommended. Accordingly, we conclude that the Church did not waive its right to an evidentiary hearing.
IV. Conclusion.
In view of our conclusion that the district court should have granted the Church a limited evidentiary hearing to inquire into the Service's purposes, we do not reach the Church's other arguments for reversal.
Reversed and remanded for further proceedings.  

83 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF HAWAII, Plaintiff-Appellee, v. THE UNITED STATES OF AMERICA, Defendant-Appellant 

No. 71-2761 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

485 F.2d 313; 1973 U.S. App. LEXIS 8023; 73-2 U.S. Tax Cas. (CCH) P9659; 32 A.F.T.R.2d (RIA) 5784 

September 6, 1973 

JUDGES:
Koelsch, Wright and Trask, Circuit Judges.  Koelsch, Dissenting.  

OPINIONBY:
TRASK 

OPINION:

 [*314]  TRASK, Circuit Judge: 
The district court denied the government's motion to dismiss in this tax refund case.  Being of the opinion that the denial involved a controlling question of law and that an immediate appeal might materially advance the ultimate disposition of the case, the trial court so stated and we allowed the interlocutory appeal under 28 U.S.C. §  1292(b). n1 

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n1 The question certified was as follows: 
"Should the defendant's motion to dismiss, on the ground that this civil Tax refund action be rendered moot by reason of an absolute and unconditional tender to plaintiff of the amounts sued for plus interest as provided by law, be granted." Appellant's Brief at 3.

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The Church of Scientology of Hawaii (Church) was granted a charter as a nonprofit religious corporation on December 8, 1964.  It filed information income tax returns for the years 1965 and 1966 claiming exemption under section 501(c) (3) of the Internal Revenue Code as a church formed exclusively for religious and educational purposes, no part of the net earnings of which inured to the benefit of any private shareholder or individual.  The Internal Revenue Service denied the claim of exemption and assessed tax deficiencies for the two years.  The Church paid the deficiencies, filed claims for refunds which were disallowed and then filed suit for a refund of the sums paid.  The issue in all of the proceedings was the claimed exempt status under section 501(c) (3).  Following discovery proceedings and a motion for summary judgment filed by the Church, the government proposed a settlement whereby a refund would be made of the amount "plaintiff would have received (other than costs) had it prevailed in this litigation." The action would then be dismissed with prejudice.  This offer was rejected but the Church suggested that an offer of judgment pursuant to Rule 68 Fed. R. Civ. P. would [**4]  receive favorable consideration.  No such offer was made but the government caused checks aggregating $806.08 to be tendered. The tender was not accepted and the motion to dismiss was filed asserting that the action had become moot and that a justiciable controversy no longer existed by virtue of the continuing tender.  The motion to dismiss was denied and this interlocutory appeal allowed. 
At the outset we recognize that there must be a viable justiciable controversy before the court in order for it to act, since the court does not render advisory opinions or decide abstract propositions.  California v. San Pablo & Tulare R.R. Co., 149 U.S. 308, 314, 37 L. Ed. 747, 13 S. Ct. 876 (1893). n2 It is also entirely clear that jurisdiction to decide questions concerning federal taxes has been expressly withheld under the Declaratory Judgments Act, 28 U.S.C. §  2201. Apart from these settled rules there is left for consideration whether under the general rules of mootness there remains anything for the court to decide after an unconditional and continuing offer by the government to refund the amount the taxpayer has paid, plus interest.  Appellee calls [**5]  our attention to several matters about the offer that it urges as significant.  (1) The offer does not include any costs in the action;  [*315]  (2) there is a dispute as to the computation of interest, and; (3) the offer states that "the terms of settlement should not be included in the stipulation." (Emphasis in original); (4) there remain a number of unresolved questions and continuing consequences whose determination will be foreclosed by a dismissal.  All of these work together, it is argued, to preserve jurisdiction against an unaccepted tender of the refund. 

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n2 "It is well settled that federal courts may act only in the context of a justiciable case or controversy." Benton v. Maryland, 395 U.S. 784, 788, 23 L. Ed. 2d 707, 89 S. Ct. 2056 (1969); Liner v. Jafco, Inc., 375 U.S. 301, 306 n.3, 11 L. Ed. 2d 347, 84 S. Ct. 391 (1964).

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Appellant relies heavily upon our decision in Mitchell v. Riddell, 402 F.2d 842 (9th Cir. 1968), cert. denied, 394 U.S. 456, 22 L. Ed. 2d 415, 89 S. Ct. 1223 (1969), [**6]  as being dispositive of this case.  In Mitchell the settlor of an inter vivos trust established exclusively for charitable purposes had attempted unsuccessfully to have the Internal Revenue Service (IRS) declare it a tax exempt organization.  The service had declined to do so and persisted in its demand that the trust report its income as a taxable organization, although apparently no assessment had been made by IRS nor other legal action taken.  In order to obtain a determination Mitchell, the settlor, filed a trust return, remitted the sum of ten dollars to IRS in behalf of the trust and " 'included the statement that no tax was due, . . . and calling for a refund with reasons stated. '" 402 F.2d at 844. He thereupon filed suit in the district court to recover the ten dollars. In a second cause of action he asked that the trust operations be found to be tax exempt under the Code.  The government later repaid the ten dollars to settlor and settlor accepted the money.  The trial court dismissed and we affirmed.  We held that the repayment mooted the first cause of action and the proscription in 28 U.S.C. §  2201 of the Declaratory Judgments [**7]  Act stripped the court of jurisdiction to pass upon the second. 
Some readily apparent distinctions make Mitchell v. Riddell, supra, a questionable precedent.  The payment of the refund was not tendered, but accepted.  Again, the entire litigation was contrived by settlor. No assessment for unpaid federal income taxes against the trust or its alter ego had been made.  Significantly, we said: 
"Appellants are not without a remedy.  The Congress has provided ample machinery for the settlement of income tax controversies.  In the event a tax is assessed against the Foundation, judicial review of such assessment may be sought under the provisions of 26 U.S.C. §  7422 by paying the tax and seeking a refund in the district court, or by petitioning the Tax Court of the United States, prior to paying the tax, and in the event of an adverse decision by the Tax Court by petitioning this Court to review the decision of the Tax Court." 402 F.2d at 847.

Here there had been an assessment for claimed tax deficiencies, payment with claim for refund and detailed statement of reasons and after denial of claim, a suit to recover [**8]  payments.  This is the "ample machinery for the settlement of income tax controversies" to which we pointed in Mitchell, supra . 
The government also cites four cases as authority for the proposition that in no other case has a taxpayer been able "to withstand a motion to dismiss following a tender of the amount in dispute." We consider them. In Drs. Hill & Thomas Co. v. United States, 392 F.2d 204 (6th Cir. 1968), the taxpayer, a professional corporation, challenged a Treasury Regulation which would eliminate taxation of income to the corporation and cause it to flow through to the individuals on a partnership basis. The Commission tendered a refund of the entire amount in dispute and the case was dismissed, the court pointing out that the identical problem was being litigated in two other circuits where no mootness defense was available. The taxpayer was thus assured of a judicial determination. In Lamb v. Commissioner, 390 F.2d 157 (2nd Cir. 1968), the taxpayer sought a determination of the deductibility of his law school expenses. During the pendency of  [*316]  the litigation a similar problem was ruled against the Commissioner,  [**9]  prompting him to tender the refund sought by this suit. The court dismissed the action as moot pointing out the foregoing and that further proceedings against the taxpayer for the next year were barred. Thus, there appears to have been a final determination.  A. A. Allen Revivals, Inc. v. Campbell, 353 F.2d 89 (5th Cir. 1965), was a case where taxpayer sought exemption as a religious and educational organization.  Its suit was to recover funds paid as Federal Insurance Contributions Act taxes. It tendered the money to the taxpayer but during the litigation the Tax Court held that the taxpayer was in fact organized and operated exclusively for charitable and educational purposes and no income taxes were due. IRS also ruled that the taxpayer was exempt from employment taxes. Thus, again, there had been a judicial determination of status.  Regina v. United States, 208 F. Supp. 137 (W.D. Pa. 1962), involved an income tax based upon a valuation of corporate stock used in an exchange. A tender of the refund sought was made and the litigation held moot and dismissed. Although the merits were not judicially determined it was a non-recurring transaction and tax with [**10]  no indicated collateral involvements upon which other difficulties to the taxpayer could hinge. 
In none of them, therefore, was there an even arguable reason to continue with litigation after the tender or payment was made. Thus we do not find any of the cases cited by the government as dispositive of the issues here. Looking first at the direct controversy between the parties, we note that there is nothing in the proposed refund payment to the taxpayer of sums involuntarily paid for 1965-1966 which would have assured it that the same demands would not be made for 1967 and 1968. Indeed, the contrary is strongly suggested. n3 It has long been the rule that "mere voluntary cessation of allegedly illegal conduct does not moot a case." United States v. Concentrated Phosphate Export Ass'n, 393 U.S. 199, 203, 21 L. Ed. 2d 344, 89 S. Ct. 361 (1968). Prior to the Phosphate Export case, the Court had warned against the danger f dismissal for mootness when actions of governmental agencies are likely to be repeated, pointing out that broader considerations should not be defeated by short-term orders "capable of repetition, yet evading review. . . ." See also Moore v. Ogilvie, 394 U.S. 814, 816, 23 L. Ed. 2d 1, 89 S. Ct. 1493 (1969); [**11]  Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498, 55 L. Ed. 310, 31 S. Ct. 279 (1911). 

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n3 Attached to appellee's brief was a reproduction of a letter from IRS dated September 24, 1971, sending back to appellee information returns it had filed based upon its claimed exempt status and notifying it that it was not eligible to file such a return, but must file federal income tax returns.

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The proscription of the Declaratory Judgments Act as to tax matters, 28 U.S.C. §  2201, has no application here. Appellee had sought relief under the statute which provided a cause of action for refunds of taxes unlawfully assessed and paid.  26 U.S.C. §  7422. It did not pretend to ask for declaratory relief. The assessment had been made by the IRS, the taxes paid and claims for refunds made and disallowed and the suit for refund then properly filed. The underlying issue at all stages was taxpayer's claim of exemption under section 501(c)  [**12]  (3). 
Turning, then, to the appellee's arguments in opposition to mootness, we conclude that the contention that the amount of the tender is unsufficient and therefore the action may not be mooted by that tender is not well taken. Insufficient interest was claimed of $1.30; costs were not included in the tender. But no objection to the tender was made for these reasons. The rejection was based upon a letter to Mr. Wilkenfield of the Department of Justice dated May 11, 1971. It relied upon charges of collateral harassment which a  [*317]  cash refund would not lay to rest and a counter offer of settlement of all questions. A refusal to accept a tender for one reason waives all others.  Moore v. Investment Properties Corp., 71 F.2d 711, 717-18 (9th Cir.), cert. denied, 293 U.S. 611, 79 L. Ed. 701, 55 S. Ct. 142 (1934). The same reason defeats appellee's argument based upon failure of the government to tender costs. 
The principal reasons advanced by appellee in support of the trial court's retention of jurisdiction are that the underlying issue of the status of appellee as an exempt corporation is a continuing one. It recurs each year. In addition, the [**13]  failure to resolve the legal issue results in adverse collateral consequences which would be resolved by a determination of the underlying issue. 
The ongoing nature of the controversy is evidenced not only by a rejection of information returns for a later year which were filed on the basis that appellee is tax exempt and a demand by IRS for regular tax returns, n4 but is evidenced even more clearly by an IRS "Manual Supplement," a copy of which dated September 21, 1970, appears in the record. The stated purpose of the manual is to identify "Church of Scientology type religious organizations" and to provide guidelines for examining returns and for processing applications for exemption. The detailed instructions which purport to describe in part the religious philosophy of the Church appear to make such organizations a suspect group. It is couched in terms of directions for future guidance. 

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n4 See footnote 3, supra.

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That the tender by IRS in this case of a refund of 1965 and 1966 income tax payments [**14]  was not intended to be a final resolution of the tax exempt status issue is also evidenced by the fact that on March 24, 1971, officials of the Church were subpoenaed to appear at the IRS office and bring with them: 

(1) Payroll records from January 1, 1967 through December 31, 1970, inclusive. 
(2) W-2's for 1967 through 1970 inclusive.

The ongoing nature of the problem was also disclosed by a levy by IRS on the bank account of the Church in the First Hawaii Bank for unpaid "941 tax" on or about March 2, 1971. n5 

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n5 The number "941" apparently refers to Form 941 which is the form on which F.I.C.A. and income withholding taxes are reported.  Treas. Reg. §  39.1-4(2) (F.I.C.A); §  31.6011(a)-4 (income tax).

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Collateral consequences are also involved. An organization exempt from income taxation pursuant to §  501(c) (3) is additionally exempt from contributing under the Federal Insurance Contributions Act, 26 U.S.C. §  3121(b) (8) (B), under certain circumstances. There [**15]  are also advantages to a church found to be exempt under other provisions of the 1954 Internal Revenue Code. n6 

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n6 See 26 U.S.C. §  3401(a) (9); (9)-1 (9)-1 Treas. Reg. §  31.3401(a) (9)-1(b) (2). 
An exemption is provided for certain withholding tax payments by religious organizations with such organizations being defined as having "the same meaning and application as is given to the term for income tax purposes."

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Other collateral consequences of its indeterminate status include the right to certain postal rates and the right to solicit financial support on the basis that gifts will be tax deductible as religious or charitable contributions. 
In United States v. W. T. Grant Co., 345 U.S. 629, 97 L. Ed. 1303, 73 S. Ct. 894 (1953), the resignation of a common director did not render moot an attack upon an interlocking directorate. 

"Voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not [**16]  make the case moot. . . . The case may nevertheless be moot if the defendant can demonstrate that 'there is no reasonable expectation that the wrong will be repeated. ' The burden is a heavy one." 345 U.S. at 632-33, 73 S. Ct. at 897,  [*318]  quoting United States v. Aluminum Co. of America, 148 F.2d 416, 448 (2nd Cir. 1945).

See also United States v. Concentrated Phosphate Export Ass'n, supra. 
In criminal cases it appears clear that the payment of the penalty will not moot the case for final appeal and determination if the judgment of conviction may entail collateral consequences.  Sibron v. New York, 392 U.S. 40, 53-55, 20 L. Ed. 2d 917, 88 S. Ct. 1889 (1968); Ginsberg v. New York, 390 U.S. 629, 633 n.2, 20 L. Ed. 2d 195, 88 S. Ct. 1274 (1968). The rule has developed to the point where the Court stated in Sibron, supra, that "a criminal case is moot only if it is shown that there is no possibility that any collateral legal consequences will be imposed on the basis of the challenged conviction." 392 U.S. at 57. 
Granted that a criminal case is different from [**17]  a civil case in many respects, it is difficult to find a reason for distinction when considering whether a case or controversy exists under Article III of the Constitution. Certainly we find no distinction under the circumstances of this case. 
Our conclusion in this respect is fortified by the judgment of the United States District Court for the Western District of Missouri in First Federal Savings & Loan Ass'n. v. United States, 288 F. Supp. 477 (W.D. Mo. 1968). In a fact situation quite similar to the case here, that court held that a tender (as distinguished from payment) was not effectual to moot the case and that the possibility of a continuing recurrence of the problem was sufficient to entitle the taxpayer to have the underlying legal issue determined. 
We must conclude with the admonition that what we say and hold here on the issue of mootness is not intended to indicate any view upon the merits. Whether the Church is eligible and can qualify for an exemption from payment of income taxes under section 501(c) (3) of the Internal Revenue Code for its taxable years 1965 and 1966 must be determined upon the evidence presented at the trial upon that issue. We only [**18]  answer the question certified by the interlocutory appeal which is that the defendant's motion to dismiss on the ground stated should be denied.  

DISSENTBY:
KOELSCH 

DISSENT:

KOELSCH, Dissenting 
If a judgment on the merits would be worth the judicial time, the outlay of money, and the attorney's efforts, I would hasten to join in the court's opinion. No good purpose would be served, now that the judicial process has been initiated, to dismiss this suit only to have a similar one commenced and prosecuted at some future time. However, I am convinced that the trial, which the Commissioner seeks to avoid, will settle nothing more than the church's income tax status for the particular years under consideration -- 1965 and 1966. Why, then, should we permit litigation which bids fair to be involved and time consuming to continue? 
The collateral estoppel effect of a judgment in an income tax matter is generally limited, because each year's taxes are based upon facts peculiar to that particular year, and give rise to separate claims by the Collector. Although the doctrine does operate in the field of tax law, the factual peculiarities of the subject have limited its application. 
Thus in Tait v. Western Md. Ry. Co., 289 U.S. 620, 77 L. Ed. 1405, 53 S. Ct. 706 (1933) [**19]  the Court, concluding that the concept of res judicata was applicable in the field of tax law despite the scheme of annual tax periods, held that a prior adverse determination regarding the deductibility of an amortized proportion of the discount on sales of bonds by the taxpayer's predecessors estopped the Collector from relitigating that issue in a suit involving a later period. However, it should be noted that the allowable discount constituted a "static fact" -- one which did not derive its legal impact from events of the later period. 
 [*319]  On the other hand, Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 92 L. Ed. 898, 68 S. Ct. 715 (1948) established two areas in which collateral estoppel does not operate: The first, where the legal climate changes in the interim between the suits; there, although the material fact is "static," the prior determination is not controlling. The second, where different -- in the sense of new -- facts have arisen, such as a series of contracts or directors' resolutions, although such facts may be similar or identical to facts that were peculiar to a prior year, the prior determination on the "old" facts does not control [**20]  the decision regarding the legal impact of the "new." 
This "separable facts" doctrine in tax cases has been criticized as being too mechanical in its operation and exalting form over substance [ United States v. Russell Mfg. Co., 349 F.2d 13 (2d Cir. 1965)] and has been confused by lower courts; but it is still good law. See Branscomb, Collateral Estoppel in Tax Cases: Static and Separable Facts, 37 Texas L. Rev. 584, 588-97 (1959). The doctrine has been defended as an application of the general rule that an issue must in fact be litigated before it can have an estoppel effect on a subsequent litigation [Heckman, Collateral Estoppel as the Answer to Multiple Litigation Problems in Federal Tax Law: Another View of Sunnen and The Evergreens, 19 Case W. Res. L. Rev. 230, 240 (1968)] and on the basis that the relitigation of genuinely identical sets of facts with the same legal implications which the doctrine necessitates in tax cases may well require less judicial time than the appeals and remands involved in an erroneous determination by a trial court that collateral estoppel applies.  Branscomb, supra, 37 Tex. L. Rev. at p. 591; 85 Harv. L. Rev. 1478 (1972). [**21]  
The record in the instant case makes clear that a trial would simply establish the "separable facts" of Sunnen, not the "static facts" of Tait. 
Under §  501(c) (3) church is eligible for exemption if it is a corporation "organized and operated exclusively for religious -- purposes -- [and] if not part of the net earning of which inures to the benefit of any private shareholder or individual --" The Tax Regulations relating to this section of the statute [ (3)-1 (3)-1 Treas. Reg. §  1.501(c) (3)-1 (1959)] set up two essential requirements for an exemption; one organizational and the other operational. Both must be met. A determination of the first requires an analysis of the corporation's charter to determine whether it was organized exclusively for religious purposes; of the second, a consideration of the actual day to day operation of the corporation. Here the Commissioner has forthrightly admitted that the church meets the organizational requirement of §  501(c) (3) and, accordingly, has made clear that his objection to church's claim of exemption is predicated solely upon operational grounds. 
There are, of course, a variety of bases upon which the Commissioner can challenge [**22]  a claim of exempt status, all of which involve a consideration and determination of the financial operation of the church during a given tax year. For instance, as in Founding Church of Scientology v. United States, 188 Ct. Cl. 490, 412 F.2d 1197 (1969), he may take the position that exemption should be denied because church income inured to the private benefit of its founder. Or he may assert that exemption is lost because church paid unreasonable salaries. However, under the "separable facts" doctrine, a determination that church has or has not violated the "inurement of benefits" clause during 1965 and 1966 would have no estoppel effect in litigation concerning the same issues with respect to subsequent years. n1 This result follows both under Sunnen and under  [*320]  the general principle of collateral estoppel that an issue must be actually litigated in order to have an impact in subsequent litigation of a different claim. Developments in the Law -- Res Judicata, 65 Harv. L. Rev. 818, 840 (1952). 

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n1 A fortiori with respect to salaries; the dollar amounts may be precisely the same but the reasonableness will vary with changes in living standards and community mores from year to year.

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The judgment should be reversed.  

84 of 133 DOCUMENTS 

The CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff-Appellant, v. Elliot RICHARDSON * et al., Defendants-Appellees 
* Elliot Richardson has been substituted for his predecessor in office, Robert H. Finch, pursuant to Fed.R.Civ.P. 25(d) (1). 

No. 24276 

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT 

437 F.2d 214; 1971 U.S. App. LEXIS 12446 

January 11, 1971 

JUDGES:
 [**1]  
Ely, Carter and Trask, Circuit Judges.  

OPINIONBY:
CARTER 

OPINION:

 [*216]  JAMES M. CARTER, Circuit Judge: 
This appeal involves an alleged deprivation of rights protected by the United States Constitution and the Civil Rights Act of 1964 (42 U.S.C. § §  1981, 1983). 
Appellant is a California non-profit corporation, organized for the ostensible purpose of disseminating religious doctrine known as "Scientology." n1 The "Hubbard E-meter" is an instrument that is allegedly essential to the practice of Scientology.  The E-meter is manufactured in the United Kingdom and is, in fact, a simple skin galvanometer that crudely measures changes in electrical resistance in the human body.  The Food and Drug Administration refused to allow the inportation of E-meters because they were deemed to be "devices" (21 U.S.C. §  321(h)) that appeared to be "misbranded" in that they did not bear adequate instructions for use (21 U.S.C. §  352(f) (1)).  The refusal was based, inter alia, on a successful condemnation action against certain E-meters in the District Court for the District of Columbia [United States v. An Article of [**2]  Device . . . E-meter (D.C.Civ.No. DC1-1963 (1967))].  The E-meters here in question were seized and detained by Post Office and Customs officials on the ground that they were in violation of the Federal Food, Drug, and Cosmetic Act. 

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n1 For a thorough presentation of the tenets and practices of "Scientology" see Founding Church of Scientology v. United States (1969) 133 U.S.App.D.C. 229, 409 F.2d 1146.

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After the instruments were seized, appellant received a hearing before the Food and Drug Administration in Los Angeles on August 6, 1968.  The hearing examiner concluded that the E-meters did not bear adequate instructions for use and, therefore, that they could not be imported into this country.  Upon considering the record of the hearing and other available information, the Food and Drug Administration concluded that the E-meter devices appeared to be misbranded within the meaning of 21 U.S.C. §  352(f) (1), as alleged in the notice of seizure, and made the determination [**3]  of misbranding. 
Appellant then filed this suit: (a) to enjoin the F.D.A. from refusing admission of the E-meters into the United States; (b) to enjoin the F.D.A. from compelling the return of the devices to their country of origin; and (c) for $20,000.00 in damages to persons in the class affected.  The district court granted the Government's motion for summary judgment.  Thereafter, appellant filed a motion for relief from judgment on the basis that, in the interim, the D.C. District Court's earlier condemnation of certain E-meters had been reversed by the D.C. Circuit Court of Appeals in Founding Church of Scientology v. United States, 133 U.S.App.D.C. 229, 409 F.2d 1146, cert. denied 396 U.S. 963, 90 S. Ct. 434, 24 L. Ed. 2d 427 (1969). The motion was denied.  We affirm. 
Discussion 
The Government may refuse admission to any "device" offered for importation if it appears to be "misbranded" [ 21 U.S.C. §  381(a)].  The term "device" is defined as "instruments, apparatus, and contrivances * * * intended (1) for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man * * *.  [ 21 U.S.C. §  321 [**4]  (h)]." A device is considered to be "misbranded" if, inter alia, its labeling  [*217]  does not bear adequate directions for use [ 21 U.S.C. §  352(f)].  
1.  Issues of Fact 
Appellant contends that the district court erred in granting summary judgment because there were material issues of fact remaining.  Appellant urges that these issues of fact were: (a) whether the E-meter was used in the religious practices of Scientology; and (b) whether the E-meters were misbranded? 
The issue of the E-meters' alleged religious use is irrelevant here.  The district court held that the exercise of religious freedom does not include the freedom to violate the Federal Food, Drug, and Cosmetic Act. We agree. 
The "misbranding" issue can be most accurately described as a question of scope of judicial review.  The district court held that the E-meter was a "device" within §  321(h) because it is intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man. n2 All "devices" are subject to the Act's branding requirements [ 21 U.S.C. §  352]. 

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n2 The Seventh Circuit upheld the same finding with regard to a similar skin galvanometer in United States v. Ellis Research Labs (7 Cir. 1962) 300 F.2d 550.

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Section 381(a) requires only that the device appear to be misbranded, and vests such determinations in the discretion of the Secretary of Health, Education, and Welfare.  The Secretary's determination of misbranding is not subject to judicial alteration unless it was arbitrary and capricious. Sugarman v. Forbragd (9 Cir. 1968) 405 F.2d 1189. 
First, there were no allegations in the complaint that the Secretary's determination of misbranding was arbitrary or capricious. The real issue tendered by the complaint was an asserted violation of civil rights, to wit religious freedom. 
Second, the district court found the action was not arbitrary or capricious. In determining that the E-meters appeared to be misbranded, the Secretary could consider: (a) appellant's literature that contains diagnostic and therapeutic claims for the E-meter; (b) appellant's admission that the devices are ineffective for any medical therapeutic purpose; (c) the absence of instructions for use on the labeling of the devices; and (d) the prior adjudication by the D.C. District Court that the E-meters were in fact misbranded devices.  In view of this evidence, the district court concluded [**6]  that appellant had failed to establish any arbitrary or capricious action by the Secretary.  We agree. 
Appellant argues that Sugarman's limitation on judicial review is inapplicable here because the Secretary has ignored the Congressional mandate to exempt from the Act's branding requirements any device as to which labeling would not be necessary for the protection of the public health [ 21 U.S.C. §  352(f)].  Appellant contends that E-meters are non-injurious and, therefore, should have been exempted.  We think that the Hubbard E-meter is akin to the device in issue in Drown v. United States (9 Cir. 1952) 198 F.2d 999. In Drown, this court held: 

"While the instruments may be harmless in themselves, their danger lies in the possibility that 'ignorant and gullible persons are likely to rely upon them instead of seeking professional advice for conditions they are represented to relieve or prevent'." [ 198 F.2d at 1006].

In this sense, appellant's E-meters cannot be considered harmless and, therefore, the Act's branding provisions are applicable.  See also United States v. Ellis Research Labs. (7 Cir. 1962) 300 F.2d 550. [**7]  
2.  First Amendment Violations 
Appellant contends that, in making the determination of "misbranding," the court must have considered and evaluated Scientology's religious literature  [*218]  in violation of its First Amendment rights.  The district court found that the appellant had conceded that the E-meter devices were ineffective for any medical or therapeutic purposes.  Appellant asserts that the devices are used solely as a confessional aid in Scientology, and that the detention of the devices by the Government unlawfully interferes with appellant's religious freedom. 
In Founding Church, supra, the D.C. Circuit held that the court could not constitutionally evaluate the truth or falsity of the medical claims made in Scientology's "religious" literature, citing United States v. Ballard (1944) 322 U.S. 78, 64 S. Ct. 882, 88 L. Ed. 1148. The statute in issue there was 21 U.S.C. §  334(a), which provides that a device is misbranded if its "labeling" bears false or misleading claims.  The court reversed the decree of condemnation on the ground that "some of that literature was at least prima facie religious [**8]  doctrine, and that the jury, as it was instructed, could have found against the E-meter by finding false statements in 'labeling' which was at the same time religious doctrine." 409 F.2d at 1164. The court specifically reserved, however, the issue of whether "a drug or device used in a religion is subject to condemnation as 'misbranded' if its labeling is found to lack * * * adequate directions for use [ 21 U.S.C. §  352(f)]." 409 F.2d at 1162. 
In determining the E-meter's intended use, the court could validly consider the appellant's publications that discuss the device's applications.  Nature Food Centres, Inc. v. United States (1 Cir. 1963) 310 F.2d 67; United States v. Article of Drug . . . Capsules (3 Cir. 1966) 362 F.2d 923; Alberty Food Products v. United States (9 Cir. 1952) 194 F.2d 463. Unlike the "mislabeling" section involved in Founding Church, the court here could determine the E-meter's intended use without evaluating the truth or falsity of any related "religious" claims.  To the contrary, appellant's claims in its literature regarding the applications of the device [**9]  in the practice of religion were presumed to be true for the purpose of determining its intended use.  We find no infringement of First Amendment rights. 
3.  Potpourri 
Appellant contends that the district court misapplied the doctrine of res judicata by allegedly relying completely on the district court result in Founding Church.  Appellant is mistaken.  The district court's opinion does not contain any mention of the doctrine of res judicata. The court only referred to the district court decision in Founding Church as a fact, among others, that the Government could have reasonably relied upon in deciding to refuse admission to the E-meters pursuant to 21 U.S.C. §  381(a).  During the pendency of the appeal in the District of Columbia, such reliance would seem to be quite proper.  The subsequent reversal by the D.C. Circuit does not require reversal here, because the doctrine of res judicata was never applied. 
Finally, appellant asserts that the E-meters are not misbranded because they bear disclamatory labels, to wit: "Not intended or effective for the diagnosis, treatment, or prevention of any disease." Such labels, however, were found to [**10]  appear on less than half of the devices seized. Furthermore, labels of disclaimer are not controlling, but are to be considered together with any extrinsic evidence of the device's intended use (e.g. publications, advertisements, etc.) Alberty Food Products v. United States (9 Cir. 1952) 194 F.2d 463. There is ample evidence to support the court's finding of the E-meter's intended use. 
We find appellant's allegations of error to be without merit.  The judgment of the district court is affirmed.  

85 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INT'L, Plaintiff, v. JAMES G. KOLTS, Defendant.  

CV 93-1390-RSWL (EEx) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

846 F. Supp. 873; 1994 U.S. Dist. LEXIS 7457 

February 16, 1994, Decided 

February 16, 1994, Filed; February 17, 1994, Entered 

COUNSEL:
 [**1]  For Plaintiff: Bowles & Moxon, Hollywood, CA.

For Defendant: Terree A. Bowers, United States Attorney, George H. Wu, AUSA, Los Angeles, CA.  

JUDGES:
LEW 

OPINIONBY:
RONALD S.W. LEW 

OPINION:

 [*876]  MEMORANDUM OPINION
Defendant James G. Kolts in the above captioned action has moved to dismiss Plaintiff's claims for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). The matter was removed from the Court's law and motion calendar for disposition based on the filed papers pursuant to Federal Rule of Civil Procedure 78.
Having carefully considered all of the papers filed in support of and in opposition to Defendant's motions, the Court finds that this case is properly before this Court, and therefore Defendant's Motion to Dismiss for lack of subject matter jurisdiction is DENIED. Defendant's Motion to Dismiss for failure to state a claim is GRANTED WITH PREJUDICE.
I. BACKGROUND
Defendant James G. Kolts  [**2]  ("Defendant Kolts") was appointed by James M. Ideman, United States District Court Judge for the Central District of California, to serve as the special master in two consolidated cases, Religious Technology Center, et al. v. Scott, et al., No. CV 85-0711 JMI(Bx), and Religious Technology Center, et al. v. Wollersheim, et al., No. CV 85-7197 JMI(Bx) (the "Scott-Wollersheim cases"). Plaintiff, Church of Scientology International ("Plaintiff"), which is also the party plaintiff in the Scott-Wollersheim cases, contends that Defendant Kolts engaged in extrajudicial communications with a Time magazine reporter, Richard Behar, as well as FBI and IRS agents while serving as special master. In particular, Plaintiff alleges that Defendant Kolts agreed to act as a confidential source to Mr. Behar at a time when Mr. Behar was writing an article for Time magazine which Plaintiff claims was "a viciously negative article." n1 Plaintiff infers from these contacts that Defendant Kolts was biased, and therefore violated its constitutional rights. Defendant Kolts does not recall any such contact with Mr. Behar and apparently denies any extrajudicial contacts that might have prejudiced [**3]  Plaintiff's case.

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 n1 That article is the subject of a federal defamation suit filed by Plaintiff in New York. See Church of Scientology Int'l v. Time Warner, Inc., et al., No. Civ. 92-3024 (S.D.N.Y).

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After Plaintiff discovered these extrajudicial contacts it brought a motion before Judge Ideman for recusal of Defendant Kolts based on the same alleged extrajudicial contacts that are the subject of this suit. Judge Ideman denied Plaintiff's motion holding that "it is patently obvious that the instant recusal motion is done for the purpose of delay and harassment, and because the motion is neither grounded in fact nor warranted by law, the Court HEREBY DENIES plaintiffs' recusal motion as to Special Master Kolts." Religious Technology Center et al., v. Scott, et al., No. Cv 85- 711 at 2 (C.D. Cal. Feb. 18, 1993) (order by Judge Ideman). Apparently, Judge Ideman recused himself as the presiding judge over the Scott-Wollersheim cases on June 30, 1993.
Plaintiff subsequently filed the instant suit against Defendant [**4]  Kolts alleging a violation of its due process rights and violation of Canons 3A(4) and 3A(6) of the Code of Conduct for United States Judges (the "Judicial Code"). n2 Plaintiff seeks a declaratory judgment  [*877]  pursuant to 28 U.S.C. §  2201 stating that Defendant Kolts violated its Fifth Amendment due process rights and violated the two provisions of the Judicial Code. Plaintiff also seeks an injunction, as necessary and proper relief pursuant to 28 U.S.C. §  2202, ordering Defendant Kolts to disclose the content of all of his extrajudicial communications regarding the Scott-Wollersheim cases or Plaintiff, and that he disgorge any fees paid to him since he first engaged in such activities. n3

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 n2 Canon 3A(4) provides as follows:

A judge should accord to every person who is legally interested in a proceeding, or his lawyer, full right to be heard according to law, and, except as authorized by law, neither initiate nor consider ex parte or other communications concerning a pending or impending proceeding. A judge, however, may obtain the advice of a disinterested expert on the law applicable to a proceeding before him if he gives notice to the parties of the person consulted and the substance of the advice, and affords the parties reasonable opportunities to respond.

Code of Conduct for United States Judges Canon 3A(4) (1992).
Canon 3A(6) provides:

A judge should abstain from public comment about a pending or impending proceeding in any court . . . . This subsection does not prohibit judges from making public statements in the course of their official duties or from explaining for public information the procedures of the court.

Code of Conduct for United States Judges Canon 3A(6) (1992). [**5]  
 n3 Plaintiff claims that it has paid in excess of $ 200,000 to Defendant Kolts in special master fees.

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On May 3, 1993, Defendant Kolts moved to dismiss the instant case on the grounds that the Court lacked subject matter jurisdiction and that Plaintiff had failed to state a claim upon which relief could be granted. This Court granted Defendant's motion on June 14, 1993 with twenty days leave to amend. Plaintiff subsequently filed a First Amended Complaint on July 6, 1993. Defendant Kolts then filed the current Motion to Dismiss Plaintiff's claims for lack of subject matter jurisdiction and failure to state a claim pursuant to Federal Rules of Civil Procedure 12(b)(1) & (6).
II. DISCUSSION
Defendant Kolts asserts that Plaintiff's amended Complaint should be dismissed because this Court lacks subject matter jurisdiction and is barred by the doctrine of sovereign immunity. In addition, Defendant Kolts moves for dismissal on the grounds that Plaintiff cannot state a claim upon which relief can be granted. In particular, Defendant Kolts contends that the Judicial Code does not create a private  [**6]  cause of action, that Plaintiff has failed to allege sufficient facts to state a claim for violation of its due process rights, that Plaintiff cannot seek declaratory and injunctive relief under 28 U.S.C. §  2201, that Plaintiff's suit is merely a collateral attack on Judge Ideman's denial of Plaintiff's motion to recuse, and finally, that Defendant Kolts is immune from suit by the doctrine of absolute quasi-judicial immunity.
A. DEFENDANT'S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION.
Plaintiff bases its subject matter jurisdiction on 28 U.S.C. §  1331 for violation of its due process rights guaranteed by the Fifth Amendment to the United States Constitution as well as violation of Canons 3A(4) and 3A(6) of the Code of Conduct for United States Judges. In addition, Plaintiff asserts that this Court also has subject matter jurisdiction pursuant to 28 U.S.C. §  1361 for "declaratory relief sought in the nature of mandamus to compel an officer of the United States to perform a duty owed to the plaintiff." (First Am. Compl. P 2.) Defendant Kolts opposes each of [**7]  these assertions of jurisdiction and contends that Plaintiff's suit against Defendant Kolts is actually a suit against the United States, and is therefore barred by the doctrine of sovereign immunity.
1. Jurisdiction pursuant to 28 U.S.C. §  1331.
If a court lacks subject matter jurisdiction the court must dismiss the case pursuant to Federal Rule of Civil Procedure 12(b)(1). Although Defendant Kolts is the moving party, Plaintiff is the party seeking to invoke this Court's jurisdiction. Accordingly, Plaintiff bears the burden of establishing subject matter jurisdiction. See Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989) ("A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.").
Plaintiff asserts that this Court has jurisdiction over the instant case pursuant to  [*878]  28 U.S.C. §  1331. Because Plaintiff states a claim arising under the Constitution (Plaintiff contends its Fifth Amendment due process rights were violated), Plaintiff's complaint meets the requirement of "arising under" the Constitution [**8]  required by 28 U.S.C. §  1331. The United States Supreme Court has held that a cause of action exists against federal officers for direct constitutional torts claims. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949); Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971); see also Daly-Murphy v. Winston, 820 F.2d 1470, 1477 (9th Cir. 1987). Thus, this Court has jurisdiction under 28 U.S.C. §  1331. See The Presbyterian Church v. United States, 870 F.2d 518, 524 (9th Cir. 1989) (holding that the court had jurisdiction over a claim for declaratory relief because plaintiff alleged a violation of the First and Fourth Amendments); Seltzer v. Foley, 502 F. Supp. 600, 601 (S.D.N.Y. 1980) (holding that subject matter jurisdiction existed over a claim for declaratory and injunctive relief  [**9]  because plaintiffs alleged that a government official had acted unconstitutionally to deprive them of a liberty interest and procedural due process).
The parties spend an inordinate amount of time in their submitted papers arguing whether the Code of Conduct for United States Judges constitutes a "law" that would confer subject matter jurisdiction on the Court pursuant to 28 U.S.C. §  1331. Because Plaintiff alleges a violation of the Constitution in its complaint, the parties' discussion seems academic. However, while the Code may have the force of law, it does not seem to provide a grant of jurisdiction. Cf. Port Drum Co. v. Umphrey, 852 F.2d 148, 149-50 (5th Cir. 1988) (holding that Rule 11 of Federal Rules of Civil Procedure is not a federal law for purposes of Section 1331 jurisdiction, but is "instead a regulator of a party's proceedings once that party is in federal court pursuant to another, independent jurisdictional grant"); Johnson v. Thomas, 932 F.2d 747, 747 (8th Cir. 1991) (per curiam) (holding that the Local Rules of the United States District Court for the District of Minnesota [**10]  addressing attorney discipline do not confer subject matter jurisdiction on federal courts); Taylor v. Diznoff, 633 F. Supp. 640, 642 (W.D. Pa. 1986) (holding that the Code of Professional Responsibility for lawyers does not confer subject matter jurisdiction on the federal courts).
Finally, Defendant Kolts contends that the Declaratory Judgment Act, 28 U.S.C. § §  2201 and 2202, as well as an action in the nature of mandamus, 28 U.S.C. §  1361, do not confer jurisdiction upon the federal courts to hear a claim for relief. This argument, however, is moot given that this Court holds that subject matter jurisdiction already exists pursuant to 28 U.S.C. §  1331 by virtue of Plaintiff's due process claim.
2. The Doctrine of Sovereign Immunity.
The United States, as a sovereign, is immune from suit except when it consents to be sued. United States v. Dalm, 494 U.S. 596, 608, 110 S. Ct. 1361, 1368, 108 L. Ed. 2d 548, 561 (1990). Waivers of the Government's immunity must be "unequivocally [**11]  expressed" to be effective. United States v. Nordic Village, Inc.,     U.S.    ,    , 112 S. Ct. 1011, 1014, 117 L. Ed. 2d 181, 187 (1992). Moreover, the Government's consent to be sued must be "'construed strictly in favor of the sovereign'" and "'not enlarge[d] . . . beyond what the language requires.'" United States Department of Energy v. Ohio,     U.S.    ,    , 112 S. Ct. 1627, 1633, 118 L. Ed. 2d 255, 266 (1992) (citations omitted); Nordic Village, 112 S. Ct. at 1015.
The Supreme Court has long held that while sovereign immunity prevents suits against the government as an entity, it does not, in all instances, prevent suits against government officers in their individual capacities. Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 686-87, 69 S. Ct. 1457, 1459-60, 93 L. Ed. 1628 (1949). However, the doctrine of sovereign immunity cannot be avoided merely by naming officers and employees of the United States as defendants. Id. at 687, 69 S. Ct. at 1460. [**12]  When a federal officer is sued in his or her representative capacity, the suit is actually a suit against the United States and it is barred by sovereign immunity. United States v. Yakima  [*879]  Tribal Court, 806 F.2d 853, 858 (9th Cir. 1986), cert. denied 481 U.S. 1069, 107 S. Ct. 2461, 95 L. Ed. 2d 870 (1987). A suit is against the sovereign if the "'judgment sought would expend itself on the public treasury or domain, or interfere with the public administration,' or if the effect of the judgment would be 'to restrain the Government from acting, or to compel it to act.'" Id. (quoting Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 101 n.11, 104 S. Ct. 900, 908, n.11, 79 L. Ed. 2d 67, 79 n.11 (1984)). However, sovereign immunity clearly will not protect an officer from liability when actions of an officer are ultra vires his designated authority. Dugan v. Rank, 372 U.S. 609, 621-22, 83 S. Ct. 999, 1007, 10 L. Ed. 2d 15, 24 (1963). Actions are ultra vires [**13]  when: (1) the official's act is beyond the limits of his statutorily designated authority, (2) the official is acting pursuant to an unconstitutional statute, or (3) the official himself commits an unconstitutional act or deprives another of a federal right. Pena v. Gardner, 976 F.2d 469, 474 (9th Cir. 1992) (concurring opinion); see also Dugan, 372 U.S. at 621-22, 83 S. Ct. at 1007. Courts generally hold that suits that charge federal officials individually with unconstitutional acts are not barred by sovereign immunity. Yakima Tribal Court, 806 F.2d at 859 (citing Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949)). In these ultra vires situations, the officer's actions can be made the basis of a suit for specific relief against the officer as an individual. Id.; see also Larson, 337 U.S. at 687, 69 S. Ct. at 1460; Tashima v. Administrative Office of the United States Courts, 719 F. Supp. 881, 887 (C.D. Cal. 1989), [**14]  aff'd, 967 F.2d 1264 (9th Cir. 1992).
a. Whether Defendant Kolts' Actions Were Ultra Vires His Authority. 
Because Plaintiff alleges in its complaint that Defendant Kolts violated its right to due process of law, Plaintiff's claim falls within one of the exceptions to the general rule protecting government officials from liability under the doctrine of sovereign immunity. Because the government has no power to confer on Defendant Kolts the authority to act unconstitutionally, an allegation that Defendant Kolts acted in an unconstitutional manner, or beyond his delegated powers, is a suit against Defendant Kolts in his personal or individual capacity. Therefore, Plaintiff's suit for declaratory or injunctive relief against Defendant Kolts is based on alleged unconstitutional acts that are ultra vires his designated authority.
b. Whether the Relief Sought Which is Nominally Addressed to the Officer is Actually Relief Against the Sovereign.
It is well settled that the federal government itself cannot be sued for constitutional violations because of the doctrine of sovereign immunity. Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949). [**15]  Thus, "a suit may fail, as one against the sovereign, even if it is claimed that the officer being sued has acted unconstitutionally or beyond his statutory powers, if the relief requested can not be granted by merely ordering the cessation of the conduct complained of but will require affirmative action by the sovereign or the disposition of unquestionably sovereign property." Id. at 691 n.11, 69 S. Ct. at 1462 n.11. Thus, an analysis of the relief sought by Plaintiff is also required.
In this case, Defendant Kolts is an officer or official of the United States. As a special master, Defendant Kolts is an officer of the court appointed pursuant to Federal Rule of Civil Procedure 53(a) & (c). See In re Joint Eastern and Southern Districts Asbestos Litigation, 737 F. Supp. 735, 742 (E. & S.D.N.Y. 1990), aff'd in part and rev'd in part, 971 F.2d 831 (2d Cir. 1992) (stating that special master is an officer of the court). Plaintiff asserts that although Defendant Kolts is a government officer, the requested remedies will not impinge upon the government's treasury [**16]  or administration because it seeks only: a declaration that the Defendant Kolts acted extrajudicially, an order requiring the Defendant Kolts to disclose the extent of his conversations about the case and its parties, and an order requiring Defendant Kolts to disgorge the money that Plaintiff has already paid to Defendant Kolts to serve  [*880]  as a special master. Defendant Kolts, however, argues that the relief requested by Plaintiff will interfere with the public administration because an order forcing Defendant Kolts to submit to discovery while presiding over the Scott-Wollersheim cases would clearly be disruptive.
The relief sought by Plaintiff would not impinge upon the government's treasury because any special master fees ordered to be repaid would come directly from Defendant Kolts' own pocket, not out of the government treasury. In addition, ordering Defendant Kolts to disclose any discussions or contacts he had regarding the Scott-Wollersheim cases or otherwise submitting to discovery on the issue of the extrajudicial communications would likely be uncomfortable for Defendant Kolts, but clearly would not be aimed at the government or require the government to take any action [**17]  on its own. While the relief requested might cause delay or some disruption in the Scott-Wollersheim cases, such a disruption does not reach a level where the Court must hold that the relief is actually aimed at the sovereign.
There is scant support in the cases for carrying the effect-on-the-government analysis as far as Defendant Kolts suggests in his moving papers. While all suits against government officers will have some deterrent and disruptive effect on the administration of government, the Supreme Court has not held that such an inevitable disruption as exists in this case rises to a level where sovereign immunity is implicated. Instead, the Court has followed a more refined path of examining the relief sought against the officer and determining whether that relief is actually against the government. The long term effects of that relief have never been a part of the test. Thus, this Court does not find that the relief sought against Defendant Kolts is actually relief against the sovereign, and therefore the doctrine of sovereign immunity does not bar plaintiff's suit against Defendant Kolts.
Defendant Kolts also contends that the Declaratory Judgment Act, 28 U.S.C. § §  2201 [**18]  and 2202 as well as a mandamus action under 28 U.S.C. §  1361, do not act as an express waiver of the government's sovereign immunity. Given that this Court holds that the exception for allegations of a constitutional violation apply in this case, the issue regarding Government waiver of sovereign immunity is not relevant.
B. DEFENDANT'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED.
Defendant Kolts asserts that this Court should dismiss this action because Plaintiff has failed to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant Kolts' contentions include: that the Judicial Code does not provide a private right of action for violations of its provisions; that even if the Judicial Code does create a cause of action, the Complaint fails to allege a violation of the Judicial Code; that Plaintiff cannot state a claim for violations of its due process rights; that Plaintiff cannot establish a basis for declaratory relief, injunctive relief, or the return of fees; that Plaintiff's suit is essentially a collateral attack on Judge Ideman's recusal order;  [**19]  and that the present action is barred by the doctrine of absolute quasi-judicial immunity.
In a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987); United States v. City of Redwood City, 640 F.2d 963, 966 (9th Cir. 1981). A court need not, however, accept conclusory allegations or unreasonable inferences at face value. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir.), cert. denied 454 U.S. 1031, 102 S. Ct. 567, 70 L. Ed. 2d 474 (1981). A complaint should not be dismissed with prejudice for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80, 84 (1957); see   [**20]  also NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
 [*881]  1. Whether the Code of Conduct for U.S. Judges Creates A Private Cause of Action.
The parties vigorously dispute whether the Code of Conduct for United States Judges provides a private cause of action. The Judicial Code clearly does not provide an express private right of action, and Plaintiff has not cited a single case which directly holds that the Judicial Code creates a private cause of action. Thus, this issue appears to be one of first impression. In Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), the Supreme Court stated a four-factor test to be applied in ascertaining whether a private right of action is implied in a statute or regulation when not expressly stated in the text. n4 The Court stated the test as follows:

First, is the plaintiff 'one of the class for whose especial benefit the statute was enacted'. . . . Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? . . . Third, is it consistent with the underlying [**21]  purposes of the legislative scheme to imply such a remedy for the plaintiff? . . . And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?

Id. at 78, 95 S. Ct. at 2088.

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 n4 The Judicial Code is technically neither a "statute" nor an agency "regulation," so the applicability of the Cort four-factor test in this case is in doubt. However, given the lack of case law on the subject, this Court holds that the Cort test is relevant in determining the issue now before this Court.

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As to the first part of the Cort test, clearly, Plaintiff is not a member of the class for whose "especial" benefit the statute was enacted. The Judicial Code was created to set standards for judicial conduct in order to uphold "the integrity and independence of the judiciary." Code of Conduct for United States   [**22]  Judges Canon 1 (1992). It was, in essence, created for use by Judges in conforming their conduct to standards which would further the administration of justice. It was not created to remedy injured third parties. n5 Second, there is no clear legislative intent to create a private right of action in the Judicial Code. Plaintiff's only evidence that the Judicial Conference intended the Code to provide a private right of action is the fact that the Judicial Conference adopted much of the wording in the ABA Code of Conduct but did not include the ABA preamble, which states that the ABA Code "did not purport to create any private right of action." See Code of Judicial Conduct, 69 F.R.D. 273 (1973) as amended through (1975). However, if the Judicial Conference participants had intended to so expand litigation against judges and essentially restrict the long standing doctrine of absolute immunity, surely they would have provided a clearer indication of that intent. Third, it would be inconsistent with the underlying purpose of the legislative scheme of the Judicial Code to imply a private right of action. In fact, to imply a private cause of action is  [**23]  problematic. Such a rule would be extremely disruptive to the orderly progression of cases through the court system. Judges would be inhibited in their judicial actions and perhaps even in their decision-making by the threat of suit for violations of the Judicial Codes, many of which are only recommendations, not mandatory requirements. Thus, allowing a private right of action would not further an independent judiciary.

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 n5 The commentary to Canon 1 further supports this Court's determination that Plaintiff is not a member of the class for which the Judicial Code was created. The commentary states that "the Code is not designed or intended as a basis for civil liability or criminal prosecution. Finally, the purpose of the Code would be subverted if the Code were invoked by lawyers for mere tactical advantage in a proceeding." Code of Conduct for United States Judges Canon 1 commentary (1992).

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A holding against the existence of a private cause of action is further supported by analogizing the Judicial Code to the [**24]  Federal Rules of Civil Procedure. The Fifth Circuit has held that Rule 11 of the Federal Rules of Civil Procedure does not create a separate, private right of action. Port Drum Co. v. Umphrey, 852 F.2d 148, 149-50 (5th Cir. 1988). While not controlling, this Court is  [*882]  persuaded by the holding in Port Drum. Moreover, after reviewing the four-factor test in Cort, this Court finds that the Judicial Code does not create a private right of action.
For the foregoing reasons, this Court hereby GRANTS WITH PREJUDICE Defendant's Motion to Dismiss Plaintiff's First and Second Claims for Relief arising under violations of the Judicial Code. Given that no private right of action exists for violations of the Judicial Code, Plaintiff can state no facts which would create a cause of action. Thus, without an underlying claim, Plaintiff has no right to a declaratory judgment pursuant to 28 U.S.C. § §  2201 and 2202 as it relates to the Judicial Code.
2. Whether Plaintiff's Complaint States A Claim for Violation of Its Due Process Right to An Impartial Tribunal.
No federal statute authorizes federal courts to hear  [**25]  suits or give relief against federal officers who violate the Constitution of the United States. However, the Supreme Court has long held that federal officers may be sued for declaratory or injunctive relief to prevent future infringements of federal laws. See, e.g., Larson v. Domestic & Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949). The Supreme Court also extended the right to sue for damages in the landmark decision of Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971). In Bivens, the Supreme Court held that it would infer a cause of action for damages directly from certain constitutional provisions. Thus, regardless of whether Plaintiff is suing for damages or injunctive relief (and this issue is disputed by the parties), it is at least possible to state a cause of action for violation of due process rights.
Plaintiff alleges in its complaint that Defendant Kolts denied its right to due process of law guaranteed by the Fifth Amendment to the United States Constitution. Plaintiff contends that [**26]  Defendant Kolts spoke extrajudicially with Mr. Behar and others regarding Plaintiff and the Scott-Wollersheim cases while Defendant Kolts was acting as a special master. Plaintiff further alleges that Mr. Behar was biased and held "habitually negative and prejudicial attitudes" toward Plaintiff. (First Am. Compl. P 30.) Plaintiff infers from these alleged contacts that because Defendant Kolts "exposed" himself to such biased individuals, Defendant Kolts also must have been biased when issuing his rulings, and therefore has deprived Plaintiff of its constitutional right to "a fair trial in a fair tribunal . . . [and the] guarantee that justice must satisfy the appearance of justice . . . ." (First Am. Compl. P 31.)
Defendant Kolts contends that Plaintiff has failed to allege sufficient facts to state a claim for violation of its constitutional right to due process of law. The first amended complaint merely contains allegations that Defendant Kolts may have been contacted by Mr. Behar and may have, "in a most casual way," discussed the Scott-Wollersheim cases. (First Am. Compl. P 12.) Plaintiff also avers that Defendant Kolts may have been approached by agents of the IRS and [**27]  FBI about the cases. Plaintiff does not allege that Defendant Kolts discussed the merits of its case with any of these alleged contacts nor that Defendant Kolts expressed his opinions about either of the parties in the cases before him. The complaint infers that Defendant Kolts was himself biased against Plaintiff at the time he issued rulings on Plaintiff's cases. n6

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 n6 Either Plaintiff expects this Court to infer that Defendant Kolts was biased simply because he spoke with someone that may have been biased, or Plaintiff is alleging that its due process rights were violated simply by the appearance of impropriety, whether or not Defendant Kolts was in fact biased.

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In essence, Plaintiff's contention in this case is that any extrajudicial communication, irrespective of content, is sufficient to allege a violation of due process. However, if a judge or special master merely responded affirmatively to a reporter's inquiry as to whether a particular case was still pending or told a government agent what stage the  [**28]  litigation happened to be at, it would be unreasonable to assert that the judge had violated a party's due process rights. In fact, it must be conceded that a judicial officer has the  [*883]  authority to explain to outsiders the procedures of the court. Based on the complaint, it appears that Plaintiff does not know what was said to Mr. Behar and the government agents, assuming that these contacts did indeed occur. This Court is very reluctant to allow Plaintiff to force Defendant Kolts to defend against an inference of prejudice wholly unsupported by factual allegations. n7

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 n7 Surely such averments, wholly unsupported by evidence, could not survive a motion for summary judgment.

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However, the Supreme Court has held that while judicial fairness obviously requires an absence of actual bias in the adjudication of cases, the Court has also noted that "our system of law has always endeavored to prevent even the probability of unfairness." In re Murchison, 349 U.S. 133, 136, 75 S. Ct. 623, 625, 99 L. Ed. 942 (1955) [**29]  (emphasis added). The Court has further stated that in order for the judicial system "to perform its high function in the best way, 'justice must satisfy the appearance of justice.'" Id. (citations omitted) (emphasis added). While this Court does not interpret this expansive reading of the due process clause to mean that any appearance of impropriety is sufficient to violate the due process clause, for purposes of a 12(b)(6) motion to dismiss, an allegation of the appearance of impropriety is sufficient to survive the limited pleading requirements of Federal Rule of Civil Procedure 8.
3. Whether Plaintiff's Due Process Claim is Proper for Declaratory Relief Pursuant to 28 U.S.C. §  2201.
Assuming that Plaintiff has stated sufficient facts to allege a violation of its due process rights, Defendant Kolts also contends that Plaintiff's due process claim should be dismissed because it cannot be stated as a claim for declaratory relief under 28 U.S.C. §  2201. Section 2201 states that

in a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the [**30]  rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

28 U.S.C. §  2201.

The Supreme Court has held that Section 2201 is "an enabling Act, which confers discretion on the courts rather than an absolute right upon the litigant." Public Service of Utah v. Wycoff Co., Inc., 344 U.S. 237, 241, 73 S. Ct. 236, 239, 97 L. Ed 291 (1952); see also Green v. Mansour, 474 U.S. 64, 72, 106 S. Ct. 423, 428, 88 L. Ed. 2d 371, 379 (1985); Alabama State Federal of Labor v. McAdory, 325 U.S. 450, 462, 65 S. Ct. 1384, 1390, 89 L. Ed. 1725 (1945); Manley, Bennett, McDonald & Co. v. St. Paul Fire & Marine Insurance Co., 791 F.2d 460, 462 (6th Cir. 1986). The propriety of issuing a declaratory judgment may depend upon equitable considerations and should be  [**31]  "'informed by the teachings and experience concerning the functions and extent of federal judicial power.'" Green, 474 U.S. at 72, 106 S. Ct. at 428 (citing Public Service, 344 U.S. at 243, 73 S. Ct. at 240).
If this Court were to issue a declaratory judgment and order the requested injunctive relief, it could greatly impede the orderly administration of justice. The Plaintiff has already attempted to recuse Defendant Kolts from his position as special master in the Scott-Wollersheim cases. Yet, in effect what Plaintiff is trying to accomplish in this suit for declaratory relief is the same result it failed to obtain in its motion for recusal. Although Plaintiff in this suit is not presently asking for Defendant Kolts' recusal, it has requested relief that, if granted, would have the result of forcing Defendant Kolts to recuse himself. Indeed, allowing a party who has been unsuccessful in a recusal motion to simply file a civil suit against that same judge or special master would be entirely disruptive to the judicial process. It would invariably create an adversarial [**32]  relationship between the party to the underlying litigation and the judge or special master appointed to be an unbiased arbiter. Such a civil suit would require the judge or special master to recuse himself because of that  [*884]  adversarial relationship. Moreover, Plaintiff is requesting that all fees paid to Defendant Kolts be returned to Plaintiff. Such a ruling would effectively prevent Defendant Kolts from serving as a special master because he would no longer be paid for his services. In effect, Plaintiff's requested ruling would do what it could not do in its recusal motion before Judge Ideman.
Additionally, Plaintiff's request for a declaratory judgment stating that Plaintiff's due process rights have been violated does not appear to encompass a proper situation for a declaratory judgment. Plaintiff does not request an injunction to prohibit future violations of its due process rights; nor does this Court believe such an injunction would be proper. As the Supreme Court noted in Green v. Mansour, considerations of the function and extent of federal judicial power should be a factor in the Court's exercise of discretion when deciding whether a declaratory judgment is proper. 474 U.S. 64, 72-73, 106 S. Ct. 423, 428, 88 L. Ed. 2d 371 (1985). [**33]  Even if this Court issued a declaratory judgment stating that Plaintiff's due process rights were violated, such a ruling probably would not settle the controversy. Plaintiff would still have to seek a recusal motion before the presiding district court judge in the Scott-Wollersheim cases in order to prevent further violation of its due process rights. Moreover, Judge Ideman previously denied just such a motion after considering the same issues of extrajudicial communication raised by Plaintiff in this lawsuit.
In some circumstances, Plaintiff's request for an injunctive order as "further necessary or proper relief" pursuant to 28 U.S.C. §  2202 would be an appropriate remedy. The Supreme Court noted in Green v. Mansour that declaratory judgments are intended to remedy a "continuing violation of federal law," and therefore would necessitate an occasion to issue an injunction. 474 U.S. at 73, 106 S. Ct. at 428. However, injunctive relief is awarded at the discretion of the district court and can only be given if there is a showing of inadequate remedies at law and of serious risk of [**34]  irreparable harm. Pulliam v. Allen, 466 U.S. 522, 537, 104 S. Ct. 1970, 1978, 80 L. Ed. 2d 565, 576 (1984). It appears that the main purpose of Plaintiff's lawsuit for declaratory judgment is to either rectify a past wrong (violation of its due process rights), or to effectively remove a judicial officer, both possibilities having ample remedies at law. If Plaintiff's purpose is the former, then a direct action for damages, by requesting repayment of over $ 200,000 in special master fees and for the costs of suit, is the better method of resolution. If Plaintiff's purpose is the latter, then Plaintiff could follow established procedures for rehearing of specific motions or removal of a judicial officer. Where litigation is pending before a federal district court and the party believes that the judge (or as here the special master) has taken improper and prejudicial action, several avenues for relief are available: (1) a party can ask the judge to reconsider his ruling (Local Rule 7.16); (2) a party can move to recuse the judge (28 U.S.C. § §  144, 455); (3) a party can seek mandamus relief [**35]  from a Court of Appeals (28 U.S.C. §  1651); n8 or (4) a party can seek to certify the issue and take an immediate appeal (28 U.S.C. §  1292).

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 n8 Although Plaintiff's complaint cites 28 U.S.C. §  1361, jurisdiction for writ of mandamus, as a basis for subject matter jurisdiction, it is not clear whether Plaintiff brings its action for a declaratory judgment and other relief in the form of a petition for a writ of mandamus. This Court does not decide the question of whether such a writ is appropriately brought before this Court because Plaintiff does not assert this issue anywhere else in its complaint or submitted papers. Consequently, this Court will not assume on the Plaintiff's behalf that its complaint is a petition for writ of mandamus. See 28 U.S.C. §  1651; Fed. R. App. P. 21. However, this Court will refer Plaintiff to the Ninth Circuit's ruling in Mullis v. United States Bankruptcy Court, Dist. of Nevada, 828 F.2d 1385 (9th Cir. 1987), where the court held that "[a] district court lacks authority to issue a writ of mandamus to another district court." Id. at 1393 (citing Lewis v. Green, 629 F. Supp. 546, 553 (D.D.C. 1986)).

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Even if Plaintiff's purpose is only to obtain a ruling that Defendant Kolts has violated its due process rights, such a ruling would in effect be a collateral attack on Judge Ideman's ruling that recusal was not proper, and therefore such a claim would not  [*885]  be properly before this Court. n9 The Ninth Circuit has held that a collateral attack disguised as a suit for declaratory judgment of due process rights is improper. In Mullis v. United States Bankruptcy Court, District of Nevada, 828 F.2d 1385 (9th Cir. 1987), the Ninth Circuit held that

by styling his or her complaint as a Bivens injunctive action, a federal court litigant could circumvent the limitations on direct appeal, including interlocutory appeal, and for extraordinary writs. To allow a district court to grant injunctive relief . . . would be to permit, in effect, a 'horizontal appeal' from one district court to another or even a 'reverse review' of a ruling of the court of appeals by a district court.
Id. at 1392-93.

The court added that "such collateral attacks on the judgments, orders, decrees or decisions of federal courts are improper." Id. at 1393 [**37]  (citing Brown v. Baden, 815 F.2d 575, 576-77 (9th Cir. 1987) (other citations omitted)).

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 n9 Although not explicitly asserted by Defendant Kolts, the doctrine of collateral estoppel might bar this Court's adjudication of this suit, and therefore would be an alternative ground for granting Defendant Kolts' current Motion to Dismiss. Collateral estoppel or issue preclusion "bars the relitigation of issues actually adjudicated in previous litigation between the same parties." Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318, 1320 (9th Cir. 1992) (citing 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure §  4402 (1981)); see also Montana v. United States, 440 U.S. 147, 153, 59 L. Ed. 2d 210, 99 S. Ct. 970 (1979). The absence of a due process violation can be inferred from Judge Ideman's denial of Plaintiff's motion for recusal. Judge Ideman would not have denied the recusal motion had he found that Defendant Kolts violated Plaintiff's due process right to an impartial tribunal. Moreover, courts have clearly held that a denial of a motion to recuse necessarily entails a holding that the movant's due process rights were not violated. United States v. Int'l Business Machs. Corp. (In re Int'l Business Machs. Corp.), 618 F.2d 923, 932 n.11 (2d Cir. 1980) ("It would be anomalous to hold that a claim under the [recusal] statutes insufficient on its merits could nevertheless satisfy the constitutional standard."); United States v. Ahmed, 788 F. Supp. 196, 205 (S.D.N.Y.) (holding that "[a] rejection of defendant's claims under [recusal] sections 144 and 455 'a fortiori defeats his due process allegations.'"), aff'd, 980 F.2d 161 (2d Cir. 1992). The parties do not state whether a due process issue was explicitly raised in the recusal motion before Judge Ideman, but it is clear from the parties' submitted papers that the same claims of extrajudicial contacts which are the basis of this due process cause of action were raised in the recusal motion.

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Thus, this Court exercises its discretion by denying Plaintiff's due process claim for declaratory judgment pursuant to 28 U.S.C. §  2201. Moreover, the Ninth Circuit's holding in Mullis supports Defendant Kolts' contention that it would also be improper for this Court to hear a claim for damages or injunctive relief if Plaintiff were allowed to amend its Complaint.
4. Whether Plaintiff's Claims Are Barred by the Doctrine of Absolute Quasi-Judicial Immunity.
Defendant Kolts also contends that this case must be dismissed because he is immune from suit under the doctrine of absolute quasi-judicial immunity. Absolute immunity may properly be raised in support of a motion to dismiss for failure to state a claim. See Imbler v. Pachtman, 424 U.S. 409, 416, 96 S. Ct. 984, 988, 47 L. Ed. 2d 128, 135 (1976); Mullis v. United States Bankruptcy Court, District of Nevada, 828 F.2d 1385, 1387 n.6 (1987).
Judges are absolutely immune from civil liability for damages for their judicial acts. Mireles v. Waco,     U.S.      [**39]  ,    , 112 S. Ct. 286, 287, 116 L. Ed. 2d 9, 13 (1991); Mullis, 828 F.2d at 1388. In addition, the judicial or quasi-judicial immunity available to federal officers in suits involving claims for damages, extends to actions for declaratory, injunctive, and other equitable relief. Mullis, 828 F.2d at 1394. n10

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 n10 It is, however, established that judicial immunity does not bar declaratory or injunctive relief in actions against state judges under 42 U.S.C. §  1983. Pulliman v. Allen, 466 U.S. 522, 541-42, 104 S. Ct. 1970, 1980-81, 80 L. Ed. 2d 565 (1984); Ashelman v. Pope, 793 F.2d 1072, 1075 (9th Cir. 1986) (en banc). While Plaintiff argues that Mullis was wrongly decided in light of policy and dicta found in the Pulliam case, this Court is obligated to follow the Ninth Circuit's clear statement of the law on the specific issue of absolute immunity for federal judicial officers in non-Section 1983 claims.

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 [*886]  In a case involving parties related to this suit, Atkinson-Baker & Assoc., Inc. v. Kolts, 7 F.3d 1452, 1454-55 (9th Cir. 1993), the Ninth Circuit held that absolute quasi-judicial immunity extends to special masters appointed by district court judges. The court reasoned that, "'When judicial immunity is extended to officials other than judges, it is because their judgments are functionally comparable to those of judges--that is, because they too, exercise a discretionary judgment as part of their function.'" Id. at 1454 (quoting Antoine v. Byers & Anderson, Inc.,     U.S.    ,    , 113 S. Ct. 2167, 2171, 124 L. Ed. 2d 391, 399 (1993) (citations and quotations omitted)). Such a conclusion is warranted by analogous court rulings which have extended absolute immunity to bankruptcy trustees, n11 court-appointed guardians ad litem, n12 court-appointed commissioners, n13 court-appointed receivers, n14 and court-appointed conservators of estates. n15 Furthermore, courts generally extend absolute quasi-judicial immunity to nonjudicial officials whose official duties have [**41]  an integral relationship with the judicial process. See e.g., Imbler v. Pachtman, 424 U.S. 409, 96 S. Ct. 984, 47 L. Ed. 2d 128 (1976); Ashbrook v. Hoffman, 617 F.2d 474, 476 (7th Cir. 1980). Therefore, this Court holds that Defendant Kolts as a special master appointed by Judge Ideman has absolute quasi-judicial immunity for his discretionary judicial acts.

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 n11 Mullis, 828 F.2d at 1390; Lonneker Farms, Inc. v. Klobucher, 804 F.2d 1096, 1097 (9th Cir. 1986). 
 n12 Ward v. San Diego County Dept. of Soc. Servs., 691 F. Supp. 238, 241 (S.D. Cal. 1988). 
 n13 Ashbrook v. Hoffman, 617 F.2d 474, 476-77 (7th Cir. 1980). 
 n14 Kermit Constr. Corp. v. Banco Credito Y Ahorro Ponceno, 547 F.2d 1, 2-3 (1st Cir. 1976). 
 n15 Mosher v. Saalfeld, 589 F.2d 438, 442 (9th Cir. 1978) (per curiam), cert. denied, 442 U.S. 941, 61 L. Ed. 2d 311, 99 S. Ct. 2883 (1979).

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Once an officer of the court has been found to be within the class protected by absolute quasi-judicial immunity, that officer "will not be deprived of immunity because the action he took was in error, was done maliciously, or was in excess of his authority; rather, he will be subject to liability only when he has acted in the 'clear absence of all jurisdiction.'" Stump v. Sparkman, 435 U.S. 349, 356-57, 98 S. Ct. 1099, 1104-05, 55 L. Ed. 2d 331, 339 (1978) (emphasis added). Moreover, the "scope of the judge's jurisdiction must be construed broadly where the issue is the immunity of the judge." Id., 98 S. Ct. at 1104-05. However, judicial officers will not be protected by absolute immunity "for nonjudicial actions, i.e., actions not taken in the judge's judicial capacity." Mireles v. Waco,     U.S.    ,    , 116 L. Ed. 2d 9, 112 S. Ct. 286, 280 (1991). The Supreme Court has emphasized that courts are to examine the "'nature' and 'function' of the act, not the 'act itself.'" Id. (quoting [**43]  Stump, 435 U.S. at 362, 98 S. Ct. at 1107). In determining whether an act is judicial in nature, courts must ask whether the act is a "function normally performed by a judge, [and] whether [the party] dealt with the judge in his judicial capacity." Stump, 455 U.S. 362, 98 S. Ct. at 1107.
a. Whether The "Act" to Be Applied to the Immunity Test is the Extrajudicial Contact or the Adjudication of Claims.
This Court must decide whether the Supreme Court's test for absolute immunity should be applied to Defendant Kolts' alleged extrajudicial communications, or the issuance of rulings and adjudication of Plaintiff's claims in an allegedly biased manner. In other words, because Plaintiff's only remaining claim is for violation of its due process rights to an unbiased tribunal, would Plaintiff's due process rights be violated when Defendant Kolts issued rulings and adjudicated Plaintiff's claims in an allegedly biased manner and with the appearance of impropriety, or would due process be violated by the alleged extrajudicial contacts themselves? The distinction is critical to the outcome of [**44]  the immunity test.
The Ninth Circuit has tangentially addressed the issue of which "act" to use in applying the immunity test. In Ashelman v. Pope, 793 F.2d 1072 (9th Cir. 1986), the court  [*887]  held that an act of conspiracy by a judge, while clearly improper, did not pierce the judge's immunity because the judge's ultimate act of adjudicating claims was clearly a judicial act. The Ashelman court stated that "as long as the judge's ultimate acts are judicial actions taken within the court's subject matter jurisdiction, immunity applies." Id. at 1078 (emphasis added). In issuing its ruling, the court specifically overturned previous Ninth Circuit opinions which had held that judicial acts of conspiracy or bribery, which were the motives behind issuing biased rulings, were not subject to immunity. Id. at 1078 (citing Rankin v. Howard, 633 F.2d 844 (9th Cir. 1980); Beard v. Udall, 648 F.2d 1264 (9th Cir. 1981)). Thus, the court made clear that judicial immunity "from civil liability should not be 'affected by the motives with which [**45]  their judicial acts are performed' . . . , intent should play no role in the immunity analysis." Id. at 1078 (quoting Cleavinger v. Saxner, 474 U.S. 193, 200, 106 S. Ct. 496, 500, 88 L. Ed. 2d 507, 513 (1985)).
Plaintiff spends an inordinate amount of time in its moving papers arguing that Defendant Kolts' extrajudicial contacts violated its due process rights. However, these contacts in and of themselves cannot violate Plaintiff's due process rights. Indeed, these contacts cannot and do not cause an injury to Plaintiff. Plaintiff's due process rights can only be violated if Defendant Kolts issues rulings or adjudicates Plaintiff's claims in a biased manner or with the appearance of impropriety. Thus, the ultimate act of adjudicating in a biased manner, not the act of talking to a reporter or government agents, causes the due process violation. The acts of talking with Mr. Behar and the government agents are simply evidence of motive and evidence to support a contention of bias or an appearance of impropriety during the adjudication of claims, but they are not the due process violation itself. Consequently, the contacts [**46]  themselves do not create a cause of action. Only when these contacts are viewed in relation to Defendant Kolts' position as a special master can they give rise to a constitutional claim for violation of due process rights.
Thus, Plaintiff's attempt to apply the Supreme Court's immunity test (i.e., whether the judge acted within his jurisdiction and whether the act was of a type normally performed by a judicial officer) to the acts of speaking with Mr. Behar and the government agents is misplaced. Plaintiff has not and can not allege a claim for having extrajudicial contacts. n16 Plaintiff has only successfully stated a claim for violation of its due process rights. Thus, this Court will analyze the absolute immunity issue as it applies to Plaintiff's due process claim which is before this Court.

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 n16 Indeed, this Court has already noted Plaintiff's inability to state a claim for violation of the Judicial Code.

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b. Whether Defendant Kolts Acted in the Clear Absence of All Jurisdiction.
Assuming for purposes of [**47]  a motion to dismiss that Defendant Kolts, in his capacity as special master, did in fact issue rulings in a biased manner or with the appearance of impropriety resulting from extrajudicial contacts, the ensuing violation of due process would not occur in the clear absence of jurisdiction. In his capacity as a special master presiding over Plaintiff's case, Defendant Kolts clearly is acting within his "jurisdiction" in that he was appointed to serve as the special master in the Scott-Wollersheim cases by order of Judge Ideman. Thus, the propriety of Defendant Kolts' jurisdiction to adjudicate the claims before him is unquestionable.
Whether Defendant Kolts was biased when adjudicating Plaintiff's case or whether his actions gave the appearance of impropriety in the execution of his duties as special master is not the deciding factor. The issue is whether Defendant Kolts had jurisdiction over the action of adjudicating claims in which Plaintiff's due process rights may or may not have been violated. Clearly he did. Therefore, Defendant Kolts did not act in the clear absence of jurisdiction.
 [*888]  c. Whether the Defendant's Alleged Acts Were of the Type Normally Performed by A Judge.  [**48]  
The Supreme Court has stated that the test for determining whether an act by a judge is "judicial" in nature is to determine whether "it is a function normally performed by a judge, and to the expectations of the parties, i.e., whether they dealt with the judge in his judicial capacity." Stump v. Sparkman, 435 U.S. 349, 362, 98 S. Ct. 1099, 1107, 55 L. Ed. 2d 331 (1978).
Clearly the acts of making rulings, holding hearings, and adjudicating claims are acts well within the purview of a special master. Indeed, the execution of these acts is the very purpose for the creation of a special master. Moreover, Plaintiff's alleged due process violation arises from the Plaintiff's dealings with Defendant Kolts in his position as a special master. In other words, it is only because of Defendant Kolts' actions in his judicial capacity in relation to Plaintiff that due process rights are at stake.
Even if Defendant Kolts was biased in the adjudication of claims or issued rulings with the appearance of impropriety, such error is not sufficient to remove Defendant Kolts' actions from functions normally performed by a special master. The Supreme Court  [**49]  has made clear that a judicial officer's rulings or actions "will not be deprived of immunity because the action he took was in error, was done maliciously, or was in excess of his authority . . . ." Stump, 435 U.S. at 356-57, 98 S. Ct. at 1104-05. In fact, the Supreme Court has upheld absolute immunity in cases involving some of the most egregious violations of constitutional rights. See e.g., Mireles v. Waco,     U.S.    , 116 L. Ed. 2d 9, 112 S. Ct. 286 (1991) (holding a judge absolutely immune after ordering police officers to "forcibly and with excessive force seize and bring [an attorney] into his courtroom" for morning session); Stump, 435 U.S. 349, 98 S. Ct. 1099, 55 L. Ed. 2d 331 (1978) (holding a judge absolutely immune after he ordered a fifteen-year-old girl sterilized at the request of her mother).
Thus, Defendant Kolts' execution of discretionary duties such as issuing rulings or adjudicating claims, whether executed in a biased manner or with an appearance of impropriety, are clearly judicial acts normally performed by a judge.
d. Whether    [**50]   Policy Supports A Finding of Absolute Immunity.
The public policy underlying the doctrine of absolute immunity requires a finding that Defendant Kolts is immune from liability resulting from the execution of his duties even if in violation of Plaintiff's due process rights. Despite the unfairness to litigants that sometimes may result, the doctrine of judicial immunity is in the best interests of "the proper administration of justice for it allows a judicial officer . . . to be free to act upon his own convictions, without apprehension of personal consequences to himself." Stump, 435 U.S. at 363, 98 S. Ct. at 1108. Thus, judicial immunity protects "judicial independence by insulating judges from vexatious actions prosecuted by disgruntled litigants." Forrester v. White, 484 U.S. 219, 225, 108 S. Ct. 538, 543, 98 l. Ed. 2d 555, 564 (1988). Moreover, absolute immunity

'is not for the protection or benefit of a malicious or corrupt judge, but for the benefit of the public, whose interest it is that the judges should be at liberty to exercise their functions with independence [**51]  and without fear of consequences.' [citations omitted] . . . His errors may be corrected on appeal, but he should not have to fear that unsatisfied litigants may hound him with litigation charging malice or corruption. Imposing such a burden on judges would contribute not to principled and fearless decisionmaking but to intimidation.

Pierson v. Ray, 386 U.S. 547, 554, 87 S. Ct. 1213, 1218, 18 L. Ed. 2d 288, 294 (1967) (quoting Scott v. Stansfield, L.R. 3 Ex. 220, 223 (1868), quoting Bradley v. Fisher, 80 U.S. 335, 13 Wall. 335, 350, 20 L. Ed. 646 (1872)).
Enabling litigants to sue judges by alleging, for whatever reason, that the judge was biased against them would clearly have a detrimental effect on the administration of justice. Harassment by unfounded litigation would cause deflection of a judge's energies from his public duties. In addition, it could  [*889]  shade his decisions instead of allowing him to exercise independence of judgment required by his public trust. Here, Defendant Kolts is still the special master over Plaintiff's case, yet he is being sued by one of the very parties  [**52]  toward whom he is supposed to remain unbiased. If litigants were permitted to sue judges for issuing rulings that appear biased, independent judicial decision-making would certainly be in jeopardy. Whether Plaintiff should have an opportunity to redress a wrong is not at issue. The broader public interest would be at stake if this suit was permitted to go forward because it would prevent vigorous and fearless performance of a judicial officer's duties that are essential to the proper functioning of the judicial system.
For the forgoing reasons, this Court finds Defendant Kolts to be absolutely immune from Plaintiff's THIRD claim for violation of its due process rights.

III. CONCLUSION
The Court finds that Plaintiff's claim for violation of its due process rights confers on this Court subject matter jurisdiction to hear this case. In addition, sovereign immunity does not bar this suit against Defendant Kolts. Plaintiff cannot, however, state a claim for violation of the Code of Conduct for United States Judges. While Plaintiff alleges sufficient facts to state a claim for violation of its due process rights, this Court exercises its discretion to deny Plaintiff's request for a  [**53]  declaratory judgment. In addition, the Court finds that this suit is simply a collateral attack on Judge Ideman's ruling denying Plaintiff's motion to recuse Defendant Kolts. Finally, the Court holds that Defendant Kolts has absolute immunity against Plaintiff's due process claim.
For the foregoing reasons, the Court DENIES Defendant's motion to dismiss for lack of subject matter jurisdiction and GRANTS WITH PREJUDICE Defendant's motion to dismiss for failure to state a claim.
IT IS SO ORDERED.

DATED: February 16, 1994
RONALD S.W. LEW
United States District Judge 

86 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INT'L, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant.  

No. CV 91-1025 RSWL (Sx) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

845 F. Supp. 714; 1993 U.S. Dist. LEXIS 12052; 93-2 U.S. Tax Cas. (CCH) P50,587; 72 A.F.T.R.2d (RIA) 5778 

August 26, 1993, Decided 

August 26, 1993, Filed; August 27, 1993, Entered 

DISPOSITION:
 [**1]  Defendant's motion for summary judgment is GRANTED.  

JUDGES:
LEW 

OPINIONBY:
RONALD S.W. LEW 

OPINION:

 [*717]  ORDER
The Internal Revenue Service, Defendant in the above-captioned action, has filed a motion for summary judgment. Plaintiff Church of Scientology International has opposed the motion. The matter was set for hearing on the Court's law and motion calendar, but was removed for disposition on the submitted papers pursuant to Federal Rule of Civil Procedure 78.
Now, having carefully considered all the papers filed in support of and in opposition to the motion, the Court hereby issues the following order:
Defendant's motion for summary judgment is GRANTED.
I. BACKGROUND
On September 16, 1990, Plaintiff Church of Scientology International ("CSI") made a Freedom of Information Act request, pursuant to 5 U.S.C. §  552, seeking access to records held by the Defendant Internal Revenue Service ("IRS"). In its initial search, the IRS found 692 documents responsive to Plaintiff's request and released 224 pages in full and 76 pages in part. The IRS withheld 468 pages in full.
On November 14, 1991, this Court ordered the IRS to produce a Vaughn Index of all withheld records [**2]  describing the records and providing statutory justification for each  [*718]  withholding. The IRS filed its first Vaughn Index on January 15, 1992. The IRS later determined that the initial searches were too restrictive. Thereafter, the parties stipulated that the IRS would conduct a second search using additional search terms and extending the temporal scope of the search. This stipulation was entered as a Court Order dated February 13, 1992. On April 8, 1992, the Court denied the IRS's motion for relief from the stipulation.
The IRS filed a partial Vaughn Index on March 13, 1992, and requested relief from the stipulation which this Court denied. On July 27, 1992, this Court held the IRS in contempt of the February 13, 1992, Order, imposed sanctions, and ordered the IRS to comply with the terms of the stipulation by producing the Vaughn Index and non-exempt documents.
On September 14, 1992, the IRS filed the results of its second search and the accompanying Vaughn Index. An additional 11,988 pages were found to be responsive to the Plaintiff's request. While the IRS released several boxes of documents in full, the Vaughn Indices describe thousands of pages of withheld [**3]  documents. These results are the subject of the current motion.
The IRS now moves for summary judgment on the grounds that Plaintiff has received all IRS documents which it is entitled to receive under law, and no documents have been improperly withheld from Plaintiff by the IRS. Plaintiff asserts that the IRS has failed to support its exemption claims and has unjustifiably refused to release "tax return information" of third parties which have submitted waivers permitting such release. Plaintiff requests that the Court allow for in camera inspection of certain records and adjudication of the remaining individual documents.
II. DISCUSSION

A. Standard on Summary Judgment
In order to prevail in a Freedom of Information Act ("FOIA") suit, a defendant agency must prove that "each document that falls within the class requested either has been produced, is unidentifiable, or is wholly exempt from the Act's inspection requirements." Zemansky v. Environmental Protection Agency, 767 F.2d 569, 571 (9th Cir. 1985). The agency must also prove that its search satisfied its duty to conduct a "reasonable" search for responsive records. Id. [**4]  
The adequacy of the IRS search is not at issue here. Rather, the parties dispute the question of whether the IRS has established as a matter of law that all withheld documents are exempt from the FOIA inspection requirements. Where responsive records are withheld, the agency bears the burden of justifying its withholdings, and the district court must review the agency's exemption claims de novo. 5 U.S.C. §  552(a)(4)(B). The agency's burden may be sustained by submitting affidavits which provide a detailed analysis of the requested documents and the reasons for invoking the exemption. Johnson, 739 F.2d 1514 at 1516. Summary judgment may be granted solely on the basis of these agency affidavits if they are clear, specific, and reasonably detailed, and describe the withheld information in a factual and nonconclusory manner. DiViaio v. Kelley, 571 F.2d 538, 543 (10th Cir. 1978).

B. Defendant's "Categorical Approach"
As a preliminary matter, this Court must address the process of adjudicating the more than 12,000 pages of documents at issue in this case. Plaintiff has challenged the [**5]  IRS's approach as a "categorical adjudication" of withheld documents. Such a volume of documents demands a manageable approach to exemption description and justification. This Court condones the IRS's approach which has allowed for efficient arguments of law while providing sufficiently detailed information in the Vaughn Indices n1 and in the supporting factual bases provided by declarations. The IRS's briefs may categorize the documents by legal claims to exemption, but  [*719]  each undisclosed document has been catalogued on a page-by-page basis in a methodical and exhaustive manner in the twenty-seven volume, 2,683-page Vaughn Indices.

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 n1 On January 13, 1992, the IRS filed its original Vaughn Index. A Supplemental Vaughn Index was filed on March 12, 1992. An additional Supplemental Vaughn Index was filed on August 31, 1992. A revised Vaughn Index was filed on September 23, 1992. All references herein to the submitted Vaughn Indices rely on these documents as a whole.

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C. Defendant's Exemption   [**6]    3 Claims Pursuant to 26 U.S.C. §  6103(a)
Under 5 U.S.C. §  552(b)(3), an agency may withhold documents where they are specifically exempted from disclosure by statute. Defendant IRS claims Exemption 3 in conjunction with 26 U.S.C. §  6103(a), an IRS code provision governing tax return information for third-parties. Section 6103(a) mandates that tax return information be held confidential subject to a number of strictly construed exemptions. Church of Scientology v. I.R.S., 484 U.S. 9, 10, 98 L. Ed. 2d 228, 108 S. Ct. 271 (1987).
Plaintiff does not contest the withholding of tax return information for specified third parties. However, CSI asserts that this exemption would not apply to six entities who have submitted tax return information release authorizations to the IRS permitting Plaintiff access to such records.
1. Third party tax return information release authorizations: The parties dispute whether any tax return information release authorizations have been submitted in this case in compliance with the stipulation provision. The IRS argues that no such waivers were [**7]  filed on or before February 24, 1992, as required by the stipulation. CSI asserts that it submitted waivers to the IRS on behalf of six entities by letter dated February 21, 1993 [sic].
The February 11, 1992, Stipulation and Order at paragraph two states: "The Church, no later than February 24, 1992, will provide the IRS with various third party tax return information authorizations. Upon completion of the new search, the IRS will newly process all of the records now in issue and will not assert any Exemption 3 tax return information claims pursuant to §  6103(a) with respect to the individuals and/or entities for which such authorizations have been furnished." Plaintiff has submitted a copy of a letter dated February 21, 1992, from CSI attorney Kendrick L. Moxon to Department of Justice attorney, Michael J. Martineau, which represents the enclosure of executed third party tax return information release authorizations for the following Church entities: Church of Spiritual Technology, Religious Technology Center, Church of Scientology of California, Celebrity Centre International, International Hubbard Ecclesiastical League of Pastors and Scientology Missions International. CSI submitted [**8]  these waivers in a separate case being handled by Mr. Martineau, Church of Scientology Int'l v. I.R.S., CV 91-0431 CBM (C.D. Cal.).
This Court finds that the third party tax return information release authorizations submitted to Mr. Martineau on February 21, 1992, do not satisfy the terms of paragraph two of the stipulation. This provision does not expressly require that the authorizations be submitted to the I.R.S. with specific reference to this particular FOIA action. However, any other interpretation would place an unmanageable burden on the I.R.S. and on the courts. There are currently twelve pending FOIA cases that involve requests for several tens of thousands of records. The interpretation urged by Plaintiff would extend the scope of these cases to an unprecedented degree. n2

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 n2 Plaintiff asserts that this Court found that Plaintiff had submitted the authorizations at issue in its ruling on Defendant's Motion for Relief from Stipulation. See Order, April 9, 1992. The Court rejects this characterization of its prior Order. In a footnote in the April 9 Order, the Court recognized the existence of a question of fact regarding whether authorizations had been filed in compliance with the stipulation. Id. at 4 n.2. The Court merely found Plaintiff's evidence sufficient to preclude a finding that the disputed provision was moot. This Court did not decide the issue of whether the submitted authorizations satisfied the requirements of the stipulation.

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For these reasons, this Court finds that Plaintiff has failed to present evidence that waivers from third parties were received from Plaintiff in this case on or before February 24, 1992. The Government's Vaughn Indices and supporting declarations establish that these documents contain confidential third party tax information. This Court finds that the I.R.S. has properly withheld these documents pursuant to Exemption 3 in conjunction with §  6103(a).
 [*720]  2. Plaintiff's request for sanctions: Plaintiff has requested that the Court sanction the IRS for refusal to comply with the February 11, 1992, Stipulation and Order. Based on the above-ruling, the IRS's assertion of Exemption 3 to withhold these documents does not constitute failure to comply with the Court's Order. Plaintiff's request for sanctions is denied.

D. Defendant's Exemption 3 Claims Pursuant to 26 U.S.C. §  6103(e)(7)
The IRS has withheld several documents as exempt under the provisions of 26 U.S.C. §  6103(e)(7). Section 6103(e)(7) exempts documents when their disclosure would "seriously impair federal tax administration." The district [**10]  court's review of an IRS determination of impairment is de novo. Long v. I.R.S., 742 F.2d 1173, 1183 (9th Cir. 1984). The court must satisfy itself, on the basis of detailed and nonconclusory affidavits, that the IRS is correct in finding that disclosure would impair the collection, assessment, or enforcement of the tax laws. Id.
Defendant IRS offers four affidavits in support of withholding documents based on Exemption 3 in conjunction with 26 U.S.C. §  6103(e)(7). n3 Each of these declarants provides detailed and nonconclusory statements in support of their findings that release of the documents withheld pursuant to §  6103(e)(7) would impair federal tax administration. This Court rejects Plaintiff's conclusory statement that the IRS assertions of impairment consist only of generalities and opinions. The Court does not find that the declarations contradict the Vaughn Indices. Furthermore, the Court does not find reason to question the integrity of the Defendant's sworn testimony based only on the alleged "history of IRS discrimination" against CSI. n4

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 n3 The Court here relies on the second declaration of Thomas J. Miller, the first and second declaration of Steven D. Harris, and the declaration of Paul Austin. [**11]  
 n4 Plaintiff makes no attempt to impeach specific statements in the affidavits of the four declarants offered in support of Defendant's motion in this particular case. Plaintiff's generalized attack on "declarations of IRS officials" is unpersuasive.

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With regard to the documents withheld pursuant to tax treaty secrecy clauses, this Court finds that this is an instance where deference is especially appropriate. See Long, 742 F.2d at 1182 (according special deference to agency's detailed affidavits in sensitive areas such as national security cases). Declarant Paul Austin, the Internal Revenue Commissioner's delegate, is likely to have unique insights into the concerns regarding the cooperation of foreign governments and tax treaty partners. Based on Mr. Austin's detailed affidavit, this Court finds that these documents are properly withheld under Exemption 3 in conjunction with §  6103(e)(7).
In sum, Defendant has presented evidence that documents withheld pursuant to Exemption 3 in conjunction with §  6103(e)(7) are totally exempt from disclosure. Plaintiff has not [**12]  pointed to any specific facts that create a triable issue regarding the withholding of these documents. Therefore, Defendant has met its burden to establish that disclosure of these documents would seriously impair federal tax administration.

E. Defendant's Exemption 7(A) Claims
The IRS has withheld certain documents or portions thereof pursuant to Exemption 7(A). The IRS asserts that these documents are records compiled in connection with the investigation of Plaintiff CSI and related entities under the Church Audit Procedures Act (CAPA), 26 U.S.C. §  7611, and for determinations of the tax exempt status of various Scientology organizations.
Exemption 7(A) allows for nondisclosure of records or information compiled for law enforcement purposes where disclosure could reasonably be expected to interfere with enforcement proceedings. 5 U.S.C. §  552(b)(7)(A). In order to sustain its burden of proof under Exemption 7(A), the IRS must establish that it is a law enforcement agency, that the withheld documents were investigatory records compiled for law enforcement purposes, and that disclosure of those documents [**13]  would interfere with pending  [*721]  enforcement proceedings. Lewis v. I.R.S., 823 F.2d 375, 379 (9th Cir. 1987).
1. Documents compiled for CAPA investigation: Plaintiff does not dispute that 26 U.S.C. §  7611 proceedings constitute a law enforcement proceeding as that term is used in the FOIA, nor does Plaintiff dispute that the IRS has the requisite law enforcement mandate. However, Plaintiff argues that the "law enforcement purpose" started on April 28, 1989, when IRS made its first document request for the §  7611 examination, and all documents created prior to that date would fall outside such purpose.
This Court rejects Plaintiff's premise. Documentation of work done by the agency in preparation for the §  7611 examination would also constitute investigatory records compiled for law enforcement purposes. See 26 U.S.C. §  7611 (IRS must have "reasonable belief" that entity is not tax exempt before formally beginning church tax inquiry).
This Court finds that the Vaughn Indices and supporting affidavits establish a rational nexus between the IRS §  7611 examination of Plaintiff [**14]  and related third party entities and the documents for which Exemption 7(A) is claimed. The affidavits also adequately reveal that release of these documents is likely to interfere with the IRS's ability to perform the §  7611 examination. Plaintiff points to no specific facts that dispute the Defendant's evidence.
2. Documents compiled for determination of tax exempt status: In light of the recent Ninth Circuit ruling in Church of Scientology Int'l v. I.R.S., 995 F.2d 916, 919 (9th Cir. 1993), that IRS determinations of tax exempt status constitute law enforcement purposes under Exemption 7(A). This Court finds that the Vaughn Indices and supporting affidavits provide the required nexus between the withheld documents and the agency's inquiry regarding the tax exempt status of various Scientology organizations. The IRS has also established that production would interfere with that process.
In sum, Defendant has met its burden to prove the withheld documents are totally exempt under Exemption 7(A) as documents compiled during the on-going CAPA investigation of Plaintiff CSI and the agency's determination of the tax exempt status of related  [**15]  organizations. n5

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 n5 Plaintiff points to Vaughn index page 2553 as an improper withholding because the IRS does not put forth a law enforcement purpose. However, the IRS did not assert Exemption 7(A) to justify withholding pages 12271-12275. Rather, it relied on Exemption 7(C) and Exemption 5.

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F. Defendant's Exemption 7(C) Claims
The IRS has withheld documents pursuant to provisions of exemption 7(C). The Government has asserted Exemption 7(C) to withhold two types of documents: (1) those containing the names, addresses, or other identifying information of IRS contacts or government employees, and (2) those revealing the handwriting of IRS personnel or third parties. The Government asserts that disclosure of IRS employees' handwriting and the identities of IRS employees could conceivably subject them to harassment and annoyance in their private lives and in the performance of their official duties.
Exemption 7(C) allows for nondisclosure of documents compiled for law enforcement purposes where disclosure [**16]  could reasonably be expected to constitute an unwarranted invasion of personal privacy. 5 U.S.C. §  552(b)(7)(C). In evaluating an Exemption 7(C) claim, the Court must balance the privacy interests at stake against the public interest in disclosure. The government agency bears the burden of establishing a privacy interest, and the balance tilts in favor of disclosure. Congressional News Syndicate v. Department of Justice, 438 F. Supp. 538, 542 (D.C. Cir. 1977).
The parties do not dispute that the withheld documents were compiled for law enforcement purposes. Nor does Plaintiff argue that a countervailing public interest outweighs the asserted privacy concern. Rather, Plaintiff challenges the Defendant's showing of a privacy interest on two grounds. First, Plaintiff has knowledge of the identities of personnel the IRS seeks to protect. An individual does not lose his privacy interest under 7(C) because his identity may be  [*722]  discovered through other means. See L & C Marine Transport, Ltd. v. United States, 740 F.2d 919, 922 (11th Cir. 1984) (noting that even where names of agency employee witnesses [**17]  are known disclosure would tie witness to particular statements and reveal nature of each employee witness' comments). In addition, Steven D. Harris, an IRS disclosure litigation attorney, has testified that the IRS did not assert Exemption 7(C) where the document on its face suggested that Plaintiff was aware of the employee in the context of the referenced activity. For these reasons, this Court finds that Plaintiff's assertion of prior knowledge cannot rebut the Government's showing of a privacy interest under 7(C).
Second, Plaintiff asserts that the IRS has withheld handwritten information that is otherwise non-exempt. CSI argues that this basis to withhold documents is moot because Plaintiff will bear the costs of re-typing any documents withheld solely on the basis of handwritten contents. Plaintiff has not pointed to any facts in the record sufficient to establish that the IRS has withheld documents solely to prevent disclosure of handwriting where the substance of the information is not exempt. The fact that the IRS has willingly re-typed handwritten text in hundreds of documents for release in this case allows for the inference that the agency has not withheld non-exempt  [**18]  information solely on the basis of its handwritten format. Finally, this Court's review of the Vaughn Indices reveals that most handwriting has been withheld through redaction.
For these reasons, this Court finds that Plaintiff has not raised a triable issue regarding the privacy interests asserted by the IRS to establish its Exemption 7(C) claims.

G. Defendant's Exemption 7(D) Claims
The IRS has withheld documents pursuant to Exemption 7(D). The Government asserts that disclosure of these documents would reveal sources who were given implied promises of confidentiality by the IRS.
Exemption 7(D) allows for nondisclosure of documents compiled for law enforcement purposes which could reasonably be expected to reveal the identities of confidential sources. 5 U.S.C. §  552(b)(7)(D). "Where implied promises of confidentiality are at issue, the index must state the circumstances surrounding the receipt of information which led the [agency] to conclude the informant would not have given the information without an implicit assurance of confidentiality." Wiener v. F.B.I., 943 F.2d 972, 986-87 (9th Cir.), reh'g  [**19]   denied, 951 F.2d 1073 (9th Cir. 1991), and cert. denied, 112 S. Ct. 3013 (1992). n6

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 n6 The Supreme Court has recently adopted a test embodying the approach taken by the Ninth Circuit in Wiener. See Department of Justice v. Landano, 124 L. Ed. 2d 84,    U.S.   , 113 S. Ct. 2014, 2023 (1993) (requiring government agency to establish narrowly defined circumstances that allow for inference of implied confidentiality).

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Plaintiff asserts that the IRS has failed to establish an implicit assurance of confidentiality. However, Defendant has submitted a detailed affidavit which supports such a finding. Steven D. Harris has testified to the following material facts: (1) the withheld pages were obtained from a third party; (2) the information was received during the IRS's investigation of possible harassment of Service employees; (3) the IRS employees involved in the procurement of the information have indicated that disclosure of the source's identity [**20]  could put someone in jeopardy; and (4) release of the information would identify cooperating foreign law enforcement agencies.
Plaintiff points to no facts in the record which controvert this evidence. For these reasons, the Court finds that the IRS has met its burden to establish that disclosure could reasonably be expected to reveal the identities of confidential information sources.

H. Defendant's Exemption 7(E) and Exemption 2 Claims
The IRS has withheld two pages from the IRS Law Enforcement Manual ("LEM") and an internal agency memorandum pursuant to both Exemptions 7(E) and Exemption 2. Exemption 7(E) allows for nondisclosure of records or information compiled  [*723]  for law enforcement purposes when production would disclose techniques and procedures for law enforcement investigations or prosecutions or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law. 5 U.S.C. §  552(b)(7)(E).
The Vaughn Indices and the Harris declarations establish that the LEM pages withheld concern procedures for handling applications for tax exemption and [**21]  examinations of Scientology entities. The agency memorandum discusses application of the LEM techniques and procedures. These documents were compiled for the purposes of the ongoing examination of CSI for tax years 1981 through 1987 pursuant to CAPA, 26 U.S.C. §  7611. Plaintiff has not pointed to any facts to controvert Defendant's showing.
Exemption 2 exempts from disclosure records related solely to the internal personnel rules and practices of an agency. 5 U.S.C. §  552(b)(2). Based on the Vaughn Indices and the Harris declaration, these documents contain information about internal law enforcement techniques, practices, and procedures used by the IRS to coordinate the flow of information regarding Scientology. Plaintiff has not controverted this evidence. In sum, this Court finds as a matter of law that these documents were properly withheld pursuant to Exemption 7(E) and Exemption 2.

I. Defendant's Exemption 5 Claims
The IRS has withheld documents pursuant to Exemption 5 on two grounds: (1) these documents contain material that falls within the governmental deliberative privilege, and (2) these [**22]  documents contain material that falls within the attorney-client privilege.
Exemption 5 allows nondisclosure of inter-agency or intra-agency memoranda or letters which would not be available by law to a party other than an agency in litigation with the agency. 5 U.S.C. §  552(b)(5). This exemption includes those documents normally privileged in the civil discovery context. N.L.R.B. v. Sears, Roebuck & Co., 421 U.S. 132, 149, 44 L. Ed. 2d 29, 95 S. Ct. 1504 (1975). Exemption 5 encompasses the governmental deliberative privilege, the attorney-client privilege, and the attorney work product doctrine. Id. at 150-55.
1. Deliberative process privilege: The IRS asserts Exemption 5 to withhold documents that reflect the agency's deliberative process. The Ninth Circuit test focuses on the function of a document as part of the deliberative process rather than on the contents of the document. National Wildlife Fed'n v. United States Forest Service, 861 F.2d 1114, 1118-19 (9th Cir. 1988). The deliberative process privilege has been held to cover all "recommendations, draft documents, proposals,  [**23]  suggestions, and other subjective documents which reflect the personal opinions of the writer rather than the policy of the agency," as well as documents which would "inaccurately reflect or prematurely disclose the views of the agency." Id. at 1118.
Defendant submits the declaration of Steven D. Harris who provides the agency's factual bases and justifications for withholding information pursuant to Exemption 5. The Harris declaration establishes that the withheld documents were generated in five specified courses of action. This affidavit also establishes that only pre-decisional deliberative material was withheld. Whenever possible, the IRS has identified the related final decision in the Vaughn Indices. Based on this evidence in conjunction with the submitted Vaughn Indices, this Court finds that the Government has met its burden of establishing the existence of a genuine deliberative process.
Plaintiff has challenged the Government's assertion of the deliberative process privilege because the Vaughn Indices describe only vague, general decisions in relation to the withheld documents. However, this Court's review of the examples from  [**24]  the Vaughn Indices that Plaintiff specifically disputes shows that the IRS's description of the nature and purpose of the withheld documents establish that they fall within the deliberative process category described in National Wildlife Fed'n, 861 F.2d at 1118. Therefore, this Court finds that Plaintiff has not raised a triable issue regarding the IRS withholdings  [*724]  pursuant to the deliberative process privilege.
2. Attorney-client privilege and work product doctrine: The IRS asserts Exemption 5 to withhold documents based on attorney-client privilege and the work product doctrine. The Vaughn Indices and the Harris declaration establish that these documents concern confidential communications of legal advice given by IRS and Department of Justice attorneys to IRS administrative personnel.
Plaintiff has not challenged the agency's assertion of attorney-client privilege in these instances. However, Plaintiff asserts that the IRS has not established that documents withheld under the work product doctrine were prepared in contemplation of litigation. Defendant's Vaughn Indices and the Harris declaration establish that these documents are [**25]  attorney work product generated in preparation for litigation between Plaintiff and the IRS in four specified matters. The descriptions of the documents at issue provided by the index in conjunction with the specified ongoing litigation and enforcement matters between the IRS and Plaintiff provide more than a bare assertion of the privilege. See Senate of Puerto Rico v. Department of Justice, 262 U.S. App. D.C. 166, 823 F.2d 574, 586 (D.C. Cir. 1987) (rejecting agency's affidavit as bare assertion where declaration state only that withheld documents "were prepared by [agency] attorneys in anticipation of litigation"). The informality or settlement posture of these actions does not raise questions as to the accuracy of the IRS's assertion of the work product doctrine. For these reasons, this Court finds that the IRS has submitted uncontroverted evidence of the privileged nature of these documents that supports its Exemption 5 claim.

J. Defendant's Exemption 6 Claims
The IRS has asserted Exemption 6 as the legal justification for withholding information including employee handwriting and other identifying information of third parties and IRS employees. Exemption 6 permits [**26]  an agency to withhold information in "personnel and medical files and similar files disclosure of which would constitute a clearly unwarranted invasion of personal privacy. 5 U.S.C. §  552(b)(6). As a threshold matter, the IRS must establish that the material is contained in personnel, medical, or similar files. Department of State v. Washington Post Co., 456 U.S. 595, 601-02, 102 S. Ct. 1957, 72 L. Ed. 2d 358 (1982). Second, the IRS must show that disclosure of the withheld information would violate a viable privacy interest of the individual who is the subject of the information. See Schell v. Department of Health & Human Serv., 843 F.2d 933, 937-38 (6th Cir. 1988).
Plaintiff argues that the IRS has not established that the documents at issue constitute "personnel, medical, or similar files." However, the Supreme Court has adopted a broad view of Exemption 6. Washington Post Co., 456 U.S. at 602. All information that applies to a particular individual meets the threshold requirement of Exemption 6 protection regardless of the class of file. Id. When disclosure of information which applies [**27]  to a particular individual is sought from Government records, courts must determine whether release of the information would constitute a clearly unwarranted invasion of that person's privacy. Id.
The Vaughn Indices and the Harris declaration establish that the information withheld meets this standard. Furthermore, the descriptions therein establish that release of these documents would constitute an invasion of the personal privacy of the referenced individual. The information includes references to the third parties' involvement in possible criminal conspiracy; third-party correspondence critical of Scientology; personnel matters including performance evaluations and information about employees' personal lives; and names, addresses, phone numbers, and other indirect identifiers of IRS employees.
Plaintiff has also challenged the agency's Exemption 6 withholdings on the same grounds asserted against the Exemption 7(C) claims. Plaintiff's mootness argument against the IRS's Exemption 6 claims is rejected here for the reasons discussed above.
In sum, the IRS has established that the documents withheld under Exemption 6 contain  [*725]  information about particular individuals and its [**28]  release would constitute an unwarranted invasion of their personal privacy. Plaintiff has not pointed to any facts that controvert the IRS's showing or raise a triable issue regarding the public interest value of these documents.

K. Segregation of Non-Exempt Information
Pursuant to the above-discussed exemptions, the IRS has withheld some documents in full asserting that the documents cannot be segregated for partial release. Plaintiff argues that the IRS has failed to demonstrate that it has reasonably segregated all non-exempt information from the documents withheld in full.
The FOIA provides that "any reasonably segregable portion of a record shall be provided to any person requesting such record after deletion of the portions which are exempt under this subsection." 5 U.S.C. §  552(b). The IRS bears the burden to demonstrate that the nonexempt portions of the documents are not "reasonably segregable." Willamette Indus., Inc. v. United States, 689 F.2d 865, 868 (9th Cir. 1982), cert. denied, 460 U.S. 1052 (1983). The question of segregability is completely dependent on the [**29]  content of the documents themselves. Mead Data Cent., Inc. v. Department of Air Force, 184 U.S. App. D.C. 350, 566 F.2d 242, 260 (D.C. Cir. 1977).
This Court finds that Defendant's Vaughn Indices and supporting declarations provide detailed descriptions of the contents of withheld documents and the specific pages affected by each exemption claim. This showing may be sufficient to allow the Court to determine the segregability of non-exempt information in any particular document. However, Plaintiff does not challenge the withholding of any specified document in full. As such, it is impossible for this Court to evaluate the Defendant's showing of non-segregability. For these reasons, this Court finds that Plaintiff has not raised a triable issue of segregability.

L. Plaintiff's request for in camera inspection: Plaintiff has requested in camera review of documents withheld pursuant to Exemption 5, Exemption 7(A), and Exemption 3 in conjunction with 26 U.S.C. §  6103(e)(7). District courts need not and should not make in camera inspections where the government has sustained its burden of proof on the claimed exemption. Lewis v. I.R.S., 823 F.2d 375, 378 (9th Cir. 1987). [**30]  For the reasons discussed above, the IRS has met its burden to prove that the withheld documents are totally exempt. Therefore, this Court has an adequate factual basis to make its determination and need not examine the disputed documents in order to determine their exempt status.
IT IS SO ORDERED. 
RONALD S.W. LEW 
United States District Judge

DATED: August 26, 1993 

87 of 133 DOCUMENTS 

BRIDGE PUBLICATIONS, INC., a California corporation; RELIGIOUS TECHNOLOGY CENTER, a California corporation; and CHURCH OF SCIENTOLOGY INTERNATIONAL, a California corporation, Plaintiffs, v. ENID VIEN, an individual; and DOES 1 through 20, inclusive, Defendants.  

CASE NO. CV 92-1539 H(M) 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA 

827 F. Supp. 629; 1993 U.S. Dist. LEXIS 14839; Copy. L. Rep. (CCH) P27,162 

May 4, 1993, Decided 

May 4, 1993, Filed; May 7, 1993, Entered 

CASE SUMMARY
 
PROCEDURAL POSTURE: Plaintiffs moved for summary judgment in an action alleging federal copyright infringement under 17 U.S.C.S. §  101 et seq.; copyright infringement under California law, Cal. Civ. Code §  980(a)(2); and trade secret misappropriation under Cal. Civ. Proc. Code §  3426.1(b).
 
OVERVIEW: The court granted plaintiffs' summary judgment motion in an action alleging state and federal copyright infringement and trade secret misappropriation under Cal. Civ. Proc. Code §  3426.1(b). There was no genuine issue of material fact regarding the elements of a federal copyright claim -- ownership of a valid copyright and unauthorized copying -- or a claim under California law. A declaration filed by defendant in opposition to the motion that contradicted her prior deposition testimony did not create an issue of fact. No genuine issue of material fact existed as to the elements of claim for trade secret misappropriation because the materials had independent economic value and plaintiffs had maintained their secrecy. Defendant failed to prove defenses based on the statute of limitations, the fair use doctrine, or the First Amendment (U.S. Const. amend. I). Therefore, the court granted the motion for summary judgment and issued a permanent injunction.
 
OUTCOME: The court granted plaintiffs' motion for summary judgment and issued a permanent injunction, because there was no genuine factual dispute that defendant infringed plaintiffs' copyrights under state and federal law and misappropriated plaintiffs' trade secret materials.

COUNSEL:
 [**1]  Toby L. Plevin, Esq., 10700 Santa Monica Blvd. Suite 4-300, Westwood, CA 90025.

Neil F. Martin, Esq., BROWN, MARTIN, HALLER and McCLAIN, 110 East "C" Street, 13th Floor, San Diego, CA 92101.

Thomas M. Small, Esq., SMALL, LARKIN, KIDDE' & GOLANT, 10940 Wilshire Blvd., 18th Floor, Los Angeles, CA 90024.

Helena K. Kobrin, Esq., BOWLES & MOXON, 6255 Sunset Blvd., Suite 2000, Hollywood, CA 90028.

JUDGES:
HUFF 

OPINIONBY:
MARILYN L. HUFF 

OPINION:

 [*631]  ORDER GRANTING SUMMARY JUDGMENT
The above-captioned matter came on regularly for hearing before the Honorable Judge Marilyn L. Huff on April 26, 1993. Thomas M. Small appeared for plaintiffs and Toby L. Plevin appeared for defendant. Considering all of the papers, pleadings, motions and declarations before the court, and after hearing the matter, the court finds that no material issue of fact exists and plaintiffs are entitled to judgment as a matter of law on the copyright (state and federal) and trade secret claims.

1. Standard for summary judgment
A motion for summary judgment shall be granted where "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); British Airways Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). [**2]  Any doubt as to the existence of any issue of material fact requires denial of the motion.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The opposing party "cannot rest on the mere allegations or denials of his pleading, but [the] response, by affidavits or as otherwise provided by this rule, must set forth specific facts showing that there is a genuine issue for trial," and "must present affirmative evidence in order to defeat a properly supported motion for summary judgment." Anderson, 477 U.S. at 257. However, the opposing party does not create a genuine issue of material fact by submitting her own affidavit which contradicts her prior deposition testimony. Harkins Amusement Enterprises, Inc. v. General Cinema Corp., 850 F.2d 477, 482 (9th Cir. 1988) (citing Radobenko v. Automated Equipment Corp., 520 F.2d 540, 543-44 (9th Cir. 1975), for the proposition that a party's inconsistent affidavit given after deposition testimony, in opposition to a summary judgment motion, does not create a genuine issue of fact).

 [*632]  2. Application of standard [**3]  
a. Copyright claims (literary works and sound recordings).
There are two basic elements to be proven in a copyright infringement action: (1) ownership of a valid copyright, and (2) copying of the copyrighted work.  Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 206 (9th Cir. 1988); Baxter v. MCA, Inc., 812 F.2d 421, 423 (9th Cir. 1987). As this court previously found in its rulings on the temporary restraining order and the preliminary injunction issued in this case, there is no issue of fact regarding plaintiffs' ownership of the copyrights on the literary works and sound recordings, published and unpublished. See also Declaration of Marilyn Pisani ("Pisani Decl."), PP 2,5,7, Exhibits C, I, L, O, R, U, X and AA; Declaration of Allan Cartwright ("Cartwright Decl."), PP 2-3, 5, 7, Exhibit B, E, and LLL; Declaration of Warren McShane ("McShane Decl."), PP 2, 5, 7, 9, Exhibits D and E.
Nor is there a genuine issue of fact regarding defendant's copying of, or directing the copying of, the copyrighted works. The undisputed evidence shows that defendant copied or directed her students to copy plaintiffs' copyrighted materials [**4]  as part of a "Dynamism" course which she offered for sale. See Declaration of Gerri Salinas ("Salinas Decl."), PP 4-5, 8-11; Pisani Decl., PP 5, 7; Cartwright Decl., PP 5, 7; McShane Decl., PP 7, 9-10. Specifically, defendant would either copy the materials herself, or would give them to her students to copy. See Salinas Decl., P 8; Deposition of Enid Vien ("Vien Depo."), Vol.I, p.44, lines 3-20, p.45, lines 15-21; p.80, lines 8-19; Vol.II, P.23, lines 2-12; p.96, lines 1-12; p.143, line 18 - p.144, line 8; Deposition of Mary Volk ("Volk Depo."), p.25, line 17 - p.26, line 11. Additionally, defendant admitted in her November 4, 1992 Declaration that she must use bootleg or copied materials as part of the courses she offers her students.
Defendant's declaration in opposition to this motion contends that she never copied, or directed the copying of, the sound recordings. However, this is contradicted by her prior declaration and deposition testimony and, therefore, does not create a genuine issue of material fact. Harkins Amusement Enterprises, Inc. v. General Cinema Corp., 850 F.2d 477, 482 (9th Cir. 1988).
b. Sound recordings made prior to [**5]  February 15, 1972.
There is also no factual dispute that defendant copied, or directed the copying of, L. Ron Hubbard's tape recorded lectures which were fixed on tape prior to February 15, 1972 and, therefore, are protected under California Civil Code section 980(a)(2). See Goldstein v. California, 412 U.S. 546, 552, 37 L. Ed. 2d 163, 93 S. Ct. 2303 (1973) (recordings fixed and sold prior to February 15, 1972 are not protected under federal copyright law, but may be given state protection); Lone Ranger Television v. Program Radio Corp., 740 F.2d 718, 724 (9th Cir. 1984). The uncontroverted evidence shows that defendant violated section 980(a)(2) by making copies of the recordings, or by having such copies made, without authorization. See Salinas Decl., P 8(b); Cartwright Decl., P 7. Again, defendant's declaration in opposition to the instant motion does not create a factual dispute in light of her earlier declaration and deposition testimony, which admit to copying and using "bootleg" L. Ron Hubbard tapes as part of her Dynamism courses. See Harkens Amusement Enterprises, supra, 850 F.2d at 482.
c. Trade secret claim [**6]  
Finally, no genuine issue of fact exists as to whether defendant misappropriated plaintiffs' trade secrets in the works known generally as the "Advanced Technology." California Civil Code section 3426.1 defines a "trade secret" as information which has independent economic value from not being generally known, the secrecy of which has been reasonably protected, or reasonably attempted to be protected. A trade secret is misappropriated when, among other things, it is disclosed or used by another without consent, and at the time of disclosure or use that person knew that the secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Cal. Civ. Proc. Code §  3426.1(b). Similarly, under the common  [*633]  law, a trade secret is determined by the extent to which the secrecy of the information is guarded, and according to the value of the information to the possessor and its competitors. See Restatement (First) of Torts, §  757, comment 6; Chicago Lock Co. v. Fanberg, 676 F.2d 400, 404 (9th Cir. 1982); Sinclair v. Aquarius Electronics, 42 Cal.App.3d 216, 221, 116 Cal. Rptr. 654 (1974).
The court finds that as [**7]  a matter of law, plaintiffs' "Advanced Technology" qualifies as a trade secret, and that no factual dispute exists regarding defendant's misappropriation, through copying or disclosure, of these works through the courses offered to her students. See Vien Depo., Vol.I, p.97, lines 5-10; p.98, lines 8-18; Salinas Decl., P 8; McShane Decl., PP 7, 10, Exhibit C.
1. Secrecy of materials
There is no factual dispute about whether plaintiffs have used reasonable steps to keep the materials secret. The Advanced Technology is confidential and is available only to those who have attained the proper level of spiritual training. See McShane Decl., P 3. These works are kept under tight security, are disclosed only to those who have attained the requisite level of spiritual training, and cannot be accessed without first signing an agreement to maintain their secrecy and confidentiality. McShane Decl., P 4. Indeed, plaintiff knew of the confidential nature of the materials and signed a confidentiality agreement prior to their disclosure to her. See Vien Depo., Vol.I, p.59 line 18 - p.60, line 12; Vien Depo, Vol.II, p.25, line 5 - p.27, line 10, Exhibits 7 and 8 thereto; p.31, line [**8]  4 - p.32, line 15.
Defendant attempts to create a factual issue about the secrecy of a portion of the Advanced Technology called "Power Processes," or "5 and 5a Processing," by declaring in opposition that she "studied [that portion] at a time when they were not deemed to be secret." However, this declaration is directly contradicted by defendant's earlier deposition testimony, and documentary corroboration and, therefore, does not create a genuine issue of material fact. See McShane Decl., P 12, Exhibits A, B, and C, attached to Reply; Declaration of Howard Gutfeld, PP 3-5, attached to Reply; Vien Depo., p.11, line 6 - p.12, line 16, p.15, line 17, p.16, lines 1-16, p.27, lines 13-14, attached to Reply.
Defendant also argues that other "issues of fact" remain as to the trade secret claim. These arguments are without merit. Defendant first claims that a certain portion of the Advanced Technology, known as "OT 3," has been repeatedly reported in print and broadcast media, thereby stripping the secret status. However, plaintiffs claim these publications are distortions of the secret materials and, therefore, plaintiffs make no claim of trade secret status or confidentiality  [**9]  as to any of these stories. Moreover, plaintiffs concede that any information in these stories should be excepted from any injunction this court might order. See McShane Decl., PP 7-11, attached to Reply.
Defendant next argues that Plaintiffs cannot gain trade secret status for a portion of the Advanced Technology known as "NOTS," because a previous court, in a previous case with different defendants, dismissed trade secret claims on that material as a discovery sanction. Defendant offers no authority for this contention. Indeed, as the substantive merits of the earlier trade secret claim were not necessarily and finally adjudicated upon, and defendant was not a party to that suit, it appears that case has no res judicata or collateral estoppel effect here. See generally Federated Dept. Stores v. Moitie, 452 U.S. 394, 69 L. Ed. 2d 103, 101 S. Ct. 2424 (1981); Guild Wineries v. Whitehall Co., 853 F.2d 755 (9th Cir. 1988).
2. Independent economic value
Finally, there is no factual dispute as to the independent economic value of the Advanced Technology. It clearly has value to plaintiffs, who use proceeds from the sale of these materials, as well [**10]  as other materials, to support the operations of Scientology Churches around the world. See McShane Decl., P 12. Indeed, the Supreme Court has recognized the economic need for churches to receive such proceeds, noting that "it is plain that a religious organization needs funds to remain a going concern." Murdock v. Pennsylvania, 319 U.S. 105, 111, 87 L. Ed. 1292, 63 S. Ct. 870 (1943). These materials also have value to defendant,  [*634]  a competitor of plaintiffs', who uses the Advanced Technology in the delivery of the courses for which she is paid. For example, defendant admitted that she would charge $ 3000 for a course package which includes the Advanced Technology materials known as "SOLO," "OT 1," "OT 2," and "OT 3." See Vien Depo., Vol.I, p.97, lines 5-10; p.98, lines 8-18.
Therefore, as no genuine issue of fact exists, the court finds as a matter of California statutory and common law that defendant has misappropriated plaintiffs' trade secrets.

3. Defenses common to all claims
a. Statute of limitations.
Defendant argues, for the first time, that all claims in this action are barred by the statute of limitations. n1 In support of this argument defendant offers evidence [**11]  that, in 1984, plaintiffs' officers had asked about defendant's possession of the Advanced Technology materials, and were told she had those materials in her possession. See Declarations of Enid Vien and Lauren Allen attached to Opposition to Summary Judgment. However, as revealed in these declarations, plaintiffs' representatives were also assured that defendant had not distributed these materials to anyone else. As defendant has the burden of proof on this affirmative defense, she must come forward with evidence that plaintiffs were on notice of all the elements of a trade secret violation. To the contrary, her evidence actually supports plaintiffs' position that they did not have such knowledge.

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 n1 The relevant statute of limitations are: 17 U.S.C. §  507 (3 years for federal copyright claims) Cal.Civ.Proc.Code §  338(1) (3 years for state copyright claims based on Cal.Civ.Code §  980(a)(2)); Cal.Civ.Code §  3426.3 (3 years for trade secret misappropriation).

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Defendant argues [**12]  plaintiffs must have known about defendant's infringing activities because they knew she left the Church of Scientology to start her own ministry. This argument is without merit. Plaintiffs had always permitted Ms. Vien to learn and study the Advanced Technology pursuant to the confidentiality agreement she signed. The fact that she may have had actual copies of the Advanced Technology, as opposed to her own notes and mental impressions, does not create an issue regarding plaintiffs' knowledge of all the elements of trade secret misappropriation. The argument that plaintiffs should have known that defendant would have disclosed the Advanced Technology to her students is also without merit. There is no evidence that plaintiffs' knew of the potential use, if any, Ms. Vien might have for the Advanced Technology in her ministry.
The court finds these declarations fail to establish, or even raise a factual issue, that plaintiffs' had knowledge, dating back to 1984, of any of the violations alleged in the complaint. The statute of limitations defense is, therefore, without merit. See Intermedics, Inc. v. Ventritex, Inc., 775 F. Supp. 1258, 1265-66 (N.D.Cal 1991) [**13]  (plaintiff's prior suit against defendant for "having knowledge of" plaintiff's trade secrets was not sufficient "discovery of the misappropriation" to start limitations period).
Indeed, as to the federal and state copyright claims, even if defendant's declarations establish plaintiffs' knowledge of defendant's unauthorized copying n2 in 1984, there is substantial, uncontroverted evidence that defendant has violated these copyrights within three years of the instant suit. Accordingly, these claims were timely filed. See Hoey v. Dexel Systems Corp., 716 F. Supp. 222 (E.D.Va 1989) (where there is a continuing violation of the copyright, the action is timely as to infringing acts accruing within the 3-year limitations period); cf.  Mangini v. Aerojet-General Corp., 230 Cal.App.3d 1125, 281 Cal. Rptr. 827 (1991) (every continuation of a nuisance gives rise to a separate claim for damages under the 3-year limitations period in Civ. Proc. Code §  338(1)).

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 n2 It should be noted, however, that defendant's declarations merely point to plaintiffs' alleged knowledge of Ms. Vien's possession of portions of the Advanced Technology materials. There is no evidentiary basis to find that, dating back to 1984, plaintiffs' knew of defendant's unauthorized copying of any of the materials at issue.

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b. First amendment.
As this court stated in its Order Granting Preliminary Injunction, plaintiffs'  [*635]  claims for copyright and trade secret protection are not barred by the religious nature of the works. The court expressly found that enforcing plaintiffs' rights in these works violated neither the establishment clause nor the free exercise clause. See United Christian Scientists v. First Church of Christ, 265 U.S. App. D.C. 20, 829 F.2d 1152, 1159 (D.C. Cir. 1987) ("normally, a grant of copyright on a religious work poses no constitutional difficulty. Religious works are eligible for protection under general copyright laws"); Religious Technology Center, Church of Scientology v. Scott, 869 F.2d 1306, 1309-10 (9th Cir. 1989) (religious material can qualify as a trade secret under California law if it confers on its owner an actual economic advantage over competitors); Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1090-91 (9th Cir. 1986); see also Jones v. Wolf, 443 U.S. 595, 604, 61 L. Ed. 2d 775, 99 S. Ct. 3020 (1979); Order of St. Benedict v. Steinhauser, 234 U.S. 640, 644, 58 L. Ed. 1512, 34 S. Ct. 932 (1914). [**15]  
The thrust of defendant's argument is that because plaintiffs refuse to sell defendant the materials she needs to practice her religion, enforcing the copyrights and trade secret rights restricts her free exercise of religion, and unconstitutionally prefers the religion of Scientology over defendant's religion. Defendant has offered no authority supporting this contention. Rather, the case law cited supports the proposition that neutral application of copyright and trade secret law to religious works does not offend the constitution.

4. Specific defenses
a. Fair use of the copyrighted works.
Defendant raises, for the first time, the applicability of the "fair use doctrine" to the works at issue. Section 107 of the Copyright Act provides that

the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature [**16]  or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

In determining "fair use" under the statute, it is necessary to balance the four factors flexibly.  Fisher v. Dees, 794 F.2d 432, 435 (9th Cir. 1986). Balancing these factors here results in a finding that defendant's use is not protected by the statute.
The first factor weighs against a finding of fair use. There is no genuine issue of fact that defendant uses the copyrighted works as an integral part of the Dynamism courses she sells to her students. See Salinas Decl., PP 4-5, 6, 8-11, Exhibit B; Pisani Decl., PP 5, 7; Cartwright Decl., PP 5, 7; McShane Decl., PP 7, 9-10; Vien Depo., Vol.II, p.23, lines 2-12; p.96, lines 1-12; p.143, line 18- p.144, line 8. Indeed, defendant admits to having earned up to $ 12,000 a year for the ten years she has been offering these courses. See Vien Decl., P 6, attached to Opposition. In general, commercial use of copyrighted [**17]  material is presumptively unfair ( Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 449-51, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984)), whereas non-commercial use weighs in favor of the defendant. See, e.g., Marcus v. Rowley, 695 F.2d 1171, 1175 (9th Cir. 1983).
Defendant's fair use claim is further weakened because defendant uses the copyrighted works for the same intrinsic purpose as plaintiffs. See Marcus, 695 F.2d at 1175; Weissmann v. Freeman, 868 F.2d 1313, 1324 (2nd Cir. 1989).
The second factor also weighs against a finding of fair use. When the nature of the copyrighted works is creative, as opposed to informational, as it is here, use of those works is less likely to be deemed fair. See  [*636]  Abend v. MCA, Inc., 863 F.2d 1465, 1481 (9th Cir. 1988).
The third factor also weighs against defendant. The undisputed facts show that defendant has substantially copied each work at issue, and in some cases the whole work. See Pisani Decl., P 7; Cartwright Decl., P 7; McShane Decl., P 9. This clearly weighs against a finding of fair use, especially [**18]  considering the commercial nature of the use. See, e.g., Marcus, 695 F.2d at 1176 ("wholesale copying of copyrighted material precludes application of the fair use doctrine"); Abend, 863 F.2d at 1481 (wholesale copying for a purely commercial purpose may never be a fair use).
The fourth factor concerns "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. §  107. As this court discussed previously in the trade secret context, since defendant uses the works for the same purpose intended by plaintiffs, it appears defendant's unauthorized copies fulfill "the demand for the original" works and "diminish or prejudice" their potential sale. See Hustler Magazine, Inc. v. Moral Majority, Inc., 796 F.2d 1148, 1155-56 (9th Cir. 1986). Therefore, this factor weighs against defendant as well.
Finally, the court finds that defendant's use does not fit within the special guidelines approved by Congress as to fair use in the educational context. See Notes of Committee on the Judiciary, House Rep. No. 94-1476, reprinted  [**19]   in 17 U.S.C.A. pp. 113-14; Marcus v. Rowley, 695 F.2d 1171, 1178 (9th Cir. 1983). Defendant's copying and use of the works was not restricted to one copy for her own use in teaching. Additionally, the undisputed evidence shows that defendant's copying was not limited and spontaneous, but was extensive and methodical, and consisted of copying from the same author, time after time. This is clearly not within the letter or spirit of the Congressional guidelines.
Under the circumstances of this case, and after balancing the four statutory factors, as well as the Congressional guidelines on fair use in the educational context, the court finds as a matter of law that defendant is not entitled to fair use protection. See Marcus, 695 F.2d at 1178-79 (summary judgment may be granted on the fair use issue); Hustler Magazine, 796 F.2d at 1150-51 (same).

5. Permanent injunction
Plaintiffs have requested permanent injunctive relief on the four claims at issue. As the court has granted summary judgment on those claims, and pursuant to the applicable statutory  [**20]  and case law, the court will grant such relief. See 17 U.S.C. §  502 ("any court having jurisdiction of a civil action arising under this title may. . .grant. . .final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright"); Cal.Civ.Code §  3426.2(a) ("actual or threatened misappropriation [of a trade secret] may be enjoined"); Chicago Lock Co. v. Fanberg, 676 F.2d 400, 404 (9th Cir. 1982) (common law trade secret misappropriation enjoinable under purview of 'unfair competition' under Cal.Civ.Code §  3369); see generally A & M Records v. Heilman, 75 Cal.App.3d 554, 142 Cal. Rptr. 390 (1977) (affirming grant of motion for summary judgment and injunction as to defendant's unauthorized copying and sale of tape recordings).
The court will issue the permanent injunction after receiving proposed orders from each party's counsel. Additionally, a hearing on damages and attorney's fees will be held on June 21, 1993, at 10:30 a.m., in courtroom 8.
IT IS SO ORDERED.

DATED: May 4, 1993
MARILYN L. HUFF, JUDGE
UNITED STATES DISTRICT [**21]  COURT 

88 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff, v. UNITED STATES OF AMERICA, Defendant.  

Misc. No. 91-322-K (CM) 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA 

1992 U.S. Dist. LEXIS 18606; 93-1 U.S. Tax Cas. (CCH) P50,078; 70 A.F.T.R.2d (RIA) 5981 

October 14, 1992, Decided 

October 15, 1992, Filed 

PRIOR HISTORY:
 Adopting Magistrate's Document of July 31, 1992, Reported at 1992 U.S. Dist. LEXIS 18611 

DISPOSITION:
 [*1]  IT IS THEREFORE ORDERED that the order of Magistrate Judge McCue is affirmed in its entirety.  

COUNSEL:
Terri E. Schapiro, Trial Attorney, Tax Division, U.S. Department of Justice, P.O. Box 683, Ben Franklin Station, Washington, D.C. 20044.

Kendrick L. Moxon, Bowles & Moxon, 6255 Sunset Boulevard, Suite 2000, Hollywood, CA 90028.  

JUDGES:
KEEP 

OPINIONBY:
JUDITH N. KEEP 

OPINION:

ORDER
On March 21, 1991, the Internal Revenue Service issued a third-party summons to the First Interstate Bank, located at 401 B Street, San Diego, California, demanding the bank records of plaintiff Church of Scientology Western United States. On March 25, 1991, plaintiff filed a petition to quash the IRS summons. Upon receipt of the petition, the IRS withdrew the summons, and plaintiff stipulated to dismissal of the action, specifically reserving the issue of plaintiff's entitlement to fees and costs.  
On October 11, 1991, United States Magistrate Judge Harry McCue heard plaintiff's motion for an order awarding attorneys' fees, expenses, and costs to petitioner. Magistrate Judge McCue denied the motion on July 31, 1992. Plaintiff, however, did not have notice of Magistrate Judge McCue's denial until September 9, 1992, when the order was served [*2]  as an attachment to the IRS's opposition to plaintiff's motion for a status conference.  Plaintiff filed an objection to Magistrate Judge McCue's order on September 23, 1992, within the ten day period allotted by Federal Rules of Civil Procedure 72 and 6.
I.
Federal Rule of Civil Procedure 72(a), incorporated herein by reference, provides that a district court reviews a magistrate's order concerning a non-dispositive question under a clearly erroneous standard. Magistrate orders concerning dispositive questions are reviewed, however, under a de novo standard. F.R.Civ.P. 72(b). In order to determine whether an issue is dispositive or non-dispositive, the court must determine how the issue would be characterized under the Federal Magistrates Act, 28 U.S.C. §  631, et. seq. See Perales v. Casillas, 950 F.2d 1066, 1070 (5th Cir. 1992). Section 636(b)(1)(A) allows a judge to hear 21 and determine any non-dispositive pretrial matter, such determination being subject to a clearly erroneous standard of review. On the other hand, section 636(b)(1)(B) states that a magistrate  [*3]  may only issue recommendations on eight listed dispositive matters, which are subject to a de novo standard of review. The question of whether to award attorney's fees is not among the eight listed matters. Thus, the court must determine whether the matter is in nature similarly dispositive by looking at the legislative intent underlying section 636(b)(1)(B). See 11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §  3076.5 at 46 (Supp. 1992).
Dispositive questions warrant a higher standard of review because "of the possible constitutional objection that only an article III judge may ultimately determine the litigation." See generally H.R.Rep. No. 94-1060, 94th Cong., 2d Sess. 10-11 (1976). Thus, matters that affect that final outcome of the litigation are dispositive, whereas pretrial matters not integral to the determination of the merits of the action are non-dispositive.
The question of whether an award of attorney's fees is dispositive has not been addressed in the Ninth Circuit. In West v. Redman, 530 F.Supp. 545 (D. Del. 1982), the district court determined that an award of attorney's [*4]  fees was a dispositive matter.  The court reasoned that attorney's fees are "essential to a full disposition of the petitioner's claim and the defendant's liability." Id. at 548. Because the Third Circuit held that attorney's fees were integral to the merits of an action rather than collateral and "clearly part of the overall relief sought and granted," the court held that attorney's fees are dispositive. Id. (citing Croker v. Boeing, 662 F.2d 975, 983 (3d Cir. 1981) (en banc)). I agree with the District Court of Delaware's analysis, and hold that an award of attorney's fees is dispositive in nature. I therefore will review Magistrate Judge McCue's order denying attorney's fees de novo.
II.
Petitioner has requested attorneys' fees and costs pursuant to 26 U.S.C. §  7430, which provides that "in any . . . court proceeding which is brought . . . against the United States in connection with the determination, collection, or refund of any tax . . . under this title, the prevailing party may be awarded a judgment or a settlement for . . . reasonable litigation costs." 26 U.S.C. §  7430 [*5]  (a). In order for a party to be awarded reasonable litigation costs under section 7430, three requirements must be met. First, the taxpayer must exhaust all administrative remedies available within the Internal Revenue Service. Id. at §  7430(b)(1). Second, the taxpayer must be the "prevailing party" as defined by section 7430(c)(4). Third, the taxpayer must show that the requested litigation costs are "reasonable." Id. at §  7430(c)(1).
The government argues, and I agree, that Magistrate Judge McCue correctly denied petitioner's request for attorney's fees and costs because petitioner did not exhaust its administrative remedies. Although the Treasury Regulations promulgated under 26 U.S.C. §  7430 are no longer binding on cases filed after January 1, 1986 due to a "sunset" provision that renders them inapplicable to such proceedings, the Regulations still serve as a guide for taxpayers who wish to comply with the statutory requirement to exhaust administrative remedies. See Kenlin Industries, Inc. v. United States, 927 F.2d 782, 786-88 (4th Cir. 1991). [*6]  Under the Regulations, a taxpayer is not considered to have exhausted his or her administrative remedies with regard to a summons unless the taxpayer submits the dispute to the district director before filing suit. See 26 C.F.R. §  301.7430-1. Even though the Regulations serve as only a guide to the taxpayer, in order to obtain attorneys' fees and costs under 26 U.S.C. §  7430(b)(1), the taxpayer must still show that he or she attempted to exhaust the administrative remedies offered by the IRS.
In this case, plaintiff has failed to show that it took any steps to exhaust administrative remedies within the IRS before filing a suit to quash the summons in district court. Although the exhaustion of administrative remedies is not required to obtain the remedy of quashing the summons, the plaintiff is required to exhaust administrative remedies before it is entitled to reimbursement for its litigation expenses.
III
For the reasons stated above, I affirm Magistrate Judge McCue's order denying attorneys' fees and costs.
IT IS THEREFORE ORDERED that the order of Magistrate Judge McCue is affirmed in its entirety.

DATED: 10/14/92
JUDITH N. KEEP, Chief Judge
United [*7]  States District Court 

89 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Petitioner, v. UNITED STATES OF AMERICA, Respondent.  

Case No. 91-MC 0332 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA 

1992 U.S. Dist. LEXIS 18611 

July 29, 1992, Decided 

July 31, 1992, Filed 

SUBSEQUENT HISTORY:
 Adopting Order of October 15, 1992, Reported at 1992 U.S. Dist. LEXIS 18606. 

COUNSEL:
 [*1]  For United States of America: WILLIAM BRANIFF, United States Attorney, ROBERT H. PLAXICO State Bar No. 054953, Assistant United States Attorney. TERRI E. SCHAPIRO, Trial Attorney, Tax Division, U.S. Department of Justice, P.O. Box 683, Ben Franklin Station, Washington, D.C. 20044, Telephone: (202) 307-6543.  

JUDGES:
McCUE 

OPINIONBY:
HARRY R. McCUE 

OPINION:

ORDER DENYING PETITIONER'S MOTION FOR FEES AND COSTS
The above matter came on for hearing on October 11, 1991, before the Honorable Harry R. McCue, United States Magistrate Judge, on the motion of petitioner, Church of Scientology Western United States, entitled Motion For An Order Awarding Attorneys' Fees, Expenses And Costs To Petitioner.
William D. Katz, Esq., appeared on behalf of petitioner, Church of Scientology Western United States. Terri E. Schapiro, Trial Attorney, Tax Division, United States Department of Justice, appeared on behalf of respondent, the United States of America.
The court has carefully considered the pleadings, arguments of counsel and the entire record herein. Good cause appearing therefor, the court denies petitioner's Motion For An Order Awarding Attorneys' Fees, Expenses And Costs To Petitioner.

IT IS SO ORDERED.

DATED: 7/29/92 [*2]  
HARRY R. McCUE
United States Magistrate Judge 

90 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant.  

No. CV 91-1048 CBM (Tx) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1992 U.S. Dist. LEXIS 6632 

April 21, 1992, Decided   
April 21, 1992, Filed; April 24, 1992, Entered 

JUDGES:
 [*1]  MARSHALL 

OPINIONBY:
CONSUELO B. MARSHALL 

OPINION:

ORDER RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT 
This matter came on regularly for hearing on April 6, 1992 before the Court, the Honorable Consuelo B. Marshall, District Judge presiding, on defendant Internal Revenue Service's ("IRS") motion for summary judgment. Having considered the papers filed in connection with these motions that are permitted by the Local Rules, n1 and the arguments of counsel at hearing, the Court finds and orders as follows: 

Jurisdiction 
1.  The Court has jurisdiction over this Freedom of Information Act ("FOIA") case, filed by plaintiff Church of Scientology International ("CSI"), pursuant to 5 U.S.C. §  552(a)(4)(B). 

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n1 The Court has considered neither pages in the IRS's moving papers in excess of the thirty-five pages limit imposed by Local Rule 3.10, nor plaintiff's Supplemental Opposition to the IRS's Reply brief which is not permitted by Local Rule 7.

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Statement of Facts 
2.  In a letter dated September 16, 1990, plaintiff CSI requested 
  [*2]  
all files, records, documents, notes, . . . relating to or concerning CSI, Church of Scientology, and "Scientology", or any individual Church of Scientology, kept, maintained or temporarily residing in the office of Marvin Friedlander, Senior Conferee Reviewer in Exempt Organizations Technical Division, Internal Revenue Service's National Office.
 
3.  Before Friedlander received this FOIA request, he was reassigned to another position with the IRS and physically moved offices.  The Scientology case files previously assigned to Friedlander had been sent to another agent that was to take over Friedlander's duties on those cases.  Before conducting the FOIA search of his new office, Friedlander reorganized all of the files he retained. 
4.  After exhausting its administrative remedy, CSI filed this suit on February 26, 1991.  Although the IRS disclosed responsive documents on July 24, 1991 and February 26, 1992, 330 pages of documents remain undisclosed and at issue in this case: The IRS is withholding 204 pages of documents in full and 126 pages of documents in part. 

Adequacy of the Search 
5.  The FOIA requires the IRS to make a reasonable effort to locate documents that  [*3]  are reasonably described.  See 5 U.S.C. §  552(a)(3)(A); Founding Church of Scientology v. National Sec. Agency, 610 F.2d 824, 837 (D.C. Cir. 1979). To discharge its FOIA statutory obligation, the IRS must "demonstrate that it has conducted a 'search reasonably calculated to uncover all relevant documents.'" Zemansky v. United States Environmental Protection Agency, 767 F.2d 569, 571 (9th Cir. 1985) (citation omitted); Miller v. United States Dep't of State, 779 F.2d 1378, 1383 (8th Cir. 1985). The issue is not whether responsive documents may exist, but whether the IRS's search was reasonable and therefore adequate. 
6.  The Court finds that it was reasonable for Friedlander to search the documents that were in his office at the time he received CSI's FOIA request. 
7.  However, Friedlander's failure to include documents as responsive because they related to other Scientology entities and no third-party waivers had been provided for those third-party entities was improper. n2 Not only are all Scientology-related documents reasonably described, but permitting an agency to skip over and deem non-responsive documents that [*4]  the agency believes are exempt from disclosure - even assuming the agency is correct with respect to the disclosure exemption - would foreclose, for example, the possibility of an in camera review to substantiate claims of non-segregability.  Since Friedlander's failure to include all reasonably described records as responsive would impermissibly allow the IRS to avoid the Court's de novo review contemplated by the FOIA, the IRS is ordered to conduct another search, including all responsive documents, notwithstanding the fact that they may later be deemed exempt from disclosure. 

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n2 The IRS contends that Friedlander failed to include tax return information of other Scientology entities as responsive documents because CSI's failure to submit third-party waivers for return information of other taxpayers constituted a failure to exhaust CSI's administrative remedy. However, the IRS has admitted that CSI exhausted its administrative remedy in this case in its answer to plaintiff's complaint (see P16); this contention therefore lacks merit.

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Exemption 3 Claims 
8.  Exempted from disclosure under the FOIA are: 

Matters that are . . . specifically exempted from disclosure by statute . . . provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld.

 5 U.S.C. §  552(b)(3).  Section 6103 of the Internal Revenue Code is such a statute.  See Long v. Internal Revenue Serv., 742 F.2d 1173, 1178-79 (9th Cir. 1984). Section 6103(a) generally provides that 

Returns and return information shall be confidential, and except as authorized by this title . . . no officer or employee of the United States, [among others] shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section.
 
9.  The FOIA imposes an obligation upon an agency to respond to any "request for records which (A) reasonably describes such records and (B) is made in accordance with published rules stating the [*6]  time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person." 5 U.S.C. §  552(a)(3).  The IRS has promulgated regulations that describe the requisites for requesting FOIA records from the IRS: 

(3) The initial request for records must . . . (v) In the case of a request for which records the disclosure of which is limited by statute or regulations (as, for example, the Privacy Act (5 U.S.C. 552a), section 6103 of the Internal Revenue Code of 1986, or regulations thereunder), establish the identity and the right of the person making the request to the disclosure of the records in accordance with paragraph (c)(4)(ii) of this section.

26 C.F.R. §  601.702(c)(3)(5) (Apr. 1, 1991).  Paragraph (c)(4)(ii) requires that "in the case of records containing information with respect to particular persons the disclosure of which is limited by statute or regulation, persons making requests shall establish their identity and right to access to such records." 26 C.F.R. §  601.702(c)(4)(ii) (Apr. 1, 1991); see also 26 C.F.R. §  601.702(d)(1) (Apr. 1, 1991).  While the IRS's belated contention that CSI failed to exhaust its administrative [*7]  remedy by not including third-party waivers with its initial request lacks merit, plaintiff failed to comply with the regulations promulgated by the IRS.  Since CSI does not attack the reasonableness of those regulations here, n3 the IRS is entitled to summary judgment on Exemption 3 claims asserted for the return information of third-party taxpayers. 

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n3 Moreover, these regulations must be upheld if they "implement the congressional mandate in some reasonable manner." See, e.g., United States v. Correll, 389 U.S. 299, 307, 88 S. Ct. 445, 19 L.Ed.2d 537 (1967); Fmali Herb, Inc. v. Heckler, 715 F.2d 1385, 1387 (9th Cir. 1983). In light of the tension between the liberal disclosure of the FOIA and the severe sanctions for a violation of section 6103, the IRS's regulations are reasonable.

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10.  The Court finds that the IRS has not sustained its burden of justifying withholding CSI's own tax return information under section 6103(e)(7) and orders an [*8]  in camera review of those documents identified in the Vaughn Index as withheld on those grounds.  See Church of Scientology v. United States Dep't of the Army, 611 F.2d 738, 742-43 (9th Cir. 1979) (where the affidavits or declarations of the government agency are insufficient to establish an exemption, an in camera review is appropriate). 

Exemption 5 Claims 
11.  The purpose of a Vaughn Index is not merely to inform the requester of the agency's conclusion that a particular document is exempt from disclosure under one or more of the statutory exemptions, but to afford the requester an opportunity to intelligently advocate release of the withheld documents and to afford the court an opportunity to intelligently judge the contest.  Wiener v. Federal Bureau of Investigation, 943 F.2d 972 (9th Cir. 1991); King v. Department of Justice, 830 F.2d 210, 218 (D.C. Cir. 1987) (the purpose of the Index is to "afford the FOIA requester a meaningful opportunity to contest, and the district court an adequate foundation to review, the soundness of the withholding").  Since the IRS has filed its Court-ordered index in this [*9]  case, the Court can focus on the specific challenges raised by CSI. 
12.  Exemption 5 protects from disclosure "interagency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." 5 U.S.C. §  552(b)(5).  In response to the IRS's exemption 5 claims, CSI challenges only: (i) the lack of a date on one document that makes a determination of "predecisional" difficult, (ii) the assertion of one claim of attorney-client privilege, and (iii) IRS claims of deliberative process privilege generally.  The undated document challenge is not persuasive given the detailed description of the document and the IRS's stated basis for believing it was predecisional.  See page 411 at Vaughn Index, p. 14.  However, the challenge to the attorney-client privilege claim is valid and this IRS claim, see page 427 at Vaughn Index, pp. 24-25, is rejected.  Finally, CSI's general attack upon IRS claims of deliberative process privilege lacks merit; the Court's review of the Vaughn Index indicates an agency decision subsequent to the creation of the records described. 

Exemption 7 Claims 
13.  This FOIA exemption as claimed [*10]  by the IRS here applies to: 

Investigatory records compiled for law enforcement purposes but only to the extent that the production of such law enforcement records or information . . . (A) could reasonably be expected to interfere with enforcement proceedings, . . . (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy . . . [or] (D) could reasonably be expected to disclose the identity of a confidential source. . . .

 5 U.S.C. §  552(b)(7).  Both parts of the standard must be met to withhold information under Exemption 7: (i) a requested document must first constitute a record or contain information compiled for law enforcement purposes, and (ii) if it satisfies this threshold, the agency then must demonstrate that release of the material would threaten one or more of the specified harms.  Rosenfeld v. United States Dep't of Justice, 761 F. Supp. 1440, 1443-44 (N.D. Cal. 1991) (citing Keys v. United States Dep't of Justice, 830 F.2d 337, 340 (D.C. Cir. 1987)). 
14.  Although the judgment of law enforcement agencies such as the FBI or the CIA are entitled to deference in an Exemption 7 threshold determination,  [*11]  see Binion v. United States Dep't of Justice, 695 F.2d 1189, 1193-94 (9th Cir. 1983), such a claim by a "mixed function" agency is subject to judicial scrutiny.  See Church of Scientology v. United States Dep't of Army, 611 F.2d 738, 748 (9th cir. 1979); Birch v. United States Postal Service, 803 F.2d 1206, 1210 (D.C. Cir. 1986); Pratt v. Webster, 673 F.2d 408, 421 (D.C. Cir. 1982); see also Rural Housing Alliance v. United States Dep't of Agric., 498 F.2d 73 (D.C. Cir. 1974) (mixed function agency must demonstrate its enforcement function).  Information is deemed "complied for a law enforcement purpose" where - focusing upon the purpose for which the information is collected - it is collected for an adjudicative or enforcement purpose.  Church of Scientology, 611 F.2d at 748. 
15.  Robert Withers, the Deputy Assistant Commissioner of Employee Plans/Exempt Organizations, testified that the Exempt Organization ("EO") Division has no law enforcement role, explaining that there cannot be any law enforcement where the IRS is unable to coerce any organization to comply [*12]  with its rules for tax exempt status. See Withers Depo. at 4, 77-78 (Exemption 7 Motion, Ex. Q); cf.  Goldschmidt v. United States Dep't of Agric., 557 F. Supp. 274, 277 (D.D.C. 1983) (information voluntarily supplied to an agency is not information complied for law enforcement purposes). n4 

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n4 Other employees of the EO Division -- directly responsible for Scientology applications - also testified that the EO has no enforcement function.  See Darling Depo. at 8 (Exemption 7 Motion, Ex. O); Friedlander Depo. at 116 (Exemption 7 Motion, Ex. P).  Though subsequent declarations by Darling and Friedlander espouse their belief that EO does have an enforcement function, it is based on an incorrect conclusion of law.

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16.  The IRS contends that the following are valid law enforcement activities giving rise to its Exemption 7 claims: (a) the processing of CSI's tax exempt status application, which occurred from June 1983 to July 1988 when a final denial was issued; (b) audits of five Scientology  [*13]  entities under 26 U.S.C. §  7611 (the Church Audit Procedures Act, or "CAPA"), which began in 1988; n5 and (c) summons actions initiated by the IRS for the audited entities' failure to respond to summons issued at the end of 1989. n6 However, the EO Division does not "enforce" section 501, et seq., by processing applications for tax exemption; taxpayers' compliance with section 501 is voluntary and the IRS imposes no penalty or sanction when an organization fails to qualify for tax exempt status under section 501.  Thus, Exemption 7 claims asserted for records complied in connection with the IRS's tax exempt status determination lack merit and documents withheld on those grounds, if segregable from other non-disclosable material, are hereby ordered disclosed within fifteen days of the date of this order. 

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n5 Four of the entities audited are not involved here; however, in case no. 89-4504, the IRS identified the fifth 1988 audited entity as CST.  Here, CSI indicates that it was the fifth entity. 
n6 See United States v. Church of Scientology Int'l, et al., No. 90-3690 HLH (filed July 10, 1990), and United States v. Church of Scientology of Boston, 739 F. Supp. 46 (D. Mass. 1990).

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17.  To the extent that any documents remain that were not compiled in connection with the tax exempt applications and continue to be withheld on the basis of Exemption 7(A) or 7(D) claims, the Court finds that the IRS has met its burden of showing these two harms exist and justify withholding. 
18.  To the extent that any documents remain that were not compiled in connection with the tax exempt applications and continue to be withheld on the basis of Exemption 7(C) claims, the Court (a) finds that little public interest exists in the disclosure of this handwriting, see Long v. Internal Revenue Serv., 742 F.2d 1173, 1178-79 (9th Cir. 1984) (a court must balance the public interest in disclosure with the possibility that disclosure will constitute an invasion of privacy), (b) agrees with both Judge Lew and Judge Tashima that the history of antagonism between the parties justifies protection of IRS employee identities, see, e.g., Church of Scientology v. Commissioner, 83 T.C. 381 (1984), aff'd, 823 F.2d 1310 (9th Cir. 1987), cert. denied, 486 U.S. 1015 (1988), and (c) finds that no government agency [*15]  is under a duty to create information disclosable under the FOIA, despite CSI's offer to have the information itself transcribed. 
19.  However, the IRS's non-disclosure of documents under Exemption 7(C) is not entirely sustainable because the IRS cannot assert an unwarranted invasion of privacy on behalf of individual employees who have no objection to the disclosure of their handwriting. n7 Consequently, the IRS cannot assert an Exemption 7(C) claim of non-disclosure in the handwriting of the following IRS employees: Marvin Friedlander, Alan P. Lipkin, Steven Petersell, Roderick Darling, Raymond Jucksch, Jr., Melvin L. Joseph, and Carl Corsi.  See Opposition, Exs. X, Y. 

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n7 Of course, these employees might state differently if they knew exactly what information would be revealed in their handwritten records, but the exemption is claimed solely because of the handwriting - not the information that is contained in the handwritten notes.

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Based on the foregoing, IT IS HEREBY ORDERED that defendant IRS's motion for [*16]  summary judgment is GRANTED in part and DENIED in part as follows, pursuant to Fed. R. Civ. P. 56(d): 
A.  the search of Friedlander's office after his reassignment and transfer of case files was reasonable; 
B.  defendant IRS is hereby ordered to conduct another search within thirty days of the date of this order and must include as responsive all reasonably described documents, notwithstanding the fact that they may later be deemed exempt from disclosure under 5 U.S.C. §  552(b)(3) and 26 U.S.C. §  6103; 
C.  IRS regulations that require an initial FOIA request to be accompanied by third-party waivers for the requester to receive return information of those third parties are enforceable and reasonable; 
D.  defendant IRS is hereby ordered to submit records withheld under 5 U.S.C. §  551(b)(3) and 26 U.S.C. §  6103(e)(7) for an in camera review within fifteen days of the date of this order; 
E.  the IRS's claim of attorney-client privilege under (b)(5) is improperly asserted for non-attorney communication in the withholding of page 427 (see Vaughn Index at 24-25); 
F.  defendant IRS's claims of deliberative process are sufficient; 
G.  documents complied in connection with CSI's [*17]  tax exempt status application from 1983 to 1988 may not be withheld on Exemption 7 grounds because they were not complied for a law enforcement purpose and, if segregable from otherwise non-disclosable material, are ordered disclosed within fifteen days of the date of this order; 
H.  for records otherwise complied for a valid law enforcement purpose, defendant IRS's exemption 7(A) and 7(D) claims are sufficient; and 
I.  for records otherwise complied for a valid law enforcement purpose, defendant IRS's exemption 7(C) claims are legitimate except to the extent they are asserted to withhold the handwriting of the following IRS employees known to CSI who do not object to disclosure of their handwriting: Marvin Friedlander, Alan P. Lipkin, Steven Petersell, Roderick Darling, Raymond Jucksch, Jr., Melvin L. Joseph, and Carl Corsi. 

IT IS SO ORDERED. 

DATED: April 21, 1992 
CONSUELO B. MARSHALL 
UNITED STATES DISTRICT JUDGE 

91 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant.  

No. CV 91-1120 CBM (Tx) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1992 U.S. Dist. LEXIS 9454 

April 20, 1992, Decided 

April 21, 1992, Filed; 

JUDGES:
 [*1]  MARSHALL 

OPINIONBY:
CONSUELO B. MARSHALL 

OPINION:

ORDER RE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
This matter came on regularly for hearing on April 6, 1992 before the Court, the Honorable Consuelo B. Marshall, District Judge presiding, on defendant Internal Revenue Service's ("IRS") motion for summary judgment. Having considered the papers filed in connection with these motions, n1 and the arguments of counsel at hearing, the Court finds and orders as follows: 

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n1 The Court considers CSI's supplemental opposition only because it contains a transcript of testimony from a Mar. 10, 1992 Darling deposition about the nature of the two file cabinets that was unavailable when CSI's opposition was filed on Mar. 12, 1992. However, the proper procedure for submitting any filing not permitted by the Local Rules is to seek leave of Court by ex parte application. CSI did not do so in this case.

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Jurisdiction 
1. The Court has jurisdiction to grant injunctive relief if the IRS improperly withholds documents it is obligated to disclose under  [*2]  the Freedom of Information Act ("FOIA") pursuant to 5 U.S.C. §  552(a)(4)(B). 

Statement of Facts 
2. On September 16, 1990, plaintiff Church of Scientology International ("CSI") submitted a request for 

a copy of all files, . . . relating to or concerning CSI, Church of Scientology, and "Scientology" or any individual Church of Scientology, maintained in a locked three drawer file cabinet under the control of Roderick Darling . . . . This file cabinet is kept in a room in the vicinity of Mr. Darling's office. 

The language used by CSI, which refers to a single cabinet, is important. During Darling's deposition in related FOIA case number CV 89-4504 CBM, he indicated to the CSI examiner that there were two cabinets and he thought they were three-drawer cabinets. See Darling Depo. at 109:6. 
3. Darling later discovered that one of the two cabinets had four drawers and one had five drawers; only the four-drawer cabinet was searched. See Darling Decl., Ex. A, at P 5. Darling did not search the five-drawer cabinet because (a) the request described a singular cabinet, (b) the five-drawer contained non-CSI Scientology taxpayer records created before 1980, (c) CSI did [*3]  not exist before 1983, and (d) no third-party waivers for the other taxpayers had been submitted so Darling believed that the pre-1980 documents were not responsive. See id., P 6. 
4. Darling conducted a search of the single file cabinet, as well as a cardboard box which contained records taken from the file cabinet before Darling received CSI's request, in late December 1990 or early January 1991. Darling did not include as responsive any files of other Scientology entities because no third-party waivers had been submitted. 
5. After the time had run for the IRS to respond to CSI's request, CSI filed this case on February 28, 1991. In July 1991 and February 1992, the IRS released responsive documents, leaving 219 pages of documents at issue in this case: 111 pages have been withheld in full and 108 pages have been withheld in part. 

Adequacy of the Search 
6. The FOIA merely requires the IRS to make a reasonable effort to locate documents that are reasonably described. See 5 U.S.C. §  552(a)(3)(A); Founding Church of Scientology v. National Sec. Agency, 610 F.2d 824, 837 (D.C. Cir. 1979). CSI's interpretation here of what its request meant to say  [*4]  is not the operative description: only the description in the request itself can set the standard for subsequent IRS search activity. The parties' disagreement about which file cabinet was intended (since no three-drawer cabinet exists), and Darling's explanation of why he searched the four-drawer rather than the five-drawer both lead the Court to the conclusion that Darling's search is reasonable under the FOIA. See Zemansky v. United States Environmental Protection Agency, 767 F.2d 569, 571 (9th Cir. 1985) (the issue is not whether responsive documents may  exist, but whether the IRS's search was reasonable and therefore adequate). 
7. However, Darling's failure to include documents as responsive because they related to other Scientology entities and no third-party waivers had been provided for those third-party entities was improper. Not only are all Scientology-related documents reasonably described, but permitting an agency to skip over and deem non-responsive documents that the agency believes are exempt from disclosure - even assuming the agency is correct with respect to the disclosure exemption - would foreclose, for example, the possibility of an  [*5]  in camera review to substantiate claims of non-segregability. Since Darling's failure to include all reasonably described records as responsive would impermissibly allow the IRS to avoid the Court's de novo review contemplated by the FOIA, the IRS is ordered to conduct another search, including all responsive documents, notwithstanding the fact that they may later be deemed exempt from disclosure. 

Exemption 3 Claims 
8. Exempted from disclosure under the FOIA are: 

Matters that are . . . specifically exempted from disclosure by statute . . . provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld. 

 5 U.S.C. §  552(b)(3). Section 6103 of the Internal Revenue Code is such a statute. See Long v. Internal Revenue Serv., 742 F.2d 1173, 1178-79 (9th Cir. 1984). Section 6103(a) generally provides that 

Returns and return information shall be confidential, and except as authorized by this title . . . no officer or employee of the United States, [among others]  [*6]  shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section. 
9. The FOIA imposes an obligation upon an agency to respond to any "request for records which (A) reasonably describes such records and (B) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person." 5 U.S.C. §  552(a)(3). The IRS has promulgated regulations that describe the requisites for requesting FOIA records from the IRS: 

(3) The initial request for records must . . . (v) In the case of a request for which records the disclosure of which is limited by statute or regulations (as, for example, the Privacy Act (5 U.S.C. 552a), section 6103 of the Internal Revenue Code of 1986, or regulations thereunder), establish the identity and the right of the person making the request to the disclosure of the records in accordance with paragraph (c)(4)(ii) of this section. 

26 C.F.R. §  601.702(c)(3)(5) (Apr. 1, 1991). Paragraph (c)(4)(ii) requires that "in the case of records containing [*7]  information with respect to particular persons the disclosure of which is limited by statute or regulation, persons making requests shall establish their identity and right to access to such records." 26 C.F.R. §  601.702(c)(4)(ii) (Apr. 1, 1991); see also 26 C.F.R. §  601.702(d)(1) (Apr. 1, 1991). While the IRS's belated contention that CSI failed to exhaust its administrative remedy by not including third-party waivers with its initial request lacks merit, plaintiff failed to comply with the regulations promulgated by the IRS. Since CSI does not attack the reasonableness of those regulations here, n2 the IRS is entitled to summary judgment on Exemption 3 claims asserted for the return information of third-party taxpayers. 

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n2 Moreover, these regulations must be upheld if they "implement the congressional mandate in some reasonable manner." See, e.g., United States v. Correll, 389 U.S. 299, 307, 88 S. Ct. 445, 19 L.Ed.2d 537 (1967); Fmali Herb, Inc. v. Heckler, 715 F.2d 1385, 1387 (9th Cir. 1983). In light of the tension between the liberal disclosure of the FOIA and the severe sanctions for a violation of section 6103, the IRS's regulations are reasonable. 

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10. The Court finds that the IRS has not sustained its burden of justifying withholding CSI's own tax return information under section 6103(e)(7) and orders an in camera review of those documents identified in the Vaughn Index as withheld on those grounds. See Church of Scientology v. United States Dep't of the Army, 611 F.2d 738, 742-43 (9th Cir. 1979) (where the affidavits or declarations of the government agency are insufficient to establish an exemption, an in camera review is appropriate). 

Exemption 5 Claims 
11. The purpose of a Vaughn Index is not merely to inform the requester of the agency's conclusion that a particular document is exempt from disclosure under one or more of the statutory exemptions, but to afford the requester an opportunity to intelligently advocate release of the withheld documents and to afford the court an opportunity to intelligently judge the contest.  Wiener v. Federal Bureau of Investigation, 943 F.2d 972 (9th Cir 1991); King v. Department of Justice, 830 F.2d 210, 218 (D.C. Cir. 1987) (the purpose of the Index is to "afford the FOIA requester a meaningful opportunity to contest,  [*9]  and the district court an adequate foundation to review, the soundness of the withholding"). Since the IRS has filed its Court-ordered index in this case, the Court can focus on the specific challenges raised by CSI. 
12. Exemption 5 protects from disclosure: 

Interagency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency. 

 5 U.S.C. §  552(b)(5). In response to the IRS's exemption 5 claims, CSI challenges only the lack of a date on one document that makes a determination of "predecisional" difficult, and claims of deliberative process privilege generally. The single undated document challenge is not persuasive because the document is a draft that, by definition, is predecisional (see Opposition, Ex. U). CSI's general attack upon IRS claims of deliberative process privilege lacks merit; the Court's review of the Vaughn Index indicates a decision subsequent to each of the records described. 

Exemption 7 Claims 
13. This FOIA exemption as claimed by the IRS here applies to: 

Investigatory records compiled for law enforcement purposes but only to the extent that the production of such  [*10]  law enforcement records or information . . . (A) could reasonably be expected to interfere with enforcement proceedings, . . . (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy . . . or (D) could reasonably be expected to disclose the identity of a confidential source . . . . 

 5 U.S.C. §  552(b)(7). Both parts of the standard must be met to withhold information under Exemption 7: (i) a requested document must first constitute a record or contain information compiled for law enforcement purposes, and (ii) if it satisfies this threshold, the agency then must demonstrate that release of the material would threaten one or more of the specified harms.  Rosenfeld v. United States Dep't of Justice, 761 F. Supp. 1440, 1443-44 (N.D. Cal. 1991) (citing Keys v. United States Dep't of Justice, 830 F.2d 337, 340 (D.C. Cir. 1987)). 
14. Although the judgment of law enforcement agencies such as the FBI or the CIA are entitled to deference in an Exemption 7 threshold determination, see Binion v. United States Dep't of Justice, 695 F.2d 1189, 1193-94 (9th Cir. 1983), such a claim by a "mixed function"  [*11]  agency is subject to judicial scrutiny. See Church of Scientology v. United States Dep't of Army, 611 F.2d 738, 748 (9th Cir. 1979); Birch v. United States Postal Service, 803 F.2d 1206, 1210 (D.C. Cir. 1986); Pratt v. Webster, 673 F.2d 408, 421 (D.C. Cir. 1982); see also Rural Housing Alliance v. United States Dep't of Agric., 498 F.2d 73 (D.C. Cir. 1974) (mixed function agency must demonstrate its enforcement function). Information is deemed "complied for a law enforcement purpose" where - focusing upon the purpose for which the information is collected - it is collected for an adjudicative or enforcement purpose.  Church of Scientology, 611 F.2d at 748. 
15. Robert Withers, the Deputy Assistant Commissioner of Employee Plans/Exempt Organizations, testified that the Exempt Organization ("EO") Division has no law enforcement role, explaining that there cannot be any law enforcement where the IRS is unable to coerce any organization to comply with its rules for tax exempt status. See Withers Depo. at 4, 77-78 (Exemption 7 Motion, Ex. Q); cf.  Goldschmidt v. United States Dep't of Agric., 557 F. Supp. 274, 277 (D.D.C. 1983) [*12]  (information voluntarily supplied to an agency is not information complied for law enforcement purposes). n3 

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n3 Other employees of the EO Division - directly responsible for Scientology applications - also testified that the EO has no enforcement function. See Darling Depo. at 8 (Exemption 7 Motion, Ex. O); Friedlander Depo. at 116 (Exemption 7 Motion, Ex. P). Though subsequent declarations by Darling and Friedlander espouse their belief that EO does have an enforcement function, it is based on an incorrect conclusion of law. 

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16. The IRS contends that the following are valid law enforcement activities giving rise to its Exemption 7 claims: (a) the processing of CSI's tax exempt status application, which occurred from June 1983 to July 1988 when a final denial was issued; (b) audits of five Scientology entities under 26 U.S.C. §  7611 (the Church Audit Procedures Act, or "CAPA"), which began in 1988; n4 and (c) summons actions initiated by the IRS for the audited entities' failure to respond to summons issued [*13]  at the end of 1989. n5 However, the EO Division does not "enforce" section 501, et seq., by processing applications for tax exemption; taxpayers' compliance with section 501 is voluntary and the IRS imposes no penalty or sanction when an organization fails to qualify for tax exempt status under section 501. Thus, Exemption 7 claims asserted for records complied in connection with the IRS's tax exempt status determination lack merit and documents withheld on those grounds, if segregable from other non-disclosable material, are hereby ordered disclosed within fifteen days of the date of this order.

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n4 Four of the entities audited are not involved here; however, in case no. 89-4504, the IRS identified the fifth 1988 audited entity as CST. Here, CSI indicates that it was the fifth entity.  
 
n5 See United States v. Church of Scientology Int'l, et al., No. 90-3690 HLH (filed July 10, 1990), and United States v. Church of Scientology of Boston, 739 F. Supp. 46 (D. Mass. 1990). 

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17. To the [*14]  extent that any documents remain that were not compiled in connection with the tax exempt applications and continue to be withheld on the basis of Exemption 7(A) claims, the Court finds that the IRS has met its burden of showing these two harms exist and justify withholding. 
18. To the extent that any documents remain that were not compiled in connection with the tax exempt applications and continue to be withheld on the basis of Exemption 7(C) claims, the Court (a) finds that little public interest exists in the disclosure of this handwriting, see Long v. Internal Revenue Serv., 742 F.2d 1173, 1178-79 (9th Cir. 1984) (a court must balance the public interest in disclosure with the possibility that disclosure will constitute an invasion of privacy), (b) agrees with both Judge Lew and Judge Tashima that the history of antagonism between the parties justifies protection of IRS employee identities, see, e.g., Church of Scientology v. Commissioner, 83 T.C. 381 (1984), aff'd, 823 F.2d 1310 (9th Cir. 1987), cert. denied, 486 U.S. 1015 (1988), and (c) finds that no government agency is under a duty to create [*15]  information disclosable under the FOIA, despite CSI's offer to have the information itself transcribed. 
19. However, the IRS's non-disclosure of documents under Exemption 7(C) is not entirely sustainable because the IRS cannot assert an unwarranted invasion of privacy on behalf of individual employees who have no objection to the disclosure of their handwriting. n6 Consequently, the IRS cannot assert an Exemption 7(C) claim of non-disclosure in the handwriting of the following IRS employees: Marvin Friedlander, Alan P. Lipkin, Steven Petersell, Roderick Darling, Raymond Jucksch, Jr., Melvin L. Joseph, and Carl Corsi. See Opposition, Exs. AA, BB. 

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n6 Of course, these employees might state differently if they knew exactly what information would be revealed in their handwritten records, but the exemption is claimed solely because of the handwriting - not the information that is contained in the handwritten notes. 

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Based on the foregoing, IT IS HEREBY ORDERED that defendant IRS's motion for summary judgment is GRANTED [*16]  in part and DENIED in part as follows, pursuant to Fed. R. Civ. P. 56(d): 
A. Darling's search of the four-drawer file cabinet was reasonable and adequate under FOIA mandates, particularly given the confusion generated by the imprecise language used by CSI in its request; 
B. defendant IRS is hereby ordered to conduct another search within thirty days of the date of this order and must include as responsive all reasonably described documents, notwithstanding the fact that they may later be deemed exempt from disclosure under 5 U.S.C. §  552(b)(3) and 26 U.S.C. §  6103; 
C. IRS regulations that require an initial FOIA request to be accompanied by third-party waivers for the requester to receive return information of those third parties are enforceable and reasonable; 
D. defendant IRS is hereby ordered to submit records withheld under 5 U.S.C. §  551(b)(3) and 26 U.S.C. §  6103(e)(7) for an in camera review within fifteen days of the date of this order; 
E. defendant IRS's claims of deliberative process are sufficient; 
F. documents complied in connection with CSI's tax exempt status application from 1983 to 1988 may not be withheld on Exemption 7 grounds because they were not complied [*17]  for a law enforcement purpose and, if segregable from otherwise nondisclosable material, are ordered disclosed within fifteen days of the date of this order; 
G. for records otherwise complied for a valid law enforcement purpose, defendant IRS's exemption 7(A) claims are sufficient; and 
H. for records otherwise complied for a valid law enforcement purpose, defendant IRS's exemption 7(C) claims are legitimate except to the extent they are asserted to withhold the handwriting of the following IRS employees known to CSI who do not object to disclosure of their handwriting: Marvin Friedlander, Alan P. Lipkin, Steven Petersell, Roderick Darling, Raymond Jucksch, Jr., Melvin L. Joseph, and Carl Corsi. 

IT IS SO ORDERED.

DATED: April 20, 1992
CONSUELO B. MARSHALL
UNITED STATES DISTRICT JUDGE 

92 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant.  

No. CV 90-2009 CBM (Ex) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1992 U.S. Dist. LEXIS 883 

January 6, 1992, Decided 

January 7, 1992, Filed 

JUDGES:
 [*1]  MARSHALL 

OPINIONBY:
CONSUELO B. MARSHALL 

OPINION:

ORDER RE DISMISSAL
This matter came on regularly for hearing on January 6, 1992 before the Court, the Honorable Consuelo B. Marshall, District Judge presiding, on the motion of defendant Internal Revenue Service ("IRS") to dismiss. Kendrick L. Moxon of Bowles & Moxon appeared for plaintiff Church of Scientology International ("CSI"). Michael J. Salem appeared for defendant IRS.
Having considered the relevant papers and evidence filed in conjunction with the motion and the arguments of counsel, the Court finds as follows:
1. Under the Freedom of Information Act ("FOIA"), the Court has jurisdiction to grant injunctive relief only if the IRS improperly withholds documents it is obligated to disclose under the FOIA. See 5 U.S.C. §  552(a)(4)(B).
2. On June 24, 1988, CSI sent a FOIA request (the "Request") to the Los Angeles District Office of the IRS, seeking:

all records, files, work papers, tape recordings, notes or other information concerning or relating in any way to meetings, interviews, statements, correspondence or other communications between Joseph A. Yanny and the IRS concerning my clients [Religious Technology Center, Church of Scientology  [*2]  International, Church of Spiritual Technology,] or other Scientology related entities or individuals. This request includes not only records or information generated by the IRS, but also any records or other written information supplied by Mr. Yanny to the IRS.
3. The IRS received the Request on June 27, 1988 and denied the Request on July 7, 1988.
4. CSI filed this action on April 23, 1990 after CSI exhausted its administrative remedies seeking documents responsive to the Request.
5. In response to this Court's November 30, 1990 Order requiring the IRS to produce a Vaughn Index, the IRS submitted the declaration of the Los Angeles Disclosure Officer, Malia Berumen, on December 26, 1990. Ms. Berumen's declaration indicated for the first time that no documents responsive to the Request exist.
6. Based in part on the fact that the IRS did not conduct a physical search of any of its Los Angeles offices in response to the Request, the Court granted CSI's motion for a more thorough search in an order signed April 17, 1991, ordering a new and adequate search for records responsive to the Request in the following Los Angeles offices: (i) the Examination Division, (ii) the Employee Plan/Exempt [*3]  Organization ("EP/EO") Division, (iii) the Criminal Investigation Division, (iv) the District Counsel's office, and (v) the Inspections Divisions' offices.
7. The results of the supplemental and additional searches turned up no responsive documents.
8. The Court is not restricted to the face of the pleadings when considering a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. McCarthy v. United States, 850 F.2d 558 (9th Cir. 1988), cert. denied 489 U.S. 1052, 109 S. Ct. 1312, 103 L.Ed.2d 581 (1989). The Court may review any evidence, such as affidavits or testimony, that might resolve factual disputes concerning the existence of jurisdiction. Id.
9. If the evidence submitted by the IRS is sufficient to establish that no responsive documents exist, i.e., an adequate search was conducted, the Court lacks subject matter jurisdiction under the FOIA. See Kissinger v. Reporters Committee for Freedom of Press, 445 U.S. 136, 150, 100 S. Ct. 960, 63 L.Ed.2d 267 (1980) ("Under 5 U.S.C. §  552(a)(4)(B) federal jurisdiction is dependent upon a showing that  [*4]  an agency has (1) 'improperly'; (2) 'withheld'; (3) 'agency records.' Judicial authority to devise remedies and enjoin agencies can only be invoked, under the jurisdictional grant conferred by §  552, if the agency has contravened all three components of this obligation.").
10. The FOIA requires the IRS to make a reasonable effort to locate documents that are reasonably described. See 5 U.S.C. §  552(a)(3)(A); Founding Church of Scientology, Inc. v. National Sec. Agency, 610 F.2d 824, 837 (D.C. Cir. 1979).
11. To discharge its FOIA statutory obligation, the IRS must "demonstrate that it has conducted a 'search reasonably calculated to uncover all relevant documents.'" Zemansky v. United States Environmental Protection Agency, 767 F.2d 569, 571 (9th Cir. 1985) (citation omitted).
12. The issue is not whether responsive documents may exist, but whether the IRS's search was reasonable and therefore adequate. The reasonableness of the search may be proved by IRS employee affidavits, so long as they are relatively detailed, nonconclusory, and submitted in good faith. Id.; Miller v. United States Dep't of State, 779 F.2d 1378, 1383-84 (8th Cir. 1985) [*5]  (affidavits should describe in detail the search procedure, the organization and size of files, and the files actually searched based on the relationship of the file to the subject matter of the request).
13. Mr. Corsi's testimony, that "information" was obtained from Yanny sometime in 1988 is not only ambiguous but is legally immaterial.
14. In response to the Court's April 17, 1991 Order for a more adequate search, Donna Cuomo, Acting Disclosure Officer in Los Angeles, sent (i) a copy of the Request, (ii) the Court's April 17 Order, and (iii) instructions to relevant IRS personnel to conduct a FOIA search on May 6 and 7, 1991. The following searches were conducted as a result of Cuomo's memo:
a. Jeffrey Ettress, Disclosure Coordinator for the EP/EO Division in the Los Angeles District, contacted Mel Joseph, EO's Branch Chief, and Mel Young, EO's Revenue Agent. Scientology cases are all handled exclusively through Joseph's Branch and Young was assigned to work Scientology cases. Joseph knew of no responsive documents; Young searched his files and found no responsive records or information.
b. Donna F. Herbert, attorney in the District Counsel's office in Thousand Oaks, California,  [*6]  searched the files of the Thousand Oaks District Counsel's Office and found no responsive records or information. n1

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 The Thousand Oaks office was created in June 1989, after the responsive period for the Request (through June 24, 1988). Nevertheless, Cuomo ordered a search of this office to insure thoroughness.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
c. Susan J. Hernandez, Disclosure Coordinator for the Examination Division of the Los Angeles District Office, was informed by Revenue Agents Carol Benner, Daylon Falido, and Odele Milligan, all of whom had worked extensively on Scientology cases and who were familiar with the cases and files, that no responsive documents or information existed within the Examination Division.
d. Kathy Lentine, Disclosure Officer for the Collection Division of the Los Angeles District, contacted Baldimar Gomez, Branch Chief, Sandy Baker, Revenue Officer, and Sherrill Fields, Division Chief. Each of these employees, who are or were assigned to Scientology cases, searched their files and located no responsive records or information.  [*7]  
e. Phoebe Tang, Acting District Counsel for the Los Angeles District, requested managers in the District Counsel's Office to search their group inventory for all open cases with issues directly or indirectly related to CSI. Responses were all negative. Additionally, Tang reviewed a computer printout of all closed Scientology cases handled by her office. All but two of the legal files had been destroyed pursuant to document destruction policy. The two remaining files, one of which had to be ordered from the Federal Records Center in Laguna Niguel, were reviewed by attorney James Yan who determined that they contained no responsive documents.
f. Sadie Towler, Disclosure Coordinator for the Criminal Investigation Division of the Los Angeles District, contacted group managers Alan Lipkin, Alphonse Ristuccia, and Daniel Rocha, all assigned to work Scientology cases. Additionally, C. Phillip Xanthos, Branch A Chief (supervisor of the managers named above) was contacted. None of the four located responsive records or information.
15. In addition to the searches conducted at the request of Cuomo, Keith W. Davidson, Assistant Regional Inspector, Internal Security, for the Western Region in [*8]  San Francisco was directed by the Office of the Chief Inspector in Washington, D.C. to conduct a similar search for documents responsive to the Request pursuant to the Court's April 17 Order. At Davidson's request, files in the Los Angeles office of Internal Security were personally searched by Steve Walsh (who was assigned to the only Scientology case in the Western Region) and his supervisor, John Rabatin. No responsive records or information were discovered in Los Angeles. Also at Davidson's request, David B. Olsen personally searched the alphabetical index files and the investigative case files in San Francisco and discovered no responsive records or information.
16. The IRS has shown that its search was reasonable and meets its statutory obligation under the FOIA. Since there are no documents responsive to the Request, the Court lacks subject matter jurisdiction over the case.
Based on the foregoing, IT IS HEREBY ORDERED that defendant IRS' motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure is granted and this case is dismissed with prejudice.

IT IS SO ORDERED.

DATED: January 6, 1992

CONSUELO B. MARSHALL
UNITED STATES DISTRICT [*9]  JUDGE 

93 of 133 DOCUMENTS 

In the Matter of the Application of RICHARD BEHAR to Quash a Deposition Subpoena; CHURCH OF SCIENTOLOGY CELEBRITY CENTER INTERNATIONAL, Plaintiff, -against- INTERNAL REVENUE SERVICE Defendant.  

Index No. M8-85, No. 90-3506 DWW (Ex) 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE CENTRAL DISTRICT OF CALIFORNIA 

779 F. Supp. 273; 1991 U.S. Dist. LEXIS 19851; 22 Fed. R. Serv. 3d (Callaghan) 70; 19 Media L. Rep. 1475 

October 18, 1991, Decided 

October 18, 1991, Filed 

JUDGES:
 [**1]  McKENNA 

OPINIONBY:
LAWRENCE M. McKENNA 

OPINION:

 [*274]  McKENNA, D.J.
In this order, the Court decide a motion submitted on behalf of Mr. Richard Behar to quash a deposition subpoena served on him by the Church of Scientology Celebrity Center International, the Plaintiff in the underlying action against the Internal Revenue Service. In additional, Mr. Behar has moved for sanctions pursuant to F. R. Civ. P. 11 and 26(a). For the reasons set forth below, the deposition subpoena is quashed and the motion for sanctions is denied.

Facts:
Mr. Behar's motion involves a subpoena served by the Church of Scientology Celebrity Center International ("the Church") for the deposition of Mr. Behar, a journalist with Time magazine. Mr. Behar recently wrote a cover story unfavorably depicting the Church and its practices. In a subsection entitled "the Scientologists and Me", he described his own experience of being harassed by attorneys and private investigators allegedly dispatched by the Church in retaliation for the article.
The Church seeks the deposition of Mr. Behar in connection with its lawsuit against the Internal Revenue Service ("the IRS") under the Freedom of Information Act ("FOIA"), 5 U.S.C.A. §  552. In that action,  [**2]  the IRS has refused to disclose certain materials under an FOIA exemption clause which shields information compiled for law enforcement purposes if disclosure "could reasonably be expected to endanger the life or physical safety of any individual" under §  552(b)(7)(F). The IRS cites the article written by Mr. Behar, along with 19 other documents, in support of its claim that release of certain information will place persons in danger of harm from the Church.
To refute the IRS defense of exemption, the Church seeks to depose Mr. Behar regarding the factual matters set forth in the article (harassment of the government and others, including himself, by the Church), details relating to Behar's communications with the IRS (both as to information which Behar allegedly provided to the IRS which may have given rise to the exemption assertions, and as to the IRS' provision of information to Behar), and the identities of IRS employees which Mr. Behar spoke with in the course of his research. Mr. Behar has moved to quash the deposition subpoena on the ground that the information is protected by the reporter's privilege.

Discussion:
The reporter's privilege protects journalists from the [**3]  compelled disclosure of information acquired in the course of gathering news. The Court of Appeals for the Second Circuit has recognized and enforced the privilege under the First Amendment of the United States Constitution. See e.g.  United States v. Burke, 700 F.2d 70, 76-77 (2d Cir.), cert. denied, 464 U.S. 816, 78 L. Ed. 2d 85 , 104 S. Ct. 72 (1983); In re Petroleum Prods. Antitrust Litig., 680 F.2d 5, 7-8 (2d Cir. 1982) (per curiam). While the federal law of privilege controls, courts have also considered the applicable state law in the jurisdiction where the reporter's deposition was noticed. New York courts have found the underlying policies served by the New york State "Shield Law," N.Y. Civ. Rights Law §  79-h et seq., and the federal Constitution to be congruent. See von Bulow by Auersperg v. von Bulow, 811 F.2d 136, 144 (2d Cir.), cert. denied, 481 U.S. 1015, 95 L. Ed. 2d 498 , 107 S. Ct. 1891 (1987).
In its Memorandum in Opposition to Mr. Behar's motion to quash, the Church focuses much of its argument on showing that Mr. Behar's communications were not confidential, and thus not eligible for the absolute privilege accorded to information from [**4]  confidential sources under §  79-h(b) of the New York Shield Law. However, because Mr. Behar claims only a qualified privilege  [*275]  and has made no attempt to prove that any of the information is confidential, the Church's extensive treatment of the confidentiality issue is immaterial. (Reply Memo. in Support of Motion at 4; Memo. in Opposition at 10-14).
The qualified reporter's privilege, accorded under the United States Constitution, the New York State Constitution, and the New York Shield Law, protects non-confidential as well as confidential information. See United States v. Marcos, 1990 U.S. Dist. LEXIS 6541, 1990 WL 74521, 17 Med. L. Rptr. 2005, 2007 (S.D.N.Y. 1990); O'Neill v. Oakgrove Construction, Inc., 71 N.Y.2d 521, 521-22, 528 N.Y.S.2d 1, 1-2, 523 N.E.2d 277, 277-78 (1988); N.Y. Civ. Rights Law §  79-h(c) (McKinney Supp. 1991). The qualified privilege can be overcome only upon a clear and specific showing by the party seeking disclosure that the information is: (1) highly material and relevant to its action; (2) necessary or critical to the claim; and (3) not obtainable from other sources.  Burke, 700 F.2d at 76-77.
In response [**5]  to Mr. Behar's assertion of a qualified privilege, the Church contends that Mr. Behar's deposition is "highly material and relevant" to prove that the IRS exemption defense is a "sham". Specifically, the Church seeks Mr. Behar's deposition to show that "information was provided to Behar by the IRS for inclusion in his article for the purpose of aiding the IRS to support its claims to exemption to withhold agency records." (Memo. in Opposition at 13-14.) This vague and wholly unsupported allegation falls far short of the "clear and specific showing" of materiality and relevance required of the party seeking disclosure. Burke, 700 F.2d at 76-77. Moreover, the alleged materiality of Mr. Behar's information is belied by the Church's own admissions that "the Behar article is . . . irrelevant to any FOIA issue," (Memo. in Opposition at 3) and would be inadmissible hearsay if the IRS seeks to use it in the underlying action. Id. at 4, 7, 8.
Secondly, the Church asserts that the information is "necessary" to the maintenance of its claim, stating that "as a matter of law, the Church is entitled to challenge the IRS' claims of exemption through discovery or whatever [**6]  means in its power to refute the government's claims." Id. at 16. In support of this contention, the Church cites, without more, an extended quote from Weiner v. FBI, Daily Journal D.A.R. 8697 (9th Cir. 1991), from the blanket proposition that discovery should be allowed in Freedom of Information Act cases.
The facts of this case refute the Church's contention that Mr. Behar's information is "necessary or critical" to the Church's claim. When testimony sought from a reporter would be cumulative of other evidence, it cannot be "necessary or critical" to an action so as to override the First Amendment privilege. See Burke, 700 F.2d at 78. The IRS has 18 other pieces of evidence in support of its exemption claim. Moreover, the IRS asserted the same FOIA exemptions in its answer to the Church's complaint in the underlying action nine months prior to publication of Mr. Behar's article. (Memo. in Support of Motion at 16.) Finally, the Church itself admits that "it is difficult to believe that the federal government must rely upon a Time magazine article as the basis for the exemption claim when the Church and the IRS have been in conflict for many years." (Memo.  [**7]  in Opposition at 15.) Indeed, the Court also finds it improbable that the article is the basis of the IRS' claim so as to make the deposition of Mr. Behar is "necessary or critical".
Addressing the third prong of the test, the Church has failed to demonstrate that the information sought from Mr. Behar is "not obtainable from other sources". Before a reporter's resources can be tapped by subpoena, the party seeking the information must demonstrate that other available sources of the information have been exhausted. See In re Petroleum Products, 680 F.2d at 8-9, & n.11. As to allegations regarding alleged harassment of the government and others by the Church, the Church is free to depose any  [*276]  and all persons who claim to have been harassed. Likewise, the Church's claim that the IRS has "failed to provide complete and honest testimony as to its communications with Behar" -- referring to the deposition of Robert Hollohan -- does not foreclose the Plaintiff from inquiring directly of any other IRS employees whom it alleges have engaged in such communications. (Memo. in Opposition at 17.) Further, the Church's remedies for alleged failures on the part of the IRS to [**8]  afford discovery required by the Federal Rules of Civil Procedure are properly sought in the underlying action. Finally, the Church has not shown that it has exhausted the avenues open to it to investigate the events recounted by Mr. Behar regarding the Church's claimed harassment of himself, through interviewing its own agents, or seeking to depose all of the persons identified in "The Scientologists and Me" portion of the Time Article. The Church must exhaust these alternative sources before any deposition of Mr. Behar would be warranted.
For the reasons cited above, the motion to quash the deposition subpoena is granted.
Fed. R. Civ. P. 11 authorizes the imposition of disciplinary sanctions to deter abuses by parties who act in bad faith in instituting or conducting litigation. The Court does not find the Church's subpoena for the deposition of Mr. Behar to have been motivated by bad faith. Mr. Behar's motion for sanctions is denied.
SO ORDERED

Dated: New York, New York
October 18, 1991

LAWRENCE M. McKENNA
U.S.D.J.  

94 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

No. 90-4784-RSWL(Kx) 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1991 U.S. Dist. LEXIS 12489 

August 20, 1991, Decided 

August 20, 1991, Filed 

JUDGES:
 [*1]  
Ronald S.W. Lew, United States District Judge.  

OPINIONBY:
LEW 

OPINION:

ORDER
Defendant in the above captioned action has moved for summary judgment. Plaintiff opposed the motion. The matter was set for oral argument on July 22, 1991 at 9:00 a.m. After a review of the papers filed, the Court determined that all of the issues had been adequately briefed and removed the matter from the Court's law and motion calendar pursuant to Fed. R. Civ. P. 78. Now having again reviewed all of the papers filed in support of and in opposition to the motion, the Court hereby issues the following order:
Defendant's motion for summary judgment is GRANTED.

I. Background
Plaintiff Church of Scientology Western United States (the "Church") has filed this an action under the Freedom of Information Act, 5 U.S.C §  552, (the "FOIA"), seeking to enjoin Defendant Internal Revenue Service (the "IRS") from withholding certain documents and records from the Church. The First Amended Complaint (the "Complaint") alleges that by letter dated June 1, 1989 (the "Request"), the Church requested the IRS to produce the following:

. . . a copy of all records, files, work papers, or electronic or other information on any medium concerning [*2]  or relating directly or indirectly to the designation, establishment and/or inclusion of the Church of Scientology, [the Church] establishment and/or parishioners of [the Church] in an illegal tax protester program, or any other records referring to Special Project Code 151 (for 'alleged Church') or a 'tax protest scheme'. [sic]
The Request was sent to the IRS, Los Angeles District, and the Request was limited to records from 1982 to the date of the Request. Complaint, Exhibit A.
The Complaint alleges that by letter dated June 16, 1989, the Disclosure Officer for the Los Angeles District denied the Request, claiming that "to the extent that they exist," the documents sought would be exempt pursuant to 5 U.S.C. §  552(b)(5) as interagency memoranda or letters. Complaint at 5:3-5; Complaint, Exhibit B.
After an unsuccessful administrative appeal, the Church filed this action to compel the IRS to produce documents in response to the Request. The IRS now moves for summary judgment. The parties indicate that Magistrate Judge Kronenberg has issued a protective order forbidding all discovery prior to the Court's ruling on the instant motion. The Church opposes the IRS' motion and, pursuant [*3]  to Federal Rule of Civil Procedure 56(f), requests that the Court permit the Church to undertake reasonable discovery regarding the scope and reasonableness of the IRS' document search.

II. Standard for Summary Judgment
Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56. The party moving for summary judgment bears the initial responsibility of identifying the absence of a genuine material issue of fact. Celotex v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553 (1986). The evidence is to be viewed in the light most favorable to the nonmovant, with all justifiable inferences drawn in his favor. Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). Federal Rule of Civil Procedure 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. [*4]  The burden on the moving party may be discharged by pointing out to the district court that there is an absence of evidence to support the nonmoving party's case. Celotex, 477 U.S. at 325.

III. Discussion
The IRS contends it is entitled to summary judgment because the IRS conducted a search that satisfied the FOIA's requirement that an agency conduct a search that is reasonably calculated to uncover all documents responsive to the Request.
A. FOIA Reasonableness Requirement
In an action under the FOIA, the agency must show that it has undertaken a search "reasonably calculated to uncover all relevant documents." Zemansky v. United States E.P.A., 767 F.2d 569, 571 (9th Cir. 1985). An agency may prove the reasonableness of its search through reasonably detailed, nonconclusory affidavits of responsible agency officials, if submitted in good faith. Id. "Agency affidavits are accorded a presumption of good faith, which cannot be rebutted by purely speculative claims about the existence and discoverability of other documents." Safecard Services, Inc. v. S.E.C., 926 F.2d 1197, 1200 (D.C. Cir. 1991) (citations [*5]  and quotation marks omitted). If agency affidavits meet the aforementioned requirements, "the district court judge has discretion to forgo discovery and award summary judgment on the basis of affidavits." Goland v. Central Intelligence Agency, 607 F.2d 339, 353 (D.C. Cir. 1978).
B. Reasonableness of the IRS' Search
In support of its assertion that the search met the FOIA requirements, the IRS submits declarations of IRS personnel, which the IRS contends adequately describe the scope of the search and establish that the search was reasonable.
First, the IRS submits the Declaration of Malia A. Berumen, Disclosure Officer of the IRS, Los Angeles District (the "Berumen Declaration"). The Berumen Declaration states that because the "illegal tax protester" program or "Special Project Code 151" referred to in the Request is exclusively a project of the Examination Division and is known in the Los Angeles District as "Compliance Project," Berumen sent a copy of the Request to the Compliance Project Coordinator, Loren Lee, with directions to search all relevant files for documents responsive to the Request. The Berumen Declaration states that at the time she processed the [*6]  Request, Berumen did not request a search for documents in any function or division of the Los Angeles District other than the Compliance Unit, because based on her experience and familiarity with the programs and projects of the Los Angeles District, Berumen did not consider any function other than the Examination Division Compliance Unit reasonably likely to maintain records responsive to the request. The Berumen Declaration further states that after this lawsuit was filed, Berumen contacted employees familiar with the records maintained by all six remaining divisional components of the Los Angeles District and asked them to ascertain whether their component would have any records responsive to the Request. Berumen states that she was informed by representatives of all six divisions that their functions have no records responsive to the Church's request. In addition, the Berumen Declaration states that she did not search for records pertaining to individual parishioners because the Request did not identify any particular parishioners, and no consents nor authorizations were provided from individual parishioners, as required for disclosure of individuals' tax return information.  [*7]  
The IRS also submits the Declaration of Loren Lee, Examination Division Compliance Projects Coordinator for the Los Angeles District of the IRS (the "Lee Declaration"). The Lee Declaration sets forth in significant detail Lee's responsibilities and familiarity with the organization of the records within the office of the Compliance Projects Coordinator. The Lee Declaration states that in response to Berumen's request, Lee searched the "Project 151--Alleged Contributions" records, and located four documents, totaling eight pages, that met the descriptions of the documents requested. According to the Lee Declaration, Lee forwarded to Berumen the four responsive documents without deletions or editing. The Lee Declaration states that Lee was not asked to search individual taxpayers' files and that he did not search his "clipping file" because he understood the request to pertain to the IRS' designation or inclusion of the Church in a compliance projects, and such information would not be contained within public sources.
Finally, the IRS submits the Declaration of Stuart D. Gibson, Counsel for the IRS, which states that the IRS provided with service of the Answer the four documents Lee [*8]  found in response to the Request.
The IRS argues that the these three declarations demonstrate that the IRS conducted a search reasonably calculated to locate all documents responsive to the Request. The IRS asserts that the reasonableness of Berumen's and Lee's searches is further corroborated by the fact that, after the Church filed this lawsuit, a broader search in the other six divisions of the Los Angeles District located no additional documents responsive to the Request. The IRS contends that because it conducted a search reasonably calculated to uncover all responsive documents, and the search did in fact uncover and produce to the Church all responsive documents, the IRS has fully met its statutory duty to the Church under the FOIA.
The Church contends that numerous facts and evidence indicate that the IRS has not conducted either an adequate or a reasonable search for responsive records. First, the Church asserts that the Examination Division searched only a small portion of the files which could reasonably contain responsive records, as evidenced by the fact that records that should have been located in the search were not located. Specifically, the Church points to a memorandum [*9]  dated March 11, 1986 regarding "tax protestor" [sic] designation that was purportedly received in the IRS Office of Tax Avoidance Special Projects Section (the "Tax Avoidance Section"). See the Church's Exhibit H. The Church contends that the Tax Avoidance Section is located within the Examination Division and that the Tax Avoidance Section in the Los Angeles District was never searched in response to the Request and that no other search located this memorandum. In addition, the Church points to a letter dated June 20, 1985, from the office of the Los Angeles District Director of the IRS, which states that the "tax protester" designation of persons contributing to a Church of Scientology organization was "erroneous." See the Church's Exhibit I.
The IRS responds by asserting that the Church's unsubstantiated allegation that the Church has identified allegedly responsive documents, which the IRS search did not locate, is insufficient to defeat this motion. The IRS argues that the mere fact that the IRS may once have possessed these documents does not mean that it possessed the documents at the time of the search, nor does it indicate that the search was inadequate.
The Court [*10]  agrees with the IRS' reasoning. Here, the Church has submitted Exhibit H, which is purportedly a memorandum regarding tax protester designation and Exhibit I, which appears to be a letter from the office of the Los Angeles District Director of the IRS. With regard to the memorandum identified as Exhibit H, the Church does not even assert that the memorandum was ever located in the Los Angeles District. Rather, the Church merely notes that the document indicates it was to be sent "all over the country." Opp. at 13:18-19. It is incongruous for the Church to argue that the IRS failed to find this document or any document similar to this in its search when there is no evidence that this document was ever sent to the Los Angeles District. Furthermore, the indication on Exhibit H that it was received in an unidentified Tax Avoidance Section raises, at best, a tenuous inference that the IRS' search was unreasonable if the IRS failed to search the Tax Avoidance Section of the Los Angeles District of the IRS. If such an inference can be drawn, it is effectively rebutted by the Berumen Declaration, which adequately sets forth Berumen's knowledge of the Los Angeles District's structure and adequately [*11]  sets forth her reasons for limiting the search to the Compliance Unit.
With regard to Exhibit I, the Church's identification of this letter does not demonstrate that the IRS' search was unreasonable. When a plaintiff questions the adequacy of the search an agency made in order to satisfy its FOIA request, the factual question raised is "whether the search was reasonably calculated to discover the requested documents, not whether it actually uncovered every document extant." Safecard Services, 926 F.2d at 1201 (D.C. Cir. 1991). The FOIA does not require a responding agency "to account for documents which the requester has in some way identified if it has made a diligent search for those documents in the places in which they might be expected to be found." Miller v. United States Dept. of State, 779 F.2d 1378, 1385 (8th Cir. 1985). Here, the Berumen Declaration and the Lee Declaration indicate with sufficient detail the method by which the search was conducted and the reasons for conducting the search as they did. Thus, the Church's identification of one document that may or may not have been located in the Los Angeles District at the time of  [*12]  the search is not sufficient to undermine the IRS' showing that the search was reasonable.
Second, the Church faults the IRS for failing to search any general Examination Division files relating to the Church or the tax protester designation and for failing to search any individual parishioner files. Furthermore, the Church contends that the IRS acted improperly in failing to search any files of the other six divisions of the Los Angeles District. The Church contends that the "conclusory nature of Ms. Berumen's assertions as to the other divisions [] suggest [sic] that the Berumen Declaration was made intentionally vague to obscure the fact that no search was actually conducted in the other divisions." Opp. at 14:11-22. Finally, the Church argues that the IRS improperly limited its search to the Compliance Unit, because there should exist orders, instructions or other policy making documents relevant to the Request, which would not logically be located in the Compliance Unit. Thus, the Church contends, the IRS has failed to demonstrate the absence of any material dispute in this case.
The IRS responds by asserting that the Berumen Declaration and the Lee Declaration are nonconclusory [*13]  and sufficiently detailed to demonstrate that the search was reasonable and that the Church's mere speculation that the search failed to uncover documents that logically should exist is insufficient to rebut the IRS' showing of reasonableness. The IRS further argues that the IRS abandoned the policy at issue in 1986, and to the extent that any documents describing a long-obsolete policy still exist, they would not be located in a field office, but in the national IRS office. In addition, the IRS contends that agency affidavits are accorded a presumption of good faith and that the Church has failed to rebut that presumption.
The Court agrees with the IRS' position. The standard of reasonableness does "not require absolute exhaustion of [agency] files"; rather, it requires a search reasonably calculated to uncover the requested documents. Miller 779 F.2d at 1384-84. Here, the IRS declarations are non-conclusory and sufficiently detailed to enable the Court to find that the IRS conducted such a search. The Berumen Declaration and the Lee Declaration adequately detail their reasons for limiting the search to the Compliance Unit, and the explanations offered are reasonable.  [*14]  Furthermore, the declarations demonstrate that Berumen and Lee acted reasonably in not examining the files of individual parishioners, in light of the Request's failure to identify any individual parishioners by name. Finally, the Church offers no evidence of bad faith by the IRS in submitting these declarations that would rebut the presumption of good faith accorded to the declarations. Safecard Services, 926 F.2d at 1200. Thus, the Court finds that the IRS has met its burden of demonstrating that it conducted a search reasonably calculated to uncover all documents responsive to the Request.
C. The Church's Request for Discovery
The Church asserts that the disputes in this case can only be resolved with reasonable discovery. The Church contends that any documents sought are within the exclusive control of the IRS, and thus, discovery is necessary to enable the Church to adequately defend itself in this action.
The Court is not persuaded by the Church's arguments that reasonable discovery is necessary. The Church offers essentially no evidence to rebut the IRS' showing that it conducted a search reasonably calculated to disclose all responsive documents. Thus,  [*15]  the Church has failed to demonstrate the existence of genuine issue of material fact as to the issue of the unreasonableness of the search. Furthermore, the Church has not persuaded the Court that discovery would enable the Church to raise a genuine issue of material fact as to this issue. Thus, the Court exercises its discretion to forgo discovery and GRANTS the IRS' motion for summary judgment. Goland, 607 F.2d at 353.
IT IS SO ORDERED.  

95 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

Case No. CV 90-2567-SVW 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1991 U.S. Dist. LEXIS 11365 

August 2, 1991, Decided 

August 2, 1991, Filed 

JUDGES:
 [*1]  
Stephen V. Wilson, United States District Judge.  

OPINIONBY:
WILSON 

OPINION:

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IN PART; ORDERING A FURTHER SEARCH; AND SETTING BRIEFING SCHEDULE
This court issued an order to show cause why summary judgment should not be granted against plaintiff Church of Scientology International (the "Church") and in favor of the Internal Revenue Service (the "IRS"). The IRS contends that summary judgment is proper because the Church has failed to show a genuine dispute as to any material fact with respect to the adequacy of the IRS's document search made pursuant to the Freedom of Information Act (the "FOIA"), 5 U.S.C. §  552. For reasons stated below, summary judgment is GRANTED in part in favor of the IRS, and defendant IRS is ordered to conduct a further search.

Background
This case arises out of a FOIA request submitted to the IRS by plaintiff Church of Scientology International on December 21, 1989. Mr. Moxon, an attorney acting on behalf of the Church, requested that a search be made of the IRS's Criminal Investigation Division records and of the IRS's International offices for documents responsive to the following search terms: Church of Scientology International,  [*2]  Church of Scientology, and/or Scientology and Dianetics. The request sought all documents, electronically stored or otherwise, pertaining to the Church, from 1980 to the present.
The IRS initially failed to respond to the Church's request. On March 29, 1990, Mr. Moxon appealed to the IRS's Chief Counsel to respond within ten days as required by statute. See 5 U.S.C. §  552(a)(6)(A)(i). Mr. Moxon then received a response from the IRS Privacy Section, advising him that he had not filed adequate power-of-attorney papers. On July 24, 1990, Mr. Moxon sent to the IRS additional authorizations empowering him to request and receive papers on behalf of the Church. The IRS thereafter executed the Church's FOIA request, which produced no responsive documents. Thereafter, the Church brought this suit alleging IRS's non-compliance with the FOIA.
Both the Church and the IRS brought cross-motions for summary judgment challenging and supporting, respectively, the adequacy of the IRS's search. The IRS maintained that it complied with the requirements of FOIA even though no responsive documents eligible for disclosure were uncovered. As evidence of its compliance with the FOIA, the IRS submitted [*3]  detailed affidavits of agents Jonnie Nix and Paul Austin who conducted the search. In opposition, the Church introduced evidence indicating that certain files were negligently searched and others, which were allegedly within the scope of the search, were not searched at all.
This court denied the parties' motions for summary judgment upon the finding that a more adequate search must be conducted by the IRS. Specifically, the court ordered the IRS to search the Office of Enforcement/Operations division of the Office of the Assistant Commissioner for the Criminal Investigative Function; the Budget Branch, Management Support Branch, and Technical Operations Branch of the Office of the Assistant Commissioner (International); and the Criminal Investigative Function of the IRS's Foreign Posts of Duty.
Following the court-ordered search, the IRS filed a statement of compliance accompanied by the new declarations of IRS agents Johnnie Nix and Paul Austin. The declarations stated that seven responsive documents were uncovered by the IRS but that each was withheld from disclosure pursuant to FOIA's privacy exemption, 5 U.S.C. §  552(b)(6). The Church now concedes that the non-disclosure of these [*4]  documents was proper, but challenges the adequacy of the search on other grounds.
After the second search, the Church was given the opportunity to depose both agents Nix and Austin. Following the depositions, the court issued an order to show cause why summary judgment should not be granted in favor of the IRS.

Discussion
Summary judgment will be granted if:

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

F.R.Civ.P. 56(c). To sustain summary judgment, therefore, the parties' evidentiary showing must be such that no reasonable trier of fact could find other than for the moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
In a FOIA case, the burden is on the government agency to show that it conducted a "search reasonably calculated to uncover all relevant documents." Zemansky v. United States E.P.A., 767 F.2d 569, 571 (9th Cir. 1985), citing Weisberg v. U.S. Dept. of Justice, 754 F.2d 1473, 1485 (D.C. Cir. 1984) [*5]  (internal citations omitted). Further, if the court is convinced that the IRS has conducted a reasonable search even though no responsive records have been located, there remains "no further judicial function to perform under the FOIA." Tijerina v. Walters, 821 F.2d 789, 799 (D.C.Cir. 1987). To avoid summary judgment the Church must demonstrate that the adequacy of the IRS's search is materially disputed. See Miller v. US Dept. of State, 779 F.2d 1378, 1383 (8th Cir. 1985); see generally F.R.Civ.P. 56(e).
The Church advances several reasons why summary judgment is improper. First, the Church alleges that the Federal Records Center and the district offices were not searched even though those offices were within the scope of the Church's search request and this court's order. Second, the Church proffers evidence in the form of documents obtained by the Church in another case, Miscavage v. IRS, No. 88-4371, C.D. Cal., tending to show the existence of responsive records in the possession of the IRS. Third, the Church contends that agent Austin, who reviewed potentially responsive documents located in the IRS's international offices, had  [*6]  no authority to decide that such documents were "non-responsive" to the Church's search request. Fourth, the Church argues that agent Nix conducted an inadequate search of the National Office since she failed to solicit the assistance of other IRS personnel who might be familiar with the records and databases to be searched. Lastly, the Church alleges that the Electronic Surveillance Database was not searched even though the database was within the scope of this court's order.

1. Search of Federal Records Center and District Offices
It is well settled that a government agency's FOIA search need not exceed the scope of the plaintiff's FOIA request. See Church of Scientology of Cal. v. I.R.S., 792 F.2d 146, 150 (D.C.Cir. 1986). Accordingly, the IRS's failure to search the Federal Records Center or the district offices cannot be the basis for opposing summary judgment, because neither location was requested to be searched in the Church's original request or in the court's subsequent order. Since the Church's request was limited to the IRS National Office and International offices, the IRS had no duty to search offices other than those specified in the request.  [*7]  Moreover, additional locations will not be readily implied into the search request if such locations do not appear on the face of the FOIA request. See Marks v. Dept. of Justice, 578 F.2d 261, 263 (8th Cir. 1985). In Marks, the court of appeals, affirming district court's grant of summary judgment, held that the FBI had no duty to search FBI field offices where the requester directed a search only of FBI headquarters:

FOIA requires that federal agencies make records available only upon a request which 'reasonably describes' the records sought. The requirement relates not only to subject matter . . . but also relates to place of search.

578 F.2d at 283. Hence, the Church cannot oppose summary judgment on the basis of the IRS's failure to search the Federal Records Center or the district offices.
The Church has failed to allege that any genuine issue of material fact is in dispute and the IRS is entitled to summary judgment on this issue.

2. The Miscavage Case
The Church's second contention is that the Miscavage case evidences the existence of responsive records.
This contention must also fail. Although an "exhaustive" search may [*8]  have revealed the existence of responsive documents, the IRS was under a duty only to "conduct a search reasonably calculated to uncover sought materials." Miller, supra, 779 F.2d at 1384. Moreover, in Miller, where an argument identical to that of the Church was asserted against the State Department, the court of appeals, affirming summary judgment, held:

The fact that a document once existed does not mean that it now exists; nor does the fact that an agency created a document necessarily imply that the agency has retained it.

779 F.2d at 1385. Thus, the IRS Is not required to account or documents which in some manner have come into the plaintiff's possession, provided that the IRS has made a diligent effort to uncover documents responsive to the instant FOIA request.
Accordingly, the IRS is entitled to summary judgment as a matter of law on this issue.

3. Adequacy of Agent Austin's Search of International Records
The Church's contention that agent Austin was prohibited, without review by a supervisor, to determine the responsiveness of documents is also without merit. As the IRS explains and the Church does not controvert, "Paul  [*9]  Austin is the final agency decision-maker with respect to whether [international] documents are or are not responsive to the plaintiff's FOIA request." If this court were to follow the advice of the Church and require every agent entrusted with executing a search to present every "potentially" responsive document to a supervisor, or to the counsel for the agency or department, government agencies would do nothing but respond to citizens' FOIA requests. FOIA was not intended to be a vexatious tapeworm inhibiting government functions by mobilizing agency officials at every level to conduct, review, appeal and reconsider every FOIA request submitted to the agency.
The Church has failed to explain what rule of law requires an otherwise competent and qualified agency official to seek a supervisor's review of his decision as to whether a document is "responsive." In view of agent Austin's uncontroverted familiarity with the IRS's document recording and retrieval procedures, as evidenced in his most recent deposition, and his unchallenged execution of those procedures in the present case, agent Austin's decision that certain documents were non-responsive did not render his search inadequate.  [*10]  
Thus, the IRS is entitled to summary judgment as a matter of law on this issue.

4. Adequacy of Agent Nix's Search of National Office
The Church's contention that agent Nix acted improperly also fails, because no fact, material as a matter of law, has been disputed.
The Church contends that since agent Nix did not ask other IRS personnel for assistance in determining the best method for conducting the instant FOIA search, agent Nix's search is inadequate per se. However, the Church has not explained why an otherwise competent and qualified agency official assigned to conduct a FOIA search must as a matter of law make inquiries of other personnel in order to execute an adequate FOIA search.
On summary judgment, the nonmoving party must present affirmative evidence demonstrating a genuine dispute of a material fact, and it is the "substantive law [that] will identify which facts are material." Anderson v. Liberty Lobby, Inc., supra, 477 U.S. at 248. Here, the FOIA does not identify consultations with other agency personnel as a material fact, provided, of course, that the official assigned to perform the FOIA search is competent to do so and in fact executes [*11]  an adequate search. Perhaps, consultation with other agency personnel may be helpful in performing an "exhaustive" search; the law, however, requires only a "reasonable" search. See Zemansky, supra.
Thus, the Church has failed materially to dispute the adequacy of agent Nix's search, and the IRS is entitled to summary judgment as a matter of law on this issue.

5. Electronic Surveillance Database
The Church's final contention is that the Electronic Surveillance Database was overlooked by the IRS even though it was within the scope of the Church's FOIA request. The court finds this to be a meritorious contention.
Agent Nix admits in her most recent deposition that the Electronic Surveillance Database was not searched. Further, the Church's request sought all documents "electronically stored or otherwise." Hence, a search of the Electronic Surveillance Database is necessary to complete an adequate FOIA search in this case.

Conclusion
For the reasons stated above, defendant IRS's motion for summary judgment is GRANTED in part and DENIED in part. The court ORDERS the IRS to execute a search of the Electronic Surveillance Database, on or before August 12,  [*12]  1991, for documents responsive to the Church's December 21, 1989 request. Depositions of the IRS agents who perform such search must be taken on or before August 17, 1991. The plaintiff is ordered to respond, on or before August 23, 1991, why summary judgment should not be granted in favor of the IRS. The IRS must reply on or before August 28, 1991. Both response and reply must be hand served on opposing party the same day as such response or reply is filed with the court.
IT IS SO ORDERED.  

96 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

No. CV-89-6370-RSWL 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

769 F. Supp. 328; 1991 U.S. Dist. LEXIS 15374; 91 Daily Journal DAR 14139 

May 24, 1991, Decided 

May 24, 1991, Filed 

JUDGES:
 [**1]  Ronald S.W. Lew, United States District Judge.  

OPINIONBY:
LEW 

OPINION:

 [*329]  ORDER
 RONALD S.W. LEW, UNITED STATES DISTRICT JUDGE 
Plaintiff in the above captioned action has moved for attorney's fees and expenses. Defendant timely opposed the motion. The matter was set for oral argument on March 25, 1991 at 9:00 a.m. After review of the papers filed, the Court determined that all of the issues had been adequately briefed and removed the matter from the Court's law and motion calendar pursuant to Federal Rule of Civil Procedure 78. Now having again reviewed all of the papers filed in support of and in opposition to the motion, the Court hereby issues the following order:
Plaintiff's motion for attorney's fees and costs is GRANTED. Plaintiff is hereby awarded attorney's fees and costs incurred in filing and litigating this action in the amount of $ 5,040.00.
Background
By letter dated May 23, 1989, counsel for plaintiff Church of Scientology (the "Church") requested access to records of defendant Internal Revenue Service (the "IRS") concerning the "tax shelter litigation project" pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. §  552. The Church sought these documents because of its concern over the IRS' designation of the Church and its  [**2]  parishioners as part of the tax shelter litigation project. By letter dated June 14, 1989, the Los Angeles Disclosure Office of the IRS responded that all requested documents were withheld in full on grounds that they were  [*330]  exempt pursuant to FOIA subsections (b)(3) (exempt by statute) and (b)(5) (exempt inter-agency communications). On August 1, 1989, the Church appealed the IRS' refusal to provide access to the documents. The IRS acknowledged the appeal by letter dated August 30, 1989.
On November 1, 1989, the Church filed this action to compel defendant Internal Revenue Service (the "IRS") to produce the records. The IRS appeal was still pending at the time the action was filed.
Subsequently, the IRS deemed twelve pages of documents responsive to the Church's request non-exempt from the FOIA. On September 11, 1990, the IRS released the non-exempt documents.
On March 25, 1991, the Church moved to voluntarily dismiss the action on grounds that the Church had obtained the records sought in the Complaint.  The motion for voluntary dismissal was not opposed, and the Court granted the Church's motion to dismiss with prejudice.
Now, the Church seeks an award of attorney's fees and expenses  [**3]  incurred in the action pursuant to 5 U.S.C. section 552(a)(4)(E).
Standard for Award of Fees Under FOIA
The FOIA provides that a court "may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed." 5 U.S.C. §  552(a)(4)(E). This provision requires a two-step inquiry: (1) whether plaintiff is eligible for an award of attorney's fees and costs; and (2) if so, whether plaintiff is entitled to such an award. Church of Scientology v. U.S. Postal Service, 700 F.2d 486, 489 (9th Cir. 1983) ("Postal Service"). The first step, eligibility for the award, is satisfied if "the facts show that the plaintiff has substantially prevailed on his or her FOIA action." Id. (citations omitted). The second step, entitlement to the award, "is left to the discretion of the district court." Id.
The Church's Eligibility for Attorney's Fees and Costs
The Church contends it is eligible for an award of attorney's fees and costs because it has substantially prevailed in the litigation.
In order to satisfy the eligibility requirement by showing  [**4]  that he or she has substantially prevailed in a FOIA suit, a plaintiff must present convincing evidence that two threshold conditions have been satisfied: (1) that the filing of the action was reasonably necessary to obtain the information; and (2) the filing of the action had a substantial causative effect on the release of the information. Id. In deciding whether a plaintiff has satisfied these threshold conditions, the district court should consider such facts as the time when the documents were released, what actually triggered the documents' release, and whether plaintiff was entitled to the documents at an earlier time. Id. at 492.
The Church argues that reasonable necessity of this action is evidenced by the fact that the Church was initially denied all access to the records sought and that, subsequently, the Church waited without word for approximately three months after filing its administrative appeal before filing this action despite the FOIA requirement that an agency respond to an appeal within twenty working days. The IRS asserts that a response to the Church's appeal was delayed because of the heavy case load and backlog of FOIA appeals in the  [**5]  Disclosure Litigation Division of the IRS.
Viewing the arguments presented in light of the factors set forth in Postal Service, the Court is satisfied that the Church is eligible for an award of attorney's fees and costs. The Court finds persuasive the fact that the Church was required to engage in this litigation for over ten months before receiving documents which the Church was apparently entitled to receive in May of 1989. Furthermore, the requested documents were only released subsequent to this Court's Order of June 28, 1990 requiring the IRS to produce a Vaughn Index of the documents withheld.  [*331]  In its opposition papers, IRS states that it released the requested records "in conjunction with" the filing of the Court-ordered Vaughn Index. It is, therefore, reasonable to conclude that the production and filing of the Vaughn Index triggered the release of the requested documents.
Thus, the Court finds the Church has substantially prevailed in the FOIA action and is eligible for an award of attorney's fees and costs. The Court finds that the filing of the action was reasonably necessary to obtain the information, and the filing of the action had a substantial causative effect on  [**6]  the release of the information.
The Church's Entitlement to an Award of Attorney's Fees and Costs
Having found the Church eligible for an award of attorney's fees and costs, the Court must exercise its discretion in determining whether the Church is entitled to such an award. The Court may take into account "whatever factors it deems relevant" in determining whether to make such an award. Id. at 492 (cite omitted). Courts considering this issue have generally considered four factors: "(1) the benefit to the public, if any, deriving from the case; (2) the commercial benefit to the complainant; (3) the nature of the complainant's interest in the records sought; and (4) whether the government's withholding of the records sought had a reasonable basis in law." Id. (citations omitted).
(1) Public Benefit
The IRS argues that no public benefit is derived from release of the requested documents because the documents pertain only to the Church and its parishioners. The Court disagrees. The public clearly has an interest in information regarding the apparently improper designation of a religion as a "tax shelter" project. Furthermore, communications between the IRS and  [**7]  the Church indicate that this litigation contributed to the IRS' decision to review its procedures and that resulting improvements in these procedures will enable better handling of over 1,000 cases involving identical legal issues. See The Church's Supp. Mem. at 2.
Thus, the Court is satisfied that public benefit was derived from disclosure of the documents.
(2) Commercial Benefit to the Complainant
The Church contends that it gained no commercial benefit from disclosure of the documents. The IRS does not respond to this contention. Furthermore, there is no evidence presented which suggests that any commercial benefit was derived from disclosure. Accordingly, the Court finds this factor weighs in favor of finding the Church is entitled to an award of attorney's fees and costs.
(3) Nature of the Complainant's Interest in the Records Sought
The IRS contends that this factor weighs against an award of attorney's fees and costs because the Church's interest in requesting the documents was purely personal. The Court agrees that the Church's request served Church's own interest, but the Court is not persuaded that this factor outweighs the public interest served by the release of  [**8]  the documents, as discussed above.
(4) Government's Legal Basis for Withholding the Records
The IRS argues that there was a reasonable basis in law for the initial withholding of the documents, and, therefore, this factor weighs against granting the Church's motion. The IRS further argues that if the Church had waited to file this action until the IRS had time to consider the Church's arguments on appeal, the need for this lawsuit could have been obviated.
The Court disagrees with the IRS' contentions regarding this factor.  Although there may have been a colorable legal basis for the IRS' initial withholding of the documents, there is no apparent justification for the IRS' tardiness in determining these documents were subject to release under the FOIA. The FOIA explicitly provides  [*332]  that determinations with respect to any appeal shall be made within twenty working days. 5 U.S.C. §  552(a)(6)(A)(ii). Here, over one year passed before the IRS complied with its statutory obligation in releasing the documents. There is no apparent basis in the law for the IRS' failure to determine whether these documents were subject to release in a more timely fashion. Thus, the Court finds this factor weighs  [**9]  in favor of finding the Church is entitled to an award of attorney's fees and costs.
On balance, the circumstances of this case dictate that the Court exercise its discretion in favor of finding the Church is entitled to an award of attorney's fees and costs under the FOIA. Accordingly, the Court grants the Church's motion for attorney's fees and costs.
Amount of the Award
In its proposed order, the Church indicates that it seeks reasonable fees and costs in the amount of $ 5,040. Having determined that the Church is eligible and entitled to an award of attorney's fees and costs under the FOIA, the Court now must determine if the amount sought by the Church is reasonable.
In support of its request, the Church submits the Supplemental Declaration of the Church's counsel, Kendrick L. Moxon (the "Moxon Declaration"). There, Moxon states that his client was billed $ 10,040 in connection with litigating this matter, for 67.6 hours of work at $ 150 per hour. The Moxon Declaration itemizes the hours spent in adequate detail, as well as adequately accounting for the expenses sought. Furthermore, the Moxon Declaration states that $ 150 per hour is his normal hourly rate and that this rate  [**10]  is substantially below the normal hourly rate for FOIA litigation in this community.
The Court is satisfied with the reasonableness of the amount sought by the Church. As shown by the Moxon Declaration, the Church seeks recovery for substantially fewer billable hours than were actually expended in this case. Furthermore, the Court notes that the IRS has not disputed the reasonableness of the hourly rate charged by Moxon. Accordingly, the Court awards the Church attorney's fees and costs incurred in the filing and litigation of this matter in the amount of $ 5,040.
IT IS SO ORDERED.  

97 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

No. C-90-2574-JPV 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 

1991 U.S. Dist. LEXIS 4635 

April 5, 1991, Decided 

April 5, 1991, Filed 

JUDGES:
 [*1]  
J. P. Vukasin, Jr., United States District Judge.  

OPINIONBY:
VUKASIN 

OPINION:

ORDER GRANTING MOTION TO DISMISS
INTRODUCTION
Defendant's Motion to Dismiss was scheduled to be heard on April 4, 1991. After a review of the briefs, this court considered it appropriate to submit the motion on the pleadings pursuant to Local Rule 220-1, and now GRANTS the motion.
DISCUSSION
1. Res Judicata Doctrine.
It is apparent from the face of the complaint that this action is identical in all relevant respects to an earlier filed case in this District, C-90-1861-JPV, in which summary judgment was granted to defendant, and that therefore this action is barred by res judicata.
Under the res judicata doctrine, a valid, final judgment on the merits bars a subsequent action between the same parties or their privies upon the same cause of action.  Hooker v. Klein, 573 F.2d 1360, 1367 (9th Cir. 1978). Although it must be applied with caution so as not to deprive a party of his day in court, the doctrine is today considered an effective tool in preventing a multiplicity of suits on a single cause of action, in controlling the massive overcrowding of the federal docket, and in effecting the rules [*2]  under which federal courts operate. See C. Wright, Law of Federal Courts 678 (4th ed. 1983). The test applies directly to this case.
2. Identity of Parties.
Although the plaintiff in the first case was not identical to the plaintiff herein, the parties are in direct privity with each other. The party to whom res judicata is applied under the privity doctrine must have been so closely related to the interest of the party in the prior suit as "to be fairly considered to have had his day in court." United States v. Gottheiner, 703 F.2d 1124, 1139 (9th Cir. 1983)
The Reverend Heber Jentzsch, plaintiff in the prior case, is the president of the Church of Scientology International, the plaintiff in this case. As the organization of which the prior plaintiff is president, plaintiff here clearly satisfies this test. Furthermore, the Reverend Jentzsch's Freedom of Information Act request, on which the prior suit was based, was signed by the same attorney who represents the Church in this case, and sought the same documents relating to the Church which were sought in the request on which this suit is based. The same attorney represents both plaintiffs in  [*3]  this court. Therefore, the interests of the Church were clearly adequately represented in the prior suit.
3. Identity of Issues.
The portion of the res judicata test requiring identity of issues is also satisfied here. The relevant portions of the Freedom of Information Act requests on which the two cases were based differ only in that the request in the prior case contained the additional words "to my client, Mr. Jentzsch and also to." Plaintiff's attempt to analogize these cases to suits brought on different but identical contracts is unavailing. The central issues in these cases involve not the request letters, but the adequacy of the search conducted by the defendant pursuant to the requests. Given that the search in the first case was found to be adequate, it would torture logic to find that the issues in the cases are not identical. Cf.  National Treasury Employees Union v. I.R.S., 764 F.2d 1174 (D.C.Cir. 1985). Such a finding would in general permit parties and their privies to file repeated suits seeking identical relief merely by making frequent requests under the Freedom of Information Act, thus utterly emasculating any notion of finality of judgments [*4]  in the federal courts.
ORDER
Therefore, defendant's Motion to Dismiss is HEREBY GRANTED, and the above captioned action is HEREBY DISMISSED with prejudice.

IT IS SO ORDERED 

98 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF SAN FRANCISCO, et al., Plaintiffs, v. INTERNAL REVENUE SERVICE, Defendant. CHURCH OF SCIENTOLOGY OF SAN FRANCISCO, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

Nos. C-90-1279-CAL, C-90-2008-CAL 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 

1991 U.S. Dist. LEXIS 4640 

March 25, 1991, Decided 

March 26, 1991, Filed 

JUDGES:
 [*1]  
Charles A. Legge, United States District Judge.  

OPINIONBY:
LEGGE 

OPINION:

ORDER AND JUDGMENT ON MOTIONS FOR SUMMARY JUDGMENT
Plaintiff Church of Scientology of San Francisco has brought these two actions against defendant Internal Revenue Service, seeking the release of certain records under the Freedom of Information Act, 5 U.S.C. §  552. Pursuant to orders of this court, defendant filed a Vaughn Index in both cases. As a result of further pretrial proceedings, the issues have been narrowed:
(1) In C-90-1279 there is one document identified by the Vaughn Index which is still in dispute. Plaintiff also challenges the adequacy of defendant's search for the records requested by plaintiff. Defendant has filed a motion for summary judgment. Plaintiff opposes that motion and seeks discovery on the adequacy of the search.
(2) In C-90-2008 no documents identified by the Vaughn Index are still in dispute, and the sole issue is the adequacy of defendant's search. Again, defendant has filed a motion for summary judgment, which plaintiff opposes, and plaintiff seeks discovery on the adequacy of the search.
Several hearings have been held, and the motions for summary judgment have been submitted for decision.  [*2]  The court has reviewed the moving and opposing papers, the record in the case, the arguments of counsel, and the applicable authorities. The court concludes that there are no genuine issues of material fact, and that judgment should be entered as follows:
C-90-1279
As a result of the Vaughn Index pretrial procedures, the dispute has narrowed to a portion of one document, identified as document No. 1. The parties' dispute over this document has narrowed to the question of whether it is excepted from the requirements of FOIA by exception No. 5. The court has reviewed the document in camera.
Defendant asserts that it is a document involving the deliberative process privilege. That privilege exempts from disclosure "advisory opinions, recommendations and deliberations comprising part of a process by which government decisions are formulated." NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150 (1975). Upon review of the document, this court concludes that defendant is correct. The portions of the document objected to by defendant relate to the internal management by defendant of a large tax shelter litigation project. It includes proposals and recommendations of [*3]  IRS employees concerning the disposition of tax litigation. The document contains legal strategy and litigation defenses. The court concludes that it is within the exception and need not be produced to plaintiff.
The remaining issue is the adequacy of the search. That is, plaintiff contends that defendant has failed to meet its statutory duty to conduct a reasonable search responsive to plaintiff's request. Defendant has the burden under FOIA to demonstrate a reasonable search.  5 U.S.C §  552(a)(3)(A); Truitt v. Dept. of State, 897 F.2d 540, 544 (D.C. 1990). The question is whether the IRS has demonstrated "beyond material doubt" that they "conducted a search reasonably calculated to uncover all relevant documents." Truitt at 542. The issue is not whether any additional documents might conceivably exist, but rather whether the search for responsive documents was within "the standard of reasonableness." Agency declarations in support of summary judgment on that issue must be "relatively detailed, non-conclusionary, and submitted in good faith." Miller v. U.S. Dept. of State, 779 F.2d 1378, 1383 (8th Cir. 1985).
At the first hearing of the  [*4]  summary judgment motions, this court did not consider the IRS's declarations to be sufficient to meet that standard. The motion was therefore continued to enable defendant to file, if it could, further declarations. Defendant did so. The court now has before it two declarations by Malia A. Berumen and the declarations of Lynn L. Casimir, Donna F. Herbert, Nadine Addison, Michael J. Salem, and Robert T. Hollohan. All declarants are employees of the defendant, and their declarations demonstrate the degree of search made for documents encompassed within plaintiff's request. The court has also considered plaintiff's challenges to the adequacy of those declarations. The court concludes that the declarations meet the standards required of the IRS by section 552(a)(3)(A), Truitt, and Miller. Therefore, summary judgment should be entered in favor of defendant, and no discovery is appropriate.
C-90-2008
There is no longer a dispute in this case regarding the production of the documents identified by the Vaughn Index. The only issue is the adequacy of the search.
In support of its motion for summary judgment, defendant has submitted the declarations of the following persons, who  [*5]  are responsible employees of defendant and who might reasonably be expected to have knowledge of the location of documents and direct or conduct an appropriate search: Gallick R. Fielding, J. Cardillo, J. Stafford, D. Lee, F. Arraujo, R. Ray, R. Hanson, and M. Berumen. The court has reviewed those declarations and the attacks made by plaintiff on their sufficiency. The court concludes that the searches met the legal standards defined above, and that summary judgment should be entered in favor of defendant and against plaintiff.
IT IS THEREFORE ORDERED that judgments be and they hereby are entered in favor of defendant Internal Revenue Service and against plaintiff Church of Scientology of San Francisco in both actions.  

99 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY WESTERN UNITED STATES, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant 

No. CV 89-5894 AWT 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

1991 U.S. Dist. LEXIS 3008 

March 4, 1991, Decided 

March 5, 1991, Filed 

JUDGES:
 [*1]  
A. Wallace Tashima, United States District Judge.  

OPINIONBY:
TASHIMA 

OPINION:

MEMORANDUM ORDER RE PARTIAL SUMMARY JUDGMENT
In this action brought under the Freedom of Information Act (FOIA), defendant has moved for partial summary judgment with respect to 301 pages of documents withheld from plaintiff in response to its FOIA request and with respect to which a Vaughn index has been prepared and furnished to plaintiff. n1 As briefly explained below, the motion will be granted in part and denied in part. In making its motion, defendant relies on three exemptions. These exemptions will be addressed seriatim.

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n1 Further documents have been identified as the result of a further court-ordered search. This order (like the motion) does not address those documents.

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1. The (b)(3) exemption.
Among its exemptions, FOIA exempts from disclosure:
Matters that are . . . specifically exempted from disclosure by statute . . . provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no  [*2]  discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld.

5 U.S.C. §  552(b)(3).
The government claims this exemption with respect to all or part of 156 pages of documents. This claim, in turn, is based on 26 U.S.C. §  6103 which prohibits disclosure of income tax returns and return information. Plaintiff concedes that it is not entitled to return information of third parties, unless it is able to provide the IRS with third party waivers. The government agrees that such information is subject to FOIA disclosure if waivers are filed; however, it claims that such waivers must accompany the initial FOIA request. The court agrees with the government, simply as a matter of administrative efficiency and to avoid unnecessary judicial review. This is, in substance, akin to the requirement of exhaustion of administrative remedies. A FOIA requester cannot claim wrongful withholding of documents if a third party waiver which is a prerequisite to disclosure is not presented to the agency. Until that is done, judicial review is premature.
One document withheld under this exemption contains plaintiff's own return information.  [*3]  The statute relied on in this case is 26 U.S.C. §  6103(e)(7). That statute is a "(b)(3)" statute. See White v. IRS, 707 F.2d 897, 900-01 (6th Cir. 1983). In this case, the Secretary has determined that "the release of the document referring to information obtainable under various treaties would chill the future cooperation of foreign governments and tax treaty partners. . . ." Accordingly, the exemption was properly invoked with respect to this document.
2. The (b)(7) exemption.
This exemption applies to:
Investigatory records compiled for law enforcement purposes but only to the extent that the production of such law enforcement records or information. . . (C) could reasonably be expected to constitute an unwarranted invasion of personal privacy . . . or (F) could reasonably be expected to endanger the life or physical safety of any individual.

5 U.S.C. §  552(b)(7).
The information withheld under this exemption consists of the identity of lower level IRS employees, including identifying information (such as telephone numbers). Also withheld are handwritten material on documents by such employees, such as their initials, and comments and entries on various forms. Plaintiff [*4]  agrees that it is proper to withhold the identities of lower level officials whose identities have not already been revealed to plaintiff, but not of those employees whose identities are known to plaintiff. However, defendant claims that this exemption protects not only identity in a vacuum, but an employee's identity associated with a particular document, recommendation or action. Given the long history of confrontation between plaintiff and defendant, see, e.g., Church of Scientology v. Commissioner, 83 T.C. 381 (1984), aff'd, 823 F.2d 1310 (9th Cir. 1987), cert. denied, 486 U.S. 1015 (1988), the court agrees with defendant's position in this case.
Plaintiff also contends, relying on a Privacy Act case, May v. Department of the Air Force, 777 F.2d 1012 (5th Cir. 1985), that if the IRS is concerned about employees' identities being revealed by their handwriting, they should provide typewritten copies of such documents. Here, the court agrees with defendant that FOIA does not require an agency to create records producible to plaintiff. n2

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n2 The court recognizes that redaction is a commonly-ordered remedy in FOIA cases, where the entire document may not be producible. Deleting information from an already existing document is not the same as creating a new document; moreover, redaction has a statutory basis.

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3. The (b)(5) exemption.
FOIA exempts from disclosure:
Interagency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency.

5 U.S.C. §  552(b)(5).
Exemption under (b)(5) requires that several factual predicates be met. Some recognized "privilege" must be involved. See NLRB v. Sears, Roebuck & Co., 421 U.S.132, 150-54 (1975). The document must be "predecisional." Id. It must also be "deliberative." Id. See also EPA v. Mink, 410 U.S. 73, 85-91 (1973). Moreover, in this Circuit, the determination of whether or not a document is deliberative is not governed by bright-line rules. See, e.g., National Wildlife Fed'n v. United States Forest Serv., 861 F.2d 1114 (9th Cir. 1988).
Here, the court agrees with plaintiff. The Vaughn index is not sufficiently detailed to enable the court to make its required de novo determination that the requirements of this exemption have been met or whether reasonably segregable material is included in the withheld documents. The summary judgment motion is based only on the Vaughn index; the court has not been provided with any documents for in   [*6]  camera examination.
4. Motion to strike.
As part of its opposition to defendant's motion, plaintiff has moved to strike the motion for summary judgment. The ground asserted is, in essence, that the motion is premature because of the further search ordered by the court on November 26, 1990. (See footnote 1.) This motion, as to the timing of partial summary judgment, is addressed to the discretion of the court. The court disagrees with plaintiff that defendant has moved prematurely.
IT IS ORDERED:
1. Defendant's motion for summary judgment is granted insofar as it claims that defendant is entitled to withhold certain documents or portions thereof under 5 U.S.C. §  552(b)(3) & (7).
2. Except as granted above, defendant's motion for partial summary judgment is denied.
3. Because of the overlap in the claimed applicable exemptions to the documents in question, the court does not rule on a document-by-document basis.
4. Plaintiff's motion to strike defendant's motion for summary judgment is denied.  

100 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff, v. Elmer F. LINBERG, et al., Defendants 

 No.  CV77-2654-Kn 

UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA 

529 F. Supp. 945; 1981 U.S. Dist. LEXIS 16458 

December 14, 1981 

COUNSEL:
 [**1]  
Howard J. Stechel, Beverly Hills, Cal., for plaintiff. 
James Stotter, II, Asst. U. S. Atty., Los Angeles, Cal., for defendants.  

OPINIONBY:
KENYON 

OPINION:

  [*948]  
ORDER RE DEFENDANTS' MOTION TO DISMISS
Plaintiff in this action seeks damages and an injunction pursuant to Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971), for alleged violations of its First and Fourth Amendment rights in connection with an extensive search and seizure operation conducted by the Federal Bureau of Investigation. Defendants, 20 agents and former FBI agents and the Department of Justice, n1  [*949]  have filed motions to dismiss the present complaint on numerous grounds. The court, as indicated in its order entered June 23, 1981, denies the motions in their entirety with the exception of striking several of the provisions plaintiff has offered as a basis for jurisdiction and its constitutional claims.

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n1. There were originally 22 individual defendants named, but on June 23, 1981, the court granted plaintiff's motion to dismiss with prejudice defendants Raymond Banoun and Henry Schuelke III, both of whom were allegedly involved with the Los Angeles searches while serving as Assistant United States Attorneys in the District of Columbia. Because these were the only two defendants which were asserted to be residing outside of this District, defendants' argument that venue "may" be improper no longer requires consideration.

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In the early morning of July 8, 1977, more than 150 FBI agents and other personnel, authorized by virtually identical warrants, entered three facilities of the Church of Scientology. One was the site of the Founding Church of Scientology in Washington, D.C., and the others were the Los Angeles premises of plaintiff, the Church of Scientology of California (hereinafter referred to as "the Church"). The warrants identified 162 items and classes of items to be seized based upon an affidavit of a former Scientology official who testified with respect to the thefts in 1975 of Government documents from the headquarters of the Department of Justice in Washington, D.C., and the offices of the United States Attorney for the District of Columbia. The vast majority of the agents participated in the Los Angeles searches, during which nearly 50,000 documents were seized in the course of approximately 23 hours.
Shortly after the execution of the warrants, the Church of Scientology filed this action and along with the Founding Church, two additional federal court actions in Los Angeles and the District of Columbia seeking the return and suppression of property pursuant to Rule 41(e) of the Federal [**3]  Rules of Criminal Procedure. n2 Following a stay of proceedings entered October 20, 1977, very little of significance occurred in this action for nearly three years, during which time the Rule 41(e) petitions were actively litigated.

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n2. Rule 41(e) of the Federal Rules of Criminal Procedure provides:
A person aggrieved by an unlawful search and seizure may move the district court for the district in which the property was seized for the return of the property on the ground that he is entitled to lawful possession of the property which was illegally seized. The judge shall receive evidence on any issue of fact necessary to the decision of the motion. If the motion is granted the property shall be restored and it shall not be admissible in evidence at any hearing or trial. If a motion for return of property is made or comes on for hearing in the district of trial after an indictment or information is filed, it shall be treated as a motion to suppress under Rule 12.

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On July 27, 1977, Chief Judge William B.  [**4]  Bryant ruled that the warrant executed in the District of Columbia was invalid on its face as a "general warrant" in violation of the particularity requirement of the Fourth Amendment. n3 In re Search Warrant Dated July 4, 1977, 436 F. Supp. 689 (D.D.C.1977). On December 1, 1977, the D.C. Circuit reversed, and upheld the validity of the warrant, remanding for consideration of the legality of the execution of the warrant.  In re Search Warrant Dated July 4, 1977, 187 U.S. App. D.C. 297, 572 F.2d 321 (D.C.Cir.1977), cert. denied sub nom.  Founding Church of Scientology v. United States, 435 U.S. 925, 98 S. Ct. 1491, 55 L. Ed. 2d 519 (1978). n4

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n3. The Fourth Amendment of the U.S. Constitution provides:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
n4. On remand, Judge Bryant held that the D.C. search was general and exploratory in violation of the Fourth Amendment and 18 U.S.C. §  2234, and therefore again ordered return of the documents seized in the District of Columbia and the destruction of all copies. In re Search Warrant Dated July 4, 1977, Misc.No. 77-0151 (D.D.C. August 24, 1979). On appeal by the Government, the D.C. Circuit again reversed, and upheld the constitutionality of the search as a whole. The court remanded to allow the Church to make a showing that particular documents may have been seized unlawfully. In re Search Warrant dated July 4, 1977, 667 F.2d 117 (D.C.Cir. 1981).

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Following several days of hearings, Judge Malcolm M. Lucas in memorandum opinions  [*950]  of April 4 and July 5, 1978, upheld the facial validity and the execution of the warrants in Los Angeles on all grounds raised by the Church. Church of Scientology v. United States, No. CV 77-2565-MML (C.D.Cal.1978) (hereinafter cited as the Lucas decision). On August 14, 1978, eleven members of the Church of Scientology, including several of its top officers, were indicted by a federal grand jury in the District of Columbia. On February 22, 1979, the Ninth Circuit, citing DiBella v. United States, 369 U.S. 121, 82 S. Ct. 654, 7 L. Ed. 2d 614 (1963), dismissed the Church's appeal of the Lucas decision in light of its potential disruptive effect on pending criminal proceedings in the District of Columbia. Church of Scientology v. United States, 591 F.2d 533 (9th Cir. 1979), cert. denied, 444 U.S. 1043, 100 S. Ct. 729, 62 L. Ed. 2d 729 (1980).
Nine of the Scientology defendants scheduled to go to trial before Judge Charles B. Richey moved to suppress the evidence seized during the July 8, 1977, searches. The suppression motion concerned only the legality of the Los Angeles searches, as the [**6]  Government took the position that it had not shown any of the documents seized in the District of Columbia to the grand jury nor did it intend to use such documents at or in preparation for trial.  United States v. Hubbard, 493 F. Supp. 209, 212 (D.D.C.1979). The suppression hearing began on July 3, 1979, in Los Angeles and ended in Washington, D.C. on August 29, 1979.
In an opinion issued September 13, 1979, Judge Richey upheld the facial validity of the Los Angeles warrants, and ruled that the 201 documents the prosecution intended to introduce in its case-in-chief had been legally seized. He rejected the attempt of the nine Scientology defendants n5 to invalidate the seizure of the 201 documents based upon, among other Fourth Amendment contentions, the seizure of numerous other documents alleged to be outside the scope of the warrant. Judge Richey based his denial of the suppression motion not only on a broad finding that the Government agents did not violate the Fourth Amendment, but also on two specific legal grounds-the virtual absence of standing to challenge seizures and an apparent rejection of defendants' theory for suppressing the 201 documents as beyond the permissible [**7]  scope of the exclusionary rule.  Id. at 215, 224. On October 26, 1979, each of the nine defendants was found guilty on a stipulated record of one count of the indictment. n6 They were sentenced on December 6-7, 1979, and appealed. Arguments were held February 27, 1981, and the D.C. Circuit in a per curiam opinion issued October 2, 1981, affirmed the convictions and rejected all of defendants' contentions, including their challenge to the denial of the suppression motion. United States v. Heldt, 215 U.S. App. D.C. 206, 668 F.2d 1238, (D.C.Cir. 1981).

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n5. The other two of the 11 individuals indicted by the grand jury resided in England and were not extradited in time to stand trial with the nine defendants before Judge Richey. These two defendants also filed motions to suppress which were denied for lack of standing by Judge Aubrey E. Robinson, Jr., in the District of Columbia federal court. On November 26, 1980, the two extradited defendants were convicted on nine counts of burglarizing Government offices.
n6. Seven of the nine were found guilty of conspiracy to obstruct justice; one was found guilty of conspiracy to obtain government documents illegally; and the other was found guilty of theft of government property.

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In the present action, activity relevant to the current proceedings began with the filing of the Second Amended Complaint on June 2, 1980. On June 23, 1980, defendants filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b). At the July 21, 1980, hearing on the motion before Judge William Matthew Byrne, Jr., defendants agreed to withdraw their motion and plaintiff on September 3, 1980, filed the Third Amended Complaint (hereinafter referred to as the Complaint). It alleges that the 20 individual defendants and the U.S. Department of Justice violated plaintiff's First, Fourth, Fifth and Ninth Amendment rights in the execution of the Los Angeles searches and their aftermath.
  [*951]  The Complaint contends that defendants violated plaintiff's rights and those of its members to be free from unreasonable searches and seizures in several specific respects, including: 1) conducting a "general search" involving the seizure of thousands of documents beyond the geographic scope of the search authorized in the warrant (P 14), and beyond the 162 categories of seizable documents described in the warrant and accompanying affidavit (PP 15, 16); 2) using the search [**9]  as an opportunity to develop information for collateral Government investigations (PP 13, 16); and 3) the "wanton and needless" destruction of Church property in connection with the forcible breaking of doors, locks and safes (P 19). n7 Plaintiff also alleges that its constitutional rights were violated when defendants disrupted Church activities by totally occupying the premises searched without any legitimate law enforcement purpose (P 17), used physical and other means of intimidating and harassing Church members who were present (P 18), and disseminated information gained in the searches to individuals and entities engaged in litigation against the Church (P 20). Plaintiff asserts that all of these actions were taken "in bad faith" and for the purpose of "harassing" the Church and its members in the exercise of their First Amendment rights (P 21), and as part of a "continuing effort" by the Justice Department, stretching over nearly a quarter of a century, to interfere with, and ultimately to destroy, the Church of Scientology (PP 7-12).

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n7. Plaintiff does not in the present complaint challenge the facial validity of the warrants used in the Los Angeles searches. Judge Byrne at the July 21, 1980, hearing on defendants' motion to dismiss ordered the constitutional challenge to the validity of the warrants stricken from the Second Amended Complaint on the ground of collateral estoppel. The court gave preclusive effect to the D.C. Circuit decision upholding the District of Columbia warrant because the Los Angeles warrant was nearly identical. See In re Search Warrant Dated July 4, 1977, supra.

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The Church seeks at least $ 100 million in general damages from defendants in their individual and official capacities, and at least $ 400 million in punitive damages. The Church also seeks injunctive and declaratory relief and reasonable attorneys' fees.
On October 20, 1980, defendants filed the present Rule 21(b) motion to dismiss the Complaint. Defendants contend that it should be entirely dismissed for lack of specificity and failure to state a claim upon which relief may be granted, and that the request for injunctive relief should be stricken on several grounds. Defendants also object to various claims and bases for jurisdiction set forth in the complaint. Three of the individual defendants assert personal defenses of improper service of process and/or lack of personal jurisdiction. Defendants also assert that the Lucas decision on the Rule 41(e) motion and Judge Richey's ruling on the Scientology defendants' suppression motion each bar plaintiff under the doctrine of collateral estoppel from attempting to relitigate any of the allegations of the complaint.
The Court held a hearing on the motion on November 10, 1980, and submitted six additional questions to the litigants [**11]  by minute order dated November 12, 1980. The Court held additional hearings on January 15, and March 4, 1981, before which the litigants submitted further documents and briefing. Meanwhile, the Department of Justice, which had not been served at the time the general motion to dismiss the Third Amended Complaint was filed, also moved to dismiss on February 9, 1981, on the ground that it is not a suable entity under the doctrine of sovereign immunity. The court denied the motion at a hearing on March 2, 1981, and the Department moved to reconsider, after which an additional hearing was held and numerous briefs were filed. Further memoranda were submitted in early June on the additional claim by the Department that Plaintiff's dissemination of information claim in Paragraph 20 is barred by res judicata.
I. LACK OF SPECIFICITY
Defendants urge the court to dismiss with prejudice under Rule 12(b)(6) the  [*952]  present Complaint, which they describe as a "hodgepodge of generalized and conclusory allegations, vaguely linked to a broad claim of an illegal search, unencumbered by any specific allegations as to what defendant did what to whom, or where or when." Defendants' Memorandum [**12]  of October 3, 1980, at 13. n8 Defendants assert that the Complaint fails to satisfy the alleged requirement of Butz v. Economou, 438 U.S. 478, 507-08, 98 S. Ct. 2894, 2911-2912, 57 L. Ed. 2d 895 (1978), that allegations of a constitutional violation against federal officials in their individual capacities be pled with clear and specific facts. Counsel for defendants also urges the court to dismiss from the suit 13 individual defendants who are not named in the text of the Complaint except for the allegation in Paragraph 5 that they were special agents of the FBI at the time of the Los Angeles searches.

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n8. Defendants are particularly critical of Paragraphs 7 through 11 of the Third Amended Complaint, which allege in very general language a wide-ranging plan, set in motion in the mid-1950's by the Justice Department and other agencies of the federal government, to harass and destroy the Scientology religion. Defendants assert that these paragraphs are as clearly defective as were the lengthy "conspiracy" and "harassment" allegations set forth in the Second Amended Complaint.
However, plaintiff indicates that it does not seek relief from the defendants for any period prior to 1977, and notes that the sole purpose of including Paragraphs 7 through 11 was to provide background information regarding the origin and nature of the "campaign" in which defendants allegedly participated by means of the Los Angeles searches. Plaintiff's Memorandum of October 14, 1980, at 5 n.2. The court declines defendants' invitation to strike Paragraphs 7 through 11 as irrelevant and inflammatory, but does intend, consistent with plaintiff's stipulation on the record at the hearing on January 15, 1981, to limit discovery regarding these paragraphs to only those individuals, documents, and activities which are reasonably calculated to lead to the discovery of evidence truly relevant to defendants' actions, motivations and plans connected with the Los Angeles searches. See Fed.R.Civ.P. 26(b)(1).
Since Paragraphs 7 through 11 do not, as interpreted by plaintiff, purport to state an independent cause of action upon which relief could be granted, the court need not address defendants' statute of limitations argument.

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The court does not find merit in defendants' contentions. Nowhere in Butz nor in any other case cited by defendants is the "short and plain statement of the claim" standard of Fed.R.Civ.P. 8(a) made inapplicable to Bivens actions against federal officials. An action may be dismissed for failure to state a claim only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957). n9 At most, Butz serves to remind federal courts that the existing rules of Civil Procedure should be applied "firm(ly)" in order to ensure that federal officials are not "harassed by frivolous lawsuits." 438 U.S. at 508, 98 S. Ct. at 2911. In similar constitutional suits against multiple governmental defendants, the courts have not required the plaintiff to do more than apprise defendants of the incident out of which the claim arose and the general nature of the action, especially where, as here, the defendants' activities are covert and thus by their nature difficult to determine. See, e.g., Founding Church of Scientology v. Director, Federal Bureau of Investigation,  [**14]  459 F. Supp. 748, 756-57 (D.D.C.1978); American Civil Liberties Union v. City of Chicago, 431 F. Supp. 25, 32 (N.D.Ill.1976). The present Complaint meets these requirements.

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n9. The Ninth Circuit authority on which the defendants rely provides no additional support for their position.  Sherman v. Yakahi, 549 F.2d 1287, 1290 (9th Cir. 1977), merely states that "conclusory allegations, unsupported by facts" have consistently been rejected as insufficient to state a claim under the Civil Rights Act. Accord, Kennedy v. H & M Landing, Inc., 529 F.2d 987, 989 (9th Cir. 1976). The court in Sherman applied the Conley v. Gibson, supra, analysis and in fact reversed in part the district court's dismissal of the claim.

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Other than to argue lack of specificity, defendants make no serious effort to establish that any paragraph of the Complaint is legally insufficient to state a constitutional claim. The courts have extended Bivens, supra, beyond Fourth Amendment claims to encompass several other constitutional provisions,  [**15]  including the First Amendment.  [*953]  See, e.g., Jacobson v. Tahoe Regional Planning Agency, 558 F.2d 928 (9th Cir. 1977); Writers Guild of America West, Inc. v. Federal Communications Commission, 423 F. Supp. 1064 (C.D.Cal.1976). The court finds no basis at this time for striking any part of the Complaint as failing to state a cause of action under the First and/or Fourth Amendments.
Defendants' request to dismiss the 13 defendants not referred to by name in the substantive paragraphs of the Complaint is also denied. Defendants have provided no authority supporting a rule of automatic dismissal of defendants named only in the caption of a complaint, nor would such a technical rule be consistent with the spirit of liberal notice pleading under the Federal Rules. Both of the cases on which defendants rely, see Potter v. Clark, 497 F.2d 1206, 1207 (7th Cir. 1974) and Child v. Beame, 417 F. Supp. 1023, 1205-26 (S.D.N.Y.1976), are distinguishable from the present action.
In Potter v. Clark, the complaint alleged no specific act by any defendant, and the court ruled that in any case the complaint must be dismissed because the issues raised were not cognizable under the Civil Rights [**16]  Act. In Child v. Beame, the defendants who were mentioned only in the caption of the complaint were dismissed because the complaint failed to assert the existence of a conspiracy or to allege facts tying the moving defendants in a personal and direct manner to the challenged action taken by the principal defendant. In any event, the complaint is far from silent on the role of the defendants other than those seven who are alleged in Paragraph 13 to have "directed and supervised" the searches at the Los Angeles premises. Paragraph 12 alleges that "all defendants" engaged in the Los Angeles searches of July 8, 1977, and the 13 defendants named only in the caption and in Paragraph 5 are at several places in the Complaint alleged to have been in "complicity" or "cooperation" with the seven supervisory defendants. (PP 13, 17, 19).
II. INJUNCTIVE RELIEF
Defendants urge the court to dismiss plaintiff's claims for injunctive relief on two grounds: 1) that the Complaint lacks sufficiently specific allegations of present or likely future harm, a necessary predicate to injunctive relief; and 2) that any injunction that might be granted would intrude too extensively into the discretion and flexibility [**17]  that must be accorded to law enforcement officials. Although each of these contentions raises legitimate problems, the court believes that dismissal of plaintiff's request for injunctive relief is unwarranted at this time.
Defendants rely upon Laird v. Tatum, 408 U.S. 1, 92 S. Ct. 2318, 33 L. Ed. 2d 154 (1972), which held that there must be an allegation of a "specific present objective harm or a threat of specific future harm" in order to establish a proper case or controversy over which a federal court has jurisdiction to enjoin data-gathering activities by the Army.  Id. at 14, 92 S. Ct. at 2326. Paragraph 22 of the Complaint alleges that defendants will continue to engage in the unconstitutional conduct set forth in the Complaint unless an injunction is issued. The allegations of harm to plaintiff from dissemination of documents to litigants against the Church, see P 20, and other actions connected with the searches, are substantially more concrete and direct than those in Laird v. Tatum, supra, and other cases cited by defendants which involved a mere "subjective chill" on the exercise of constitutional rights. See Founding Church of Scientology v. Director of FBI, supra, 459 [**18]  F. Supp. at 760 (refusing to dismiss claim for injunction against collection and utilization of certain information brought by a class of Scientology churches, including plaintiff); cf.  Socialist Workers Party v. Attorney General, 419 U.S. 1314, 1318, 95 S. Ct. 425, 427, 42 L. Ed. 2d 627 (1974) ("(w)hether the claimed "chill' is substantial enough is still subject to question, but that is a matter to be reached on the merits, not as a threshold jurisdictional question.").
Defendants correctly observe that courts should act with great caution in  [*954]  granting injunctions against law enforcement action or surveillance. See, e.g., Long v. District of Columbia, 152 U.S. App. D.C. 187, 469 F.2d 927, 932 (D.C.Cir.1972). However, injunctive relief may be ordered against law enforcement agencies in appropriate circumstances. See, e.g., Allee v. Medrano, 416 U.S. 802, 94 S. Ct. 2191, 40 L. Ed. 2d 566 (1974); Lyons v. City of Los Angeles, 615 F.2d 1243 (9th Cir. 1980). Defendants have not established that any injunctive decree that could be issued in this case would necessarily encroach improperly on legitimate investigative activities. Nor has the Justice Department established, as [**19]  it contends in its separate motion to dismiss, that it cannot be enjoined because its conduct relevant to this case is "committed to agency discretion by law" and therefore is not reviewable under 5 U.S.C. §  701(a) (2). The Department points to no statute that gives it absolute discretion to commit the acts alleged in the Complaint, and the mere existence of some degree of discretion does not render activity nonreviewable unless the potential disruption of the administrative process is shown clearly to outweigh the need for and feasibility of judicial review. See, e.g., Local 2855, AFGE (AFL-CIO) v. United States, 602 F.2d 574, 578-80 (3d Cir. 1979); Ferry v. Udall, 336 F.2d 706, 711 (9th Cir. 1964), cert. denied, 381 U.S. 904, 85 S. Ct. 1449, 14 L. Ed. 2d 286 (1965). No such clear showing has been made.
III. BASES FOR JURISDICTION AND CONSTITUTIONAL CLAIMS
The court has jurisdiction over this case pursuant to 28 U.S.C. §  1331, as the complaint states a Bivens cause of action under the Federal Constitution. The complaint sets forth numerous other bases for jurisdiction, but the court agrees with defendants that none is valid, and orders them stricken from the Complaint. Plaintiff's [**20]  assertion of jurisdiction under 28 U.S.C. §  1343(4) is improper because plaintiff has stated no claim for relief under any act of Congress for the protection of civil rights. Jurisdiction does not lie under the Administrative Procedure Act, 5 U.S.C. §  551 et seq., because that act "does not afford an implied grant of jurisdiction permitting federal judicial review of agency action." Califano v. Sanders, 430 U.S. 99, 107, 97 S. Ct. 980, 985, 51 L. Ed. 2d 192 (1977). Nor does the Declaratory Judgment Act, 28 U.S.C. § §  2201 and 2202, provide an independent basis for federal jurisdiction.  Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72, 70 S. Ct. 876, 878-879, 94 L. Ed. 1194 (1950). Plaintiff's reliance on the mandamus statute, 28 U.S.C. §  1341, is also unavailing because mandamus does not lie in this case. Plaintiff does not seek to compel the execution of a ministerial, nondiscretionary act, the duty to perform which is so plainly prescribed as to be free from doubt. See Lee Pharmaceuticals v. Kreps, 577 F.2d 610, 618 (9th Cir. 1978), cert. denied, 439 U.S. 1073, 99 S. Ct. 847, 59 L. Ed. 2d 40 (1979).
Defendants also contend that plaintiff lacks even an arguable basis [**21]  for asserting a violation of its Fifth and Ninth Amendment rights. n10 Plaintiff has provided no authority or hint as to how its Fifth Amendment rights to due process or equal protection, or its Ninth Amendment rights, may have been infringed. Since plaintiff's claims appear to be adequately encompassed by the First and Fourth Amendments, the court orders stricken from the Complaint any mention of the Fifth and Ninth Amendments.

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n10. The Fifth Amendment to the United States Constitution provides that no person shall "be deprived of life, liberty, or property, without due process of law," and has been interpreted to incorporate the equal protection clause of the Fourteenth Amendment in suits against federal agencies and officers.  Bolling v. Sharpe, 347 U.S. 497, 74 S. Ct. 693, 98 L. Ed. 884 (1954). The Ninth Amendment states that "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."

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IV. COLLATERAL ESTOPPEL EFFECT OF THE LUCAS DECISION [**22]  
In order to have collateral estoppel effect in a subsequent action, an issue of fact or law must be actually litigated and determined by a valid and final judgment,  [*955]  and the determination of the issue must be essential to the judgment.  Hoag v. New Jersey, 356 U.S. 464, 470, 78 S. Ct. 829, 833, 2 L. Ed. 2d 913 (1958); Haize v. Hanover Ins. Co., 536 F.2d 576, 579 (3d Cir. 1976); Restatement (Second) of Judgments §  68 (Tentative Draft No. 4, 1977).
Plaintiff contends that Judge Lucas' dismissal of its Fed.R.Crim.P. 41(e) action fails to satisfy the final judgment requirement for collateral estoppel. It urges that his decision must be appealable in order to have preclusive effect in this action, and raises doubts about its appealability in view of its past unsuccessful efforts to appeal. The Ninth Circuit has twice dismissed appeals from the Lucas decision for lack of appellate jurisdiction, once after the indictment of eleven Scientology defendants in the District of Columbia, Church of Scientology v. United States, 591 F.2d 533 (9th Cir. 1979), cert. denied, 444 U.S. 1043, 100 S. Ct. 729, 62 L. Ed. 2d 729 (1980), and later, without opinion, after nine of the defendants [**23]  were convicted.
Defendants, without offering any reasons for appealability, merely surmise that Judge Lucas' decision "may" be appealable while repeatedly asserting that appealability does not matter. They contend that the decision on the 41(e) motion is "final" for purposes of collateral estoppel, if not for purposes of appeal, since it is not tentative in any way and fully disposes of the Church's claim for the return of its property.
The court disagrees. It concludes that the Lucas decision cannot be invoked as collateral estoppel unless it is appealable, and further that the decision does not appear to be appealable under the relevant caselaw and policy considerations. The court also believes that the Lucas decision fails to satisfy the actually litigated and full and fair opportunity to litigate standards required for issue preclusion.
A. Importance of Appealability
Defendants cite some authority suggesting that appealability may not be essential to giving a prior judgment preclusive effect, see Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80 (2d Cir. 1961), cert. denied, 368 U.S. 986, 82 S. Ct. 601, 7 L. Ed. 2d 524 (1962); Sherman v. Jacobson, 247 F. Supp. 261 (S.D.N.Y.1965). [**24]  n11 Although the issue presents "(l)ive and difficult questions," 1B Moore's Federal Practice, supra, P 0.416(6), at 2325, this court concludes that the Lucas decision should not collaterally estop plaintiff from relitigating the legality of the search and seizure unless it is now or will at some future time be appealable.

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n11. The court notes that in both of these cases the prior decision was appealable, and thus the language suggesting that appealability is only a factor to be considered and not a prerequisite to collateral estoppel is dicta. In Lummus Co., supra, the court noted that the prior judgment had in fact been litigated on appeal, even though in the typical case the order entered would not have been appealable. 297 F.2d at 90. In Sherman, supra, the court recognized that an opportunity to appeal the prior decision "will one day materialize." 247 F. Supp. at 270.

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In support of this view, plaintiff cites Standefer v. United States, 447 U.S. 10, 100 S. Ct. 1999, 64 L. Ed. 2d 689 (1980). In that case,  [**25]  the Supreme Court relied heavily upon the absence of an opportunity for appellate review to reject the argument of a convicted aider and abettor that the criminal complaint against him was barred under the doctrine of collateral estoppel by a prior acquittal of the principal. The Court stated that the inability of the Government to obtain appellate review and to utilize certain other procedural devices for correcting errors "strongly militates against" giving a prior acquittal preclusive effect, citing the Restatement (Second) of Judgments §  68.1 (Tentative Draft No. 3, 1976), which denies preclusive effect to any judgment "unreviewable as a matter of law." 447 U.S. at 23, 100 S. Ct. at 2007. The Court noted that the absence of appellate review makes "often unwarranted" an underlying premise of the estoppel doctrine-a basic confidence that the result achieved in the initial litigation was substantially correct.  Id. at 23 n.18, 100 S. Ct. at 2007 n.18. n12

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n12. The Standefer Court specifically refrained from ruling that the availability of appellate review is always an essential predicate of estoppel, citing Johnson Co. v. Wharton, 152 U.S. 252, 14 S. Ct. 608, 38 L. Ed. 429 (1894), and 1B Moore's Federal Practice, supra, P 0.416(5).  447 U.S. at 23 n.18, 100 S. Ct. at 2007 n.18. But the exceptions recognized in these authorities are not applicable here. In Johnson Co. v. Wharton, the plaintiff sought to preclude relitigation of the defense of noncoverage of a patent and license agreement in a second action against a licensee to recover royalties. The Court gave preclusive effect to the prior judgment of the circuit court, the original trier of fact, even though it had not been appealable to the Supreme Court because the jurisdictional amount required by statute was lacking.  152 U.S. at 261, 14 S. Ct. at 611.
The Johnson Co. v. Wharton analysis is primarily applicable to claims of res judicata, involving causes of action that are essentially identical. 1B Moore's Federal Practice, supra, P 0.416(5), at 2301 (noting that in Johnson Co. v. Wharton the plaintiffs had split virtually identical claims into separate actions). Where only collateral estoppel and not res judicata may be asserted because the causes of action are not identical, see id. P 0.405(3), a prior nonappealable judgment is conclusive as to issues previously litigated only if appeal of the second action is also not permitted by statute. Id. P 0.416(6), at 2325-26. To reach a contrary result would frustrate legislative intent in providing a right of appeal in the second action.
Thus, the Johnson Co. v. Wharton exception noted by the Court does not apply here, where the Lucas decision is asserted only as collateral estoppel and not res judicata, and where no statute precludes appeal from the prior determination or from a decision in this action. See also 18 Wright, Miller & Cooper, Federal Practice and Procedure §  4433, at 320-21 & n.39 (1981) (exception may apply where special factors may explain lack of appellate review). Defendants in the present action have not relied on the doctrine of res judicata for good reason. The causes of action in the two proceedings, although raising some of the same Fourth Amendment issues, are different in that 1) the Rule 41(e) motion concerned the legality of the seizure of particular documents, whereas the present action concerns the legality of the search and seizure operation as a whole; and 2) the defendant in the 41(e) action was the United States, and here defendants are alleged to be certain of the individual Government agents involved in the Los Angeles searches.

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  [*956]  In addition, plaintiff invokes the well-settled rule that a prior judgment does not preclude relitigation of issues it determined if the right to appeal that judgment was destroyed by events beyond the control of the losing litigant, i.e., the appeal became moot. See 1B Moore's Federal Practice, supra, P 0.416(1), at 2203. The only external event which had an effect on the right to appeal the 41(e) decision was the Government's action in indicting eleven members of the Church two months after Judge Lucas issued his ruling. As the Church did not voluntarily destroy its right to appeal, it would be unfair to invoke the 41(e) ruling against it in view of the "critical" importance that the opportunity to appeal has assumed in the law of collateral estoppel. See Standefer v. United States, supra; Restatement (Second) of Judgments §  68.1 (Tentative Draft No. 4, 1977) & comment a; Dorsey v. Solomon, 435 F. Supp. 725, 741-42 (D.Md.1977), modified on other grounds, 604 F.2d 271 (4th Cir. 1979). n13

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n13. Several other well-established rules of collateral estoppel highlight the importance of appealability. For example, a prior judgment is conclusive of only those issues whose determination supports the judgment, since the prevailing litigant does not generally have the opportunity or incentive to appeal issues adjudicated against it. 1B Moore's Federal Practice, supra, P 0.443(5), at 3922-23. Once an appeal of a decision resting on alternative grounds is decided, the judgment is conclusive of only those issues reached and affirmed by the appellate court. Id. at 3921.
In addition, although concepts of "finality" are not precisely the same for collateral estoppel and appealability purposes, the two are "closely related." Id. P 0.416(3), at 2251. To the extent that they diverge, the finality requirement for appealability is generally easier to satisfy, as, for example, a number of interlocutory decisions may be appealed but may not be given preclusive effect in subsequent actions. See id.; Restatement (Second) of Judgments §  41 (Tentative Draft No. 1, 1973), comment b (finality for issue preclusion purposes resembles the more restrictive formulation of the concept of finality formerly used in connection with appellate review).

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Furthermore, giving preclusive effect to the Lucas decision would be inconsistent with the Supreme Court's decision in United States v. Wallace & Tiernan Co., 336 U.S. 793, 69 S. Ct. 824, 93 L. Ed. 1042 (1949). That case was a civil antitrust action in which defendants sought to invoke as res judicata a suppression order in a prior criminal action. The district court in that prior action had dismissed the criminal indictments  [*957]  and suppressed and returned the subpoenaed documents and copies because women had been excluded from the grand jury. The Supreme Court found that the order was not intended to apply beyond the criminal matter with respect to which it was entered, but even if it was, the Court held that the prior order could not be treated as final for purposes of res judicata since the prior decision was not appealable as it was not litigated as "an independent plenary proceeding." As discussed in the next section, the Court believes that the 41(e) petition before Judge Lucas similarly lacks sufficient characteristics of independence to be treated as appealable or be given preclusive effect.
B. Appealability of the Lucas Decision
In dismissing the Church's appeal [**28]  for lack of appellate jurisdiction, the Ninth Circuit in Church of Scientology v. United States, supra, carefully avoided deciding whether Judge Lucas' ruling may someday be appealable. The court was troubled by the fact that the action was brought by the Church itself, against which there has not yet been any indictment. See 591 F.2d at 535. In the absence of an indictment against the Church, the question arises whether the Church would ever have an alternative means-including an opportunity to appeal-of seeking the return of its documents, since the normal procedure of seeking return by a motion in a pending criminal proceeding might not be available.
The Ninth Circuit cited United States v. Ryan, 402 U.S. 530, 91 S. Ct. 1580, 29 L. Ed. 2d 85 (1971), in which the Court recognized an exception to the rule, see DiBella v. United States, supra, of not disturbing ongoing criminal proceedings with interlocutory appeals for a limited class of cases where denial of immediate review would render impossible any appellate review of an individual's claims for return of seized property.  591 F.2d at 536. Denial of review when there is no criminal prosecution pending against the moving party [**29]  could mean that the Government might retain indefinitely the property without any opportunity for the movant to assert on appeal his right to possession.  402 U.S. at 533, 91 S. Ct. at 1582. Obviously concerned about the impact of Ryan on a possible future appeal of Judge Lucas' decision, Judge Duniway concluded by stating that:
Our decision that the order appealed from is not appealable is not free from doubt, for the reasons stated by Mr. Justice Brennan in United States v. Ryan, supra. There must, at some time, be a remedy available to the Church for the return of its property, if it has been unlawfully taken. But the present appeal is not that remedy. We decide nothing more.
Appeal dismissed.

 591 F.2d at 537.
It could be argued that the Lucas decision will become appealable at some future date when the criminal litigation is completed, because at that point there would no longer be any concern about interfering with an ongoing criminal proceeding. Clearly, the concern with interruption of criminal litigation is one of the reasons why the immediate appeal from the 41(e) ruling was denied by the Ninth Circuit. The principal case that the Ninth Circuit relied [**30]  upon was DiBella v. United States, supra, in which the Supreme Court held that a pre-indictment Rule 41(e) motion was not normally appealable because such an appeal may be used as "an instrument of harassment" that could seriously disrupt the criminal proceedings.  369 U.S. at 129, 82 S. Ct. at 659. After citing numerous cases following DiBella, the Ninth Circuit stated that:
The principle that runs through all of these authorities is that an ongoing criminal proceeding is not to be interrupted by an appeal from an order denying suppression of evidence that may be used in that proceeding. This is such a case.

 591 F.2d at 536.
However, the potential for disruption of pending criminal proceedings is not the only reason why pre-indictment Rule 41(e) motions are generally not appealable. The Supreme Court has consistently held that the appealability of a petition for suppression and/or the return of documents depends  [*958]  on "its essential character and the circumstances under which it is made," i.e., whether the proceeding is "independent" or "merely a step in the trial of the criminal case." See DiBella v. United States, supra, 369 U.S. at 129-31, 82 S. Ct. at 659-660; [**31]  Carroll v. United States, 354 U.S. 394, 404 & n.17, 77 S. Ct. 1332, 1338 & n.17, 1 L. Ed. 2d 1442 (1957); United States v. Wallace & Tiernan Co., supra, 336 U.S. at 802, 69 S. Ct. at 829; Cogen v. United States, 278 U.S. 221, 225, 49 S. Ct. 118, 119, 73 L. Ed. 275 (1929). The Court in DiBella characterized as "truly interlocutory" pre-indictment Rule 41(e) motions directed at the suppression of evidence, and noted that the filing of such a motion at a very early stage of the criminal proceedings does not by itself "transmute the ensuing evidentiary ruling into an independent proceeding begetting finality even for purposes of appealability," let alone for issue preclusion purposes.  369 U.S. at 131, 82 S. Ct. at 660.
In examining the character of a Rule 41(e) proceeding to determine if it is appealable, the DiBella Court focused on two criteria. The Court held that:
Only if the motion is solely for the return of property and is in no way tied to a criminal prosecution in esse against the movant can the proceedings be regarded as independent.

 369 U.S. at 131-32, 82 S. Ct. at 660. The Ninth Circuit in Church of Scientology v. United States, supra, quoted this language, and [**32]  several decisions have interpreted it literally to require dismissal of an appeal if there was any attempt in the motion to suppress evidence or any connection with a pending criminal proceeding, including a grand jury investigation. See, e.g., Meier v. Keller, 521 F.2d 548, 556 (9th Cir. 1975), cert. denied, 424 U.S. 943, 96 S. Ct. 1410, 47 L. Ed. 2d 348 (1976); Parrish v. United States, 376 F.2d 601, 603 (4th Cir. 1967) (Boreman, J., concurring); Hill v. United States, 346 F.2d 175, 178 (9th Cir.), cert. denied, 382 U.S. 956, 86 S. Ct. 433, 15 L. Ed. 2d 361 (1965). n14 Other authorities suggest that an appellate court may be less strict about requiring that the 41(e) action be absolutely separate from any criminal proceedings. But these authorities also require dismissal of an appeal from a Rule 41(e) decision where suppression was the primary if not the exclusive objective of the action. See Carroll v. United States, supra, 354 U.S. at 404 & n.17, 77 S. Ct. at 1338 & n.17; Cogen v. United States, supra, 278 U.S. at 228, 49 S. Ct. at 120; Dudley v. United States, 427 F.2d 1140, 1141 (5th Cir. 1970).

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n14. Two Ninth Circuit decisions following DiBella indicate that the denial of a Rule 41(e) petition does not necessarily become appealable upon the termination of a pending criminal proceeding, the existence of which had previously required dismissal of an appeal. In Hill v. United States, supra, the court held that the denial of a 41(e) petition was not appealable even though there was no longer any pending criminal matter because a change in the law barred further prosecution of the moving party. The court ruled that the motion was interlocutory in character because it had been directed at suppressing evidence in any possible future prosecution. Id. at 177-78. In Goodman v. United States, 369 F.2d 166 (9th Cir. 1966), the Ninth Circuit suggested that a proceeding for suppression and return of documents is independent and appealable only if "there is, and has been, no criminal case pending in any stage" to which it was closely tied.  Id. at 168 (emphasis added).

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There can be little doubt that the suppression objective and the relationship to the pending criminal proceedings in the District of Columbia had a pervasive effect on the conduct of the Rule 41(e) litigation. As the Ninth Circuit stated in dismissing the first appeal,
The petition or motion here did not and does not seek only the return of the property. It expressly seeks suppression of evidence, and is avowedly aimed at suppressing evidence in grand jury, extradition, and other criminal proceedings.

 Church of Scientology v. United States, supra, 591 F.2d at 537. The court had earlier indicated that:
Throughout the proceedings in the District Court in the case at bar, the Church has made it clear that the principal reason for its motion has been and is to prevent the use of any of the seized papers for the purpose of obtaining indictments  [*959]  against either the Church or its officials or employees.

 Id. at 534. n15 Because of the suppression objective and the close connection with the pending criminal proceedings in the District of Columbia, the court believes that the Church's 41(e) motion is not a sufficiently "independent" proceeding to be appealable [**34]  or capable of collateral estoppel effect in the present action. n16

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n15. Plaintiff now contends that the Ninth Circuit's characterization of the 41(e) action is "inaccurate" in that the primary purpose of the Church was to prevent a further invasion of privacy by seeking return of its documents. Plaintiff's Memorandum of February 27, 1981, at 8-9. But the Church itself in its opening brief to the Ninth Circuit urged that mere return of the documents would not be a sufficient remedy, since only their suppression could prohibit the Government from making any use whatsoever of the documents or the information contained in them. Brief of the Church of Scientology of California, Church of Scientology v. United States, supra, at 65. Furthermore, Judge Lucas stated that
As the Petitioner has a copy of the documents, the principal purpose of this action is to determine whether the Government will be free to use the documents in possible future criminal proceedings.
Lucas decision at 3.
n16. This conclusion is further supported by an examination of the reasons for the DiBella criteria for appealability. Rulings on specific items of evidence tend to be "disjointed" in a preindictment Rule 41(e) proceeding because the legality of the search as to that evidence cannot truly be determined until the evidence in the case is sufficiently developed and organized to bring all relevant circumstances to light.  DiBella v. United States, supra, 369 U.S. at 129, 82 S. Ct. at 659. Permitting appeals of such proceedings would lead to a "truncated" and "premature and inadequate" discussion of admissibility by the appellate court.  Id. at 129, 132, 82 S. Ct. at 659, 660. Important preliminary issues such as standing also might not receive proper focus. See Church of Scientology v. United States, supra, 591 F.2d at 537 ("(s)uppression at the behest of the Church would be an abuse of Rule 41(e) (because it would benefit individuals who may not, in fact, have Fourth Amendment standing, see United States v. Hubbard, supra, 493 F. Supp. at 215) and is an additional reason to deny appealability.").

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Finally, it may be argued that the possible unavailability of an alternative remedy, permitting appeal, for the return of the Church's documents requires that an appeal of Judge Lucas' decision someday be permitted. See United States v. Ryan, supra. However, the court believes that a decision of the D.C. Circuit last year substantially lessens the basis for the Ninth Circuit's concern about the availability of an alternative remedy.
In appeals from Judge Richey's denial of several post-trial motions by the Church, the D.C. Circuit ruled that the district court had ancillary jurisdiction to entertain the Church's motion for return of property, even though it was not a party to the criminal proceedings. See United States v. Hubbard, 208 U.S. App. D.C. 399, 650 F.2d 293 at 307, 310 (D.C.Cir.1980). The court vacated and remanded Judge Richey's decision to make public all the documents seized, whether or not used in the criminal litigation, id. at 325, and in a supplemental opinion filed February 9, 1981, ordered most of the documents to remain sealed based on the "privacy" interests of the Church. In the course of its opinion the D.C. Circuit appeared to assume that the Church would [**36]  be entitled to return of the documents, regardless of the validity or invalidity of the underlying search and seizure, upon bringing a motion in the district court as soon as the evidentiary utility of all of the documents is exhausted. See id. at 302, 310.
C. Additional Problems
The Lucas decision does not appear to satisfy two additional prerequisites for invoking collateral estoppel. First, it appears that the Church's contentions that the scope of the search went far beyond the terms and geographic confines of the warrant were not "actually litigated." See 1B Moore's Federal Practice, supra. Although the 41(e) hearings were continued for several months in order to permit the Church to prepare its evidence on these issues, the Church introduced no such evidence. Judge Lucas denied the Church's request for a further continuance, observing that the Church had "abandoned" its prior contentions  [*960]  and unveiled a "completely new theory" based upon a failure to minimize the intrusion. Lucas decision at 7-8, 24 n.10. Given the extensive evidence later introduced in support of the suppression motion before Judge Richey regarding the number of documents seized beyond the terms [**37]  and geographic confines of the warrant, it would be unfair to preclude plaintiff from raising these issues here based upon a ruling on which no evidence was introduced.
Second, by virtue of the nature of 41(e) proceedings, Plaintiff does not appear to have had a "full and fair opportunity" to litigate its Fourth Amendment contentions before Judge Lucas, an opportunity which the Supreme Court has repeatedly emphasized in recent years. See, e.g., Standefer v. United States, supra, 447 U.S. at 22, 100 S. Ct. at 2007 (1980); Montana v. United States, 440 U.S. 147, at 164, 99 S. Ct. 970, at 979, 59 L. Ed. 2d 210 (1979); Parklane Hosiery Co. v. Shore, 439 U.S. 322, at 332, 99 S. Ct. 645, at 652, 58 L. Ed. 2d 552 (1979). Plaintiff's Fourth Amendment claims were litigated far less extensively before Judge Lucas than they were before Judge Richey. In the 41(e) action before Judge Lucas approximately 12 FBI agents and three members of the Church testified in the course of several days of hearings on the execution of the search. The suppression hearing before Judge Richey covered six full weeks, divided between Washington, D.C., and Los Angeles, and the transcript is over 8,000 pages long. The [**38]  Scientology defendants called 5 witnesses and introduced 701 exhibits; they presented to Judge Richey two major studies of the number and variety of documents seized outside of the warrant and the plain view exception.  United States v. Hubbard, supra, 493 F. Supp. at 233-34.
By contrast, the Church in the 41(e) action conducted no discovery, even though it was a civil action, as Judge Lucas ruled initially that there was no authority for discovery under Rule 41(e), and the Church made no subsequent attempt to pursue discovery. Lucas decision at 26 n.12. The absence of litigation over the extent of documents seized outside the warrant and the absence of an opportunity to appeal also preclude a finding that the Church's Fourth Amendment contentions were "fully and fairly" litigated in the 41(e) proceeding. n17

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n17. The importance of the fullness and fairness of the litigation asserted as estoppel is accentuated by the fact that defendants to the present action were not parties to the 41(e) action. The doctrine of mutuality of estoppel once required that one who invokes the conclusive effect of a judgment have been either a party or a privy to the suit in which the judgment was rendered. 1B Moore's Federal Practice, supra, P 0.412, at 1801. Although use of the mutuality doctrine in the federal courts has been eliminated, Allen v. McCurry, 449 U.S. 90, 101 S. Ct. 411, 415, 66 L. Ed. 2d 308 (1980), it remains proper to give greater weight to concerns about the fairness of using a prior decision as collateral estoppel where, as here, the party asserting estoppel was not a party to the prior action. See Standefer v. United States, supra, 447 U.S. at 22-24, 100 S. Ct. at 2007-2008; Restatement (Second) of Judgments §  88 (Tentative Draft No. 3, 1976), comment b.

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V. COLLATERAL ESTOPPEL EFFECT OF THE RICHEY DECISION
The nine Scientology defendants vigorously and extensively litigated their Fourth Amendment contentions in a suppression motion before Judge Richey in the District of Columbia. The court rejected these arguments, finding that "(o)verall, the FBI agents who executed the warrants at issue in this case performed a very difficult job in a most reasonable manner." United States v. Hubbard, supra, 493 F. Supp. at 234. In reaching its ultimate conclusion of reasonableness, the court found that the agents had adequate preparation and supervision for the searches, did not use excessive force, did not exceed the geographical bounds of the warrant, and did not seize an unreasonable number of documents outside of the terms of the warrant and not within the "plain view" exception to the warrant requirement.  Id. at 219-34.
Plaintiff offers numerous arguments against the use of Judge Richey's ruling on the suppression motion as collateral estoppel. It places primary emphasis on asserting the absence of two essential elements of collateral estoppel: 1) lack of sufficient  [*961]  identity of the Scientology defendants and plaintiff, one of [**40]  several assertedly "different" and "independent" churches of the Scientology faith; and 2) that Judge Richey's findings of no Fourth Amendment violation are not "essential to the judgment" in the District of Columbia criminal action. Although the court finds little merit in plaintiff's other contentions, n18 the court agrees with the Church that its two primary arguments preclude the Richey decision from having any preclusive effect in the present action.

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n18. Plaintiff's assertion that the motion to suppress was merely a "procedural step" in the litigation which cannot be accorded preclusive effect lacks merit because the denial of the suppression motion was incorporated in the final judgments of conviction. Plaintiff's contention that differences in procedure and rules of evidence justify a refusal to permit issue preclusion in a civil case based upon a criminal judgment is also unpersuasive, since numerous courts have used the denial of a criminal suppression motion prior to conviction as a bar to civil suits against police officers for violation of civil rights. See, e.g., Allen v. McCurry, supra, 101 S. Ct. at 414; Manis v. United States, 467 F. Supp. 828 (E.D.Tenn.1979).
Plaintiff also urges that the Richey decision should not preclude the Church from relitigating any of the issues connected with the search and seizure because the allegations of bad faith and intent to interfere with First Amendment rights (see PP 12, 13 & 21) render the issues in the present suit fundamentally different from those litigated in the suppression motion. Plaintiff relies on Brubaker v. King, 505 F.2d 534 (7th Cir. 1974), for the proposition that a constitutional claim may be asserted against an officer for acting in bad faith even though a prior decision has held that the conduct itself was lawful. In Brubaker, the court refused to dismiss a civil claim for unlawful arrest in spite of a magistrate's finding of objective probable cause for arrest.  Id. at 538 n.2. But in Allen v. McCurry, supra, the Supreme Court expressly disapproved of the result in Brubaker, stating that "a state court decision that the police acted legally cannot but foreclose a claim that they acted in bad faith." Plaintiff's addition of a bad faith gloss to its essentially Fourth (and thus not First) Amendment claims (which do not include, in the court's opinion, Paragraphs 17, 18 and 20 of the Complaint) thus has no bearing on whether the Richey decision has collateral estoppel effect in the present action.

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A. Identity of Parties
Defendants set forth two theories for binding the Church even though it was not a party to the criminal proceedings in the District of Columbia:
1) that the Church behind the scenes effectively controlled the Scientology defendants' conduct of the litigation, see Montana v. United States, 440 U.S. 147, 99 S. Ct. 970, 59 L. Ed. 2d 210 (1979); and
2) that a sufficient identity of interests exists between the California Church and the nine Scientology defendants, many of whom at the time of the searches and their trial were top officials of the Church, to bring the Church in privity with them. The court believes that defendants have failed to carry their burden on both theories, each of which involves significant factual issues.
1. Control by a nonparty
Nonparties may be bound to the results of a prior litigation in which they had a direct financial or proprietary interest and over which they assumed a sufficient degree of control and participation.  Montana v. United States, supra, 440 U.S. at 154-55 & n., 99 S. Ct. at 974 & n. (control theory as analytically distinct from privity); Restatement (Second) of Judgments §  83 (Tentative Draft No. 2, 1975); 1B [**42]  Moore's Federal Practice, supra, P 0.411(6). Exercise of control is a question of fact to be proved affirmatively by the party invoking the conclusive forces of the judgment. Id. at 1566-67.
The Government defendants assert that "(i)t is logical to assume" that the Church paid for the attorney's fees and the costs of defending its officers and members before Judge Richey, and that the Church had significant influence on the way in which their defense was conducted. They note that many of the nine Scientology defendants were prominent decisionmakers in the Church as a whole, including Mary Sue Hubbard, who is the wife of the founder of the Church of Scientology, Ronald Hubbard, and its "Commodore Staff Guardian," and Henning Heldt, who has been described by his counsel as "the highest administrative official of the Church of Scientology in  [*962]  the United States." The Government defendants also request the court to infer control of the litigation by the Church because certain of the large contingent of attorneys for the nine Scientology defendants have also represented either the California or Founding Churches of Scientology in related proceedings not including the present [**43]  action.
The court is not willing to entertain such assumptions. Defendants have made no real effort to establish with probative evidence that the Church had a sufficient "laboring oar" in the criminal proceeding to activate principles of estoppel, see Montana v. United States, supra, 440 U.S. at 155, 99 S. Ct. at 974, and thus the control theory for binding the Church to the ruling on the suppression motion must be denied for lack of proof.
2. Privity
Issue preclusion has long been available where the party against whom the prior decision is asserted is not identical to the losing party in the prior action, but nevertheless has a sufficient identity with that party to be deemed its "privy". See, e.g., Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S. Ct. 645, 649, 58 L. Ed. 2d 552 (1979). Privity for estoppel purposes is a creature of particular circumstances which may be described by a variety of terms, including "substantial identity," see Chicago, R. I. & P. Railway Co. v. Schendel, 270 U.S. 611, 618, 46 S. Ct. 420, 423, 70 L. Ed. 757 (1927), and status as a "virtual representative," see Performance Plus Fund v. Winfield & Co., 443 F. Supp. 1188, 1191 (N.D.Cal.1977). Whatever [**44]  the label, the fundamental issue is whether the party against whom estoppel is asserted has a sufficient identity of interests with the losing litigant in the prior suit to make the assertion of judicial finality consistent with fairness to all litigants involved. The question is factual, and one of substance, not form.  Expert Electric, Inc. v. Levine, 554 F.2d 1227, 1233 (2d Cir. 1977); Aerojet General Corp. v. Askew, 511 F.2d 710, 719 (5th Cir.), cert. denied, 423 U.S. 908, 96 S. Ct. 210, 46 L. Ed. 2d 137 (1975).
The privity issue in this case is a difficult one because the Ninth Circuit's opinion in Church of Scientology v. United States, supra, 591 F.2d at 537, and the position taken by the Scientology defendants and the Church in documents filed in other actions which the parties have inserted into the record in this case, do contain language suggesting that there might be an identity of interests between plaintiff and the nine Scientology defendants. Curiously, however, after the initial hearing on the present motion, the Government defendants explicitly abandoned their assertion of privity in favor of exclusive reliance on the Montana v. United States, supra, theory of control [**45]  by a nonparty. In response to the Court's question regarding the application of legal precedents to the privity issue, see Minute Order of November 12, 1980, the defendants argued that "the test for use of collateral estoppel is not privity" but rather whether the party to be estopped had a sufficient "laboring oar" in the prior suit. Defendants' Memorandum of January 14, 1981, at 7. As a result, the court declines to find privity on the present motion because defendants have failed to carry their burden as moving parties of proving that the ties between the California Church and the Scientology defendants are sufficient to meet the legal standards for privity.
A finding of privity in the circumstances of this case would be a novel result for which the court has found no analagous precedent. Many cases hold that as a prerequisite for privity the party in the prior litigation must have express or implied authority to represent the interests of the party to be bound. See, e.g., Ellentuck v. Klein, 570 F.2d 414, 425 (2d Cir. 1978); 1B Moore's Federal Practice, supra, P 0.411(1), at 1253-54 & n.14. The Government defendants have not established the existence of such authority, nor have [**46]  they shown that the due process requirements of notice and full and fair opportunity to litigate were afforded the Church through the defendants in the criminal litigation. See Performance Plus Fund v. Winfield & Co., supra, 443 F. Supp. at 1191; 1B Moore's Federal Practice, supra, P 0.411(1), at 1252.  [*963]  Nor have defendants attempted to prove the extent and nature of any "direct" interest the Church itself might have had in the proceedings before Judge Richey. See Davis v. Eide, 439 F.2d 1077 (9th Cir. 1971) (findings for defendant in prior criminal action on consent to entry and probable cause for arrest issues could not be asserted against police officers in subsequent civil rights action for lack of privity because officers had no measure of control over criminal proceedings and had no "direct individual personal interest" in its outcome).
Furthermore, Judge Byrne has ruled in this case that the Church has standing to seek monetary damages only on its own behalf, and not on behalf of its members. Minute Order of July 21, 1980; see Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 97 S. Ct. 2434, 53 L. Ed. 2d 383 (1977). This ruling suggests that the Church [**47]  is a jural entity distinct from its members, which is a key factor in determining whether or not privity exists. See, e.g., Restatement (Second) of Judgments §  110 (Tentative Draft No. 4, 1977) (unincorporated associations); id. §  108, comment a (judgment in action to which corporation is a party does not generally bind or redound to benefit of shareholders, directors, or officers since corporation is for most purposes treated as a distinct jural person). Defendants have not persuasively responded to plaintiff's assertion that, as in the corporate context, the Church and its officers cannot be deemed to be in privity in the absence of an "alter ego" relationship that has not been demonstrated on the present record. See, e.g., Dudley v. Smith, 504 F.2d 979, 982 (5th Cir. 1974).
B. Not Essential to the Judgment
Plaintiff also argues that Judge Richey's findings cannot preclude relitigation here of its Fourth Amendment claims because those findings fail to meet the "essential to the judgment" requirement for issue preclusion. See Hoag v. New Jersey, 356 U.S. 464, 470, 78 S. Ct. 829, 833, 2 L. Ed. 2d 913 (1958); Segal v. American Telephone & Telegraph Co., 606 F.2d 842, 845 n.2 (9th [**48]  Cir. 1979). The court agrees, although its reasoning has changed in light of the D.C. Circuit's affirmance of the convictions of the nine Scientology defendants in a per curiam opinion issued October 2, 1981.
Plaintiff points out that Judge Richey's rulings on the merits of the Scientology defendants' Fourth Amendment contentions were not the sole bases for his denial of the motion to suppress. The defendants did not make the traditional argument that the particular evidence to be used against them at trial was unlawfully seized and therefore should be suppressed under the exclusionary rule. See Stone v. Powell, 428 U.S. 465, 96 S. Ct. 3037, 49 L. Ed. 2d 1067 (1976). Judge Richey noted that defendants made very little, if any, effort to challenge directly as not described in the valid warrant and therefore improperly seized any of the 201 documents the prosecution had earmarked for use in its case-in-chief.  United States v. Hubbard, supra, 493 F. Supp. at 221, 234. Thus, defendants' only theory for suppressing the 201 case-in-chief documents was to argue that the Los Angeles searches went so far beyond permissible bounds as to constitute a "general" or "exploratory" search which required [**49]  the exclusion of all documents seized therein.  Id. at 221-22.
After extensive analysis of the caselaw, the court seemingly reached two legal conclusions which "convincingly undermined" defendants' general search theory for total suppression. Id. at 213. Each provided a sufficient basis for denial of the motion to suppress the 201 documents without any factual inquiry into the lawfulness of the execution of the Los Angeles warrants. First, the court ruled that only four of the nine Scientology defendants had standing to assert their Fourth Amendment rights against the search, and that the rights of the four were limited to evidence to be used against them which was seized from their own respective offices.  Id. at 215. Thus, because of the limited scope of defendants' "reasonable expectation of privacy" under Rakas v. Illinois, 439 U.S. 128, 99 S. Ct. 421, 58 L. Ed. 2d 387 (1978), the court permitted only a very small percentage of the documents  [*964]  seized from over 40 offices and other areas to be subject to challenge in the suppression motion, the consequence of which would apparently be to impair significantly defendants' efforts to argue that the searches as a whole were [**50]  unreasonable.
Second, the court appeared to reject defendants' legal theory for suppression of the only evidence at issue, the lawfully seized case-in-chief documents. The court carefully distinguished all five cases which the Scientology defendants cited in support of their theory for total suppression. 493 F. Supp. at 222-24. Judge Richey concluded, after citing a number of cases contrary to defendants' position, that even the cases relied upon by the defendants show that "where the warrant is valid, and severability (of the validly and invalidly seized items) is possible, only material which has been illegally seized is suppressed." Id. at 224.
However, the court went on to cite two district court cases not relied upon by defendants which suggest, in dicta, that "at some point an entire search may become so unreasonable that its unreasonableness infects the seizure of each and every item asported." Id. Thus, despite the court's prior analysis of the standing and scope of exclusionary rule issues, it undertook to examine at length "the reasonableness of the entire search to be completely certain that justice is done in this case." Id. In fact, the court's analysis of the facts [**51]  went beyond what was called for by the theory of the two district court cases it cited and defendants' theory for total suppression that the search and seizure were so unreasonable as to be a "general search" in total disregard of the warrant. The court applied the general "reasonableness" standard to the defendants' specific Fourth Amendment objections to the searches, id. at 225, rejecting each one with a finding that the Government agents acted reasonably and in good faith.  Id. at 228, 231, 234. The court framed its conclusions as broadly as possible. It concluded not only that the search was not "general" or "exploratory," but that there was "no illegality in the actions of the government agents who executed the warrants at issue." Id. at 211.
This court by its order of June 23, 1981, denied the Government defendants' motion with respect to the assertion of the Richey decision as collateral estoppel because of their failure to establish sufficient identity of parties and because the court believed that Judge Richey's findings of no Fourth Amendment violations were not essential to his denial of the suppression motion. If correct, the alternative bases for the denial of the motion-standing [**52]  and the denial or severely limited scope of the theory for total suppression, neither of which are or could be relevant to this action-rendered immaterial Judge Richey's broad factual findings. This court therefore declined to give preclusive effect to those findings because they appeared to have some of the characteristics of dicta, including the substantial risk that appellate review of those particular findings could not be obtained. See Restatement (Second) of Judgments §  68, comment i (Tentative Draft No. 4, 1977); Stebbins v. Keystone Insurance Co., 156 U.S. App. D.C. 326, 481 F.2d 501, 507 (D.C.Cir.1973); Halpern v. Schwartz, 426 F.2d 102 (2d Cir. 1970). But see 1B Moore's Federal Practice, supra, P 0.443(5), at 3921-22; Williams v. Ward, 556 F.2d 1143, 1154 (2d Cir. 1977).
The court delayed issuance of the present opinion pending resolution of the Scientology defendants' appeal in the D.C. Circuit. The appellate court's opinion affirming the district court has substantiated this court's above analysis and provided a clearer, although slightly modified, basis for deeming not essential to the judgment Judge Richey's findings on the reasonableness of the Los Angeles searches.  [**53]  
The D.C. Circuit affirmed the district court's denial of the suppression motion "by way of a somewhat different rationale." United States v. Heldt, 668 F.2d at 1269 (D.C.Cir. 1981). It found the lower court's resolution of the standing issue "unclear" but did not itself appear to resolve the difficult issue of whether the allegations of a general search can be based, even in part, upon evidence that the agents rummaged at will in areas  [*965]  outside of the few personal offices as to which certain of the defendants had standing. Id. at 1258 n.28. The court merely concluded that "the district court properly considered the totality of circumstances surrounding the search of the two buildings."
The D.C. Circuit also did not limit the exclusionary rule to preclude defendants from asserting their theory that a general search justified the remedy of total suppression. However, in the course of ruling on this issue, the court made clear how extreme a violation of defendants' Fourth Amendment rights had to be before the "drastic remedy" of total suppression could be invoked:
We recognize that in some cases a flagrant disregard for the limitations in a warrant might transform an [**54]  otherwise valid search into a general one, thereby requiring the entire fruits of the search to be suppressed. (Citations omitted). If in this case law enforcement officers had conducted a document search as if no limiting warrant existed, rummaging at will among defendants' offices and files, then the mere existence of a valid-but practically irrelevant-warrant for certain specified documents would not be determinative of whether the search was so unreasonable as to require suppression of everything seized.

Id. at 1259. Absent such "flagrant disregard" for the terms of the warrant or the limits on the use of force, the court found the appropriate rule to be that the seizure of "some items" outside the scope of a valid warrant has no effect on the admissibility of contemporaneously seized items which do fall within the warrant. Id. at 1259. Thus, the court held that the defendants' motion to suppress the 201 case-in-chief documents could succeed only if the defendants proved such a "flagrant disregard" for their Fourth Amendment rights. The appellate court's entire analysis of the record on the suppression motion was focused upon whether this extreme form of Fourth Amendment [**55]  violation has occurred. The court on several occasions found "disturbing" evidence of some possible violations, but found the evidence not of sufficient magnitude to justify the extraordinary remedy of excluding the otherwise lawfully seized case-in-chief documents. Id. at 1260 n.33, 1261 - 62, 1263 n.49, id. at 1288 - 89 (Wald, Jr., concurring in part and concurring the result). For example, the court recognized "the possibility that many documents were improperly seized under the plain view doctrine," but nevertheless concluded that the remedy of total suppression was not required. Id. at 1268. As the court explained:
We must emphasize at this point ... that our concern with the agents' obedience to the limitations of the warrant relates solely to determining whether a violation of such egregious magnitude occurred that all fruits of the search must be suppressed .... If particular documents seized under the plain view exception had been admitted and the admissibility of those documents had been put in issue before us, an entirely different analysis would be required. In conclusion, despite the possibility that some (unspecified) documents seized under plain view failed the incriminating [**56]  character requirement (of the plain view doctrine), we hold that the searches of Fifield Manor and Cedars-Sinai (the Church premises in Los Angeles) were not so unreasonable that total suppression is required.

Id. at 1269 (emphasis by the court).
Because this is a civil action, the flagrant violation requirement for use of the exclusionary rule remedy of total suppression is not applicable. As in the normal criminal suppression motion challenging the legality of the seizure of particular items of evidence, the fundamental inquiry in the present action is whether or not the search and seizure is "reasonable under all the circumstances." See United States v. Chadwick, 433 U.S. 1, 9, 97 S. Ct. 2476, 2482, 53 L. Ed. 2d 538 (1977). As a result of the appellate court's holding, the ultimate issue decided in the suppression motion was limited to whether a "flagrant" or "egregious" Fourth Amendment violation occurred, which is not "in substance the same" as the  [*966]  issue of reasonableness in the present Bivens action. See Montana v. United States, 440 U.S. 147, 155, 99 S. Ct. 970, 974, 59 L. Ed. 2d 210 (1979). Therefore, the Church's Fourth Amendment contentions are not properly [**57]  precluded by the holding of the appellate court. n19

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n19. Even the qualified immunity for "good faith" conduct which the Government defendants may later assert, see Butz v. Economou, supra, does not make the ultimate issues in the present action identical to the issues considered by the D.C. Circuit for two reasons. The level of proof that the D.C. Circuit required before the suppression motion could have been granted is clearly greater than the mere absence of good faith by the law enforcement officers involved. See at  -- . In any case, the burden of proving a good faith affirmative defense shifts to the Government defendants, whereas the burden of proving flagrant disregard for the warrant was entirely on the parties claiming a Fourth Amendment violation.

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The D.C. Circuit opinion did not expressly disapprove Judge Richey's broad findings that the Los Angeles searches were completely lawful. In fact, the appellate court, in an initial summary of its conclusions that has no support at all by virtue of [**58]  the holding it repeatedly emphasized in its actual analysis of the suppression motion, stated that the execution of the Los Angeles warrants "satisfied the ultimate constitutional requirement of reasonableness." Id. 668 F.2d at 1254. Nevertheless, the "flagrant disregard" standard set forth by the appellate court clarifies the fact that in ruling on the reasonableness and good faith of the Government agents, the district court went beyond the necessities of the case. It is well-settled that findings which are immaterial, collateral or incidental to the prior judgment cannot have preclusive effect in subsequent litigation. See 1B Moore's Federal Practice, supra, P 0.443(5), at 3919; Memorex Corp. v. International Business Machines Corp., 555 F.2d 1379, 1384 (9th Cir. 1977).
Judge Richey's findings beyond the application of the flagrant disregard standard cannot bar plaintiff's Bivens claims for the further reason that the appellate court did not reach those specific findings in affirming the ruling on the suppression motion. The appellate decision has a critical bearing on the continued force of a final judgment as res judicata or collateral estoppel. Once an appeal is resolved, the [**59]  alternative grounds raised on appeal but not decided upon by the appellate court are not "essential to the judgment," 1B Moore's Federal Practice, supra, P 0.443(5), at 3921 n.10; Restatement (Second) of Judgments §  68, comment o (Tentative Draft No. 4, 1977); Stebbins v. Keystone Insurance Co., supra, 481 F.2d at 507 n.13; International Refugee Organization v. Republic S.S. Corp., 189 F.2d 858, 862 (4th Cir. 1951), because appellate review of the grounds omitted from the appellate court decision has not been available to the litigant (or his privy) against whom the omitted ground is asserted. 18 Wright, Miller & Cooper, Federal Practice & Procedure, supra, §  4421, at 205-06 & n.25.
VI. SERVICE OF PROCESS
Defendants Varley and Chefalo urge that the complaint be dismissed against them as individuals for insufficient service of process under Rule 12(b)(5). Plaintiff responds that these defendants have waived their personal defenses by prior participation in this action combined with a failure to assert the defenses in a previous Rule 12(b) motion. The court agrees.
The United States Attorney for the Central District of California, the only counsel of record who has appeared for [**60]  any of the 23 original defendants in this action, filed on June 23, 1980, a Rule 12(b)(6) motion to dismiss the Second Amended Complaint for failure to state a claim upon which relief may be granted. The motion did not assert the personal defenses of the two defendants, now raised for the first time in this action. Under Rules 12(g) and 12(g)(1), n20  [*967]  these defenses are therefore permanently waived since they were omitted from a previous 12(b) motion. 5 Wright & Miller, supra, §  1391.

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n20. Fed.R.Civ.P. 12(g) states that
If a party makes a motion under this rule but omits therefrom any defense or objection then available to him which this rule permits to be raised by motion, he shall not thereafter make a motion based on the defense or objection so omitted, except a motion as provided in subdivision (h)(2) hereof on any of the grounds there stated.
Rule 12(h)(2) excludes certain defenses from the consolidation requirement of Rule 12(g), but Rule 12(h)(1) specifies that the defense of insufficiency of service of process is waived if omitted from a motion in the circumstances described in subdivision (g).

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Defendants Varley and Chefalo raise two arguments against waiver, but neither is persuasive. First, they assert that the filing of a very different amended complaint by plaintiff revives their right to raise Rule 12(b) waivable defenses. However, Rule 12(g) specifically rejects this possibility where, as here, the grounds for the objections were "available" at the time the previous motion was filed. See, e.g., Rowley v. McMillan, 502 F.2d 1326, 1332-33 (4th Cir. 1974); 2A Moore's Federal Practice, supra, P 12.22, at 2442-43.
Second, defendants argue that their personal defenses were not waived by the prior motion to dismiss because they were not parties to that motion. They claim that the defenses were effectively "reserved" by the notation in the June 23 motion that it was brought on behalf of only "those defendants herein who have been properly served with process." Nothing in the Federal Rules requires multiple defendants who are represented by different counsel from the outset of a case to consolidate all of their Rule 12(b) objections into one motion. However, in view of the U.S. Attorney's previous and contemporaneous representation of all defendants, the court will not permit [**62]  defendants Varley and Chefalo to circumvent the consolidation requirements of Rules 12(g) and 12(h)(1) by purporting to have been excluded from representation in connection with the June 23 motion.
Counsel for defendants concedes that at a February 15, 1978, hearing on a motion to serve interrogatories, he told the court that he had received authority to represent all the defendants except for Frank Kelly, who was and still remains an unknown person. See Defendants' Brief of December 8, 1980, at 24. Counsel acted on behalf of defendants Varley and Chefalo, among others, by filing several motions prior to the June 23 motion to dismiss. n21 Counsel now points to no legitimate reason-for example, potentially differing interests among defendants-why it could not have represented the two defendants in connection with the June 23 motion. Under these circumstances to permit defendants now to assert insufficient service of process would run directly counter to the central objectives of Rules 12(g) and 12(h)(1)-to force litigants to exercise great diligence in challenging personal service at the earliest possible time, and to deter defendants from the dilatory tactic of filing a series of [**63]  12(b) motions. See Wright & Miller, supra, §  1391, at 855; 2A Moore's Federal Practice, supra, P 12.22, at 2440.

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n21. Represented by the U.S. Attorney, defendants Varley and Chefalo, along with other named defendants, filed opposition to plaintiff's motion to transfer on October 10, 1978, and on January 24, 1978, they filed opposition to plaintiff's motion to serve interrogatories.
The hollowness of the U.S. Attorney's vigorous effort to "reserve" the Rule 12(b) personal defenses is perhaps most graphically evidenced by the fact that the initial brief for the present motion again excludes from representation the "five named defendants (which originally included the now voluntarily dismissed defendants, Banoun and Schuelke) who have not been properly served," even though the brief goes on to urge dismissal of these very defendants based on the personal defenses.

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VII. SOVEREIGN IMMUNITY
The United States Attorney on February 9, 1981, moved to dismiss the United States Department of Justice under Fed.R.Civ.P.  [**64]  12(b)(1) on the ground that the court lacks subject matter jurisdiction over it because it cannot be sued eo nomine under the doctrine of sovereign immunity. See Blackmar v. Guerre, 342 U.S. 512, 515, 72 S. Ct. 410, 411, 96 L. Ed. 534 (1952). It is well-established that suits to enjoin the United States or its agencies, like damage suits, cannot be maintained unless Congress first consents by enacting a waiver of sovereign  [*968]  immunity. 14 Wright & Miller, supra, §  3655. The Justice Department contended that no such waiver was applicable here, but at the March 2, 1981, hearing, the court denied the motion to dismiss based upon the waiver of sovereign immunity for nonmonetary relief contained in the 1976 amendments to 5 U.S.C. § §  702 and 703. Because the issue had not yet been adequately briefed, the Department moved to reconsider. After receiving a series of memoranda on the issue, the court once again denies the Department's motion to dismiss.
The Department, without any reference to the legislative history of the 1976 amendments or the leading cases interpreting them, argues that the waiver of sovereign immunity contained in 5 U.S.C. §  702 applies only to actions which [**65]  are cognizable under the Administrative Procedure Act (APA), 5 U.S.C. §  551 et seq. Section 702, which is part of the APA, now reads in relevant part:
A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. An action in a court of the United States seeking relief other than money damages and stating a claim that an agency or an officer or employee thereof acted or failed to act in an official capacity or under color of legal authority shall not be dismissed nor relief therein be denied on the ground that it is against the United States or that the United States is an indispensable party. The United States may be named as a defendant in any such action, and a judgment or decree may be entered against the United States.
The Department, contending that the "agency action" language in section 702 limits the scope of the waiver, relies on 5 U.S.C. §  704, which states that "agency action" is reviewable under the APA only if it is "made reviewable by statute" or "final agency action for which there is no other adequate remedy in a court." Pointing [**66]  to the definition of "agency action" set forth in 5 U.S.C. §  551(13), n22 the Department accurately observes that the actions of the Department and its agents which are alleged in the complaint are not made reviewable by any section of the APA, nor are they "final agency action" within the meaning of section 704.

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n22. Section 551(13) defines "agency action" as including "the whole or a part of an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act."

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But the fact that the APA does not provide a statutory basis for review of the allegations against the Department is not the end of the analysis. The waiver of sovereign immunity contained in section 702 is not by its terms limited to "agency action" reviewable under the APA. In Jaffee v. United States, 592 F.2d 712 (3d Cir. 1979), cert. denied, 441 U.S. 961, 99 S. Ct. 2406, 60 L. Ed. 2d 1066 (1980), the Third Circuit held that the section 702 waiver of sovereign immunity extended also to "nonstatutory" review [**67]  of agency action sought under 28 U.S.C. §  1331. The court rejected, based upon an extensive review of the legislative history, an earlier decision, Watson v. Blumenthal, 586 F.2d 925, 932 (2d Cir. 1978), in which the Second Circuit ruled that the section 702 waiver did apply generally to section 1331 suits.  592 F.2d at 718-19. As discussed in the House Report on P.L. 94-574, which amended section 702, "nonstatutory" review actions refer to those involving matters which arise "under the Constitution, Laws, or treaties of the United States" as provided in section 1331(a), but for which there is no special statute, regulatory in nature or contained in the APA itself, which authorizes review in federal court of that particular action. H.R.Rep.No.94-1656, 95th Cong., 2d Sess. at 5, reprinted in (1976) U.S.Code Cong. & Ad.News 6121, 6125 (hereinafter H.R.Rep.). The Report notes that actions by many of the older executive departments, including the Department of Justice, are subject to judicial review only through such "nonstatutory" suits under section 1331. Id. Plaintiff's Bivens constitutional tort action is precisely such a nonstatutory review action  [*969]  covered by section 702 [**68]  insofar as it seeks nonmonetary relief against the Department.
The Ninth Circuit in Beller v. Middendorf, 632 F.2d 788, 796-97 (9th Cir. 1980), recently approved the Third Circuit's ruling in Jaffee. The Department cites the statement in Hill v. United States, 571 F.2d 1098, 1102 n.2 (9th Cir. 1978), that section 702 waives sovereign immunity as to all nonmonetary claims against government agencies, officers or employees "covered by the Administrative Procedure Act," and asserts that Beller v. Middendorf is in accord with this view. But the language in Hill is simply dicta since the court dismissed the case for failure to state a claim and not on grounds of sovereign immunity. Beller v. Middendorf does not specifically note the inconsistency of Jaffee with the Hill dictum, nor does it mention the critical distinction between actions reviewable under the APA and "nonstatutory" review actions. Nevertheless, the court in Beller v. Middendorf acknowledged the split of authority among the circuits as to whether section 702 constitutes a general waiver of sovereign immunity in section 1331 actions. It rejected the Second Circuit's limitation of the section 702 waiver, and affirmed the district [**69]  court's determination that it had jurisdiction over the plaintiff's claims for nonmonetary relief against the Secretary of the Navy in his official capacity.  632 F.2d at 797.
To the extent that Beller v. Middendorf leaves any doubt about the applicability of section 702 to nonstatutory review actions under section 1331 for nonmonetary relief, the court holds that such application is compelled by the legislative history of the 1976 amendment. The House Report states that the amendment seeks to "facilitate nonstatutory judicial review of Federal administrative action ...," H.R.Rep., supra, at 19, U.S.Code Cong. & Ad.News at 6140, and that "the time (has) now come to eliminate the sovereign immunity defense in all equitable actions for specific relief against a Federal agency or officer acting in an official capacity." H.R.Rep. at 9, U.S.Code Cong. & Ad.News at 6129. It is not surprising that every circuit other than the Second Circuit which has considered the issue has followed the Jaffee decision. See, e.g., Beller v. Middendorf, supra; Sheehan v. Army & Air Force Exchange Service, 619 F.2d 1132, 1139 (5th Cir.1980); Collyard v. Washington Capitals, 477 F. Supp. 1247, 1252-53 (D.Minn.1979). [**70]  
Section 702 itself does not address whether the Justice Department may be a proper party defendant in an action where sovereign immunity has been waived. That issue is treated in 5 U.S.C. §  703, which, as amended in 1976, provides in relevant part that
If no special statutory review provision is applicable, the action for judicial review may be brought against the United States, the agency by its official title, or the appropriate officer.

The House Report on P.L. 94-574 makes clear that section 703 permits the plaintiff in suits for nonstatutory review of administrative action to name as a defendant the agency or department itself. See H.R.Rep., supra, at 3, 18, U.S.Code Cong. & Ad.News at 6123, 6138. This intention is also implied by 28 U.S.C. §  1331(a), which, as amended in 1976, provides that the $ 10,000 amount in controversy requirement does not apply to actions under the section brought against "the United States, any agency thereof, or any officer or employee thereof in his official capacity" (emphasis added). n23

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n23. In light of the ruling on the coverage of the §  702 waiver, the court finds it unnecessary to rule upon plaintiff's additional contention that sovereign immunity does not bar suits for injunctive relief against federal agencies, even in the absence of a congressional waiver, where unconstitutional action is alleged. Of the cases which plaintiff cites for this proposition, only Wounded Knee Legal Defense/Offense Committee v. F.B.I., 507 F.2d 1281 (8th Cir. 1974), appears to be truly supportive. Most of the cases in this area distinguish between suits against individual federal officers in their official capacities and suits against the United States or the agencies themselves. See 14 Wright & Miller, supra, §  3655. Under the legal fiction adopted in Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 69 S. Ct. 1457, 93 L. Ed. 1628 (1949), courts have reasoned that sovereign immunity does not apply to actions seeking nonmonetary relief where the officer acted unconstitutionally, since such relief would not then "in effect" be "against the sovereign," so long as the relief requested can be accomplished by merely ordering the cessation of the conduct, and need not require "affirmative action" by the sovereign or the disposition of unquestionably sovereign property.  Id. at 691 n.11, 69 S. Ct. at 1462 n.11.
Most authorities, including the Ninth Circuit, have not extended this doctrine to suits against federal agencies, and have required statutory waiver of the sovereign immunity bar before the action could proceed. See, e.g., City of Whittier v. United States Department of Justice, 598 F.2d 561, 562 (9th Cir.1979); Midwest Growers Cooperative Corp. v. Kirkemo, 533 F.2d 455, 465 (9th Cir. 1976). These cases, of course, do not have any bearing on the court's ruling regarding the §  702 waiver since the application of the sovereign immunity bar in both was predicated on the lack of any congressional consent to suit that had been brought to the attention of the court.

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  [*970]  VIII. DISMISSAL OF THE DISSEMINATION CLAIM
In its final two filings with the court, the Department also asserts that Paragraph 20 of the Third Amended Complaint is barred as to it by res judicata. In Church of Scientology of California v. United States Department of Justice, No. CV 78-3365-RF(Kx) (C.D.Cal. October 10, 1979), Judge David Williams dismissed with prejudice for lack of jurisdiction a complaint against the Department. The complaint, which was amended several times, sought relief from the Department for "selectively" leaking to the Los Angeles Times (which, along with two of its reporters, was dismissed as a defendant by a previous order) confidential information obtained in the Los Angeles searches in a deliberate attempt to create a "negative animus" toward the Church in the community and in the courts.
The court finds the Department's assertion of res judicata to be without merit. The cause of action asserted in Paragraph 20 of the present complaint asserts that the Department and several individual defendants disseminated the fruits of the search to private and governmental entities involved in litigation against the Church in an effort to interfere with [**72]  the free exercise of the Scientology religion. The cause of action asserted in that paragraph is clearly not identical to that raised before Judge Williams, and therefore res judicata does not apply. Neither does the doctrine of collateral estoppel bar litigation of Paragraph 20, since the subject matter of the prior complaint was quite different, and the Department failed to show that any of the issues previously decided are raised in Paragraph 20. In any case, because Judge Williams' dismissal was not on the merits, it fails to satisfy the requirement that the issue asserted as estoppel have been "actually litigated." See, e.g., 1B Wright, Miller & Cooper, supra, §  4436.
CONCLUSION
Defendants' motions to dismiss are DENIED in all respects except that plaintiff's Fifth and Ninth Amendment claims are stricken, as are the jurisdictional bases set forth in the complaint other than 28 U.S.C. §  1331.
IT IS SO ORDERED.  

101 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a corporation, Plaintiff, v. Paulette COOPER, Defendant 

 No.  CV 78-2053-AAH(PX) 

UNITED STATES DISTRICT COURT FOR THE DISTRICT CENTRAL OF CALIFORNIA 

495 F. Supp. 455; 1980 U.S. Dist. LEXIS 12100 

June 18, 1980 

COUNSEL:
 [**1]  
Kaplan & Randolph by Mark Vincent Kaplan, Los Angeles, Cal., for plaintiff. 
Morgan, Wentzel & McNicholas by Darryl Dmytriw, Los Angeles, Cal., for defendant.  

OPINIONBY:
HAUK 

OPINION:

  [*455]  
DECISION AND ORDER GRANTING PLAINTIFF'S AFFIDAVIT FOR DISQUALIFICATION AND REASSIGNMENT OF CASE AND NOTICE TO COUNSEL
This matter has now come on for hearing in the above-entitled Court on Monday, June 16, 1980, at 1:00 p.m. upon plaintiff's Motion for Recusal, pursuant to 28 U.S.C.  [*456]  s 144 n1; 28 U.S.C. §  455(a) n2 and Canon 3 C of the Code of Judicial Conduct n3; the Affidavits of Muriel Yassky, n4 and Rebecca Chambers, n5 and the Certificate of Good  [*457]  Faith of Mark Vincent Kaplan, Esq., n6 filed May 16, 1980, together with points and authorities; and arguments of counsel; and the Court having considered all the aforesaid  [*458]  now makes its Order and Decision granting said Motion for Recusal.

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n1. §  144. Bias or prejudice of judge
Whenever a party to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding.
The affidavit shall state the facts and the reasons for the belief that bias or prejudice exists, and shall be filed not less than ten days before the beginning of the term at which the proceeding is to be heard, or good cause shall be shown for failure to file it within such time.  A party may file only one such affidavit in any case.  It shall be accompanied by a certificate of counsel of record stating that it is made in good faith. [**2]  
n2. §  455. Disqualification of justice, judge, or magistrate
(a) Any justice, judge, or magistrate of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.
n3. C. Disqualification
(1) A judge shall disqualify himself in a proceeding in which his . . .  impartiality might reasonably be questioned, . . . .
n4. STATE OF CALIFORNIA
ss
COUNTY OF LOS ANGELES
I, Muriel Yassky, do hereby depose and say:
On July 19, 1979, I was present on the premises of the United States District Court, Central District of California, located in Los Angeles.
I was working in a voluntary capacity for the Church of Scientology.  My function as a volunteer was to perform various duties necessary to the smooth running of the Church related litigation which was ongoing at the time.  I was serving in a logistic liaison capacity.
At about 10:15 a.m. I was entering the elevator at the Spring Street side of the court house building.  I was accosted by a man who yelled "Who are you?" and then he yelled, "Do you work here?"
He then grabbed me by the arm and forcefully pulled me out of the elevator.
I asked him to identify himself and he did so.  He identified himself as Judge Hauk.
Judge Hauk ordered me over to the Guard's table and escorted me there.
I did not have any identification with me, so Judge Hauk ordered the Guard to accompany me to the witness room where my purse was located to obtain the identification.
During the whole period of time that I observed Judge Hauk's behavior, he was very irate.  He angrily recounted something about posters and stickers being put up.  Apparently the posters had something about Marshals assassinating government witnesses.  Judge Hauk referred to this and said he was sick of it.  He asked me while at the Guard Table if I was with Scientology.  I answered affirmatively.  He asked me how long I'd been with Scientology.  I answered fifteen years.  He asked if I were a member of "this Guardian Office." I answered negatively.
While his anger was directed at me personally, he repeatedly questioned me on my connection to Scientology and intermittently made reference to the posters. Judge Hauk informed the Guard that if, while taking me to check my identification, I gave the guard any trouble to, "slap her in irons and bring her to me."
As soon as the Judge left, the Marshal walked me back to check my identification and we amicably settled the situation.
/s/ Muriel Yassky
Muriel Yassky
Subscribed and sworn to before me, this 14th day of May, 1980.
/s/ Ben Mustard
Notary Public
[seal] [**3]  
n5.  MARK VINCENT KAPLAN
Attorney for Plaintiff
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
NO. CV 78-2053
AFFIDAVIT OF DISQUALIFICATION OF
HONORABLE A. ANDREW HAUK
STATE OF CALIFORNIA
ss
COUNTY OF LOS ANGELES
I. Rebecca Chambers, being duly sworn, deposes and says:
1. She is the duly authorized officer of the Plaintiff in the above-entitled action.
2. The Plaintiff herein believes and avers that the judge before whom this action has been transferred and is now pending, Honorable A. ANDREW HAUK, has a personal bias and prejudice against the said Plaintiff,

NO. CV 78-2053

AFFIDAVIT OF DISQUALIFICATION OF

HONORABLE A. ANDREW HAUK

CHURCH OF SCIENTOLOGY OF CALIFORNIA.
3. The facts and reasons for the belief that such personal bias and prejudice does in fact exist are as hereinafter set forth in the Affidavit on file of MS. MURIEL YASSKY and the foregoing Memorandum of Points and Authorities, and I hereby affirm that all the information contained therein is true and correct to the best of my knowledge and forms the basis of my belief in the existence and extent of the bias of the Honorable A. ANDREW HAUK.
Dated: May 15, 1980
/s/ Rebecca Chambers
REBECCA CHAMBERS, CHURCH OF
SCIENTOLOGY OF CALIFORNIA
Subscribed and sworn to before me this 15th day of May, 1980.
/s/ Ben Mustard
NOTARY PUBLIC
[seal] [**4]  

n6.  UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a corporation, Plaintiff,

v.

PAULETTE COOPER, Defendants

NO. CV 78 2053 F (PX)

CERTIFICATE OF GOOD FAITH
MARK VINCENT KAPLAN certifies:
1. That I am counsel of record for the Defendant CHURCH OF SCIENTOLOGY OF CALIFORNIA in this cause;
2. That as such I am familiar with the Affidavit of MURIEL YASSKY, made and filed to attain the recusal of the Honorable ANDREW A. HAUK under 28 U.S.C. §  144.
3. That I am familiar with the contents of said Affidavit and the reasons it is made and filed in this cause and states that said Affidavit is and was made in good faith and I have sought to examine all the participants with regard to these allegations set forth in Affidavit of Muriel Yassky and that I have found that examination and investigation fully support the veracity of said allegations and find them to be true to the best of my information and belief based on these interviews and examinations.
4. That this Certificate is made in support of the Affidavit for Recusal and is made to fulfill the express requirements of 28 U.S.C. §  144.
Dated:
LAW OFFICES OF MARK VINCENT KAPLAN
By: /s/ Mark Vincent Kaplan
MARK VINCENT KAPLAN

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FINDINGS AND CONCLUSIONS
Since they are based upon 28 U.S.C. § §  144 and 455 and Code of Judicial Conduct, Canon 3 C, we are required to examine plaintiff's Affidavits and Certificate to determine if they meet the tests required by the United States Code and said Canon, namely, those of (1) timeliness and (2) legal sufficiency.  If they do, then the factual allegations contained in the Affidavit must be taken as true and the Court has no power or authority to contest in any way whatsoever the necessary acceptance of truthfulness of the facts alleged, even though the Court may be aware of facts which would indicate clearly the falsity of any such allegations.  Berger v. United States, 255 U.S. 22, 33, 41 S. Ct. 230, 65 L. Ed. 481 (1921); Botts v. United States, 413 F.2d 41 (9th Cir. 1969); United States v. Tropiano, 418 F.2d 1069 (2d Cir. 1969); Lyons v. United States, 325 F.2d 370 (9th Cir. 1963), cert. den.  377 U.S. 969, 84 S. Ct. 1650, 12 L. Ed. 2d 738 (1964). See also: United States v. Zarowitz, 326 F. Supp. 90, 91 (C.D.Cal.1971), United States v. Zerilli, 328 F. Supp. 706, 707 (C.D.Cal.1971), Spires et al. v. Hearst, 420 F. Supp. 304, 306-307 (C.D.Cal.1976), State of California [**6]  et al. v. Kleppe, 431 F. Supp. 1344 (C.D.Cal.1977), and Hayes v. National Football League et al., 463 F. Supp. 1174 (C.D.Cal.1979). Cf.: Mavis v. Commercial Carriers, Inc., 408 F. Supp. 55, 58 (C.D.Cal.1975).
While perhaps not essential, it does seem to us appropriate, that we should now affirm that the Judge herein does not have, nor did he ever have, any personal bias or prejudice in the slightest degree for or against any of the parties to the case, cause and proceeding herein, and more particularly, does not now have and never did have any such personal bias or prejudice in the slightest degree against the Church of Scientology, plaintiff herein.  Nor has the Judge ever knowingly or unknowingly given any cause for allegations of any such alleged personal bias or prejudice, or belief therein or suspicion thereof.
At the outset it might be argued with some possible justification that the plaintiff's Affidavits and Certificate are not "timely" within the meaning of 28 U.S.C. §  144, since they were not filed until May 16, 1980, whereas the action herein was transferred to this Court from the Hon. Warren J. Ferguson on December 27, 1979. However, it should be noted that this Court's [**7]  Clerk received from plaintiff's counsel, Mark Vincent Kaplan, Esq., a letter addressed to the Court dated February 4, 1980, n7 requesting the Court to recuse itself  [*459]  from the matter herein.  The Clerk's response to this request was made in a letter from Law Clerk Brian A. Sun to Mr. Kaplan, dated February 11, 1980, n8 indicating to  [*460]  Mr. Kaplan that this Court would not act upon his letter because his ex-parte communication with the Court was inconsistent with and in violation of Local Rule 1.8 of the Rules of the United States District Court, Central District of California.

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n7.  February 4, 1980

The Honorable A. Andrew Hauk

Judge of the United States

District Court

312 N. Spring Street

Los Angeles, California 90012
Re: Church of Scientology of California v.
Paulette Cooper
Case No. CV 78-2053-F (Px)
Dear Judge Hauk:
Please be advised that I am the attorney of record for the Church of Scientology of California in the above-referenced matter. As the file in this matter will clearly reflect, I was substituted as counsel of record on or about the date of October 15, 1979. Within the last two weeks, it has come to the attention of my client and myself, that a bias exists on behalf of the Court in this matter.  As will hereinafter be more fully set forth, the result of this bias compels me to request that this Honorable Court disqualify itself on the basis of the alleged bias regarding the Church of Scientology of California.
I am writing this letter on an informal basis and should the Court so desire, I will proceed, if necessary, with a formal affidavit and certificate of good faith pursuant to 28 U.S.C. §  144 and §  455, as hereinafter indicated.
Finally, I wish to state that although my attention was first addressed to the factual criteria which give rise to this letter within the last few weeks, I have awaited sufficient documentation from my client for the purposes of documenting the events which are alleged to have occurred.
As we are all aware, the transfer of this case before this Honorable Court from the Court of Judge Ferguson was a result of the elevation of Judge Ferguson to the Ninth Circuit Court of Appeals. I pursue this matter with the Court at this time inasmuch as there have been no substantive proceedings regarding the subject case addressed to this Court to date.
The factual incidents which have given rise to the opinion of my client, in which counsel joins, are as follows:
1. On or about July 19, 1979, one Muriel Yassky, a member of the Church of Scientology, was present at the United States District Court building for the Central District of California.  Ms. Yassky was standing outside the elevators on the fourth floor when, it is alleged, that Your Honor ordered Ms. Yassky out of the elevator and proceeded to direct Ms. Yassky to the guard's table for the purpose of identifying herself and her purposes for being in the Courthouse building.  It is further alleged that Your Honor requested Ms. Yassky to identify whether she was with Scientology and/or with "this guardian office", referring to the office of the Church of Scientology.
2. Evidently, at the time of the incident, posters had been placed upon Courthouse property indicating, in substance, that marshals were responsible for the killing of government witnesses. Ms. Yassky indicated that from the manner in which Your Honor focused upon her presence and her affiliation with Scientology, that Your Honor seemed to equate the responsibility for the posting of these anti-government slogans with members of the Church of Scientology.  From the data available to the undersigned, there is no reason why the presence of anti-government posters in the Courthouse should any way have been automatically equated with the presence of Scientologists in the Courthouse.  I am prepared, if necessary, to supply affidavits from the principals involved in this matter to substantiate the relevant factual allegations.
The undersigned joins in the good faith belief of my client that the facts of the subject incident indicate that there exists on behalf of the Court, a bias towards members of Scientology as well as Scientology as an organization.  I would be prepared, if necessary, to file a formal affidavit and certificate of good faith placing before the Court our request for disqualification in the above-referenced matter pursuant to 28 U.S.C. §  455, 28 U.S.C. §  144, Canon 3 C of the Code of Judicial Conduct as amended to date.
Finally, I respectfully request that this Court reassign the above-referenced matter to a different Court in accordance with local Rule 2 as well as other applicable rules and orders of this Court.
The exercise of your sound discretion will be greatly appreciated and I remain ready to proceed should the Court so desire.
Sincerely,
LAW OFFICES OF KAPLAN AND RANDOLPH
MARK V. KAPLAN
MVK/ia

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n8.
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES COURTHOUSE
LOS ANGELES, CALIFORNIA 90012
CHAMBERS OF
A. ANDREW HAUK
UNITED STATES DISTRICT JUDGE
February 11, 1980
Mark V. Kaplan, Esq.
Law Offices of Kaplan and Randolph
11620 Wilshire Boulevard
Sixth Floor
Los Angeles, California 90025
Dear Mr. Kaplan:
In response to your letter of February 4, 1980, you should be advised that Local Rule 1.8 of the United States District Court, Central District of California, entitled "Correspondence and Communications with the Judge," clearly states that attorneys "should refrain from writing letters to the Judge" of an ex parte nature or "otherwise communicating with the Judge unless opposing counsel is present." Judge Hauk follows a policy which adheres to the aforesaid rule and would expect your request to be submitted the proper written form and notice given to all parties involved.  At that time, your recusal request will be addressed by the Court.
If you have any questions regarding this matter, please do not hesitate to contact me.
Sincerely,
/s/ Brian A. Sun
Brian A. Sun
Law Clerk to
Judge A. Andrew Hauk

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While the Court, therefore, has some doubt about the validity of measuring "timeliness" by the five week interval which elapsed between the date of transfer of this case from Judge Ferguson and Mr. Kaplan's February 4, 1980, letter, rather than by the five month interval between Judge Ferguson's transfer and the filing of the within Motion, the Court nevertheless finds that the herein Affidavits and Certificate were timely, and Mr. Kaplan's letter-writing efforts to bring this Motion to the attention of the Court, while not made in accordance with the Local Rules and accepted practice, were apparently made in good faith and sufficiently set forth legal "timeliness."
Now, the next question is whether or not the Affidavit and Certificate are "legally sufficient" within the meaning of the same statutory sections and Canon.  Certainly they appear to be and the Court so finds.  They are in proper form; they assert alleged facts and not just conclusions of law; and so, in line with the cases the Court has previously cited, they are legally sufficient. The only question left is whether facts are alleged which require the Judge to disqualify or recuse himself under 28 U.S.C. §  455(a) and [**10]  Code of Judicial Conduct, Canon 3 C.
As stated earlier, the Court recognizes that the factual allegations contained in the Affidavit must be taken as true and the Court has no power or authority to contest in any way whatsoever the necessary acceptance of truthfulness of the facts alleged, even though the Court may be aware of facts which would indicate clearly the falsity of any such allegations.  In that regard, and for the record, the Court strongly takes issue with the alleged facts asserted in the Affidavits of Muriel Yassky and Rebecca Chambers, and the Certificate of Good Faith of Mark Vincent Kaplan, Esq.
The so-called "elevator incident" referred to in plaintiff's moving papers did not occur exactly as alleged.  On July 19, 1979, upon Judge Hauk's driving into the Courthouse garage, Federal Protective Service Contract Guard Officer Jennifer Jackman, guarding the entrance to the Main Street Garage, told Judge Hauk that a number of stickers had been found pasted to the front door of the building, the sentry box on the Spring Street Parking level, and elsewhere, labelling the United States Marshals as assassins.  She reported to Judge Hauk that she had also heard about an episode [**11]  of a lady found wandering in a Judge's private hallway.
Acting in his capacity as Vice Chairman of the Security Committee, and Acting Chairman in Judge Firth's absence, and carrying out the duties delegated to him by the mandatory and unanimous Order of all  [*461]  of the Judges of this Federal District Court, Judge Hauk proceeded to inquire further into these reports.  He checked with the United States Marshal's Office who reported that they had heard of the same incidents and told him that copies of the label were in the Federal Protective Service Office on the Main Street level.  Judge Hauk proceeded there and saw one of the labels, green background with black printing, and the legend: n9

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n9. [SEE ILLUSTRATION]

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U. S. Marshals Are Assassinating Governments Witness."
Judge Hauk then went out into the Main Street lobby area to discuss with the Federal Protective Service Contract Guard there, Walter H. Bonner, whether or not he (Bonner) had seen any unusual or improper activities with respect to the pasting [**12]  of the labels, the use, or misuse, of the Main Street garage and Spring Street parking area by any unauthorized persons, or any other activities indicating any breach of security in the Courtrooms or Courthouse.  At that time, Judge Hauk noticed, standing between himself and the officer, near the officer's desk, and in the space immediately adjacent to the elevators, a young lady, apparently endeavoring to eavesdrop upon Judge Hauk's conversation with the Officer.  When Judge Hauk looked at her, she turned her eyes up and pretended not to be listening or interested in what he was saying.
Judge Hauk went over and asked her what she was doing in the building and she replied "Oh, nothing in particular." He asked her again what she was doing, and she again said "Nothing in particular." The Judge asked her name, and she refused to give it to him, and said she was going upstairs "for a cup of coffee."
Whereupon Judge Hauk asked her to come over to the officer's desk, and escorted her to said desk to answer a few questions.  She came over and Judge Hauk asked her name, address and telephone number, requesting the Officer to write them down as she gave them Muriel Yassky, 5959 Franklin Avenue,  [**13]  Apt. 407, Hollywood, California 90028, phone no. 462-0135.  Judge Hauk further asked her for her I.D., which she said was "upstairs in the waiting room." At that point, the Chief Deputy Marshal, James L. Propotnick, appeared on the scene and Judge Hauk asked him to go with the young lady to the waiting room and check out the I.D. she mentioned.  At no time did Judge Hauk ever state that Ms. Yassky should be "slapped in irons" if she resisted the Marshals.
Despite the problems the Court has with the factual allegations contained in plaintiff's motion, and despite the Court's firm recollection and conviction that the allegations are false, it feels compelled and bound to follow the more prudent course of granting the plaintiff's Motion for Recusal. Canon 3 C(1) and 28 U.S.C. §  455(a) mandate that a Judge shall disqualify himself whenever "his impartiality might reasonably be questioned." The Court herein finds that plaintiff's Motion for Recusal, while indeed false and erroneous in its allegations, is based upon what Ms. Yassky and plaintiff's counsel apparently feel is reasonable. Moreover, it has been said in some cases and by some authorities that recusal should be granted, pursuant [**14]  to the aforementioned Canon 3 C(1) of the Code of Judicial Conduct, and 28 U.S.C. §  455(a), in such a situation, even when the Court is in doubt as to the "reasonableness" of an affiant's belief.  This conclusion is reached on the basis of the Court's recognition of the sensitive nature of the case itself and the principles underlying the pertinent sections of the United States Code and the Code of Judicial Conduct, as well as other relevant  [*462]  factors governing Judicial disqualifications, having in mind that when in doubt the Court should resolve the issue in favor of the party seeking recusal. E. g. Mims v. Shapp, 541 F.2d 415, 417 (3d Cir. 1976); Hodgson v. Liquor Salesmen's Union, 444 F.2d 1344, 1348 (2d Cir. 1971). Of course, this does not constitute any finding or conclusion that the plaintiff's allegations are factually true or have any real substantive merit, nor does it have any bearing whatsoever upon the merits of the basic cause of action.
ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED:
1. That the undersigned Judge does hereby disqualify and recuse himself from any and all further matters in the within case, cause and proceeding, pursuant to 28 U.S.C. §  455(a)  [**15]  and Canon 3 C(1) of the Code of Judicial Conduct, as amended to date, and pursuant, of course, also, to the Affidavits and Certificate filed herein by and on behalf of the plaintiff;
2. That the within case, cause and proceeding be and the same hereby is returned to the Clerk for random transfer and reassignment by the Clerk to another Judge of this District Court, Central District of California, in accordance with the applicable Rules and Orders of this Court, particularly General Order No. 104, filed January 18, 1971, Part Two, Section One, Paragraph I; and
3. That the Clerk serve copies of this Decision and Order forthwith by United States mail on counsel for all parties appearing in this case, cause and proceeding.  

102 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, on its own behalf and on behalf of its members, et al., Plaintiffs, v. William SIMON, Secretary of the Treasury, et al., Defendants 

 No.  CV 76-2160-WPG 

UNITED STATES DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA 

460 F. Supp. 56; 1978 U.S. Dist. LEXIS 14955 

October 13, 1978 

COUNSEL:
 [**1]  
H. Peter Young, Santa Monica, Cal., for plaintiffs. 
Andrea Sheridan Ordin, U. S. Atty., Frederick M. Brosio, Jr., Chief, Civ. Div., Michael E. Wolfson, Asst. U. S. Attys., Los Angeles, Cal., for defendants.  

JUDGES:
Before BARNES, Circuit Judge, and GRAY and FERGUSON, District Judges.  

OPINIONBY:
GRAY 

OPINION:

  [*57]  MEMORANDUM OF DECISION
This three-judge court was convened to consider the constitutionality of 19 U.S.C. §  1305, n1 which prohibits the importation into the United States of several categories of documents and articles, including any writing or document that is obscene or contains:

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n1. A three-judge court was convened because the plaintiffs seek to restrain certain customs searches and seizures permitted by that statute. In all actions filed prior to August 12, 1976, that seek to enjoin enforcement of a statute, adjudication by a three-judge court is proper.  28 U.S.C. § §  2281 Et seq. The instant suit was filed on July 7, 1976.

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" . . . any matter advocating or urging treason or insurrection [**2]  against the United States, or forcible resistance to any law of the United States, or containing any threat to take the life or inflict bodily harm upon any person in the United States . . .."
Under the authority of this statute, the United States Customs Service searches materials entering this country from abroad. The plaintiffs filed suit to enjoin the enforcement of this statute and to prohibit the customs officers from searching documents without obtaining a search warrant.
The relevant facts in the instant case are fairly straightforward. Four cartons of papers and documents were shipped from England, via international air cargo, to Church of Scientology employees in Los Angeles County. On July 3, 1976, the Customs Inspector on duty at Los Angeles International Airport opened the cartons, briefly scanned the documents, expressed uncertainty regarding the importability of the materials, and detained the cartons for further review of their contents.
Subsequently, special customs agents more carefully reviewed the documents and, on July 7, 1976, the District Director of Customs concluded that the contents were importable. On that same day, the Church of Scientology filed suit [**3]  for damages and injunctive relief. On July 13, 1976, the cartons of documents were released to the plaintiffs.
A temporary restraining order issued in this case enjoined the Customs Service from copying or disseminating copies of any of the documents contained in the cartons. The Customs Service was permitted, however, to disclose the materials to the United States Attorney, who could make one copy of documents he found appropriate for criminal evidentiary purposes or for defense of any damage claims that the plaintiffs might assert.
The plaintiffs raise several arguments in support of their claims for injunctive relief. First, they contend that Section 1305 is facially unconstitutional. Second, the plaintiffs urge that even if the statute is deemed constitutional, the method of enforcement  [*58]  in the instant case was improper. The plaintiffs take the position that a warrant was required initially to read the private, noncommercial documents shipped from abroad. Finally, the plaintiffs contend that once the Customs Service deemed the documents to be importable under Section 1305, its agents could not continue to read, detain, copy or disseminate copies of their documents without [**4]  a warrant. We are unpersuaded by these arguments within the context of the facts of this case and we accordingly deny the request for an injunction.
CONSTITUTIONALITY OF 19 U.S.C. §  1305
The Church of Scientology asserts that Section 1305 is overbroad, a prior restraint on speech, and void for vagueness. We disagree with these arguments, and hold that the statute is constitutional when properly construed and applied.
The plaintiffs insist that the statute is unconstitutionally overbroad, for it prohibits the importation of written materials that discuss violence as an abstract doctrine, as well as "action now" materials. It is obvious that the statute does not incorporate specifically the restrictions set forth in Brandenburg v. Ohio, 395 U.S. 444, 89 S. Ct. 1827, 23 L. Ed. 2d 430 (1969), which held that a state cannot proscribe advocacy of the use of force " . . . except where such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action." 395 U.S. at 447, 89 S. Ct. at 1829. Nonetheless, we read such standards into Section 1305 in order to uphold its constitutionality. In doing so, we follow the example set by the Supreme [**5]  Court in United States v. Thirty-Seven Photographs, 402 U.S. 363, 91 S. Ct. 1400, 28 L. Ed. 2d 822 (1971) and in United States v. 12 200- Ft. Reels, 413 U.S. 123, 93 S. Ct. 2665, 37 L. Ed. 2d 500 (1972).
In Thirty-Seven Photographs, the Supreme Court applied constitutional standards to uphold the statute's validity. The plaintiffs in that case had argued that Section 1305 was unconstitutional in that it failed to specify procedural time limits for judicial determination of obscenity as required by the First Amendment. Rather than invalidate the statute based on this lack of an express standard, the Court adhered to the " . . . cardinal principle that this Court will first ascertain whether a construction of the statute is fairly possible by which the question may be avoided." 402 U.S. at 369, 91 S. Ct. at 1404. Similarly, in 12 200- Ft. Reels, supra, the Court foreclosed an overbreadth attack, although the statute prohibited the importation of obscene materials both for private use and possession, as well as for commercial use.
In accordance with these decisions upholding the constitutionality of 19 U.S.C. §  1305, we interpret the "advocacy" section of that statute in a manner consistent [**6]  with the Constitution. Thus, we will "read in" the standards set forth in Brandenberg v. Ohio, supra, and construe the statute to avoid the overbreadth attack.
We also reject the plaintiffs' argument that the statute permits an unconstitutional prior restraint of speech through the detention of imported materials. In this case, the Church of Scientology's papers, which consisted of many thousands of pages, were detained for a very short period by the Customs Service before the Service determined the papers to be importable. Under the Customs Service's broad powers to restrict imports and conduct a search of materials entering the country from abroad, this temporary delay and retention of documents do not constitute a constitutional deprivation.
Finally, the plaintiffs' argument that the statute is void for vagueness must also fail. This contention relates to the scope of discretion afforded the Secretary of the Treasury to admit books of recognized literary or scientific merit. The question of an improper exercise of this discretionary power is not presented by the facts of this case, and so we need not resolve it within this decision. Thus, we hold that the statute is constitutional [**7]  as applied to advocacy issues, just as it previously has been  [*59]  held constitutional as applied to obscenity issues.
ENFORCEMENT OF 19 U.S.C. §  1305
We also hold that the search pursuant to the statute was conducted in a constitutionally valid manner. The plaintiffs argue unsuccessfully that warrantless reading of materials entering the United States from abroad is suspect. We disagree with their contentions that a warrant was needed for the original inspection and that a warrant was required once the documents were deemed importable pursuant to §  1305. n2

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n2. Complaints regarding allegedly unlawful operation or administration of a statute normally are not the proper subject of adjudication by a three-judge court under the standards set forth in 28 U.S.C. § §  2281 Et seq. However, in the interests of judicial economy, we may exercise our discretion to resolve pendent statutory claims, and we do so here. See, Rosado v. Wyman, 397 U.S. 397, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970).

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It is indisputable [**8]  that the instant case involves a border search. The Customs Service has the statutory authority to examine materials coming into the United States, and the Supreme Court has enunciated clearly the position that the government possesses an inherent right to protect itself by stopping and examining persons and property entering the country from abroad. United States v. Ramsey, 431 U.S. 606, 97 S. Ct. 1972, 52 L. Ed. 2d 617 (1977).
In addition, the Constitution has given Congress broad, comprehensive powers to regulate commerce with foreign nations, and under this power "(import) restrictions and searches of persons or packages at the national borders" are justified by different "considerations and different rules of constitutional law from domestic regulations." United States v. 12 200- Ft. Reels, 413 U.S. 123, 125, 93 S. Ct. 2665, 2667, 37 L. Ed. 2d 500 (1972).
Under its general powers in setting import restrictions, Congress may promulgate regulations regarding the importability of obscene material and material advocating the overthrow of the government. To enforce these regulations, the Customs Service has the right to search luggage and persons at our national borders. This search [**9]  necessarily involves the examination or review of the materials in question, for the customs officers must scan or peruse and perhaps even read the materials to determine whether or not they are importable.
The Supreme Court recently reconsidered the standards and requirements for border searches in United States v. Ramsey, 431 U.S. 606, 97 S. Ct. 1972, 52 L. Ed. 2d 617 (1977). The Court reaffirmed the policy that border searches without probable cause and without a warrant are reasonable. In that case, the customs officials opened letter size envelopes arriving airmail from Thailand which they reasonably suspected contained illegally imported narcotics. The Court concluded that mail entering the country from overseas was not entitled to any greater privacy than material coming from abroad by any other mode of entry.
In line with the reasoning set forth in Ramsey, the search involved here must be measured against the normal border search standards. The Court did leave open the question, however, of when a border search might be unreasonable and "particularly offensive." 431 U.S. at 618, 97 S. Ct. at 1980. However, it would be inappropriate and unnecessary for this court to determine [**10]  what is reasonable under all circumstances, or what type of search would be unreasonable. It is sufficient that in this case the search was reasonable and complied with the more stringent border search test promulgated by the Ninth Circuit, in United States v. Wilmot, 563 F.2d 1298 (9th Cir. 1977). In that decision, the opinion cites Ramsey for the well-established principle that routine border searches "are reasonable simply by virtue of the fact that they occur at the border." It then stated that in order to justify an intrusive search, additional cause is necessary, and held that for a strip search "there must be "real suspicion' directed specifically to the person searched." 563 F.2d at 1300.
  [*60]  The instant case withstands analysis under the Ninth Circuit's "real suspicion" test. The initial search, simply as a border search, was reasonable. It appears that the customs officer developed a "real suspicion" as to the importability of the contents of the cartons as a result of this initial search. We conclude that the customs officer's real suspicion concerning the importability of the documents fulfilled the additional cause requirement, and provided the basis for the more [**11]  intrusive search that subsequently took place. Thus, the actions of the customs officers were proper and the effectuation of the border search was valid.
Finally, we reject the plaintiffs' argument that the government had to obtain a search warrant to continue searching, detaining and copying the documents. The "plain view" doctrine provides that an officer may seize evidence without a warrant if that officer has a proper justification for being coincidentally in a position to come upon the incriminating evidence. Harris v. United States, 390 U.S. 234, 88 S. Ct. 992, 19 L. Ed. 2d 1067 (1968).
The plaintiffs have neither argued nor presented any credible evidence in this case that the original inspection of the documents was conducted in bad faith or that the initial Section 1305 search was used as a guise for obtaining incriminating evidence for use against the Church of Scientology in other proceedings. Accordingly, we must conclude that the initial search was conducted in good faith and a proper inspection occurred.
The customs officers had a right to inspect the shipments and could seize any evidence of another crime, under the "plain view" doctrine, without first obtaining a [**12]  search warrant. This conclusion regarding the permissible absence of a search warrant is buttressed by the Supreme Court's comment in Ramsey, supra. In Ramsey, the customs officials opened the airmail envelopes, discovered the heroin, resealed the envelopes and sent them to the Drug Enforcement Administration for further action. The Drug Enforcement Administration obtained search warrants after it received the envelopes. The Supreme Court treated the search warrants as an unnecessary and insignificant step, for the original opening and inspection of the envelopes had been legal. We hold, similarly, that a search warrant would be unnecessary, for the customs officers already were examining the documents in good faith and therefore the "plain view" doctrine is controlling.
For the foregoing reasons, the plaintiffs' application for a preliminary injunction will be denied and the action dismissed. This opinion shall constitute findings of fact and conclusions of law, as authorized by Rule 52(a) of the Federal Rules of Civil Procedure.  

103 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, a Nonprofit Corporation, Plaintiff, v. UNITED STATES DEPARTMENT OF JUSTICE et al., Defendants 

No. CV 74-3550-F 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA 

410 F. Supp. 1297; 1976 U.S. Dist. LEXIS 15737 

April 2, 1976 

COUNSEL:
 [**1]  
Joel Kreiner, Los Angeles, California, Leonard Unger, Levine & Krom, Beverly Hills, California, for plaintiff.
William D. Keller, U.S. Atty., Frederick M. Brosio, Jr., Asst. U.S. Atty., Chief, Civil Div., James Stotter II, Asst. U.S. Atty., Los Angeles, California, for defendants.  

JUDGES:
Ferguson, District Judge.  

OPINIONBY:
FERGUSON 

OPINION:

 [*1298]  MEMORANDUM OPINION
FERGUSON, District Judge.
This case raises the question of whether the 1974 amendments to the Freedom of Information Act permit non-disclosure of confidential information supplied to the Drug Enforcement Agency by foreign, state, and local law enforcement agencies.
The government defendants produced a series of witnesses who testified that information provided from one law enforcement agency to another law enforcement agency is given on the understanding that it will not be revealed to members of the general public without the prior approval of the providing source.  The witnesses testified that foreign, state, and local law enforcement agencies would be reluctant to disclose information to any federal agency if the Freedom of Information Act jeopardized the confidentiality of their information.  Among the witnesses [**2]  were Chief Rocky Pomerance, the Chief of Police of Miami Beach, Florida, and immediate past president of the International Association of Chiefs of Police; David C. Dilley, Commander, Metropolitan Police and Intelligence  [*1299]  Branch, Scotland Yard, London, England; and Francois Le Mouel, Controller General, French National Police Chief, French Bureau of Narcotics, Paris, France.
The plaintiff Church of Scientology contends that the Congress intended that confidential information provided by law enforcement agencies must be produced under the Act.  The plaintiff argues that since it does not condone or tolerate the use of drugs, since it has promoted programs which combat the use of drugs, and since it is not involved in drug or narcotic trafficking, no valid governmental interest supports non-disclosure. Although the government does not contest the fact that the plaintiff is an opponent of drug trafficking, it contends that the Act, nonetheless, permits non-disclosure. The government is correct.
Background
1. On December 4, 1974 the Church of Scientology of California filed an action pursuant to the provisions of the Freedom of Information Act, 5 U.S.C. §  552, naming [**3]  the United States Department of Justice, the Attorney General of the United States, and the Drug Enforcement Administration as defendants.
2. Jurisdiction was founded on 5 U.S.C. §  552(a)(3) on the ground that the action was one to enjoin an agency from withholding agency records and to order the production of agency records alleged to have been improperly withheld.
3. Since the plaintiff maintains its principal place of business in the Central District of California, venue in this district was properly based upon 5 U.S.C. §  552(a)(3).
4. The plaintiff has exhausted its administrative remedies under 5 U.S.C. §  552 and the regulations promulgated thereunder by the defendant Department of Justice.
5. The parties stipulated that the amendments to the Freedom of Information Act, 5 U.S.C. §  552(b), which became effective on February 19, 1975, were to be deemed effective and fully applicable to this action.
6. The Drug Enforcement Agency at various times released numerous documents to the plaintiff n1 but a dispute over the propriety of the Agency's decision to withhold fifteen documents in their entirety and portions of nine other documents necessitated a trial on January 7-9,  [**4]  1976, and an in camera hearing on January 12, 1976.

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n1 The parties dispute as to why these documents were released.  The question may be of importance in determining the assessment of litigation costs and the propriety of an award of attorneys' fees to the plaintiff.  The court will retain jurisdiction to determine these questions in subsequent proceedings.

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7. The defendants claim multiple exemptions under 5 U.S.C. §  552(b) with respect to each of the fifteen documents that were wholly withheld. They invoke the (b)(7)(C) n2 and (b)(7)(D) n3 exemptions with respect to all fifteen documents, the (b)(7)(A) n4 exemption with respect to ten of the documents, the (b)(7)(F) n5 exemption with respect to five of the documents, the (b)(2) n6 exemption with respect to four of the documents, the (b)(5) n7 exemption with respect to two of  [*1300]  the documents, and the (b)(1) n8 exemption with respect to one of the documents.

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n2 5 U.S.C. §  552(b)(7) exempts: "investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel." [**5]  
n3 See footnote 2.
n4 See footnote 2.
n5 See footnote 2.
n6 5 U.S.C. §  552(b)(2) exempts matters "related solely to the internal personnel rules and practices of an agency."
n7 5 U.S.C. §  552(b)(5) exempts matters that are "inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency."
n8 5 U.S.C. §  552(b)(1) exempts matters "specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy . . . and are in fact properly classified pursuant to such Executive order."

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8. With respect to the nine documents in which partial excisions were made, the defendants contend that the (b)(7)(C) n9 and (b)(7)(D) n10 exemptions apply to material in each of the nine documents, the (b)(7)(F) n11 and (b)(2) n12 exemptions to material in seven of the documents, and the (b)(7)(A) n13 exemption to a portion of one document.

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n9 See note 2. [**6]  
n10 See note 2.
n11 See note 2.
n12 See note 6.
n13 See note 2.

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9. During the course of the trial, the plaintiff indicated that it did not seek access to the internal routing procedures, administrative markings, or the names of law enforcement personnel contained in the documents.
10. Each of the documents was examined by the court in camera and testimony concerning each of them was taken in camera. The descriptions provided by the defendants were found to be accurate.  Some of the material was found to have been improperly withheld, and after the court indicated its views during the in camera proceeding, the defendants agreed to disclose those brief portions of the material which had been improperly withheld. This is not to imply that any of the material examined in camera was withheld in bad faith.  Applying the Freedom of Information Act exemptions can be a complicated and tedious task.  It often requires line by line examination of the documents and the making of subtle judgments.
11. The court finds that the balance of the material was properly withheld.  [**7]  In all those instances in which the government claims that the (b)(7)(D) exemption justified exclusion of the entire document, the claim was well taken.  The materials involved are criminal investigatory records compiled for law enforcement purposes given under conditions of confidentiality. Since the (b)(7)(D) exemption is applicable, it is unnecessary to determine the validity of the other government claims with respect to those documents.  As to the other documents, the court finds that the exemptions relied upon were properly invoked with the exception of the material which the defendants agreed to release during the course of the hearing in camera. The only issue requiring extended discussion is the scope of the (b)(7)(D) exemption.
Discussion
The Freedom of Information Act (5 U.S.C. §  552) was signed into law by President Johnson on July 4, 1966.  The basic philosophy of the Act was well stated by the President in his bill signing statement: "[A] democracy works best when the people have all the information that the security of the Nation permits.  No one should be able to pull curtains of secrecy around decisions which can be revealed without injury to the public [**8]  interest." Thus the Act required that government records be made available to the public subject only to nine exceptions.  The seventh of these exceptions, as it was originally enacted, provided that an agency was permitted to refuse disclosure of "investigatory files compiled for law enforcement purposes except to the extent available by law to a party other than an agency." 5 U.S.C. §  552(b)(7)
In response to what the House Committee on Government Operations described as "years of foot-dragging by the Federal bureaucracy" (Committee on  [*1301]  Government Operations & Committee on the Judiciary, 94th Cong., 1st Sess., Freedom of Information Act and Amendments of 1974 (P.L. 93-502), at 8 (Joint Comm. Print 1975) (hereinafter "Legislative History")), on November 21, 1974, the Congress, overriding a Presidential veto, enacted a series of amendments to the Act.  The amendments in general were designed to undermine governmental secrecy and to strengthen public disclosure without sacrificing legitimate interests in confidentiality. In particular, Michigan Senator Phillip Hart proposed and Congress passed an amendment which was designed to promote fuller disclosure of information [**9]  contained in the files of law enforcement agencies without sacrificing legitimate law enforcement needs for confidentiality. Senator Hart was particularly concerned with the effects of a series of decisions of the District of Columbia Court of Appeals (id. at 349) which had erected formidable barriers to the disclosure of any information in the files of a law enforcement agency. See Center for National Policy on Race and Urban Issues v. Weinberger, 163 U.S.App.D.C. 368, 502 F.2d 370 (1974); Ditlow v. Brinegar, 161 U.S. App.D.C. 154, 494 F.2d 1073 (1974); Aspin v. Department of Defense, 160 U.S. App.D.C. 231, 491 F.2d 24 (1973); Weisberg v. United States Department of Justice, 160 U.S.App.D.C. 71, 489 F.2d 1195 (1973). Those decisions held that if investigatory files were initially compiled for law enforcement purposes they were immune from required disclosure under the Act whether or not any legitimate law enforcement purpose or interest in secrecy remained. n14 See, e.g., Center for National Policy Review on Race and Urban Issues v. Weinberger, supra, 502 F.2d at 372.

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n14 The only exception to this policy was that provided for in the language of the statute itself, "except to the extent available by law to a party other than an agency." 5 U.S.C. §  552(b)(7).  That exception was narrowly construed.  Weisberg v. United States Department of Justice, supra, 489 F.2d at 1203 n. 15.

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Senator Hart believed that the courts had erred in not balancing the relevant interests involved.  Legislative History, supra, at 349.  However, instead of requiring or permitting the courts to engage in a process of ad hoc balancing, he introduced an amendment which itself sought to balance the relevant interests.  Id. As enacted, the amendment provides that the Act's disclosure requirements do not apply to

investigatory records compiled for law enforcement purposes, but only to the extent that the production of such records would (A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel.
Thus [**11]  it is not the court's responsibility to balance the equities and to determine whether its subjective appreciation of the relevant policies dictates disclosure. n15 The Act does not grant the courts general supervisory power to control the performance of executive agencies.  Congress has struck the policy balance (see Legislative History, supra, at 300, 334, 349).  The judicial task is to discern the intent of Congress and to apply it to the documents.

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n15 If the court were required to balance the equities, much more disclosure would have been required.  The bulk of the information is innocuous, sometimes even silly.  The Act, however, permits the defendants to withhold information provided by confidential sources even if that information is innocuous and even if the revelation of that information could not possibly reveal the source.

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 [*1302]  The Act clearly states that confidential information furnished by a confidential source compiled in the course of a criminal investigation is not to be revealed.  [**12]  Congress feared that the revelation of even apparently innocuous information might inadvertently reveal the identity of confidential sources.  Moreover the Congress believed that potential sources would fear that disclosure of information would reveal their cooperation and that such sources would be discouraged from cooperating.  Thus the Joint Explanatory Statement of the Committee of Conference explained that "[Where] the records are compiled by a criminal law enforcement authority, all of the information furnished only by a confidential source may be withheld if the information was compiled in the course of a criminal investigation." Id. at 230 (emphasis in original).
The plaintiff contends that the term "source" refers exclusively to people, not to entities such as law enforcement agencies. The defendants maintain that the term source includes any provider of confidential information.
The term source is not defined in the Act, and it appears that the issue was not precisely addressed in the legislative history. The Joint Explanatory Statement of the Committee of Conference in discussing its substitution of the term "source" for "informer" stated that:
The substitution [**13]  of the term "confidential source" n16 in section 552(b)(7)(D) is to make clear that the identity of a person other than a paid informer may be protected if the person provided information under an express assurance of confidentiality or in circumstances from which such an assurance could be reasonably inferred.  Id. at 230 (emphasis added).

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n16 The plaintiff contends that since it is well known that law enforcement agencies cooperate with each other, they cannot be considered confidential sources.  The Attorney General's Memorandum on the 1974 Amendments to the Freedom of Information Act exposes the error of this position: "[The] test, for purposes of the provision, is whether he was a confidential source with respect to the particular information requested, not whether all connection between him and the agency is entirely unknown." Legislative History, supra, at 520.

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Whether the use of the term person was meant to exclude non-human sources is not explained.  Other portions of the [**14]  legislative history suggest that the legislator's focus was upon human sources.  For example, Senator Kennedy, the prime sponsor of the amendments in the Senate, at one point, stated that, "[We] also provided that there be no requirement to reveal not only the identity of a confidential source, but also any information obtained from him in a criminal investigation." Id. at 459 (emphasis added).
Assorted grammatical nuances, however, are no substitute for an assessment of what interpretation the legislature would have given the term source if the issue involved here had been presented at the time of passage.  A recognition of the overall purpose of the amendment and the political realities surrounding its passage make it unmistakably clear that the term source means source, not human source.
The opponents of the Hart amendment feared that the disclosure of law enforcement records would undermine confidentiality. In response to those concerns, the term source was substituted for informer in order to "provide a wider degree of protection." Id. at 459.  Despite that substitution and other accommodations, President Ford vetoed the bill, in part because he believed that [**15]  "confidentiality would not be maintained." Id. at 484.  In response to the attacks, the sponsors of the amendments assured the Congress that, "We have been most careful to protect . . . law enforcement interests to the utmost in the bill we passed." Id. at 440.  In order to secure an override of the Presidential veto, it was necessary to convince the legislature and the public that no legitimate law enforcement interest had  [*1303]  been compromised.  Most persuasive in this regard was the statement of Senator Hart in his effort to sustain an override of the President's veto:

The major change in conference was the provision which permits law enforcement agencies to withhold "confidential information furnished only by a confidential source." In other words, the agency not only can withhold information which would disclose the identity of a confidential source but also can provide blanket protection for any information supplied by a confidential source. The President is therefore mistaken in his statement that the FBI must prove that disclosure would reveal an informer's identity; all the FBI has to do is to state that the information was furnished by a confidential  [**16]   source and it is exempt. n17 Id. at 451 (emphasis added).

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n17 The defendants maintain that since they have declared this material to be derived from confidential sources a contrary finding by this court is not permitted.  The issue need not be decided since the court finds that the material was provided by confidential sources.

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Again Senator Hart told the Congress that, "One of the reasons given by the President for his veto is that the investigatory files amendment which I offered would hamper criminal law enforcement agencies in their efforts to protect confidential files.  We made major changes in the conference to accommodate this concern." Id. at 450-51.
Thus the sponsors of the amendments, and the Congress following in step, believed that the Hart amendment would protect the confidential files of law enforcement. There was no argument raised to support the proposition that confidential information provided by law enforcement agencies was any less important to the mission of federal [**17]  law enforcement than information provided by ordinary citizens.  In light of the legislative history, it is clear that the Congress did not intend to throw open the confidential files of law enforcement to the general public, and its intent to protect against disclosure of confidential information extends to material provided by any confidential source including law enforcement agencies. n18

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n18 Thus it is not necessary to score the debator's point that information emanating from law enforcement agencies would necessarily come from people in the agencies who would qualify as sources even if the term source were confined to human sources.  Nor is it necessary to dwell on the irony that if a contrary result obtained, the Freedom of Information Act, which purports to operate only against federal agencies, would have the effect of revealing confidential information contained in the files of foreign, state, and local governments.

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The court therefore holds that the (b)(7)(D) exemption is applicable to law enforcement [**18]  agency sources.  Pursuant to the provisions of Rule 52(a) of the Federal Rules of Civil Procedure, this opinion shall constitute the findings of fact and conclusions of law of the court.
Pursuant to 28 U.S.C. §  1291 and Rules 58 and 79(a) of the Federal Rules of Civil Procedure, a judgment shall be entered as follows:
It is adjudged and decreed that:
(1) The defendants are entitled to withhold the material still at issue in this litigation.
(2) The court retains jurisdiction for the purpose of determining which of the parties has "substantially prevailed" and to determine awards of costs and attorneys' fees.  Such determinations shall be made after the disposition of appeals in this case.  

104 of 133 DOCUMENTS 

Church of Scientology of Hawaii, Plaintiff v. United States of America, Defendant.  

Civil No. 70-3138.  

United States District Court for the District of Hawaii.  

1975 U.S. Dist. LEXIS 16716; 75-2 U.S. Tax Cas. (CCH) P9651; 36 A.F.T.R.2d (RIA) 5710 

August 4, 1975.  

OPINIONBY:
PENCE 

OPINION:

Judgment 
PENCE, District Judge: Pursuant to the Stipulation of the parties filed in this action, it is hereby ORDERED AND DECREED: 
(1) The Church of Scientology of Hawaii was a tax exempt organization within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1954 during the years 1965 and 1966.  
(2) The United States of America is indebted to the Church of Scientology of Hawaii in the amount of $685.64 for income taxes and interest paid for the year 1965 and $63.40 for income taxes and interest paid for the year 1966 plus interest as provided by law together with allowable costs.  

105 of 133 DOCUMENTS 

Church of Scientology of California, a non-profit corporation, Plaintiff v. Internal Revenue Service, Donald C. Alexander, Commissioner of Internal Revenue, Department of the Treasury of the United States, William Simon, Secretary of the Treasury of the United States, Defendants.  

No. CV74-3465-RJK.  

United States District Court, Cent. Dist. Calif.  

1974 U.S. Dist. LEXIS 11615; 75-1 U.S. Tax Cas. (CCH) P9197; 35 A.F.T.R.2d (RIA) 643 

12/12/74.  

OPINIONBY:
 [*1]  
KELLEHER 

OPINION:

Findings of Fact and Conclusions of Law Re: Denial of Plaintiff's Motion for Order to Show Cause and Preliminary Injunction 
KELLEHER, District Judge: Plaintiff filed a motion for an order to show cause re: preliminary injunction requiring the Defendants to produce immediately for inspection and copying any and all records of the Internal Revenue Service relating or pertaining to the activities, operation or conduct of the Church of Scientology of California, indexed under the name of Scientology, Church of Scientology, or Church of Scientology of California.  In support of its motion Plaintiff submitted a memorandum of points and authorities and the affidavit of Reverend James C. Mulligan.  Thereafter, Defendants filed their opposition to Plaintiff's motion.  
The matter came on for hearing before this Court on December 2, 1974, at 10:00 A.M.  Appearing for Plaintiff was Joel Kreiner, Attorney At Law.  Appearing on behalf of the Defendants was Assistant United States Attorney Arthur M. Greenwald.  
The Court, having considered the contents of the pleadings, memoranda and affidavit filed, as well as the arguments of counsel, makes the following findings of fact and [*2]  conclusions of law, as required by Rule 52(a) of the Federal Rules of Civil Procedure: 
Findings of Fact 
1.  On November 26, 1974, Plaintiff filed a complaint entitled, "Verified Complaint for Injunction Against the Unlawful Withholding of Records and for Order for Production of Records Pursuant to Section 552 of Title 5, United States Code, the Freedom of Information Act".  
2.  On November 26, 1974, Plaintiff filed a motion for an order to show cause re: preliminary injunction to enjoin withholding of records and compel production of records with supporting memorandum of points and authorities and affidavit of the Reverend James C. Mulligan.  
3.  On November 27, 1974, Defendants filed their opposition to Plaintiff's motion.  
4.  This Court considers Plaintiff's motion as one requesting a preliminary injunction requiring the Defendants to produce immediately for inspection and copying any and all records of the Internal Revenue Service relating or pertaining to the activities, operation or conduct of the Church of Scientology of California, indexed under the name of Scientology, Church of Scientology, or Church of Scientology of California.  
Conclusions of Law 
1.  This [*3]  Court has jurisdiction over these proceedings in accordance with Section 552 (a)(3) of Title 5, United States Code and Rule 65(a) of the Federal Rules of Civil Procedure. 
2.  Plaintiff has failed to make a clear showing of probable success upon trial and possible irreparable harm; therefore, the injunctive relief requested cannot be granted.  Checker Motor Corp. v. Chrysler Corp. , 405 F.2d 319, 323 (2d Cir. 1969); Dymo Industries, Inc. v. Tapeprinter, Inc. , 326 F.2d 141 (9th Cir. 1964). 
3.  Defendants shall be permitted to answer or otherwise respond to Plaintiff's complaint within 60 days after service of a copy of summons and complaint in accordance with Rule 12(a) of the Federal Rules of Civil Procedure. 
4.  Plaintiff's request for a preliminary injunction is denied without prejudice.  

106 of 133 DOCUMENTS 

United States of America and Robert H. Cluberton, Internal Revenue Agent, Internal Revenue Service, Petitioners v. Church of Scientology of California and Henning Heldt, Vice President, Respondents.  

No. 73-2100-HP 

U.S. District Court, Cent. Dist. Calif.  

1973 U.S. Dist. LEXIS 11050; 74-1 U.S. Tax Cas. (CCH) P9107; 33 A.F.T.R.2d (RIA) 329 

11/15/73.  

COUNSEL:
William D. Keller, United States Attorney, Charles H. Magnuson, Arthur M. Greenwald, Assistant United States Attorneys, Los Angeles, Calif., for petitioners.  

OPINIONBY:
PREGERSON 

OPINION:

Findings of Fact and Conclusions of Law 
Statement of Proceedings 
 PREGERSON, District Judge: On September 5, 1973, petitioners filed their petition to enforce an Internal Revenue Service summons [*2]  with the supporting affidavit of Robert H. Cluberton, Internal Revenue Agent.  
On September 5, 1973, this Court issued an Order to Show Cause ordering that the respondents show cause why they should not be required to obey the Internal Revenue Service summons served upon the respondents on February 9, 1973.  
On September 19, 1973, the respondents filed a notice to take the depositions of Regional Commissioner of Internal Revenue, Homer Croasmun; Internal Revenue Service Group Manager, James Argue, and Internal Revenue Agent, Robert H. Cluberton, also requesting that these deponents produce at these depositions certain records and documents, as more particularly described in the notice. 
On September 25, 1973, the petitioners filed a motion to quash the notice to take the depositions of Messrs. Croasmun, Argue and Cluberton, and to produce the documents requested.  
On October 9, 1973, the respondents filed their memorandum of points and authorities in opposition to the petition to enforce the Internal Revenue Service summons at issue, to which the petitioners filed a reply on October 26, 1973.  
On November 1, 1973, the respondents filed their memorandum of points and authorities [*3]  in opposition to petitioners' motion to quash, to which the petitioners thereafter filed a reply. 
On November 5, 1973, the petitioners' motion to quash and this Court's Order to Show Cause came on regularly for hearing before this Court.  Appearing for the petitioners was Assistant United States Attorney, Arthur M. Greenwald and on behalf of the respondents, James Q. Fisher, a member of the law firm of Karno, Rudnick & Fisher, a professional corporation.  No witnesses or documentary evidence were offered during the course of this hearing.  Counsel for the parties presented oral arguments as to both the motion to quash and order to show cause.  
This Court having considered all of the pleadings, memoranda, exhibits attached thereto, affidavits and arguments of counsel and thereafter on November 9, 1973, having ruled that petitioners' motion to quash the notice to take the depositions of Messrs. Croasmun, Argue and Cluberton, and the production of documents thereto and the petition to enforce the Internal Revenue Service summons are granted; 
This Court now makes the following FINDINGS OF FACT AND CONCLUSIONS OF LAW: 
I Findings of Fact 
1.  The petitioner, Robert H. Cluberton,  [*4]  is a duly commissioned Internal Revenue Agent of the Audit Division of the Internal Revenue Service with post of duty in Los Angeles, California, performing his duties under the District Director of Internal Revenue, Los Angeles, California.  
2.  In his capacity as an Internal Revenue Agent, he was assigned to investigate and ascertain the correct tax liabilities of the respondent, Church of Scientology of California, (hereafter referred to as the respondent, Church) for each of the taxable years 1968 and 1969.  
3.  Pursuant to this assignment and in accordance with Sections 7602 and 7603 of Title 26, United States Code, an Internal Revenue Service summons, Treasury Form 2039, was served on February 9, 1973 upon the respondents.  
4.  This summons called for the respondents to produce certain books and records in the possession and/or control of the respondents, as more particularly described in the summons, which were then and are now necessary to the determination of the correct tax liability of the respondent, Church, for each of the taxable years 1968 and 1969.  
5.  The issuance of this summons was the culmination of almost two years of negotiations between the respondent,  [*5]  Henning Heldt (hereafter referred to as the respondent, Heldt) and representatives of the Internal Revenue Service, wherein the Internal Revenue Service attempted to secure the respondent's cooperation in commencing the examination of the respondent Church's taxable years 1968 and 1969, and in this regard, have an opportunity to audit the books and records described in the summons. 
6.  As required by the summons, the respondent, Heldt, appeared on February 20, 1973, before the petitioner, Internal Revenue Agent, Robert H. Cluberton, (hereafter referred to as the petitioner, Cluberton).  He advised the petitioner, Cluberton, that on February 16, 1973, he, the respondent, Heldt, had resigned as a director and Vice President of the respondent, Church, and as he did not have possession or control of the records sought in the summons because of his resignation, he could not produce the records sought.  
7.  At no time during the course of the negotiations between the respondent, Heldt, and representatives of the Internal Revenue Service (including a conference held on the date the summons was issued) did the respondent, Heldt, state to representatives of the Internal Revenue Service [*6]  that he contemplated resigning as a director and Vice President or that, as respondent, Church's representative, he, on the date called for in the summons for the production of the books and records requested, i.e., February 20, 1973, would not have possession or control of the requested books and records.  
8.  The respondent, Heldt, during the period of negotiations consistently held himself out to be the representative of the respondent, Church, who either had control of the books and records requested or was in a position to effect their production.  
9.  To date, the respondents have failed to produce the books and records described in the summons. No testimony has been taken from the respondent, Heldt, or any other representative of the respondent, Church, relative to the determination of the respondent, Church's tax liabilities for 1968 and 1969.  
10.  Any conclusion of law deemed as or properly constituting a finding of fact is hereby adopted as a finding of fact.  
II Conclusions of Law 
1.  This Court has jurisdiction to enforce judicially an Internal Revenue Service summons in accordance with Sections 7402(b) and 7604(a) of Title 26, United States Code.  
2.  Petitioners [*7]  issued the summons for a lawful and proper purpose, i.e., to determine the correct tax liabilities of the respondent, Church, for the years 1968 and 1969.  Section 7602 of Title 26, United States Code.  United States v. Powell, 379 U.S. 48 (1964); Boren v. Tucker, 239 F.2d 767 (9th Cir. 1969); United States v. Salter, 432 F.2d 697 (1st Cir. 1970). 
3.  The administrative steps required by the Code have been met by the petitioners.  United States v. Powell, supra. The resignation of the respondent, Heldt, does not constitute adequate grounds for the respondent, Church, to refuse to turn over the books and records requested.  On the date the summons was served, the respondent, Heldt, was a Vice President of the respondent, Church, having held himself out as a representative of the respondent, Church, who either had control of or was in a position to effect the production of the books and records requested.  
4.  The information sought in the summons is relevant to the determination of the respondent, Church's tax liabilities for each of the years 1968 and 1969.  United States v. Powell, supra. 
 5.  The information sought in the summons is not already within the petitioners' possession.  [*8]  United States v. Powell, supra.
 6.  The respondents have failed to meet their burden of showing good cause for the allowance of the discovery requested; their allegation of harassment is not supported by the record.  (HP) Petitioners' motion to quash the notice to take the depositions of Messrs. Croasmun, Argue and Cluberton, and production of documents thereto is granted.  Kevin L. Donaldson, et al. v. United States, et al., 400 U.S. 517 (1971); United States v. National State Bank, 454 F.2d 1249 (7th Cir. 1972); United States v. Ruggerio, 425 F.2d 1069 (9th Cir. 1970); United States v. Ahmanson, 415 F.2d 785 (9th Cir. 1969); United States v. Salter, supra. 
 7.  Respondents have failed to meet their burden of showing good cause for not enforcing the Internal Revenue Service summons issued by the petitioners.  The petition to enforce the summons is granted.  United States v. Powell, supra. 
 8.  Any finding of fact deemed as or properly constituting a conclusion of law is hereby adopted as a conclusion of law. 
Order for the Enforcement of Internal Revenue Service Summons 
In accordance with this Court's Findings of Fact and Conclusions of Law: 
IT IS HEREBY ORDERED that [*9]  the respondent, Church of Scientology of California, by and through its authorized representative, shall appear before the petitioner, Robert H. Cluberton, Internal Revenue Agent, and/or any other authorized representative of the petitioner, United States of America, at the offices of respondent, Church of Scientology of California, located at 5930 Franklin Avenue, Los Angeles, California, on December 17, 1973, at 10:00 A.M. and produce for examination and/or copying by any means of reproduction the following records in the matter of the tax liability of the respondent, Church of Scientology of California, for each of the years 1968 and 1969.  Said records shall be made available from day-to-day until the examination is completed: 
1.  All bank statements and cancelled checks in the possession and/or control of the respondent, Church of Scientology of California, which reflect all transactions in all checking accounts of the respondent, Church of Scientology of California and/or any and all of its divisions located at the Crocker National Bank, Wilshire-Westlake Branch, Los Angeles, California, for each of the calendar years 1968 and 1969.  
2.  All documents and records in the possession [*10]  and/or control of the respondent, Church of Scientology of California, necessary to the determination of the correct Federal income tax liabilities of the respondent, Church of Scientology of California, for each of the taxable years 1968 and 1969.  
3. All documents and records in the possession and/or control of the respondent, Church of Scientology of California, necessary to the determination of the correct employer's annual Federal unemployment tax liability for each of the calendar years 1968 and 1969.  
4.  All documents and records in the possession and/or control of the respondent, Church of Scientology of California, necessary to the determination of the employer's quarterly Federal employment tax liabilities (consisting of income and F.I.C.A. taxes withheld from employees' wages, as well as the employer's liability, applicable to taxable F.I.C.A. wages paid) for the four quarters applicable to each of the calendar years 1968 and 1969.  
IT IS FURTHER ORDERED that the respondent, Henning Heldt, and any other person or persons who may be designated by the respondent, Church of Scientology of California, appear before the petitioner, Robert H. Cluberton, Internal Revenue [*11]  Agent and/or any other authorized representative of the petitioner, United States of America, at a time and place agreed upon mutually for the purpose of giving testimony concerning the Federal tax liabilities described in paragraphs 2, 3, and 4 of this Order, reserving their right to assert any constitutional privilege with respect to any question propounded.  
In the event agreement cannot be reached upon a time and place the respondent, Henning Heldt, and any other person who may be designated by the respondent, Church of Scientology of California, shall appear before the petitioner, Robert H. Cluberton, Internal Revenue Agent; or any other authorized representative of the petitioner, United States of America, at a time and place designated by the petitioner, Robert H. Cluberton, Internal Revenue Agent, or any other authorized representative of the petitioner, United States of America.  Notice of said time and place shall be given to the respondent, Henning Heldt, and any other person who may be designated by the respondent, Church of Scientology of California, by means of a letter sent by certified mail to the respondents, Henning Heldt and Church of Scientology of California [*12]  at their last known addresses at least ten (10) days prior to the date set by the petitioner, Robert H. Cluberton, Internal Revenue Agent, or any other authorized representative of the petitioner, United States of America.  

107 of 133 DOCUMENTS 

The CHURCH OF SCIENTOLOGY OF CALIFORNIA a religious corporation, and Reverend Robert H. Thomas, Plaintiffs, v. DELL PUBLISHING CO., INC., a New York corporation, and George Malko, Defendants 

No. C-70-2089 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 

362 F. Supp. 767; 1973 U.S. Dist. LEXIS 12410 

August 3, 1973 

SUBSEQUENT HISTORY:
 [**1]  
As Corrected September 17, 1973.  

JUDGES:
Schnacke, District Judge.  

OPINIONBY:
SCHNACKE 

OPINION:

 [*768]  OPINION AND ORDER
 Schnacke, District Judge.
In this defamation action, defendants have moved for summary judgment. The Court has concluded that the motion must be denied but deems it advisable to discuss some of the legal issues for guidance in future phases of the case.
Defendants are the publisher and author, respectively, of a book entitled Scientology: The Now Religion, originally published in a hardcover edition, upon which the present complaint is founded, and later reissued in paperback following the commencement of this action, a point which will be discussed below.  Plaintiffs are a corporation and an individual engaged in "proselytizing the religion of Scientology."
In connection with its consideration of the present motion, the Court has read the book in question.  In general terms, it is a work of the expose type, its thesis being that "Scientology" is a pseudoreligion concocted by one Lafayette Ronald Hubbard, originally a science-fiction writer, but now claiming credentials as a religious founder and teacher; that Hubbard concocted Scientology primarily for commercial [**2]  purposes (which have been most successfully achieved despite running battles with governmental officials in this country and abroad); and that it is no more than a hodgepodge of (1) scientific gobbledygook with borrowings from Freudian psychology, (2) other scientific and pseudoscientific sources, and (3) fantasies of the type familiar to devotees of science-fiction -- all decked out in religious guise solely to attract the gullible and achieve certain hoped-for legal advantages.
Whether or not the book is false or defamatory of plaintiffs or others is not the issue before the Court; for present purposes it may be assumed to be.
The basic issue raised by defendants' motion is whether, under undisputed facts before the Court, defendants are entitled to judgment as a matter of law.  F.R. Civ. P., Rule 56.
This turns in large measure upon whether the undisputed facts disclose that the publication is privileged under the rules laid down in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S. Ct.  [*769]  710, 11 L. Ed. 2d 686 (1964) and subsequent controlling decisions, only a few of which need be discussed here.
Plaintiffs at the outset argue that the privilege is inapplicable,  [**3]  not because the subject matter is not one of "public interest", Time, Inc. v. Hill, 385 U.S. 374, 388, 87 S. Ct. 534, 17 L. Ed. 2d 456 (1967); Rosenbloom v. Metromedia, 403 U.S. 29, 41-42, 91 S. Ct. 1811, 29 L. Ed. 2d 296 (1971), but because the privilege applies only to news media -- newspapers, magazines, radio and television -- and not to more permanent publications such as a book.  Plaintiffs concede that the privilege was afforded to a book in Gordon v. Random House, Inc., 349 F. Supp. 919 (E.D. Pa. 1972), apparently the only case following New York Times involving a book, but argue that the Court there "did not face the issue." However, in granting summary judgment for defendant, that Court necessarily assumed, although it did not specifically so state, that the book there involved was privileged under the standards of the New York Times doctrine.
Moreover, the distinction urged by plaintiffs is not an appealing one.  The Times line of cases rests upon the essential freedom of public discussion enshrined in the First Amendment and not upon the form such discussion may take or the mere expediency of getting news reports to the public promptly. n1 Historically, books [**4]  have played at least as vital a role in the discussion of public issues as the other media.

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n1 The need for speed in news reporting may bear upon the issue of investigative sufficiency.  Cf. Curtis Publishing Co. v. Butts, 388 U.S. 130, 157, 87 S. Ct. 1975, 18 L. Ed. 2d 1094 (1967), rehearing denied, 389 U.S. 889, 88 S. Ct. 11, 19 L. Ed. 2d 197 (1967).

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We therefore hold that the privilege laid down in the New York Times line of cases is applicable here.
The nature of, and limitations upon, the privilege are stated in the New York Times case as follows:
"The constitutional guarantees require, we think, a federal rule that prohibits a public official from recovering damages for a defamatory falsehood relating to his official conduct unless he proves that the statement was made with 'actual malice' -- that is, with knowledge that it was false or with reckless disregard of whether it was false or not." (Pp. 279-280 of 376 U.S., p. 726 of 84 S. Ct.).

The type of persons and subject matter against [**5]  which the privilege applies have been broadened in later cases, so that it now applies generally to matters of "public interest".  See cases cited above.  But the limitations or qualifications have remained the same, and have been repeated a number of times by the Court.  E.g., St. Amant v. Thompson, 390 U.S. 727, 728, 88 S. Ct. 1323, 20 L. Ed. 2d 262 (1968).
It is clear that the concept of "actual malice" includes what follows the quoted term.  Thus, the issue is not whether there was ill will or animosity, but only whether the defendant acted with "knowledge" of the falsity of the published matter or with "reckless disregard of whether it was false or not." Accordingly, the cases have generally boiled down to a consideration of the circumstances leading up to the publication, the investigation that preceded it and the like.  In most of the cases, in fact, the principal issue is the nature, extent and reasonableness of the prepublication investigation.
The requirements of such investigation are extensively discussed in Curtis Publishing Co., supra, and other cases.
The background of the writing and publication of Scientology: The Now Religion is the subject of numerous [**6]  affidavits, interrogatories, depositions and other matters we have considered.  After such consideration, the Court is not convinced that no triable issues are presented.
It would not be profitable to review the material in detail.  We shall focus  [*770]  on only one matter that is of both legal and factual importance, that of the effect the trier of the fact might give to the admitted republication of the book in paperback after defendant's receipt of a letter from one of the attorneys for plaintiffs demanding a retraction, accompanied by a signed statement of one of the persons referred to in the book (not a party hereto) denying the truth of certain statements about him in the book.
Defendants argue that these matters should be disregarded, since the present complaint is founded on the hardcover edition and not the paperback. But it is not claimed that the latter differed any way other than format or that receipt of the above items led defendants to make any additional investigation as to the truth of the statements made in the book.  If the republication is found to be malicious, that can be evidence of maliciousness in the original publication.
The effect of republication [**7]  after a demand for retraction or claim of falsity by the person allegedly defamed has not been authoritatively determined under the New York Times standards. n2

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n2 California has adopted the Uniform Single Publication Act, Civil Code §  3425.3, and a statute pertaining to damages recoverable in retraction cases, Civil Code §  48a.  But these do not bear directly, as we see it, on the present motion, which raises different issues.

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In New York Times, supra, at p. 286 of 376 U.S., at p. 729 of 84 S. Ct., the Court said:

"The Times' failure to retract upon respondent's demand, although it later retracted upon the demand of Governor Paterson, is likewise not adequate evidence of malice for constitutional purposes."
The Court reserved, however, the question "Whether or not a failure to retract may ever constitute such evidence. . . ." (Id.)
In his concurring opinion in Curtis Publishing, supra, Warren, C.J., referred to the failure to make additional inquiries, after receipt of prepublication [**8]  denials, as a factor among others supporting a jury finding of malice. n3

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n3 The main opinion, by Harlan, J., ruled that the jury instructions regarding "malice", while given under a state statute dealing with punitive damages, essentially complied with the New York Times standards.  Pp. 156-157 of 388 U.S., 87 S. Ct. 1975.

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Lower court decisions fail entirely to answer the question of retraction or republication left open in New York Times. Morgan v. Dun & Bradstreet, Inc., 421 F.2d 1241 (5th Cir. 1970) and Diplomat Electric, Inc. v. Westinghouse Electric Sup. Co., 430 F.2d 38 (5th Cir. 1970), relied upon by plaintiffs, were not constitutional cases, but cases involving the privilege of confidential communications to interested parties.  The Supreme Court of Minnesota seems to have conflicting views.  Compare Rose v. Koch, 278 Minn. 235, 154 N.W. 2d 409, 428 (1967), with Mahnke v. Northwest Publications, Inc., 280 Minn. 328, 160 N.W. 2d 1, 10 (1968). The better view seems to us to be that of the latter [**9]  case, that prepublication denials and demands for retraction are not decisive either way, but are for the trier of fact to determine under the circumstances as a part of the overall questions of knowledge and recklessness.
The existence of this element, alone, therefore, raises a disputed issue of fact which precludes the granting of summary judgment.
The motion for summary judgment is denied.  

108 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY of Arizona, an Arizona Corporation, Appellant, v. CITY OF PHOENIX POLICE DEPARTMENT, a municipal agency, Lawrence M. Wetzel, Chief of Police, John Does I-X, Appellees 

No. 1 CA-CIV 3825 

Court of Appeals of Arizona, Division One, Department B 

122 Ariz. 338; 594 P.2d 1034; 1979 Ariz. App. LEXIS 447 

April 26, 1979 

PRIOR HISTORY:
 [***1]   
An Appeal from the Superior Court of Maricopa County Cause N3. C-335234 The Honorable Warrant L. McCarthy, Judge 

DISPOSITION:
Reversed and remanded with instructions.  

COUNSEL:
Jules I. Firetag, Phoenix, for appellant.
Venable, Rice, Lee & Capra by Gilbert T. Venable, Phoenix, for appellant.
Jones, Teilborg, Sanders, Haga & Parks, P. C. by Linda A. Drake, Phoenix, for appellees.  

JUDGES:
Schroeder, Presiding Judge.  Haire, J., concurs.  Ogg, Judge, dissenting.  

OPINIONBY:
SCHROEDER 

OPINION:

 [*338]   [**1034]  OPINION
This is an action brought by the appellant, Church of Scientology of Arizona, for the disclosure of certain documents in the possession of the appellee, City of Phoenix Police Department. The appellant sought disclosure of the documents pursuant to Arizona's document inspection statutes, A.R.S. §  39-121 et seq. This is an appeal from the trial court's judgment denying disclosure.
Appellant is a nonprofit organization which, along with affiliated corporations throughout the country, was at one time subjected to considerable scrutiny and investigation by various law enforcement agencies apparently leading to unfavorable publicity.  In an effort to quell some of the controversy,  [***2]  and to present its side of the story, appellant sought disclosure of records in the possession of the Phoenix Police Department relating to appellant, its affiliates,  [*339]   [**1035]  and certain designated leading members.  The appellee police department did furnish some material, but declined to disclose a group of approximately twenty-two pieces of paper which it designated as "inter or intra-agency communications." Appellant then filed this special action in the trial court seeking to compel disclosure.
It is undisputed that the documents are all over twenty years old.  There is no ongoing investigation to which they pertain, nor is any further investigation contemplated.  Appellee has never suggested that the documents reveal any confidential information sources or information gathering techniques, or that disclosure to appellant would involve any invasion of privacy. Indeed appellee has never specifically articulated any potential harm likely to result from disclosure of the documents.  Rather, it has adhered to the premise that investigative files, and particularly inter and intra-agency communications, originally intended to be confidential should, as a matter of [***3]  policy, ever remain so.
The appellant brought this action pursuant to statutory provisions regarding inspection of public agency records.  A.R.S. §  39-121 et seq. The original Arizona statute, A.R.S. §  39-121, adopted from a similar California statute, provides simply that

Public records and other matters in the office of any officer at all times during office hours shall be open to inspection by any person.

After an in-camera inspection the trial court ruled in favor of the appellee police department finding that the documents subject to disclosure were not "public records."
There has been very little Arizona judicial interpretation of A.R.S. §  39-121.  The leading case is Mathews v. Pyle, 75 Ariz. 76, 251 P.2d 893 (1952), in which a newspaper sought access to an investigative report submitted to the Governor on the activities of the Attorney General's Office.  The Court there held that the report was not a "public record" which it defined as "'one made by a public officer in pursuance of a duty, the immediate purpose of which is to disseminate information to the public, or to serve as a memorial of official transactions for public reference.'" 75 Ariz. at [***4]  78, 251 P.2d at 895. The Court held, however, that the report might be subject to inspection as an "other matter." In determining whether records other than "public records" should be available for inspection, the Court held that disclosure is appropriate unless the documents are "confidential or of such a nature that it would be against the best interests of the state to permit a disclosure of their contents." 75 Ariz. at 80, 251 P.2d at 896. The Court ordered an in-camera inspection by the trial court to determine whether disclosure of the particular document in question was appropriate.
In 1975, the legislature added A.R.S. §  39-121.01.  That provision, which now incorporates subsequent amendments not material to the questions before us, defines a responsibility of all officers of public bodies to

maintain all records reasonably necessary or appropriate to maintain an accurate knowledge of their official activities and of any of their activities which are supported by funds from the state or any political subdivision thereof.  A.R.S. §  39-121.01(B).

It further provides in subsection (D), that the custodian of such records shall furnish copies on request.  We agree [***5]  with a 1976 opinion of the Attorney General that, following passage of the 1975 provisions,

the proper way to view all requests for information is not to determine whether or not a record is technically a public record or other matter, but instead to determine if release of the information would have an important and harmful effect upon the official duties of the official or agency.  76-43 Ariz.Op.Att'y Gen. (1976).
The appellee's principal underlying contention is that, even though no specific harm will be done by the disclosure of these particular documents, the efficient functioning of law enforcement agencies will be undermined by any disclosure of investigatory materials, no matter how stale.  In  [*340]   [**1036]  support of this contention, the appellee relies upon a series of California cases, holding that various investigatory materials are not subject to disclosure. See Runyon v. Board of Prison Terms and Paroles, 26 Cal.App.2d 183, 79 P.2d 101 (1938) (letters to parole board); People v. Wilkins, 135 Cal.App.2d 371, 287 P.2d 555 (1955) (current police records); People v. Pearson, 111 Cal.App.2d 9, 244 P.2d 35 (1952) (sheriff records described [***6]  as "public records but confidential"); City Counsel of City of Santa Monica v. Superior Court, 204 Cal.App.2d 68, 21 Cal.Rptr. 896 (1962) (private investigator's report concerning dismissal of police chief denied to newspaper).  All of those cases, however, apparently involved materials of a highly contemporary nature.  Disclosure would have resulted in impairment of investigation or invasion of privacy. We find nothing in those cases to indicate that investigative materials should forever remain confidential simply as a result of its original characterization as such.  In fact, one California decision cited by appellee dealing with grand jury transcripts, holds that material which at one time is properly secret should not permanently be withheld from public inspection. Craemer v. Superior Court, 71 Cal.Rptr. 193, 265 Cal.App.2d 216 (1968).
There is no specific Arizona statutory exemption from inspection for investigative materials.  We note that the Federal Freedom of Information Act exempts investigatory records from inspection only to the extent that production would:
(A) interfere with enforcement proceedings, (B) deprive a person of a right to a fair trial or an [***7]  impartial adjudication, (C) constitute an unwarranted invasion of personal privacy, (D) disclose the identity of a confidential source and, in the case of a record compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by the confidential source, (E) disclose investigative techniques and procedures, or (F) endanger the life or physical safety of law enforcement personnel; . . . 5 U.S.C. §  552(b)(7).
Under these federal standards the appellant would be permitted to inspect these materials.  The appellee has not suggested that the federal policy is unsound, and in fact has referred us to another provision of the Federal Act exempting "inter or intra-agency communications" from disclosure. We agree that the Federal Act offers guidance, but the provision to which appellee refers does not support the position which it urges.  Far from exempting all inter and intra-agency communications per se, the Federal Act provides that they shall be subject to disclosure to the extent that they would be subject to discovery by a party in [***8]  litigation with the agency.  5 U.S.C. §  552(b)(5).  See Environmental Protection Agency v. Mink, 410 U.S. 73, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973). In oral argument, appellee conceded that the materials involved here would be discoverable under such a standard.
In sum, we are mindful of the importance of protecting truly confidential investigatory materials but find no justification for refusing to disclose these documents.  We are not persuaded that our statutory policy in favor of disclosure should be so easily, and permanently, thwarted by the unilateral and potentially self-serving inclination of government officials to classify files as confidential. Whether the materials retain, or ever had, any significance or value to the appellant is a decision properly left to the appellant.
The judgment of the trial court is reversed, and the matter is remanded to the trial court with instructions to make copies of the documents in question available to appellant.  

DISSENTBY:
OGG 

DISSENT:

OGG, Judge, dissenting:
I respectfully dissent.  I do not believe the legislature intended to include police interoffice and intra-agency communications as public records. See Mathews v. Pyle, supra [***9]  . I do believe such communications  [*341]   [**1037]  qualify as "other matters" under A.R.S. §  39-121, and they may be inspected by the public unless they are (1) confidential, or (2) of such a nature that it would be against the best interest of the state to permit disclosure of their content.
In order for the documents requested in this case to be considered confidential, the police department's need for secrecy must outweigh the Church's interest in disclosure. Such a balancing test was established in the case of Mathews v. Pyle, where the Arizona Supreme Court stated a governmental agency has the authority to deny the inspection of such material if it thinks such disclosure would be detrimental to the best interest of the state.  If such decision is challenged, the issue must be determined by the courts.  The trial judge must hold an "in camera" inspection of the disputed documents and in the exercise of sound discretion determine if the inspection would be detrimental to the best interests of the state.
In this case, the trial judge followed the Mathews v. Pyle guidelines and held an "in camera" inspection of the interoffice and intra-agency police communications [***10]  relative to the criminal investigation made involving the Church.  At the conclusion of this inspection, the court entered an order finding they were not public records and therefore denying inspection of these communications by the Church.
Viewing the evidence in a light most favorable to upholding the judgment of the trier of fact, I find no abuse of discretion by the trial court.  The Church wanted these records so they could straighten out the thinking of those who sent or received these communications during the investigation.  The documents were not and are not needed for any litigation between the parties.  Such inspection has been held to be proper where litigation is involved, but even there the trial court has the authority to withhold confidential materials, such as the names and addresses of witnesses or complainants.  City of Tucson v. Superior Court, 25 Ariz.App. 512, 544 P.2d 1113 (1976); City of Phoenix v. Peterson, 11 Ariz.App. 136, 462 P.2d 829 (1969). Mere fishing expeditions are not permitted.  State ex rel. DeConcini v. Superior Court, 20 Ariz.App. 33, 509 P.2d 1070 (1973). From my personal inspection of the contested documents, it appears that while [***11]  some are innocuous, others are investigation memoranda of officers and opinions of potential witnesses as well as lists of names, addresses and phone numbers.  In my opinion, there is a strong state interest in protecting the free flow of information, both interoffice and intra-agency, among police agencies.  If a private citizen knows his name, address and testimony may be divulged, no matter how remote in time, to the party under investigation by the police, this will have a chilling effect upon the participation by the public in police investigations.
I find the interest of the Church in the disputed documents to be minimal.  Much of the information requested has been disclosed.  Using the balancing test of Mathews v. Pyle, I cannot say the trial judge abused his discretion in refusing to order the disclosure of these police interoffice and intra-agency communications.
I would affirm the judgment.  

109 of 133 DOCUMENTS 

Church of Scientology of California, Appellant v. Lawrence Wollersheim, Respondent And Companion Case 

S052262 

SUPREME COURT OF CALIFORNIA 

1996 Cal. LEXIS 2783 

May 22, 1996, Decided 

PRIOR HISTORY:
 [*1]  Appeal from Second Appellate District, Division 3, No. B084686, B068063 

JUDGES:
Kennard, J., is of the opinion the petition should be granted.  

OPINION:

Petition for review DENIED. 
Kennard, J., is of the opinion the petition should be granted.  

110 of 133 DOCUMENTS 

Church of Scientology International, Respondent v. Gerald Armstrong, Appellant 

S040674 

SUPREME COURT OF CALIFORNIA 

1994 Cal. LEXIS 4433 

August 10, 1994, Decided 

PRIOR HISTORY:
 [*1]  Appeal from Second Appellate District, Division 4, No. B069450 

OPINION:

Appellant's petition for review DENIED.  

111 of 133 DOCUMENTS 

Larry Wollesheim, Respondent v. Church of Scientology of California, Appellant 

S011790 

SUPREME COURT OF CALIFORNIA 

1994 Cal. LEXIS 2190 

April 20, 1994, Decided 

PRIOR HISTORY:
 [*1]  Appeal from Second Appellate District, Division 7, No. B023193 

OPINION:

The request for an order directing publication of the opinion in the above entitled cause is DENIED.  

112 of 133 DOCUMENTS 

Larry Wollersheim, Respondent v. Church of Scientology of California, Appellant 

S011790 

SUPREME COURT OF CALIFORNIA 

1993 Cal. LEXIS 3749 

July 15, 1993, Decided 

PRIOR HISTORY:
 [*1]  2 Dist. B023193.  Div. 7 

JUDGES:
Lucas, C.J., Mosk, J., Panelli, J., Kennard, J., Arabian, J., Baxter, J., George, J.  

OPINION:

Pursuant to Rule 29.4(c), California Rules of Court, the above-entitled review is DISMISSED and cause is remanded to the Court of Appeal, Second Appellate District, Division Seven.  

113 of 133 DOCUMENTS 

Larry Wollersheim, Respondent v. Church of Scientology, Appellant 

S011790 

SUPREME COURT OF CALIFORNIA 

1992 Cal. LEXIS 5150 

October 16, 1992, Decided 

OPINION:

 [*1]  
The request of respondent Lawrence Wollersheim to file a supplemental brief herein is hereby denied.  

114 of 133 DOCUMENTS 

Larry Wollersheim, Respondent v. Church of Scientology of California, Appellant 

S011790 

SUPREME COURT OF CALIFORNIA 

832 P.2d 898; 1992 Cal. LEXIS 3750; 10 Cal. Rptr. 2d 182; 92 Cal. Daily Op. Service 6486; 92 Daily Journal DAR 10282 

July 23, 1992, Decided 

PRIOR HISTORY:
 [*1]  2 Dist. B023193.  Div. 7.  

JUDGES:
Arabian, Acting C.J., Kennard, J., Baxter, J., George, J.  

OPINION:

Petition for review GRANTED. 
Submission of additional briefing, otherwise required by rule 29.3, California Rules of Court, is deferred pending further order of the court.  

115 of 133 DOCUMENTS 

Church of Scientology of California, Appellant v. Gerald Armstrong, Respondent, And Companion Case 

No. S022840 

Supreme Court of California 

1991 Cal. LEXIS 4825 

October 17, 1991 

PRIOR HISTORY:
 [*1]  

Appeal from the Second Appellate District, Division Three, Nos. B025920, B038975.  

OPINION:

Petition for review DENIED.  

116 of 133 DOCUMENTS 

Church of Scientology Mission of Riverside et al., Appellants v. Bent Corydon et al., Respondents v. Bent Corydon et al., Respondents 

No. S021192 

Supreme Court of California 

1991 Cal. LEXIS 3137 

July 10, 1991 

PRIOR HISTORY:
 [*1]  

Appeal from the Fourth Appellate District, Division One, No. D014341.  

OPINION:

Appellant's petition for review DENIED.  

117 of 133 DOCUMENTS 

Church of Scientology, International et al., Petitioners v. Superior Court of the County of Los Angeles, Respondent; Bent Corydon, Real Party in Interest 

No. S021196 

Supreme Court of California 

1991 Cal. LEXIS 2731 

June 10, 1991 

PRIOR HISTORY:
 [*1]  

Appeal from the Second Appellate District, Division Three, No. B056622.  

OPINION:

Application for stay and petition for review DENIED.  

118 of 133 DOCUMENTS 

Church of Scientology of California, Appellant v. Gerald Armstrong, Respondent 

S020826 

Supreme Court of California 

1991 Cal. LEXIS 1955 

May 8, 1991 

PRIOR HISTORY:
 [*1]  

Appeal from the Second Appellate District, Division Five, No. B058119.  

JUDGES:
Mosk, J., is of the opinion the stay should be granted.  

OPINION:

Application for stay and petition for review DENIED.  

119 of 133 DOCUMENTS 

Larry Wollersheim, Respondent v. Church of Scientology of California, Appellant 

No. S011790 

Supreme Court of California 

1989 Cal. LEXIS 2557 

October 26, 1989 

PRIOR HISTORY:
 [*1]  
Appeal from the Second Appellate District, Division Seven, No. B023193.  

OPINION:

Appellant's and respondent's petitions for review DENIED.  

120 of 133 DOCUMENTS 

LARRY WOLLERSHEIM, Plaintiff and Respondent, v. CHURCH OF SCIENTOLOGY INTERNATIONAL et al., Defendants and Appellants.  

No. B118114.  

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION TWO 

69 Cal. App. 4th 1012; 1999 Cal. App. LEXIS 90; 81 Cal. Rptr. 2d 896; 99 Cal. Daily Op. Service 999; 99 Daily Journal DAR 1247 

February 4, 1999, Decided 

NOTICE:
 [**1]  Opinion certified for partial publication.  * 

 * Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part b.

SUBSEQUENT HISTORY:
As Modified on Denial of Rehearing February 4, 1999, Reported at: 1999 Cal. App. LEXIS 95. 

PRIOR HISTORY:
APPEAL from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. C332027. John P. Shook, Judge.  

DISPOSITION:
The judgments against the Church of Scientology International (CSI) and Religious Technology Center (RTC) are reversed. This matter is remanded for further consideration of plaintiff's motion to add these parties to the judgment by evaluating the evidence according to the preponderance of the evidence burden of proof in a manner consistent with this opinion. Each side to bear their own costs on appeal.  

COUNSEL:

Hagenbaugh & Murphy, Daniel A. Leipold, Robert F. Donohue, Cathy L. Shipe; Gartenberg, Jaffe, Gelfand & Stein and Craig J. Stein for Plaintiff and Respondent Lawrence Wollersheim. 

Edward J. Horowitz; Orrick, Herrington & Sutcliffe and Gerald. L. Chaleff for Defendant and Appellant Church of Scientology International. 

Paul,  [**2]  Hastings, Janofsky & Walker, Samuel D. Rosen and Barbara A. Reeves for Defendant and Appellant Religious Technology Center.  

JUDGES:
Opinion by Zebrowski, J., with Boren, P. J., and Fukuto, J., concurring.  

OPINIONBY:
ZEBROWSKI 

OPINION:

 [*1013]   [***897]  
ZEBROWSKI, J. 
This case concerns the proper test to be applied by a trial court in deciding whether to grant a posttrial motion to add an alleged alter ego as an additional judgment debtor. Appellant contends that the proper test is the normal preponderance of the evidence burden of proof that  [*1014]  applies generally to factfinding proceedings in a trial court. Respondent contends that the proper test is the substantial evidence test normally applied only by an appellate or other reviewing court. The issue is directly controlled by Evidence Code section 115 (section 115). Section 115 identifies three possible burdens of proof applicable to factfinding proceedings: preponderance of the evidence, clear and convincing proof, and proof beyond a reasonable doubt. Section 115 specifies that "[e]xcept as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence." The law does not [**3]  otherwise provide, and preponderance of the evidence is therefore the test which must be applied. The substantial evidence test has no application in this context. 
DISCUSSION 
a. The substantial evidence issue. 
 Plaintiff Larry Wollersheim sued the Church of Scientology of California (CSC) on various tort claims in 1980. While the case was in its pretrial stages, CSC was reorganized and the two entities which are now appellants were created: Church of Scientology International (CSI) and Religious Technology Center (RTC). Wollersheim eventually obtained judgment against original defendant CSC. After many years of appeals and related proceedings, Wollersheim made a motion in the superior court to add CSI and RTC as judgment debtors on the grounds that CSI and RTC are the alter egos of CSC. His briefing was dominated by issues relating to the long delay between the judgment and the motion, the nature of the evidence, the elements which must be proven to establish alter ego liability, etc. In a brief comment, however, Wollersheim's moving papers stated that a "judgment is properly amended where the movant shows substantial evidence that a party's alter ego should be held accountable [**4]  for that party's wrong." (Italics added.) 
In support of his proposition that the substantial evidence test should be applied to his alter ego motion, Wollersheim cited NEC Electronics, Inc. v. Hurt (1989) 208 Cal. App. 3d 772 [256 Cal. Rptr. 441] (NEC). NEC concerned a judgment creditor's motion to have the judgment debtor's chief executive  [***898]  officer and sole shareholder added to the judgment as an alter ego. The trial court granted the motion, and the chief executive officer/sole shareholder/alter ego (CEO) appealed. After summarizing the facts, the Court of Appeal in NEC made the unremarkable statement: ". . . we must consider whether the trial court's findings are supported by substantial evidence." (NEC, supra, 208 Cal. App. 3d at p. 777, italics added.) The CEO was arguing that the judgment creditor's evidence was insufficient to show that he was an  [*1015]  alter ego. Although the CEO acknowledged that there was a unity of interest between him and the corporation, he argued that the evidence failed to establish that an inequitable result would follow if he and the corporation were treated as separate entities. The Court of Appeal [**5]  rejected this argument, finding that "there is substantial evidence to support the trial court's conclusion that [the CEO's] manipulation of the assets of [the corporation] produced an inequity . . . ." ( Id. at p. 778, italics added.) Continuing with its inquiry, the court later found "we do not believe that there is substantial evidence to support the trial court's conclusion that [the CEO] controlled the action between NEC and [the corporation]." ( Id. at p. 781, italics added.) The alter ego finding was therefore reversed on this latter point. 
As is plain, NEC is simply an example of the standard application of the substantial evidence test by a reviewing court on appeal. NEC does not stand for the proposition that a trial court, in carrying out its factfinding duties, can apply the substantial evidence test. The substantial evidence test is entirely unsuited to factfinding proceedings, inasmuch as it can require a reviewing court to affirm a factual finding which the reviewing court does not regard as supported by a preponderance of the evidence. Inherent in the substantial evidence test is the proposition that a finding [**6]  must be affirmed even though the reviewing court considers it more likely than not that the finding under review is incorrect, so long as that finding is supported by substantial evidence. 
Perhaps because the proposition that a trial court should apply the substantial evidence test when factfinding is so clearly misdirected, or perhaps because the subject of proper test to be applied was so minimally mentioned in Wollersheim's briefing, CSI and RTC made no express argument regarding burden of proof in their initial opposing papers in the trial court. Instead, their opposing papers focused on the facts, arguing them as if based on an assumption that the normal preponderance of the evidence standard would be applied. This is not surprising, since it is well established that in making factual findings, a trial court must apply the preponderance of the evidence burden of proof except in special circumstances not here involved. (Evid. Code §  115 ["Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence."].) 
The trial court's ruling, issued initially by minute order and without oral hearing, stated the determinative [**7]  question as follows: "The court must determine whether there is substantial evidence of the following: [P] 1. CSI and RTC are the alter egos of CSC; [and] [P] 2. CSI and RTC controlled the litigation." For this proposition, the minute order cites NEC Electronics, Inc. v. Hurt, supra, 208 Cal. App. 3d 772 and Triplett v. Farmers Ins. Exchange (1994) 24 Cal. App. 4th 1415, 1420, 1421 [29 Cal. Rptr. 2d 741] (Triplett).  [*1016]  
NEC has been discussed above. Triplett concerned a car accident. The defendant's insurer refused to settle, and the matter was tried to a judgment for the plaintiff. The trial court then added the insurer to the judgment, even though it was undisputed that the insurer was not the defendant's alter ego, and additionally sanctioned the insurer for refusing to settle. The Court of Appeal reversed, but without making any rulings germane to the instant case. Triplett does, however, cite NEC and state the general law of alter ego. 
After receiving the court's minute order, CSI and RTC moved to vacate the judgments against them on the grounds that the trial court had applied an inapplicable standard.  [**8]  Wollersheim opposed. He acknowledged that the court had "found that substantial evidence presented by Mr. Wollersheim supported his alter ego allegations,"  [***899]  and continued to argue that substantial evidence was the correct standard, stating that "the cases are uniform in declaring that, where a trial court's finding is based upon substantial evidence, that determination will not later be disturbed." This latter statement is a correct description of the function of a reviewing court applying the substantial evidence standard of review, but it does not describe the function of a trial court acting as a finder of fact. (See, e.g., §  115, [specifying application of the preponderance of the evidence burden of proof].) 
At oral argument, CSI and RTC argued that Wollersheim's briefing had led the trial court astray in several particulars, first among them "that the burden was substantial evidence as opposed to a preponderance of the evidence." Arguing this point, counsel for RTC stated: "They cited a case, of course, which stands for the proposition that is unremarkable at best, that is, an appellate court reviews a record of a trial court below on a substantial evidence standard. I want [**9]  to go back to basics. Everyone agrees that Mr. Wollersheim has the burden of proof in alleging--in asking your honor to amend the judgment to include anyone else. Everyone agrees to that. Everyone agrees that the burden of proof means, at a minimum, in a civil action, preponderance. . . ." In response, counsel for Wollersheim stated: "Briefly, with regard to the standard of proof, you know, case after case after case, as your honor is certainly aware, cites 'substantial evidence' as being that which the court must find in order to make a finding of alter ego." Wollersheim's counsel went on to argue that no appellate court had ever stated that the necessary findings for an alter ego determination had to be made by a preponderance of the evidence, and concluded that "we are ready to have the appellate court look at it at this point." n1 

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n1 In view of the wide spectrum of subject matter subject to the preponderance of the evidence burden of proof (including almost every factual issue tried in a civil court other than special subjects such as punitive damages; see Civil Code, §  3294, subdivision (a)), it is undoubtedly true that there is not a separate case expressly stating that the preponderance burden of proof applies to every separate conceivable factual issue that can arise in a trial court.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**10]  
The trial court did not respond specifically to the arguments concerning the preponderance of the evidence burden of proof versus the substantial  [*1017]  evidence standard of review, but instead simply stated "I don't think I have made any mistake. I think I'm absolutely correct on the law." The motion to vacate was denied. 
The proposition that the substantial evidence test has no proper application to factfinding in the trial court does not require extended discussion or an elaborate explanation. The matter is directly controlled by section 115, which states the general rule that factual findings must be made by a preponderance. The substantial evidence test simply accords deference to trial court findings made according to a preponderance in order to avoid de novo redetermination of every factual issue at the appellate level. The substantial evidence test is uniquely unsuited to initial factfinding. It begins with a bias toward confirming findings already made, and rejects them only if there is no evidence upon which a reasonable person could make such findings. The substantial evidence test does not ask what proposed facts are more likely than not to be the true facts.  [**11]  
Wollersheim nevertheless relies upon an isolated misstatement in Jack Farenbaugh & Son v. Belmont Construction, Inc. (1987) 194 Cal. App. 3d 1023, 1029-1030 [240 Cal. Rptr. 78]. In a lengthy opinion traversing the law of alter ego and affirming a trial court order adding an alleged alter ego as a judgment debtor, the Farenbaugh court stated: "[o]nce the trial court was satisfied that there was substantial evidence [of alter ego status] . . ., it was empowered to amend the judgment to add appellant as a judgment debtor." (Ibid.) This isolated passage could be read literally to support the proposition that a trial court may add an alleged alter ego as a judgment debtor based merely on substantial evidence. If so read, however, it would stand in stark contrast to well-settled law that the preponderance test applies generally in the trial court. We conclude that the Farenbaugh court simply  [***900]  "misspoke" when it stated that the trial court, rather than the appellate court, must determine whether there is substantial evidence to support a factual finding. The trial court must determine whether a requested factual finding is supported by a preponderance; the [**12]  appellate court then reviews that finding according to the substantial evidence test. 
If the issue of the proper test to be applied had not been vigorously and expressly contested in the trial court, it might be appropriate to assume that the trial court had applied the preponderance of the evidence test in the normal course. On this record, however, in which Wollersheim argued both  [*1018]  orally and in writing that the substantial evidence test should be applied, in which CSI and RTC pointed out both orally and in writing the error in this contention, and in which the trial judge expressly chose to apply the substantial evidence test even after oral argument of a motion to vacate, we must reverse and remand for new findings of fact to be made according to the preponderance of the evidence standard. 
b. Other issues.  * 

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

 * See footnote, ante, page 1012.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
DISPOSITION 
The judgments against the Church of Scientology International (CSI) and Religious Technology Center (RTC) are [**13]  reversed. This matter is remanded for further consideration of plaintiff's motion to add these parties to the judgment by evaluating the evidence according to the preponderance of the evidence burden of proof in a manner consistent with this opinion. Each side to bear their own costs on appeal. 
Boren, P. J., and Fukuto, J., concurred.  

121 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA, Plaintiff and Appellant, v. LAWRENCE WOLLERSHEIM, Defendant and Respondent.  

Nos. B084686, B086063.  

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION THREE 

42 Cal. App. 4th 628; 1996 Cal. App. LEXIS 87; 49 Cal. Rptr. 2d 620; 96 Cal. Daily Op. Service 773; 96 Daily Journal DAR 1162 

February 1, 1996, Decided 

PRIOR HISTORY:
 [**1]  Superior Court of Los Angeles County, No. BC074815, Edward Y. Kakita, Judge.  

DISPOSITION:
Judgment of dismissal and judgment awarding attorney fees are affirmed. Wollersheim is awarded costs and attorney fees on appeal. The matter is remanded to the trial court to determine the amount thereof.  

COUNSEL:

Rabinowitz, Boudin, Standard, Krinsky & Lieberman, Eric M. Lieberman, Michael Ludwig, Moxon & Bartilson, Kendrick L. Moxon and Laurie J. Bartilson for Plaintiff and Appellant. 

Hagenbaugh & Murphy, Daniel A. Leipold and Mark Goldowitz for Defendant and Respondent. 

John C. Barker, Elizabeth Pritzker, Gray, Cary, Ware & Freidenrich, Guylyn R. Cummins, Parker, Chapin, Flattau & Klimpl and Herbert L. Rosedale as Amici Curiae.  

JUDGES:
Opinion by Aldrich, J., with Klein, P. J., and Croskey, J., concurring.  

OPINIONBY:
ALDRICH, J.  

OPINION:

 [*635]   [***624]  
ALDRICH, J. 
INTRODUCTION 
Plaintiff and appellant Church of Scientology (the Church) appeals from the order of the trial court granting the motion of defendant and respondent  [*636]  Lawrence Wollersheim (Wollersheim) pursuant to Code of Civil Procedure section 425.16 (hereinafter, section 425.16) to dismiss the [**2]  Church's complaint against him. The dismissed complaint attacked the judgment Wollersheim had obtained against the Church in a prior action (the prior action).  n1 Section 425.16 was adopted in 1992 to deter and prevent so-called SLAPP (Strategic Lawsuits Against Public Participation) suits. 

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n1 Wollersheim v. Church of Scientology (1989) 212 Cal. App. 3d 872 [260 Cal. Rptr. 331].

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The Church contends the trial court erred in granting the motion because its action against Wollersheim is not a SLAPP suit as defined by section 425.16. The Church also contends the Church demonstrated the probability of the success of its complaint and therefore the motion should have been denied in any event. Furthermore, the Church contends, the amount awarded for attorney fees was excessive. 
We find the motion to dismiss was properly granted and substantial evidence supports the award of attorney fees. We therefore affirm the judgments. 
FACTUAL AND PROCEDURAL BACKGROUND 
The Prior Action 
The procedural [**3]  history of this litigation spans more than 15 years. Wollersheim filed his original action against the Church on July 28, 1980. Wollersheim, a former member of the Church, had alleged the Church intentionally and negligently inflicted severe emotional injury on him through certain practices, including "auditing," "disconnect," and "fair game." 
During the pendency of that lawsuit Scientology affiliates (Scientology) sued Wollersheim, his counsel, and his expert witnesses in the prior action in a RICO (Racketter Influenced and Corrupt Oranizations Act) action in the federal district court in Los Angeles. Thereafter, Scientology petitioned the Ninth Circuit Court of Appeals to disqualify the entire United States District Court for the Central District of California. In an unprecedented ruling the Ninth Circuit struck the motion from its records. Thereafter the RICO action was dismissed by the court. Scientology once again appealed to the Ninth Circuit Court of Appeals which affirmed the dismissal. (Religious Technology Center v. Wollersheim (9th Cir. 1992) 971 F.2d 364; cert. den. (1987) 479 U.S. 1103 [94 L. Ed. 2d 187, 107 S. Ct. 1336].) 
In March 1986, Judge Ronald Swearinger,  [**4]  the superior court judge assigned as the trial judge in the prior action, ordered the Church to produce its  [*637]  "auditing" and "pre-clear" files on Wollersheim. Thereafter, the Church sued Judges Alfred Margolis (who had made previous pretrial rulings in the case) and Swearinger and the entire Los Angeles Superior Court in federal district court. (Church of Scientology v. Superior Court, (U.S. Dist. Ct. (C.D.Cal.), No. CV 86-1362ER.) This suit was dismissed by the court in November 1986. 
After much discovery and several petitions for writs of mandate to the Court of Appeal brought by the Church, the prior action went to trial in superior court on February 18, 1986, before Judge Swearinger. After five months of trial the jury returned its verdict  [***625]  in favor of Wollersheim on July 22, 1986. It assessed compensatory damages in the sum of $ 5 million and punitive damages in the sum of $ 25 million against the Church. On August 8, 1986, the Church filed its motion for new trial and for judgment notwithstanding the verdict both of which were denied on September 18, 1986, after three days of oral argument. The Church thereafter appealed to the Second District Court of [**5]  Appeal which reversed as to the cause of action for negligent infliction of emotional injury, affirmed the judgment as to the cause of action for intentional infliction of emotional injury and modified the judgment to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million. (Wollersheim v. Church of Scientology, supra, 212 Cal. App. 3d 872.) The Church then petitioned the California Supreme Court for review which was denied. Upon the Church's petition for a writ of certiorari, the United States Supreme Court vacated the judgment of the Court of Appeal and remanded to that court for reconsideration in light of the Supreme Court's ruling in Pacific Mutual Life Insurance Co. v. Haslip (1991) 499 U.S. 1 [113 L. Ed. 2d 1, 111 S. Ct. 1032]. (Church of Scientology of California v. Wollersheim (1991) 499 U.S. 914 [113 L. Ed. 2d 234, 111 S. Ct. 1298].) 
On remand the Court of Appeal adhered to its original decision, affirming the judgment subject to a remittitur. (Wollersheim v. Church of Scientology * (Cal. App.).) Once again the Church petitioned the California Supreme Court for review and on July 23, 1992, review was granted. However,  [**6]  on July 15, 1993, following the United States Supreme Court's decision in TXO Production Corp. v. Alliance Resource Corp. (1993) 509 U.S. 443 [125 L. Ed. 2d 366, 113 S. Ct. 2711], the California Supreme Court dismissed its prior grant of review. The Church's subsequent petition for writ of certiorari to the United States Supreme Court was denied on March 7, 1994. 

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 * Review of opinion (B023193) was dismissed July 15, 1993.

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The Instant Litigation 
While its appeal in the prior action was pending before the California Supreme Court, the Church filed this action on February 16, 1993, seeking to  [*638]  set aside the judgment Wollersheim had obtained against the Church on July 22, 1986. The complaint alleged that newly discovered evidence demonstrated that the trial judge appeared to, or did, harbor actual malice and prejudice against the Church at the time of the trial and may have conveyed prejudicial information to the jury, either directly or indirectly. 
The "newly discovered evidence"  [**7]  alleged in the complaint consisted of the following: posttrial interviews with jurors by the Church's attorneys revealed that "the jurors 'believed' that they were being followed by members of the [Church]." Juror Terri Reuter stated that "the jury had been told by 'unnamed court personnel,' whom she refused to identify, that during the trial, Judge Swearinger's tires had been slashed, and that his dog had been found dead. She said that the jurors attributed these actions to unknown and unnamed members of the [Church]." The complaint stated that Church counsel suspected that private investigators hired by Wollersheim's counsel "were responsible for 'dirty tricks' designed to implicate the Church, and prejudice the jury." Additionally, the complaint alleged that, because Judge Swearinger refused "to allow[] discovery into the jurors in order to establish the extent and source of the taint," "[t]he source of the jury's bias thus remained a mystery for five years." 
The complaint continued, "Finally, in an interview with William W. Horne, a reporter employed by The American Lawyer magazine which took place in 1992, Judge Swearinger revealed that he maintained a condition [**8]  of mind of unfavorable bias against the Church during the trial of the Prior Action. According to Horne, Judge Swearinger stated that his dog had drowned in the family swimming pool during the trial of the Prior Action, and that the judge believed that he had been followed when in his car throughout the trial. The judge informed Horne that, while he was in possession of no evidence to corroborate the suspicions he harbored, he nonetheless felt that members of the Church of Scientology were responsible for such actions." On March 19, 1992, Horne revealed Judge Swearinger's statements to the  [***626]  Church's attorneys, Eric M. Lieberman and Jonathan Lubell. "For the first time, the Church and its attorneys suspected that the source of infection of the jury was the judge himself." 
The complaint continued, alleging Horne provided further details of the judge's statements to the Church's attorney, Michael L. Hertsberg, on March 23, 1992. Horne allegedly stated the judge told him the judge's veterinarian told him the dog was old and had died of a heart attack, yet the judge still felt the dog had fallen or been pushed into the pool. Also, Horne stated the judge had said he felt the [**9]  Church was somehow responsible for the dog's  [*639]  death. The judge also told Horne that he had been followed "a few times" in his car during the trial and he had assumed the Church was responsible for these actions. 
Horne's article in the July/August 1992 issue of The American Lawyer quoted Judge Swearinger as saying: 
"'I was followed [at various times] throughout the trial . . . and during motions for a new trial . . . . All kinds of things were done to intimidate me, and there were a number of unusual occurrences during that trial. My car tires were slashed. My collie drowned in my pool. But there was nothing overtly threatening, and I didn't pay any attention to the funny stuff.'" (Horne, The Two Faces of Scientology (July/Aug. 1992) Am. Law., p. 77.) 
Upon information and belief, the Church alleged that the judge described these incidents to court personnel during the trial and that court personnel revealed them to the jurors, "resulting in a jury as biased as the judge." 
The complaint referred to other occasions in which the judge made statements to others regarding the Church. In April 1992, during a chamber's conference in an unrelated case, Judge Swearinger [**10]  stated to Wollersheim's appellate lawyer "that he believed the award of damages . . . was excessive but that he had deliberately chosen to allow the excessive verdict to stand because of his displeasure with the Church and its trial counsel." The judge referred to the Church's counsel, Earl Cooley, as Earl "Fooley," "because Mr. Cooley had alleged that there had been tampering with the jury." Judge Swearinger allegedly repeated the substance of this discourse in a telephone conversation with Church counsel: he stated he did not reduce the jury's damage award "because such an action would have given credibility to Mr. 'Fooley's' charge that the jury was tainted." These comments, the complaint alleged, revealed the judge possessed unfounded suspicions and unfavorable beliefs regarding the Church and that he "improperly permitted entry of a judgment he knew to be outrageous, and the result of bias and prejudice, in order to conceal that he, himself, was the source of the jury's bias and prejudice." The Church alleged it was recently apprised of this information and prayed the judgment be declared null and void. The complaint was verified by James Morrow, president of the Church of Scientology [**11]  California. 
Wollersheim filed a special motion to strike pursuant to section 425.16, arguing that such a motion was authorized by that provision and that the Church could not demonstrate a probability that it would prevail on its  [*640]  claims. The motion, as subsequently amended, presented a number of contentions: (1) the court had no jurisdiction over the action because the main action was pending before the California Supreme Court; (2) the court had no jurisdiction because the action was "merely a disguised attempt" to bring an untimely motion for a new trial; (3) the action was barred because the Church had not exercised due diligence in raising its claims; (4) the Church did not plead and could not show that it has a meritorious defense to the main action; (5) the complaint is not sufficient to set aside the judgment because it alleges at most intrinsic fraud; (6) the Church could not demonstrate a probability that it would prevail on its claim; (7) the Church could not demonstrate a probability that it could prove key facts which were alleged in the complaint; (8) the action is part of the Church's litigation strategy to use the courts to harass opponents; (9) the action [**12]  was part of the Church's litigation strategy of attacking judges who rule against them as biased; and (10) the Church has unclean hands and is not entitled to the  [***627]  equitable relief sought. Wollersheim argued that the Church could not meet his affirmative defenses: laches, unclean hands and collateral estoppel. 
In support of his motion, Wollersheim submitted the following: Charles B. O'Reilly, the lead counsel for Wollersheim at trial and on the initial appeal, declared that Judge Alfred Margolis ruled on the Church's pretrial motions in the main action which sought to preclude any reference to the Church's "auditing" of Wollersheim. When the motions were denied, two affiliates of the Church, Religious Technology Center (RTC) and the Church of Scientology International (CSI), filed "a so-called RICO action" in the United States District Court for the Central District of California against Wollersheim, his two designated experts, and his counsel, including O'Reilly, "seeking basically the same relief that had been denied by Judge Margolis." A special master determined the action to be "not only frivolous but bordering on malicious," and accordingly the action was dismissed [**13]  by the judge of the district court, the dismissal affirmed on appeal in Religious Technology Center v. Wollersheim (9th Cir. 1992) 971 F.2d 364.) While the RICO action was still pending, the Church, RTC, and/or CSI filed a motion/petition in the Ninth Circuit seeking to disqualify the entire United States District Court for the Central District of California on the ground of bias and prejudice against the Church. The motion/petition was ordered struck from the record by the Ninth Circuit. 
O'Reilly declared that, due to his calendar, Judge Margolis withdrew from the main action. The Church moved to disqualify the entire Los Angeles Superior Court and/or to transfer the action to another county on the ground the entire court was biased. The motion was denied as well as the Church's  [*641]  writ petition to the Court of Appeal. The case was assigned to Judge Lopez and the Church filed a Code of Civil Procedure section 170.6 motion to disqualify him. The action was assigned to Judge Swearinger for trial. After ruling the Church was required to produce its auditing file, the Church filed an action in United States District Court against the judge and others claiming bias and [**14]  prejudice. This federal case was dismissed. (Church of Scientology v. Superior Court (U.S. Dist. Ct. (C.D.Cal. 1986), No. CV 86-1362.) Later, after the judge denied the Church's motion for nonsuit on the intentional infliction of emotional distress cause of action, the Church filed a formal motion to disqualify him for cause, bias and prejudice, which motion was denied. 
Wollersheim declared that he had liquidated all of his assets, personally spent about $ 300,000, and gone more than $ 900,000 into debt, not including attorney fees, during the litigation of the main action and related litigation, over an 11-year period. 
Andre A. Anderson, the jury foreperson in the prior action, declared that "from the start of the trial up through the return of the verdict, there was no reference to nor comment, by any juror or by any other person in my presence, about the trial judge, the Honorable Ronald Swearinger, to the effect that his tires had been slashed, or that his dog had died, or that he was being followed or in any other way harassed or bothered by Scientology." Antoinette Saldana, one of the court bailiffs present during the trial, declared that she, "as well as all court personnel,  [**15]  took precautions to ensure that no one discussed the case with members of the jury or with anyone outside the courtroom." Also, she declared that she was never aware of any unfavorable beliefs or biases held by the judge against the Church, and the judge never mentioned any strange occurrences for which he suspected the Church was or might be responsible. He did not mention that his tires were slashed. He mentioned his dog had died but never suggested the Church might be responsible for the dog's death. 
Declarations of former members and officials of the Church, Gerald Armstrong and Vicki Aznaran, revealed the practices and policies of the Church, including its "fair game" doctrine and employment of litigation practices designed "to bludgeon the opposition into submission," as well as attacks against judges who rule against it. The declaration of an attorney who had represented the Church (Joseph A. Yanny), submitted in an action brought by the Church against him and others, related aspects of the Church's "fair game" doctrine, including copies of exhibits to demonstrate "the Cult, according to  [***628]  written policy, will use any means legal or illegal to  [*642]  subvert [**16]  and frustrate judicial process against them, and will willingly and knowingly abuse judicial process in order to attack perceived 'enemies.'" 
The Church opposed Wollersheim's motion to strike and requested sanctions against Wollersheim and his attorneys. The Church contended Wollersheim's free speech and petition rights were not the subject of the complaint. The Church argued that even if section 425.16 applied, the Church could establish the probability that it would prevail. 
To demonstrate that the Church could meet its burden of proof (which the Church contended was the production of "evidence demonstrating the existence of a material factual issue as to its claim . . ."), the Church submitted the declaration of counsel, Paul F. Moore II, which had been submitted in support of the Church's application for a new trial in the prior action. Moore had declared that on August 18, 1986, Terri Reuter confirmed that the facts discussed in an "attached declaration" were true but she said she would not sign any declaration because she did not want to do anything to jeopardize the verdict. Ms. Reuter told him, he declared, that she knew that she and other members of the jury were being [**17]  followed but she could not prove it and that within the last week she was told by some court personnel that the judge's tires had been slashed and his dog had been found dead. "This was told to me in conjunction with our conversations about the trial and in particular in relation to Defendant's alleged practice of 'Fair Game.'" There was no declaration of Terri Reuter attached to Moore's declaration submitted in this action. 
The Church also submitted the declaration of Eric M. Lieberman. Lieberman declared he had been interviewed on March 10, 1992, by William Horne, a reporter for the American Lawyer and Horne told Jonathan Lubell and him that Judge Swearinger had told Horne he believed the Church had attempted to harass him during the course of the trial. The Church also submitted an unauthenticated copy of the American Lawyer article by Horne, entitled The Two Faces of Scientology, in which Judge Swearinger is quoted.  n2 

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n2 The article states: "California superior court judge Ronald Swearinger, who presided over the Wollersheim trial, describes the case itself as anything but normal: Church trial lawyer Cooley and his co-counsel, the late John Peterson, filed a number of unsuccessful 'writs and motions' throughout the trial in an attempt to halt it, according to Judge Swearinger. Three days into the trial, the judge says, they moved for his disqualification based on 'some secret conversation I'd had with someone I'd never heard of.' They also filed a Section 1983 federal civil rights action against both him and the judge who sat on the case prior to him, says Swearinger, on the theory that by allowing the case to go to trial, the judges were denying the church its civil rights. (Cooley confirms that the Section 1983 action and the disqualification motion were filed.) [P] But Swearinger's recollections of the oddities of the Wollersheim case go beyond court filings: 'I was followed [at various times] throughout the trial . . . and during the motions for a new trial,' the judge claims. 'All kinds of things were done to intimidate me, and there were a number of unusual occurrences during that trial. My car tires were slashed. My collie drowned in my pool. But there was nothing overtly threatening, and I didn't pay attention to the funny stuff.'" (Horne, The Two Faces of Scientology, Am. Law., supra, at pp. 77, 78.) 
"At the trial Scientologists packed the courtroom and hallways of the courthouse and regularly interrupted the proceedings by protesting against alleged religious discrimination. [P] 'I'd let the jury out, let the [protesters] blab on, and then let the jury back in,' says Judge Swearinger. 'It didn't bother me.' Swearinger says he thought Cooley's histrionics were 'comical' rather than effective, and that he often caught the jury 'rolling their eyes' at Cooley's 'loud talk and hostility to opposing counsel and witnesses.' The jury returned a $ 30 million verdict in July 1986; $ 5 million in compensatory damages and $ 25 million in punitives." (Horne, The Two Faces of Scientology, Am. Law., supra, at p. 78.)

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In addition, Barry Van Sickle, who represented Wollersheim in his defense of the appeal in the prior action, declared that on April 6, 1992, Judge  [*643]  Swearinger expressed an interest in acting as a "facilitator" in resolving the Wollersheim matter, now that the Court of Appeal had issued its opinion. On the judge's request, Van Sickle contacted the Church's counsel in charge of settlement matters, Mr. Drescher. Drescher declared he spoke on the telephone with Judge Swearinger a day or two later, and the judge stated that at the time of new trial motions he considered the jury award should have been reduced in the fashion that the Court of  [***629]  Appeal did, but that he did not do this because he was upset with Church counsel, whom Judge Swearinger called "Fooley." "In particular, Judge Swearinger told me that he was angered by Mr. Cooley arguing to the Court before a packed gallery, including media, that the jury had been 'in the tank' and that there was no way that he would reduce that verdict after Mr. Cooley had raised those allegations for fear of validating them." 
The trial court stayed the proceedings, including discovery, pending a final ruling by the California [**19]  Supreme Court on the petition for review of the prior action by the Church. On July 15, 1993, the California Supreme Court dismissed the petition and remanded to Division Seven of the Second Appellate District. Wollersheim reset his motion after the remittitur was issued and the opinion of the Court of Appeal became final. 
The parties submitted additional argument and documentation. Wollersheim submitted the declaration of Steven Fishman, on parole for a conviction of mail fraud. He was a former member who had been sued by the Church. Fishman declared that in the late summer or early fall of 1986 another Scientologist told him that he had drowned a dog named "Duke" that belonged to a Judge Swearinger. Fishman also declared that, as part of "Operation Wolly," he had been ordered to call up jurors in the Wollersheim case in the middle of the night and hang up on them. He relayed details of  [*644]  his involvement in raiding the trash dumpster of the law office of Charles O'Reilly. He also reported that an "agent" had been assigned to work in O'Reilly's law office as a typist/clerk/receptionist, to copy legal briefs and to influence O'Reilly into forcing Wollersheim to accept a [**20]  settlement from the Church. 
Wollersheim's counsel, Mark Goldowitz, declared that he had actively participated in the enactment of the anti-SLAPP legislation. He traced the legislative history of Senate Bill No. 1264, 1991-1992 Regular Session, which he contended demonstrated the intent to cover all lawsuits and other lawsuit-related communications as petition activity. 
The Church disputed Wollersheim's interpretation of the applicability of section 425.16. The Church attacked the credibility of Fishman, submitting declarations containing statements which contradicted Fishman's. In reply, Wollersheim submitted a supplemental declaration of Fishman, accusing of lying the persons who said the statements in his declaration were false. 
On March 30, 1994, the trial court granted the motion to strike the complaint "for the reasons set forth in Defendant's moving papers," and dismissed the action with prejudice. 
The Church appealed. Thereafter, the trial court granted Wollersheim's motion for an award of attorney fees, pursuant to subdivision (c) of section 425.16. The Church appealed from that judgment and the two appeals were consolidated. 
ISSUES 
Does section 425.16 apply to [**21]  this action? 
If it does, did the Church demonstrate there is a probability it would prevail? 
Did the trial court abuse its discretion in setting the amount of the award of attorney fees? 
DISCUSSION 
1. Section 425.16 provides a remedy for SLAPP suits. 
 Section 425.16 is designed to protect citizens in the exercise of their First Amendment constitutional rights of free speech and petition. It is California's response to the problems created by meritless lawsuits brought to harass those who have exercised these rights.  [*645]  
SLAPP suits have been defined as ". . . 'civil lawsuits . . . that are aimed at preventing citizens from exercising their political rights or punishing those who have done so.' (Canan & Pring, Strategic Lawsuits Against Public Participation (1988) 35 Social Problems 506.)" (Wilcox v. Superior Court (1994) 27 Cal. App. 4th 809, 815 [33 Cal. Rptr. 2d 446].) They are brought, not to vindicate a legal right, but rather to interfere with the defendant's ability to pursue his or her interests. Characteristically, the SLAPP suit lacks  [***630]  merit; it will achieve its objective if it depletes defendant's resources or energy. The aim is not [**22]  to win the lawsuit but to detract the defendant from his or her objective, which is adverse to the plaintiff. (See Wilcox v. Superior Court, supra, at pp. 815-817, and authorities cited therein.) 
California enacted section 425.16 to provide a procedural remedy to resolve such a suit expeditiously. Section 425.16 provides, in relevant part, as follows: 
"(a) The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. 
"(b) A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability [**23]  that the plaintiff will  [***631]  prevail on the claim. In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. 
"If the court determines that the plaintiff has established a probability that he or she will prevail on the claim, neither that determination nor the fact of that determination shall be admissible in evidence at any later stage of the case, and no burden of proof or degree of proof otherwise applicable shall be affected by that determination. 
"(c) In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs. If the court finds that a special motion to strike is frivolous or is  [*646]  solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.
"        
"(e) As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue'  [**24]  includes any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; or any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest.
"(f) The special motion may be filed within 60 days of the service of the complaint or, in the court's discretion, at any later time upon terms it deems proper. 
"(g) All discovery proceedings in the action shall be stayed upon the filing of a notice of motion made pursuant to this section. The motion shall be noticed for hearing not more than 30 days after service unless the docket conditions of the court require a later hearing. The stay of discovery shall remain in effect until notice of entry of the order ruling on the motion. The court, on noticed motion and for good cause shown, may order that specified discovery be conducted notwithstanding this subdivision. . . ." 
 [**25]  
The moving party bears the initial burden of establishing a prima facie showing the plaintiff's cause of action arises from the defendant's free speech or petition activity. (Wilcox v. Superior Court, supra, 27 Cal. App. 4th at p. 820.) "The defendant may meet this burden by showing the act which forms the basis for the plaintiff's cause of action was a written or oral statement made before a legislative, executive, or judicial proceeding . . . ." (Ibid.) If the defendant establishes a prima facie case, then the burden shifts to the plaintiff to establish "'a probability that the plaintiff will prevail on the claim,'" i.e., "make a prima facie showing of facts which would, if proved at trial, support a judgment in plaintiff's favor." (Id. at p. 823.) In making its determination, the trial court is required to consider the pleadings and the supporting and opposing affidavits stating the facts upon which the liability or defense is based. (§  425.16, subd. (b).) Discovery is stayed upon the filing of the motion (§  425.16, subd. (g).) However, upon iscovery is stayed upon the filing of the motion. (§  425.16, subd. (g).) However, upon  [*647]  noticed motion [**26]  and for good cause shown, the court may allow specified discovery. n3 

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n3 The provisions of section 425.16 were designed to provide an economical and expeditious remedy to SLAPP suits. The defendant may file a motion to strike within 60 days of the service of the complaint. Because the motion is heard within 30 days of the notice of the motion, the plaintiff's case may not be developed. However, the provision allowing discovery for good cause provides plaintiff a means to avoid any legitimate prejudice due to the alacrity of the proceedings. Scientology did not file a motion to conduct additional discovery.

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2. The Church's action was properly subjected to a section 425.16 motion to strike. 
a. Section 425.16 applies to a cause of action arising from defendant's valid exercise of his petition rights, including litigation activities. 
 In accordance with the accepted principles of statutory interpretation, we first examine the language of the statute to determine the Legislature's intent. If the [**27]  language is clear and unambiguous there is no need to resort to other interpretative aids, such as the legislative history. (Rojo v. Kliger (1990) 52 Cal. 3d 65, 73 [276 Cal. Rptr. 130, 801 P.2d 373].) 
 Section 425.16 applies to a cause of action against a person "arising from any act of that person in furtherance of the person's right to petition or free speech under the United States or California Constitution in connection with a public issue." (§  425.16, subd. (b).) 
Subdivision (e) of section 425.16 expressly defines the First Amendment activity from which the subject cause of action arises as "includ[ing] [1] any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; [2] any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; or [3] any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest." (Italics added.) 
The right of access [**28]  to the courts is an aspect of the First Amendment right to petition the government for redress of grievances. (McDonald v. Smith (1985) 472 U.S. 479, 482-484 [86 L. Ed. 2d 384, 388-390, 105 S. Ct. 2787]; California Motor Transport Co. v. Trucking Unlimited (1972) 404 U.S. 508, 510 [30 L. Ed. 2d 642, 646, 92 S. Ct. 609]; Bill Johnson's Restaurants, Inc. v. NLRB (1983) 461 U.S. 731, 740 [76 L. Ed. 2d 277, 287, 103 S. Ct. 2161];  [*648]  see also Matossian v. Fahmie (1980) 101 Cal. App. 3d 128, 135-137 [161 Cal. Rptr. 532].) "The [United States Supreme Court] traditionally has held that the Due Process Clauses protect civil litigants who seek recourse in the courts, either as defendants hoping to protect their property or as plaintiffs attempting to redress grievances." (Logan v. Zimmerman Brush Co. (1982) 455 U.S. 422, 429 [71 L. Ed. 2d 265, 273, 102 S. Ct. 1148].) n4 A cause of action "arising from" defendant's litigation activity may appropriately be the subject of a section 425.16 motion to strike. 

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n4 The right to petition is not absolute, providing little or no protection for baseless litigation or sham or fraudulent actions. Under the statutory scheme, a motion to strike cannot be successful unless the plaintiff's action is a meritless attempt to interfere with the defendant's exercise of petition activity and it is shown it lacks merit. Thus section 425.16 protects the defendant from retaliatory action for his or her exercise of legitimate petition rights but does not unconstitutionally interfere with the plaintiff's own petition rights.

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 The Church contends section 425.16 does not apply because its action against Wollersheim is not an attack on Wollersheim personally and would not interfere with Wollersheim's right to pursue his claims against the Church--i.e., the Church's complaint  [***632]  does not "arise" from any act in furtherance of Wollersheim's right of petition or free speech because the Church does not challenge Wollersheim's right to file a lawsuit nor is its lawsuit "brought primarily to chill the valid exercise" of that right. 
The Church's approach to the interpretation of section 425.16 is too restrictive, suggesting that only a direct personal attack on the defendant would be subject to a motion to strike. 
The statutory language, however, is clear and unambiguous. (Rojo v. Kliger, supra, 52 Cal. 3d at p. 73.) It specifically applies to "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition" including a "written or oral statement or writing made in connection with an issue under . . . review by a . . . judicial body . . . ." (§  425.16, subds. (b), italics added, & (e).) And, thus, it literally applies [**30]  to any direct attack on the judgment in the prior action, which resulted from Wollersheim's petition activity. 
Furthermore, an examination of the history of the underlying litigation reveals that the instant action is consistent with a pattern of conduct by the Church to employ every means, regardless of merit, to frustrate or undermine Wollersheim's petition activity.  When a party to a lawsuit engages in a course of oppressive litigation conduct designed to discourage the opponents' right to utilize the courts to seek legal redress, the trial court may properly apply section 425.16. We hold that in making that determination, the trial court may properly consider the litigation history between the  [*649]  parties. The legislative rationale in enacting the statute is consistent with such an analysis because acts 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 [**31]  must be closely scrutinized for constitutional implications. 
 In the instant action the Church's actions clearly fall within the ambit of section 425.16. Among its other litigation strategies, the Church has filed two nonmeritorious federal court actions as well as this one.  n5 The Church has filed numerous appeals in state and federal courts and has prolonged Wollersheim's 1980 lawsuit for 15 years. When the litigation actions of the Church are analyzed in the light of the entire litigation history between the parties, it appears the instant lawsuit was brought by the Church against Wollersheim: (a) in retaliation for his 1980 lawsuit against the Church; (b) to punish him economically for bringing that lawsuit; and (c) to obliterate the value of any victories over the Church by forcing him to abandon his efforts to recover the damages awarded in the prior action by making it too costly to do so.  n6 

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n5 Just prior to oral argument we were informed by counsel for Wollersheim that on August 21, 1995, Scientology filed still another action against Wollersheim in the federal district court of Colorado. Wollersheim complains that through a civil writ of seizure in that action the Church has seized over 600,000 documents from Wollersheim and has used that lawsuit to conduct discovery as to Judge Swearinger, Attorney Charles O'Reilly and Daniel Leipold, the trial judge, and Wollersheim's past and present attorneys respectively in the prior action, in violation of the automatic stay order of section 425.16. The Church objects to our considering the Colorado lawsuit on the grounds that it is irrelevant to the proceedings herein. Inasmuch as we know nothing of the facts underlying that lawsuit we agree with the Church and decline to consider that lawsuit in this appeal. We will leave the issue of whether that suit is meritorious to the Colorado courts. [**32]  

n6 Wollersheim declares he has spent $ 300,000 and is indebted for another $ 900,000 as a result of his disputes with the Church.

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The Church argues that it has every right to exhaust its legal remedies, including appeal rights. We agree. However, when a litigant continuously and unsuccessfully uses the litigation process in filing unmeritorious motions, appeals and lawsuits, such actions have constitutional implications which may be reviewed on a motion under section 425.16. 
 [***633]  The Church also argues it has been successful in its posttrial motion and appellate strategy and therefore, even if the litigation history is considered, it  [*650]  favors the Church. We disagree. The only relief the Church has obtained from all of its lawsuits, petitions for writs of mandate, appeals to the California Court of Appeal and the Ninth Circuit Court of Appeals, the California and the United States Supreme Courts was obtained in the initial state court appeal in 1989 which resulted in a reduction of Wollersheim's judgment. The fact that both the California and the United States Supreme Courts [**33]  granted the Church's petitions was no more than fortuitous as both courts at that time were reviewing the issue of punitive damages. In each instance, however, the case was remanded to the intermediate appellate courts with no change in ruling. 
 The Church also argues that Wollersheim's tort action against a private party (the Church) was not a matter of public interest subject to the protection of section 425.16. Subdivision (e), describing protected activity, refers to three categories; only the category of activity referred to as the "exercise of free speech rights" is subject to the limitation that it be "made in a place open to the public or a public forum in connection with an issue of public interest." n7 The first two categories parallel the description of privileged communications in Civil Code section 47, subdivision (b) and include judicial proceedings without any limitation as to subject matter.  n8 

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n7 See, e.g.,Wilcox v. Superior Court, supra, 27 Cal. App. 4th at page 820, citing Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1136 [270 Cal. Rptr. 1, 791 P.2d 587].) The Bear Stearns court placed limits on the ability to bring a tort action against persons who brought an action or induced another to bring an action against plaintiff. "If any person who induced another to bring a lawsuit involving a colorable claim could be liable in tort, free access to the courts could be choked off with an assiduous search for unnamed parties. . . . [I]t would defeat the purpose of assuring free access to the courts, and cause a flood of oppressive derivative litigation, to assess tort liability for their activities." (Id. at p. 1136.) [**34]  

n8 Civil Code section 47, subdivision (b) refers to privileged publication or broadcast made in any "(1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure . . . [with certain exceptions thereafter listed]."

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But even if we were to assume that a motion to strike pursuant to section 425.16 were limited to issues of public interest, the motion would apply to this action against Wollersheim, arising from his lawsuit against the Church. Although matters of public interest include legislative and governmental activities, they may also include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals. Examples are product liability suits, real estate or investment scams, etc. (See Wilcox v. Superior Court, supra, involving an  [*651]  action against private [**35]  entities.) The record reflects the fact that the Church is a matter of public interest, as evidenced by media coverage and the extent of the Church's membership and assets. Furthermore, the underlying action concerned a fundamental right, the constitutional protection under the First Amendment religious practices guaranties, and addressed the scope of such protection, concluding that the public has a compelling secular interest in discouraging certain conduct even though it qualifies as a religious expression of the Scientology religion. (Wollersheim v. Church of Scientology, supra, 212 Cal. App. 3d at pp. 887-900.) 
The Church objects that the application of section 425.16 to any action arising from the defendant's exercise of petition rights through litigation would subject all counterclaims and other claims relating to a defendant's prior legal action to a special motion to strike. 
 Although a cross-complaint may be subject to a section 425.16 motion, not all cross-complaints would qualify as SLAPP suits. A defendant may file a cross-complaint against the plaintiff for any existing cause of action regardless of its nature and origins. (Code Civ. Proc., §  428.10,  [**36]  subd. (a).) Only those cross-complaints  [***634]  alleging a cause of action arising from the plaintiff's act of filing the complaint against the defendant and the subsequent litigation would potentially qualify as a SLAPP action. (§  425.16, subds. (b) and (d).) For example, a person may attempt to bring a SLAPP suit alleging that libelous allegations or statements were contained in the complaint itself. However, because defendant's allegations are privileged communications under Civil Code section 47, the suit would be merit-less. (See, e.g., California Physicians' Service v. Superior Court (1992) 9 Cal. App. 4th 1321 [12 Cal. Rptr. 2d 95].) 
A compulsory cross-complaint on a "related cause of action" against the plaintiff (Code Civ. Proc., §  426.30, subd. (a)) would rarely, if ever, qualify as a SLAPP suit arising from petition activity. By definition, a "related cause of action" is "a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint." (Code Civ. Proc., §  426.10, subd. (c), italics added.) The SLAPP suit is not "related" to the transaction [**37]  or occurrence which is the subject of the plaintiff's complaint, but arises out of the litigation process itself.  [*652]  
b. Section 425.16 applies to any cause of action arising from petition activity, not only tort actions. 
The Church also argues section 425.16 applies to tort actions only.  n9 

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n9 The Church points to comments in the legislative history and language from Wilcox v. Superior Court, supra, 27 Cal. App. 4th 809, regarding these particular aspects of SLAPP suits. For example, in discussing SLAPP suits, Wilcox stated, "The favored causes of action in SLAPP suits are defamation, various business torts such as interference with prospective economic advantage, nuisance and intentional infliction of emotion distress. . . . Plaintiffs in these actions typically ask for damages which would be ruinous to the defendants. . . . [P] SLAPP suits are brought to obtain an economic advantage over the defendant, not to vindicate a legally cognizable right of the plaintiff." (Id. at p. 816, original italics, citations omitted.) Nothing in Wilcox or the statute specifically limits the applicability of section 425.16 to tort actions only. Furthermore, as Wollersheim correctly points out, the comments about tort actions are contained in documents which do not constitute legislative history.

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Considering the purpose of the provision, expressly stated, the nature or form of the action is not what is critical but rather that it is against a person who has exercised certain rights such as Wollersheim did in the prior action against the Church. Although the "favored causes of action" in SLAPP suits may be defamation, various business torts, nuisance and intentional infliction of emotional distress (Wilcox v. Superior Court, supra, 27 Cal. App. 4th at p. 816), the Legislature did not limit application of the provision to such actions, recognizing that all kinds of claims could achieve the objective of a SLAPP suit--to interfere with and burden the defendant's exercise of his or her rights. 
The Church argues that "The legislature was especially concerned by the threat to the exercise of constitutional rights posed by a complaint demanding costly damages, which is likely to be a tort suit demanding punitive damages. Thus, because of the possibility of punitive damages, a SLAPP suit in tort poses the greatest threat to the exercise of constitutional rights; therefore, it was against these tort suits that the legislature directed its statutory remedy." Once again the [**39]  Church's construction of the legislative intent behind section 425.16 is too restrictive. There is no such limiting language in the statute. Moreover, the free exercise of the constitutional right of judicial redress is no less threatened by the employment of nontortious litigation practices designed to economically "bludgeon the opposition into submission." In either case the result is to subject the litigant to economic loss sufficient to discourage the free exercise of a constitutionally protected right. 
Furthermore, the Church's argument that its complaint sought no relief or judgment directly against Wollersheim and therefore he would remain free  [*653]  to assert and pursue his claims against the Church is equally misplaced. The Church's complaint asserted that the judgment in the prior action should be declared null and void and a new trial should be ordered. The effect of such an order would be to directly impact Wollersheim by requiring him to incur further economic hardship by relitigating a matter that  [***635]  has already consumed fifteen years of litigation; a five-month jury trial; at least two appeals and six writ petitions in the Court of Appeal; two petitions [**40]  for review in the California Supreme Court; two petitions for certiorari in the United States Supreme Court and two lawsuits in federal district court, all arising out of Wollersheim's original 1980 lawsuit against the Church. 
3. The Church failed to establish the "probability" it would prevail on its claim. 
Once the defendant has met the burden of establishing that section 425.16 applies to the lawsuit, the burden shifts to the plaintiff to establish "that there is a probability that the plaintiff will prevail on the claim." (§  425.16, subd. (b).) On appeal, we independently review the entire record to determine whether the Church made a sufficient prima facie showing that it would prevail in light of the applicable law relative to the claim. (Cf. Robertson v. Rodriguez (1995) 36 Cal. App. 4th 347, 357-358 [42 Cal. Rptr. 2d 464] [libel action which requires clear and convincing evidence of malice].) 
"In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." (§  425.16, subd. (b).) 
Wilcox held that the "probability" hurdle was met if the plaintiff [**41]  demonstrated sufficient facts to establish a prima facie case, similar to the standard used in determining a motion for nonsuit or directed verdict. (Wilcox v. Superior  [***636]  Court, supra, 27 Cal. App. 4th at p. 824.) "To establish 'a probability that the plaintiff will prevail on the claim' the plaintiff must make a prima facie showing of facts which would, if proved at trial, support a judgment in plaintiff's favor." (Id. at p. 823.) The Wilcox court observed that the original version of Senate Bill No. 1264 required a "substantial" probability, but it was amended to eliminate the adjective. (27 Cal. App. 4th at p. 824.) Nevertheless, the court reasoned the Legislature did not intend a threshold lower than a "reasonable probability." "Rather, it appears the Legislature eliminated the word 'substantial' in order to avoid the implication the trial court was to weigh the evidence which . . . would raise a serious constitutional problem [regarding the preservation of the plaintiff's right to a jury trial]. [Citation.]" (Id. at pp. 824-825.)  [*654]  
The court explained, "[T]he common features of SLAPP suits are their lack of merit and chilling [**42]  of defendants' valid exercise of free speech and the right to petition the government for a redress of grievances. . . . Section 425.16 was intended to address those features by providing a fast and inexpensive unmasking and dismissal of SLAPP's. . . . It is also presumed the Legislature intended to enact a valid statute. . . . Anti-SLAPP legislation, therefore, must be fast, inexpensive and constitutional or it is of no benefit to SLAPP victims, the court or the public. In order to satisfy due process, the burden placed on the plaintiff must be compatible with the early stage at which the motion is brought and heard (§  425.16, subds. (f) and (g)) and the limited opportunity to conduct discovery (subd. (g)). In order to preserve the plaintiff's right to a jury trial the court's determination of the motion cannot involve a weighing of the evidence." (27 Cal. App. 4th at p. 823, citations omitted, original italics.) 
Subsequent appellate decisions have employed the standard applied in Wilcox. (See Evans v. Unkow (1995) 38 Cal. App. 4th 1490, 1496 [45 Cal. Rptr. 2d 624]; LaFayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal. App. 4th 855, 867 [44 [**43]  Cal. Rptr. 2d 46], review den.; Ludwig v. Superior Court (1995) 37 Cal. App. 4th 8, 15 [43 Cal. Rptr. 2d 350], re-view den.; Robertson v. Rodriguez (1995) 36 Cal. App. 4th 347, 355 [42 Cal. Rptr. 2d 464]; Dixon v. Superior Court (1994) 30 Cal. App. 4th 733, 746 [36 Cal. Rptr. 2d 687], review den.) It is recognized, with the requirement that the court consider the pleadings and affidavits of the parties, the test is similar to the standard applied to evidentiary showings in summary judgment motions pursuant to Code of Civil Procedure section 437c and requires that the showing be made by competent admissible evidence within the personal knowledge of the declarant. (Ludwig v. Superior Court, supra, at pp. 15-16.). n10 Averments on information and belief are insufficient. (Evans v. Unkow, supra, 38 Cal. App. 4th at pp. 1493, 1497-1498; cf. College Hospital,  [*655]  Inc. v. Superior Court (1994) 8 Cal. 4th 704, 719 [34 Cal. Rptr. 2d 898, 882 P.2d 894] [construing Code Civ. Proc., §  425.13, which requires a motion to amend a complaint to state a punitive damages claim against a health care provider].) As in a motion [**44]  for summary judgment, the pleadings frame the issues to be decided. (See, e.g., Dorado v. Knudsen Corp. (1980) 103 Cal. App. 3d 605, 611 [163 Cal. Rptr. 477].) 

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n10 Wollersheim and amici curiae implore this court to apply a heavier burden of proof, contending that "probability" means "more likely than not." 
The legislative history reveals that the "probability" language was a compromise. A predecessor bill to Senate Bill No. 1264 was drafted as a pleading bar, requiring plaintiffs to obtain prefiling approval of any lawsuit arising out of a defendant's exercise of First Amendment or petition rights. Governor Deukmejian vetoed that bill. (Wilcox v. Superior Court, supra, 27 Cal. App. 3d 809, 820.) Senate Bill No. 1264 originally contained a burden of proof requiring plaintiff to show a "substantial probability" of prevailing on the merits. In response to opposition to that standard, the bill was amended to the "probability" standard. The Legislature rejected a standard proposed by Governor Wilson: "sufficient evidence upon which a reasonable claim may be based." It is contended that the "probability" standard adopted was intended to require a plaintiff to show a "likelihood" or "51 chance" of prevailing. The "legislative history" cited for this interpretation is a letter from the Governor's office which states that there appeared to be no meaningful distinction between the "substantial probability" standard and the "reasonable probability" standard then being proposed. In criticizing that standard as "fundamentally unfair," the letter stated that it "would require a plaintiff to have 51 of his or her case proven the day the suit is filed and before any discovery is taken." The bill's sponsor, Bill Lockyer, objected to the Governor's proposed standard, claiming it would "eviscerate the measure." The Governor signed the legislation with the "probability" standard.  
In light of potential problems with the constitutional right to a jury trial, the courts have interpreted the plaintiff's burden in opposing a motion to strike pursuant to section 425.16 as requiring the demonstration of a prima facie case. (Layfayette Morehouse, Inc. v. Chronicle Publishing Co., supra, 37 Cal. App. 4th 855, 867.) We are in accord with these authorities.

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 Therefore, the Church was required to demonstrate by admissible evidence the probability that it would succeed in obtaining an injunction to set aside the former judgment in Wollersheim's favor on the ground of judicial bias during the conduct of the prior action. This it failed to do. 
In order to establish the probability of success the Church had to present admissible evidence of judicial bias sufficient to void the judgment in the prior action. Courts applying the former judicial disqualification statute, Code of Civil Procedure section 170, subdivision (a), held that judgments of a disqualified judge were void. A void judgment is open to attack at any time. (Cadenasso v. Bank of Italy (1932) 214 Cal. 562, 567-568 [6 P.2d 944].) However, courts applying the new provisions, Code of Civil Procedure section 170 et seq., adopted in 1984, consider such judgments or orders merely voidable. (Betz v. Pankow (1993) 16 Cal. App. 4th 931, 939-940 [20 Cal. Rptr. 2d 841], and cases cited therein.) 
Code of Civil Procedure section 170.1, subdivision (a)(6) provides for the disqualification of a judge if "For any reason . . . (B) the judge believes there is a substantial [**46]  doubt as to his or her capacity to be impartial, or (C) a person aware of the facts might reasonably entertain a doubt that the judge would be able to be impartial. Bias or prejudice towards a lawyer in the proceeding may be grounds for disqualification." 
"The matter of disqualification should be raised when the facts constituting the grounds for disqualification are first discovered and, in any event, before the matter involved is submitted for decision. (Baker v. Civil Service Com. (1975) 52 Cal. App. 3d 590, 594 . . . .) This rule applies, however, only when the facts constituting the disqualification are discovered before a  [*656]  case is submitted for decision. The rule rests on the principle that a party may not gamble on a favorable decision. (Ibid.) . . . [C]ase law recognizes situations in which a party is entitled to relief even though the grounds for disqualification are not discovered until after judgment is entered. In such  [***637]  case, a statement of disqualification is timely if submitted at the 'earliest practicable opportunity' after the disqualifying facts are discovered." (Urias v. Harris Farms, Inc. (1991) 234 Cal. App. 3d 415,  [**47]  424-425 [285 Cal. Rptr. 659] [summary judgment granted by disqualified judge held to be voidable] review den.) n11 

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n11 Wollersheim's contention that the Church's complaint is an unsuccessful attempt to allege either intrinsic or extrinsic fraud is somewhat beside the point. Rather the complaint is an attempt to allege the judgment in the underlying action is void because the matter was tried before a judge who concealed his bias. Nevertheless, the Church failed to successfully plead or present evidence in opposition to Wollersheim's motion to support the essential basis for such a claim--facts of Judge Swearinger's alleged bias during the trial.

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In making our determination whether the Church has established a probability that it would prevail, we now consider "the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based," (§  425.16, subd. (b)), as discussed above. 
 An examination of the Church's complaint reveals an absence of any admissible [**48]  evidence to demonstrate its claim. The allegations of fact in the complaint which are critical to the Church's claim of judicial bias are not admissible, even though the complaint is verified, because they were not within the personal knowledge of the verifier, the president of the Church. Generally, a party cannot simply rely on the allegations in its own pleadings, even if verified, to make the evidentiary showing required in the summary judgment context or similar motions, such as plaintiff's motion to amend to include a punitive damage claim under section 425.13, subdivision (a). (College Hospital Inc. v. Superior Court, supra, 8 Cal. 4th at p. 720, fn. 7.) The same rule applies to motions under section 425.16. Here, like motions under Code of Civil Procedure section 437c, the pleadings merely frame the issues to be decided. Similarly, an averment on information and belief is inadmissible at trial, and thus cannot show a probability of prevailing on the claim. (Evans v. Unkow, supra, 38 Cal. App. 4th at pp. 1497-1498.) "An assessment of the probability of prevailing on the claim looks to trial, and the evidence that will be presented at that time. (See  [**49]  Wilcox v. Superior Court, supra, 27 Cal. App. 4th at p. 824 . . . .) Such evidence must be admissible. (Id. at p. 830.)" (Id. at p. 1497, original italics.) 
Wollersheim made a number of objections to the evidence the Church offered by declarations. Wollersheim's objections to portions of the declaration of Paul Moore on the grounds they were hearsay (Evid. Code, §  1200)  [*657]  and irrelevant (Evid. Code, §  351) are properly sustained. Mr. Moore refers to a statement of Juror Terri Reuter, which showed on its face that she did not learn of the allegations concerning the judge's tires being slashed and the death of his dog until long after the verdict. Also Moore's report of her statements regarding statements of court personnel were inadmissible double hearsay. The declaration of Ms. Reuter to which Moore referred was not attached and was reportedly unsigned and never served on Wollersheim's counsel. 
Wollersheim also properly objected to the declaration of Eric Lieberman, which consists of his statement about the statements of the reporter, Mr. Horne, regarding the statements made by the judge to Mr. Horne. This is inadmissible double hearsay. (Evid.  [**50]  Code, §  1200.) 
Wollersheim objected to the declaration of Earle Cooley as irrelevant. It simply states that the judge never mentioned to Church counsel that his tires had been slashed or that his collie had drowned in his pool, and that the judge did not "reveal his belief or concern" that Church personnel were responsible for acts of harassment. Although Cooley's declaration may have some relevance to the issue of "discovery" of the alleged "new evidence" of bias, it contains no evidence of bias on the part of the judge. 
Wollersheim also properly objected to statements in the declaration of Barry Van Sickle on the grounds of hearsay, untrustworthiness and relevancy. The declaration contains hearsay evidence of statements of the judge made six years after the trial in the prior action to one of Wollersheim's appellate  [***638]  counsel. The judge is reported to have said that he was willing to act as a facilitator to settlement as he did not want to see the case retried. These statements are irrelevant to the Church's claim of the existence of judicial bias during the trial itself. 
The declaration of William T. Drescher also contains hearsay and multiple hearsay, relaying [**51]  the statements of Judge Swearinger to him and the statements of Van Sickle regarding the judge's comments to him six years after trial and Wollersheim objected on that basis. The Church contends the statements are admissible under the state-of-mind exception. Wollersheim also objected to these statements as irrelevant to the Church's claim of bias at the time of trial and that objection is sustainable. 
The unauthenticated copy of the American Lawyer article does not contain any competent evidence, as it too is multiple hearsay--the statements of Horne of the statements of Judge Swearinger. Furthermore, the quoted statements of the judge which indicate that he believed "funny stuff"  [*658]  was occurring also indicate he did not "pay attention" to it. Therefore it is irrelevant, as Wollersheim contended. 
In opposition to the Church's "evidence," Wollersheim submitted substantial admissible evidence that the jury members had no knowledge that the judge's tires were slashed or that his dog had died. There is evidence by declarations of court personnel that they were unaware of any bias on the part of the judge. Terri Reuter declares that she learned of the tire slashing and dog [**52]  drowning "sometime well after the trial in the Wollersheim case was over." 
 Finally, we turn to the issue of the timeliness of the Church's lawsuit to set aside the verdict. An action to void a judgment based on judicial bias is timely if filed at the "'earliest practicable opportunity' after the disqualifying facts are discovered." (Urias v. Harris Farms, Inc., supra, 234 Cal. App. 3d at p. 425.) Here, the Church also failed in carrying its burden. In its 1986 motion for new trial the Church raised the issue of Judge Swearinger's alleged bias and the possible contamination of the jury by Terri Reuter's unsigned declaration. 
The Church's numerous claims of judicial and jury bias and prejudice were adjudicated at earlier stages of the litigation. Yet the Church waited seven years to file the instant lawsuit alleging the same facts to support its complaint. Clearly the Church is too late. 
The trial court acted properly in granting Wollersheim's motion to strike the Church's complaint. This conclusion did not require weighing evidence as the Church failed to present a prima facie case supported by admissible evidence. This conclusion also obviates the need to address [**53]  the various credible, potentially meritorious, defenses of laches, unclean hands and collateral estoppel presented by Wollersheim, except to observe that such defenses are to be considered if necessary in determining plaintiff's probability of success once the plaintiff has presented evidence of the probability of success. (§  425.16, subd. (b).) 
4. The award of attorney fees was proper and supported by substantial evidence. 
 Upon the motion of Wollersheim, the trial court awarded attorney fees pursuant to section 425.16, subdivision (c) in the amount of $ 130,506.71. In doing so, the trial court rejected Wollersheim's request to double the "lodestar" amount, the number of attorney hours expended multiplied by the hourly rates. (See Serrano v. Priest (1977) 20 Cal. 3d 25  [*659]  [141 Cal. Rptr. 315, 569 P.2d 1303].) The Church contends the total number of hours claimed was unreasonable and inexplicable, pointing out that the case was dismissed on the basis of pleadings and accompanying declarations. 
 "'The matter of reasonableness of attorney's fees is within the sound discretion of the trial judge. [Citations.] Determining the weight and credibility of the [**54]  evidence, especially credibility of witnesses, is the special province of the trier of fact. [Citation.]' [Citation.] 'In determining what constitutes a reasonable compensation for an attorney who has rendered services in connection with a legal proceeding, the court may and should consider "the nature of the litigation, its difficulty, the amount involved, the skill required and the skill employed in  [***639]  handling the litigation, the attention given, the success of the attorney's efforts, his learning, his age, and his experience in the particular type of work demanded . . . ; the intricacies and importance of the litigation, the labor and necessity for skilled legal training and ability in trying the cause, and the time consumed." [Citations.]' [Citations.]" (Stokus v. Marsh (1990) 217 Cal. App. 3d 647, 656-657 [266 Cal. Rptr. 90].) 
 We find the trial court did not abuse its discretion in awarding attorney fees and that substantial evidence supports the award. Wollersheim's counsel submitted declarations of their experience and expertise providing information supportive of the rates charged by counsel as well as itemized accountings of attorney time. Wollersheim [**55]  also submitted the declaration of an expert on attorney fees who opined that the rates requested by his counsel were "well within the range of market rates charged by attorneys of equivalent experience, skill and expertise." The Church has not presented any evidence in the record that the award was based upon unnecessary or duplicative work or any other improper basis. 
5. Wollersheim is entitled to an award of attorney fees on appeal. 
Wollersheim has asked this court to award him attorney fees on this appeal. Subdivision (c) of section 425.16 provides for an award of attorney fees to the defendant who successfully brings a motion to strike. 
 "A statute authorizing an attorney fee award at the trial court level includes appellate attorney fees unless the statute specifically provides otherwise. (Morcos v. Board of Retirement (1990) 51 Cal. 3d 924, 927-929 . . .; Grade-Way Construction Co. v. Golden Eagle Ins. Co. (1993) 13 Cal. App. 4th 826, 837-838 . . . .)" (Evans v. Unkow, supra, 38 Cal. App. 4th at pp. 1499-1500.) Section 425.16, subdivision (c) provides that a prevailing defendant is entitled to recover attorney fees and costs, and does not preclude [**56]  recovery on appeal. (38 Cal. App. 4th at p. 1500.) [*660]  
Wollersheim is awarded his attorney fees on this appeal, the amount of which is to be determined by the trial court upon remand. 
DISPOSITION 
Judgment of dismissal and judgment awarding attorney fees are affirmed. Wollersheim is awarded costs and attorney fees on appeal. The matter is remanded to the trial court to determine the amount thereof. 
Klein, P. J., and Croskey, J., concurred. 
Appellant's petition for review by the Supreme Court was denied May 22, 1996. Kennard, J., was of the opinion that the petition should be granted.  

122 of 133 DOCUMENTS 

DEE ROWE et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CHURCH OF SCIENTOLOGY OF ORANGE COUNTY et al., Real Parties in Interest.  

No. B070406 

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION THREE 

15 Cal. App. 4th 1711; 1993 Cal. App. LEXIS 554; 19 Cal. Rptr. 2d 625; 93 Cal. Daily Op. Service 3846; 93 Daily Journal DAR 6583 

May 25, 1993, Decided 

PRIOR HISTORY:
 [**1]  Superior Court of Los Angeles County, No. BC038955, Paul G. Flynn, Judge.  

DISPOSITION:
The alternative writ is discharged.  A peremptory writ shall issue directing the trial court to vacate its order of September 22, 1992, denying Rowe's motion to amend the complaint to allege claims for punitive damages and to conduct further proceedings consistent with this opinion.  

COUNSEL:

Cummins & White, Barry Van Sickle, Richard J. Wynne and Toby L. Plevin for Petitioners. 

No appearance for Respondent. 

Rabinowitz, Boudin, Standard, Krinsky & Lieberman, Eric M. Lieberman, Hillary Richard, Bowes & Moxon, Karen D. Holly and Laurie J. Bartilson for Real Parties in Interest.  

JUDGES:
Opinion by Croskey, J., with Klein, P. J., and Hinz, J., concurring.  

OPINIONBY:
CROSKEY, J. 

OPINION:

 [*1715]   [***626]  
Petitioners Dee Rowe and S. Glover Rowe (collectively Rowe) seek a writ of  [***627]  mandate to overturn the trial court's refusal to permit the amendment of Rowe's complaint against the Church of Scientology of Orange County (Scientology) n1 to allege a claim for punitive damages. Such pre- pleading permission by the court is a requirement imposed by Code of Civil Procedure section 425.14. n2 Rowe attacks this legislation by asserting  [**2]  that it is unconstitutional on the grounds that it violates (1) California's constitutional guarantee of a jury trial and (2) the establishment clause of the First Amendment to the United States Constitution.  We conclude that Rowe is incorrect on both points.  However, because it appears that the trial court  [*1716]  may not have applied the proper standard in evaluating Rowe's proposed amended pleading, we grant the writ. 

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n1 Church of Scientology International, Religious Technology Center and Sea Organization were also named as defendants in Rowe's complaint.  For purposes of this opinion there is no reason to distinguish between them and they are all embraced within the term "Scientology."

n2 Unless otherwise noted, all further statutory references are to the Code of Civil Procedure. 
Section 425.14 provides: 
"No claim for punitive or exemplary damages against a religious corporation or religious corporation sole shall be included in a complaint or other pleading unless the court enters an order allowing an amended pleading that includes a claim for punitive or exemplary damages to be filed.  The court may allow the filing of an amended pleading claiming punitive or exemplary damages on a motion by the party seeking the amended pleading and upon a finding, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established evidence which substantiates that plaintiff will meet the clear and convincing standard of proof under Section 3294 of the Civil Code.  [P] Nothing in this section is intended to affect the plaintiff's right to discover evidence on the issue of punitive or exemplary damages."

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FACTUAL AND PROCEDURAL BACKGROUND 
On October 3, 1991, Rowe filed a complaint against Scientology alleging claims for fraud, false imprisonment, assault, intentional infliction of emotional distress, invasion of privacy and deceptive trade practices.  The allegations arose out of a relationship which began with a management and consulting contract between Rowe and a company known as Sterling Management Systems (Sterling) which Rowe claims was a Scientology "front group." This contract related to Rowe's Alabama dental practice.  Subsequently, Rowe alleges, Sterling recruited Rowe to enroll and participate in counseling programs at Scientology's Orange County facility located in Tustin, California. 
There is no need to recite in detail the factual allegations concerning Scientology's claimed misconduct.  It is sufficient to note that Rowe's complaint charged six separate intentional torts each of which was alleged to have been committed with malice and oppression.  Based on such allegations, Rowe sought recovery of punitive damages. 
Scientology responded with a motion to strike Rowe's allegations and prayer for punitive damages on the ground that Rowe had not complied with the requirement [**4]  of section 425.14 to first obtain leave of court before seeking such relief.  On December 11, 1991, the trial court granted the motion. n3 

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n3 Rowe sought a writ of mandate from this court with respect to such order, claiming that section 425.14 violated the establishment clause of the First Amendment of the United States Constitution.  On February 26, 1992, we denied Rowe's petition without prejudice "to the filing of a motion to amend the complaint in the court below."

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Thereafter, Rowe made a motion for leave to amend the complaint to allege a prayer for punitive damages. In support of the motion, Rowe filed three declarations and documentary material apparently copied from certain Scientology publications.  In addition, Rowe argued that section 425.14 violated two constitutional guarantees: (1) the right to a jury trial under both the United States and California Constitutions and (2) the establishment clause of the First Amendment. 
Scientology opposed this motion with excerpts from depositions of Rowe and certain [**5]  documentary evidence together with legal argument regarding the admissibility of Rowe's evidence and a response to the  [***628]  constitutional  [*1717]  questions raised.  Scientology concluded its opposition with arguments which bear upon the issue before us: ". . . the only evidence submitted by plaintiffs in support of their pending motion consists of the declarations of Dee Rowe and S. Glover Rowe.  As demonstrated . . . those declarations do not satisfy [their] burden of establishing their claim for punitive damages by clear and convincing proof"; and later, "the evidence offered by [Rowe] not only is not 'clear and convincing,' it is largely inadmissible.  Analysis of the remaining admissible evidence pursuant to §  425.14 reveals that plaintiffs have failed to meet the clear and convincing standard, or any lesser standard for that matter." n4 

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n4 This argument in effect assumes that section 425.14 imposes a requirement that Rowe must satisfy the court of ultimate success on the punitive damage issue before a pleading will be permitted.  Such construction of the statute finds an echo in the trial court's own ruling.  (See fn. 6, post.) As we point out below, to construe the statute in this manner would result in an unconstitutional impairment of the right to a jury trial.

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On September 22, 1992, the motion came on for hearing.  The trial court rejected Rowe's constitutional arguments with little or no discussion n5 and then heard extensive argument as to whether Rowe had satisfied the "clear and convincing" prepleading hurdle of section 425.14.  After considering the competing declarations and evidence before it the court denied Rowe's motion.  In describing the conclusion which it reached it appears that the court was of the opinion that section 425.14 required Rowe to demonstrate evidence sufficient to satisfy the clear and convincing standard and that, after weighing the evidence before it, the court concluded that Rowe had failed to meet that burden. n6 Rowe's motion was therefore denied. 

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n5 Although the record is not entirely clear, it appears that these issues were considered and denied on their merits.  The record reflects the following colloquy with the court: 
"The Court: I suppose the first issue that is raised is that CCP 425.14 is unconstitutional. 
"Ms. Plevin: Yes, Sir. 
"The Court: I am not in a position to declare 425.14 unconstitutional.  The Legislature deemed in its wisdom appropriate to legislate and that's what they did when they enacted 425.14. 
"As far as that claim is concerned, that does not sway the court. 
"Ms. Plevin: May I ask, are you ruling then as to the issue regarding the constitutionality of 425.14 both on the 7th amendment issue and the 1st Amendment issue? 
"The Court: Yes, you can take that to the bank and do whatever you want with it, but I am not in a position to make a determination that 425.14 is unconstitutional.  Either as violative of the 7th Amendment, the right to freedom of religion--what are the other constitutional claims that you base your arguments on?  Portions of the constitution? 
"Ms. Plevin: Jury trial and establishment cause. 
"The Court: Under both of those clauses, I am not going to declare 425.14 unconstitutional.  You are just basing it on federal constitution? 
"Ms. Plevin: California as well 
"The Court: All right." [**7]  

n6 The trial court announced its decision, and the reasoning on which it was based, in the following terms: 
"The Court: I've reviewed the somewhat conclusionary declarations of the Rowes and I must admit I have reviewed the depositions on other occasions as well as now with respect to prior hearings. 
"And there is a marked contrast between that which is contained in the depositions with respect to these allegations as far as claims for punitive damages are concerned. 
"There is quite a disparity between that which is in the declarations and that which is in the depositions, and leaves me with a view that--I have to have before me in order to grant relief under section 425.14, I have to have, in my view, clear and convincing proof, unequivocal, the kind of proof that will leave no substantial doubt. 
"The kind of proof that is sufficiently strong to command the unhesitating assertion of every reasonable mind that indeed there was this despicable conduct that would call for the issue of punitive damages to be placed before the jury. 
"I have a hard time in just reviewing the affidavits alone, concluding that the information there rises to the level of convincing the court by clear and convincing evidence that there was fraud, oppression, malice, of the quantity that would warrant adding on the punitive damages claim.  There is a doubt. 
"Therefore, I'm going to deny the motion for leave to allow the prayer for punitive damages based upon that view.  . . ." (Italics added.)

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Rowe then brought the instant petition for writ of mandate.  We issued an  [***629]  alternative writ and set the matter for hearing. 
ISSUES PRESENTED 
Rowe asserts that the trial court's order, which prevented the pleading of any punitive damage claim, resulted from the operation of section 425.14, which Rowe claims is unconstitutional.  Therefore, Rowe argues, issuance of a writ of mandate compelling the trial court to vacate its order is warranted.  Rowe asserts that section 425.14 is unconstitutional on two grounds: first, it requires the trial court to weigh evidence and decide the issue of entitlement to punitive damages, thus depriving Rowe of the constitutionally protected right to a jury trial; and second, it creates an impermissible benefit for religious organizations and thus violates the establishment clause of the First Amendment. 
We discuss each of these claims in turn. 
DISCUSSION 
1. SECTION 425.14 DOES NOT IMPAIR THE RIGHT TO A JURY TRIAL. 
(7)(See fn. 7.) Article I, section 16 of the California Constitution provides in pertinent part, "Trial by jury is an inviolate right and shall be secured to all, . . .." n7 "In California, the constitutional [**9]  right to a jury trial in civil cases is coextensive with the right as it existed under the common law of  [*1719]  England in 1850, when the California Constitution was adopted.  [Citation.] ' "The right has always been regarded as sacred and has been jealously guarded by the courts.  [Citation.]" ' [Citation.] It is the function of the jury to determine questions of fact.  [Citations.]" ( Hung v. Wang (1992) 8 Cal.App.4th 908, 927 [11 Cal.Rptr.2d 113].) 

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n7 Rowe also relied in the trial court upon the Seventh Amendment to the United States Constitution.  However, the Seventh Amendment only guarantees a federal right to a jury trial in civil cases and is not binding on the states.  ( Jehl v. Southern Pacific Co. (1967) 66 Cal.2d 821, 827 [59 Cal.Rptr. 276, 427 P.2d 988].) Therefore, we confine our discussion to the impact of the provisions of the California Constitution.

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 There is no question or dispute in this [**10]  case that the claims asserted by Rowe, including the claim for punitive damages, are of the type to which the jury trial right attaches. n8 The question which we must address is whether section 425.14 in any way impairs that right.  If we construe the statute to require the trial judge to weigh the evidence on both sides and only permit the filing of a claim for punitive damages if the court finds that Rowe will prevail, then Rowe's jury right would be clearly violated. 

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n8 The resolution by jury of punitive damage claims was firmly a part of the common law by the time of the adoption of the California Constitution.  As the United States Supreme Court recently put it, " 'It is a well-established principle of the common law, that in actions of trespass and all actions on the case for torts, a jury may inflict what are called exemplary, punitive or vindictive damages upon a defendant, having in view the enormity of his offense rather than the measure of compensation to the plaintiff.  . . .  [P] This has always been left to the discretion of the jury, as the degree of punishment to be thus inflicted must depend on the peculiar circumstances of each case.' [Citation.]" ( Pacific Mutual Life Insurance Co. v. Haslip (1991) 499 U.S. 1, 16 [113 L.Ed.2d 1, 18, 111 S.Ct. 1032], quoting from Day v. Woodworth (1852) 54 U.S. (13 How.) 363, 371 [14 L.Ed. 181].)

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A. SECTION 425.14 IS AMBIGUOUS 
We look first to the plain language of the statute.  Where statutory language is clear and unambiguous there is no need for construction.  ( Rojo v. Kliger (1990) 52 Cal.3d 65, 73 [276 Cal.Rptr. 130, 801 P.2d 373].) The critical statutory language here involved reads, ". . . the court may allow the filing of an amended pleading claiming punitive or exemplary damages on a motion by the party seeking the amended pleading and upon a finding, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established evidence which substantiates that plaintiff will meet the clear and convincing standard of proof under section 3294 of the Civil Code." (Italics added.) 
Is this language clear and free from ambiguity?  We begin our analysis of that question by examining the nature of the burden which this imposes on a pleading party.  On the surface, it appears to be a different burden, if not a greater one, than that which is imposed by section 425.13, which contains a related pleading hurdle with respect to punitive damage claims  [***630]  against healthcare providers.  [**12]  That section provides in pertinent part, ". . .  The court  [*1720]  may allow the filing of an amended pleading claiming punitive damages on a motion by the party seeking the amended pleading and on the basis of the supporting and opposing affidavits presented that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim pursuant to Section 3294 of the Civil Code." (Italics added.) n9 No citable decision has yet analyzed this pleading hurdle for clarity or meaning. n10 

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n9 There are at least two other statutory provisions where the Legislature has created similar hurdles to the pleading or proof of particular claims.  Each uses language similar to section 425.13: 
(1) Civil Code section 1714.10, subdivision (a), where the term "reasonable probability" is utilized: 
"No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action. . . ." (Italics added.) 
The legislative history of Civil Code section 1714.10, subdivision (a), reveals that its similarity to section 425.13 is more than coincidental; it was patterned after that section.  ( Hung v. Wang, supra, 8 Cal.App.4th at p. 934, fn. 6.) 
(2) Civil Code section 3295, subdivision (c), relating to restrictions on the pretrial discovery of a defendant's financial condition except upon a "substantial probability" showing: 
"No pretrial discovery by the plaintiff shall be permitted with respect to [evidence of defendant's "profits" from the alleged wrongful conduct or the defendant's "financial condition"] unless the court enters an order permitting such discovery pursuant to this subdivision . . ..  Upon motion by the plaintiff supported by appropriate affidavits and after a hearing, if the court deems a hearing to be necessary, the court may at any time enter an order permitting the discovery otherwise prohibited by this subdivision if the court finds, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim pursuant to Section 3294. . . ." (Italics added.) [**13]  

n10 In College Hospital, Inc. v. Superior Court (1993) 13 Cal.App.4th 1193 [16 Cal.Rptr.2d 833], the court construed section 425.13 by applying the reasoning of the Hung court (see below) notwithstanding the slight difference in language utilized in Civil Code section 1714.10, subdivision (a).  However, on May 13, 1993, the California Supreme Court granted review (S027255).

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However, similar language used in Civil Code section 1714.10 has recently been examined and found to be ambiguous.  ( Hung v. Wang, supra, 8 Cal.App.4th at p. 930.) More than one reasonable construction was possible for the language used in section 1714.10, which required a showing of "reasonable probability of success" before the pleading of a claim of civil conspiracy between an attorney and client would be allowed.  The court, noting that it was bound to adopt the construction which would save the statute from constitutional infirmity, stated: ". . .  [T]he legislative purpose of section 1714.10 was to eliminate frivolous allegations [**14]  that attorneys have  [*1721]  conspired with their clients.  This statutory purpose is served by a construction that requires a prefiling procedure to determine whether the proposed conspiracy pleading is legally sufficient, and whether it is supported by a sufficient prima facie showing of facts to sustain a favorable decision if the evidence submitted by the petitioner is credited.  If either of these requirements is not met, the petition must be denied; if both are satisfied, it must be granted.  This is a determination of law, not of fact.  [Citation.] So construed, the statute provides a vehicle to preclude frivolous allegations of conspiracy without subjecting the allegations to a fact adjudicative screen that would violate the jury clause." (8 Cal.App.4th at p. 931.) Thus, the demonstration of a "reasonable probability" of success requires only the exhibition of a prima facie case. 
While the "substantial probability" language of section 425.13 differs from Civil Code section 1714.10's use of the term "reasonable probability," it does not appear to so alter the pleader's burden as to compel a different analysis than that applied by [**15]  the Hung court.  Certainly, the language utilized in section 425.13 is ambiguous in  [***631]  the same way the phrase "reasonable probability" was found to be ambiguous in Hung. n11 This conclusion necessarily influences our examination of section 425.14. 

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n11 As the court in Hung stated, "The phrase, 'a reasonable probability' may be taken to mean that the petitioner must show that he or she has a case that will survive a motion for nonsuit and that, if successful, will be supported by sufficient evidence to warrant affirmance on appeal.  This construction gives to the noun 'probability' its literal meaning as descriptive of the relative likelihood of an outcome.  [Citation.] The adjective 'reasonable' requires the petitioner to do more than demonstrate some chance of winning; the petitioner must show that, given the evidence, he or she has a substantial case.  [P] If the Legislature had intended to require a petitioner to not only show a cognizable case but also that it is a winning case, it would have been a simple matter to use language that would have conveyed that meaning unambiguously, or at least with greater clarity.  [Citations.]" (8 Cal.App.4th at p. 929, italics in the original.)

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The legislative history of section 425.14 demonstrates an intent on the part of the Legislature to impose a burden similar to that imposed by section 425.13.  As originally proposed, this legislation was an amendment to Civil Code section 3294 which barred the recovery of any punitive damages against a charitable organization, including a religious corporation.  (Sen. Bill No. 1 (1987-1988 Reg. Sess.).) It was amended in the Senate, on January 26, 1988, so as to incorporate charitable organizations into the recently enacted healthcare provider legislation (§  425.13).  The Senate passed this version.  It was in the Assembly, on August 26, 1988, where the present wording was adopted, where the attempt to integrate with the healthcare provider statute was dropped and a new section (§  425.14) was drafted.  This new language also narrowed the coverage of the statute from charitable organizations generally and limited it to religious corporations.   [*1722]  The legislation, as so modified, was approved by the Senate and was signed by the Governor on September 26, 1988. 
Rowe argues that the language, as finally approved, is free from ambiguity and can only be read to require that  [**17]  the trial judge make a factual finding that sufficient evidence has been presented to satisfy the clear and convincing burden of proof required of plaintiffs seeking punitive damages. In other words, Rowe contends, the statute requires that the trial judge must first determine, from a review and weighing of supporting and opposing affidavits, that the plaintiff will win on the issue of punitive damages before a claim for such damages may be pled.  Such construction would most certainly invade Rowe's constitutional jury right.  ( Hung v. Wang, supra, 8 Cal.App.4th at p. 927.) Nonetheless, given the language used by the Legislature, this is certainly one reasonable way to construe the statute. 
However, as was the case with the statutory language examined in Hung, it is not the only reasonable construction.  The burden imposed is to produce sufficient evidence to "substantiate" that the plaintiff "will meet" the high standard of proof required for punitive damages. This language can also be read to require only that the plaintiff demonstrate to the court's satisfaction that sufficient evidence exists to go to the jury on  [**18]  the issue of punitive damages. That is, plaintiff has sufficient evidence, if credited, to meet the clear and convincing standard and the judge is unable to say that a reasonable jury could not find for the plaintiff under that standard of proof.  We therefore must conclude that this statute is ambiguous. 
B. CONSTRUCTION OF SECTION 425.14 
"Judicial doctrine governing construction of a law to avoid unconstitutionality is well settled.  If 'the terms of a statute are by fair and reasonable interpretation capable of a meaning consistent with the requirements of the Constitution, the statute will be given that meaning, rather than another in conflict with the Constitution.' [Citations.] Consequently, '[i]f feasible within bounds set by their words and purposes, statutes should be construed to preserve their constitutionality.' [Citation.]" ( Metromedia, Inc. v. City of San Diego (1982) 32 Cal.3d 180, 186 [185 Cal.Rptr. 260, 649 P.2d 902].) "This follows from the presumption that the legislative body intended  [***632]  to enact a valid statute, . . .  [Citations.] The United States Supreme Court has explained that the rule [**19]  in favor of a construction which upholds a statute's validity 'plainly must mean that where a statute is susceptible of two constructions, by one of which grave and doubtful constitutional questions arise and by the other of which such questions are avoided, our duty is to adopt the latter.' [Citations.]" ( People v. Davenport (1985) 41 Cal.3d 247, 264 [*1723]  [221 Cal.Rptr. 794, 710 P.2d 861]; see Izazaga v. Superior Court (1991) 54 Cal.3d 356, 371-372 [285 Cal.Rptr. 231, 815 P.2d 304].) 
Applying these general rules, we are required to resolve any ambiguity in section 425.14 in a manner which is consistent, not inconsistent, with Rowe's constitutional right to a jury trial. ( Hung v. Wang, supra, 8 Cal.App.4th at p. 931.) We therefore must read the statute to require only that a plaintiff demonstrate the existence of sufficient evidence to establish a prima facie case for punitive damages, having in mind the higher clear and convincing standard of proof.  In the words of the Hung court, it is only necessary that [**20]  plaintiff provide "a sufficient prima facie showing of facts to sustain a favorable decision if the evidence submitted is credited." (8 Cal.App.4th at p. 931.) The trial court is not required to make any factual determination or to become involved in any weighing process beyond that necessarily involved in deciding whether a prima facie case for punitive damages exists.  Once the court concludes that such a case can be presented at trial it must permit the proposed amended pleading to be filed.  If it concludes that no such case exists, then it properly rejects the proposed pleading amendment.  In making this judgment, the trial court's consideration of the defendant's opposing affidavits does not permit a weighing of them against the plaintiff's supporting evidence, but only a determination that they do not, as a matter of law, defeat that evidence. 
This construction not only avoids obvious unconstitutionality, but is consistent with the intent of the Legislature.  The legislative history n12 clearly demonstrates that the statute's purpose is to protect religious organizations from the expense of defending against punitive damage claims [**21]  for which a plaintiff can show no likelihood of success. n13 

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n12 In compliance with Evidence Code sections 455 and 459 we advised counsel prior to oral argument that we intended to take judicial notice of the legislative history of section 425.14.  Counsel were given an opportunity to provide relevant information regarding such history both at oral argument and by postargument letter briefs which have been received and considered.

n13 In the records of both the Senate, where the bill originated, and in the Assembly, where the final amendments were made, the same statement of purpose is repeatedly reflected, "[T]he primary purpose of this bill is to protect religious organizations from what some individuals consider to be unjustifiably large punitive damage awards.  This bill eliminates the immediate threat of a large punitive damage award by erecting a 'pleading hurdle,' namely, the requirement that some likelihood of success be demonstrated to the court as a condition of pleading punitive damages. Of course, this bill does nothing to limit the actual award of punitive damages once a court has granted leave to amend the complaint.  [P] In this regard, the change enacted last year in SB 241 (Lockyer), in which the standard of proof for punitive damages was raised from preponderance of the evidence to clear and convincing evidence, will do more to control 'excessive' punitive damage awards." (Third reading analysis of Sen. Bill No. 1, italics added.  Cf. Analysis of Sen. Bill No. 1 prepared for the Assem. Com. on Judiciary, Subcom. on the Admin. of Justice (1987-1988 Reg. Sess.).)

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 The imposition of such a prepleading burden does not impair Rowe's right to a jury trial. The decision which the trial judge is required to  [*1724]  make under this statute is substantially the same as in the case of a summary judgment motion.  The only distinction is that under section 425.14 the burden is on the plaintiff to sustain the proposed pleading while in other cases, where the plaintiff does not have such a statutory pleading hurdle, a defendant's summary judgment motion imposes the burden on the defendant to defeat plaintiff's claim.  (§  437c, subd. (n)(2); Torres v. Reardon (1992) 3 Cal.App.4th 831, 836 [5 Cal.Rptr.2d 52].) However, merely reversing  [***633]  that burden does not involve deprivation of a jury right. 
The burden imposed on a plaintiff by this legislation is very similar to that imposed on a plaintiff who responds to a summary judgment under the Federal Rules of Civil Procedure; and that burden has been upheld against claims that it violated the federal right to a jury trial under the Seventh Amendment.  ( Johnston v. IVAC Corp. (Fed.Cir. 1989) 885 F.2d 1574, 1577; Etalook v. Exxon Pipeline Co. (9th Cir. 1987) 831 F.2d 1440, 1446-1447; [**23]  see also Hung v. Wang, supra, 8 Cal.App.4th at p. 932.) This conclusion is not altered by the fact that the pretrial threshold is the heightened "clear and convincing" standard required for proof of entitlement to punitive damages. 
 When a motion for summary judgment is made in a case where the plaintiff's claim carries a clear and convincing burden of proof, the evidence and all inferences which can reasonably be drawn therefrom must meet that higher standard.  ( Anderson v. Liberty Lobby, Inc. (1986) 477 U.S. 242, 254-255 [91 L.Ed.2d 202, 215-216, 106 SCt. 2505]; Reader's Digest Assn. v. Superior Court (1984) 37 Cal.3d 244, 252 [237 Cal.Rptr. 359, 62 A.L.R.4th 301]; Miller v. Nestande (1987) 192 Cal.App.3d 191, 196 [237 Cal.Rptr. 359, 62 A.L.R.4th 301].) As the United States Supreme Court put it, ". . . in ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burden.  . . .  [P]  [**24]  Our holding that the clear-and-convincing standard of proof should be taken into account in ruling on summary judgment motions does not denigrate the role of the jury.  It by no means authorizes trial on affidavits.  Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, whether he is ruling on a motion for summary judgment or for a directed verdict." ( Anderson v. Liberty Lobby, Inc., supra, 477 U.S. at pp. 254-255 [91 L.Ed.2d at pp. 215-216].) If the federal summary judgment procedure does not impinge on the right to a jury trial, then section 425.14, which imposes no greater burden on a state plaintiff, likewise does not.  [*1725]  
C. CONCLUSION 
 We thus conclude that there is no invasion of Rowe's right to a jury trial; and we therefore reject the contention that section 425.14 is unconstitutional as an infringement of that right.  That does not, however, conclude our examination of this objection to the trial court's ruling.  We also have to determine, on the record before us, whether the trial court properly found [**25]  that Rowe had failed to demonstrate the existence of a prima facie case. 
However, before we can reach that issue, we must address Rowe's second constitutional argument: that section 425.14 violates the establishment clause of the First Amendment of the United States Constitution.  Rowe contends that the statute provides a unique benefit to religious organizations and imposes a unique burden upon their adverse parties, in the absence of a legitimate secular purpose for doing either. 
2. SECTION 425.14 DOES NOT VIOLATE THE ESTABLISHMENT CLAUSE OF THE FIRST AMENDMENT. 
The religion clauses of the First Amendment forbid the making of laws "respecting an establishment of religion, or prohibiting the free exercise thereof." Commonly referred to as the establishment and free exercise clauses, they together permit and require that government maintain a "benevolent neutrality which will permit religious exercise to exist without sponsorship and without interference." ( Walz v. Tax Commission (1970) 397 U.S. 664, 669 [25 L.Ed.2d 697, 701, 90 S.Ct. 1409].) 
The "benevolent neutrality" required by the First Amendment involves a  [**26]  delicate balance between the avoidance of sponsorship on the one hand and interference on the other.  The United States Supreme Court has noted that the two religion clauses exist in "tension" with one another ( Thomas v. Review Bd., Ind. Empl. Sec. Div. (1981) 450 U.S. 707, 719 [67 L.Ed.2d 624, 634, 101 S.Ct. 1425]; see also Wisconsin  [***634]  v. Yoder (1972) 406 U.S. 205, 220-221 [32 L.Ed.2d 15, 27-28, 92 S.Ct. 1526]) and has "struggled to find a neutral course between [them], both of which are cast in absolute terms, and either of which, if expanded to a logical extreme, would tend to clash with the other." ( Walz v. Tax Commission, supra, 397 U.S. at pp. 668- 669 [25 L.Ed.2d at p. 701].) 
The religion clauses are, of course, in harmony to the extent that a law which "establishes" one religious view inevitably tends to "prohibit the free exercise" of others.  (See Sands v. Morongo Unified School Dist. (1991) 53 Cal.3d 863, 870 [*1726]  [281 Cal.Rptr. 24, 809 P.2d 809].) [**27]  However, the two clauses come into conflict when secular laws, although neutral as to religion in their intent, nonetheless in some manner impair the free exercise of religion. If the impairment is severe, the free exercise clause may be violated.  ( Hobbie v. Unemployment Appeals Comm'n of Fla. (1987) 480 U.S. 136, 146 [94 L.Ed.2d 190, 200, 107 S.Ct. 1046]; Wisconsin v. Yoder, supra, 406 U.S. at p. 220 [32 L.Ed.2d at p. 27].) Yet, exemptions from the ordinary requirements of the law may, if they are overly generous to religion, be subject to attack as "establishing" the religions exempted.  ( Texas Monthly, Inc. v. Bullock (1989) 489 U.S. 1, 15 [103 L.Ed. 2d 1, 15, 109 S.Ct. 890]; Estate of Thornton v. Caldor, Inc. (1985) 472 U.S. 703, 710 [86 L.Ed.2d 557, 563, 105 S.Ct. 2914].) 
The establishment clause, which is made applicable to the states through the Fourteenth Amendment ( Everson v. Board of Education (1947) 330 U.S. 1, 15 [91 L.Ed. 711, 723, 67 S.Ct. 504]), [**28]  was intended to protect against three main evils: (1) sponsorship, (2) financial support of religion by the civil government, and (3) active involvement of the sovereign in religious activity.  ( Lemon v. Kurtzman (1971) 403 U.S. 602, 612 [29 L.Ed.2d 745, 755, 91 S.Ct. 2105]; Walz v. Tax Commission, supra, 397 U.S. at p. 668 [29 L.Ed.2d at p. 701].) However, the establishment clause has not been broadly applied to prohibit the grant to a religious organization of every possible benefit.  For example, such a grant is permissible, if it meets the three-prong test set out in Lemon v. Kurtzman, supra, 403 U.S. 602. Under Lemon, a valid benefit grant must (1) have a valid secular purpose, (2) not have a primary effect of advancing religion or any particular religious sect, and (3) not foster excessive government entanglement in religion. (403 U.S. at pp. 612-613 [29 L.Ed.2d at p. 755].) 
Within such limitations, it has long been recognized [**29]  that the government may, and sometimes must, make specific "accommodations" of religious needs of the people, and that it may do so without violating the establishment clause. ( Corporation of Presiding Bishop v. Amos (1987) 483 U.S. 327, 334- 335 [97 L.Ed.2d 273, 282, 107 S.Ct. 2862]; Zorach v. Clauson (1952) 343 U.S. 306, 314 [96 L.Ed. 954, 962, 72 S.Ct. 679]; see generally, McConnell.  Accommodation of Religion (1986) 1985 S.Ct. Rev. 1-59.) The validity of any particular benefit to religion depends upon whether the benefit constitutes such an "accommodation" of religion or instead is an impermissible "advancement." Rowe, of course, argues that section 425.14 impermissibly advances religion. In particular, Rowe contends the statute suffers from the same constitutional defect as a statute found invalid by the United States Supreme Court in Texas Monthly, Inc. v. Bullock, supra, 489 U.S. 1.  [*1727]  
In Texas Monthly, the court struck down a Texas statute which granted [**30]  an exemption from its sales tax for religious publications distributed by religious faiths and consisting of religious teachings or sacred religious texts.  Justice Brennan, writing for the three-member plurality, stated the basis for overturning the statute as follows: "[W]hen government directs a subsidy exclusively to religious organizations that is not required by the Free Exercise Clause and that either burdens nonbeneficiaries markedly or cannot reasonably be seen as removing a significant state-imposed deterrent to the free exercise of religion, as Texas has done . . ., it 'provides unjustifiable rewards of assistance to religious organizations' and cannot but 'conve [***635]  [y] a message of endorsement' to slighted members of the community.  [Citation.] This is particularly true where, as here, the subsidy is targeted at writings that promulgate the teachings of religious faiths." ( Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 15 [103 L.Ed.2d at p. 13], italics in the original.) 
Rowe argues that section 425.14 violates the establishment clause by providing a unique benefit to religious organizations,  [**31]  as did the statute overturned in Texas Monthly, and by imposing a unique burden upon others, again as did the statute in Texas Monthly. Rowe contends such circumstances prove the statute is intended to, and does, sponsor and financially support religion, thereby advancing it. 
For the reasons which we discuss below, we disagree and conclude section 425.14 is a reasonable accommodation of religion, which passes all three of the Lemon criteria and which accordingly serves the interests embodied in the free exercise clause, without sacrificing those represented by the establishment clause. However, in reaching this conclusion we must emphasize that while there can be little doubt that the Lemon criteria are the proper standard to be applied ( Sands v. Morongo Unified School Dist., supra, 53 Cal.3d at pp. 871-872), it is also clear that where the subject is legislation such as section 425.14, which seeks to advance free exercise values, a rigid application of Lemon is not appropriate.  ( Duffy v. State Personnel Bd. (1991) 232 Cal.App.3d 1, 11 [283 Cal.Rptr. 622].) [**32]  
 As the court in Duffy put it, "Legislation exempting religious observers from generally applicable government obligations would seldom, if ever, pass the 'purpose' and 'effects' prongs of the Lemon test since by definition, such legislation has a religious purpose and effect in promoting the free exercise of religion. [Citation.] On the other hand, judicial deference to all legislation that purports to facilitate the free exercise of religion would completely vitiate the establishment clause since any statute pertaining to religion can be viewed as accommodating free exercise rights.  . . ." (232  [*1728]  Cal.App.3d at p. 11.) The question which we address is whether section 425.14 falls within the limits imposed by the establishment clause on voluntary government efforts to facilitate the free exercise of religion when such exercise is burdened by government itself.  With that as a preface, we turn to an application of the three Lemon criteria. n14 

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n14 As will be apparent from the following discussion, there is considerable overlap and interdependence between the "secular purpose" and "primary effect" criteria set out in Lemon. Indeed, Justice O'Connor, concurring in Wallace v. Jaffree (1985) 472 U.S. 38 [86 L.Ed.2d 29, 105 S.Ct. 2479], appears to call for the merger of these two tests.  At least that is the view of one California court.  ( Duffy v. State Personnel Bd., supra. 232 Cal.App.3d at pp. 11- 12.) In Duffy, the court noted that even if recognition is given to the fact that a particular governmental act advances religion, it is nonetheless necessary "to separate those benefits to religion that constitutionally accommodate the free exercise of religion from those that provide unjustifiable awards of assistance to religious organizations.  In so doing the inquiry is 'whether government's purpose is to endorse religion and whether the statute actually conveys a message of endorsement.' [Citation.] Under this approach, the 'purpose' inquiry does not stand as an independent test, capable of striking down government acts on its own.  Rather, it is an additional, subordinate index of unconstitutionality.  To ascertain whether the statute conveys a message of endorsement, the relevant issue is how it would be perceived by an objective observer, acquainted with the text, history, and implementation of the government act.  [Citation.] [P] The merger of the 'purpose' and 'effects' tests in this way reduces the likelihood of an erroneous conclusion about legislative motive, and eliminates the danger that a rigidly applied 'purpose' test alone might invalidate laws whose effects are purely secular or advance free exercise values.  It also helps explain cases where the Supreme Court has upheld long-established state practices that began in religion, such as Sunday closing laws, [citation], and practices that acknowledge religion such as legislative prayers [citation], and state-owned creches [citations.]." (Ibid.)

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A. SECULAR LEGISLATIVE PURPOSE 
As already noted, Rowe argues section 425.14 has no legitimate secular purpose and thus is not simply a permissible "accommodation" of religion, but rather is a constitutionally prohibited "advancement."  [***636]  The primary basis for Rowe's argument is that only religious organizations are benefited.  Rowe relies primarily upon Texas Monthly, Inc. v. Bullock, supra, 489 U.S. 1, as authority. 
In Texas Monthly, the circumstance that the subsidy was directed exclusively to religious organizations and that it was not required by the free exercise clause formed a substantial part of the plurality's rationale for finding Texas's sales tax exemption for religious publications unconstitutional.  ( Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 15 [103 L.Ed.2d at p. 13].) Rowe contends section 425.14 parallels the Texas exemption in this respect.  [*1729]  
Section 425.14 does not, of course, direct an actual or constructive subsidy to religious organizations. n15 However, it does afford a procedural advantage which may  [**34]  result in a saving of legal costs, and which, in some ways, is a benefit analogous to a subsidy. Further, section 425.14 admittedly is directed exclusively to religious organizations. 

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n15 We also note that section 425.14 differs in one other very significant respect from the statute invalidated in Texas Monthly. The statute in that case did not merely exempt religious organizations from a tax; it exempted religious publications from a tax, and did so only if such publications consisted wholly of "writings promulgating the teaching of the faith" or of "writings sacred to a religious faith." (489 U.S. at p. 5 [103 L.Ed.2d at p. 7].) The circumstance that the Texas statute gave preferential treatment to the publication of religious messages was the only circumstance that a majority of the court found violative of the First Amendment.

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However, those circumstances, without more, do not rebut the existence of a secular purpose. Of course, a valid secular [**35]  purpose is more easily established where legislation grants a benefit to a broad class of institutions and organizations, which is so defined that "it can be fairly concluded that religious institutions could be thought to fall within [its] natural perimeter." ( Walz v. Tax Commission, supra, 397 U.S. at p. 696 [25 L.Ed.2d at p. 717] (conc. opn. of Harlan, J.); see also Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 17 [103 L.Ed.2d at p. 14] (lead opn. of Brennan, J.).) Nonetheless, such a broad class is not essential to establish a proper purpose for a benefit to religious organizations, and it is not required that benefits to religion "come packaged with benefits to secular entities." ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 338 [97 L.Ed.2d at p. 284]; see also Walz v. Tax Commission, supra, 397 U.S. at p. 674 [25 L.Ed.2d at p. 704].) n16 Thus, a violation of the establishment clause is not established by the mere [**36]  circumstance that section 425.14 protects only religious organizations.  ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at pp. 335-336 [97 L.Ed.2d at pp. 282-283]) 

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n16 Even the plurality in Texas Monthly, supra, which found the challenged statute unconstitutional in large part because "it lack[ed] sufficient breadth," stopped short of finding invalid all benefits that are (1) conferred exclusively upon religious groups, or upon individuals because of their religious beliefs, and (2) not required by the free exercise clause. The Texas Monthly plurality noted that previous decisions of the court had upheld such exclusive benefits to religion as long as they either (1) did not impose substantial burdens on nonbeneficiaries, or (2) were designed to alleviate significant governmental intrusions upon the free exercise of religion ( Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 18, fn. 8, 103 L.Ed.2d at p. 15.)

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Nor does the requirement of a secular purpose amount to a requirement that the law's purpose be unrelated to religion. ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 335 [97 L.Ed.2d at p. 282].) To the contrary, although "advancement" of religion by the government is prohibited ( Lemon v. Kurtzman, supra, 403 U.S. at p. 612 [29 L.Ed.2d at p. 755]),  [*1730]  the Constitution does not require the government to show "a callous indifference to religious groups." ( Zorach v. Clauson, supra, 343 U.S. at p. 314 [96 L.Ed.2d at p. 962]. See also Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 335 [97 L.Ed.2d at p. 282].) 
To facilitate the "benevolent neutrality" toward religion the government may make "accommodations" to religion without violating the establishment clause. The Supreme Court has found that a number of such "accommodations"  [***637]  are not prohibited.  (See, e.g., Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at pp. 334-335 [97 L.Ed.2d at p. 282] [**38]  [federal statute exempting employers who are religious organizations from equal employment requirements of the Civil Rights Act of 1964]; Zorach v. Clauson, supra, 343 U.S. at p. 315 [96 L.Ed.2d at p. 962] [city ordinance providing "released time" for public school students to attend religious instruction]; Selective Draft Law Cases (1918) 245 U.S. 366, 389-390 [62 L.Ed. 349, 357-358, 38 S.Ct. 1597] [exemption from combat service of persons whose religious tenets forbid it].) Beyond finding that various benefits to religion are not prohibited by the establishment clause, the Supreme Court has affirmatively held that "[u]nder the Lemon analysis, it is a permissible legislative purpose to alleviate significant governmental interference with the ability of religious organizations to define and carry out their religious missions." ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 335 [97 L.Ed.2d at p. 282], italics added.) n17 

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n17 In so holding, the Supreme Court acknowledged that an express purpose of benefiting religious organizations is not, strictly speaking, "secular," even where the benefit can legitimately be characterized as an "accommodation." ( Corporation of Presiding Bishop v. Amos, supra, at p. 335 [97 L.Ed.2d at p. 282].) Lemon's requirement of a secular purpose "does not mean that the law's purpose must be unrelated to religion." (Ibid.) In effect, the court appears to have adopted the views expressed by Justice O'Connor in her concurrence in Wallace v. Jaffree, supra, 472 U.S. 38, 83 [86 L.Ed.2d at pp. 29, 60]. In her opinion, Justice O'Connor suggested that the "purpose" test under the establishment clause should be modified from the strict "secular" purpose test enunciated in Lemon to one which leaves room under the establishment clause for legislation which does not have a secular purpose in the ordinary sense of that term, but which serves the values embodied in the free exercise clause. Specifically, Justice O'Connor said: "The solution to the conflict between the Religion Clauses lies . . . in identifying workable limits to the government's license to promote the free exercise of religion. . . .  On its face, the [free exercise] Clause is directed at government interference with free exercise. Given that concern, one can plausibly assert that government pursues Free Exercise Clause values when it lifts a government-imposed burden on the free exercise of religion. If a statute falls within this category, then the standard Establishment Clause test should be modified accordingly.  It is disingenuous to look for a purely secular purpose when the manifest objective of a statute is to facilitate the free exercise of religion by lifting a government-imposed burden.  Instead, the Court should simply acknowledge that the religious purpose of such a statute is legitimated by the Free Exercise Clause." (472 U.S. at p. 83 [86 L.Ed.2d at p. 60] conc. opn. of O'Connor, J., italics added.)

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In Presiding Bishop, the Supreme Court upheld section 702 of the Civil Rights Act of 1964, as amended (42 U.S.C. §  2000c-1). This section created  [*1731]  a statutory exemption of religious organizations from provisions of title VII of that act which otherwise prohibit discrimination in employment on the basis of religion. ( at pp. 339-340 [ 97 L.Ed.2d at p. 285].) As originally enacted, section 702 of the Civil Rights Act exempted only the religious activities of such organizations from the general prohibition.  However, in 1972, the statute was amended to exempt all activities of such organizations.  ( Presiding Bishop, supra, 483 U.S. at p. 332, fn. 9 [97 L.Ed.2d at p. 280].) The district court concluded the amendment's purpose was the legitimate secular purpose of minimizing governmental "interfer[ence] with the decision-making process in religions." ( at p. 332 [ 97 L.Ed.2d at p. 280], quoting from the opinion of the district court.) n18 

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n18 However, we note that the district court found the statute invalid under the establishment clause, as having the primary effect of advancing religion. ( at p. 333 [ 97 L.Ed.2d at p. 281].)

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The Supreme Court agreed with the district court's conclusion: "We may assume for the sake of argument that the pre-1972 exemption was adequate in the sense that the Free Exercise Clause required no more.  Nonetheless, it is a significant burden on a religious organization to require it, on pain of substantial liability, to predict which of its activities a secular court will consider religious. The line is hardly a bright one, and an organization might understandably be concerned that a judge would not understand its religious tenets and sense of mission. Fear of potential liability might affect the way an organization carried out  [***638]  what it understood to be its religious mission." ( Presiding Bishop, supra, at p. 336 [97 L.Ed.2d at p. 283].) 
The governmental interference with religion which was intended to be alleviated by section 702 of the Civil Rights Act--a clear governmental restriction on religious organizations' discretion in hiring--was particularly obvious and direct.  By comparison, the interference to be alleviated by section 425.14 is perhaps less obvious, but it is no less real and no less burdensome [**41]  on religion. Civil Code section 3294, by recognizing a cause of action for exemplary and punitive damages, effectively puts the power and authority of the state and its courts at the disposal of private parties to prosecute claims which may or may not be meritorious, and if such claims are proven meritorious, to enforce them.  The requirement that the parties sued must either appear and defend against punitive damage claims or risk a potentially immense forfeiture thus constitutes a palpable and material state-imposed burden. n19 

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n19 This conclusion finds an analogy in the reasoning of the United States Supreme Court in Shelley v. Kraemer (1948) 334 U.S. 1, [92 L.Ed. 1161, 68 S.Ct. 836] and in the recently decided Edmonson v. Leesville Concrete Co. Inc. (1991) 500 U.S.  [ 114 L.Ed.2d 660, 111 S.Ct. 2077]. In Shelley, it will be remembered, the Supreme Court held there is "state action" within the meaning of the Fourteenth Amendment where the state courts are utilized by private litigants to enforce racially restrictive covenants regarding the use and occupancy of real property.  (334 U.S. at p. 20 [92 L.Ed. 1184].) In Edmonson, the court held there is "state action" when a private litigant exercises peremptory challenges to strike jurors in a civil case on grounds of racial or group bias.  (114 L.Ed.2d at pp. 673-679 [111 S.Ct. at pp. 2082-2087].)

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 Under well-established principles of establishment clause analysis, the government can legitimately relieve religious institutions of this  [*1732]  burden, because it can rationally be seen as posing a significant deterrent to the free exercise of religion. n20 Just as the fear of litigation under title VII might improperly affect a religious organization's hiring practices, the fear of being called before a court to defend against unfounded claims for punitive damages might likewise improperly affect the way in which a religious organization carries out what it views as its religious mission. The free exercise of religion is thus served, and the prohibition against establishing religion is not violated, by legislation designed to mitigate the potentially chilling effects upon the practices of religious groups resulting from the threat of litigation over unfounded punitive damages claims.  The statute endeavors to insulate religious organizations from the threat of being required to defend against insupportable punitive damages claims--a potentially significant state-imposed burden upon religious practices.  This is a reasonable goal, and seeking to achieve it is a legitimate  [**43]  secular purpose. ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 335 [97 L.Ed.2d at p. 282].) 

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n20 Although laws discriminating among religions are subject to strict scrutiny, laws which afford a uniform benefit to all religions are upheld if rationally related to the furtherance of a legitimate end ( Corporation of the Presiding Bishop, supra, 483 U.S. at p. 339 [97 L.Ed.2d at p. 285]) and are found invalid only if "wholly motivated by an impermissible purpose." ( Bowen v. Kendrick (1988) 487 U.S. 589, 602 [101 L.Ed.2d 520, 535, 108 S.Ct. 2562]; Wallace v. Jaffree, supra, 472 U.S. at p. 56 [86 L.Ed.2d at p. 43].)

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B. "PRIMARY EFFECT" 
Under the second Lemon test, the law in question must have a "principal or primary effect . . . that neither advances [**44]  nor inhibits religion." (403 U.S. at p. 612 [29 L.Ed.2d at p. 755].) Here, the inquiry is whether, irrespective of the government's intent, the practice in question "advances" religion. 
What constitutes an improper "advancement" of religion has been variously characterized. n21 Generally, the court has invalidated  [***639]  legislation which either (1) burdens others while benefiting religion ( Estate of Thornton v.  [*1733]  Caldor, Inc., supra, 472 U.S. at pp. 708-709 [86 L.Ed.2d at p. 562]; (2) compels participation in religious observances ( Lee v. Weisman (1992) 505 U.S. [120 L.Ed.2d 467, 488, 112 S.Ct. 2649]; or (3) endorses particular religious ideas or endorses religious ideas generally ( Epperson v. Arkansas (1968) 393 U.S. 97, 106-107 [21 L.Ed.2d 228, 235-236, 89 S.Ct. 266]). By contrast, the Supreme Court has found legislation to effect a reasonable "accommodation" to religion where the legislation imposed no substantial burdens upon nonbeneficiaries,  [**45]  while at the same time either allowing the adherents of particular religions to act according to their beliefs, or alleviating governmental intrusions that might significantly deter or chill conduct that is protected by the free exercise clause. ( Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 18, fn. 8 [103 L.Ed.2d at p. 15].) 

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n21 In Corporation of Presiding Bishop, supra, 483 U.S. 327, the majority stated that "[a] law is not unconstitutional simply because it allows churches to advance religion, which is their very purpose.  For a law to have forbidden 'effects' under Lemon it must be fair to say that the government itself has advanced religion through its own activities and influence." ( Corporation of Presiding Bishop v. Amos, supra, 483 U.S. at p. 337 [97 L.Ed.2d at p. 283], italics in the original.) Concurring separately, Justice O'Connor criticized the majority's analysis as "obscur[ing] far more than enlighten[ing]" and, instead, characterized an impermissible governmental "advancement" of religion as a benefit to a religious institution which provides "unjustifiable awards of assistance to religious organizations" or "conveys a message of endorsement" either of a particular religion or of religion generally.  ( at pp. 347- 348 [ 97 L.Ed.2d at p. 290], conc. opn. of O'Connor, J.)

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Without question, the threat of incurring legal expenses in the defense of unfounded claims for punitive damages constitutes a significant potential deterrent to the free exercise of religion. Section 425.14 was enacted with the express intent of removing, or at least mitigating, that threat, and it plainly does so.  A plaintiff wishing to claim punitive damages against a religious organization must make a prima facie showing of merit before the claim can be pleaded or the organization required to answer. 
However, the requirement of such a showing does not burden nonbeneficiaries markedly or compel participation in religious observances or endorse religious ideas or tenets.  Unlike a tax exemption for religious organizations, which has the effect of making the tax burden greater for those not exempt ( Texas Monthly, Inc. v. Bullock, supra, 489 U.S. at p. 14 [103 L.Ed.2d at p. 13]; Bob Jones University v. United States (1983) 461 U.S. 574, 591 [76 L.Ed.2d 157, 173, 103 S.Ct. 2017]), or a requirement that employers accommodate the schedules of religiously observant [**47]  employees ( Estate of Thornton v. Caldor, Inc., supra, 472 U.S. at pp. 708-709 [86 L.Ed.2d at p. 562]), section 425.14 imposes no burden upon defendants that are not religious organizations.  Such defendants must respond to frivolous, as well as potentially meritorious, punitive damage claims, whether the same requirement applies to religious organizations or not. 
Nor does the statute unreasonably burden plaintiffs who do have legitimate punitive damage claims against religious organizations.  These plaintiffs need only make a showing of prima facie merit earlier in the course of litigation than plaintiffs with similar claims must do against other defendants.  Thus, section 425.14 leaves ultimately undisturbed both the rights of  [*1734]  injured parties to enforce legitimate claims against religious organizations and the right of civil society to protect its citizens from oppression, fraud and malice, whether by religious sects or others. 
C. EXCESSIVE GOVERNMENT ENTANGLEMENT WITH RELIGION 
With respect to the third and final Lemon criterion, it is obvious that section 425.14 does not foster excessive entanglement [**48]  between religion and the state.  ( Lemon v. Kurtzman, supra, 403 U.S. at p. 613 [29 L.Ed.2d at p. 755]). If anything, section 425.14 minimizes involvement between the government and religious institutions by allowing religious institutions to refrain from responding in any manner to a claim for punitive damages until after the claimant has made the required statutory showing of merit. 
D. CONCLUSION 
Section 425.14 was intended to, and does, relieve religious organizations of the need to respond to claims for punitive damages  [***640]  unless and until a prima facie showing of merit has been made.  It has both the intent and the primary effect of freeing mosques, synagogues, churches, and religious organizations of all kinds from "a significant governmental interference with [their] ability to define and carry out their religious missions." ( Corporation of the Presiding Bishop v. Amos, supra, 483 U.S. at p. 335 [97 L.Ed.2d at p. 282].) It thus constitutes a permissible "accommodation" of religion that is not inconsistent with the establishment clause and in [**49]  fact nourishes the "benevolent neutrality" by government toward religion which is the ultimate aim of the First Amendment's two religion clauses considered together. n22 

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n22 We do not reach or consider the issue of whether section 425.14 might violate the guarantees of separation of church and state contained in the California Constitution.  (Cal. Const., art. I, §  4.) While arguably Rowe raised the issue in the trial court (see fn. 5, ante), it was not briefed or argued on appeal and therefore has been waived.  ( Mann v. Cracchiolo (1985) 38 Cal.3d 18, 41; Adoption of Matthew B. (1991) 232 Cal.App.3d 1239, 1267, fn. 16 [210 Cal.Rptr. 762, 694 P.2d 1134].) Parenthetically, however, we note that as California's establishment clause is "virtually identical" to the one contained in the First Amendment ( Sands v. Morongo, supra, 53 Cal.3d at p. 882), our analysis and conclusion would doubtless not be different were the issue before us.  (See Duffy v. State Personnel Bd., supra, 232 Cal.App.3d at p. 9.)

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3. THE COURT SUBJECTED ROWE'S EVIDENTIARY SHOWING TO AN IMPROPER STANDARD 
 As discussed in some detail above, we have construed section 425.14 to require Rowe to demonstrate the existence of sufficient evidence to establish a prima facie right to recover punitive damages. That is, it is enough to show sufficient evidence to permit that claim to go to a jury under  [*1735]  the clear and convincing standard. Our review of the record strongly suggests that Rowe's showing was subjected to a much more stringent hurdle. 
Both counsel for Scientology and the trial court appeared to have read section 425.14 as requiring Rowe to actually prove, by clear and convincing evidence, a right to recover punitive damages. Counsel argued that Rowe's evidence did "not satisfy [the] burden of establishing [the] claim for punitive damages by clear and convincing proof." (See fn. 4, ante.) 
The trial court, in the announcement of its decision, indicated that it considered and apparently weighed all of the supporting and opposing evidence and found Rowe's evidence unpersuasive. Specifically, the court stated: ". . .  I have to have before me in order to grant relief under section 425.14,  [**51]  I have to have, in my view, clear and convincing proof, unequivocal, the kind of proof that will leave no substantial doubt.  [P] The kind of proof that is sufficiently strong to command the unhesitating assertion of every reasonable mind that indeed there was this despicable conduct that would call for the issue of punitive damages to be placed before the jury.  [P] I have a hard time in just reviewing the affidavits alone, concluding that the information there rises to the level of convincing the court by clear and convincing evidence that there was fraud, oppression, malice, of the quantity that would warrant adding on the punitive damages claim.  There is a doubt.  [P] Therefore, I'm going to deny the motion for leave to allow the prayer for punitive damages based upon that view.  . . ." 
We cannot review such comments without some concern as to whether the court had not in fact imposed upon Rowe a far heavier burden than either was intended by the Legislature or is permitted by the language of the statute if it is to pass constitutional muster.  Indeed, from the words used by the court, it appears likely that a standard was imposed on Rowe which required an evidentiary showing [**52]  which demonstrated a winning case.  To the extent that we have any doubt in this regard, fairness and justice require us to return the matter to the trial court for reconsideration under the proper standard. 
 It seems clear that, subject to the usual limitations on the amendment of pleadings prior to or during trial, a party seeking to comply with section 425.14 should be able  [***641]  to do so at any time when there is available sufficient evidence to make the required prima facie showing.  Therefore, a party should be free to renew a properly denied motion upon a subsequent and timely discovery of additional evidence.  That being the case, Rowe should be permitted the opportunity to supply such additional evidence as may be available to support the reconsidered application for leave to file an  [*1736]  amended pleading. Similarly, Scientology should be given an opportunity to supplement its opposition. 
DISPOSITION 
The alternative writ is discharged.  A peremptory writ shall issue directing the trial court to vacate its order of September 22, 1992, denying Rowe's motion to amend the complaint to allege claims for punitive damages and to conduct further proceedings consistent [**53]  with this opinion. 
Klein, P. J., and Hinz, J., concurred.  

123 of 133 DOCUMENTS 

LARRY WOLLERSHEIM, Plaintiff and Respondent, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, Defendant and Appellant.  

B023193 

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION SEVEN 

1992 Cal. App. LEXIS 523; 6 Cal. Rptr. 2d 532; 92 Cal. Daily Op. Service 3388; 92 Daily Journal DAR 5251 

April 20, 1992, Filed 

PRIOR HISTORY:
 [*1]  (LASC No. C332827)

 Original Opinion of March 20, 1992, Reported at 1992 Cal. App. LEXIS 370. 

JUDGES:
LILLIE, JOHNSON, JR., WOODS 

OPINIONBY:
THE COURT 

OPINION:

 [**534]  ORDER MODIFYING OPINION AND DENYING REHEARING
THE COURT:
It is ordered that the opinion filed herein on March 20, 1992, be modified in the following particulars:
1. On page 31, line 9, delete footnote number 10. At the bottom of that page delete footnote 10.
2. On page 36, lines 5 through 7 of the text, replace the remainder of the sentence after the words "damage award" with the following:
are modified to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million.
This modification of the opinion represents a change in judgment.
Appellant's petition for rehearing is denied.

LILLIE
JOHNSON, JR.
WOODS 

124 of 133 DOCUMENTS 

LARRY WOLLERSHEIM, Plaintiff and Respondent, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, Defendant and Appellant.  

No. B023193 

COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION SEVEN.  

15 Cal. App. 4th 1426; 1992 Cal. App. LEXIS 370; 6 Cal. Rptr. 2d 532; 92 Daily Journal DAR 3831; 92 Daily Journal DAR 4192 

March 20, 1992, Decided 

NOTICE:
NOT CITABLE - SUPERSEDED BY GRANT OF REVIEW 

SUBSEQUENT HISTORY:
 [**1]  
As Modified April 20, 1992.
Review Granted July 23, 1992 (S011790)
[Reprinted without change to permit tracking pending disposition on review by the Supreme Court (See Preface to Cumulative Subsequent History Table.  Previous cites 4 Cal. App. 4th 1074 and 10 Cal. App. 4th 370.)] 

PRIOR HISTORY:
 Superior Court of Los Angeles County, No. C332827, Ronald E. Swearinger, Judge.  

DISPOSITION:
The judgment is reversed as to the cause of action for negligent infliction of emotional injury.  The judgment as to the cause of action for intentional infliction of emotional injury is affirmed with the exception the compensatory damage award and the punitive damage award are modified to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million.  Each party to bear its own costs on appeal.  

COUNSEL:

Rabinowitz, Boudin, Standard, Krinsky & Lieberman, Eric M. Lieberman, Terry Gross, Lenske, Lenske & Heller, Lawrence E. Heller and Michael Lee Hertzberg for Defendant and Appellant. 

Cummins & White, Barry Van Sickle, Robert S. Horvitz and Tina B. Fisher [**2]  for Plaintiff and Respondent.  

JUDGES:
Opinion by Johnson, J., with Lillie, P. J., and Woods Fred, J., concurring.  

OPINIONBY:
JOHNSON, J. 

OPINION:

 [*1431]   [***534]  
This case is on remand from the United States Supreme Court to reconsider the punitive damage award modified and approved in our earlier opinion ( Wollersheim v. Church of Scientology (1989) 212 Cal.App.3d 872 [260 Cal.Rptr. 331], review den. Oct. 26, 1989, cert. granted, vacated and remanded. (1991) 499 U.S. [113 L.Ed.2d 234, 111 S.Ct. 1298],) in the light of the high court's decision in Pacific Mut. Life Ins. Co. v. Haslip (1991) U.S. [113 L.Ed.2d 1, 111 S.Ct. 1032]. To facilitate review of this question, we ordered supplemental briefing and heard oral argument from the parties.  Upon reconsideration, we conclude the California procedures for determining punitive damage awards pass constitutional muster under Haslip. We further conclude, as we did in our prior opinion, the jury acted appropriately in imposing a punitive damage award in this case but the amount it awarded is excessive under the standards established [**3]  by California law.  Consequently, we affirm the judgment, subject to a remittitur. n1 

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n1 Our prior opinion dealt exhaustively with the tort, freedom of religion, evidentiary and procedural issues appellant raised in its appeal.  Our rationale for and disposition of those issues remain the same.  We see no virtue in repeating that discussion in this opinion. Accordingly, except as we may touch some of these topics tangentially in the course of addressing the question of the punitive damages award and its constitutionality, as to all these issues the original opinion remains and is incorporated intact and unaltered in this decision.  The punitive damages section and the disposition paragraph of the original opinion, however, are replaced in their entirety by this opinion.

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I. The Proceedings Thus Far 
The original appeal followed a jury award of $ 30 million in compensatory and punitive damages to Larry Wollersheim (Wollersheim), a former member of the Church of Scientology (Scientology).  The complaint alleged [**4]  Scientology intentionally and negligently inflicted severe emotional injury on Wollersheim through certain practices, including "auditing," "disconnect," and "fair game." Since the trial court granted summary adjudication that Scientology is a religion and "auditing" is a religious practice, the trial proceeded under the assumption they were.  In our original opinion we concluded there was substantial evidence to support a finding Scientology had committed the tort of intentional infliction of emotional injury against Wollersheim.  We also found sufficient evidence the "auditing" and other practices in this case were conducted in a coercive environment.  Thus, none of them qualified as "voluntary religious practices" entitled to constitutional protection under the First Amendment religious freedom guarantees.  At the same time, we concluded both the compensatory and punitive damages the jury awarded in this case were excessive. Consequently, we reduced the compensatory damages to $ 500,000 and the punitive damage award to $ 2 million. 
The California Supreme Court denied the petitions for review unanimously. (Oct. 26, 1989.) The United States Supreme Court, however, granted certiorari [**5]  on the punitive damages issue and held this case along with 10 others (see fn. 4, post) awaiting its disposition of the lead case on the constitutionality of punitive damages-- Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S.  [ 113 L.Ed.2d 1, 111 S.Ct. 1032]. After deciding Haslip, the Supreme Court remanded all 11 punitive damage cases it was holding for the lower courts to review in light of Haslip. 
Since the Haslip opinion was limited solely to the issue of the constitutionality of punitive damage awards, our reconsideration of our prior decision likewise is confined to that issue. n2 We first review the procedures and standards California courts apply in deciding the appropriateness and  [*1433]  amount of punitive damage awards and determine whether that process is constitutional under Haslip. We then examine the specific punitive damage award in this case, as reduced by this court, and determine whether it passes constitutional muster. 

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n2 After this court filed its original opinion in the instant case the United States Supreme Court decided Employment Div., One Dept. of Human Res. v. Smith (1990) 494 U.S. 872 [108 L.Ed.876, 110 S.Ct. 1595].  In this decision, the high court altered the constitutional standard for judging whether a state law which impinges on a citizen's free exercise of religion violates the First Amendment. No longer must there be a compelling interest in applying the state law to those whose religion prohibits compliance.  After Smith it is sufficient the law is a valid, neutral law of general applicability and not aimed at a specific religion or at religion in general. "To make an individual's obligation to obey such a law contingent upon the law's coincidence with his religious beliefs, except where the State's interest is 'compelling'--permitting him, by virtue of his beliefs, 'to become a law unto himself,' (citation omitted)--contradicts both constitutional tradition and common sense." ( at p. 885 [ 108 L.Ed. at p. 890, 110 S.Ct. at p. 1603].) 
The California Supreme Court presently has before it the issue whether the religious guarantees of the state Constitution are to fall into line with the Smith decision.  Our state's highest court recently granted review of an appellate decision holding the "compelling state interest analysis still applies under state constitutional law." ( Donahue v. Fair Employment & Housing Com. (1991) 1 Cal.App.4th 387, 401 [2 Cal.Rptr.2d 32], review granted Feb. 27, 1992. See also People v. Woody (1964) 61 Cal.2d 716 [40 Cal.Rptr. 69, 394 P.2d 813] and Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092 [252 Cal.Rptr. 122, 762 P.2d 46], pre-Smith decisions applying compelling interest balancing test to free exercise issues and arguably decided under California Constitution as well as United States Constitution.) 
We need not reenter this particular thicket, however.  To the extent we reached that step of the analysis, this court applied the compelling interest test to its review of the constitutionality of imposing tort liability on Scientology's "fair game," "disconnect," and "auditing" practices.  (See Wollersheim v. Church of Scientology, supra, 212 Cal.App.3d at pp. 887-899.) For the most part, as will be recalled, we found these activities were not constitutionally protected religious practices because Wollersheim was coerced into participating in them. Accordingly, in most instances it was unnecessary to ask the next question--whether the state had a "compelling interest" which overrode the "free exercise" concerns.  Where that question was reached, however, we used the stricter, pre-Smith standard.  Having upheld the constitutionality of the state's tort laws under this tougher standard, it is unnecessary to reconsider whether those laws would survive the lesser standard suggested in Smith. For the same reason, we also need not bother pondering the intriguing question whether the religious guarantees of the state Constitution will continue to impose a compelling interest test on state laws of general application even though the federal Constitution no longer does.

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II. The Process California Uses for Determining and Reviewing Punitive Damages Awards Is Constitutional Under the Recent United States Supreme Court Decision in Pacific Mut. Insur. Co. v. Haslip. 
 This court and other California appellate courts already have ruled this state's procedures for determining punitive damages comply with the "due process" standards enunciated in Haslip. ( Liberty Transport, Inc. v. Harry W. Gorst Co. (1991) 229 Cal.App.3d 417 [280 Cal.Rptr. 159]; Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220 [1 Cal.Rptr.2d 301].) None of these opinions, however, had occasion to consider this question in depth.  Consequently, we examine the Haslip opinion in some detail and the Alabama punitive damages procedures approved in that decision as background for reviewing the punitive damage award the jury levied on Scientology.  As further background for our review, we also  [*1434]  have included an appendix containing a table of appellate opinions in which California courts evaluated punitive damage awards.  This table updates a similar table which [**7]  appears in Devlin v. Kearney Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 393- 396 [202 Cal.Rptr. 204]. 
In Haslip an insurance agent was accredited by at least one other insurance carrier as well as the defendant, Pacific Mutual.  The plaintiffs were employees of a company this agent signed up for a group combined health and life insurance policy.  Pacific only supplied the life insurance portion of this policy and another of this agent's companies provided the health insurance component.  Later the agent embezzled premiums plaintiffs' employer had forwarded to him instead of paying them over to the insurance companies. The policies were cancelled.  So when these plaintiffs became sick they suddenly and unhappily found out they had no health coverage.  ( U.S. at p.  [ 113 L.Ed.2d at p. 11, 111 S.Ct. at p. 1036].) 
The plaintiffs sued the agent and Pacific for fraud.  The other three plaintiffs only received compensatory damages, but Haslip won "general damages" in the amount of $ 1,040,000.  ( U.S. at p.  [ 113 L.Ed.2d at pp. 12-13, 111 S.Ct. at p. 1037].) [**8]  The Supreme Court concluded at least $ 840,000 of this represented punitive damages. ( U.S. at p.  fn. 2 [ 113 L.Ed.2d at pp. 12-13, fn. 2, 111 S.Ct. at p. 1037, fn. 2].) Pacific appealed and the Alabama Supreme Court affirmed, including the punitive damages portion of the award, by a divided vote.  After granting certiorari the United States Supreme Court also affirmed in a majority opinion signed by five justices.  Two justices separately concurred and one dissented.  (The ninth justice did not participate in the decision.) 
In assessing the constitutionality of the punitive damages award in Haslip, the United States Supreme Court traced the long history and important role of punitive damages in Anglo-American law.  On the basis of this historical review, the high court ruled, "So far as we have been able to determine, every state and federal court that has considered the question has ruled that the common-law method for assessing punitive damages does not in itself violate due process.  [Citation omitted.] In view of this consistent history, we cannot say that the common-law method for assessing punitive damages is so inherently unfair [**9]  as to deny due process and be per se unconstitutional." [ at p.  [ 113 L.Ed.2d at p. 19].) 
Having ruled punitive damages awards are constitutional in concept, the Supreme Court considered whether the specific award in the Haslip case was constitutionally acceptable.  The justices set forth the general considerations that are to guide the decision of whether a specific award is constitutional.   [*1435]  "[U]nlimited jury discretion--or unlimited judicial discretion for that matter--in the fixing of punitive damages may invite extreme results that jar one's constitutional sensibilities.  ...  [G]eneral concerns of reasonableness and adequate guidance from the court when the case is tried to a jury properly enter into the constitutional calculus." ( at p.  [ 113 L.Ed.2d at p. 20].) 
 The Supreme Court described several attributes of the Alabama process for determining punitive damage awards and, on that basis, concluded "the award here did not lack objective criteria.  ...  [I]n this case it does not cross the line into the area of constitutional impropriety." ( at p.  [ 113 L.Ed.2d at p. 23].) [**10]  The high court did not, however, hold nor imply the Alabama process was the one and only system which accords due process.  Nor did it suggest any particular attribute of the Alabama process was absolutely essential to constitutionality. n3 All the Supreme Court held was that the Alabama process achieved the constitutional requirement of "reasonableness" and "adequate guidance to the jury." n4 

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n3 "Other than explaining that Alabama's procedure passes constitutional muster, Haslip offers little guidance as to what would be necessary to render a different system unconstitutional." ( George v. International Society for Krishna Consciousness (1992) 3 Cal.App.4th 52, 119 (4 Cal.Rptr.2d 473, 515.)

n4 It is clear we are not alone in construing Haslip to allow a variety of punitive damage systems which do not necessarily mimic the Alabama system under review in that particular case.  According to our research, four of the eleven cases the Supreme Court remanded after Haslip have been decided thus far and another sixteen other cases (other than those decided by California courts) have considered the constitutionality of their state punitive damages processes under the Haslip opinion. 
In all four remanded cases the courts upheld the state punitive damages system under review and affirmed the particular award.  Thus, the punitive damages procedures of Alabama, Georgia, and Mississippi as well as California have passed constitutional muster at least at the first level of appeal in these remanded cases.  (Alabama: Southern Life and Health v. Turner (Ala. 1991) 586 So.2d 854; Georgia: Hospital Authority of Gwinnett County v. Jones (1991) 261 Ga. 613 [409 S.E.2d 501]; California: George v. International Society for Krishna Consciousness of California, supra, 3 Cal.App.3d 52; Mississippi: Eichenseer v. Reserve Life Ins. Co. (5th Cir. 1991) 934 F.2d 1377.) Of the 16 other cases evaluating the constitutionality of punitive damages awards under Haslip, 11 upheld the jurisdiction's process and the specific award outright, 2 upheld the process but found the specific award excessive (as we do in the instant case), and 3 found their state's process defective in some way.  In total, in these 16 cases state or federal courts have applied Haslip and approved the punitive damage procedures in 10 states (in addition to California): Alabama (once again): Yamaha Motor Co. Ltd. v. Thornton (Ala. 1991) 579 So.2d 619; Killough v. Jahandarfard (Ala. 1991) 578 So.2d 1041; Braswell v. Conagra, Inc. (11th Cir. 1991) 936 F.2d 1169; Louisiana: Galjour v. General American Tank Car Corp. (E.D.La. 1991) 764 F.Supp. 1093; Minnesota: Bradley v. Hubbard Broadcasting, Inc. (Minn.Ct.App. 1991) 471 N.W.2d 670 [procedure approved although specific award found excessive]; Missouri: Wolf v. Goodyear Tire & Rubber Co. (Mo.Ct.App. 1991) 808 S.W.2d 868; Oregon: Oberg v. Honda Motor Co. (1991) 108 Or.App. 43 [814 P.2d 517]; Pennsylvania: Coyne v. Allstate Insurance Co. (E.D. Pa. 1991) 771 F.Supp. 673; South Carolina: Gamble v. Stevenson (S.C. 1991) 406 S.E.2d 350; Texas: Glasscock v. Armstrong Cork Co. (5th Cir. 1991) 946 F.2d 1085; State Farm Mut. Auto Ins. Co. v. Zubiate (Tex.Ct.App. 1991) 808 S.W.2d 590 [procedure approved although specific award found excessive]; Wisconsin: Heideman v. American Family Ins. Group (1991) 163 Wis.2d 847 [473 N.W.2d 14]; Arkansas: Robertson Oil Co., Inc. v. Phillips Petroleum Co. (W.D. Ark. 1991) 779 F.Supp. 994. 
Several of these courts found procedures constitutional which deviated substantially from the Alabama punitive damage system approved in Haslip. For instance, the Fifth Circuit held the Texas procedure constitutional even though juries and courts only consider three factors--nature of the wrong, degree of culpability, and extent the conduct offends propriety and justice--all of them relate solely to the reprehensibility of the defendant's conduct.  ( Glasscock v. Armstrong Cork Co., supra, 946 F.2d 1085.) The Pennsylvania and Missouri procedures were found to satisfy Haslip even though the jury awards are reviewed for "excessiveness" without any specific, articulated standards.  ( Coyne v. Allstate Insurance Co., supra, 771 F.Supp. 673; Wolf v. Goodyear Tire & Rubber Co., supra, 808 S.W.2d 868.) And, the Oregon procedure was approved even though the state Constitution severely limits the review of jury awards of punitive damages by allowing reversal only when a reviewing court finds a lack of any evidence to support the award.  ( Oberg v. Honda Motor Co., supra, 814 P.2d 517.)

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The Supreme Court found several features of the Alabama process worthy of mention.  We consider each and consider how the Supreme Court's observations about Alabama criteria and procedures relate to the constitutionality of California's punitive damages process. 
A. The Adequacy of Jury Instructions 
 The Supreme Court observed the Alabama jury instructions adequately described the purposes of punitive damages as punishing the defendant and deterring "the defendant and others from doing such wrong in the future," rather than compensating the plaintiff.  The instructions gave the jury "significant discretion" in determining punitive damages, but that discretion was limited to the amount needed to advance the "state policy concerns" of "deterrence and retribution." Moreover, the degree of discretion allowed "is no greater than that pursued in many familiar areas of the law." (The Supreme Court listed several examples including "reasonable care," "due diligence," and "appropriate compensation for pain and suffering or mental anguish.") ( at p.  [ 113 L.Ed.2d at p. 21, 111 S.Ct. at p. 1044].) 
We note in the instant case the trial [**12]  court gave the standard instructions on punitive damages which reflect California law on the same basic subjects as the Alabama instructions endorsed in Haslip. Indeed the California instructions given here were, if anything, more extensive and more precise than the Alabama instructions described in Haslip. Not only did these instructions describe the purposes of punitive damages and distinguish them from compensatory damages, they also informed the jury the amount of damages awarded should bear a reasonable relation to the injury the plaintiff sustained and to the defendant's financial condition.  [*1437]  
 Scientology does not claim the trial court failed to give the instructions defining the purposes and scope of punitive damages which the Supreme Court found important in Haslip. Instead Scientology complains the trial court failed to give an instruction appellant's counsel requested which it now claims was meant to implement the corporate responsibility provision found in Civil Code section 3294, subdivision (b).  This provision limits punitive damages against corporations to acts an officer, director or managing agent ordered, ratified or knew about before they [**13]  happened. n5 

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n5 Civil Code section 3294, subdivision (b) reads in pertinent part as follows: 
"With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud or malice must be on the part of an officer, director or managing agent of the corporation."

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Scientology's requested instruction, however, did not address the "corporate responsibility" issue covered in Civil Code section 3294, subdivision (b).  The request did not mention the clause "officer, director, or managing agent" nor suggest Scientology's liability for punitive damages was limited to actions this class of agent personally did or authorized, ratified, or knew of in advance.  Instead the proposed instruction advised jurors they "may not award punitive damages against the defendant Church for the intentional oppressive or malicious acts of its members, employees, or agents, unless you find that the defendant Church of Scientology directed, authorized or ratified such intentional [**14]  oppressive acts." As proffered, the requested instruction in no way even hinted only an officer, director or managing agent" could make the "defendant Church of Scientology" liable for punitive damages. 
It is not absolutely clear from the record why Scientology did not request a "corporate responsibility" instruction.  Perhaps it was because appellant wanted the jurors to think of it as a religious "church" and not a secular "corporation." In any event, the "corporate responsibility" instruction was not relevant to the issues framed by the pleadings or raised in the evidence. Scientology did not base its defense on a contention Wollersheim's alleged injuries were inflicted by out of control lower level employees.  Instead its pleadings and evidence emphasized the harmful acts, if any, were constitutionally protected religious practices.  The evidence was undisputed the "auditing," "fair game," and "disconnect" actions taken in regard to Wollersheim were official practices of the Church of Scientology promulgated by its leaders, not some ad hoc aberrational acts of individual employees. Thus, it is not surprising Scientology did not bother to request an instruction it was only liable [**15]  in punitive damages for what its "officers, directors, or managing agents" personally, authorized or ratified. 
By failing to tender a "corporate responsibility" instruction, Scientology is foreclosed under California law from claiming the trial court committed  [*1438]  "reversible error" when it neglected to give such an instruction.  ( Agarwal v. Johnson (1979) 25 Cal.3d 932, 951 [160 Cal.Rptr. 141 [603 P.2d 58][when defendant corporation failed to tender and the trial court failed to give a "corporate responsibility" instruction in a punitive damage case] the court concluded "[the defendants] have waived their right to complain that a qualified instruction distinguishing between ... vicarious liability for compensatory and for punitive damages should have been given.") 
 Despite having itself failed to propose a "corporate responsibility" instruction during trial Scientology now claims it was denied federal "due process" under Haslip because the trial court also failed to give such an instruction.  That the court's failure to instruct on "corporate responsibility" is not a constitutional violation under Haslip [**16]  is apparent from the facts of that case.  There the United States Supreme Court held a punitive damage award against an insurance company afforded constitutional due process even though the award was imposed for liability for punitive damages was predicated solely respondeat superior. Indeed Alabama law, specifically found to satisfy due process in Haslip, permits punitive damages to be assessed against corporations without any proof the senior corporate officials authorized or ratified the offensive conduct.  ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p.  [ 113 L.Ed.2d at pp. 17-18, 111 S.Ct. at p. 1041].) Thus, it is apparent federal due process does not prohibit the imposition of punitive damages on a corporation just because the corporation's leadership remains ignorant of the egregious acts of its lesser employees or agents.  It is California law--not constitutional due process--which limits corporate liability for punitive damages to acts done, authorized, or ratified by senior corporate officials. Accordingly, the consequences for failing to give a "corporate responsibility"  [**17]  instruction likewise are determined under California law. 
Scientology offers a further argument the failure to give this "corporate responsibility" instruction rises to the level of a federal "due process" violation.  This argument likewise is without merit.  It treats language in Haslip pointing out the "jury was adequately instructed" in that case as if the Supreme Court had held the failure to give any possibly relevant instruction in a punitive damages case automatically violates the federal "due process" clause.  For reasons explained above, while it may have been preferable for the trial court to have given a "corporate responsibility" instruction in the instant case, Scientology waived its right to complain by failing to request the instruction.  Moreover, under the pleadings and evidence in this case "corporate responsibility" was not a significant issue.  Consequently, the "jury was adequately instructed." The instructions the Supreme Court mentioned in Haslip were those the Alabama court delivered advising  [*1439]  the jurors on the purposes of punitive damages and the criteria they were to apply in fixing the amount of those damages.  The trial court in the instant [**18]  case gave instructions covering those same topics.  That is the most Haslip and the "due process" clause require. 
 Finally, after reviewing the total evidence offered in this trial and the actual issues involved, we find that even if it were error to fail to give a "corporate responsibility" instruction that error was not prejudicial.  ( Henderson v. Harnischfeger Corp. (1974) 12 Cal.3d 663, 670 [117 Cal.Rptr. 1, 527 P.2d 353]; Williams v. Carl Karcher Enterprises, Inc. (1986) 182 Cal.App.3d 479, 489 [117 Cal.Rptr. 1, 527 P.2d 353]; see 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, §  352, pp. 355-356.) There is nothing to suggest the giving of these instructions would have substantially enhanced the chances Scientology would have prevailed. 
B. Evidence of Defendant's Financial Condition. 
 The Supreme Court noted with apparent approval Alabama law excludes any evidence of a defendant's wealth even in punitive damages cases.  Thus, "the fact finder must be guided by more than the defendant's net worth. Alabama plaintiffs do not enjoy a windfall because [**19]  they have the good fortune to have a defendant with a deep pocket." ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p.  [ 113 L.Ed.2d at p. 22].) 
For good reason, Scientology does not claim the California punitive damages process violates due process because it permitted--and now mandates--evidence of a defendant's financial condition in all punitive damages cases.  ( Adams v. Murakami (1991) 54 Cal.3d 105 [284 Cal.Rptr. 318, 813 P.2d 1348].) As our Supreme Court has pointed out, the defendant's financial condition is an essential limitation on the jury's discretion in this state.  The jury is instructed it may only award punitive damages which, taking account of the defendant's financial condition, are enough to punish and deter but not so high as to impair the defendant's ability to continue functioning.  We do not read the United States Supreme Court opinion in Haslip to suggest a state punitive damages procedure which admits evidence of financial condition for this purpose and with these limiting instructions denies due [**20]  process to defendants. 
C. Review of Punitive Damages at the Trial Court Level. 
In Alabama, the posttrial review of punitive damages awards at the trial court level requires the trial judge to scrutinize the amount of those awards for possible "excessiveness." The criteria the Alabama Supreme Court has  [*1440]  set forth to guide this trial court review include "culpability of the defendant's conduct," "desirability of discouraging others from similar conduct," and "impact on the parties." 
 California law likewise provides for trial court review of the possible excessiveness of punitive damage awards.  The criteria guiding this review, however, are more precise in many ways than those the United States Supreme Court found "meaningful and adequate" in Haslip. As the California Supreme Court listed them in Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910 [148 Cal.Rptr. 389, 582 P.2d 980], and as reemphasized in Adams v. Murakami, supra, 154 Cal.3d 105, these criteria fall in three main categories--first, the relative egregiousness of the defendant's conduct, as measured by the consequences [**21]  of its acts, second, whether the punitive damages award bears a reasonable relationship to the plaintiff's injury, and third, whether the punitive damages award bears a reasonable relationship to the defendant's financial condition--enough to punish and deter the egregious conduct, but not so much as to destroy the defendant. Nearly all of the individual factors the Alabama courts employ are subsumed under one or the other of the main categories the California courts use. 
There is a slight difference between California and Alabama in the procedure required of trial courts after they have completed their review of a punitive damage award. According to Haslip, Alabama requires trial judges to state their findings and reasoning on the record, whether they affirm, modify or reverse the award.  ( U.S. at p.  [ 113 L.Ed.2d at pp. 20-21, 111 S.Ct. at p. 1044].) California has not had such a requirement, although trial judges frequently do so on their own. 
 Scientology complains the trial judge in this case denied its lengthy new trial and judgment non obstante veredicto (JNOV) motions by filing a simple minute order noting those motions [**22]  were "denied." Among other things, these posttrial motions raised punitive damage issues. Scientology seizes upon language in Haslip to the effect Alabama trial courts reflect "on the record" the reasons for refusing to interfere with a jury's punitive damage award. It interprets this to be a federal "due process" requirement and argues the trial court's failure to give a detailed account of its reasoning "on the record" denied Scientology its constitutional right. 
 We first observe that at no place in Haslip did the Supreme Court suggest a state punitive damages procedure had to match the Alabama procedure in each and every aspect if it were to satisfy federal due process requirements.  (See fn. 3, ante.) It neither said nor implied it was essential every state require trial judges to state their reasons on the record.  [*1441]  
Indeed, the Supreme Court seemed to place far more importance on the existence of a set of criteria the trial court is to apply in judging whether the jury's verdict was excessive than whether the trial court places its reasoning on the record.  After mentioning the fact Alabama requires judges to reflect their reasons on the record and [**23]  then listing the criteria they are to apply in evaluating punitive damage awards, the Supreme Court emphasizes: "[This] test ensures meaningful and adequate review by the trial court whenever a jury has fixed the punitive damages." ( U.S. at p.  [ 113 L.Ed.2d at p. 21, 111 S.Ct. at p. 1044], italics added.) 
 In the instant case, the trial court patiently entertained a lengthy hearing on the new trial and JNOV motions which took several hours spread over several days.  The judge fully heard Scientology's presentation challenging the punitive damages award. These arguments addressed the criteria California law establishes for evaluating the propriety and amount of these awards.  A full transcript exists of the arguments made and the evidence relevant to evaluating the propriety and amount of punitive damages. n6 Thus the record is complete and sufficient for this court on appeal to review the jury verdict on punitive damages and the trial court's disposition of Scientology's claim those damages were excessive. The fact the trial court found it unnecessary to set forth its reasoning on the record only means the court deviated in this one [**24]  detail from the procedure Alabama apparently follows.  It does not mean Scientology was denied a "meaningful and adequate review" of the punitive damage award by the trial court or that it was denied due process. 

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n6 The posttrial hearing assumes special importance in Alabama.  Unlike California, some of the facts essential to meaningful review of the punitive damages award do not appear in the trial record.  In particular, Alabama law does not permit either party to introduce any evidence of the defendant's financial condition at the trial itself.  In contrast, California has always allowed such evidence and now requires it.  ( Adams v. Murakami, supra, 54 Cal.3d 105.) Trial courts in Alabama accept this sort of evidence for the first time at the posttrial hearing on excessiveness of the punitive damage award. Thus, it is only the evidence introduced at this posttrial hearing which allows Alabama's trial and appellate courts to conduct a "meaningful review" of whether the damages awarded bear a reasonable relation to defendant's conduct and financial resources.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - - [**25]  
The record produced in the trial court was more than ample for purposes of that court's consideration of the punitive damage award and for appellate review by this court.  We would have gained little had it reflected the trial court's reasoning.  Indeed, that record was sufficient for this court to determine the punitive damages award should be reduced.  (See p. 1432, ante.) 
The trial court here did not violate California law by failing to place its reasoning on the record nor does California law run afoul of the Constitution  [*1442]  by failing to require this particular procedural step.  This is not to say it would not be a preferable practice for trial judges to do so.  It is merely to conclude the failure to make a record of the reasoning behind the trial court's ruling does not deny the parties of due process under the United States Constitution.  Nor does it constitute reversible error under California law. 
 There is empirical evidence trial court review in California is "meaningful and adequate" which was not available or at least not mentioned by the Supreme Court in its evaluation of the Alabama process.  The high court found trial court review of punitive damages [**26]  in Alabama to be "meaningful and adequate" without citing any specific examples where trial courts in that state actually had reversed or reduced punitive damages awards.  (The high court, on the other hand, specifically mentioned cases where such awards had been reduced at the appellate level.) ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p.  [ 113 L.Ed.2d at pp. 31-33, 111 S.Ct. at p. 1053].) By way of contrast, the tables incorporated in Devlin v. Kearny Mesa AMC/Jeep Renault, Inc., supra, 155 Cal.App.3d 381 and the appendix to this opinion document numerous cases in which California trial courts have reduced punitive damages awards, a fact which reinforces our finding trial court review of punitive damages awards in California is at least as "meaningful and adequate" as is true in Alabama. 
This conclusion is bolstered further by a recent Rand Corporation study of posttrial reductions of jury awards in selected California and Illinois courts. n7 (Shanley and Peterson, Posttrial Adjustments to Jury Awards (Rand Institute for Civil Justice [**27]  (1987).) The study revealed verdicts which include punitive damage awards are reduced over twice as much on average as those limited to compensatory damages--by 43 percent in those with punitive damages versus 18 percent in those without.  ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p.  [ 113 L.Ed.2d at pp. 38-39].) n8 Furthermore, courts reduce damage awards far more drastically than they are through posttrial  [*1443]  settlements--by 54 percent on average compared to 33 percent.  ( at pp.  [ 113 L.Ed.2d at pp. 43-46].) The study further found "[m]ore of those cases [in which courts reduced damage awards] resulted from motions to the trial court than from the appeals process." ( Id., 113 L.Ed.2d at p. 45.) Thus, this empirical data supplies strong evidence California trial courts afford "meaningful and adequate" review of punitive damages awards in practice as well as theory. 

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n7 The study was based on data from three jurisdictions--Cook County, Illinois, the City and County of San Francisco, California, and the ring of counties surrounding it, and "all California counties greater than 150,000 in population but outside the largest metropolitan areas." (Shanley & Peterson, Posttrial Adjustments to Jury Awards, (Rand Institute for Civil Justice, 1987) at p. 3., fn. 15.) (Despite their size, the latter category included cities as large as Sacramento and Bakersfield.) Although the study included a non-California jurisdiction, the authors report "[r]esults appear to vary little across the three locations in the study." ( at p. ix.) Consequently, the findings discussed in this opinion represent valid evidence of what is happening in this state. [**28]  

n8 In the 165 cases where punitive damages constituted a part of the total award, final payments were only .57 of the total.  In contrast, when only compensatory damages were involved, final payments were .82 of the total.  ...  This result is not just a function of the larger award size of punitive damage cases, but holds for all cases with verdicts greater than $ 100,000.  ... [F]or cases with verdicts between $ 100,000 and $ 999,000, those with punitive damages paid an average proportion of .61 [a reduction of 39 percent], while those without such damages paid an average proportion of .86 [a reduction of 14 percent].  For cases exceeding $ 1 million, the difference is about the same.  With punitive damages the payout rate was .55 [a reduction of 45 percent], while without punitive damages the payout was .76 [a reduction of 24 percent]." (Shanley & Peterson, Posttrial Adjustments to Jury Awards, supra, at p. 38.) 
These findings are corroborated by another Rand study which was confined to punitive damage cases in San Francisco, California, and Cook County, Illinois.  That study reported punitive damages were reduced an average 50 percent in the sample it covered from the 1979-1983 period.  (Peterson et al., Punitive Damages: Empirical Findings (Rand Institute for Civil Justice (1987).)

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D. Review of Punitive Damages at Appellate Level. 
The United States Supreme Court also emphasized the Alabama Supreme Court conducted its own review of the possible excessiveness of the punitive damage award. California likewise provides one and sometimes two levels of appellate review of these awards. 
By the time of its review of the Haslip award the list of criteria the Alabama high court applied had been refined to include the "relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred," "degree of reprehensibility" and "duration" of that conduct, "defendant's awareness" or "concealment" of the conduct, "existence and frequency of past conduct," "profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss," defendant's "financial position," "all costs of litigation," and "imposition of criminal sanctions" or "other civil awards... for the same conduct ... these also to be taken in mitigation." ( U.S. at p.  [ 113 L.Ed.2d at p. 22, 111 S.Ct. at p. 1045].) [**30]  
 Most but not all of the above criteria are subsumed in the three major categories of criteria California appellate courts as well as trial courts apply in reviewing punitive damages awards.  The United States Supreme Court did not hold or imply that each and every one of the criteria the Alabama Supreme Court now applies is essential to due process.  It merely  [*1444]  held this particular set of criteria was sufficient to satisfy due process, not that another set would fail to do so.  The nation's high court emphasized Alabama's appellate review "ensures that punitive damages awards are not grossly out of proportion to the severity of the offense and have some understandable relationship to compensatory damages .... Alabama plaintiffs do not enjoy a windfall because they have the good fortune to have a defendant with a deep pocket.  ...  [P] The standards provide for a rational relationship in determining whether a particular award is greater than reasonably necessary to punish and deter." ( U.S. at pp.  [ 113 L.Ed.2d at pp. 22-23, 111 S.Ct. at pp. 1045-1046].) 
 Scientology complains the California criteria do not specifically highlight [**31]  two factors it deems important--"impact on innocent third parties," and "punitive damage awards imposed in prior cases for the same conduct." Nothing in Haslip suggests these two particular factors are essential to the constitutionality of a formula for reviewing punitive damage awards.  But it is worthwhile to note both of them can be subsumed under the existing California formula and its overall goal of producing an award that is sufficient to punish and deter harmful conduct but not so severe it destroys the defendant.  Evidence of prior punitive damage awards for the same conduct or the impact on "innocent third parties" both bear on that ultimate question and would be admissible under one or the other of the three major categories. 
 What the United States Supreme Court concluded about the purpose and effect of appellate review of punitive damages awards in Alabama is equally true in California.  Our high court has emphasized and reemphasized both trial and appellate courts should scrutinize these awards to ensure the amount is not beyond that required to punish and deter the offending conduct.  The United States Supreme Court found appellate review in Alabama had "real effect"  [**32]  primarily because it could point to two cases in which the Alabama Supreme Court had reduced punitive damage awards.  A survey of California appellate decisions reveals many reversals and reductions of punitive damages even in cases where the trial court had refused to interfere with the jury's verdict.  (See appen., infra, and Devlin v. Kearny Mesa AMC/Jeep Renault, Inc., supra, 155 Cal.App.3d at pp. 393-396.) 
 Scientology complains about the standard of review this court and other California courts apply under California law--the traditional "passion and prejudice" standard.  Scientology equates California's "passion and prejudice" standard with the Vermont and Mississippi standards which the Haslip opinion noted had warranted expressions of "concern" from individual Justices in other opinions.  ( Pacific Mut. Life Ins. Co. v. Haslip, supra,  [*1445]  U.S. at p. , fn. 10 [113 L.Ed.2d at p. 22, 111 S.Ct. at p. 1045], citing Browning-Ferris Industries v. Kelco Disposal, Inc. (1989) 492 U.S. 257 [106 L.Ed.2d 219, 109 S.Ct. 2909] [**33]  and Bankers Life & Casualty Co. v. Crenshaw (1988) 486 U.S. 71 [100 L.Ed.2d 62, 108 S.Ct. 1645].) 
Setting aside the fact the Haslip court only mentioned the Vermont and Mississippi formulations had raised "concerns" and in no way held they violated due process, Scientology is mixing apples and oranges in comparing California's version of a "passion and prejudice" standard with what exists in these two jurisdictions.  Vermont allows punitive damages to be modified or set aside only if "manifestly and grossly excessive" while Mississippi modifies or sets aside a punitive damages verdict only if the award "evinces passion, bias and prejudice on the part of the jury so as to shock the conscience." 
It is true California uses the rubric of a "presumption the jury acted out of passion and prejudice" to justify setting aside or modifying jury awards of punitive damages. But in reality, as discussed earlier, that standard now stands for a set of specific criteria, detailed jury instructions, and procedures which define "passion and prejudice" in a way which is far more precise and far less subjective than the Vermont and Mississippi [**34]  formulations. n9 Indeed, as highlighted earlier, the California criteria closely parallel--and in some respects are more precise and less subjective--than the Alabama criteria found constitutional in Haslip. We find nothing in Haslip suggesting California's version of a "presumption of passion and prejudice" standard of review is unconstitutional.  (Accord: Las Palmas Associates v. Las Palmas Center, supra, 235 Cal.App.3d 1220.) Accordingly, we have no reservations about applying this standard to the punitive damage award the jury imposed in the instant case. 

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n9 It is interesting but not essential to our decision in this case to note a federal appellate court has held the Mississippi standard of review is constitutional under Haslip despite the expressions of "concern" reflected in that opinion.  Eichenseer v. Reserve Life Ins. Co., supra, 934 F.2d 1377 was one of the other cases the United States Supreme Court was holding at the time it decided Haslip and remanded for reconsideration in the light of Haslip. On remand the Fifth Circuit Court of Appeal evaluated the Mississippi procedures and the specific punitive damage award. The court upheld that award even though it was 500 times compensatory damages and even though Mississippi courts only reverse when an award evinces passion, bias, or prejudice sufficient to "shock the conscience." ( at p. 1386.) "As long as there is some meaningful procedural assurance that the amount of the award is not an impulsive reaction to the wrongful conduct of the defendant, the award survives the procedural protection aspect of the due process analysis.  ..." ( at p. 1385.)

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E. The Preponderance of the Evidence Standard as Applied to Punitive Damages Issues. 
 The United States Supreme Court expressly approved the use of a "preponderance of the evidence" standard in deciding punitive damages  [*1446]  issues.  ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p. , fn. 11 [113 L.Ed.2d at p. 23, 111 S.Ct. at p. 1046].) California law has been amended to require the higher standard of "clear and convincing" evidence.  (Civ. Code, §  3294, subd. (a).) However, at the time of the trial in the instant case the standard was still "preponderance of the evidence." Yet, as the nation's high court held, "the lesser standard prevailing in Alabama--'reasonably satisfied from the evidence'--when buttressed, as it is, by the procedural and substantive protections outlined above is constitutionally sufficient." ( Pacific Mut. Life Ins. Co. v. Haslip, supra, U.S. at p. , fn. 11 [113 L.Ed.2d at p. 23, 111 S.Ct. at p. 1046.) For reasons expressed above, California law supplies the same "buttress"  [**36]  of procedural and substantive protections, and did so at the time the instant case was tried.  Accordingly, the use of a "preponderance of the evidence standard" in this case was constitutionally sufficient under Haslip. 
III. Applying California's Standards to This Case We Conclude the Punitive Damages Award Was Excessive and Must Be Reduced or Retried. 
Having determined California punitive damages law is constitutional, we now apply that law to the punitive damages award in this case.  We first review the guiding principles of California law on this subject, most of which have been mentioned in the course of the constitutional discussion. 
A. Applying the California Criteria. 
 "It is well established that a reviewing court should examine punitive damages and, where appropriate, modify the amount in order to do justice." ( Gerard v. Ross (1988) 204 Cal.App.3d 968, 980 [251 Cal.Rptr. 604]; Allard v. Church of Scientology (1976) 58 Cal.App.3d 439, 463 [129 Cal.Rptr. 797].) In reviewing a punitive damages award, the appellate court applies a standard similar to that used in reviewing [**37]  compensatory damages, i.e., whether, after reviewing the entire record in the light most favorable to the judgment, the award was the result of passion or prejudice. (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 64 [118 Cal.Rptr. 184, 529 P.2d 608, 65 A.L.R.3d 878]; Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at p. 388.) However, as discussed earlier the test here is more refined, employing three factors to evaluate the propriety of the award. 
The first factor is the degree of reprehensibility of the defendant's conduct.  ( Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389, 582 P.2d 980].) "[C]learly, different acts may be of varying  [*1447]  degrees of reprehensibility, and the more reprehensible the act, the greater the appropriate punishment, assuming all other factors are equal." (Ibid.) 
The second factor is the relationship between the amount of the award and the actual harm suffered.  (; Seeley v. Seymour (1987) 190 Cal.App.3d 844, 867 [237 Cal.Rptr. 282].) [**38]  This analysis ordinarily focuses upon the ratio of compensatory damages to punitive damages; the greater the disparity between the two awards, the more likely the punitive damages award is suspect.  ( Seeley v. Seymour, supra, 190 Cal.App.3d at p. 867; see Little v. Stuyvesant Life Ins. Co. (1977) 67 Cal.App.3d 451, 469- 470 [136 Cal.Rptr. 653].) 
Finally, a reviewing court will consider the relationship of the punitive damages to the defendant's financial condition. ( Adams v. Murakami, supra, 54 Cal.3d 105; Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928; Devlin v. Kearney Mesa AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at p. 390.) In applying this factor courts must strike a proper balance between inadequate and excessive punitive damage awards.  "While the function of punitive damages will not be served if the wealth of the defendant allows him to absorb the award with little or no discomfort, the function also [**39]  will not be served by an award which is larger than necessary to properly punish and deter." ( Devlin v. Kearney Mesa AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at p. 391.) 
 In this case, we need not go beyond the third factor--the ratio between punitive damages and the defendant's financial condition. The evidence admitted at trial supported the finding the appellant church had a net worth of $ 16 million at the time of trial. Accepting these figures as true, the punitive damages award was 150 percent of appellant's net worth. Under prevailing standards established in prior appellate cases, this ratio is clearly excessive. ( Seeley v. Seymour, supra, 190 Cal.App.3d at p. 869 [punitive damages reversed; award was 200 percent of defendant's net worth]; Burnett v. National Enquirer, Inc. (1983) 144 Cal.App.3d 991, 1012 [193 Cal.Rptr. 206, 49 A.L.R.4th 1125] [punitive damages reduced; initial award was 35 percent of defendant's net worth]; Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 824 [157 Cal.Rptr. 482, 598 P.2d 452] [**40]  [punitive damages reversed; award was 58 percent of defendant's net income]; Allard v. Church of Scientology, supra, 58 Cal.App.3d at pp. 445-446, 453 [punitive damages reversed; award was 40 percent of defendant's net worth]; compare Devlin v. Kearney AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at pp. 391-392 [punitive damages affirmed where award was 17.5 percent of defendant's net worth]; Schomer v. Smidt (1980) 113 Cal.App.3d 828, 836- 837 [170 Cal.Rptr. 662] [punitive damages affirmed; award was 10 percent of defendant's net worth]; Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co.  [*1448]  (1987) 189 Cal.App.3d 1072, 1100 [234 Cal.Rptr. 835] [punitive damages affirmed; award was 7.2 percent of defendant's net income].) Accordingly, we reverse the punitive damage award unless the plaintiff accepts a remittitur of that judgment to $ 2 million. 
B. It Is Both Proper and Constitutional to Reduce Rather Than Reverse the Punitive Damage Award in This Case. 
 Scientology questions a court's [**41]  authority to reduce a punitive damages award even under a remittitur where it has concluded the award was excessive under a "presumption of passion and prejudice" standard. According to Scientology, we should be required to reverse the entire punitive damages judgment unconditionally. 
Scientology relies for this proposition on a single decision of the United States Supreme Court, Minneapolis, etc. Ry. v. Moquin (1931) 283 U.S. 520, 521 [75 L.Ed. 1243, 1244, 51 S.Ct. 501]. There are several grounds on which Moquin--and its holding that "no verdict can ... stand which is found to be in any degree the result of appeals to passion and prejudice"--could be distinguished.  However, that is not necessary since Moquin is in no sense binding on this or any other California court.  Moquin was not announcing a rule of federal due process to guide litigation in state courts.  Rather this case arose in a federal action tried in state court.  It sets forth a rule of federal law and is limited in its application to federal cases.  Indeed, the United States Supreme Court was careful to highlight the rule it was announcing  [**42]  had nothing to do with the rules Minnesota courts apply in state litigation.  Accordingly, there is no merit to Scientology's claim Moquin supersedes the many California Supreme Court and Court of Appeal cases which have reduced punitive damage awards rather than setting them aside after finding those awards were excessive and thus "presumed to be the product of passion and prejudice." (See, e.g., Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d 910; Gerard v. Ross, supra, 204 Cal.App.3d.968, 980; Allard v. Church of Scientology, supra, 58 Cal.App.3d at p. 453.) See also other appellate cases in which punitive awards were reduced rather than set aside in the appendix to this case and the earlier chart in Devlin v. Kearney AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d 381.) 
C. Scientology Is Not Exempt From Punitive Damages for Acts, Such as Those Involved in This Case, Which Are Not Constitutionally Protected Religious Practices. 
 In a final challenge, Scientology claims the First [**43]  Amendment bars the imposition of punitive damages on religious organizations for their  [*1449]  "religious expressions" or, at a minimum, the First Amendment in combination with the due process clause requires closer scrutiny of any punitive damage award than would be true for other persons or entities.  To support these arguments, Scientology cites cases actually involving freedom of speech or press not freedom of religion but which it claims "express reservations" about the use of punitive damages which might inhibit First Amendment activity (i.e., Gertz v. Robert Welch, Inc. (1974) 418 U.S. 323 [41 L.Ed.2d 789, 94 S.Ct. 2997]; Electrical Workers v. Foust (1979) 442 U.S. 42 [60 L.Ed.2d 698, 99 S.Ct. 2121].) Notably, several opinions, including one cited by Scientology, uphold punitive damage awards in private defamation actions.  ( Gertz v. Robert Welch, Inc., supra, 418 U.S. 323; Dun & Bradstreet v. Greenmoss Builders (1985) 472 U.S. 749 [86 L.Ed.2d 593, 105 S.Ct. 2939]; [**44]  Curtis Publishing Co. v. Butts (1967) 388 U.S. 130 [18 L.Ed.2d 1094, 87 S.Ct. 1975].) 
The first of Scientology's arguments ignores the fact this court found the patterns of activities which justified punitive damages in this case were either found not to qualify as "religious expression" at all (i.e., "fair game") ( Wollersheim v. Church of Scientology, supra, 212 Cal.App.3d at pp. 891-899) or were found not to be constitutionally protected because forced on participants like Wollersheim through emotional, economic and physical coercion (i.e., "auditing," "disconnect.") (Ibid.) Thus, the imposition of punitive damages for this conduct does not impinge on constitutionally protected religious expression. It only punishes and deters reprehensible activities which visit serious harm on others in society.  Under California law, punitive damages could be imposed on other individuals and entities which engaged in this conduct. Therefore, such damages can be imposed on those who claim to have done these constitutionally unprotected actions out of religious motivation. ( Employment Div. Dept. of Human Res. v. Smith, supra, 494 U.S. 872.) [**45]  
The "heightened scrutiny" argument merely resurrects the contention and many of the authorities Scientology marshalled in support of its earlier position the court must closely scrutinize liability claims based on actions which may constitute "religious expression." Once again, the cases cited involve freedom of speech not free exercise of religion (i.e., Young v. American Mini Theatres (1976) 427 U.S. 50 [49 L.Ed.2d 210, 96 S.Ct. 2440]; New York Times Co. v. United States (1971) 403 U.S. 713 [29 L.Ed.2d 822, 91 S.Ct. 2140]; Speiser v. Randall (1958) 357 U.S. 513 [2 L.Ed.2d 1460, 78 S.Ct. 1332].) Moreover, these cases focus on the process the court uses in determining whether the speech involved qualifies for constitutional protection at all, not whether it warrants a punitive damage award. 
Nonetheless, setting these problems aside, the fundamental problem with Scientology's argument is that we already have applied this "heightened  [*1450]  scrutiny" to the activities for which Scientology claims  [**46]  constitutional protection. We found those activities did not qualify as "voluntary religious expression" or in some instances did not qualify as "religious expression" at all.  (See Wollersheim v. Church of Scientology, supra, 212 Cal.App.3d at pp. 891- 899.) We already subjected these activities to "heightened scrutiny" and found them to lack constitutional protection under the free exercise of religion clause.  Consequently, there is no reason to subject them to another round of "heightened scrutiny" in order to determine whether they are immune from punitive damages. The reason for "heightened scrutiny" of the punitive damage award evaporated with the finding the acts themselves were not constitutionally protected. 
Alternatively, even if we follow Scientology's request and subject the punitive damage award in this case to "heightened scrutiny" we arrive at the same conclusion as when we subjected the acts themselves to "heightened scrutiny." There is a compelling state interest in punishing and deterring this constitutionally unprotected, harmful conduct just as there is a compelling state interest in compensating the victims. 
Disposition [**47]  
The judgment is reversed as to the cause of action for negligent infliction of emotional injury.  The judgment as to the cause of action for intentional infliction of emotional injury is affirmed with the exception the compensatory damage award and the punitive damage award are modified to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million.  Each party to bear its own costs on appeal. 
Lillie, P. J., and Woods Fred, J., concurred.  [*1451]  
			RELATIONSHIP	
			OF PUNITIVE	TRIAL COURT	
	COMPENSA-	ORIGINAL	DAMAGES TO	RULING ON	
	TORY	PUNITIVE	WEALTH OF	NEW TRIAL	
CASE	DAMAGES	DAMAGES	DEFENDANT	MOTION	
	
Nelson v.	$ 450,000	$ 1.5 mil	No wealth	
Gaunt (1981)			data	
125 Cal.App.3d	
623	
	
Chodos v.	$ 5,146.71	$ 200,000	.08% net	Denied	
Insurance			profit	
Co. of N.			.01% net	
America			worth	
(1981)	
126 Cal.App.	
3d 86	
	
Betts v.	$ 500,000	$ 3 Mil.	Less than	Granted	
Allstate	against	against	one-half	(Unless joint	
Ins. Co.	D1	D1	week's	and several	
(1984)	$ 500,000		earnings	compensatory	
154 Cal.App.	against			remitted to	
3d 688	D1 and D2			$ 50,000.)	
	
Goshgarian	$ 714.29	$ 15,000	10.7% net	
v. George			worth	
(1984)	
161 Cal.App.	
3d 1214	
	
Hobbs v.	$ 96,000	$ 220,000	1% net	Denied	
Bateman	against	against	worth	
Eichler,	D1 and	D1	
Hill,	D2	
Richards,	
Inc. (1985)	
164 Cal.App.	
3d 174	
	
Sprague v.	$ 100,000	$ 5 Mil.	No wealth	Denied	
Equifax,			data	(Conditional)	
Inc. (1985)				upon reduction	
166 Cal.App.				in punitives	
3d 1012				to $ 1 Mil.)	
	
Greenfield	$ 350,000	$ 400,000	D2 earned	Granted	
v. Spectrum	against D1	against	$ 2,000/mo.	(Unless com-	
Investment	and D2	D1	and owned	pensatory re-	
Corp. (1985)		$ 42,500	automobile	duced to	
174 Cal.App.		against		$ 150,000; pun-	
3d 111		D2		itives against	
				D1 reduced to	
				$ 200,000; pun-	
				itives against	
				D2 reduced to 	
				$ 15,000.)	
	
West v.	$ 500,000	$ 10 Mil.	.44% net	Granted	
Johnson &			worth	(Unless com-	
Johnson				pensatory	
Products,				damages re-	
Inc. (1985)				mitted to	
174 Cal.App.				$ 100,000 and	
3d 831				punitives to	
				$ 1 Mil.)	
	
Campbell	$ 181,	$ 99,	No wealth	None	
v. McClure	291.13	393.19	data	
(1986) 182		(To be	
Cal.App.3d		reduced	
806		to $ 1,000	
		if paid by	
		deadline.)	
	
Greenup v.	$ 338,000	$ 338,000	No wealth	None	
Rodman			data	
(1986)	
42 Cal.3d	
822	

	

	
	
Barragan	$ 1 Mil.	$ 2 Mil.	No wealth	None	
v. Banco			data	
BCH (1986)	
188 Cal.App.	
3d 283	

	

Downey S&L	$ 152,983.43	$ 5 Mil.	1.9% net	Denied	
Assn. v.			worth; 1%	
Ohio			net worth of	
Casualty Ins.			parent co.	
Co. (1987)			16.7% net	
189 Cal.App.			annual income;	
3d 1072			3.64% net an-	
			nual income of	
			parent co.;	
	
			7.14% average	
			net annual income	
DeTomaso v.	$ 265,000	$ 300,000	No wealth	Granted	
Pan. Am.			data	(Unless remit-	
World				tur of	
Airways, Inc.				$ 358,393	
(1987) 43				accepted.)	
Cal.3d 517	

	
	
Seeley v.	$ 200,000	$ 2.66	200% net	Denied	
Seymour	joint and	Mil.	worth	
(1987)	several	against	
190 Cal.	among 5	D1	
3d 844	defendants	

	
	
Palmer v.	$ 29,500	$ 150,000	No wealth	Denied	
Ted Stevens			data	
Honda	
(1987)	
193 Cal.App.	
3d 530	

	
	
Castaic Clay	$ 529,000	$ 200,000	No wealth	
Manuf. Co. v.			data	
Gus Dedes	
(1987) 195	
Cal.App.3d	
444	

	
	
Gerard v.	$ 8,200	$ 50,000	70% gross	Granted	
Ross (1988)	against	against	income of	unless puni-	
204 Cal.App.	D1 and	D1;	D1, 11%	tives against	
3d 968	D2	$ 100,000	net worth	D1 remitted	
		against	of D1,	to $ 25,000	
		D2	100% net	
			worth of D2	
			111% to 67%	
			annual net	
			income of D2	

	
	
Gagnon v.	$ 70,000	$ 2.5 Mil.	No wealth	
Continential			data	
Casualty	
Co. (1989)	
211 Cal.App.	
3d 1598	

	
	
Wollersheim	$ 5 Mil.	$ 25 Mil.	156% net	Denied	
v. Church			worth	
of	
Scientology	
of California	
(1989)	
212 Cal.App.	
3d 872	

	
	
Dumas v.	$ 47,000	$ 141,000	No wealth	Denied	
Stocker			data	
(1989)	
213 Cal.App.	
3d 1262	

	
	
Storage	$ 1 Mil.	$ 75,000	50% - 37.5%	
Services v.	044,250	against	net worth	
Osterbann	against	D1	of D1	
(1989)	D1 and	$ 150,000	144% - 129%	
214 Cal.App.	D2	against	gross income	
3d 498		D2	of D1	
			No wealth	
			data on D2	

	
	
Fenlon v.	$ 95,000	$ 40,000	No wealth	Denied	
Brock (1989)			data	
216 Cal.App.	
3d1174	

	
	
Armitage v.	$ 25,000	$ 1,000	No wealth	Denied	
Decker (1990)			data	
218 Cal. App.	
3d 887	

	
	
Roberts v.	$ 292,224.09	$ 750,000	No wealth	Denied	
Ford			data	
Aerospace	
&	
Communications	
Corp. (1990)	
224 Cal.App.	
3d 793	

	
	
Pat Rose	About	$ 3 Mil.	No wealth	
Assoc. v.	$ 5.2 Mil.		data	
D. Wesley	
Coombe	
(1990)	
225 Cal.App.	
3d 9	

	
	
Liberty	$ 82,500	D1:	No wealth	Denied	
Transport,	against	$ 40,000	data	
Inc. v.	D1 and	D2:	
Harry W.	D2	$ 400,000	
Gorst	
Company, Inc.	
(1991) 229	
Cal.App.3d	
417	

	
	
Adams v.	$ 274,266	$ 570,000	No wealth	None	
Murakami	(after	(after	data	
(1991)	adjustment	adjustment	
54 Cal.3d	trial ct.)	trial ct.)	
105			

	
	
Las Palmas	$ 1 Mil,	$ 10 Mil.	2% net	Denied	
Assoc. v.	502,393		value	
Las Palmas	
Center	
Assoc. (1991)	
235 Cal.App.	
3d 1220	

	
	
Douglas v.	$ 10,624	$ 187,000	Per defen-	Denied	
Ostermeier			dant,nearly	
(1991)			50% value of	
1 Cal.App.			his business	
4th 729			property. Per	
			plaintiff,	
			"small fraction"	
			of defendant's	
			net worth	

	
	
Washington	$ 10,000	$ 50,000	More than	Denied	
v. Farlice			30% ad-	
(1991)			mitted	
1 Cal.App.			worth	
4th 766	
 [**48]  
			FINAL	
	RELATIONSHIP		RELATIONSHIP	FINAL RATIO	
	OF PUNITIVE	APPELLATE	OF PUNITIVE	OF PUNITIVE	
	DAMAGES TO	COURT	DAMAGES TO	DAMAGES TO	
	WEALTH OF	DECISION	WEALTH OF	COMPENSATORY	
CASE	DEFENDANT	(RE DAMAGES)	DEFENDANT	DAMAGES	
	
Nelson v.	No wealth	Affirmed	No wealth	3.3 to 1	
Gaunt (1981)	data		data	
125 Cal.App.3d	
623	
	
Chodos v.	.08% net	Affirmed	.08% net	40 to 1	
Insurance	profit		profit	
Co. of N.	.01% net		.01% net	
America	worth		worth	
(1981)	
126 Cal.App.	
3d 86	
	
Betts v.	Less than	Affirmed	Less than	5.5 to 1	
Allstate	one-half		one-half	
Ins. Co.	week's		week's	
(1984)	earnings		earnings	
154 Cal.App.	
3d 688	
	
Goshgarian	10.7% net	Affirmed	5.4% net	10.5 to 1	
v. George	worth	Compensatory worth	
(1984)		damages.	
161 Cal.App.		Punitives	
3d 1214		reversed.	
		(Unless remitted to $ 7,500.)	
	
Hobbs v.	1% net	Affirmed	1% net	2.3 to 1	
Bateman	worth		worth	
Eichler,	
Hill,	
Richards,	
Inc. (1985)	
164 Cal.App.	
3d 174	
	
Sprague v.	No wealth	Affirmed	No wealth	10 to 1	
Equifax,	data		data	(If remittitur	
Inc. (1985)				accepted.)	
166 Cal.App.	
3d 1012	
	
Greenfield	D2 earned	Reinstated	D2 earned	D1: 1.1 to 1	
v. Spectrum	$ 2,000/mo.	original	$ 2,000/mo.	D2: .12 to 1	
Investment	and owned	judgements	and owned	
Corp. (1985)	automobile		automobile	
174 Cal.App.	
3d 111	
	
West v.	.04% net	Affirmed	.04% net	10 to 1	
Johnson &	worth		worth	
Johnson	
Products,	
Inc. (1985)	
174 Cal.App.	
3d 831	
	
Campbell	No wealth	Affirmed	No wealth	.55 to 1	
v. McClure	data		data	If deadline 	
(1986) 182				 met, .01	
Cal.App.3d				to 1.) 	
806	
	
Greenup v.	No wealth	Ct. of	No wealth	6.7 to 1	
Rodman	data	Appeal affd.	data	
(1986)		Supreme Ct.	
42 Cal.3d		revd. and	
822		reduced com-	
		pensatory	
		damages	
		to $ 15,000	
		and punitives	
		to $ 100,000. (Unless	
		D files amended complaint.)	
	
Barragan	No wealth	Modified	---	---	
v. Banco	data	compensa-	
		satory damages	
		to $ 500,000;	
		reversed pun-	
		itives and re-	
		manded to deter-	
		mine defendant's	
		net worth	
	
Downey S&L	(Same as	Affirmed	(Same as	33 to 1	
Assn. v.	column 3)		column 3)	
Ohio	
Caualty Ins.	
Co. (1987)	
189 Cal.App.	
3d 1072	
	
DeTomaso v.	No wealth	Ct. of	No wealth	---	
Pan. Am.	data	Appeal affd.	data	
World		and rein-	
Airways, Inc.		stated	
(1987) 43		original	
Cal.3d 517		judgment.	
		Supreme Ct.	
		reversed.	
		(Tort action	
		preempted by Federal	
		Railway Labor Act;	
		breach of warranty; cause of	
		action remanded for new trial.	
	
Seeley v.	200% net	Reversed	---	---	
Seymour	worth	comepnsa-	
(1987)		tory and	
190 Cal.		and puni-	
3d 844		damages as	
		excessive	
	
Palmer v.	No wealth	Puni-	No wealth	---	
Ted Stevens	data	tive	data	
Honda		damages	
(1987)		reversed because	
193 Cal.App.		evidence of	
3d 530		actual damages	
		improperly excuded	
	
Castaic Clay	No wealth	Affirmed	No wealth	.38 to 1	
Manuf. Co. v.	data		data	
Gus Dedes	
(1987) 195	
Cal.App.3d	
444	
	
Gerard v. 	5.6% net	Reduced	5.6% net	D1: 3.1 to 1	
Ross (1988)	worth of D1	punitives	worth of D1	
204 Cal.App.	35% gross	against	35% gross	D2: .12 to 1	
3d 968	income of	D2 to	income of D1	
	of D1	$ 1,000	1% net worth	
	100% net		of D2	
	worth of D2		1.11%-.67% an-	
	111% -		ual net income	
	67% annual		of D2	
	net income of	
	D2	
	
Gagnon v.	No wealth	Compensa-	---	Plaintiff not	
Continental	data	tory and		entitled to	
Casualty		and puni-		compensatory	
Co. (1989)		damages		damages	
211 Cal.App.		reversed	
3d 1598		(Plaintiff not	
		entitled to com-	
		pensatory damages and	
		prejudical error made in	
		jury instructions.)	
	
Wollersheim	156% net	Modified	13% net	4 to 1	
v. Church	worth	punitives	worth	
of		to $ 2 Mil.	
Scientology		and compen-	
of California		satory damages	
(1989)		to $ 500,000	
212 Cal.App.	
3d 872	
	
Dumas v.	No wealth	Reversed	No wealth	---	
Stocker	data	punitives	data	
(1989)		and remanded	
213 Cal.App.		for re-	
3d 1262		determination	
		based on	
		defendant's net	
		wealth	
	
Storage	50% - 37.5%	Reversed	---	---	
Services v.	net worth	punitives	
Osterbaan	of D1	against	
(1989)	144% - 129%	D1 as	
214 Cal.App.	gross income	excessive.	
3d 498	of D1	(If plaintiff	
	No wealth	consents	
	data on D2	to remittur	
		modified to	
		$ 20,000); reverses	
		punitives against	
		D2 in absence of data	
		on net wealth.	
	
Fenlon v.	No wealth	Affirmed	No wealth	.42 to 1	
Brock (1989)	data		data	
216 Cal.App.	
3d 1174	
	
Armitage v.	No wealth	Affirmed	No wealth	.04 to 1	
Decker (1990)	data		data	
218 Cal.App.			(Court infers	
3d 887			from record	
			that $ 1,000	
			not excessive)	
	
Roberts v.	No wealth	Affirmed	No wealth	2.6 to 1	
Ford	data		data	
Aerospace	
&	
Communications	
Corp. (1990)	
224 Cal.App.	
3d 793	
	
Pat Rose	No wealth	Affirmed	No wealth	.58 to 1	
Assoc. v.	data	modified	data	
D. Wesley		judgement	
Coombe		allowing	
(1990)		for offset	
225 Cal.App.		against com-	
3d 9		satory damages	
	
Liberty	No wealth	Affirmed	No wealth	D1: .48 to 1	
Transport,	data		data	D2: 4.8 to 1	
Inc. v.	
Harry W.	
Gorst	
Company, Inc.	
(1991) 229	
Cal.App.3d	
417	
	
Adams v.	No wealth	Ct. of	No wealth	---	
Murakami	data	Appeal affd.	data	
(1991)		Supreme Ct.	
54 Cal.3d		reversed	
105		punitives	
		because of	
		lack of evi-	
		dence of 	
		defendant's	
		wealth	
	
Las Palmas	2% net	Reduced	.4%	4.3 to 1	
Assoc. v.	value	punitives	
Las Palmas		to $ 2 Mil.	
Center		Reduced com-	
Assoc. (1991)		satory to	
235 Cal.App.		to $ 464,786	
3d 1220	
	
Douglas v.	Per defen-	Affirmed	Per defen-	18 to 1	
Ostermeier	dant, nearly		dant, nearly	
(1991)	50% value of		50% value of	
1 Cal.App.	his business		his business	
4th 729	property. Per		property. Per	
	plaintiff,		plaintiff	
	"small 		"small	
	 fraction"		 fraction"	
	of defendant's		of defendant's	
	net worth		net worth	
	
Washington	More that	Affirmed	---	---	
v. Farlice	30% ad-	compensa-	
(1991)	mitted	tory	
1 Cal.App.	worth	damages.	
4th 766		Reversed	
		punitives.	
		(remanded	
		for re-	
		determination	
		on evi-	
		dence of 	
		defendant's	
		financial condition	
 [**49]  

125 of 133 DOCUMENTS 

CHURCH OF SCIENTOLOGY OF CALIFORNIA et al., Plaintiffs and Appellants, v. GERALD ARMSTRONG, Defendant and Respondent 

Nos. B025920, B038975 

Court of Appeal of California, Second Appellate District, Division Three 

232 Cal. App. 3d 1060; 1991 Cal. App. LEXIS 862; 283 Cal. Rptr. 917; 91 Cal. Daily Op. Service 5954; 91 Daily Journal DAR 9172 

July 29, 1991 

SUBSEQUENT HISTORY:
 [**1]  
Appellants' petition for review by the Supreme Court was denied October 17, 1991.  

PRIOR HISTORY:
Superior Court of Los Angeles County, No. C420153, Paul G. Breckenridge, Jr., and Bruce R. Geernaert, Judges.  

DISPOSITION:
The judgment is affirmed.  The order vacating the order sealing the record in the trial court is reversed.  Each party to bear its own costs on this appeal.  

COUNSEL:
Rabinowitz, Boudin, Standard, Krinsky & Lieberman, Eric M. Lieberman, Bowles & Moxon, Timothy Bowles, Kendrick L. Moxon and Michael Lee Hertzberg for Plaintiffs and Appellants.
Gerald Armstrong, in pro. per., Toby L. Plevin, Paul Morantz and Michael L. Walton for Defendant and Respondent.
Lawrence Wollersheim as Amicus Curiae on behalf of Defendant and Respondent.  

JUDGES:
Opinion by Danielson, J., with Klein, P. J., and Hinz, J., concurring.  

OPINIONBY:
DANIELSON 

OPINION:

 [*1063]   [***918]  In consolidated appeals, the Church of Scientology of California (the Church) and Mary Sue Hubbard (hereafter collectively plaintiffs) appeal from an order after appealable judgment unsealing the file in Church of Scientology of California v. Gerald Armstrong (No. B038975), and from the judgment entered in the case (No. B025920).  We vacate the order and affirm the judgment.
Facts [**2]  and Procedural History
In the underlying action, the Church sued Armstrong, a former Church worker, alleging he converted to his own use confidential archive materials and disseminated the same to unauthorized persons, thereby breaching his fiduciary duty to the Church, which sought return of the documents, injunctive relief against further dissemination of the information contained therein, imposition of a constructive trust over the property and any profits Armstrong might realize from his use of the materials, as well as damages.  Mary Sue Hubbard (Hubbard), wife of Church founder L. Ron Hubbard, intervened in the action, alleging causes of action for conversion, invasion of privacy, possession of personal property [sic], and declaratory and injunctive relief.  Armstrong cross-complained, seeking damages for fraud, intentional infliction of emotional distress, libel, breach of contract, and tortious interference with contract.
With respect to the complaint and complaint-in-intervention, the trial court found the Church had made out a prima facie case of conversion, breach of fiduciary duty, and breach of confidence, and that Mary Sue Hubbard had made out a prima facie case  [**3]  of conversion and invasion of privacy. However, the court also determined that Armstrong's conduct was justified, in that he  [*1064]  believed the Church threatened harm to him and his wife, and that he could prevent such harm by taking and keeping the documents.
Following those determinations the court made and entered an order, entitled "Judgment," on August 10, 1984, n1 ordering and adjudging that plaintiffs take nothing by their complaint and complaint-in-intervention, and that defendant Armstrong have and recover his costs and disbursements.  Plaintiffs filed notice of appeal from that order.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 The "judgment" of August 10, 1984, is not included in the present record on appeal.  However, it is included in the petition of plaintiffs and appellants for review by our Supreme Court of our decision (No. B005912) in this case, filed December 18, 1986.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
We dismissed the appeal (No. B005912) because that "judgment" was not a final judgment and was not appealable; Armstrong's cross-complaint had not yet been resolved and [**4]  further judicial action was essential to the final determination of the rights of the parties.  ( Lyon v. Goss (1942) 19 Cal.2d 659, 670 [123 P.2d 11].)
Armstrong's cross-action was then settled and dismissed, the subject documents  [***919]  were ordered returned to the Church, and the record was sealed by Judge Breckenridge pursuant to stipulation of the parties.  The dismissal of Armstrong's cross-action was a final determination of the rights of the parties, and constituted a final judgment, permitting appellate review of the court's interlocutory order captioned "judgment" filed August 10, 1984.
Plaintiffs then timely filed a new notice of appeal (No. B025920), from the orders entitled "Order for Return of Exhibits and Sealed Documents" and "Order Dismissing Action With Prejudice," both filed December 11, 1986, and from the "Judgment" filed August 10, 1984, stating that the appeal was "only from so much of those orders and judgment which denied damages to plaintiff and plaintiff-intervenor" on their complaints.  We rule that the order dismissing action with prejudice is the appealable judgment in No. B025920. n2

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n2 We later granted the motion of appellant Church to deem the record on appeal in No. B005912 to be the record on appeal in No. B025920, which is one of the current consolidated appeals; we also take judicial notice of the entire record in No. B005912.  Consequently the reporters' transcript, the appendices of the parties on appeal, and the parties' briefs in No. B005912 are part of the record on appeal in No. B025920.  The parties have also filed briefs in No. B025928.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
 [**5]  

The Unsealing Order After Judgment (No. B038975)
On October 11, 1988, Bent Corydon, who is a party to other litigation against the Church, moved to unseal the record in this case for the purpose of preparing for trial of his cases.  He sought only private disclosure.  Judge  [*1065]  Breckenridge having retired, Corydon's motion was heard by Judge Geernaert, who made an order dated November 9, 1988, which he clarified by another order dated November 30, 1988, which opened the record not only to Corydon but also to the general public, thus vacating the earlier order made by Judge Breckenridge.
On December 19, 1988, plaintiffs filed a timely notice of appeal from those orders made after appealable judgment. That appeal, No. B038975, is the other of the current consolidated appeals.
On December 22, 1988, Division Four of this court issued an order staying Judge Geernaert's orders (1) unsealing the record and (2) denying a motion for reconsideration of the unsealing order, to the extent those orders unsealed the record as to the general public and permitted review by any person other than Corydon and his counsel of record.  On December 29, 1988, Division Four modified this stay [**6]  order by adding to it a protective order prohibiting Corydon and his counsel from disseminating copies of or disclosing the content of any documents found in the file to the public or any third party, except to the extent necessary to litigate the actions to which Corydon and the Church were parties.  Corydon and his counsel were also required to make good faith efforts in Corydon's litigation to submit under seal any documents they found in the file of this case.
On this appeal, Corydon argues in favor of the trial court's order unsealing the record, as he wishes to be free of the protective orders contained in the modified stay order issued by Division Four.

The "Judgment" of August 10, 1984 (No. B025920)
Armstrong's taking of the documents is undisputed.  The evidence relating to his claim of justification, which was found credible by the trial court, n3 established that Armstrong was a dedicated member of the Church for a period of 12 years.  For 10 of those years, he was a member of the Sea Organization, an elite group of Scientologists working directly under Church founder L. Ron Hubbard.  In 1979, Armstrong became a part of L. Ron Hubbard's "Household Unit" at Gilman  [**7]  Hot Springs, California.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n3 Plaintiffs' contention that certain testimony was impeached by testimony given in other proceedings subsequent to the judgment herein is, of course, not cognizable on this appeal.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
In January 1980, fearing a raid by law enforcement agencies, Hubbard's representatives ordered the shredding of all documents  [***920]  showing that Hubbard controlled Scientology organizations, finances, personnel, or the  [*1066]  property at Gilman Hot Springs.  In a two-week period, approximately one million pages were shredded pursuant to this order.
In the course of the inspection of documents for potential shredding, Armstrong reviewed a box containing Hubbard's early personal letters, diaries, and other writings, which Armstrong preserved.
Thereafter, Armstrong petitioned for permission to conduct research for a planned biography of Hubbard, using his discovery of the boxed materials.  Hubbard approved the petition, and Armstrong, who had discovered and preserved approximately 16 more boxes of similar materials, became [**8]  the senior personal relations officer researcher.  He subsequently moved the materials to the Church of Scientology Cedars Complex in Los Angeles.
Hubbard selected one Omar Garrison to write his biography. Armstrong became Garrison's research assistant, copying documents and delivering the copies to him, traveling with him, arranging interviews for him, and generally consulting with him about the project.  Armstrong also conducted a genealogical study of Hubbard's family, and organized the materials he had gathered into bound volumes for Garrison's use, retaining a copy for the Church archives.  The number of documents obtained by Armstrong ultimately reached 500,000 to 600,000.  Within a week after commencing the biography project, Armstrong and Garrison began to note discrepancies between the information set forth in the documents and representations previously made concerning Hubbard.  Then Armstrong was summoned to Gilman Hot Springs, where he was ordered to undergo a "security check" consisting of interrogation while connected to a crude lie-detector called an E-meter, to determine what materials he had delivered to Garrison and to meet charges that he was speaking out against [**9]  Hubbard.
In November 1981, Armstrong wrote a report urging the importance of ensuring the accuracy of all materials published concerning L. Ron Hubbard, and relating examples of factual inaccuracies in previous publications.  In December 1981, Armstrong and his wife left the Church, surreptitiously moving their possessions from the Church premises because they knew that persons attempting to leave were locked up, subjected to security checks, and forced to sign promissory notes to the Church, confessions of "blackmailable" material obtained from their personal files, and incriminating documents, and they were afraid that they would be forced to do the same.  Before leaving, Armstrong and his wife copied a number of documents which he delivered to Garrison for his work on the Hubbard biography. After leaving, Armstrong cooperated with his successor, assisting him in locating documents and other items.
 [*1067]  Commencing in February 1982, the international Church of Scientology issued a series of "suppressive person declares" in effect labelling Armstrong an enemy of the Church and charging that he had taken an unauthorized leave, was spreading destructive rumors about senior Church [**10]  officials, and secretly planned to leave the Church.  These "declares" subjected Armstrong to the "Fair Game Doctrine" of the Church, which permits a suppressive person to be "tricked, sued or lied to or destroyed . . . [or] deprived of property or injured by any means by any Scientologist.  . . ."
At around the same time, the Church confiscated photographs of Hubbard and others that Armstrong had arranged to sell to one Virgil Wilhite.  When Armstrong met with Church members and demanded the return of the photographs, he was ordered from the Church property and told to get an attorney.  Thereafter, he received a letter from Church counsel threatening him with a lawsuit.  In early May 1982, he became aware of private investigators watching his house and following him.
These events caused Armstrong to fear that his life and that of his wife were in danger, and that he would be made the target of costly and harassing lawsuits.  The author, Garrison, feared that his home would be burglarized by Church personnel  [***921]  seeking to retrieve the documents in his possession.
For these reasons, Armstrong took a number of documents from Garrison and sent them to his attorney.
Following commencement [**11]  of the instant action, Armstrong was pushed or shoved by one of the Church's investigators. In a later incident his elbow was struck by an investigator's vehicle; still later, the same investigator pulled in front of Armstrong on a freeway and slammed on his brakes.  This investigator's vehicle also crossed a lane line as if to push Armstrong off the road.  Plaintiffs' position is that the investigators were hired solely for the purpose of regaining the documents taken by Armstrong.
Trial of the complaint and the complaint-in-intervention was by the court sitting without a jury.  On August 10, 1984, the court made its order, captioned "Judgment," ordering that plaintiff Church and plaintiff in intervention Hubbard, take nothing by their complaint and complaint-in-intervention and that defendant Armstrong have and recover from each of them his costs and disbursements.
 [*1068]  Discussion

The Order Unsealing the Record Must Be Reversed
"Although the California Public Records Act (Gov. Code, § §  6250 [et seq.]) does not apply to court records (see §  6252, subd. (a)), there can be no doubt that court records are public records, available to the public in general . . . unless a [**12]  specific exception makes specific records nonpublic.  (See Craemer v. Superior Court (1968) 265 Cal.App.2d 216, 220-222 [71 Cal.Rptr. 193].) To prevent secrecy in public affairs public policy makes public records and documents available for public inspection by . . . members of the general public . . . .  [Citations.] Statutory exceptions exist [citations], as do judicially created exceptions, generally temporary in nature, exemplified by such cases as Craemer, supra, and Rosato v. Superior Court (1975) 51 Cal.App.3d 190 [124 Cal.Rptr. 427], which involved temporary sealing of grand jury transcripts during criminal trials to protect defendant's right to a fair trial free from adverse advance publicity.  Clearly, a court has inherent power to control its own records to protect rights of litigants before it, but 'where there is no contrary statute or countervailing public policy, the right to inspect public records must be freely allowed.' ( Craemer, supra, 265 Cal.App.2d at p. 222.) The court in Craemer suggested that countervailing public policy [**13]  might come into play as a result of events that tend to undermine individual security, personal liberty, or private property, or that injure the public or the public good." ( Estate of Hearst (1977) 67 Cal.App.3d 777, 782-783 [136 Cal.Rptr. 821].)
"If public court business is conducted in private, it becomes impossible to expose corruption, incompetence, inefficiency, prejudice, and favoritism.  For this reason traditional Anglo-American jurisprudence distrusts secrecy in judicial proceedings and favors a policy of maximum public access to proceedings and records of judicial tribunals.  Thus in Sheppard v. Maxwell (1966) 384 U.S. 333, 350 [16 L.Ed.2d 600, 613, 86 S.Ct. 1507], the court said it is a vital function of the press to subject the judicial process to 'extensive public scrutiny and criticism.' And the California Supreme Court has said, 'it is a first principle that the people have the right to know what is done in their courts.  ( In re Shortridge (1893) 99 Cal. 526, 530 [34 P. 227]) Absent strong countervailing reasons, the public has a legitimate interest and right [**14]  of general access to court records . . . ." ( Estate of Hearst, supra, 67 Cal.App.3d at p. 784.)
We are unaware of any showing made before Judge Breckenridge, other than the parties' stipulation, justifying sealing by the trial court of the record in this case.  However, inasmuch as the parties agreed to the sealing in December of 1986, and no third party intervened at that time to seek  [*1069]  reconsideration or review of the court's order, the order became final long before Corydon intervened in the action almost two years later.
 [***922]  In Greene v. State Farm Fire & Casualty Co. (1990) 224 Cal.App.3d 1583 [274 Cal.Rptr. 736], the court stated at page 1588: "The power of one judge to vacate an order duly made by another judge is limited.  In Fallon v. Superior Court (1939) 33 Cal.App.2d 48, 52 [90 P.2d 858] we issued a writ of prohibition restraining a successor law and motion judge from vacating an order of his predecessor, stating, 'Except in the manner prescribed by statute a superior court may not set aside an order regularly made.' In Sheldon v Superior Court (1941) 42 Cal.App.2d 406, 408 [108 P.2d 945] [**15]  the Court of Appeal, Second Appellate District annulled the order of one probate judge which vacated the previously made order of another probate judge appointing an administrator, stating 'that a valid order made ex parte may be vacated only after a showing of cause for the making of the latter order, that is, that in the making of the original order there was (1) inadvertence, (2) mistake, or (3) fraud.' Even more on point, in Wyoming Pacific Oil Co. v. Preston (1958) 50 Cal.2d 736, 739 [329 P.2d 489] the California Supreme Court reversed the order of a second judge dismissing an action under former [Code of Civil Procedure] section 581a for failure to make service of process within three years, after a first judge had found as a fact that the affected defendant was concealing himself to avoid service of process, quoting Sheldon.  [Citation.]" (Fn. omitted.)
In Greene, supra, Alameda County Superior Court Judge Donald McCullum issued general order 3.30, in which he found it impracticable, futile, or impossible to bring certain cases, including Greene, to trial within the applicable five-year limitation [**16]  period (Code Civ. Proc., §  583, subd. (b)), and extended the deadline for bringing those cases to trial.  Thereafter, Judge Richard Bartalini, to whom the case was assigned for trial, dismissed the action, on motion of the defendants, for failure to bring it to trial within five years.  The court stated, "[D]efendants were, in effect, asking Judge Bartalini to focus on the particular facts of the case and, in light of those facts, to rethink Judge McCullum's order and to see whether he agreed with it.  No statutory authority exists for such a request, and Judge Bartalini erred in granting it.  [Citations.] General order 3.30 could 'not be set aside simply because "the court concludes differently than it has upon its first decision."' [Citations.]" ( Greene v. State Farm Fire & Casualty Co., supra, 224 Cal.App.3d at p. 1589.)
In our case, Corydon intervened in the action between plaintiffs and Armstrong, seeking access to the sealed record for the limited purpose of preparing his own cases involving the Church.  Judge Geernaert, on his own motion, vacated Judge Breckenridge's order sealing the record.  The time had  [*1070]  long since expired for [**17]  reconsideration of Judge Breckenridge's order (Code Civ. Proc., §  1008), or relief therefrom pursuant to Code of Civil Procedure section 473, and the parties had the right to rely on the sealing order.  No showing was made other than that supporting Corydon's motion for access to the record. n4 We hold Judge Geernaert exceeded his authority in vacating Judge Breckenridge's order sealing the record. n5

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n4 Plaintiffs do not challenge Corydon's access to the record, stating in their brief: "Corydon's access must continue to be limited by the conditions imposed thus far by this court's Modified Temporary Stay Order . . . .  He sought access only for use in private litigation against the Church; this court's order, which permits him to use the information he obtains only in said litigations and only after making a good faith effort to have it introduced under seal, is appropriately tailored to meet his asserted need without unnecessarily invading appellants' privacy." Pursuant to the stay order issued by Division Four, Corydon has had the desired access since December 22, 1988, and the issue is moot as to him.  He now seeks in this court more than he sought by his motion in the trial court. [**18]  
n5 Armstrong, who did not participate in the hearing on the motion below, has filed a brief claiming the record should be unsealed because the Church has failed to comply with the terms of its settlement agreement with him.  His declarations to the latter effect are not properly before us on this appeal, as they were not considered by the trial court.  We therefore consider neither the meaning of the portions of the settlement agreement to which he refers nor the question whether the Church has complied therewith.
We are also in receipt of an amicus curiae brief of Lawrence Wollersheim, who urges unsealing of the record based on reasons of public policy. Wollersheim's argument is directed primarily to the documentary exhibits lodged in the underlying case.  Those documents have been returned to the Church in accordance with the terms of the settlement agreement.

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 [***923]  The Record on Appeal Is Not Sealed
There remains a question as to the effect of this appeal upon the sealing order.  The brief filed by the plaintiffs apparently assumes continued effectiveness of the order on appeal.
In Champion v. Superior Court (1988) 201 Cal.App.3d 777 [247 Cal.Rptr. 624], [**19]  the court referred to "an increasing trend by litigants to assume that when the parties stipulate below or convince the trial court of the need for confidentiality, no showing of need must be made in this court." ( Id. at p. 785.) The Champion court determined to the contrary, stating "that a party seeking to lodge or file a document under seal bears a heavy burden of showing the appellate court that the interest of the party in confidentiality outweighs the public policy in favor of open court records.  'The law favors maximum public access to judicial proceedings and court records.  [Citations.] Judicial records are historically and presumptively open to the public and there is an important right of access which should not be closed except for compelling countervailing reasons.' [Citation.]" ( Id. at p. 788.)
Plaintiffs cite Champion, claiming, inter alia, that the appellate court, in granting the motion to seal in that case, stated it was "influenced by the  [*1071]  parties' agreement to the procedure and by the lower court's sealing of its records." The quoted language appears at page 786 of the decision,  [**20]  and refers to the court's initial response to requests to seal received in connection with the petition, opposition, and amici curiae requests.  Later, after receiving "rebuttal briefs, rebuttal declarations, reply to amici, declarations in reply to amici, and supplemental declarations," ( Champion v. Superior Court, supra, 201 Cal.App.3d at p. 786) resulting in a file containing "some sealed documents, some public documents, and many documents not yet designated as sealed or public," (ibid.) most of which blended together discussions of confidential and public materials, as well as requests to seal all of the documents without any explanation of why any of the documents deserved such treatment (ibid.), the court stated, at page 787, "it is apparent that we acted precipitously in granting the earliest, unsupported, requests to seal documents lodged or filed in this matter." While the court did ultimately grant the application to seal the entire file, it did so because of the confusion and undue complication and delay that would be caused by return of the documents for segregation into public and confidential portions.  ( Id. at pp. 789-790.) [**21]  
In our case, plaintiffs have not formally requested sealing of the record on appeal.  They argue, in seeking reversal of Judge Geernaert's order vacating the sealing order made in the trial court, that their pursuit of an action brought primarily for the purpose of protecting their respective privacy interests in the documents converted by Armstrong should not cause disclosure of the very information they sought to protect, through references in the record to such information.  The argument is not limited to any particular portion or portions of the voluminous record of the trial court proceedings.  Should plaintiffs move to seal the record on appeal, we would require a much more particularized showing.

The Defense of Justification Applies to the Causes of Action Alleged Against Armstrong; the Judgment Is Affirmed
"One who invades the right of privacy of another is subject to liability for the resulting harm to the interests of the other." (Rest.2d Torts, §  652A (1).) "The right of privacy is invaded by [para.] (a) unreasonable intrusion upon the seclusion of another, . . . or . . . (c) unreasonable publicity given to the other's private life . . . ." (Rest.2d Torts, §  652 A [**22]  (2).) "The rules on conditional privileges to publish defamatory matter  [***924]  stated in § §  594 to 598A, and on the special privileges stated in § §  611 and 612, apply to the publication of any matter that is an invasion of privacy." (Rest.2d Torts, §  652G.) Under section 594 of the Restatement Second of Torts, "[a]n occasion makes a publication conditionally privileged if the circumstances induce a correct  [*1072]  or reasonable belief that (a) there is information that affects a sufficiently important interest of the publisher, and (b) the recipient's knowledge of the defamatory matter will be of service in the lawful protection of the interest."
"Unless otherwise agreed, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him by the principal or acquired by him during the course of or on account of his agency or in violation of his duties as agent, in competition with or to the injury of the principal, on his own account or on behalf of another, although such information does not relate to the transaction in which he is then employed, unless the information is a matter of general knowledge." (Rest.2d Agency, §  395.) However, "[a]n [**23]  agent is privileged to protect interests of his own which are superior to those of the principal, even though he does so at the expense of the principal's interests or in disobedience to his orders." (Rest.2d Agency, §  418.)
With respect to plaintiffs' causes of action for conversion, "[o]ne is privileged to commit an act which would otherwise be a trespass to or a conversion of a chattel in the possession of another, for the purpose of defending himself or a third person against the other, under the same conditions which would afford a privilege to inflict a harmful or offensive contact upon the other for the same purpose." (Rest.2d Torts, §  261.) "For the purpose of defending his own person, an actor is privileged to make intentional invasions of another's interests or personality when the actor reasonably believes that such other person intends to cause a confinement or a harmful or offensive contact to the actor, of that such invasion of his interests is reasonably probable, and the actor reasonably believes that the apprehended harm can be safely prevented only by the infliction of such harm upon the other.  (See §  63.) A similar privilege is afforded an actor for the protection [**24]  of certain third persons.  (See §  76.)" (Rest.2d Torts, §  261, com. b.)
We find no California case, and the parties cite none, holding that the above described privileges apply in this state. n6 We  [***925]  believe the trial  [*1073]  court appropriately adopted the Restatement approach respecting conditional privilege.  (See 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, §  278, p. 360; Gilmore v. Superior Court (1991) 230 Cal.App.3d 416, 421 [281 Cal.Rptr. 343].)

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n6 No purpose would be served by our engaging in an exhaustive discussion of each of the points asserted by plaintiffs.
For example, plaintiffs misconstrue the decision in Dietemann v. Time, Inc. (9th Cir. 1971) 449 F.2d 245. The Dietemann court stated: "Privilege concepts developed in defamation cases and to some extent in privacy actions in which publication is an essential component are not relevant in determining liability for intrusive conduct antedating publication." ( Id. at pp. 249-250.) The question in that case was whether the defendant, whose employees gained entrance to plaintiff's home by subterfuge and there photographed him and recorded his conversation without his consent, was insulated from liability by the First Amendment because its employees did these acts for the purpose of gathering material for a magazine story which was thereafter published.  The case has nothing to do with the justification asserted herein.  Pearson v. Dodd (D.C. Cir. 1969) 410 F.2d 701 [133 App.D.C. 279], is similarly inapposite.
Discussing the privilege of an agent set forth in section 418 of the Restatement Second of Agency, plaintiffs point to the last sentence of comment b, which reads: "So, too, if the agent acquires things in violation of his duty of loyalty, he is subject to liability for a failure to use them for the benefit of the principal." This language has reference to the initial sentence of the comment: "If the conflict of interests is created through a breach of duty by the agent, the agent is subject to liability if he does not prefer his principal's interests." In the present case, the conflict was created by the plaintiffs, who threatened Armstrong with harm.
Referring to comment b to section 396 of the Restatement Second of Agency, which has to do with the use of customer lists in unfair competition, plaintiffs urge that even if Armstrong was privileged to verbally report to others information he gained in his capacity as an agent of the Church, he would not be privileged under any circumstances to retain or disseminate Church documents.  They also urge, based on cases which are inapposite to that at bench, that the justification defense applies only in emergency situations requiring immediate action to avert danger, or where the agent believes that the principal's documents are the fruits or instrumentalities of crime or fraud.  The court found, on substantial evidence, that Armstrong was under a reasonable apprehension of danger when he delivered the documents to his attorney.  More was not required.

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In its statement of decision the court found Armstrong delivered the documents in question to his attorney ". . . because he believed that his life, physical and mental well-being, as well as that of his wife, were threatened because the organization was aware of what he knew about the life of L. Ron Hubbard, the secret machinations and financial activities of the Church, and his dedication to the truth.  He believed that the only way he could defend himself, physically as well as from harassing lawsuits, was to take from Omar Garrison those materials which would support and corroborate everything that he had been saying within the Church about L. Ron Hubbard and the Church, or refute the allegations made against him in the April 22 Suppressive Person Declare.  He believed that the only way he could be sure that the documents would remain secure for his future use was to send them to his attorneys, and that to protect himself, he had to go public so as to minimize the risk that L. Ron Hubbard, the Church, or any of their agents would do him physical harm." The court's findings were substantially supported by the evidence adduced at trial.

Admission of Documentary and Testimonial  [**26]   Evidence Over Appellants' Objections Did Not Result in a Miscarriage of Justice
Armstrong's defense was predicated on his claim that he reasonably believed the Church intended to cause him harm, and that he could prevent the apprehended harm only by taking the documents, even though the taking resulted in harm to the Church.
 [*1074]  Plaintiffs complain of the trial court's admission of documentary and testimonial evidence concerning the history of Armstrong's relationship with the Church, and certain practices of the Church in relation to its members, as well as its former members and/or critics.  The record is replete with statements of the court's recognition of the limited purpose for which the complained of statements were properly admitted, i.e, to prove Armstrong's state of mind when he converted the Church's documents.  These statements are referenced in Armstrong's briefs, and acknowledged by plaintiffs.
Plaintiffs complain that certain testimony of defense witnesses was irrelevant, as there was no showing that Armstrong was aware of the facts to which the witnesses testified.  The testimony in question was largely corroborative of Armstrong's testimony with respect to [**27]  Church practices affecting his state of mind, and was relevant to the issue of the reasonableness of his belief that the Church intended to cause him harm.
Plaintiffs complain, finally, that the trial court's statement of decision shows the court improperly considered the evidence admitted for the limited purpose of establishing Armstrong's state of mind. We are satisfied the complained of comments reflect the court's findings on the elements of the justification defense asserted by Armstrong, and that neither the admission of the evidence nor the court's comments resulted in a miscarriage of justice.  (Cal. Const., art. VI, §  13.)
Decision
The judgment is affirmed.  The order vacating the order sealing the record in the trial court is reversed.  Each party to bear its own costs on this appeal.  

126 of 133 DOCUMENTS 

LARRY WOLLERSHEIM, Plaintiff and Respondent, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, Defendant and Appellant 

No. B023193 

Court of Appeal of California, Second Appellate District, Division Seven 

212 Cal. App. 3d 872; 1989 Cal. App. LEXIS 723; 260 Cal. Rptr. 331; 66 Cal. Rptr. 2d 1 

July 18, 1989 

SUBSEQUENT HISTORY:
 [**1]  
A petition for a rehearing was denied August 17, 1989, and the petition of respondent and appellant for review by the Supreme Court was denied October 26, 1989.  

PRIOR HISTORY:
Superior Court of Los Angeles County, No. C332827, Ronald E. Swearinger, Judge.  

DISPOSITION:
The judgment is reversed as to the cause of action for negligent infliction of emotional injury.  The judgment as to the cause of action for intentional infliction of emotional injury is modified to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million.  In all other respects the judgment is affirmed.  Each party to bear its own costs on appeal.  

COUNSEL:
Rabinowitz, Boudin, Standard, Krinsky & Lieberman, Eric M. Lieberman, Terry Gross, Lenske, Lenske & Heller, Lawrence E. Heller and Michael Lee Hertzberg for Defendant and Appellant.
Boothby, Ziprick & Yingst, William F. Ziprick, Lee Boothby and James M. Parker as Amici Curiae on behalf of Defendant and Appellant.
Greene, O'Reilly, Broillet, Paul, Simon, McMillan, Wheeler & Rosenberg and Charles B. O'Reilly for Plaintiff and Respondent.  

JUDGES:
Opinion by Johnson, J., with Lillie, P. J., and Woods (Fred), J., concurring.  

OPINIONBY:
JOHNSON 

OPINION:

 [*877]   [***334]   This appeal arises after a jury awarded $  [**2]  30 million in compensatory and punitive damages to a former member of the Church of Scientology of California (the Church or Scientology).  The complaint alleged  [*878]  appellant intentionally and negligently inflicted severe emotional injury on respondent through certain practices, including "auditing," "disconnect," and "fair game." Since the trial court granted summary adjudication that Scientology is a religion and "auditing" is a religious practice, the trial proceeded under the assumption it was.  We conclude there was substantial evidence to support a factual finding the "auditing," as well as other practices in this case, were conducted in a coercive environment.  Thus, none of them qualified as "voluntary religious practices" entitled to constitutional protection under the First Amendment religious freedom guaranties.  At the same time, we conclude both the compensatory and punitive damages the jury awarded in this case are excessive. Consequently, we modify the judgment to reduce both of these damage awards.
 [***335]  Facts and Proceedings Below
Construing the facts most favorably to the judgment, as we must, respondent Larry Wollersheim was an incipient manic-depressive  [**3]  for most of his life.  Appellant Scientology and its leaders were aware of Wollersheim's susceptibility to this mental disorder: What appellant did to him during and after his years in Scientology aggravated Wollersheim's mental condition, driving him into deep depressive episodes and causing him severe mental anguish.  Furthermore, Scientology engaged in a practice of retribution and threatened retribution -- often called "fair game" -- against members who left or otherwise posed a threat to the organization.  This practice coerced Wollersheim into continued participation in the other practices of Scientology which were harming him emotionally.
Wollersheim first became acquainted with Scientology in early 1969 when he attended a lecture at the "Church of Scientology of San Francisco." During the next few months he completed some basic courses at the San Francisco institution.  He then returned to his home state of Wisconsin and did not resume his Scientology training for almost two years.
When Wollersheim did start again it was at the appellant, Church of Scientology of California, headquartered in Los Angeles.  From 1972 through 1979 Wollersheim underwent "auditing" at both the [**4]  basic and advanced levels.  In 1973 he worked several months as a staff member at the Church of Scientology Celebrity Center located in Los Angeles.  In 1974, despite his repeated objections, Wollersheim was persuaded to participate in auditing aboard a ship maintained by Scientology.  While on the ship, Wollersheim was forced to undergo a strenuous regime which began around 6 a.m. and continued until 1 a.m. the next morning.  Further, Wollersheim and others were forced to sleep nine deep in the ship's hold.  During his six weeks under these conditions, Wollersheim lost fifteen pounds.
 [*879]  Wollersheim attempted to escape from the ship because he felt he "was dying and losing [his] mind." His escape was thwarted by Scientology members who seized Wollersheim and held him captive until he agreed to remain and continue with the auditing and other religious practices taking place on the vessel.  One of the psychiatric witnesses testified Wollersheim's experience on the ship was one of five cataclysmic events underlying the diagnosis of his mental illness and its cause.
At another stage Scientology auditors convinced him to "disconnect" from his wife and his parents and other family [**5]  members because they had expressed concerns about Scientology and Wollersheim's continued membership.  "Disconnect" meant he was no longer to have any contact with his family.
There also was evidence of a practice called "freeloader debt." "Freeloader debt" was accumulated when a staff member received Church courses, training or auditing at a reduced rate.  If the member later chose to leave, he or she was presented with a bill for the difference between the full price normally charged to the public and the price originally charged to the member.  Appellant  maintained a "freeloader debt" account for Wollersheim.
During his years with Scientology Wollersheim also started and operated several businesses.  The most successful was the last, a service which took and printed photographic portraits.  Most of the employees and many of the customers of this business were Scientologists.
By 1979, Wollersheim's mental condition worsened to the point he actively contemplated suicide.  Wollersheim began experiencing personality changes and pain.  When the Church learned of Wollersheim's condition, Wollersheim was sent to the Flag Land Base for "repair."
During auditing at Flag Land Base, Wollersheim's [**6]  mental state deteriorated further.  He fled the base and wandered the streets.  A guardian later arranged to meet Wollersheim.  At that meeting, the guardian told Wollersheim he was prohibited from ever speaking of his problems with a priest, a doctor or a psychiatrist.
Ultimately Wollersheim became so convinced auditing was causing him psychiatric  [***336]  problems he was willing to risk becoming a target of "freeloader debt" and "fair game." Evidence was introduced that, at least during the time relevant to Wollersheim's case, "fair game" was a practice of retribution Scientology threatened to inflict on "suppressives," which included people who left the organization or anyone who could pose a threat to the  [*880]  organization.  Once someone was identified as a "suppressive," all Scientologists were authorized to do anything to "neutralize" that individual -- economically, politically, and psychologically.
After Wollersheim left the organization Scientology leaders initiated a "fair game" campaign which among other things was calculated to destroy Wollersheim's photography enterprise.  They instructed some Scientology members to leave Wollersheim's employ, told others not to place any [**7]  new orders with him and to renege on bills they owed on previous purchases from the business.  This strategy shortly drove Wollersheim's photography business into bankruptcy.  His mental condition deteriorated further and he ended up under psychiatric care.
Wollersheim thereafter filed this lawsuit alleging fraud, intentional infliction of emotional injury, and negligent infliction of emotional injury. At the law-and-motion stage, a trial court granted summary adjudication on two vital questions.  It ruled Scientology is a religion and "auditing" is a religious practice of that religion.
During trial, Wollersheim's experts testified Scientology's "auditing" and "disconnect" practices constituted "brain-washing" and "thought reform" akin to what the Chinese and North Koreans practiced on American prisoners of war.  They also testified this "brain-washing" aggravated Wollersheim's bipolar manic-depressive personality and caused his mental illness.  Other testimony established Scientology is a hierarchical organization which exhibits near paranoid attitudes toward certain institutions and individuals -- in particular, the government, mental health professions, disaffected members and [**8]  others who criticize the organization or its leadership.  Evidence also was introduced detailing Scientology's retribution policy, sometimes called "fair game."
After the evidence was heard, the trial judge dismissed the fraud count but allowed both the intentional and negligent infliction of emotional injury counts to go to the jury.  The jury, in turn, returned a general verdict in favor of plaintiff on both counts.  It awarded $ 5 million in compensatory damages and $ 25 million in punitive damages. The motion for new trial was denied and appellants filed a timely appeal.
Discussion
Appellant raises a broad spectrum of issues all the way from a technical statute of limitations defense to a fundamental constitutional challenge to this entire species of claims against Scientology.  If the narrower grounds of appeal had merit and disposed of the case we could avoid confronting the  [*881]  difficult constitutional questions.  But since they do not we must consider Scientology's religious freedom claims.
 I. There Is Substantial Evidence to Support Wollersheim's Claim for Intentional Infliction of Emotional Distress.
The cause of action for intentional infliction of emotional injury [**9]  formed the centerpiece of the case which went to the jury.  This claim actually cumulates four courses of conduct which together allegedly inflicted severe emotional damage on the psychologically weak Wollersheim.  These courses of conduct are: (1) subjecting Wollersheim to forms of "auditing" which aggravated his predisposition to bipolar mania-depression; (2) psychologically coercing him to "disconnect" from his family; (3) "disclosing personal information" Wollersheim revealed during auditing under a mantle of confidentiality; and, (4) conducting a retributive campaign "fair game" against Wollersheim and particularly against his business enterprise.
The tort of intentional infliction of emotional distress was created to punish conduct "'exceeding all bounds usually tolerated by a decent society, of a nature which is especially calculated to cause, and  [***337]  does cause, mental distress.'" ( Agarwal v. Johnson (1979) 25 Cal.3d 932, 946 [160 Cal.Rptr. 141, 603 P.2d 58].) A prima facie case requires: (1) outrageous conduct by the defendant; (2) an intention by the defendant to cause, or the reckless disregard of the probability of causing,  [**10]  emotional distress; (3) severe emotional distress; and (4) an actual and proximate causation of the emotional distress.  ( Nally v. Grace Community Church (1988) 47 Cal.3d 278, 300 [253 Cal.Rptr. 97, 763 P.2d 948].)
"Behavior may be considered outrageous if a defendant (1) abuses a relation or position which gives him power to damage the plaintiff's interest; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress." ( Agarwal v. Johnson, supra, 25 Cal.3d at p. 946.)
There is substantial evidence to support the jury's finding on this theory.  First, the Church's conduct was manifestly outrageous.  Using its position as his religious leader, the Church and its agents coerced Wollersheim into continuing "auditing" although his sanity was repeatedly threatened by this practice.  (See pp. 892-894, post.) Wollersheim was compelled to abandon his wife and his family through the policy of disconnect. When his mental illness reached such a  [**11]  level he actively planned his suicide, he was  [*882]  forbidden to seek professional help.  Finally, when Wollersheim was able to leave the Church, it subjected him to financial ruin through its policy of "fair game."
Any one of these acts exceeds the "bounds usually tolerated by a decent society," so as to constitute outrageous conduct. In aggregate, there can be no question this conduct warrants liability unless it is privileged as constitutionally protected religious activity.  (See pp. 883-886, post.)
Second, the Church's actions, if not wholly calculated to cause emotional distress, unquestionably constituted reckless disregard for the likelihood of causing emotional distress.  The policy of fair game, by its nature, was intended to punish the person who dared to leave the Church. Here, the Church actively encouraged its members to destroy Wollersheim's business.
Further, by physically restraining Wollersheim from leaving the Church's ship, and subjecting him to further auditing despite his protests, the Church ignored Wollersheim's emotional state and callously compelled him to continue in a practice known to cause him emotional distress.
Third, Wollersheim suffered [**12]  severe emotional distress.  Indeed, his distress was such that he actively considered suicide and suffered such psychiatric injury as to require prolonged professional therapy.  (See Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 397 [89 Cal.Rptr. 78, 47 A.L.R.3d 286] [severe emotional distress "may consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment or worry"].)
Finally, there is substantial evidence the Church's conduct proximately caused the severe  emotional distress.  Wollersheim's bankruptcy and resulting mental distress was the direct result of the Church's declaration that he was fair game. Additionally, according to the psychiatric testimony auditing and disconnect substantially aggravated his mental illness and triggered several severe depressive episodes.
In sum, there is ample evidence to support the jury's verdict on Wollersheim's claim for intentional infliction of emotional distress.  This, however, does not conclude our inquiry.  As we discuss below, Wollersheim's action may nonetheless be barred if we conclude  [**13]  the Church's conduct was protected under the free exercise clause of the First Amendment.
 [*883]  II. Constitutional Religious Freedom Guaranties Do Not Immunize Scientology From Liability for Any of the Actions on Which Wollersheim's Intentional Infliction of Emotional Injury Cause of Action Is Based
Scientology asserts all four courses of conduct comprising the intentional infliction  [***338]  claim are forms of religious expression protected by the freedom of religion clauses of the United States and California Constitutions.  We conclude some would not be protected religious activity even if Wollersheim freely participated.  We further conclude none of these courses of conduct qualified as protected religious activity in Wollersheim's case.  Here they occurred in a coercive atmosphere appellant created through threats of retribution against those who would leave the organization.  To explain our conclusions it is necessary to examine the parameters and rationale of the religious freedom provisions in some depth.
A. The Basic Principles of the "Free Exercise" Clause
Religious freedom is guaranteed American citizens in just 16 words in the First Amendment. "Congress shall make no law [**14]  respecting an establishment of religion, or prohibiting the free exercise thereof; . . . "(U.S. Const., Amend. I, italics added.) n1

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n1 All discussion in this opinion as to the freedom of religion provisions of the United States Constitution applies also to appellant's claims under article I, section 4 of the California Constitution which guarantees "[f]ree exercise and enjoyment of religion without discrimination or preference."

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When it was adopted, the First Amendment only applied to the federal government, not the states.  (U.S. Const., 1st Amend. ["Congress shall make no law . . ."], italics added; see Permoli v. First Municipality (1845) 44 U.S. 589, 609 [11 L.Ed. 739, 748].) However, following ratification of the Fourteenth Amendment, the First Amendment protections became enforceable against the states via the Fourteenth Amendment's due process clause.  ( California v. Grace Brethren Church (1982) 457 U.S. 393, 396, fn. 1 [73 L.Ed.2d 93, 99, 102 S.Ct. 2498]; [**15]  Everson v. Board of Education (1947) 330 U.S. 1, 8 [91 L.Ed. 711, 719, 67 S.Ct. 504, 168 A.L.R. 1392].)
"[T]he application of tort law to activities of a church or its adherents in their furtherance of their religious belief is an exercise of state power.  When the imposition of liability would result in the abridgement of the right to free exercise of religious beliefs, recovery in tort is barred." ( Paul v. Watchtower Bible & Tract Soc. of New York (9th Cir. 1987) 819 F.2d 875, 880; accord Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1114 [252 Cal.Rptr. 122, 762 P.2d 46] ["judicial sanctioning of tort recovery constitutes  [*884]  state action sufficient to invoke the same constitutional protections applicable to statutes and other legislative actions"]; see New York Times Co. v. Sullivan (1964) 376 U.S. 254, 277 [11 L.Ed.2d 686, 705-705, 84 S.Ct. 710, 95 A.L.R.2d 1412].)
As can be seen, the First Amendment creates two very different protections.  The "establishment clause" -- actually [**16]  an "anti-establishment clause" -- guarantees us the government will not use its resources to impose religion on us.  The "free exercise clause," on the other hand, guarantees us government will not prevent its citizens from pursuing any religion we choose.
The "establishment clause" comes into play when a government policy has the effect of promoting religion -- as by financing  religious schools or requiring religious prayers in public schools, and the like.  These policies violate the establishment clause unless they survive a three-part test.  They must have a secular purpose.  Their primary effects must be ones which neither advance nor inhibit religion. And they must avoid any excessive entanglements with religion. ( Lemon v. Kurtzman (1971) 403 U.S. 602, 612-613 [29 L.Ed.2d 745, 755-756, 91 S.Ct. 2105]; see also Committee for Public Education v. Nyquist (1973) 413 U.S. 756, 773 [37 L.Ed.2d 948, 963, 93 S.Ct. 2955]; Abington School Dist. v. Schempp (1963) 374 U.S. 203, 222 [10 L.Ed.2d 844, 858, 83 S.Ct. 1560].) The "free exercise [**17]  clause," in contrast to the "establishment clause," was adopted without debate or comment when the First Congress deliberated the Bill of Rights.  (Malbin, Religion and Politics: The Intentions of the Authors of the First Amendment (1976).) Thus the courts have turned to other writings by those responsible for the Bill of  [***339]  Rights, especially James Madison and Thomas Jefferson, to divine the meaning of "free exercise of religion."
The subsequent cases interpreting these four words make it clear that while the free exercise clause provides absolute protection for a person's religious beliefs, it provides only limited protection for the expression of those beliefs and especially actions based on those beliefs.  ( Cantwell v. Connecticut (1940) 310 U.S. 296, 303-304 [84 L.Ed. 1213, 1217-1218, 60 S.Ct. 900, 128 A.L.R. 1352].) Freedom of belief is absolutely guaranteed; freedom of action is not.  Thus government cannot constitutionally burden any belief no matter how outlandish or dangerous.  But in certain circumstances it can burden an expression of belief which adversely affects significant societal interests.   [**18]  To do so, the burden on belief must satisfy a four-part test.  First, the government must be seeking to further an important -- and some opinions suggest a compelling -- state interest.  Second, the burden on expression must be essential to further this state interest.  Third, the type and level of burden imposed must be the minimum required to achieve the  [*885]  state interest.  Finally, the measure imposing the burden must apply to everyone, not merely to those who have a religious belief; that is, it may not discriminate against religion.
A straightforward exposition of three prongs of this test is found in United States v. Lee (1982) 455 U.S. 252, 257-258 [71 L.Ed.2d 127, 132, 102 S.Ct. 1051] where the Supreme Court held: "The state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest.  (Citations omitted.)" All four are mentioned in Braunfeld v. Brown (1961) 366 U.S. 599, 607 [6 L.Ed.2d 563, 568-569, 81 S.Ct. 1144]: "If the purpose or effect of a law is to impede the observance of one or all religions or [**19]  is to discriminate invidiously between religions, that law is constitutionally invalid . . . .  But if the State regulates conduct by enacting a general law within its power, the purpose and effect of which is to advance the State's secular goals, the statute is valid despite its indirect burden on religious observance unless the State may accomplish its purpose by means which do not impose such a burden." (See also Thomas v. Review Bd., Ind. Empl. Sec. Div. (1981) 450 U.S. 707, 717-718 [67 L.Ed.2d 624, 633-634, 101 S.Ct. 1425]; Wisconsin v. Yoder (1972) 406 U.S. 205, 220 [32 L.Ed.2d 15, 28, 92 S.Ct. 1526]; Gillette v. United States (1971) 401 U.S. 437, 462 [28 L.Ed.2d 168, 187-188, 91 S.Ct. 828]; Sherbert v. Verner (1963) 374 U.S. 398, 402-403 [10 L.Ed.2d 965, 969-970, 83 S.Ct. 1790]; Cantwell v. Connecticut, supra, 310 U.S. at pp. 304-305 [84 L.Ed.2d at pp. 1218-1219].)
A review of the Supreme Court's "free exercise" rulings also  [**20]  makes it apparent the four critical factors are interrelated.  Roughly speaking, the heavier the burden the government imposes on the expression of belief and the more significant the particular form of expression which is burdened, the more important the state interest must be.  Or to put it the other way around, the more important the interest the state seeks to further, the heavier the burden it can constitutionally impose on the more important forms of expressing religious belief.  Thus, only the most compelling of state interests -- such as the preservation of life or of the state itself -- will justify an outright ban on an important method of expressing a religious belief.   (See, e.g., Reynolds v. United States (1878) 98 U.S. 145, 164 [25 L.Ed. 244, 249] [polygamy can be outlawed even though a central religious tenet of the Mormon religion because it "has always been odious among the northern and western nations of Europe, . . . and from the earliest history of England has been treated as an offence against society." (Italics added.)]; Prince v. Massachusetts (1944) 321 U.S. 158, 170 [88 L.Ed. 645, 654-655, 64 S.Ct. 438] [**21]  [parents can be prohibited from allowing their children to distribute religious literature even though this is a religious duty required in order to avoid "everlasting destruction at Armageddon" where necessary to protect  [*886]  the health and safety of youth]; Jacobson v. Massachusetts (1905) 197 U.S. 11, 26 [49 L.Ed. 643, 649-650, 25 S.Ct. 358] [adults and children can be compelled to be vaccinated  [***340]  for communicable diseases even though their religious beliefs oppose vaccination because as was observed in Prince v. Massachusetts, supra, 321 U.S. at pp. 166-167 (88 L.Ed. at p. 653), "[T]he right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill health or death"].)
But a less significant state interest may be enough where the burden is less direct or the form of expression less central to the exercise of the particular religion. (See, e.g., Goldman v. Weinberger (1986) 475 U.S. 503, 509-510 [89 L.Ed.2d 478, 485-486, 106 S.Ct. 1310] where the military's  [**22]  apparently rather marginal interest in absolutely uniform attire was enough to justify an outright ban against a Jewish officer's apparently rather marginal form of religious expression in wearing a yarmulke [a religious cap] indoors.) In Bowen v. Roy (1986) 476 U.S. 693 [90 L.Ed.2d 735, 106 S.Ct. 2147], disapproved on other grounds in Hobbie v. Unemployment Appeals Commission (1987) 480 U.S. 136, 141 [94 L.Ed.2d 190, 197-198, 107 S.Ct. 1046], the U.S. Supreme Court found the federal government's interest in administrative convenience in preventing fraud in a benefit program was enough to justify the minimal burden of denying benefits to those who because of religious beliefs refuse to obtain and reveal social security numbers.  ( Braunfeld v. Brown, supra, 366 U.S. 599, 605 [6 L.Ed.2d 563, 567] [governmental interest in prohibiting economic activity on Sundays is enough to justify imposing the burden of an economic loss on those orthodox Jews who choose to exercise their religious belief that they not work on Saturdays and thus lose two rather [**23]  than only one day's opportunity to earn money.  "[T]he case before us . . . does not make unlawful any religious practices of appellants; the Sunday law simply regulates a secular activity and, as applied to appellants, operates so as to make the practice of their religious beliefs more expensive"], italics added.)
We now apply the above principles to the four courses of conduct alleged in Wollersheim's intentional infliction of emotional injury cause of action. To be entitled to constitutional protection under the freedom of religion clauses any course of conduct must satisfy three requirements.  First, the system of thought to which the course of conduct relates must qualify as a "religion," not a philosophy or science or personal preference.  Thus, it is unlikely a psychiatrist could successfully shield himself from malpractice by asserting he was merely practicing the "religion" of psychotherapy and following the "religious" teachings of Freud and Jung.  Second, the course of conduct must qualify as an expression of that religion and not just an activity that religious people happen to be doing.  Thus, driving a  [*887]  Sunday-school bus does not constitute a religious [**24]  practice merely because the bus is owned by a religion, the driver is an ordained minister of the religion, and the bus is taking church members to a religious ceremony.  (See Malloy v. Fong (1951) 37 Cal.2d 356, 373 [232 P.2d 241] [religious organization held liable for employee's negligent driving]; Meyers v. S.W. Reg. Con. Ass'n. of Seventh Day Adv. (1956) 230 La. 310 [88 So.2d 381, 386] [First Amendment does not bar minister's workers' compensation action against church for injuries arising from auto accident which occurred when minister was traveling to church conference].) And, third, the religious expression must not inflict so much harm that there is a compelling state interest in discouraging the practice which outweighs the values served by freedom of religion. Thus, the fact polygamy  was a central practice of the Mormon religion was not enough to qualify it for constitutional protection from state governments which desired to ban this practice.
This means we must first ask three questions as to each of the four courses of conduct Wollersheim alleged against Scientology.  (1) Does Scientology qualify [**25]  as a religion? (2) If so, is the course of conduct at issue an expression of the religion of Scientology?  (3) If it is, does the public nevertheless have a compelling secular interest in discouraging this course of conduct even though it qualifies as a religious  [***341]  expression of the Scientology religion? After answering these three questions, however, the special circumstances of this case require us to ask a fourth.  Did Wollersheim participate in this course of conduct voluntarily or did Scientology coerce his continued participation through the threat of serious sanctions if he left the religion?
The threshold question for all four courses of conduct is whether Scientology qualifies as a religion. As will be recalled, at the law-and-motion stage, a judge granted summary adjudication on this issue.  That court ruled Scientology indeed was a religion. And at the trial stage, another judge reinforced this ruling by submitting the case to the jury with an instruction that Scientology is a religion.
As a result of the law-and-motion judge's decision on this question, evidence was not introduced at trial on the specific issue of whether Scientology is a religion. Given that vacuum [**26]  of information, it would be presumptuous of this court to attempt a definitive decision on this vital question.  We note other appellate courts have observed this remains a very live and interesting question.  (See Founding Church of Scientology v. United States (D.C. Cir. 1969) 409 F.2d 1146, 1160-1161 [133 App.D.C. 229, 13 A.L.R.Fed. 721]; Founding Church of Scientology v. Webster (D.C. Cir. 1986) 802 F.2d 1448, 1451 [256 App.D.C. 54] ["whether Scientology is a religious organization, a for-profit private enterprise, or something far more  [*888]  extraordinary [is] an intriguing question that this suit does not call upon us to examine . . . ."].) However, we have no occasion to go beyond a review of the summary adjudication decision the trial court reached at the law-and-motion stage.  In reviewing this decision, we find that on the evidence before the court the judge properly ruled Scientology qualifies as a religion within the meaning of the freedom of religion clauses of the United States and California Constitutions.
This brings us to the remaining three questions as to each of the four courses [**27]  of conduct: Is the conduct a "religious practice"?  If so, is there a compelling secular interest in requiring compensation for the injuries attributable to that practice?  If the constitutional immunity is not overridden by a compelling state interest in the ordinary situation, is it nevertheless stripped away here because the religion coerced the injured member into continuing his participation in the practice?
B. Even Assuming the Retributive Conduct Sometimes Called "Fair Game" Is a Core Practice of Scientology It Does Not Qualify for Constitutional Protection
As we have seen, not every religious expression is worthy of constitutional protection.  To illustrate, centuries ago the inquisition was one of the core religious practices of the Christian religion in Europe.  This religious practice involved torture and execution of heretics and miscreants.  (See generally Peters, Inquisition (1988); Lea, The Inquisition of the Middle Ages (1961).) Yet should any church seek to resurrect the inquisition in this country under a claim of free religious expression, can anyone doubt the constitutional authority of an American government to halt the torture and executions?  And can anyone [**28]  seriously question the right of the victims of our hypothetical modern day inquisition to sue their tormentors for any injuries -- physical or psychological -- they sustained?
We do not mean to suggest Scientology's retributive program as described in the evidence of this case represented a full-scale modern day "inquisition." Nevertheless, there are some parallels in purpose and effect.  "Fair game" like the "inquisition" targeted "heretics" who threatened the dogma and institutional integrity of the mother church. Once "proven" to be a "heretic," an  individual was to be neutralized.  In medieval times neutralization often meant incarceration, torture, and death.  (Peters, Inquisition, supra, pp. 57, 65-67, 87, 92-94, 98, 117-118, 133-134; Lea, The Inquisition of the Middle Ages, supra, pp. 181, 193-202, 232-236, 250-264, 828-829.) As described in the evidence at this trial the "fair game" policy neutralized the "heretic" by stripping this person of his or her economic, political and psychological power.  (See, e.g., Allard v. Church of Scientology  [*889]   [***342]  (1976) 58 Cal.App.3d 439, 444 [129 Cal.Rptr. 797] [former church member falsely [**29]  accused by Church of grand theft as part of "fair game" policy, subjecting member to arrest and imprisonment].)
In the instant case, at least, the prime focus of the "fair game" campaign was against the "heretic" Wollersheim's economic interests.  Substantial evidence supports the inference Scientology set out to ruin Wollersheim's photography enterprise.  Scientologists who worked in the business were instructed to resign immediately.  Scientologists who were customers were told to stop placing orders with the business.  Most significantly, those who owed money for previous orders were instructed to renege on their payments.  Although these payments actually were going to a factor not Wollersheim, the effect was to deprive Wollersheim of the line of credit he needed to continue in business.
Appellant argues these "fair game" practices are protected religious expression. They cite to a recent Ninth Circuit case upholding the constitutional right of the Jehovah's Witness Church and its members to "shun" heretics from that religion even though the heretics suffer emotional injury as a result.  ( Paul v. Watchtower Bible & Tract Soc. of New York, supra, 819 F.2d 875.) [**30]  In this case a former Jehovah's Witness sued the church and certain church leaders for injuries she claimed to have suffered when the church ordered all other church members to "shun" her.  In the Jehovah Witness religion, "shunning" means church members are prohibited from having any contact whatsoever with the former member.  They are not to greet them or conduct any business with them or socialize with them in any manner.  Thus, there was a clear connection between the religious practice of "shunning" and Ms. Paul's emotional injuries.  Nonetheless, the trial court dismissed her case.  The Ninth Circuit affirmed in an opinion which expressly held "shunning" is a constitutionally protected religious practice. "[T]he defendants, . . . possess an affirmative defense of privilege -- a defense that permits them to engage in the practice of shunning pursuant to their religious beliefs without incurring tort liability." ( Id. at p. 879.)
We first note another appellate court has taken the opposite view on the constitutionality of "shunning." ( Bear v. Reformed Mennonite Church (1975) 462 Pa. 330 [341 A.2d 105].) In this case the [**31]  Pennsylvania Supreme Court confronted a situation similar to Paul v. Watchtower Bible & Tract Soc. of New York.  The plaintiff was a former member of the Mennonite Church. He was excommunicated for criticizing the church. Church leaders ordered that all members must "shun" the plaintiff.  As a result, both his business and family collapsed.  The appellate court reversed the trial court's dismissal of the action, holding: "In our opinion, the complaint, . . . raises issues that the 'shunning' practice of appellee church and the conduct of the  [*890]  individuals may be an excessive interference within areas of 'paramount state concern,' i.e., the maintenance of marriage and family relationship, alienation of affection, and the tortious interference with a business relationship, which the courts of this Commonwealth may have authority to regulate, even in light of the 'Establishment' and 'Free Exercise' clauses of the First Amendment." ( Bear v. Reformed Mennonite Church, supra, 341 A.2d at p. 107, italics in original.)
We observe the California Supreme Court has cited with apparent approval the viewpoint on "shunning" expressed in [**32]  Bear v. Mennonite Church, supra, rather than the one adopted in Paul v. Watchtower Bible & Tract Soc. of New York, supra. (See Molko v. Holy Spirit Assn., supra, 46 Cal.3d 1092, 1114.) But even were Paul v. Watchtower Bible & Tract  Soc. of New York the law of this jurisdiction it would not support a constitutional shield for Scientology's retribution program.  In the instant case Scientology went far beyond the social "shunning" of its heretic, Wollersheim.  Substantial evidence supports the conclusion Scientology leaders made the deliberate decision to ruin Wollersheim economically and possibly psychologically.  Unlike the plaintiff in Paul v. Watchtower Bible & Tract Soc. of New York, Wollersheim did  [***343]  not suffer his economic harm as an unintended byproduct of his former religionists' practice of refusing to socialize with him any more.  Instead he was bankrupted by a campaign his former religionists carefully designed with the specific intent it bankrupt him.  Nor was this campaign limited to means which are arguably legal such as refusing to continue working [**33]  at Wollersheim's business or to purchase his services or products.  Instead the campaign featured a concerted practice of refusing to honor legal obligations Scientologists owed Wollersheim for services and products they already had purchased.
If the Biblical commandment to render unto Caesar what is Caesar's and to render unto God what is God's has any meaning in the modern day it is here.  Nothing in Paul v. Watchtower Bible & Tract Soc. of New York or any other case we have been able to locate even implies a religion is entitled to constitutional protection for a campaign deliberately designed to financially ruin anyone -- whether a member or nonmember 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.
We [**34]  are not certain a deliberate campaign to financially ruin a former member or the dishonoring of debts owed that member qualify as "religious  [*891]  practices" of Scientology.  But if they do, we have no problem concluding the state has a compelling secular interest in discouraging these practices.  (See pp. 884-886, supra.) Accordingly, we hold the freedom of religion guaranties of the United States and California Constitutions do not immunize these practices from civil liability for any injuries they cause to "targets" such as Wollersheim.
C. "Auditing" Is a Constitutionally Protected Religious Practice Where It Is Conducted in a Noncoercive Environment But Is Not Protected Where Conducted Under a Threat of Economic, Psychological and Political Retribution as It Was Here
Auditing is a process of one-on-one dialogue between a Scientology "auditor" and a Scientology student.  The student ordinarily is connected to a crude lie detector, a so-called "E-Meter." The auditor asks probing questions and notes the student's reactions as registered on the E-Meter.
Through the questions, answers, and E-meter readings, the auditor seeks to identify the student's "n-grams" or "engrams."  [**35]  These "engrams" are negative feelings, attitudes, or incidents that act as blockages preventing people from realizing their full potential and living life to the fullest.  Since Scientology holds the view people actually have lived many past lives over millions of years they carry "engrams" accumulated during those past lives as well as some from their present ones.  Once the auditor identifies an "engram" the auditor and the student work to surface and eliminate it.  The goal is to identify and eliminate all the student's engrams so he or she can achieve the state of "clear." Students can pass through several levels of "auditing" en route to ever higher states of "clear."
Auditing performs a similar function for Scientology as sermons and other forms of mass persuasion do for many religions. In those religions, ministers, priests or other clergy preach to the multitude in order to bring their adherents into line with the religion's principles.  Scientology instead emphasizes a one-on-one approach -- the "auditing"  process -- to accomplish the same purpose.
At the law-and-motion stage, the trial court granted summary adjudication that "auditing" is a "religious practice" of Scientology.  [**36]  Once again, our review of the trial court decision reveals that on the basis of the evidence before the court on that occasion, the ruling is correct.  Thus for  [***344]  purposes of this appeal we find "auditing" qualifies as a "religious practice" just as Scientology qualifies as a "religion."
Having found for purposes of this appeal that Scientology is a religion and auditing is a religious practice, we must next ask whether the state  [*892]  has a "compelling interest" in awarding compensation for any harm auditing may cause which outweighs the values served by the religious expression guaranties of the Constitution.
We first note we have already held there was substantial evidence to support a jury finding that what happened during the "auditing" process, along with Scientology's other conduct toward Wollersheim, caused this particular adherent serious emotional injury. We further found substantial evidence Scientology leaders were aware of Wollersheim's psychological weakness and yet continued practices during auditing sessions which caused the kinds of psychological stress that led to his mental breakdown.  Thus, there is adequate proof the religious practice of auditing caused real [**37]  harm in this instance to this individual and that appellant's outrageous conduct caused that harm.  Furthermore, there is sufficient evidence to support a conclusion that despite its knowledge auditing was aggravating Wollersheim's serious psychological problems appellants deliberately insisted he not seek help from professional psychotherapists.  None of this, however, means auditing represents such a threat of harm to society that the state has a compelling interest in awarding compensation which overcomes the values served by the religious expression guaranties of the Constitution.
To better understand why we conclude voluntary auditing may be entitled to immunity from liability for the emotional injuries it causes, consider some analogies.  Assume Wollersheim were not a former Scientologist, but a former follower of one of the scores of Christian denominations.  Further assume he sued on grounds a preacher's sermons filled him with such feelings of inferiority and guilt his manic-depressive condition was aggravated to the same degree Wollersheim contends auditing aggravated his mental illness in this case.  Or assume another Wollersheim sued another church for a similar emotional [**38]  injury on grounds his mental illness had been triggered by what a cleric told him about his sins during a confession -- or series of confessions.  It is one of the functions of many religions to "afflict the comfortable" -- to deliberately generate deep psychological discomfort as a means of motivating "sinners" to stop "sinning." Whether by "hell fire and damnation" preaching, "speaking in tongues," private chastising, or a host of subtle and not so subtle techniques religion seeks to make us better people.
Many of these techniques are capable of inflicting emotional distress severe enough that it is foreseeable some with psychiatric problems will "crack" or be driven into a deep depression.  But the Constitution values the good religion does for the many more than the psychological injury it may inflict on the few.  Thus, it cannot tolerate lawsuits which might chill religious practices -- such as auditing, "hell fire and damnation" preaching,  [*893]  confessions, and the like -- where the only harm which occurs is emotional injury to the psychologically weak.
There is an element present in the instant case, however, that reduces the religious value of the "auditing" practiced [**39]  on Wollersheim and increases its harm to the community.  This is the element of coercion. Scientology, unlike most other religions or organizations claiming a religious purpose, uses various sanctions and the threat of sanctions to induce continued membership in the Church and observance of its practices.  These sanctions include "fair game," "freeloader debt" and even physical restraint.  There was nothing in the evidence presented at this trial suggesting new recruits and members undergoing lower-level "auditing" were subject to sanctions if they decided to leave.  Nor was there evidence these recruits or "lower level" auditors would be aware any  program of sanctions even existed and thus might be intimidated by it.  But there was evidence others, like Wollersheim, who rose  [***345]  to higher levels of auditing and especially those, like Wollersheim, who became staff members -- the rough equivalent of becoming a neophyte priest or minister -- were aware of these sanctions and what awaited them if they chose to "defect." Thus, their continued participation in "auditing" and the other practices of Scientology was not necessarily voluntary.
Wollersheim was familiar with the whole spectrum [**40]  of sanctions and indeed was the target of some during and after his affiliation with Scientology.  He first learned of one of these forms of retribution, "fair game," in 1970.  He also knew that, despite the Church's public rejection of the fair game practice, it continued to use fair game against targeted ex-Scientologists throughout the 1970's.  Under Scientology's "fair game" policy, someone who threatened Scientology by leaving the church "may be deprived of property or injured by any means by a Scientologist . . . .  [The targeted defector] may be tricked, sued or lied to or destroyed."
Wollersheim feared "fair game" would be practiced against him if he refused further auditing and left the Church of Scientology.  As described in the previous section, those fears proved to be accurate.  Scientology leaders indeed became very upset by his defection and retaliated against his business.
But "fair game" was not the only sanction which Scientology held over Wollersheim's head during his years as an "upper level" auditor and occasional staff member.  Scientology also used a tactic called "freeloader debt" as a means of coercing Wollersheim's continued participation in the church and [**41]  obedience to its practices.  "Freeloader debt" was devised by Scientology founder L. Ron Hubbard as a means of punishing members who, inter  [*894]  alia, chose to leave the Church or refused to disconnect from a suppressive person.
"Freeloader debt" was accumulated when a staff member received Church courses, training or auditing at a reduced rate.  The Church maintained separate records which listed the discounts allowed.  If the member later chose to leave, he or she was presented with a bill for the difference between the full price normally charged to the public and the price originally charged to the member. n2 A person who stayed in the Church for five years could easily accumulate a "freeloader debt" of between $ 10,000 and $ 50,000.  Wollersheim was familiar with the "freeloader debt" policy as well as the "fair game" policy.  He also knew the Church was recording the courses and auditing sessions he was receiving at the discounted rate.  The threat of facing that amount of debt represented a powerful economic sanction acting to coerce continued participation in auditing as the core religious practice of the Church of Scientology.

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n2 During the 1970's a staff member was paid approximately $ 17 per week for an expected 50 hours of work.  In 1973, Wollersheim earned between $ 10 to $ 18 per week when he worked at the Celebrity Center as a staff member.  This salary was augmented by an occasional $ 10 bonus.

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There also was evidence Wollersheim accepted some of his auditing under threat of physical coercion. In 1974, despite his repeated objections, Wollersheim was induced to participate in auditing aboard a ship Scientology maintained as part of its Rehabilitation Project Force.  The Church obtained Wollersheim's attendance by using a technique dubbed "bait and badger." As the name suggests, this tactic deployed any number of Church members against a recalcitrant member who was resisting a Church order.  They would alternately promise the "bait" of some reward and "badger" him with verbal scare tactics.  In the instant case, five Scientologists "baited and badgered" Wollersheim continuously for three weeks before he finally gave in and agreed to attend the Rehabilitation Project Force.
But these verbal threats and psychological pressure tactics were only the beginning of Wollersheim's ordeal.  While on the ship, Wollersheim was forced to undergo a strenuous regime which began around 6 a.m. and continued until 1 a.m. the next morning.  The regime included mornings of  [***346]  menial and repetitive cleaning of the ship followed by an  afternoon of study or coauditing.  The evenings were spent [**43]  working and attending meetings or conferences.  Wollersheim and others were forced to sleep in the ship's hole.  A total of 30 people were stacked 9 high in this hole without proper ventilation.  During his six weeks under these conditions, Wollersheim lost fifteen pounds.
 [*895]  Ultimately, Wollersheim felt he could bear the regime no longer.  He attempted to escape from the ship because as he testified later: "I was dying and losing my mind." But his escape effort was discovered.  Several Scientology members seized Wollersheim and held him captive.  They released him only when he agreed to remain and continue with the auditing and other "religious practices" taking place on the vessel.
One of the psychiatric witnesses testified that in her opinion Wollersheim's experience on the ship was one of five cataclysmic events underlying her diagnosis of his mental illness and its cause.  As the psychiatrist reported, following this incident, Wollersheim felt the Church "broke him." In any event, this episode demonstrated the Church was willing to physically coerce Wollersheim into continuing with his auditing. Moreover they were willing to do so even when it was apparent this practice [**44]  was causing him serious mental distress and he preferred to cease or at least suspend this particular religious practice. Not only was the particular series of auditing sessions on the ship conducted under threat of physical compulsion, but the demonstrated willingness to use physical coercion infected later auditing sessions.  The fact the Church was willing to use physical coercion on this occasion to compel Wollersheim's continued participation in auditing added yet another element to the coercive environment under which he took part in the auditing process.
There was substantial evidence here from which the jury could have concluded Wollersheim was subjecting himself to auditing because of the coercive environment with which Scientology had surrounded him.  To leave the Church or to cease auditing he had to run the risk he would become a target of "fair game," face an enormous burden of "freeloader debt," and even confront physical restraint.  A religious practice which takes place in the context of this level of coercion has less religious value than one the recipient engages in voluntarily.  Even more significantly, it poses a greater threat to society to have coerced religious [**45]  practices inflicted on its citizens.
There are important analogies to Molko v. Holy Spirit Assn., supra, 46 Cal.3d 1092. In Molko the California Supreme Court held a religious organization could be held civilly liable for using deception and fraud to seduce new recruits into the church. n3 In that case the church concealed from new  [*896]  recruits the fact they were enlisting in the Unification Church. The plaintiffs argued the Unification Church psychologically and physically coerced them into accepting the Church and, therefore, they were unable to refuse formally joining once the Church's true identity was revealed.  ( Id. at pp. 1108-1109.) The Supreme Court agreed and further concluded there was no constitutional infirmity to bar the action.

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n3 In Molko, two plaintiffs brought actions against the Unification Church for, inter alia, fraud and intentional infliction of emotional distress based upon the Unification Church's initial misrepresentations concerning its religious affiliation.  The Supreme Court held the First Amendment did not bar the plaintiffs' claims to the extent they were based upon actual coercive conduct by the Unification Church as opposed to merely the threat of divine retribution should the plaintiffs leave.

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"We conclude . . . that although liability for deceptive recruitment practices imposes a marginal burden on the Church's free exercise of religion, the burden is justified by the compelling state interest in protecting individuals and families from the substantial threat to public safety, peace and order posed by the fraudulent induction of unconsenting individuals into an atmosphere of coercive persuasion." (46 Cal.3d at p. 1118.)
 [***347]  Here Scientology used coercion -- "fair game," "freeloader debt," and in this instance, at least, physical restraint, along with the threat one or more of these sanctions will be deployed -- to prevent its members from leaving the Church. This coercion is similar  to the coercion found in Molko and far different from the threat of divine retribution our Supreme Court held was nonactionable.  (46 Cal.3d at pp. 1120, 1122 ["To the extent the claims are based merely on threats of divine retribution if [the plaintiffs] left the church, they cannot stand"].) Instead, Scientology promised -- and in this case delivered -- retribution in the here and now.
In O'Moore v. Driscoll (1933) 135 Cal.App. 770 [28 P.2d 438], [**47]  cited with approval by the California Supreme Court in Molko v. Holy Spirit Assn., supra, 46 Cal.3d 1092, 1114, a Catholic priest sued a Catholic organization and an ordained priest for false imprisonment when the plaintiff was restrained in an asylum run by the Catholic Church to compel his confession to criminal acts.  The practice of confessing one's sins is an established religious practice of the Catholic church. But that did not immunize the defendants from liability for harm the plaintiff suffered where the religious practice was imposed on him in a coercive environment.  ( Driscoll, supra, 135 Cal.App. at p. 774.)
In the instant case except for the experience on the ship the coercion was more subtle than physical restraint.  Yet the threat of "fair game" and "freeloader debt" and even the possibility of future physical restraint loomed over Wollersheim whenever he contemplated leaving Scientology and terminating auditing or the other practices of that religion.
It is not only the acts of coercion themselves -- the sabotage of Wollersheim's business and the episode of captivity on the ship -- which [**48]  are actionable.  These acts of coercion and the threat of like acts make the Church's  [*897]  other harmful conduct actionable as well.  No longer is Wollersheim's continued participation in auditing (or for that matter, his compliance with the "disconnect" order) merely his voluntary participation in Scientology's religious practices.  The evidence establishes Wollersheim was coerced into remaining a member of Scientology and continuing with the auditing process.  Constitutional guaranties of religious freedom do not shield such conduct from civil liability.  We hold the state has a compelling interest in allowing its citizens to recover for serious emotional injuries they suffer through religious practices they are coerced into accepting.  Such conduct is too outrageous to be protected under the Constitution and too unworthy to be privileged under the law of torts.
We further conclude this compelling interest outweighs any burden such liability would impose on the practice of auditing. We concede as the California Supreme Court did in Molko that allowing tort liability for this conduct imposes some burden on appellants' free exercise of this religion. n4 Despite the  [**49]  possibility of liability Scientologists can still believe it serves a religious purpose to impose and threaten to impose various sanctions on staff members or upper level auditors who might leave the church or cease its core religious practices.  But it does place a burden on Scientologists should they act on that belief.  Scientology would be subject to possible monetary loss if someone suffers severe psychological harm during auditing where that auditing is conducted under the threat of these sanctions.  Likewise, Scientology may lose some staff members and upper level auditors who would not continue in the Church or continue to submit to the core practice of auditing except for their fears of retribution.

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n4 "While such liability does not impair the Church's right to believe in recruiting through deception, its very purpose is to discourage the Church from putting such belief into practice by subjecting the church to possible monetary loss for doing so.  Further, liability presumably impairs the Church's ability to convert nonbelievers, because some potential members who would have been recruited by deception will choose not to associate with the Church when they are told its true identity." ( Molko v. Holy Spirit Assn., supra, 46 Cal.3d 1092, 1117.)

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 [***348]  Like the Supreme Court in Molko, however, we find these burdens "while real, are not substantial" and, moreover, are the minimum required to achieve the state interest.  To borrow from the high court's language in Molko: "Being subject to liability [for coerced auditing] does not in any way or degree prevent or inhibit [Scientologists]  from operating their religious communities, worshipping as they see fit, freely associating with one another, selling or distributing literature, proselytizing on the street, soliciting funds, or generally spreading [L. Ron Hubbard's] message among the population.  It certainly does not . . . compel [Scientologists] to perform acts 'at odds with fundamental tenets of their religious beliefs.' [Citation omitted.]" ( Molko v. Holy Spirit Assn., supra, 46 Cal.3d 1092, 1117.)
 [*898]  Most significantly, by imposing liability in the instant case we "in no way or degree prevent or inhibit" Scientology from continuing the free exercise of the religious practice of auditing. Returning to the words of the Supreme Court: "At most, it potentially closes one questionable avenue for" coercing certain  [**51]  members to remain in the church and to continue its core practices such as auditing. (46 Cal.3d at p. 1117.)
D. The "Disconnect" Policy Is Not a Constitutionally Protected Religious Practice in the Circumstances of This Case
Substantial evidence supports the conclusion Scientology encouraged Wollersheim to "disconnect" from family members, including his wife and parents.  Furthermore, substantial evidence supports the conclusion Scientology has a general policy of encouraging members to "disconnect" from non-Scientologists who oppose Scientology or express reservations about its teachings.
The first question is whether the "disconnect" policy qualifies as a "religious practice" of Scientology.  The trial court did not grant summary adjudication on this factual issue.  Nonetheless, we find the evidence supported the conclusion disconnect is a "religious practice." "Disconnect" is similar in purpose and effect to the "shunning" practiced by Jehovah's Witnesses and Mennonites, among others.  It also shares some attributes with the remote monasteries common to many other religions. All of these practices serve to isolate members from those,  [**52]  including family members, who might weaken their adherence to the religion. Courts have held these policies qualify as "religious practices" of other religions. (See, e.g., Paul v. Watchtower Bible & Tract Soc. of New York, supra, 819 F.2d 875, 879-880; Rasmussen v. Bennett (Mont. 1987) 741 P.2d 755 [church statements condemning plaintiffs' conduct and calling for shunning were privileged under the First Amendment].) We see no justification for treating Scientology's "disconnect" policy differently and thus hold it is a "religious practice."
We recognize the "shunning" cases have involved claims brought by former church members whom other family members were ordered to shun.  The instant case, in contrast, involves a cause of action brought by a former church member ordered to shun the rest of his family not the other way around.  In the circumstances of this case this is a distinction without a difference.  Here appellant caused Wollersheim to isolate himself from his parents, wife and other family members even though appellant had reason to know it would inflict serious emotional injury on him.  The injury to him and to  [**53]  the family was just as severe as if his family had "shunned" him.
We need not and do not reach the question whether the practice of "disconnect" is constitutionally protected religious activity in ordinary circumstances.   [*899]  (Contrast Paul v. Watchtower Bible & Tract Soc. of New York, supra, 819 F.2d 875 [religion cannot be held civilly liable to shunned former member because "shunning" is constitutionally protected] with Bear v. Reformed Mennonite Church, supra, 341 A.2d 105 [religion may be civilly liable to shunned former member because "shunning" must yield to compelling state interest in promoting family relations].) Whether  [***349]  or not the "disconnect" policy is constitutionally protected when practiced in a voluntary context it is not so protected if practiced in the coercive environment appellant imposed on Wollersheim.  The reasons are the same as apply to "auditing." (See pp. 893-898, ante.) Substantial evidence supports the finding Scientology created this coercive environment and Wollersheim continued to submit to the practices of the church such as "disconnect" because of that coercion. Furthermore,  [**54]  the evidence in the instant case is sufficient to support a factual  finding appellant imposed the "disconnect" policy on Wollersheim with the knowledge he was psychologically susceptible and therefore would suffer severe emotional injury as a result.  Accordingly, in the circumstances of this case, the free exercise clause did not immunize appellants from liability for the "disconnect" policy practiced on respondent.
E. Scientology's Improper Disclosure of Information Wollersheim Gave During Confidential Religious Sessions Is Not Religious Expression Immunized From Liability by the Constitution
There is substantial evidence Wollersheim divulged private information during auditing sessions under an explicit or implicit promise the information would remain confidential.  Moreover, there is substantial evidence Scientology leaders and employees shared this confidential information and used it to plan and implement a "fair game" campaign against Wollersheim.  Scientology argues there also is substantial evidence in the record supporting its defense that Scientology leaders and employees shared this confidential information only in accordance with normal procedures and for the purpose [**55]  of gaining the advice and assistance of more experienced Scientologists in evaluating Wollersheim's auditing sessions.  However, the jury was entitled to disregard this innocent explanation and to believe Wollersheim's version of how and why Scientology divulged information he had supplied in confidence.
The intentional and improper disclosure of information obtained during auditing sessions for nonreligious purposes can hardly qualify as "religious expression." To clarify the point, we turn once again to a hypothetical situation which presents a rough analogy under a traditional religion. Imagine a stockbroker had confessed to a cleric in a confessional that he had engaged in "insider trading." Sometime later this same stockbroker leaves  [*900]  the church and begins criticizing it and its leadership publicly.  To discredit this critic, the church discloses the stockbroker has confessed he is an insider trader.  This disclosure might be said to advance the interests of the cleric's religion in the sense it would tend to discourage former members from criticizing the church. But to characterize this violation of religious confidentiality as "religious expression" would distort [**56]  the meaning of the English language as well as the United States Constitution.  This same conclusion applies to Scientology's disclosures of Wollersheim's confidences in the instant case.  And, since these disclosures do not qualify as "religious expression" they do not qualify for protection under the freedom of religion guaranties of the Constitution.  (See Discussion at pp. 887-889, supra.)
III. The Cause of Action for Negligent Infliction of Emotional Injury Must Be Reversed
For reasons set forth in section II, we have concluded Scientology is not constitutionally immunized from civil liability for its cumulative course of conduct to intentionally inflict emotional injury on Wollersheim.  However, this course of conduct does not supply a suitable predicate for a cause of action based on negligent infliction of emotional injury. These actions are potentially actionable only when they are driven by an animus which can properly qualify them as "outrageous conduct." That is, they must be done for the purpose of emotionally injuring the plaintiff, or at the least with reckless disregard about their adverse impact on plaintiff's mental health.  ( Nally v. Grace Community  [***350]  Church, supra, 47 Cal.3d 278, 300; [**57]  Miller v. National Broadcasting Co. (1986) 187 Cal.App.3d 1463, 1487 [232 Cal.Rptr. 668, 69 A.L.R.4th 1027].)
We have held in the prior section that Scientology and its leaders indeed engaged in these actions with an intent to emotionally injure Wollersheim.  But this intentional activity was alleged in the intentional infliction of emotional injury count and was tried under that count.  The negligence count, on the other hand, of necessity alleges a lesser degree of culpability and can be sustained only if the defendant could be liable even if the emotional injuries were caused by completely unintentional, merely negligent acts or omissions.   (See Slaughter v. Legal Process Courier Service (1984) 162 Cal.App.3d 1236, 1249 [209 Cal.Rptr. 189]; 6 Witkin, Summary of Cal.Law (9th ed. 1988) Torts, §  838, p. 195.)
In this context, Scientology is responsible only if it or any other religion could be held liable where through inadvertence something it or its leaders did damaged someone's business and thereby caused the businessman emotional injury. Or if it or any other religion could be held liable where [**58]  it inadvertently revealed some information a member had disclosed in  [*901]  confidence as part of a religious practice like auditing or a confession.  Or if it or another religion could be held liable where its functionaries inadvertently said something during auditing or a sermon or a confession which triggered a listener's nascent mental illness.
At bottom, this question of duty is a matter of weighing competing public policy considerations.  ( Dillon v. Legg (1968) 68 Cal.2d 728, 734 [69 Cal.Rptr. 72, 441 P.2d 912, 29 A.L.R.3d 1316]; Ballard v. Uribe (1986) 41 Cal.3d 564, 572, fn. 6 [224 Cal.Rptr. 664, 715 P.2d 624].) n5 On balance, the religious freedom consideration outweighs any concern about spreading the cost of emotional injury, reducing the frequency of such emotional injuries, and the like.  It is one thing to say we will impose liability when a religious organization intentionally or recklessly sets out to ruin a business or to reveal confidential information or to "audit" mercilessly or to "disconnect" a psychologically weak person from his family and thereby [**59]  succeeds in emotionally injuring a member or former member of that religion. It is quite another to impose liability for negligent acts which inadvertently cause the same types of injuries.  (See Coon v. Joseph (1987) 192 Cal.App.3d 1269, 1273 [237 Cal.Rptr. 873].)

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n5 "'[D]uty' is not an immutable fact of nature "'but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection."' [Citation.]" ( Ballard v. Uribe, supra, 41 Cal.3d at p. 572, fn. 6.)

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Since we hold religious organizations owe no duty to members or former members with respect to these forms of injury, the cause of action for negligent infliction of emotional injury must be reversed.  We need not, however, reverse the entire judgment.
Here, the jury found the Church liable for both negligent and intentional infliction of emotional distress.  As we discussed above, there is substantial [**60]  evidence to support a finding on the intentional infliction theory.  We may fairly presume any damages awarded on the negligence theory are subsumed in the award for intentional infliction of emotional distress.  Accordingly, any error in allowing the jury to consider the negligence theory does not affect the judgment.  (See Vahey v. Sacia (1981) 126 Cal.App.3d 171, 179-180 [178 Cal.Rptr. 559]; Bacciglieri v. Charles C. Meek Milling Co. (1959) 176 Cal.App.2d 822, 826 [1 Cal.Rptr. 706].)
IV. The Trial Court Properly Denied Appellant's Motions to Dismiss for Failure to File Before the Statute of Limitations Had Expired on Wollersheim's Causes of Action
Scientology argues on appeal, as it did at virtually every opportunity below, that Wollersheim's causes of action are barred by the statute of  [*902]  limitations.  At each and every juncture the various trial judges  [***351]  who heard these arguments rejected them.  These judges ruled correctly that Wollersheim's causes of action were subject to the discovery rule.  (3 Witkin, Cal. Procedure (3d ed. 1985) Actions, §  356, p. 383.) The issue in each instance, thus, was  [**61]  when Wollersheim discovered, or should have discovered, all of the elements of his cause of action against Scientology.  (See Leaf v. City of San Mateo (1980) 104 Cal.App.3d 398, 407-408 [163 Cal.Rptr. 711].) The trial judges properly ruled this issue, in turn, was a jury question.  ( Id. at p. 409.)
On appeal, this court is bound to uphold the jury's resolution of these factual questions unless we determine the findings are not supported by substantial evidence. After a careful review of the evidence, we conclude these findings about the timeliness of Wollersheim's filing of this case are supported by substantial evidence. Consequently, we affirm  the rulings by the judges below and, furthermore, we likewise affirm the factual findings the jury impliedly made that Wollersheim did not discover and should not have discovered his causes of action until a time within the statutory period.
V. The Trial Court Did Not Commit Instructional Error or Evidentiary Error During This Five-month Trial Which Denied Appellant a Fair Trial or Due Process of Law
Appellant's final contention is that it was denied a fair trial and [**62]  due process of law because of various instructional and evidentiary rulings the court made during this five-month trial.  Considering the length of the trial it is surprising appellant was able to identify so few questionable rulings.
Appellant first complains the trial court erroneously denied two instructions it requested.  The first of these instructions restated the elements of the cause of action for intentional infliction of emotional distress or outrageous conduct with a slant favoring appellant's position. n6

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n6 The requested instruction reads: "Plaintiff's claim for intentional infliction of emotional distress, or outrageous conduct, is divided into several parts.  [para.] First, plaintiff's claim that defendant engaged in outrageous conduct by subjecting plaintiff to its practice of auditing -- which, as I shall instruct you, is the central religious practice of the religion of Scientology.  [para.] Second, plaintiff claims that defendant caused plaintiff to separate from his family and friends as a condition for remaining in Scientology.  [para.] Third, plaintiff claims that defendant 'attacked plaintiff's business' and induced those of his employees who were Scientologists to leave his employ.  [para.] Fourth, plaintiff claims that defendant disclosed his auditing files in disregard of alleged promises of confidentiality to persons not authorized to receive them.  [para.] All of these acts were allegedly undertaken to inflict severe emotional distress upon the plaintiff.  [para.] The plaintiff is restricted in this case to the claims he set forth in his complaint.  Evidence of any purported acts of the defendant not relating to the four categories I have just described to you may not be considered in determining whether plaintiff has established that defendant committed the tort of intentional infliction of emotional distress."

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 [*903]  As requested the instruction implied the jury was to disregard evidence of appellant's acts which did not fit precisely under the courses of conduct as appellant defined them.  Actually the plaintiff's causes of action were broader in many respects than the descriptions the appellant requested.  Moreover, some of the evidence introduced at the trial related to acts relevant to issues of appellant's state of mind (intent, motivation, and the like) and whether respondent was voluntarily participating in Scientology's practices or was doing so within a coercive environment.  Accordingly, the instruction as requested would have been misleading to the jury.  The trial court gave an instruction which set forth the elements of the cause of action. Any amplification of that instruction should have been more accurate than the one appellant requested and less misleading as to the full scope of the jury's range of inquiry.  Thus it was not error to refuse to give this instruction.
Appellant also complains about the refusal of one of its requested instructions ordering the jury in very specific  [***352]  fashion to disregard evidence presented which was relevant to the nonsuited fraud counts.  [**64]  Again, the requested instruction was stated in overbroad terms and unduly slanted in appellant's direction.  For instance, as requested, it instructed the jury that "it must disregard evidence presented in this trial regarding statements purportedly made to [the plaintiff] to induce his participation in defendant church." If given, this instruction could have misled the jury into believing it must disregard evidence which provided context for the intentional infliction count or which went to the presence or absence of coercion and appellant's state of mind.  So once again it was not error to refuse these instructions.  (See Wank v. Richman & Garrett (1985) 165 Cal.App.3d 1103, 1113 [211 Cal.Rptr. 919]; Lubek v. Lopes (1967) 254 Cal.App.2d 63, 73 [62 Cal.Rptr. 36].)
In any event, on reviewing the total evidence offered in this trial, we find that even if it were error to refuse these instructions that error was not prejudicial.  ( Henderson v. Harnischfeger (1974) 12 Cal.3d 663, 670 [117 Cal.Rptr. 1, 527 P.2d 353]; Williams v.  Carl Karcher Enterprises, Inc. (1986) 182 Cal.App.3d 479, 489 [227 Cal.Rptr. 465]; [**65]  see 9 Witkin, Cal. Procedure, supra, Appeal, §  352, pp. 355-356.) We cannot say that the giving of these instructions would have substantially enhanced the chances appellant would have prevailed.
Appellant likewise complains about evidentiary rulings.  Although it mentions only a handful of specific incidents, it accuses the judge of admitting a mass of prejudicial evidence about actions Scientology took toward third  [*904]  persons.  In its brief appellant concedes this evidence was admissible under Evidence Code section 1101, subdivision (b) as proof of "intent" and "malice." n7 But it asks us to reverse the trial court under Evidence Code section 352 on grounds the relevance of this evidence was overwhelmed by its prejudicial effect. n8

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n7 "Nothing in this section prohibits the admission of evidence that a person committed a crime, civil wrong, or other act when relevant to prove some fact (such as motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake or accident or whether a defendant in a prosecution for an unlawful sexual act or attempted unlawful sexual act did not reasonably and in good faith believe that the victim consented) other than his or her disposition to commit such an act." (Evid. Code, §  1101, subd. (b).) [**66]  
n8 "The court in its discretion may exclude evidence if its probative value is substantially outweighed by the probability that its admission will (a) necessitate undue consumption of time or (b) create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury." (Evid. Code, §  352, italics added.)

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In reviewing the trial court's exercise of its discretion under section 352, appellate courts traditionally give great deference to the trial court's evaluation of relevance versus prejudice.  (See People v. Mota (1981) 115 Cal.App.3d 227, 234 [171 Cal.Rptr. 212]; 1 Johnson, Cal. Trial Guide (1988) §  22.40, p. 22-43.) In the instant case we do not find an abuse of discretion.  Much of the evidence appellant objects to was highly relevant to show the network of sanctions and coercive influences with which Scientology had surrounded Wollersheim.  Much of the rest was highly relevant to show Wollersheim's state of mind while undergoing audit, disconnect and the like or appellant's state of mind, that is, its intent, malice, motives,  [**67]  and the like.  Whatever prejudice to appellant may have accompanied introduction of this evidence it does not "substantially outweigh" the probative value of the evidence to important issues in this case.
Finally, appellant complains about the alleged prejudicial conduct of Wollersheim's counsel during the trial and closing argument.  As was true of its claims of instructional and evidentiary evidence, appellant provides us with only a few examples of alleged prejudicial error and imply these are but the tip of the iceberg.  It confines itself to this handful of incidents either because no other potentially prejudicial incidents occurred or because it expects this court to do its job by scouring the 25,000-page record for other examples to bolster its claim of error.  If what appellant sets forth in its brief represent the only incidents it alleges as prejudicial  [***353]  conduct, we find them insufficient to justify reversal under applicable standards of prejudice.  ( Garden Grove School Dist. v. Hendler (1965) 63 Cal.2d 141, 144 [45 Cal.Rptr. 313, 403 P.2d 721] [attorney misconduct only requires reversal if "it is reasonable to conclude that  [**68]  a verdict more favorable to defendants would have been reached but for the error"]; see 9 Witkin, Cal. Procedure, supra, §  340, p. 346.) And if these brief examples were only an invitation to do  [*905]  appellant's work in identifying prejudicial error in its opposing attorney's conduct, we decline that invitation.  ( Horowitz v. Noble (1978) 79 Cal.App.3d 120, 139 [144 Cal.Rptr. 710] ["'The reviewing court is not required to make an independent, unassisted study of the record in search of error or grounds to support the judgment'"]; Wint v. Fidelity & Casualty Co. (1973) 9 Cal.3d 257, 265 [107 Cal.Rptr. 175, 507 P.2d 1383, 90 A.L.R.3d 1185].)
VI. The General Damages and Punitive Damages the Jury Awarded Are Excessive for the Intentional Infliction of Emotional Injury Count and Thus Those Damage Awards Must Be Reduced
In the previous section, we concluded the allegations which are supported by substantial  evidence are enough to sustain a cause of action for intentional infliction of emotional injury against Scientology.  But that conclusion does not determine whether the proved allegations [**69]  support the level of damages the jury awarded under this cause of action. We turn to that issue now.
We are only concerned now with whether a reasonable juror could have found this level of "outrageous" conduct inflicted $ 5 million worth of emotional injury on Wollersheim.  Similarly, we ask whether this level of "outrageous" conduct and Scientology's degree of intent in carrying it out warrant $ 25 million in punitive damages. We conclude these awards are excessive for the conduct alleged and proved in this case.
An award for compensatory damages will be reversed or reduced "upon a showing that it is so grossly disproportionate to any reasonable view of the evidence as to raise a strong presumption that it is based upon prejudice or passion." ( Koyer v. McComber (1938) 12 Cal.2d 175, 182 [82 P.2d 941]; accord Schroeder v. Auto Driveaway Co. (1974) 11 Cal.3d 908, 919 [114 Cal.Rptr. 622, 523 P.2d 662] ["an appellate court may reverse an award only '"When the award as a matter of law appears excessive, or where the recovery is so grossly disproportionate as to raise a presumption that it is the result [**70]  of passion or prejudice"' [Citations]"]; Fagerquist v. Western Sun Aviation, Inc. (1987) 191 Cal.App.3d 709, 727 [236 Cal.Rptr. 633]; see 8 Witkin, Cal. Procedure, supra, Attack on Judgment in Trial Court, §  46, p. 446.) Even under this stringent standard, it is manifest the jury's award here is excessive since it is so grossly disproportionate to the evidence concerning Wollersheim's damages.
Wollersheim's psychological injury although permanent and severe is not totally disabling.  Moreover, even Wollersheim admits Scientology's conduct  [*906]  only aggravated a preexisting psychological condition; Scientology did not create the condition.  While the jury awarded Wollersheim $ 5 million in compensatory damages, we determine the evidence only justifies an award of $ 500,000.
"It is well established that a reviewing court should examine punitive damages and, where appropriate, modify the amount in order to do justice." ( Gerard v. Ross (1988) 204 Cal.App.3d 968, 980 [251 Cal.Rptr. 604]; Allard v. Church of Scientology, supra, 58 Cal.App.3d at p. 453.) In reviewing a  [**71]  punitive damages award, the appellate court applies a standard similar to that used in reviewing compensatory damages, i.e., whether, after reviewing the entire record in the light most favorable to the judgment, the award was the result of passion or prejudice.  (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 64 [118 Cal.Rptr. 184, 529 P.2d 608, 65 A.L.R.3d 878]; Devlin v.  [***354]  Kearny Mesa AMC/Jeep/Renault, Inc. (1984) 155 Cal.App.3d 381, 388 [202 Cal.Rptr. 204].) However, the test here is somewhat more refined, employing three factors to evaluate the propriety of the award.
The first factor is the degree of reprehensibility of the defendant's conduct.  ( Neal v. Farmers Ins. Exchange (1978) 21 Cal.3d 910, 928 [148 Cal.Rptr. 389, 582 P.2d 980].) "[C]learly, different acts may be of varying degrees of reprehensibility, and the more reprehensible the act, the greater the appropriate punishment, assuming all other factors are equal." (Ibid.)
The second factor is the relationship between the amount of the award and the actual harm [**72]  suffered.  ( Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928; Seeley v. Seymour (1987) 190 Cal.App.3d 844, 867 [237 Cal.Rptr. 282].) This analysis focuses upon the ratio of compensatory damages to punitive damages; the greater the disparity between the two awards, the more likely the punitive damages award is suspect.  ( Seeley v. Seymour, supra, 190 Cal.App.3d at p. 867; see Little v. Stuyvesant Life Ins. Co. (1977) 67 Cal.App.3d 451, 469-470 [136 Cal.Rptr. 653].)
Finally, a reviewing court will consider the relationship of the punitive damages to the defendant's net worth. ( Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928; Devlin v. Kearny Mesa AMC/Jeep Renault, Inc., supra, 155 Cal.App.3d at p. 390.) In applying this factor courts must strike a proper balance between inadequate and excessive punitive damage awards.  "While the function of punitive damages will  not be served if the wealth of the defendant allows him to absorb [**73]  the award with little or no discomfort, the function also will not be served by an award which is larger than necessary to properly punish and deter." ( Devlin v. Kearny Mesa AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at p. 391.)
 [*907]  As to the punitive damage award, we find it is not commensurate with Scientology's conduct in this case.  This is not a situation where the centerpiece of the case involved a Church-ordered physical beating or theft or criminal fraud against Wollersheim.  The "outrageous conduct" was less outrageous and more subtle than that.  We further note Wollersheim's counsel in the full flood of his emotional summation at the conclusion of this lengthy trial only deigned to urge the jury to return punitive damages of as much as "six or seven million dollars."
The evidence admitted at trial supported the finding the appellant church had a net worth of $ 16 million at the time of trial.  Accepting these figures as true, the jury awarded Wollersheim 150 percent of appellant's net worth in punitive damages alone -- 195 percent if compensatory damages are included.  This ratio is well outside the permissible range [**74]  established in other appellate cases.  ( Seeley v. Seymour, supra, 190 Cal.App.3d at p. 869 [punitive damages reversed; award was 200 percent of defendant's net worth]; Burnett v. National Enquirer, Inc. (1983) 144 Cal.App.3d 991, 1012 [193 Cal.Rptr. 206, 49 A.L.R.4th 1125] [punitive damages reduced; initial award was 35 percent of defendant's net worth]; Egan v. Mutual of Omaha Insurance Co. (1979) 24 Cal.3d 809, 824 [169 Cal.Rptr. 691, 620 P.2d 141] [punitive damages reversed; award was 58 percent of defendant's net income]; Allard v. Church of Scientology, supra, 58 Cal.App.3d at pp. 445-446, 453 [punitive damages reversed; award was 40 percent of defendant's net worth]; compare Devlin v. Kearny AMC/Jeep/Renault, Inc., supra, 155 Cal.App.3d at pp. 391-392 [punitive damages affirmed where award was 17.5 percent of defendant's net worth]; Schomer v. Smidt (1980) 113 Cal.App.3d 828, 836-837 [170 Cal.Rptr. 662] [punitive damages affirmed; award was [**75]  10 percent of defendant's net worth]; Downey Savings & Loan Assn. v. Ohio Casualty Ins. Co. (1987) 189 Cal.App.3d 1072, 1100 [234 Cal.Rptr. 835] [punitive damages affirmed; award was 7.2 percent of defendant's net income].) Respondent asserts appellant's true net worth approaches $ 250 million not $ 16 million and thus the punitive damage award is not excessive. However, respondent failed to prove the higher net worth figure at trial.  Accordingly  [***355]  we reduce the punitive damage award to $ 2 million.
The judgment is reversed as to the cause of action for negligent infliction of emotional injury. The judgment as to the cause of action for intentional infliction of emotional injury is modified to reduce the compensatory damages to $ 500,000 and the punitive damages to $ 2 million.  In all other  [*908]  respects the judgment is affirmed.  Each party to bear its own costs on appeal.  

127 of 133 DOCUMENTS 

LOS ANGELES POLICE DEPARTMENT et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; CHURCH OF SCIENTOLOGY OF CALIFORNIA, Real Party in Interest 

Civ. No. 49339 

Court of Appeal of California, Second Appellate District, Division Two 

65 Cal. App. 3d 661; 1977 Cal. App. LEXIS 1076; 135 Cal. Rptr. 575 

January 5, 1977 

SUBSEQUENT HISTORY:
 [**1]  
A Petition for a Rehearing was Denied February 2, 1977, and the Opinion was Modified to Read as Printed Above.  The Petition of the Real Party in Interest for a Hearing by the Supreme Court was Denied April 26, 1977.  Bird, C. J., did not Participate therein.  

DISPOSITION:
We conclude that the order of respondent court is erroneous and the court is therefore directed to vacate its order.  Accordingly, we grant the petition and issue the peremptory writ of mandate requiring the court to vacate its order requiring defendants to answer interrogatories 9, 10 and 11 and to enter a new and different order sustaining defendant's objections thereto.  

COUNSEL:
Burt Pines, City Attorney, and Hilary F. Goldstone, Deputy City Attorney, for Petitioners.
No appearance for Respondent.
Mark A. Ivener and Mark V. Kaplan for Real Party in Interest.
Fred Okrand, Jill Jakes, Mark D. Rosenbaum and Gary D. Sowards as Amici Curiae on behalf of Real Party in Interest.  

JUDGES:
Opinion by Roth, P. J., with Compton and Beach, JJ., concurring.  

OPINIONBY:
ROTH 

OPINION:

 [*664]   [***576]  Government Code, n1 sections 6250 through 6261, comprise the California Public Records Act (Act).  Section 6250 recites in part: ". . . the [**2]  Legislature, mindful of the right of individuals to privacy, finds and declares that access to information concerning the conduct of the people's business is a fundamental and necessary right of every person in this state." (Italics added.) Act is a group of integrated sections which generally define public records and the rights of any person to inspect, copy and receive copies of such records.  (§ §  6250, 6252, 6253, 6253.5, 6254.7, 6254.8.)

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n1 All code references herein made are to the Government Code unless otherwise noted.

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Section 6254, however, lists 14 separate types of records which are by legislative fiat exempt from disclosure. Section 6254, as is relevant here, recites: ". . . nothing in this chapter [Act] shall be construed to require disclosure of records that are: . . .
"(f) Records of complaints to or investigations conducted by, or records of intelligence information or security procedures of, . . . any . . . local police agency, . . ." (referred to herein as Exemption (f)). n2

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n2 It is clear from one of the cases strongly relied on by Church, Black Panther Party v. Kehoe, 42 Cal.App.3d 645 [117 Cal.Rptr. 106], that the Legislature meant to make certain types of records exempt from disclosure. Thus, Justice Friedman says at page 655: "If citizenship in a functioning democracy requires general access to government files, limited but genuine interests also demand restricted areas of nonaccess." (Italics added.)

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Real party in interest, Church of Scientology (Church) instituted this action against petitioner, Los Angeles Police Department (Department) under the authority of Act and seeks to have any records which Department maintains of its activities and the activities of its founder declared to be public records free from any exemption and open for public inspection.
The summary exemption provided for in Exemption (f) n3 in section 6254 is reiterated  [***577]  in section 6255.  In addition, however, section 6255 provides for the withholding of any record embraced in Act which is not specifically exempted by section 6254 if public interest in nondisclosure "outweighs" disclosure.

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n3 A helpful explanation of section 6254, subdivision (f) is set out in Younger v. Berkeley City Council (1975) 45 Cal.App.3d 825, 832 [119 Cal.Rptr. 830]: "Ordinarily all criminal offender record information, including that compiled by the Berkeley Police Department, is confidential and not 'public' or subject to disclosure. (Gov. Code, §  6254, subd. (f); People v. Wilkins (1955) 135 Cal.App.2d 371, 377 [287 P.2d 555].) While the Attorney General conceded in this case that the City of Berkeley could permit whatever access the city council deemed appropriate in the case of arrest records compiled by the Berkeley Police Department, the same does not apply to records compiled by the State Department of Justice, particularly where Penal Code sections 11077 and 11079 contemplate a continuing state interest in those records."
The special nature of records such as the alleged records at bench is further explained in Younger in a comment distinguishing Uribe v. Howie (1971) 19 Cal.App.3d 194 [96 Cal.Rptr. 493], a case relied upon by Church: "Uribe dealt with a routine report in a public file.  It could gain exemption not because of its content but only when and if it became a part of an investigatory file.  Here, by their very content, the criminal records compiled by the State Department of Justice are independently entitled to exemption. (See Black Panther Party v. Kehoe (1974) 42 Cal.App.3d 645, 654 [117 Cal.Rptr. 106].)"

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 [*665]  Section 6255 provides: "The agency shall justify withholding any record by demonstrating that the record in question is exempt under express provisions of this chapter or that on the facts of the particular case the public interest served by not making the record public clearly outweighs the public interest served by disclosure of the record." (Italics added.)
The procedure which enables any person to obtain judicial relief from a wrongful denial of access to public records is set out in section 6258: "Any person may institute proceedings for injunctive or declarative relief in any court of competent jurisdiction to enforce his right to inspect or to receive a copy of any public record or class of public records under this chapter.  The times for responsive pleadings and for hearings in such proceedings shall be set by the judge of the court with the object of securing a decision as to such matters at the earliest possible time."
Section 6259 provides in pertinent part: "Whenever it is made to appear by verified petition to the superior court of the county where the records or some part thereof are situated that certain public records are being improperly withheld [**5]  from a member of the public, the court shall order the officer or person charged with withholding the records to disclose the public record or show cause why he should not do so.  The court shall decide the case after examining the record in camera, if permitted by subdivision (b) of Section 915 of the Evidence Code, papers filed by the parties and such oral argument and additional evidence as the court may allow.
"If the court finds that the public official's decision to refuse disclosure is not justified under the provisions of Section 6254 or 6255, he shall order the public official to make the record public. If the judge  [*666]  determines that the public official was justified in refusing to make the record public, he shall return the item to the public official without disclosing its content with an order supporting the decision refusing disclosure. Any person who fails to obey the order of the court shall be cited to show cause why he is not in contempt of court.  . . ."
After Church had filed its action, an application for a temporary injunction requiring disclosure was denied on the ground there was no showing that the records sought were not expressly exempt from [**6]  disclosure by reason of Exemption (f).  Prior to the conclusion of the argument for a temporary injunction and its denial, the following exchange took place between the court and counsel for Church:
"The Court: What about this problem: these cases which involved administrative agencies did not deal with situations where you have a police department maintaining, quote, 'intelligence information,' so, of course, the court wasn't dealing with that type of situation.  And yet the statute specifically recognizes that there can be such a thing as intelligence information.
"Mr. Ivener: Yes.
"The Court: What must be the statutory intent regarding that?
"Mr. Ivener: Well, the statutory intent relating to intelligence files and relating  [***578]  to investigatory files is that they are exempt. . . ."
Church did not appeal the order denying a temporary injunction. Church did, however, initiate the discovery proceedings before us by filing and serving on Department certain interrogatories. Department refused to answer the interrogatories; n4 Church moved for an order requiring responses.  The court treated the issue as if it were a conditional privilege under Evidence Code section 1040;  [**7]  deferred ruling on the question of privilege as embraced in section 1040 of the Evidence Code until time of trial and then ordered the cited interrogatories answered and directed discovery to proceed.  Petitioner's request for a writ of mandate to set aside that order is before us.

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n4 These interrogatories are:
"INTERROGATORY #9: Has the Defendant [Department] determined, at any time within the period commencing January 1, 1969 to the present, that the CHURCH OF SCIENTOLOGY OF CALIFORNIA, or any Scientology organization, has engaged, or is engaging, in acts disruptive of the public order as that term is defined in the Guidelines of the Public Disorder Intelligence Division of the Los Angeles Police Department.
"INTERROGATORY #10: If the answer to Interrogatory #9 is affirmative, please state the following: 
"(a) Is a file presently maintained by the Public Disorder Intelligence Division relating to the determination hereinabove referred in Interrogatory #9?
"(b) The date of the last entry of any such file hereinabove referred in Interrogatory #10(a).
"INTERROGATORY #11: If the answer to Interrogatory #10(a) is affirmative, please state: 
"(a) The person(s), if any, and title thereof, who conducted a review of any such file since April 10, 1975.
"(b) The date upon which such review(s) was conducted."

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 [*667]  Church's verified complaint to require disclosure and its declarations and documents filed in support of its motion for the temporary injunction, which was denied, clearly establish that the records which it seeks, if they in fact exist as claimed, are the type which are embraced in Exemption (f).  The complaint refers repeatedly to "information, documents, reports and records" (italics added) which are being allegedly maintained by Department and which relate to Church; and, in oral argument upon the motion for preliminary injunction, Church's attorney admitted that "the statutory intent relating to intelligence files and relating to investigatory files is that they are exempt." It is plain that "records of intelligence information" fall within the ambit of Exemption (f).  Thus, the soundness of the action itself is drawn into question by the binding allegations of the complaint, n5 as well as by the admission of Church at the proceedings for a temporary injunction excerpted above.  We are thus presented with the question, what, if any, discovery should take place, especially when any proceeding under the Act is from first to last a form of discovery, i.e.,  [**9]  the disclosure of certain records and/or information.

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n5 Exemption (f) refers to "investigatory or security files compiled by any [ ] state or local agency for correctional, law enforcement as licensing purposes." The complaint alleges that defendant L.A.P.D. ". . . received, compiled, and otherwise maintained information, documents, reports and records pertaining to the Plaintiff herein" and, at another point, refers to "records of intelligence information or security procedures of, or any such investigatory or security files compiled and/or maintained by Defendant L.A.P.D. for correctional, law enforcement or licensing purposes" as records which are exempt only when "the prospect of future enforcement proceedings is concrete." What these allegations demonstrate is that Church well knows that records embraced in Exemption (f) exist and that, in the very terms of the allegations themselves, they are exempt from disclosure.

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In proceeding under Act, section 6255 provides the public entity which has denied a person [**10]  the right of inspection two alternative justifications, independent of section 1040 of the Evidence Code although similar  [*668]  thereto, for its decision not to open its files: (1) the information sought may be exempt under one or more of the 14 exemptions listed in section 6254; or (2) disclosure of the information sought, although not exempt, would not be in the public interest.
Church argues in support of its position that the records are inappropriately kept and contain inaccurate information and asserts that upon disclosure the records may be corrected.  In fact, the interrogatories previously set forth, as well as other interrogatories, posed by Church are intended to discover whether Department has complied with internal administrative criteria on intelligence files.
 [***579]  In this connection, it should be noted that if the record is a public record all persons have access thereto as permitted by Act and a person who may be the subject of the particular record sought does not, because he is personally affected, have any greater right than any person to examine the record.  Conversely, a subject person has no right under Act to prevent disclosure [**11]  of the record to any other person.  (Black Panther Party v. Kehoe, 42 Cal.App.3d 645 [117 Cal.Rptr. 106].)
Act was enacted with the objective of increasing freedom of information.  It is designed to give the public access to information in possession of public agencies.  Act itself does not undertake to prescribe what type of information a public agency may gather, nor to designate the type of records such an agency may keep, nor to provide a method of correcting such records.  Its sole function is to provide for disclosure.
Common sense dictates that when the principal action itself seeks records which are in all likelihood not "discoverable" under Act because of Exemption (f) or the public interest, interrogatories which seek information about these records should not be permitted.  To allow the ancillary discovery process of written interrogatories to proceed would enable Church to accomplish indirectly the objective of its discovery action without any showing that Exemption (f) does not apply or, if it is not embraced in Exemption (f), that public interest requires disclosure. When viewed in the context of the action at bench, neither Shepherd v. Superior Court [**12]  (1976) 17 Cal.3d 107 [130 Cal.Rptr. 157, 550 P.2d 161] nor Pitchess v. Superior Court (1974) 11 Cal.3d 531 [113 Cal.Rptr. 897, 522 P.2d 305], relied upon by Church and the trial court are applicable.  Neither Shepherd nor Pitchess were actions brought under Act which, as  [*669]  noted, is a special proceeding the sole object of which is the discovery and production of records.
The exemption for the records of law enforcement agencies as contained in the quoted language of section 6254, subdivision (f) "Records of complaints to our investigations conducted by or records of intelligence information . . ." is broad and all-encompassing.  It does not further describe the type of complaints or investigations or the nature of intelligence information that is exempt. (See Uribe v. Howie, 19 Cal.App.3d 194 [96 Cal.Rptr. 493].)
We conclude that the order of respondent court is erroneous and the court is therefore directed to vacate its order.  Accordingly, we grant the petition and issue the peremptory writ of mandate requiring the court to vacate its order requiring defendants to answer interrogatories 9, 10 and 11 and to enter a new and different order [**13]  sustaining defendant's objections thereto.  

128 of 133 DOCUMENTS 

L. GENE ALLARD, Plaintiff, Cross-defendant and Respondent, v. CHURCH OF SCIENTOLOGY OF CALIFORNIA, Defendant, Cross-complainant and Appellant 

Civ. No. 45562 

Court of Appeal of California, Second Appellate District, Division Two 

58 Cal. App. 3d 439; 1976 Cal. App. LEXIS 1529; 129 Cal. Rptr. 797 

May 18, 1976 

SUBSEQUENT HISTORY:
 [**1]  
A petition for a rehearing was denied June 17, 1976, and the petitions of both parties for a hearing by the Supreme Court were denied July 15, 1976.  

PRIOR HISTORY:
Superior Court of Los Angeles County, No. 988151, Parks Stillwell, Judge.  

DISPOSITION:
The judgment is modified by reducing the award of punitive damages only, from $ 250,000 to the sum of $ 50,000.  As modified the judgment is in all other respects affirmed.
Costs on appeal are awarded to respondent Allard.  

COUNSEL:
Morgan, Wenzel & McNicholas, John P. McNicholas, Gerald E. Agnew, Jr., and Charles B. O'Reilly for Plaintiff, Cross-defendant and Respondent.
Levine & Krom, Meldon E. Levine, Murchison, Cumming, Baker & Velpmen, Murchison, Cumming & Baker, Michael B. Lawler, Tobias C. Tolzmann and Joel Kreiner for Defendant, Cross-complainant and Appellant.  

JUDGES:
Opinion by Beach, J., with Roth, P. J., and Fleming, J., concurring.  

OPINIONBY:
BEACH 

OPINION:

 [*443]   [***799]  Gene Allard sued the Church of Scientology for malicious prosecution. Defendant cross-complained for conversion.  A jury verdict and judgment were entered for Allard on the complaint for $ 50,000 in compensatory damages and $ 250,000 in punitive damages. Judgment was entered [**2]  for Allard and against the Church of Scientology on the cross-complaint.  Defendant-cross complainant appeals from the judgment.

Facts:
The evidence in the instant case is very conflicting.  We relate those facts supporting the successful party and disregard the contrary showing.  ( Nestle v. City of Santa Monica, 6 Cal.3d 920, 925-926 [101 Cal.Rptr. 568, 496 P.2d 480].)
In March 1969, L. Gene Allard became involved with the Church of Scientology in Texas.  He joined Sea Org in Los Angeles  [***800]  and was sent to San Diego for training.  While there, he signed a billion-year contract agreeing to do anything to help Scientology and to help clear the planet of the "reactive people." During this period he learned about written policy directives that were the "policy" of the church, emanating from L. Ron Hubbard, the founder of the Church of Scientology. n1 After training on the ship, respondent was assigned to the Advanced Organization in Los Angeles, where he became the director of disbursements.  He later became the Flag Banking Officer.

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n1 One such policy, to be enforced against "enemies" or "suppressive persons" was that formerly titled "fair game." That person "[may] be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist.  May be tricked, sued or lied to or destroyed." (Exhibit 1.)

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 [*444]  Alan Boughton, Flag Banking Officer International, was respondent's superior.  Only respondent and Boughton knew the combination to the safe kept in respondent's office.  Respondent handled foreign currency, American cash, and various travelers' checks as part of his job.
In May or June 1969, respondent told Boughton that he wanted to leave the church. Boughton asked him to reconsider.  Respondent wrote a memo and later a note; he spoke to the various executive officers.  They told him that the only way he could get out of Sea Org was to go through "auditing" and to get direct permission from L. Ron Hubbard.  Respondent wrote to Hubbard.  A chaplain of the church came to see him.  Lawrence Krieger, the highest ranking justice official of the church in California, told respondent that if he left without permission, he would be fair game and "You know we'll come and find you and we'll bring you back, and we'll deal with you in whatever way is necessary."
On the night of June 7 or early morning of June 8, 1969, respondent went to his office at the Church of Scientology and took several documents from the safe. These documents were taken by him to the Internal Revenue [**4]  Service in Kansas City; he used them to allege improper changes in the records of the church. He denies that any Swiss francs were in the safe that night or that he took such Swiss francs. Furthermore, respondent denies the allegation that he stole various travelers' checks from the safe. He admitted that some travelers' checks had his signature as an endorsement, but maintains that he deposited those checks into an open account of the Church of Scientology.  There is independent evidence that tends to corroborate that statement.  Respondent, having borrowed his roommate's car, drove to the airport and flew to Kansas City, where he turned over the documents to the Internal Revenue Service.
Respondent was arrested in Florida upon a charge of grand theft. Boughton had called the Los Angeles Police Department to report that $ 23,000 in Swiss francs was missing.  Respondent was arrested in Florida; he waived extradition and was in jail for 21 days.  Eventually, the charge was dismissed.  The deputy district attorney in Los Angeles recommended a dismissal in the interests of justice. n2

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n2 Leonard J. Shaffer, the deputy district attorney, testified outside the presence of the jury that members of the church were evasive in answering his questions.  He testified that the reasons for the dismissal were set forth in his recommendation; the dismissal was not part of a plea bargain or procedural or jurisdictional issue.

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 [*445]  Contentions on Appeal:
1. Respondent's trial counsel engaged in flagrant misconduct throughout the proceedings below and thereby deprived appellant of a fair trial.
2. The verdict below was reached as a result of (a) counsel's ascription to appellant of a religious belief and practices it did not have and (b) the distortion and disparagement of its religious character, and was not based upon the merits of this case.  To allow a judgment thereby achieved to stand would constitute a violation of appellant's free exercise of religion.
 [***801]  3. Respondent failed to prove that appellant maliciously prosecuted him and therefore the judgment notwithstanding the verdict should have been granted.
4. The refusal of the trial court to ask or permit voir dire questions of prospective jurors pertaining to their religious prejudices or attitudes deprived appellant of a fair trial.
5. It was prejudicial error to direct the jury, in its assessment of the malicious prosecution claim, to disregard evidence that respondent stole appellant's Australian and American Express travelers' checks.
6. The order of the trial court in denying to appellant discovery of the factual basis [**6]  for the obtaining of a dismissal by the district attorney of the criminal case People v. Allard was an abuse of discretion and a new trial should be granted and proper discovery permitted.
7. Respondent presented insufficient evidence to support the award of $ 50,000 in compensatory damages which must have been awarded because of prejudice against appellant.
8. Respondent failed to establish corporate direction or ratification and also failed to establish knowing falsity and is therefore not entitled to any punitive damages.
9. Even if the award of punitive damages was proper in this case, the size of the instant reward, which would deprive appellant church of more  [*446]  than 40 percent of its net worth, is grossly excessive on the facts of this case.
10. There was lack of proper instruction regarding probable cause. n3

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n3 This issue is raised for the first time in appellant's reply brief.

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Discussion:
1. There was no prejudicial misconduct by respondent's trial counsel, and appellant was not  [**7]   deprived of a fair trial.
Appellant claims that it was denied a fair trial through the statements, questioning, and introduction of certain evidence by respondent's trial counsel.  Love v. Wolf, 226 Cal.App.2d 378 [38 Cal.Rptr. 183], is cited as authority.
We have reviewed the entire record and find appellant's contentions to be without merit.  Several of counsel's individual statements and questions were inappropriate.  However, there often were no objections by counsel for appellant where an objection and subsequent admonition would have cured any defect; or there was an objection, and the trial court judiciously admonished the jury to disregard the comment.  Except for these minor and infrequent aberrations, the record reveals an exceptionally well-conducted and dispassionate trial based on the evidence presented.
As in Stevens v. Parke, Davis & Co., 9 Cal.3d 51, 72 [107 Cal.Rptr. 45, 507 P.2d 653], a motion for a new trial was made, based in part upon the alleged misconduct of opposing counsel at trial.  What was said in Stevens applies to the instant case.  "'A trial judge is in a better position than an appellate court to determine whether a verdict [**8]  resulted wholly, or in part, from the asserted misconduct of counsel and his conclusion in the matter will not be disturbed unless, under all the circumstances, it is plainly wrong.' [Citation.] From our review of the instant record, we agree with the trial judge's assessment of the conduct of plaintiff's counsel and for the reasons stated above, we are of the opinion that defendant has failed to demonstrate prejudicial misconduct on the part of such counsel." ( Stevens v. Parke, Davis & Co., supra, 9 Cal.3d at p. 72.)
2. The procedure and verdict below does not constitute a violation of appellant's First Amendment free exercise of religion.
 [*447]  Appellant contends that various references to practices of the Church of Scientology were not supported by the evidence, were not legally relevant, and were unduly prejudicial.  The claim is made that the  [***802]  trial became one of determining the validity of a religion rather than the commission of a tort.
The references to which appellant now objects were to such practices as "E-meters," tin cans used as E-meters, the creation of religious doctrine purportedly to "get" dissidents, and insinuations that the Church [**9]  of Scientology was a great money making business rather than a religion.
The principal issue in this trial was one of credibility.  If one believed defendant's witnesses, then there was indeed conversion by respondent.  However, the opposite result, that reached by the jury, would naturally follow if one believed the evidence introduced by respondent.  Appellant repeatedly argues that the introduction of the policy statements of the church was prejudicial error. However, those policy statements went directly to the issue of credibility.  Scientologists were allowed to trick, sue, lie to, or destroy "enemies." (Exhibit 1.) If, as he claims, respondent was considered to be an enemy, that policy was indeed relevant to the issues of this case.  That evidence well supports the jury's implied conclusion that respondent had not taken the property of the church, that he had merely attempted to leave the church with the documents for the Internal Revenue Service, and that those witnesses who were Scientologists or had been Scientologists were following the policy of the church and lying to, suing and attempting to destroy respondent.  Evidence of such policy statements were damaging to appellant,  [**10]  but they were entirely relevant.  They were not prejudicial.  A party whose reprehensible acts are the cause of harm to another and the reason for the lawsuit by the other cannot be heard to complain that its conduct is so bad that it should not be disclosed.  The relevance of appellant's conduct far outweighs any claimed prejudice. n4

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n4 The trial court gave appellant almost the entire trial within which to produce evidence that the fair game policy had been repealed.  Appellant failed to do so, and the trial court thereafter permitted the admission of Exhibit 1 into evidence.

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We find the introduction of evidence of the policy statements and other peripheral mention of practices of the Church of Scientology not to be error.  In the few instances where mention of religious practices may have been slightly less germane than the policy statements regarding fair game, they were nonetheless relevant and there was no prejudice to appellant by the introduction of such evidence.
 [*448]  3. The trial court properly  [**11]   denied the motion for judgment notwithstanding the verdict.
Appellant claimed that it had probable cause to file suit against respondent.  The claim is made that even if Alan Boughton did take the checks from the safe, knowledge of that act should not be imputed to appellant church.
Based on the policy statements of appellant that were introduced in evidence, a jury could infer that Boughton was within the scope of his employment when he stole the francs from the safe or lied about respondent's alleged theft. Inferences can be drawn that the church, through its agents, was carrying out its own policy of fair game in its actions against respondent.  Given that view of the evidence, which as a reviewing court we must accept, there is substantial evidence proving that appellant maliciously prosecuted respondent.  Therefore, the trial court did not err in denying the motion for the judgment notwithstanding the verdict.
4. The trial court performed proper voir dire of prospective jurors.
Appellant claims that the trial court refused to ask or permit voir dire questions of prospective jurors pertaining to their religious prejudices or attitudes.  The record does not so indicate.  [**12]  Each juror was asked if he or she had any belief or feeling toward any of the parties that might be regarded as a bias or prejudice for or  [***803]  against any of them.  Each juror was also asked if he or she had ever heard of the Church of Scientology.  If the juror answered affirmatively, he or she was further questioned as to the extent of knowledge regarding Scientology and whether such knowledge would hinder the rendering of an impartial decision.  One juror was excused when she explained that her husband is a clergyman and that she knows a couple that was split over the Church of Scientology.
The trial court's thorough questioning served the purpose of voir dire, which is to select a fair and impartial jury, not to educate the jurors or to determine the exercise of peremptory challenges.  ( Rousseau v. West Coast House Movers, 256 Cal.App.2d 878, 882 [64 Cal.Rptr. 655].)
5. It was not prejudicial error to direct the jury, in its assessment of the malicious prosecution claim, to disregard evidence that respondent stole appellant's Australian and American Express travelers' checks.
 [*449]  Appellant submits that evidence of respondent's purported theft of [**13]  the Australian and American Express travelers' checks should have been admitted as to the issue of malicious prosecution as well as the cross-complaint as to conversion.  If there were any error in this regard, it could not possibly be prejudicial since the jury found for respondent on the cross-complaint.  It is evident that the jury did not believe that respondent stole the travelers' checks; therefore, there could be no prejudice to appellant by the court's ruling.
6. Appellant suffered no prejudice by the trial court's denial of discovery of the factual basis for obtaining of the dismissal by the district attorney.
Prior to trial, appellant apparently sought to discover the reasons underlying the dismissal of the criminal charges against respondent.  This was relevant to the instant case since one of the elements of a cause of action for malicious prosecution is that the criminal prosecution against the plaintiff shall have been favorably terminated.  ( Jaffe v. Stone, 18 Cal.2d 146 [114 P.2d 335, 135 A.L.R. 775].)
Whether or not the lower court was justified in making such an order, the denial of discovery along these lines could not be prejudicial.  During the [**14]  trial, counsel for all parties stipulated that the criminal proceedings against Allard were terminated in his favor by a dismissal by a judge of that court upon the recommendation of the district attorney.
In addition, there was a hearing outside the presence of the jury in which the trial court inquired of the deputy district attorney as to the reasons for the dismissal.  It was apparent at that time that the prospective witnesses for the Church of Scientology were considered to be evasive.  There was no prejudice to appellant since the deputy district attorney was available at trial.  Earlier knowledge of the information produced would not have helped defendant.  We find no prejudicial error in the denial of this discovery motion.
7. The award of $ 50,000 compensatory damages was proper.
Appellant contends that based upon the evidence presented at trial, the compensatory damage award is excessive. In addition, appellant contends that the trial court erred in not allowing appellant to introduce evidence of respondent's prior bad reputation.
 [*450]  There was some discussion at trial as to whether respondent was going to claim damaged reputation as part of general [**15]  damages.  The trial court's initial reaction was to allow evidence only of distress or emotional disturbance; in return for no evidence of damaged reputation, appellant would not be able to introduce evidence of prior bad reputation. The court, however, relying on the case of Clay v. Lagiss, 143 Cal.App.2d 441 [299 P.2d 1025], held that lack of damage to reputation is not admissible.  Therefore, respondent was allowed to claim damage to reputation without allowing appellant to introduce evidence of his prior bad reputation.
 [***804]  In matters of slander that are libelous per se, for example the charging of a crime, general damages have been presumed as a matter of law.  ( Douglas v. Janis, 43 Cal.App.3d 931, 940 [4] [ 118 Cal.Rptr. 280], citing Clay v. Lagiss, supra, 143 Cal.App.2d at p. 448. Compare Gertz v. Robert Welch, Inc., 418 U.S. 323 [41 L.Ed.2d 789, 94 S.Ct. 2997].) n5 Damages in malicious prosecution actions are similar to those in defamation. Therefore, damage to one's reputation can be presumed from a charge, such as that in the instant case that a person committed the crime of theft. In any event, as the trial court in the [**16]  instant case noted, there was no offer of proof regarding respondent's prior bad reputation; any refusal to allow possible evidence on that subject has not been shown to be error, much less prejudicial error.

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n5 The Supreme Court held in Gertz v. Robert Welch, Inc., supra, 418 U.S. 323, 349 [41 L.Ed.2d 789, 810], an action for defamation, that "the States may not permit recovery of presumed or punitive damages, at least when liability is not based on a showing of knowledge of falsity or reckless disregard for the truth." (Italics added.) The instant case is distinguishable from Gertz.  Initially, the interests protected by a suit for malicious prosecution include misuse of the judicial system itself; a party should not be able to claim First Amendment protection maliciously to prosecute another person.  Secondly, the jury in the instant case must have found "knowledge of falsity or reckless disregard for the truth" in order to award punitive damages herein.  Therefore, even under Gertz, a finding of presumed damages is not unconstitutional.

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Appellant further contends that the amount of compensatory damages awarded was excessive and that the jury was improperly instructed regarding compensatory damages. The following modified version of BAJI Nos. 14.00 and 14.13 was given:
"If, under the court's instructions, you find that plaintiff is entitled to a verdict against defendant, you must then award plaintiff damages in an amount that will reasonably compensate him for each of the following elements of loss or harm, which in this case are presumed to flow from  [*451]  the defendant's conduct without any proof of such harm or loss: damage to reputation, humiliation and emotional distress.
"No definite standard or method of calculation is prescribed by law to fix reasonable compensation for these presumed elements of damage.  Nor is the opinion of any witness required as to the amount of such reasonable compensation.  Furthermore, the argument of counsel as to the amount of damages is not evidence of reasonable compensation.  In making an award for damage to reputation, humiliation and emotional distress, you shall exercise your authority with calm and reasonable judgment, and the damages you find shall be just and reasonable."  [**18]  
The following instruction was requested by defendant and was rejected by the trial court: "The amount of compensatory damages should compensate plaintiff for actual injury suffered.  The law will not put the plaintiff in a better position than he would be in had the wrong not been done." Accompanying the request for that motion is a citation to Staub v. Muller, 7 Cal.2d 221 [60 P.2d 283], and Basin Oil Co. v. Baash-Ross Tool Co., 125 Cal.App.2d 578 [271 P.2d 122].
The Supreme Court has recognized that "Damages potentially recoverable in a malicious prosecution action are substantial.  They include out-of-pocket expenditures, such as attorney's and other legal fees . . .; business losses . . .; general harm to reputation, social standing and credit . . .; mental and bodily harm . . .; and exemplary damages where malice is shown . . . ." ( Babb v. Superior Court, 3 Cal.3d 841, 848, fn. 4 [92 Cal.Rptr. 179, 479 P.2d 379].) While these damages are compensable, it is the determination of the damages by the jury with which we are concerned.  Appellant seems to contend that the jury must have actual evidence of the damages suffered and the monetary amount thereof.  [**19]   [***805]  
"'The determination of the jury on the issue of damages is conclusive on appeal unless the amount thereof is so grossly excessive that it can be reasonably imputed solely to passion or prejudice in the jury.  [Citations.]'" ( Douglas v. Janis, supra, 43 Cal.App.3d at p. 940.) The presumed damage to respondent's reputation from an unfounded charge of theft, along with imprisonment for 21 days, and the mental and emotional anguish that must have followed are such that we cannot say that the jury's finding of $ 50,000 in compensatory damages is unjustified.   [*452]  The amount does not alone demonstrate that it was the result of passion and prejudice.
8. Respondent is entitled to punitive damages.
Appellant cites the general rule that although an employer may be held liable for an employee's tort under the doctrine of respondeat superior, ordinarily he cannot be made to pay punitive damages where he neither authorized nor ratified the act.  (4 Witkin, Summary of Cal. Law. (8th ed.) §  855, p. 3147.) n6 Appellant claims that the Church of Scientology, which is the corporate defendant herein, never either authorized or ratified the malicious prosecution.  [**20]  

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n6 We again note that Gertz v. Robert Welch, Inc., supra, precludes the award of punitive damages in defamation actions "at least when liability is not based on a showing of knowledge of falsity or reckless disregard for the truth." The facts of the instant case fall within that categorization, so a finding of punitive damages was proper.  Moreover, as we noted above, an egregious case of malicious prosecution subjects the judicial system itself to abuse, thereby interfering with the constitutional rights of all litigants.  Punitive damages may therefore be more easily justified in cases of malicious prosecution than in cases of defamation. The societal interests competing with First Amendment considerations are more compelling in the former case.

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The finding of authorization may be based on many grounds in the instant case.  For example, the fair game policy itself was initiated by L. Ron Hubbard, the founder and chief official in the church. (Exhibit 1.) It was an official authorization to treat "enemies"  [**21]  in the manner in which respondent herein was treated by the Church of Scientology.
Furthermore, all the officials of the church to whom respondent relayed his desire to leave were important managerial employees of the corporation.  (See 4 Witkin, Summary of Cal. Law (8th ed.) supra, §  857, p. 3148.)
The trier of fact certainly could have found authorization by the corporation of the act involved herein.
9. The award of punitive damages.
Any party whose tenets include lying and cheating in order to attack its "enemies" deserves the results of the risk which such conduct entails.  On the other hand, this conduct may have so enraged the jury that the award of punitive damages may have been more the result of  [*453]  feelings of animosity, rather than a dispassionate determination of an amount necessary to assess defendant in order to deter it from similar conduct in the future.  In our view the disparity between the compensatory damages ($ 50,000) and the punitive damages ($ 250,000) suggests that animosity was the deciding factor.  Our reading of the decisional authority compels us to conclude that we should reduce the punitive damages. We find $ 50,000 to be a reasonable [**22]  amount to which the punitive damages should be reduced.  We perceive this duty, and have so modified the punitive damages award not with any belief that a reviewing court more ably may perform it. n7 Simply stated the decisional authority seems to indicate that the reviewing court should examine punitive damages and where necessary modify the amount in order  [***806]  to do justice.  ( Cunningham v. Simpson, 1 Cal.3d 301 [81 Cal.Rptr. 855, 461 P.2d 39]; Forte v. Nolfi, 25 Cal.App.3d 656 [102 Cal.Rptr. 455]; Shroeder v. Auto Driveaway Company, 11 Cal.3d 908 [114 Cal.Rptr. 622, 523 P.2d 662]; Livesey v. Stock, 208 Cal. 315, 322 [281 P. 70].)

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n7 See dissent in Cunningham v. Simpson, 1 Cal.3d 301 [81 Cal.Rptr. 855, 461 P.2d 39].

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10. Instruction on probable cause.
Appellant requested an instruction stating: "Where it is proven that a judge has had a preliminary hearing and determined that the facts and evidence show probable cause to believe the plaintiff guilty [**23]  of the offense charged therefore, ordering the plaintiff to answer a criminal complaint, this is prima facie evidence of the existence of probable cause." The trial court gave the following instruction: "The fact that plaintiff was held to answer the charge of grand theft after a preliminary hearing is evidence tending to show that the initiator of the charge had probable cause. This fact is to be considered by you along with all the other evidence tending to show probable cause or the lack thereof." n8

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n8 This instruction was given on the court's own motion.

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Appellant claimed for the first time in its reply brief that the trial court's lack of proper instruction regarding probable cause was prejudicial error. Since this issue was raised for the first time in appellant's reply brief, we decline to review the issue. n9

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n9 We note that given the circumstances of the instant case, the juror could have easily been misled by the requested instruction.  If the evidence showed that the agents and employees of appellant were lying, then the preliminary hearing at which they also testified would not be valid.  While the jurors may of course consider that the magistrate at the preliminary hearing found probable cause, that should be in no way conclusive in the jury's determination of probable cause.

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 [*454]  The judgment is modified by reducing the award of punitive damages only, from $ 250,000 to the sum of $ 50,000.  As modified the judgment is in all other respects affirmed.
Costs on appeal are awarded to respondent Allard.  

129 of 133 DOCUMENTS 

Christofferson v. Church of Scientology 

(No. 15952) 

SUPREME COURT OF OREGON 

293 Ore. 456; 650 P.2d 928; 1982 Ore. LEXIS 991 

August 3, 1982, Filed 

PRIOR HISTORY:
 [*1]  
(28702) (57 Or App 203) (respondent's petition) 

OPINION:

PETITION FOR REVIEW DENIED 
Tanzer and Peterson, JJ. would allow.  

130 of 133 DOCUMENTS 

Christofferson v. Church of Scientology 

(No. 15952) 

SUPREME COURT OF OREGON 

293 Ore. 456; 650 P.2d 928; 1982 Ore. LEXIS 992 

August 3, 1982, Filed 

PRIOR HISTORY:
 [*1]  
(28705) (57 Or App 203) (appellant Church of Scientology's petition) 

OPINION:

PETITION FOR REVIEW DENIED 
Tanzer and Peterson, JJ. would allow.  

131 of 133 DOCUMENTS 

MARTIN SAMUELS, Respondent, v. LAFAYETTE RONALD HUBBARD, Defendant, and CHURCH OF SCIENTOLOGY OF CALIFORNIA, INC., and CHURCH OF SCIENTOLOGY, MISSION OF DAVIS, Intervenors-Appellants 

CA No. A30844 

COURT OF APPEALS OF OREGON 

71 Ore. App. 481; 692 P.2d 700; 1984 Ore. App. LEXIS 4684 

October 10, 1984, Argued and submitted 

December 19, 1984, Filed; Argued and submitted October 10, 1984 

SUBSEQUENT HISTORY:
 [***1]  
Reconsideration Denied February 8, 1985.  Petition for Review Denied April 30, 1985 (299 Or 118). 

PRIOR HISTORY:
Appeal from Circuit Court, Multnomah County.  Charles S. Crookham, Judge.  No. A8311-07227.  

DISPOSITION:
Affirmed.  

COUNSEL:
Marc D. Blackman, Portland, and Eric M. Lieberman, New York, New York, argued the cause for intervenors-appellants.  On the briefs were Marc D. Blackman, Diane L. Alessi, and Ransom, Blackman & Simson, Portland. 
Garry P. McMurry, Portland, argued the cause for respondent.  With him on the brief were Ronald L. Wade, and Rankin, McMurry, VavRosky & Doherty, Portland.  

JUDGES:
Richardson, Presiding Judge, and Van Hoomissen and Young, Judges.  

OPINIONBY:
VAN HOOMISSEN 

OPINION:

 [*483]   [**701]  Plaintiff filed this civil action against Hubbard, the founder of Scientology, alleging that Hubbard had committed torts against him.  Plaintiff does not allege that Hubbard personally committed the alleged torts, which include conversion, outrageous conduct, defamation and fraud.  Rather, he alleges that he directed and controlled others who did so and that they were Hubbard's agents.  They include intervenors Church of Scientology of California, Inc., and Church of Scientology, Mission [***2]  of Davis.  Plaintiff is a former minister of the California church and a former president of the Davis mission. Plaintiff served Hubbard by substituted service pursuant to an ex parte court order, but Hubbard has not appeared.  After the service, the California church and the Davis mission moved to intervene as defendants.  The trial court denied their motions, and they appeal.  We affirm. 
Plaintiff moves to dismiss on the ground that an order denying a motion to intervene is not appealable. ORS 19.010(2)(a) provides that appealable orders include "[a]n order affecting a substantial right, and which in effect determines the action or suit so as to prevent a judgment or decree therein." (Emphasis supplied.) Other states with similar appeal statutes have  [**702]  held that an order denying intervention is final as to the party seeking to intervene, because it prohibits a judgment in the main action on that party's claim.  They therefore treat such orders as immediately appealable. Henry v. Travelers' Ins. Co., 16 Colo 179, 26 P 318 (1891); Ousley v. Osage City, 95 Kan 254, 147 P 1110 (1915); Likover v. Cleveland, 60 Ohio App 2d 154, 396 NE 2d 491 (1978); [***3]  James S. Jackson Co. v. Horseshoe Creek Ltd., 650 P2d 281 (Wyo 1982); see also Thorpe v. North Moneta, etc. Water Co., 12 Cal App 187, 106 P 1106 (1909) (intervenor could not appeal from final judgment in the case; the time for an appeal was when petition to intervene was denied). 
Federal courts take a slightly different position.  28 USC §  1291 provides for appeals "from all final decisions" of the district courts.  Final decisions generally include orders that, as a practical matter, end the litigation.  Catlin v. United States, 324 U.S. 229, 233, 65 S Ct 631, 89 L Ed 911 (1945); Weston v. The City Council of Charleston, 27 U.S. (2 Pet.) 449, 464-65, 7 L Ed 481 (1829); Matter of Glover, Inc., 697 F2d 907,  [*484]  909 (10th Cir 1983). An order denying a petition to intervene is appealable under the federal statute if the petitioner had a right to intervene or if the denial was an abuse of the trial court's discretion.  If the decision was discretionary and the trial court did not abuse its discretion, federal courts take either of two positions.  The traditional approach is to dismiss the appeal.  Wheeler v. American Home Products Corp., 582 F2d 891,  [***4]  896 (5th Cir 1977); State of N.M. v. Aamodt, 537 F2d 1102, 1106 (10th Cir 1976), cert den 429 U.S. 1121 (1977). However, deciding whether to dismiss the appeal requires the appellate court to determine the merits of the trial court's denial of intervention, just as it would do if it had jurisdiction.  Some commentators and other federal courts have suggested that it is simpler to treat all denials of intervention as appealable and to affirm those where the trial court properly exercised its discretion.  Reedsburg Bank v. Apollo, 508 F2d 995, 997 (7th Cir 1975); Levin v. Ruby Trading Corp., 333 F2d 592, 594 (2nd Cir 1964); 3B Moore's Federal Practice para. 24.15.  State courts whose appeal provisions are similar to the federal generally take this latter position.  Citibank, N.A., v. Blackhawk Heating, Etc., 398 So 2d 984, 986 (Fla App 1981); Mayflower Development Corp. v. Dennis, 11 Mass App 630, 633-35, 418 NE 2d 349 (1981); Apodaca v. Town of Tome Land Grant, 86 NM 132, 520 P2d 552 (1974). 
In short, in most other jurisdictions, either some or all denials of intervention are immediately appealable. If not all denials are immediately appealable, the court [***5]  must first decide the merits of the denial in order to determine whether a particular order is appealable. Oregon has not yet clearly decided the issue.  In State Highway Com. v. Superbilt Mfg. Co., 200 Or 478, 481-83, 266 P2d 1072 (1954), the Supreme Court noted that a denial of intervention of right may be final and therefore appealable. However, the intervention at issue was premature, and denial of the motion to intervene was without prejudice to a renewed motion later in the case.  The court, therefore, dismissed the appeal.  In General Const. v. Fish Comm., 19 Or App 485, 490-92, 528 P2d 122 (1974), we dismissed an appeal from a denial of a motion to intervene on the ground that the intervenor could assert its claim in a separate action.  In Brown v. Brown/Brown, 10 Or App 80, 82-83, 497 P2d 671, rev den (1972), we dismissed an appeal because the trial court did not abuse its discretion in denying  [*485]  the motion to intervene. These cases can best be seen as applications of the majority federal rule that, when the decision on intervention is within the trial court's discretion and the trial court did not abuse its discretion, the appellate court should [***6]  dismiss the appeal.  In each case the court determined the merits of the appeal in order to dismiss it; the Superbilt court indicated that it would not have dismissed the appeal if it had been meritorious. 
Although Oregon cases may apply the majority federal rule, they do not constitute  [**703]  a reasoned adoption of it.  Other states have held, and we agree, that a decision to deny a motion to intervene affects a substantial right of the intervenor and, as a practical matter, determines the action so as to prevent a judgment in that action on the intervenor's claim or defense.  It, therefore, comes within the language of ORS 19.010(2)(a).  We also agree with those courts which hold that it makes little sense to distinguish procedurally between motions for intervention which are properly or improperly denied.  We must address the merits of the trial court's decision in either situation, and it is less confusing simply to affirm a denial that was within the court's discretion.  We deny plaintiff's motion to dismiss the appeal. 
ORCP 33 provides, in relevant part: 
"B.  At any time before trial, any person shall be permitted to intervene in an action when a statute [***7]  of this state, these rules, or the common law, confers an unconditional right to intervene. 
"C.  At any time before trial, any person who has an interest in the matter in litigation may, by leave of court, intervene. In exercising its discretion, the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties."

ORCP 33 is the first clear recognition in Oregon of a distinction between intervention of right and permissive intervention.  Some cases considering intervention under former ORS 13.130 (repealed by Or Laws 1979, ch 284, §  199) suggested that a party that met the requirements of that statute had a right to intervene. See Barendrecht v. Clark, 244 Or 524, 528, 419 P2d 603 (1966); Duke v. Franklin, 177 Or 297, 304-05, 162 P2d 141 (1945). The present rule, however, clearly limits intervention of right to the few circumstances described in  [*486]  ORCP 33B.  We review decisions on motions based on those circumstances as matters of law.  Other motions for intervention must meet the requirements of ORCP 33C and, even if they do, the trial court has discretion whether to [***8]  grant them.  We review these latter decisions only to determine whether they are within the court's discretion.  Intervenors assert both that they have a right to intervene under ORCP 33B and that they are permissive intervenors under ORCP 33C. 
The underlying assumption of many of intervenor's arguments is that a default judgment against Hubbard would seriously prejudice them. n1 We do not agree.  Plaintiff's complaint alleges that Hubbard, through intervenors and other of his agents, committed a number of torts.  A judgment against him would be conclusive between plaintiff and Hubbard, but it would not bind intervenors. If, as they insist, they are independent entities over whom Hubbard has influence only as the founder of their faith, the effect of a judgment would at best be indirect and speculative. None of the allegations proved against Hubbard would be deemed proved against intervenors. They would remain free to deny that they are his agents or that he controls them.  Plaintiff could not use the judgment to hold intervenors liable in another case. 

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n1 Intervenors assert that Hubbard will not appear.  The record shows only that he has not yet appeared.

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Plaintiff may try to satisfy a judgment against Hubbard by executing on intervenors' property. To do so successfully, he would have to prove that some property that intervenors hold is in fact Hubbard's property.  That would require a full trial of those issues, and the judgment would not aid plaintiff in that regard.  He may attempt to reach intervenors' property by showing that Hubbard so dominates intervenors that they are his alter-egos. If he succeeds, not only would intervenors' property be Hubbard's property, but intervenors would have no interest in this proceeding different from Hubbard's, because they would have no existence separate from Hubbard's.  In those circumstances, it would not be inappropriate to bind them to  [**704]  the result of plaintiff's action against Hubbard. 
If plaintiff cannot show that Hubbard dominates intervenors, plaintiff will be unable to use a judgment against  [*487]  Hubbard to acquire their property.  Plaintiff may also try to show that Hubbard, although he does not control intervenors, has an interest in their property.  If so, plaintiff could reach that retained interest to satisfy a judgment against Hubbard.  Such an action would [***10]  not harm intervenors, because the interest plaintiff receives would not be theirs in the first place.  They would be in the same position as any other garnishee.  Thus, intervenors have not shown direct prejudice to themselves from a judgment against Hubbard. n2 

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n2 If Hubbard appears and obtains a judgment in his favor, intervenors would benefit because of the judgment's collateral estoppel effects.  See Bahler v. Fletcher, 257 Or 1, 474 P2d 329 (1970).

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We turn to the specific bases on which intervenors claim the court erred in denying their motions to intervene. They first assert that they are entitled to intervene as of right under ORCP 33B because they are persons to be joined, if feasible, under ORCP 29A. n3 We need not decide whether a person who should be joined under ORCP 29A is also entitled to intervene as of right under ORCP 33B, because intervenors are not persons who must be joined. Their presence is not necessary for complete relief between plaintiff and Hubbard.  To the extent that the issues [***11]  relate to intervenors' activities, plaintiff and Hubbard may need their evidence, but that evidence is available without joining them as parties.  There is no danger that intervenors, plaintiff or Hubbard would be exposed to a substantial risk of double liability or inconsistent obligations as a result of proceedings in intervenors' absence.  Neither is this a case in which intervenors would be bound by challenged rules or would be deprived of money from a challenged fund if plaintiff's action is successful.  See New York Pub. I.R.G., Inc., v. Regents of Univ. of St. of N.Y., 516 F2d 350 (2nd Cir 1975); Decker v. United States Dept. of Labor, 473 F Supp 770 (ED Wis 1979), aff'd 661 F2d 598 (7th Cir 1980). Therefore, intervenors are not entitled to intervene as  [*488]  of right under ORCP 33B. 

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n3 ORCP 29A provides in part: 
"A person who is subject to service of process shall be joined as a party in the action if (1) in that person's absence complete relief cannot be accorded among those already parties, or (2) that person claims an interest relating to the subject of the action and is so situated that the disposition in that person's absence may (a) as a practical matter impair or impede the person's ability to protect that interest or (b) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of their claimed interest."

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Intervenors' other arguments in support of intervention are in fact for permissive intervention, although they label some of them as seeking intervention as of right.  They assert that the adoption of ORCP 33C expanded the bases for permissive intervention in Oregon from what they were under former ORS 13.130. n4 They are incorrect.  The first sentence of ORCP 33C is simply a repetition of the standard for intervention found in former ORS 13.130.  Although the second sentence of ORCP 33C is derived from FRCP 24(b), it merely states criteria that courts have traditionally used in deciding whether to permit intervention.  It does not adopt the broad federal standard for permissive intervention. n5 

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n4 Those bases were strict.  "[T]he right or interest which will allow a third person to intervene must be of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation of the judgment[.]" Brune v. McDonald, 158 Or 364, 370, 75 P2d 10 (1938). 
n5 FRCP 24(b)(2) permits intervention whenever the intervenor's claim or defense and the main action have an issue of law or fact in common.  The bases for permissive intervention in ORCP 33C, rather than being comparable to those in FRCP 24(b)(2), are closer to those for intervention of right in FRCP 24(a)(2).  The numerous federal cases which intervenors cite are therefore of limited assistance in resolving this case.  Even those federal cases which hold that a party had a right to intervene do little more than indicate that a similarly situated party would qualify for permissive intervention under Oregon law.  That determination is of little assistance in deciding whether a denial of permissive intervention exceeded the trial court's discretion.  Intervenors would have been better advised to seek authorities applying intervention provisions similar to Oregon's rather than assuming that there is a federal answer for every state problem.

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 [**705]  Intervenors assert that disposition of the case in their absence may, as a practical matter, impede their ability to protect their religious and reputational interests.  Assuming that those concerns give intervenors an "interest in the matter in litigation," they are not significant enough that the trial court's action was outside its discretion.  Although there may be extensive litigation between various Scientology organizations and their opponents, we do not see how the exclusion of intervenors from this case would damage their interests in others.  There would be no res judicata as to them.  Despite their arguments to the contrary, there would also be no stare decisis effect.  The effect of a judgment against Hubbard on intervenors' reputation is highly speculative. 
Intervenors allege that the actions of which plaintiff complains, to the extent that they occurred at all, were part of  [*489]  intra-church religious discipline and that the secular authorities may not interfere with that discipline. A judgment against Hubbard in this case neither decides this point nor impairs intervenors' ability to raise it in another proceeding.  Plaintiff's complaint [***14]  alleges a number of intentional torts.  It does not by its terms implicate intervenors' ecclesiastical concerns.  Those concerns are matters of defense.  If Hubbard does not control intervenors, his failure to raise these defenses cannot affect intervenors. If intervenors are his alter-egos, it is not improper for them to bear the results of his decision not to appear (if he does not) or not to raise those issues (if he does not). n6 To the degree that intervenors are in fact separate entities from Hubbard, failure to join them would not as a practical matter affect their ability to protect their separate interests. n7 

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n6 As we discuss below, intervenors as Hubbard's indemnitors may be able to insist that he raise those defenses. 
n7 Intervenors' assertion that certain property which plaintiff alleges Hubbard converted actually belonged to them does not meet the requirements of ORCP 33C.  Plaintiff seeks damages for conversion, not replevin of the property, and therefore intervenors do not have an interest in the subject matter of that claim.

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Intervenors' strongest argument is that their position as Hubbard's indemnitors makes intervention necessary.  The indemnity obligation arises from contracts between intervenors and the Church of Scientology International and Scientology Missions International.  Under those contracts intervenors must indemnify Hubbard from all claims against him which arise from their practice of Scientology.  The contracts were executed in July and September, 1982, after many of the events of which plaintiff complains had occurred.  However, each claim for relief refers to events in October, 1982, or later, so we will assume that intervenors may be required to indemnify Hubbard for at least some of plaintiff's alleged damages.  The indemnity agreements give intervenors a sufficient interest in the matter in litigation that the court would not have erred by permitting them to intervene. See Barendrecht v. Clark, supra. Whether the court's denial of intervention was beyond its discretion depends on whether intervenors would be prejudiced in defending against Hubbard's demand for indemnity if they are not allowed to intervene. If they would not, the court's action was permissible. 
 [*490]   [***16]  If intervenors are not permitted to intervene, Hubbard may refuse to defend the case or may do so inadequately.  Intervenors express particular concern that he may not raise their ecclesiastical defenses.  However, under California law, which governs the interpretation of the agreements according to their express terms, intervenors can control Hubbard's defense to the extent that the issues involve their indemnity liability.  If they do not, they will have  [**706]  a defense to any indemnity claim Hubbard may bring against them.  Cal Civ Code §  2778 provides in relevant part: 
"In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears: 
"* * * 
"6.  If the person indemnifying, whether he is a principal or a surety in the agreement, has no reasonable notice of the action or proceeding against the person indemnified, or is not allowed to control its defense, judgment against the latter is only presumptive evidence against the former; 
"7.  A stipulation that a judgment against the person indemnified shall be conclusive upon the person indemnifying, is inapplicable if he had a good defense upon the merits, which [***17]  by want of ordinary care he failed to establish in the action."

Subsection 7 apparently applies to all situations in which an indemnitee may claim that a judgment is conclusive. See Nicholson-Brown, Inc. v. City of San Jose, 62 Cal App 3d 526, 133 Cal Rptr 159 (1976). California courts have gone beyond the statute to hold that an action against an indemnitee is in substance an action against the indemnitor. The indemnitor, they hold, is the real party in interest and has an opportunity in defending the indemnitee to make any defense which may exist.  Dutil v. Pacheco, 21 Cal 438 (1863); Sunlight Elec. Supply Co. v. McKee, 226 Cal App 2d 47, 37 Cal Rptr 782 (1964); see also 14 Cal Jur 3d 734-38, Contribution and Indemnification § §  70-71; Restatement (Second) Judgments, §  57(1)(b)(ii). 
If Hubbard appears in this case, intervenors on his behalf may raise all the defenses that they could raise if they were parties.  If he does not appear and does not permit intervenors to appear for him, they may have a defense to his  [*491]  indemnification claim.  Although the trial court could have allowed intervention, its refusal to do so does not so damage intervenors [***18]  that it was an abuse of the court's discretion. 
Affirmed.  

132 of 133 DOCUMENTS 

Marks v. Rudie et al/State ex rel Rudie et al v. Church of Scientology of Portland et al 

(No. A20440) 

COURT OF APPEALS OF OREGON 

59 Ore. App. 409; 650 P.2d 191; 1982 Ore. App. LEXIS 3657 

September 15, 1982, Filed 

OPINION:

 [*1]  
CASE AFFIRMED WITHOUT OPINION 

133 of 133 DOCUMENTS 

CHRISTOFFERSON, Respondent, v. CHURCH OF SCIENTOLOGY OF PORTLAND et al, Appellants 

CA No. 15952 

COURT OF APPEALS OF OREGON 

57 Ore. App. 203; 644 P.2d 577; 1982 Ore. App. LEXIS 2838; 40 A.L.R.4th 1017 

September 3, 1981, Argued and submitted 

May 3, 1982 

SUBSEQUENT HISTORY:
 [***1]  
Appellants' and Respondent's Reconsiderations Denied June 10, 1982.  Both Petitions for Review Denied August 3, 1982 (293 Or 456). 

PRIOR HISTORY:
Appeal from Circuit Court, Multnomah County.  Robert P. Jones, Judge.  No. A7704-05184.  

DISPOSITION:
Reversed as to defendants Church of Scientology of Portland and Delphian Foundation; reversed and remanded for a new trial as to defendants Samuels and Church of Scientology, Mission of Davis.  

COUNSEL:
Charles J. Merten, Portland, and Emily M. Bass, New York, New York, argued the cause for appellants.  On the briefs was Charles J. Merten, Portland. 
Garry P. McMurry, Portland, argued the cause for respondent.  With him on the brief were Patric J. Doherty, Ronald L. Wade, Rankin, McMurry, VavRosky & Doherty, William T. Powers and Powers & Powers, Portland. 
Elden M. Rosenthal and Leslie M. Roberts, Portland, filed a brief amicus curiae for Cooperating Counsel for the American Civil Liberties Union of Oregon. 
James K. Hoops, Lee Boothby, and Robert W. Nixon, Portland, filed a brief amicus curiae for Americans United for Separation of Church and State.  

JUDGES:
Gillette, Presiding Judge, Young, Judge, and Roberts, Judge Pro Tempore.  

OPINIONBY:
GILLETTE 

OPINION:

 [*205]   [***2]   [**580]  Defendants appeal from the judgment entered on a jury verdict in favor of plaintiff in her action for fraud and intentional infliction of emotional distress ("outrageous conduct"). n1 Plaintiff's fraud cause of action alleged 14 misrepresentations which induced her to pay some $ 3,000 to defendants.  Her cause of action for outrageous conduct alleged in two counts a scheme to gain control of her mind and to force her into a life of service to defendants and a course of retaliatory conduct after plaintiff disassociated herself from defendants.  Defendants interposed various defenses, including a defense based upon the Free Exercise Clause of the First Amendment. The jury awarded compensatory and punitive damages. We reverse and remand. 

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n1 Plaintiff's complaint also contained a cause of action for Unlawful Trade Practices against all defendants.  The jury found that the action was barred by the statute of limitations as to all defendants except the Church of Scientology of Portland.  As to the Church, it awarded no damages on that claim, and we are not asked to review that verdict.

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THE PARTIES AND THE FACTUAL BACKGROUND 
Plaintiff is a young woman who moved to Portland from Eureka, Montana, in July, 1975, shortly after she graduated from high school, intending to obtain some work experience before going to college in the fall to study civil engineering.  When she first arrived, she stayed for a few days with a friend from Montana, Pat Osler, and then moved into an apartment with a young woman she met through Osler.  She soon found a job with an engineering firm and worked there full-time. 
Defendants are the Church of Scientology of Portland (COSOP), a religious corporation; the Church of Scientology, Mission of Davis (the Mission), also a religious corporation; the Delphian Foundation (Delphian), a nonprofit educational institution not expressly organized as a church-related school; and Martin Samuels, an ordained minister of the Church of Scientology and the president of the Mission and Delphian. 
The beliefs of Scientology were summarized in Founding Church of Scientology v. United States, 409 F2d 1146, 1151-52, (DC Cir 1969), in a manner which appears to be accurate according to the record before us in this case: 
 [*206]  "The movement [***4]  apparently rests almost entirely upon the writings of one man, L. Ron Hubbard, an American who maintained the headquarters of the  [**581]  movement in England at the time this action was brought.  In the early 1950's, Hubbard wrote tracts elucidating what he called 'Dianetics.' Dianetics is a theory of the mind which sets out many of the therapeutic techniques now used by Scientologists, * * *. 
"The basic theory of Dianetics is that man possesses both a reactive mind and an analytic mind.  The analytic mind is a superior computer, incapable of error, to which can be attributed none of the human misjudgments which create social problems and much individual suffering.  These are traceable rather to the reactive mind, which is made up of 'engrams,' or patterns imprinted on the nervous system in moments of pain, stress or unconsciousness.  These imprinted patterns may be triggered by stimuli associated with the original imprinting, and may then produce unconscious or conditioned behavior which is harmful or irrational. 
"Dianetics is not presented as a simple description of the mind, but as a practical science which can cure many of the ills of man.  It terms the ordinary person,  [***5]  encumbered by the 'engrams' of his reactive mind, as a 'preclear,' by analogy to a computer from which previously programmed instructions have not been erased.  The goal of Dianetics is to make persons 'clear,' thus freeing the rational and infallible analytical mind.  The benefits this will bring are set out in considerable and alluring detail.  All mental disorders are said to be caused by 'engrams,' as are all psychosomatic disorders, and that concept is broadly defined. 
"A process of working toward 'clear' is described as 'auditing.' This process was explicitly characterized as 'therapy' in Hubbard's best-selling book DIANETICS: THE MODERN SCIENCE OF MENTAL HEALTH (1950).  The process involves conversation with an 'auditor' who would lead the subject or 'preclear' along his 'time track,' discovering and exposing 'engrams' along the way.  Though auditing is represented primarily as a method of improving the spiritual condition of man, rather explicit benefits to bodily health are promised as well.  Hubbard has asserted that arthritis, dermatitis, asthma, some coronary difficulties, eye trouble, bursitis, ulcers and sinusitis are psychosomatic and can be cured, and further [***6]  that tuberculosis is 'perpetuated by engrams.' 
"* * * 
 [*207]  "The Hubbard Electrometer, or E-meter, plays an essential, or at least important, part in the process of auditing. The E-meter is a skin galvanometer, similar to those used in giving lie detector tests.  The subject or 'preclear' holds in his hands two tin soup cans, which are linked to the electrical apparatus.  A needle on the apparatus registers changes in the electrical resistance of the subject's skin.  The auditor asks questions of the subject, and the movement of the needle is apparently used as a check of the emotional reaction to the questions.  According to complex rules and procedures set out in Scientology publications, the auditor can interpret the movements of the needle after certain prescribed questions are asked, and use them in diagnosing the mental and spiritual condition of the subject." (Footnotes omitted).
 
From Dianetics developed Scientology, which incorporates Dianetics, but includes broader concepts.  As characterized in Founding Church, supra: 
"With Scientology came much of the overlay which lends color to the characterization of the movement as a religious one.  Hubbard [***7]  has claimed kinship between his theories and those espoused by Eastern religions, especially Hinduism and Buddhism.  He argues that man is essentially a free and immortal spirit (a 'thetan' in Scientological terminology) which merely inhabits the 'mest body' ('mest' is an acronym of the words matter, energy, space, time).  Man is said to be characterized by the qualities of 'beingness,' 'havingness,' and 'doingness.' The philosophical theory was developed that the world is constructed on the relationships of 'Affinity,' 'Reality' and 'Communication,' which taken together are denominated 'the  [**582]  ARC Triangle.'" 409 F2d at 1152. (Footnotes omitted).
 
The thetan is said by Hubbard to be immortal; it is the spirit controlling the body, through the mind.  After the death of the body, the thetan "exteriorizes" and returns in another body.  The thetan does not care to remember the life just lived when separated from the body and mind, but because each individual comes back, he is responsible for what goes on today because he will experience it tomorrow. 
Plaintiff became involved with Scientology n2 almost immediately upon arriving in Portland.  Her friend Osler  [*208]   [***8]  was taking courses from the Mission and, on his advice, she enrolled in a communications course offered by the Mission.  As part of the enrollment process, she also applied for membership in the Church of Scientology.  Because she was not yet 18 years old, she was told that she must obtain her mother's consent to receive the services offered by the Mission.  She telephoned her mother and dictated a consent form which her mother typed, signed and returned. 

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n2 References to "Scientology" refer to plaintiff's involvement with the movement in general and do not refer to plaintiff's relationship with any particular defendant.

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Plaintiff paid $ 50 for the communications course and began attending classes at the Mission every evening after work and at least one day on the weekends.  Before completing the communications course, she signed up for another course and continued to participate in courses and services offered at the Mission until the beginning of October, 1975. 
In early September, plaintiff applied to become [***9]  a provisional staff member at Delphian, located at Sheridan, Oregon.  She informed her parents that she had decided not to attend college that fall.  Moving to Delphian in early October, she worked as a provisional staff member until the beginning of December.  At that time, she was asked to leave Delphian until she could convince her mother to stop opposing her involvement in Scientology.  Plaintiff moved from Sheridan back to Portland and worked as a waitress.  While there, she worked with a staff member of the Mission, attempting to convince her parents not to interfere with Scientology. 
Plaintiff went home for Christmas and then returned to Portland in the early part of January, 1976.  She lived with several people, mainly Scientologists, and continued to work as a waitress.  She did not participate in courses or programs at the Mission, but continued to work on "handling" her parents.  In April, 1976, plaintiff went to her parents' home in Montana to "handle" them, that is, to convince them to accept her involvement in Scientology, or else to "disconnect" from them.  When she reached home, she was locked in the house and "deprogrammed." She did not return to her involvement [***10]  with Scientology and, in fact, became active in anti-Scientology activities and participated in "deprogramming" others.  She filed this action in 1977. 
 [*209]  Defendants raise 52 assignments of error, covering nearly every phase of the proceedings from pretrial to post-verdict.  Organization of the issues is somewhat complicated by the various causes of action and the various defendants.  Several assignments involve the First Amendment defense raised by defendants.  However, before reaching the constitutional issues which must be decided in this case, we first consider non-constitutional challenges to the outrageous conduct cause of action. 
OUTRAGEOUS CONDUCT 
Plaintiff alleged two counts of outrageous conduct. The first alleged a scheme to gain control of her mind and to force her into a life of service to defendants.  The allegations in this count involve actions committed by defendants during the time that plaintiff was involved with Scientology.  At the close of the case, defendants moved for directed verdicts on this cause of action, arguing that, as a matter of law, plaintiff had not proved acts that exceeded the limits of social toleration. n3 

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n3 The motion below was directed to both counts of the outrageous conduct claim.  On appeal, defendants argue that there was no outrageous conduct as a matter of law as to Count II.  As to Count I, defendants do not make that precise argument, but make several other arguments, including the argument that the actions are protected by the First Amendment. We decide the issue as to both counts on the non-constitutional basis rather than reach the constitutional issue as to Count I.

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 [**583]  The tort of intentional infliction of emotional distress, or outrageous conduct, is still in the process of developing in this state.  For example, there remain some questions as to what state of mind is required in particular situations to subject a defendant to liability.  See Brewer v. Erwin, 287 Or 435, 454-58, 600 P2d 398 (1979); compare Turman v. Central Billing Bureau, 279 Or 443, 568 P2d 1382 (1977), with Rockhill v. Pollard, 259 Or 54, 485 P2d 28 (1971). 
A "special relationship" between the parties has played a role in every case in this state involving this tort. n4  [*210]  The tort was characterized in Turman v. Central Billing Bureau, supra, as "'* * * an abuse by the actor of a position, or a relation with the other, which gives him actual or apparent authority over the other, or power to affect his interests.  * * *.'" 279 Or at 446. See also Brewer v. Erwin, supra (landlord and tenant); Rockhill v. Pollard, supra (doctor and patient); Fitzpatrick v. Robbins, 51 Or App 597, 626 P2d 910, rev den 291 Or 151 (1981) (landlord and tenant); Bodewig v. K-Mart, 54 Or App 480, 635 P2d 657 (1981), rev den 292 Or 450 (1982) [***12]  (employer-employe). n5 The role of that relationship has recently been explored in Hall v. May Department Stores Co., 292 Or 131, 637 P2d 126 (1981), a case involving an employer-employe relationship, in which the court stated: 
"The character of the relationship bears on the mental element required to impose liability, compare Rockhill with Turman and Brewer, and also on the next issue, the offensiveness of conduct that crosses the threshold of potential liability, see Pakos v. Clark, [253 Or 113, 453 P2d 682 (1969)]." 292 Or at 137.

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n4 Brewer specifically did not decide whether there could be recovery in a situation in which there was no special relationship and where only recklessness was shown.  One of defendants' assignments of error concerns an instruction which informed the jury that plaintiff could recover if defendants acted recklessly.  Plaintiff had previously withdrawn portions of her complaint which alleged a special relationship between her and defendants.  We do not reach the issue of the instruction because we dispose of the outrageous conduct claims on other grounds. [***13]  
n5 Bodewig involved one party defendant who had no special relationship to the plaintiff.  However, even in that case, some of the acts necessary to establish the tort were committed only by the employer-defendant, albeit with the other party defendant's encouragement.

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A plaintiff's particular susceptibility to distress has also played a part in certain of the cases.  See Rockhill v. Pollard, supra (plaintiff already distraught because of automobile accident and injury to child); Turman v. Central Billing Bureau, supra (plaintiff blind and suffering from glaucoma, requiring treatment by clinic for which bill was being collected); Fitzpatrick v. Robbins, supra (plaintiffs aged and visually disabled). 
Part of the uniqueness of this case lies in the absence of both of the considerations just discussed.  At the close of the evidence, plaintiff withdrew the portion of her complaint which alleged a special relationship between her and defendants.  Neither does she argue on appeal that she was in any way particularly susceptible to the infliction of emotional distress. n6 

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n6 Plaintiff was 17 years old when she first enrolled in the communications course but turned 18 soon after.  She does not contend that her age or the fact that she was living on her own for the first time made her particularly susceptible to the infliction of emotional distress.

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 [*211]  The type of conduct for which liability may be imposed for infliction of emotional distress, absent physical injury, is not well defined.  Rockhill v. Pollard, supra, rejected  [**584]  the description in Restatement (Second) of Torts, §  46 (1965) n7 and decided: 
"We need a simpler test and think it best for this case to merely hold that the conduct must be outrageous in the extreme.  It is our impression that the test for liability in these cases can only be worked out on a case by case basis.  Here we must determine whether defendant's conduct was so extreme as to warrant the imposition of liability for any severe emotional distress caused thereby." 259 Or at 59-60.

In later cases, the type of conduct which would subject a defendant to liability has been characterized as "beyond the limits of social toleration." Brewer v. Erwin, supra, 287 Or at 458; see also, Hall v. May Department Stores Co., supra, 292 Or at 137. 

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n7 The Restatement describes the conduct which gives rise to liability as follows: 
"* * * It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by 'malice,' or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort.  Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.  Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, 'Outrageous!'" Restatement (Second) of Torts, §  46, comment d (1965), quoted in Rockhill v. Pollard, supra, 259 Or at 59-60.

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Although it is ordinarily for the trier of fact to determine not only the historical facts, but also "whether the offensiveness of the defendant's conduct exceeds any reasonable limit of social toleration," Hall v. May Department Stores Co., supra, 292 Or at 137, 
"[i]t [is] for the trial court to determine, in the first instance, whether the defendants' conduct may reasonably be regarded as so extreme and outrageous as to permit recovery.  If the minds of reasonable men would not differ on the subject the court [is] obliged to grant an order of involuntary nonsuit * * *." Pakos v. Clark, supra, 253 Or at 132.
 
 [*212]  The trial court here erred in denying defendants' motions for a directed verdict as to Count I of the outrageous conduct cause of action. We find no conduct both alleged and proved under that count that could subject defendants to liability for the tort.  Plaintiff's first count alleges: 
"That the above misrepresentations and other unlawful practices were part of a scheme to gain control of Plaintiff's mind and force her into a life of service to the Defendants.  She was intentionally alienated from her family and friends.  Plaintiff's [***16]  ability to direct her life and form reasonable judgments was intentionally impaired by Defendants through the use of a crude polygraph, intense peer pressure and other covert means.  She was coerced into performing labor for which she was not paid.  She was held up to ridicule, humiliated, and forced under threat of retribution and physical harm to follow the dictates of the Defendants, and caused to give Defendants all the monies she had or could beg or borrow from others. 
"As part of the above scheme, Defendants caused Plaintiff to believe and fear that she would be subject to severe punishment should she ever bring suit against Defendants, voice her disapproval of Defendants' practices, testify against Defendants, demand a return of money from Defendants or commit any other act Defendants determined to be against their interests."
 
In this pleading, defendants' intent, their conduct and the effect on plaintiff are interwoven.  However, this interweaving should not be permitted to obscure the fact that each of the three elements -- intent, conduct which is outrageous or beyond the limits of social toleration, and resultant severe emotional distress -- must be proved.  In [***17]  the present case, defendants made no  [**585]  argument concerning intent, but they maintain that there is not sufficient evidence of either of the last two elements -- the outrageous conduct and the resultant distress -- to permit the case to go to a jury.  We agree that there is no sufficient evidence of the resultant severe emotional distress.  However, that specific basis for taking the case from the jury was not argued to the trial court and we therefore decline to reverse the court on that basis.  This brings us to a consideration of the evidence concerning defendants' conduct.  It is only by proof of conduct that is "beyond the limits of social toleration" that plaintiff may recover in an action for outrageous  [*213]  conduct, no matter what defendants may have intended and no matter what the effect on plaintiff may have been. n8 

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n8 It may well be that much of the effect on plaintiff that is alleged is not "emotional distress" either, but we need not consider here whether recovery for such effects may be had in an action for outrageous conduct. We note that the misrepresentations which are re-alleged are the same misrepresentations which form the basis for the fraud action.  These representations are not separately sufficient to be actionable as outrageous conduct.

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With respect to the well-pleaded allegations, the evidence, viewed in the light most favorable to plaintiff, is as follows.  Plaintiff enrolled in the communications course on the advice of her friend Pat Osler.  She paid $ 50 and began the course almost immediately.  In signing up for the course, plaintiff filled out forms which stated that she was applying for membership in the Church of Scientology and which explained that Scientology was a religion. Because she was 17 years old at the time, she was required to get permission from her mother to take the course and did so.  Plaintiff did not pay any attention to the explanations of the religious nature of the courses because she was told that she had to fill out the forms in order to be allowed to take the communications course, and that was all she was interested in. 
Plaintiff found a job working full-time in an engineering office in Portland and was living with a non-Scientologist roommate.  She testified that she would go to work until 5 p.m. or 6 p.m. and then attend class every evening from about 7 p.m. until between 10 p.m. and midnight.  She also attended class at least one full day, and often both days, on weekends.  This [***19]  schedule continued from July 13, when she began the communications course, until the beginning of October, when she moved to Delphian.  At the same time, plaintiff maintained contact with family members and friends in the Portland area, visiting them a number of times and corresponding regularly with her mother. 
The communications course in which plaintiff first enrolled consisted of a set of "drills" which were practiced on an individual basis with a supervisor.  As part of each drill plaintiff would read bulletins which described the theory of the particular drill to be undertaken.  She was  [*214]  then "checked out" on that information to be certain that she understood what she had read.  Then she would practice the drill "to a win," that is, until she could complete the drill as prescribed.  After completing each of eight drills, plaintiff repeated each on a more difficult level until a final pass was achieved. 
The drills were described by plaintiff at trial.  The first drill involved reading a bulletin entitled "How to Study" and being checked out on it.  The second drill involved reading the prescribed bulletin and then sitting across from another person with eyes closed [***20]  and attempting to clear her mind of all thoughts and to eliminate all outside influences or distractions.  She testified that she practiced this drill for "a couple of hours" before her supervisor indicated that she had completed it to a win.  The third drill involved the same procedure, except that she sat across from her supervisor with her eyes open. 
The fourth drill is called "bullbaiting." Plaintiff described it as follows: 
"* * * You're sitting with your eyes open facing another person.  The other person, while you're sitting there staring at them, tries to distract you by telling you jokes, making fun of you, pointing at  [**586]  you, touching you, making faces at you, trying anything that they can to make you laugh or twitch or cry or frown - make any sort of acknowledgement that you heard what he said or saw what he did. 
"And the objective is to be able to sit there while that person says anything to you and does anything around you without thinking about what they're doing, and without getting mad - making any gestures. 
"Q: How was it practiced on you? 
"A: Well, first of all they started by just telling me jokes and I like a good joke and I would laugh.  And [***21]  they would say: Flunk, you laughed.  And they would start you all over again on the same drill and they would tell the same jokes until they reached a point that you no longer laughed at it. 
"They would make fun of me.  * * * Well, they teased me about my religion; they teased me about sex; they teased me about my looks.  Some of them made gestures toward me like coming up close to me as if they were going to kiss me or touch me.  * * * As soon as they found an area that caused me to laugh more or to frown or to cry, they would  [*215]  go into that area in depth and * * * try and get me embarrassed or to cry or make some sort of reaction. 
"Q: Did they use obscene words or any foul language? 
"A: Yes, they did.  I was embarrassed by obscene words and they used obscene words a lot.  Every obscene word that I ever heard was used. 
"Q: Were you reduced to tears? 
"A: Yes, I was, at times. 
"Q: How long did the bullbaiting thing go on? 
"A: I was bullbaited several different times during the communications course, through three weeks."

After plaintiff was able to complete the bullbaiting drill, she participated in teaching it to other people. n9 

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n9 There was other testimony regarding the experiences of others in bullbaiting on other occasions when plaintiff was not present.  However, in considering defendants' conduct toward this plaintiff, we consider as relevant only what plaintiff experienced.

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The next drill required that plaintiff read sentences from Lewis Carroll's Alice in Wonderland and Through the Looking Glass until she was able to read without any inflection.  After that drill plaintiff participated in a drill which was described as "learning to acknowledge someone." 
"And in that drill the person that's acting as coach would * * * ask you a question and all you were supposed to do is acknowledge them by saying: 'Good,' or 'Yes.' And you weren't supposed to put again any inflection in your voice.  You were supposed to just say it.  * * * There was no specific meaning to it or anything; just to get the person to know that you heard what they said. 
"Q: What type of questions were asked? 
"A: There were two questions; one was * * * I don't think they were all questions.  I think the person just read phrases out of the books 'Through the Looking Glass' and 'Alice in Wonderland.'"
 
The next drill was learning how to receive an acknowledgment from a person. 
"And what that was there were two questions.  The first one was 'do fish swim' and the second one was 'do birds fly.' * * * [Y]ou sat across from the coach and you say to him: Do fish swim.  [***23]  And the coach tries to ignore you and you try to say it in as much of a forceful manner that you get an acknowledgement from him.  And he will sit there  [*216]  and laugh at what you're doing, or totally ignore you.  And you're supposed to just sit there and stare right at him and clear your head of all thoughts and ask him this question with such force that he feels he has to answer you. 
"And then, as another step up from that same drill, the coach, instead of just ignoring you or laughing, will begin to make remarks just like in the bullbaiting drill. You will say: Do birds fly.  He  [**587]  will say: I don't know, what do you think.  And then you're supposed to just repeat the question 'Do birds fly' until you get him to answer.  And he will - sometimes the person will say that they have a headache or that they want a drink of water and you're supposed to say - you're supposed to get them to forget that they have a headache or that they need something and to answer your question for you."
 
Plaintiff's memory was not clear on four further drills, called "upper indoctrination" drills. One involved reading a bulletin entitled "What is Control," which plaintiff remembered [***24]  as "telling you how to control people and how to achieve the response and the actions that you want to achieve from the other person." Another involved learning commands, such as "Look at the wall, walk over to that wall, touch that wall, turn around." In another drill, 
"* * * you give a command to [an] ashtray as you hold it in front of you.  I can't remember what the commands were, but they were something like * * * 'Rise up,' or something.  And you raise the ashtray up and you do this drill over and over until you are convinced that you have told the ashtray to move and it has moved." n10

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n10 There was some other testimony concerning the type of activities involved in the "upper indoctrination" drills. Although somewhat more detailed, it is substantially the same as plaintiff's descriptions.

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Plaintiff completed the communications course in about one month.  However, on July 25, 1975, less than two weeks after she started that course, she signed up for another, known as the Student HAT course,  [***25]  for which she paid $ 250 to the Mission.  While she was taking the communications course she was also approached by the Mission staff about receiving "auditing," for which certain claims were made that are included among the misrepresentations alleged in the fraud action.  When she was approached about "auditing" by a staff member, he told her everyone has "hangups" that inhibit communication and asked if she  [*217]  would like to get rid of all of her hangups and improve herself.  Plaintiff signed up for auditing because the staff member told her it was the best thing she could do for herself, she was convinced that it was, and she wanted to develop herself to her fullest potential.  On July 26, plaintiff paid $ 780 and on July 31, she paid an additional $ 1100 for a number of hours of auditing. 
Because she did not have the money to pay for the hours of auditing she was told she would need, plaintiff was coached by Mission staff members to borrow money from friends and family.  The staff members helped her to call people and ask to borrow money.  A staff member would tell her the type of conversation to use and sit there while she called, giving her ideas and suggestions.  In [***26]  the evenings when she went to the Mission she would take courses for a while and then be asked to come to a staff member's office to make phone calls.  She borrowed $ 700-800 from friends and family and another $ 500 from Freedom Federal Credit Union, which is operated by Scientologists. 
Plaintiff began the Student HAT course and the auditing right after completing the communications course, approximately in mid-August.  She took the course on weekends and participated in auditing in the evenings during the week.  As explained above, the purpose of auditing is claimed to be to relieve the negative effects of past experiences.  This is accomplished by the use of an "E-meter," which is a crude galvanometer.  The individual receiving the auditing holds what are described as two tin cans, one in each hand.  The cans are connected to a device which has a needle which reacts in some manner to the responses made. n11 

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n11 The E-meter was described in United States v. Article or Device, etc., 333 F Supp 357 (DDC 1971): 
"The E-meter is essentially a simple galvanometer using two tin cans as electrodes.  It is crude, battery-powered, and designed to measure electrial skin resistance.  It is completely harmless and ineffective in itself.  A person using the meter for treatment holds the tin cans in his hands during an interview with the operator who is known as an auditor and who purports to read indicators from the galvanometer needle as it notes reactions to questions.  * * *"

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 [**588]  Plaintiff testified that the auditor would ask a question, such as "Do you have any problems with your  [*218]  parents?" She would describe a particular argument, and he would ask if there were earlier, similar times she had had arguments with her parents.  She testified that he would take her back earlier and earlier until he decided she had related the earliest incident and her "needle was floating." The auditor would then go on to another question. 
The time spent on auditing varied.  Plaintiff testified: 
"I spent at least two hours, and often as many as five or six hours in auditing. If a point was reached, after a couple of hours, where I was pretty happy, then the auditor would end the session.  But if during the course of the questions he asked me, I became very upset and cried or wouldn't answer his questions, he would keep asking me questions over and over again until I reached a point where he felt it was safe to end the session. 
"There was a rule that in auditing that the auditor could never let the person leave when they were upset.  And so I remember a number of times that I became real upset and just wanted to leave and go home and get out of [***28]  the place, but he said: No, just sit down.  The way out is the way through, was the phrase he used.  What upsets you the most by talking about it more with me will help you overcome it."
 
The Student HAT course involved listening to tapes of lectures by L. Ron Hubbard, the founder of Scientology, and reading various bulletins, after which plaintiff would be examined to determine whether she knew the material contained in each one.  These materials concerned proper study habits and methods and the values of auditing. 
In conjunction with the Student HAT course, plaintiff attended Friday evening "musters," which all students in the communication course and the Student HAT course were required to attend.  According to plaintiff, the purpose of these meetings was "to discuss our progress on the course and reinforce one another, telling each other how many points we had made." n12 She described the musters as follows: 
 [*219]  "Well, I would go into the graduation room and be seated and then someone would come in that was officiating that night.  And it varied, like the person would come in and usually do something to get everybody to relax.  One of the most common things [***29]  they did was to say: I want everybody in here to introduce themself to two people in the room that they have never met before.  And then the people would do that and they would be relaxed and then he would start talking about Scientology and Dianetics and communications course and all of these things and how we were all going to become part of clearing the planet or making sure that everyone on the planet got Dianetic auditing. 
"Sometimes they did little drills like: Once a person asked us to locate a space around us that we would call ours and then everyone would sit there and do that.  And he would say: Now increase that space - increase that space to include you and two people beside you, and you do that.  And then he would say: Increase the space to include this room, and we did that. 
"He would say: Increase the space to include the whole world, and you just bodily increased it to that spot.  And he said: See what it is going to be like.  We are going to increase ourselves until we get everyone on this planet clear."

 [**589]  The graduates of the courses would stand up and tell the group what they had gained from the course.  They would 
"* * * say how it [***30]  had changed their lives and how they were - they had finally found meaning and finally found a way to improve themselves and rid themselves of their harmful past, emotions and attitudes."

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n12 The students received points for what they learned in the courses, and a charting system was maintained in which each student's points were recorded to show his or her progress in Scientology.

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Around the end of August or the beginning of September, staff members at the Mission began to talk to plaintiff about becoming a staff member. They told her how rewarding it was, and they began to talk about Delphian.  Certain of the claims made for Delphian are included as misrepresentations alleged in the fraud count.  According to plaintiff's testimony, she was told that she could take courses at Delphian which could be applied toward a college degree, that she would learn about architecture and engineering "from the ground up" and that Delphian was partially funded by government grants for doing research in solar and wind [***31]  energy and recycling.  Plaintiff decided that going to Delphian would be the best way to combine her  [*220]  interests in architecture and engineering with her interest in Scientology and Dianetics.  She informed her parents that she would not be going to college that fall as she had planned; instead, she applied to Delphian as a provisional staff member. After visiting her parents' home in Montana in September, she moved to Delphian at the beginning of October. 
Plaintiff was assigned to live in a room with two other women and two children.  She had a small space for her belongings.  She worked harvesting crops for a couple of weeks after she arrived and then helped to move an old garbage dump on the property.  In the evenings, she worked indoors cleaning floors, washing dishes and other such tasks.  Her work day extended from 8:30 a.m. to 11 p.m. or later.  After three or four weeks, she was assigned to care for small children of other staff members.  She was given instructions on using Scientology methods in caring for the children.  She worked as a "nanny" until she left Delphian.  She received wages of a few dollars a week. 
Visitors were not encouraged at Delphian, and [***32]  plaintiff was instructed that two-weeks notice was necessary if visitors were coming.  She described one incident that occurred around Halloween when she was reprimanded because her mother and one of her friends from Montana came to visit unannounced.  Plaintiff's mail was sometimes opened before she received it at Delphian. 
Beginning in October and continuing into November, plaintiff reported to Delphian staff members that her mother was very concerned about her involvement with Scientology.  She had been told that she must report that kind of activity, because if it was upsetting to her it would inhibit her progress in Scientology.  Plaintiff eventually became aware that her mother had hired a lawyer to find a way to get her away from Delphian.  She informed the staff of this action and that her mother had also gone to the media. 
Plaintiff was told that this kind of activity was bad for Scientology and that it would give Delphian and Scientology a bad reputation.  She was told that she would have to leave Delphian until she could "handle" her parents,  [*221]  which meant that she must convince them to sign a statement that they would not sue, attack or embarrass Scientology [***33]  or Delphian. 
Plaintiff left Delphian in late November or early December and returned to Portland.  She began working as a waitress in an hotel and lived in a house with several other people, including her friend Osler, who had also been at Delphian during the time plaintiff was there and had left when she did.  Plaintiff went to the Mission and saw staff member Jim Brooks, who was to help her handle her parents.  She was told that she could not take any classes or auditing until she could handle them.  She was informed that in order to continue in Scientology she had to handle her parents or "disconnect," i.e., cut off all relations with them. 
 [**590]  Brooks coached her on what to say in letters to her parents to convince them to allow her to continue in Scientology without interference.  Plaintiff obtained permission from Brooks to go home for Christmas to attempt to handle her parents.  She rode home with her brother, who lived near Portland.  Her parents would not agree to plaintiff's requests, and plaintiff returned to Portland with Osler. 
Under the direction of Brooks, plaintiff wrote her parents a letter on January 5, 1976, informing them that she was no longer [***34]  involved with Scientology.  Although that was not true, Brooks told her it would help her family "destimulate." She continued to report her parents' activities to Brooks, including an unsuccessful attempt to hold plaintiff in an hotel for "deprogramming." Brooks coached plaintiff in writing letters to her parents, either asking that they not interfere with her involvement in Scientology or "good road, fair weather" letters avoiding the subject of Scientology. 
Plaintiff also met with Kay Wilson from COSOP, who told her that if she wanted to continue in Scientology she would have to disconnect from her parents.  Regarding that conversation, plaintiff testified: 
"We were discussing my mother and I told Kay Wilson that my mother had hired an attorney and that she had told me all these things about Scientology I had never heard about.  My mother mentioned something about a  [*222]  Fair Game Law and I said that to Kay Wilson.  And she said: Oh, that policy letter has been cancelled.  However, the treatment of suppressive persons is still the same."
 
A "suppressive person" is one who attempts to damage or interfere with Scientology.  The Fair Game policy was proclaimed by [***35]  L. Ron Hubbard in a policy letter of October 18, 1967.  It stated that suppressive persons "[m]ay be deprived of property or injured by any means by any Scientologist without any discipline of the Scientologist.  May be tricked, sued, lied to or destroyed." n13 Plaintiff testified that she had been shown several policy letters regarding treatment of "suppressive persons." Plaintiff had been told that her mother was suppressive. 

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n13 Defendants maintain that this policy had been cancelled.  There was conflicting evidence as to the status of the policy and its meaning.  We need not resolve those conflicts because the mere existence of the policy does not constitute outrageous conduct as to this plaintiff.

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Plaintiff did not want to disconnect from her parents, but she did want to continue in Scientology.  She asked for permission from Brooks to go back to Montana to persuade her parents to agree not to sue, attack or embarrass Scientology and not to interfere with her involvement in it.  She made the trip in April,  [***36]  1976.  When she arrived at her parents' home, she was locked in the house and "deprogrammed." As a result, plaintiff decided that she did not want to return to her involvement in Scientology, and she did not. 
Whether viewed as individual acts or taken together as a "scheme," we find nothing in this record which constitutes conduct which is "beyond the limits of social toleration." There is no evidence that plaintiff was threatened or forced to remain involved in Scientology.  To the contrary, she maintained many contacts with non-Scientologists.  She had a full-time job both before and after her stay at Delphian.  The record shows that she visited with relatives living in the Portland area periodically while she was there.  She maintained correspondence with her parents and went back to Montana twice before her visit in April when she was "deprogrammed." Her parents or her mother visited her several times in Portland or at Delphian.  Plaintiff became involved and maintained her involvement  [*223]  because she desired to do so.  If misrepresentations were made regarding the benefits or the nature of Scientology which gave rise to that desire, her remedy would be for fraud, not [***37]  outrageous conduct. 
Plaintiff was recruited and indoctrinated into the Church of Scientology.  That recruitment and indoctrination, as far as this record discloses, were not so very different than might be used by any number of organizations.  She joined the group voluntarily,  [**591]  albeit, as she claims, on the basis of misrepresentations made to her.  However, she continued to participate and maintained her involvement for whatever reason without actionable threats or coercion by defendants. 
The drills plaintiff was subjected to as part of the communications course she initially signed up for were not in themselves outrageous. Plaintiff studied the theory behind each drill before participating in it.  She returned day after day to participate in the course, although she had daily contact with non-Scientologists in her job and at her apartment with her non-Scientologist roommate.  The most that can be said is that plaintiff was convinced by defendants to accept what they were teaching; unless the means involved more than persuasion, that is not outrageous. Whether or not we find any merit to defendants' teachings, plaintiff apparently did find merit in them during the [***38]  time she was associated with Scientology.  The fact that she was later convinced of their invalidity does not make defendants' conduct outrageous post hoc. 
The only evidence which supports the allegation that plaintiff was caused "to believe and fear that she would be subject to severe punishment should she ever bring suit against Defendants, voice her disapproval of Defendants' practices, testify against Defendants, demand a return of money from Defendants or commit any other act Defendants determined to be against their interests" is the testimony regarding the Fair Game policy.  Plaintiff testified that after she was "deprogrammed" she was fearful of retaliation by defendants.  There is no evidence that during her association with Scientology plaintiff was afraid to terminate her involvement or feared defendants in any way.  The fact that she was informed of a policy known as Fair Game is not outrageous conduct. 
 [*224]  We hold that the evidence presented under Count I of the outrageous conduct cause of action does not, as a matter of law, establish conduct that is outrageous in the extreme or beyond the limits of social toleration. 
Count II of the outrageous [***39]  conduct action n14 alleges that: 
"Subsequent to Plaintiff's deprogramming, Defendants have pursued a course of conduct against Plaintiff that is designed to threaten, humiliate, and intimidate Plaintiff and cause her fear, anguish and mental distress.  Defendants on June 7, 1977, filed suit against Plaintiff without cause and for the purpose of intimidating Plaintiff; Defendants have, in June of 1976 and April of 1977, declared Plaintiff to be a suppressive person subject to Defendants continuing 'fair game' policy of retribution which directs Defendants' organizations and other Scientology organizations and their members to trick, lie to or destroy Plaintiff.  Defendants have, beginning in June of 1976 and continuing to the present, forbid, through threats of mental and physical harm, any friends of Plaintiff connected with Defendants from communicating with Plaintiff; Defendants have caused and continue to cause the mailing of materials to Plaintiff and Plaintiff's family subsequent to Plaintiff's request that such mailings cease."

Defendants moved for a directed verdict on this count as well, on the basis that the conduct proved was not such that it could subject [***40]  them to liability. 

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n14 This count was withdrawn as to defendant Delphian at the close of the evidence.  COSOP and defendant Samuels contend that no involvement by them was shown.  Because of our disposition of this count on other grounds, we need not reach that issue.  We use the term "defendants" here without delineating whose involvement was shown.

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The evidence established, first, that a libel action was filed by certain of the defendants against plaintiff after a press conference in which plaintiff participated. That matter was still pending at the time of the trial of this action.  We said in Erlandson v. Pullen, 45 Or App 467, 472, 608 P2d 1169 (1980): 
"Without necessarily suggesting that it could never be so, we note that it would be a rare case in which the bringing of a  [**592]  lawsuit would fit the definition of outrageous conduct. This tort has been reserved for 'intentional acts of  [*225]  a flagrant character under most unusual facts and circumstances * * *' Melton v. Selen [***41]  , 282 Or 731, 736, 580 P2d 1019 (1978)."

Here the record reveals nothing about the other case except that it was an action for libel.  We do not know, nor can we infer from this record, that it was without foundation.  Such proof would not even support an action for abuse of process without evidence that plaintiff had prevailed.  Erlandson v. Pullen, supra. Filing such a suit is not outrageous conduct. 
There is evidence that plaintiff was declared a suppressive person by certain individuals connected with the Mission.  Plaintiff testified at trial that she knew she had been declared suppressive because that is what is done.  At her deposition, she testified that someone had told her that she had been declared suppressive. However, there is no evidence that defendants informed plaintiff that she was declared suppressive and subject to the Fair Game policy, or knew or intended that she be so informed. n15 

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n15 At her deposition, plaintiff testified that she did not know whether she had been declared suppressive. Later, however, she said she had been told by someone that she had been declared suppressive. She stated that she could not remember who had told her, but thought it was someone who left Scientology after she did.

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The only evidence that defendants forbade, "through threats of mental and physical harm, any friends of Plaintiff connected with Defendants from communicating with Plaintiff" is a document issued June 7, 1976: 
"All staff are hereby notified not to attempt to contact or interfere with JULIE CHRISTOFFERSON or PATRICK OSLER in any manner.  These two persons have attacked the Church of Scientology so I repeat, they are not to be communicated to for any reason. 
"If either of these two contact any one in the Church, or if any associates of theirs try to contact any one of the Church, report this action * * * immediately."

This directive followed a letter sent on June 6, 1976, by an attorney on behalf of plaintiff and Osler.  That letter said: 
"This office represents Julie Christofferson and Patrick Osler, formerly members of your group.  Enclosed are photocopies of affidavits to the effect that they have both been deprogrammed, and that they request legal assistance should you make any effort to induce them back into the  [*226]  cult.  Naturally, a large civil action would be an expected element of any such legal assistance.  Therefore you are hereby on notice [***43]  that any attempt to contact them, or to interfere with them in any manner, will result in most grave consequences to you."
 
In addition, a former staff member of the Mission testified that they were told at a staff meeting not to communicate or associate with plaintiff or Osler under any conditions, or if they did so, to write it up immediately. 
Following, as the directive had, the letter from plaintiff's attorney demanding that defendants not contact plaintiff in any way, the orders that plaintiff's demand be met can in no way be considered outrageous conduct. There is no evidence that any threats of mental or physical harm were made to enforce the prohibition on contact with plaintiff. 
The mailings of which plaintiff complains were, with one exception, from the American Saint Hill Foundation (known as ASHO) in California, a Scientology organization.  Several personal letters to plaintiff, signed by individuals she did not know, asked about her progress in Scientology.  Some of those letters contained brochures on Scientology.  In addition, two editions of a newsletter entitled Cause, also published by ASHO, were received by plaintiff.  Finally, plaintiff received one [***44]  form letter with brochures from COSOP.  Plaintiff does not seem to contend that the contents of the letters were offensive, but she testified that she was made fearful by the fact that she received mail from Scientology organizations  [**593]  at all.  Certain of the mailings were addressed to plaintiff's last Portland address and were forwarded to her in Montana.  Others were addressed to the post office box which was her Eureka, Montana, address. 
Mailing letters, brochures on Scientology and a newsletter which were in themselves innocuous cannot constitute outrageous conduct. There was nothing sinister in any of the material plaintiff received.  Neither was there anything mysterious about the fact that plaintiff's forwarding address was obtained, for it is clear that certain of the items were forwarded by the post office and that the envelopes contained an "address correction requested" imprint. 
 [*227]  In addition to what was alleged in her complaint, plaintiff also presented evidence at trial, without an objection that it was outside the scope of the pleadings, of three incidents which made her fearful.  Once, a couple of months after she left Scientology, she was in [***45]  Portland and was walking down the street with Osler near the house in which she was staying.  They noticed a car parked about a block from the house, and Osler recognized the person in the car as a Scientologist.  They walked up to the car and asked the person what he was doing.  He did not answer but started the car and drove away.  Later that afternoon plaintiff noticed a van parked about a block from the house and, as they approached the van, it drove away.  Osler recognized the person driving as a Scientologist. 
Finally, in June, 1976, plaintiff and Osler were out walking and noticed two Scientologists behind them.  They walked into the library and were followed into one of the library rooms.  There the two Scientologists sat down at a table and stared at them while they looked at books.  When they started to leave, the Scientologists got up, but plaintiff and Osler left quickly and did not see them after that.  These three incidents, either singly or taken as a group, cannot conceivably be called outrageous conduct. 
We have reviewed the record as it relates to the conduct which plaintiff claims to be outrageous. We recognize that plaintiff does not claim that any particular [***46]  action, by itself, would constitute outrageous conduct, but rather contends that the actions together rise to the level of actionable conduct.  We find as a matter of law that the conduct shown is not actionable as outrageous conduct, whether viewed as individual acts or as a course of conduct.  Defendants' motions for directed verdicts on the cause of action for outrageous conduct should have been granted. 
FRAUD 
We turn to plaintiff's cause of action for fraud.  Plaintiff's complaint contained the following allegations: 
"VII 
"Between July, 1975 and April, 1976, in Oregon Defendants Church of Scientology, Mission of Davis, Church of Scientology, Portland, and the Delphian Foundation made the following misrepresentations regarding the standard,  [*228]  quality, grade, sponsorship, status, characteristics, ingredients, uses, benefits, character or qualities of the courses or goods offered by Defendants when they knew or should have known that such representations were false: 
"STUDENT HAT AND COMMUNICATIONS COURSE 
"(1) * * * the Church of Scientology Communication Course would provide more knowledge of the mind than is possessed by any psychologist or psychiatrist.  [***47]  
"(2) * * * the communication course was completed and endorsed by Father Pat Flanagan of Boys' Town, Omaha, Nebraska.  * * * 
"(3) * * * the communication course would help the Plaintiff in college work and that the course was offered on a money back guaranteed basis.  * * * 
"(4) * * * [the] student HAT course enabled a student to understand any subject better and more accurately.  * * * the Student HAT Course was offered on a money back guaranteed basis. 
 [**594]  "PLAINTIFF WAS FURTHER INDUCED TO ENGAGE IN A PROGRAM KNOWN AS AUDITING BY THE FOLLOWING REPRESENTATIONS: 
"(5) * * * auditing relieves the effects of past experiences.  * * * through auditing she would have more knowledge of the mind than any psychiatrist or psychologist and more knowledge of the bodily processes than any doctor. 
"* * *. 
"(a) Auditing develops creativity; 
"(b) Auditing increases I.Q. scores; 
"(c) Auditing cures neuroses, criminality, insanity, psychosomatic ills, homosexuality and drug dependence; 
"(d) Auditing allows one to control his own emotions and the physical universe; and 
"(e) Auditing was offered on a money back guaranteed basis. 
"* * *. 
"PLAINTIFF WAS INDUCED TO ENGAGE [***48]  IN THE STUDY OF 'DIANETICS' BY THE FOLLOWING REPRESENTATIONS: 
"(8) * * * Dianetics is scientifically provable and that it cures asthma, arthritis, rheumatism, ulcers, toothaches, pneumonia, colds, and color blindness.  * * * 
"(9) * * * L. Ron Hubbard, the creator of auditing, is an engineer and nuclear physicist and has a degree from  [*229]  Princeton University and an honorary degree from Sequoia University and is a graduate of George Washington University who revealed Dianetics to mankind as a service to humanity, with no intent to profit therefrom.  * * * 
"(10) * * * L. Ron Hubbard had a civil engineering degree; a 'B.S.' degree and was a nuclear physicist, a graduate of George Washington University; and had received an honorary degree from Sequoia University and Princeton University; 
"DEFENDANTS FURTHER INDUCED PLAINTIFF TO QUIT HER JOB AND LIVE AND WORK AT THE DELPHIAN FOUNDATION BY MAKING THE FOLLOWING REPRESENTATIONS: 
"(11) * * * Delphian Foundation was funded by government grants for developing education and alternative energy sources; further that Plaintiff could take courses at the Delphian Foundation that could be applied by an accredited college toward a college [***49]  degree. 
"(12) * * * L. Ron Hubbard was a graduate of George Washington University, was an engineer and nuclear physicist and had an honorary degree from Sequoia University and that the Delphian Foundation was nearing accreditation and had almost been accredited in September of 1975; further that in the Spring of 1976 Plaintiff could take courses at the Delphian Foundation that could be applied by an accredited college toward a college degree. 
"(13) * * * [Plaintiff] could attend school at the Delphian Foundation and, after such study, be able to obtain college credit hours in architecture or engineering at any college in the country merely by taking a test. 
"(14) * * * [Plaintiff] would obtain at the Delphian Foundation an education superior to any University in the world. 
"* * *." n16

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n16 Defendants do not argue that these alleged statements may not be fraudulent, at least under some circumstances.

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We first consider the motions for directed verdict made by each of the parties on other than [***50]  constitutional grounds.  COSOP moved for a directed verdict on the ground that plaintiff had not shown that any of its agents or employes had made any of the misrepresentations alleged.  COSOP argues on appeal that that motion should have been granted. 
 [*230]  Plaintiff's complaint alleged that the misrepresentations were made by specific individuals who were agents or employes of the Mission or Delphian.  None of the individuals named is claimed to have been an agent or employe of COSOP.  The complaint did  [**595]  allege that the misrepresentations were repeated by various employes of defendants and that they were contained in literature provided to plaintiff by COSOP.  However, at trial, plaintiff did not introduce any evidence that the statements were made by employes of COSOP or that she was provided with any literature by COSOP. 
There is evidence that plaintiff paid $ 75 to COSOP for a "Lifetime HASI" on July 30, 1975.  HASI is an acronym for Hubbard Association of Scientology International.  HASI membership entitles one to a 10 percent discount on purchases from all Scientology organizations.  Plaintiff contends that COSOP may be held liable for the misrepresentations [***51]  made by employes of the Mission, because it received money from plaintiff while knowing about the fraudulent practices employed by the Mission.  She does not contend that actual knowledge was shown, but only that COSOP had constructive knowledge of the marketing practices of the Mission and of the claims that were made for the courses offered. 
Assuming without deciding that COSOP could be held liable on such a basis, we find no evidence, nor has plaintiff pointed to any, to indicate that COSOP was aware on July 30, 1975, when plaintiff paid $ 75 for the HASI membership, that plaintiff had had any contact with the Mission at all.  The only evidence regarding the $ 75 payment to COSOP is a receipt.  Plaintiff did not testify to the circumstances surrounding that payment and, in fact, testified mistakenly that she had not paid any money to COSOP.  The fact that both COSOP and the Mission are Scientology organizations does not by itself provide a sufficient link to hold COSOP liable for what may have been done by the Mission.  Neither does the fact that policy letters and bulletins written by L. Ron Hubbard are espoused by both COSOP and the Mission make COSOP liable to this plaintiff.  [***52]  
Plaintiff has not shown that the Mission acted as an agent for COSOP, nor does she claim that such a  [*231]  relationship existed.  She has shown no basis upon which COSOP may be held vicariously liable for the actions of the Mission.  We conclude that the motion of COSOP for a directed verdict on plaintiff's action for fraud should have been granted. 
Delphian's motion for directed verdict was on the ground that none of the statements alleged by plaintiff were made by any of its agents or employes and that plaintiff had already paid the $ 3,000 she claims was procured by fraud long before she went to Delphian.  Although the complaint alleges that certain of the misrepresentations were made or repeated by employes of Delphian, plaintiff appears to concede in her brief that there is no evidence to support that allegation.  Plaintiff argues, however, that Delphian should be held liable because 1) the relationship between the Mission and Delphian was such that Delphian should be held liable; 2) Delphian confirmed certain of the misrepresentations regarding its funding, structure and courses in a data sheet given to plaintiff to read to acquaint her with Delphian when she arrived;  [***53]  and 3) Delphian did receive some money from plaintiff, apparently for books, and also received free labor from plaintiff while she was there. 
Plaintiff does not state the theory behind her contention that the relationship between Delphian and the Mission is such that Delphian should be held liable for misrepresentations made by the Mission.  The evidence she points to in support of her contention is as follows: 
"* * * Mission of Davis has a branch at Sheridan on the Foundation premises * * *, the management of Mission of Davis is centered at Sheridan * * *, and that Mission of Davis, Delphian Foundation and the Sheridan Mission all co-exist on the same property to such an intertwined extent that a memorandum was necessary to prevent confusion in writing out purchase receipts * * *.  The two organizations have a common president, Martin Samuels * * *, who lives at Sheridan * * *. 
"Additionally, [the Mission's] representations were not made coincidentially, but as part of a policy calculated to induce  [**596]  members who had spent all their available funds for courses in auditing at the Mission, to work at the Delphian Foundation in return for further courses and auditing [***54]  * * *."
 
 [*232]  It is not clear whether plaintiff is suggesting that the Mission acted as the agent for Delphian in making the representations or that the two corporations are in reality one entity, i.e., an alter ego theory. n17 The evidence adduced at trial does not support "piercing the corporate veil" so as to permit treating the two corporations as one or as the alter ego of defendant Samuels.  The memorandum to which plaintiff refers shows only that the affairs of the corporations were maintained separately.  One shared corporate officer and shared facilities are not enough to permit such an approach.  See Howco Leasing Corp. v. Oregon Lumber Export Co., 283 Or 225, 228, 582 P2d 4 (1978); Schlecht v. Equitable Builders, 272 Or 92, 535 P3d 86 (1975); Wakeman v. Paulson, 257 Or 542, 480 P2d 434 (1971); A. J. Rose & Son, Inc. v. Bd. of Funeral Dir., 31 Or App 537, 570 P2d 1008 (1977). n18 

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n17 Plaintiff's brief responds to Delphian's argument as follows: 
"Defendants' argument presumes, erroneously, that since these misrepresentations were made by someone from 'Mission of Davis' rather than from 'Delphian Foundation,' Delphian is insulated from liability no matter how blatant the misstatements."

Plaintiff then recites the facts quoted above and concludes: "Any claim of no relationship between Mission and Delphian is absurd and contrary to all the evidence." This misses the point -- the issue is not whether there was a relationship; the issue is whether that relationship was so close as to give rise to joint or vicarious liability. [***55]  
n18 Because of our disposition of this issue we need not consider whether the doctrine of "piercing the corporate veil" should be applied differently, or if it may be applied at all, to religious corporations.

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We also find no evidence to support a finding that the Mission was acting as the agent of Delphian in making the alleged misrepresentations. n19 Our responsibility at this stage of the proceedings is to decide whether there is any evidence which would support a reasonable inference of agency between the Mission and Delphian.  Briggs v. Morgan, 262 Or 17, 496 P2d 17 (1972). One essential feature of agency is the right of the principal to control over the agent.  "A business organization which operates in its sole and unlimited discretion is not an agent but a principal." Kuhns et ux v. State Tax Com., 223 Or 547, 555, 355 P2d 249 (1960); and see Restatement (Second) of Agency, § §  1, 14 (1958).  There is nothing in the record before us to  [*233]  support an inference that Delphian had any right to control the actions of the Mission or had actual control over those actions;  [***56]  therefore, there could be no finding of agency. 

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n19 Plaintiff does not specifically claim that there was an agency relationship.

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Plaintiff contends that Delphian may be held liable on the basis of the following statements contained in the data sheet which was given to plaintiff to read when she arrived at Delphian, because these statements "confirmed" the misrepresentations made by the Mission: 
"That some 'external' students be accepted for tuition in accordance with our school and university structure. 
"* * * 
"That funding shall be by donations and endowments and by grants for specific projects, and that the full definition of allowable income routes be obtained and used. 
"* * * 
"That apprenticeships be a standard part of any educational program. 
"* * * 
"That there be a designated faculty, both for primary/secondary school and for the University. 
"* * * 
"That the formal structure of a university be created and maintained, and a program leading to accreditation be developed. 
"* * *  [***57]  
"That special attention be given to the maintenance of ethical relationships and  [**597]  exchanges among the dynamics of TDF; this shall be the guiding principle behind decisions as to techniques and orientations in architecture, agriculture, forestry, utilities, etc.  * * *"
 
The statements quoted above are contained under a heading "Policies." Plaintiff does not seem to claim that these are misrepresentations in themselves, and they could not fairly be construed as such.  There is no evidence to suggest that they were not the policies of Delphian; neither do the statements show a connection between Delphian and the Mission sufficient to permit a finding of agency or an alter ego situation.  They do not aid plaintiff. 
Finally, plaintiff argues from the fact that Delphian received some money from plaintiff and also received the benefit of her free labor that Delphian can be held liable for misrepresentations made by the Mission.  As  [*234]  with the COSOP motion, we need not decide if that is a viable theory of recovery because, at the close of all the evidence, the trial court struck plaintiff's claim that Delphian had received free labor and was paid money by plaintiff.  [***58]  Plaintiff has not contended here that that was error. 
We conclude that there is no basis in this record for holding Delphian liable for any misrepresentations made to plaintiff and that its motion for directed verdict should have been granted. n20 

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n20 Delphian argues that plaintiff had already paid all the money she claims to have paid before she had any contact with Delphian and that, therefore, there is no causative link between plaintiff's damages and anything Delphian may have done.  Plaintiff did buy some books while at Delphian, but it is not clear whether the amount she spent for those books is included in the amount of damages she claims.  Plaintiff's complaint claimed that she was induced to pay the defendants $ 3,000.20.  The receipts that plaintiff introduced at trial add up to something more than that figure.

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Defendant Samuels' motion for directed verdict was based on the ground that he had not participated in the alleged fraud and could not be held liable to plaintiff merely because he is the [***59]  president of the Mission.  The Oregon Supreme Court held in Osborne v. Hay, 284 Or 133, 145-46, 585 P2d 674 (1978), that 
"* * * in order to hold the officer of a corporation personally liable for fraud by an agent or employee of the corporation it is necessary to show that the officer had knowledge of the fraud, either actual or imputed, or that he personally participated in the fraud.  See McFarland v. Carlsbad Sanitorium Co., 68 Or 530, 536-537, 137 P 209 (1914), and Hoff v. Peninsula Drainage Dist., 172 Or 630, 643, 143 P2d 471 (1943)." And see McDonough v. Jones, 48 Or App 785, 617 P2d 948 (1980), rev den 290 Or 519 (1981).

There is evidence in the record from which a jury could have found that Samuels had knowledge of at least some of the alleged misrepresentations. It was not error to deny his motion for directed verdict on that basis. n21 

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n21 Samuels is alleged to be liable only because he is resident of the Mission and Delphian.  His liability, therefore, is limited by the liability of the Mission.  In the remainder of this opinion the term defendants refers to the Mission and Samuels.

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The Mission asserted only constitutional grounds for its motion.  Not all of the alleged representations are  [*235]  claimed to be religious and therefore the motion was properly denied. n22 

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n22 Defendants claim that the statements regarding the communications course, the Student HAT course, Dianetics and auditing are protected.  They do not claim that the statements concerning Delphian or the statements regarding Hubbard's educational background are religious.

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FREE EXERCISE CLAUSE DEFENSE 
We now consider the appropriate procedures for dealing with a defense to an action for fraud based on the Free Exercise Clause of the First Amendment. n23 Defendants  [**598]  made a pretrial motion to exclude from the trial "any evidence regarding the validity or sincerity of defendants' religious beliefs and practices." In the alternative, they asked for a hearing 
"* * * to determine whether the courses, training, studies, and counseling constitute a part of the religious beliefs and practices of defendants'  [***61]  religious organizations and are thus protected from inquiry as to their validity or sincerity by the Oregon and United States constitutions and applicable law interpretive thereof."

That motion was denied.  At the close of the evidence, defendants moved to strike on various grounds certain of the specifications of fraudulant statements.  As part of that motion, defendants moved to strike and withdraw from the jury all allegations regarding the communications course, the Student HAT course, auditing and Dianetics on the ground that they constitute religious practices of the defendants.  That motion was also denied.  Defendants assign error to the denial of both motions.  As we will explain hereafter, the pretrial motion was premature, but the motion at the close of all the evidence properly presented the question for the trial court's consideration. 

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n23 Defendants rely on both the United States and the Oregon constitutions for their defense.  They do not, however, argue that the scope of the Oregon constitution differs materially from that of the federal constitution and, therefore, we refer only to the First Amendment of the federal constitution in discussing this defense.

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A defense based on the Free Exercise Clause presents particular difficulties in an action for fraud.  To establish fraud, a plaintiff must ordinarily prove that the representations made were false.  See Meader v. Francis Ford, Inc., 286 Or 451, 595 P2d 480 (1979). However, when  [*236]  religious beliefs and doctrines are involved, the truth or falsity of such religious beliefs or doctrines may not be submitted for determination by a jury.  See United States v. Ballard, 322 U.S. 78, 64 S Ct 882, 88 L Ed 1148 (1944). The Supreme Court there stated: 
"* * * Freedom of thought, which includes freedom of religious belief, is basic in a society of free men.  Board of Education v. Barnette, 319 U.S. 624. It embraces the right to maintain theories of life and of death and of the hereafter which are rank heresy to followers of the orthodox faiths.  Heresy trials are foreign to our Constitution.  Men may believe what they cannot prove.  They may not be put to the proof of their religious doctrines or beliefs.  Religious experiences which are as real as life to some may be incomprehensible to others.  Yet the fact that they may be beyond the ken of mortals does not mean that [***63]  they can be made suspect before the law.  Many take their gospel from the New Testament.  But it would hardly be supposed that they could be tried before a jury charged with the duty of determining whether those teachings contained false representations.  The miracles of the New Testament, the Divinity of Christ, life after death, the power of prayer are deep in the religious convictions of many.  If one could be sent to jail because a jury in a hostile environment found those teachings false, little indeed would be left of religious freedom.  The Fathers of the Constitution were not unaware of the varied and extreme views of religious sects, of the violence of disagreement among them, and of the lack of any one religious creed on which all men would agree.  They fashioned a charter of government which envisaged the widest possible toleration of conflicting views.  Man's relation to his God was made no concern of the state.  He was granted the right to worship as he pleased and to answer to no man for the verity of his religious views.  The religious views espoused by respondents might seem incredible, if not preposterous, to most people.  But if those doctrines are subject to trial [***64]  before a jury charged with finding their truth or falsity, then the same can be done with the religious beliefs of any sect.  When the triers of fact undertake the task, they enter a forbidden domain.  The First Amendment does not select any one group or any one type of religion for preferred treatment.  It puts them all in that position.  Murdock v. Pennsylvania, 319 U.S. 105.  [**599]  As stated in Davis v. Beason, 133 U.S. 333, 342, 'With man's relations to his Maker and the obligations he may think they impose, and the manner in which an expression shall  [*237]  be made by him of his belief on those subjects, no interference can be permitted, provided always the laws of society, designed to secure its peace and prosperity, and the morals of its people, are not interfered with.'" 322 U.S. at 86-87.
 
Defendants here were asking by both motions that the trial court determine which of the alleged misrepresentations were religious and withdraw from the jury the issue of the truth or falsity of those statements.  Rather than make that determination, the trial court submitted to the jury the question of whether the statements were religious, with instructions that [***65]  it was not to determine the truth or falsity of any statements it found to be religious. n24 

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n24 Defendants also assign error to the instruction given on the Free Exercise defense and to the failure of the trial court to give certain requested instructions.  We consider those assignments infra.

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Defendants and amici argue that it is the responsibility of the trial court to determine in the first instance the religious character of statements alleged to be fraudulent and that, if it is determined that the statements relate to religious beliefs or practices, further inquiry is forbidden.  They argue that submission of the question to a jury makes the determination one that is not reviewable after a general verdict, leaving the possibility that a defendant's adherence to unpopular or unorthodox religious beliefs could be made the basis for liability.  Plaintiff argues, on the other hand, that it is appropriate for the trial court to determine which statements are religious only if it can do so as a matter of [***66]  law. She contends that, if the determination requires resolution of questions of fact, that resolution is for the jury.  Plaintiff further contends that the courses and practices in which she participated were held out to her as secular and that she therefore is entitled to have a jury consider the allegedly fraudulent statements, because they were not religious in the context in which they were made. 
Courts have had little occasion to consider the application of a Free Exercise Clause defense in an action for fraud in a jury trial.  By far the majority of the cases in this area have been non-jury cases.  We have found no cases which have considered this specific issue, and none have been cited to us.  In fact, there has been little discussion in  [*238]  even a general way of whether an action or statement is religious is a question of law or of fact.  In practice, the issue has been treated as one of fact by many courts, without discussion.  See, e.g., Fiedler v. Marumsco Christian Sch., 631 F2d 1144 (4th Cir 1980); Brown v. Dade Christian Schools, Inc., 556 F2d 310 (5th Cir 1977); United States v. Carroll, 567 F2d 955 (10th Cir 1977), but see United States v.  [***67]   Silberman, 464 F Supp 866 (MD Fla 1979); People v. Mullins, 50 Cal App 3d 61, 123 Cal Rptr 201 (1975). 
In Founding Church of Scientology v. United States, 409 F2d 1146 (DC Cir 1969), a false labeling case, the court directed that, if a new trial were to follow its remand of the case to district court, 
"* * * it is incumbent on the trial judge to rule in the first instance whether each item of alleged false labeling makes religious claims and hence cannot be submitted to the jury for the factual determination of whether it is a label for the device in question and whether it is false." (Footnote omitted.) 409 F2d at 1165.

On remand, the district court interpreted this admonition to mean that the trial court should remove from the jury's consideration only those items which made "purely religious" appeals, 
"* * * reserving a presentation of the other literature for determination under instructions differentiating the secular from the religious." United States v. Article  [**600]  or Device, Etc., 333 F Supp 357, 361 (DDC 1971).

We agree with and adopt this approach. n25 

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n25 Although in Wisconsin v. Yoder, 406 U.S. 205, 92 S Ct 1526, 32 L Ed 2d 15 (1972), the Supreme Court seemed to undertake to determine on its own, from the record in the case, whether the Amish parents who refused to send their children to secondary school were acting on the basis of religious conviction, 406 U.S. at 215-16, the good faith religious belief of the parents was not questioned by the state.  There was no fact dispute to be resolved.

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The jury is the usual trier of fact in tort cases such as the one before us.  Disputes in the evidence should be resolved by the trier of fact.  We conclude that the trial court was required to determine the religious character of the alleged misrepresentations only if it could do so as a matter of law, that is, if there was only one conclusion to be drawn from the evidence.  We now turn to that question. 
 [*239]  The fundamental qualification for protection based on the Free Exercise Clause of the First Amendment is that that which is sought to be protected must be "religious." Wisconsin v. Yoder, 406 U.S. 205, 215-16, 92 S Ct 1526, 32 L Ed 2d 15 (1972). The Mission claims that Scientology is a religion and that statements regarding its beliefs and practices are protected. n26 Plaintiff does not contend that Scientology is not a religion, but instead concentrates on the particular representations at issue.  She contends that those representations are not religious statements, no matter what the status of Scientology, and that the statements are therefore not protected by the First Amendment. 

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n26 Because defendant Samuels is only sought to be held liable only as president of the Mission, we look to the protection afforded the Mission.  Samuels may be held only to the extent the Mission is liable.

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Plaintiff's approach to this case has been to treat the alleged statements by defendants in vacuo, but we do not believe that it is constitutionally permissible to approach them that way.  In this case, the issue of whether the allegedly fraudulent statements are entitled to the protection of the First Amendment involves several questions.  Statements made by religious bodies must be viewed in the light of the doctrines of that religion. Courts may not sift through the teachings of a religion and pick out individual statements for scrutiny, deciding whether each standing alone is religious. While plaintiff has skipped past the issue of whether Scientology is a religion, we do not believe we can do so, because the answer to that question is pertinent to, although not dispositive of, the determination of whether the statements made by the agents of the Mission are religious. 
The Supreme Court stated in Wisconsin v. Yoder, supra, 
"* * * Although a determination of what is a 'religious' belief or practice entitled to constitutional protection may present a most delicate question, the very concept of ordered liberty precludes allowing every person to make his own standards [***70]  on matters of conduct in which society as a whole has important interests." 406 U.S. at 215-16. (Footnote omitted.)

And, as noted by the court in Founding Church of Scientology v. United States, supra: 
 [*240]  "* * * Though litigation of the question whether a given group or set of beliefs is or is not religious is a delicate business, our legal system sometimes requires it so that secular enterprises may not unjustly enjoy the immunities granted to the sacred.  When tax exemptions are granted to churches, litigation concerning what is or is not a church will follow.  When exemption from military service is granted to those who object on religious grounds, there is similar litigation.  When otherwise proscribed substances are permitted to be used for purposes of worship, worship must be defined.  The law has provided doctrines and definitions, unsatisfactory as they may be, to deal with such disputes.  * * *" 409 F2d 1160.
 
 [**601]  Without attempting an "unprecedented definition of religion," Malnak v. Yogi, 440 F Supp 1284, 1320 (DNJ 1977), aff'd, 592 F2d 197 (3d Cir 1979), we draw guidance from the case law.  We find that, while beliefs relating [***71]  to the existence of, and man's relationship to, a God are certainly religious, belief in a traditional, or any, "god" is not a prerequisite to a finding that a belief is religious. Torcaso v. Watkins, 367 U.S. 488, 81 S Ct 1680, 6 L Ed 2d 982 (1961); Everson v. Board of Education, 330 U.S. 1, 67 S Ct 504, 91 L Ed 711, 168 ALR 1392 (1947); Washington Ethical Soc. v. District of Columbia, 249 F2d 127 (DC Cir 1957); Malnak v. Yogi, supra; Fellowship of Humanity v. County of Alameda, supra.  Neither does the fact that Scientology is of relatively recent origin mean that it is not entitled to the protection of the First Amendment. See Loney v. Scurr, 474 F Supp 1186 (SD Iowa 1979); Malnak v. Yogi, supra; Remmers v. Brewer, 361 F Supp 537 (SD Iowa 1973); see also United States v. Ballard, supra; Founding Church of Scientology v. United States, supra. On the other hand, 
"[a] way of life, however, virtuous and admirable, [is not entitled to First Amendment protection] if based on purely secular considerations. 
"* * * 
"Thus, if the Amish asserted their claims because of their subjective evaluation and rejection of contemporary secular values accepted [***72]  by the majority, much as Thoreau rejected the social values of his time and isolated himself at Walden Pond, their claims would not rest on a religious basis.  Thoreau's choice was philosophical and personal rather than religious, and such belief does not rise to the  [*241]  demands of the Religion Clauses." Wisconsin v. Yoder, supra, 406 U.S. at 215-16; see also, United States v. Seeger, 380 U.S. 163, 176, 85 S Ct 850, 13 L Ed 2d 733 (1965); and see Welsh v. United States, 398 U.S. 333, 90 S Ct 1792, 26 L Ed 2d 308 (1970).
 
Courts may not, of course, judge the "truth" or "falsity" of the beliefs espoused by a group in determining its status as a religion; the inquiry here is simply whether the teachings of Scientology are of the type that qualify for the protection of the Free Exercise Clause.  The record in this case demonstrates indisputably that they are.  Although certain of the theories espoused by Scientology appear to be more psychological than religious, we cannot dissect the body of beliefs into individual components.  It seems clear that if defendants sought to teach Scientology in the public schools in this country, they would be prohibited from [***73]  doing so by reason of the Establishment Clause of the First Amendment. See Malnak v. Yogi, supra; Epperson v. Arkansas, 393 U.S. 97, 89 S Ct 266, 21 L Ed 2d 228 (1968). The theories of Hubbard are interrelated and involve a theory of the nature of the person and of the individual's relationship with the universe.  See Founding Church of Scientology v. United States, 409 F2d at 1160. 
The Mission is incorporated as a tax-exempt religious organization; it has ordained ministers and characterizes itself as a church. It has a system of beliefs, or creed, which encompasses beliefs which are religious in character.  We conclude that Scientology is a religion and that the Mission is a religious organization entitled to invoke the protection of the Free Exercise Clause. 
The second inquiry to be made in determining whether the statements at issue are protected is whether those statements relate to the religious beliefs and practices of the Mission.  It is clear that a religious organization, merely because it is such, is not shielded by the First Amendment from all liability for fraud.  See Founding Church of Scientology v. United States, supra; see also Cantwell v. Connecticut [***74]  , 310 U.S. 296, 60 S Ct 900, 84 L Ed 1213 (1940). If the statements involved here do not concern the religious beliefs and practices of the Mission, the Free Exercise Clause provides no defense to plaintiff's action.  [*242]  Defendant presented evidence that  [**602]  the courses and auditing in which plaintiff participated, and about which the alleged misrepresentations were made, were part of the religious beliefs and practices of Scientology.  Plaintiff did not, and does not, contest that fact. 
The final inquiry involved in determining whether the alleged misrepresentations are protected by the First Amendment is whether the statements, although made on behalf of a religious organization and having a religious character, were nonetheless made for a wholly secular purpose.  Although we find that it has been established in this record that Scientology is a religion, that the Mission is a religious organization and that the statements which are claimed to be religious relate to religious beliefs and practices of Scientology, plaintiff did present evidence that the courses and auditing she received were offered to her on an entirely secular basis for self-improvement, thereby [***75]  creating a jury issue as to that matter.  Plaintiff testified that she was told that the term "religion" and "church" were used only for public relations purposes.  She also presented testimony from a former Mission staff member that the staff was instructed to avoid the issue of religion when attempting to interest someone in Scientology and that, if pressed, they were to say that it is not a religion. n27 

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n27 It is suggested in Weiss, Privilege, Posture and Protection: "Religion" in the Law, 73 Yale LJ 593, 604 (1964), that 
"Because religion can be in conflict with other disciplines, because it cuts across everyday life, we can only know that a claim is based on religion when we are told that it is.  The legal basis for stating that a claim is in the religious domain can be that it is held out as being religious in nature. 
"* * * 
"Since the Constitution prohibits defining an area of belief as 'religious,' a man must make it clear that the beliefs he represents are 'religious' if he wants to be free to express them under the constitutional warrant of freedom of religious belief.  He has the burden of communicating that he speaks only from the authority of religion. But, once such a burden has been met, then we cannot attack the particular aspects of his faith as fraudulent. 
"* * * 
"What a man presents as a religious claim, then, cannot be attacked.  It is only when he makes a representation beyond religious authority that we can apply laws of fraud."

As attractive as this analysis may be, we do not believe that it has been the approach taken by the courts in considering claims for protection under the First Amendment. As in Welsh v. United States, supra, and Malnak v. Yogi, supra, the proponents of a particular doctrine may unwittingly fail to define as "religious" what is, in fact, constitutionally protected as such.

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 [*243]  There is, on the other hand, evidence that plaintiff joined the Church of Scientology and that she was told that the courses and practices were religious in nature.  Many of the materials which she read contained a statement inside the front cover which indicated that Scientology is a religion, that auditing is a religious practice and that the E-meter is a religious artifact. n28 

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n28 It is clear that in the context of the Establishment Clause the characterization of the activity as non-religious is not a determinative factor.  See Malnak v. Yogi, supra; see also Engel v. Vitale, 370 U.S. 421, 82 S Ct 1262, 8 L Ed 2d 601, 86 ALR2d 1285 (1962); Torcaso v. Watkins, 367 U.S. 488, 81 S Ct 1680, 6 L Ed 2d 982 (1961); Welsh v. United States, supra. On the other hand, the characterization of beliefs as religious by one seeking the protection of the Free Exercise Clause is not determinative either.  See Wisconsin v. Yoder, supra, 406 U.S. at 215-16; Founding Church of Scientology v. United States, supra; People v. Woody, supra; United States v. Kuch, 288 F Supp 439 (DDC 1968).

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In United States v. Article or Device, Etc., supra, 333 F Supp at 363-365, the district court, sitting without a jury, found that Scientology services were offered on both a religious and a secular basis and that the E-meter was misbranded because much of the literature explaining its use and expounding on its value was presented in an entirely non-religious context.  The court recognized that complete condemnation of the E-meter would encroach upon the religious freedom of those who used the device as a religious artifact.  It therefore ordered the device condemned with the provision that it could be distributed only for use in bona fide religious counseling.  This case  [**603]  differs from United States v. Article or Device, Etc., supra, in that the court there pointed out that there were organizations other than the Founding Church of Scientology that were using the E- meter and offering auditing services.  It was the use of the E-meter by the secular organizations which the court forbade.  The court did not consider whether use by the Church could be on a secular as well as on a religious basis.  We believe that such a possibility exists. 
There are certainly [***78]  ideas which may only be classified as religious. Statements regarding the nature of a supreme being, the value of prayer and worship are such statements.  There are also, however, statements which are  [*244]  religious only because those espousing them make them for a religious purpose.  The statements which are alleged by plaintiff to be misrepresentations in this case are not of the type which must always and in every context be considered religious as a matter of law. 
We have found that it is established in this case that the Mission is a religious organization and that Scientology is a religion. Plaintiff does not dispute the claim that the courses and auditing she received are part of the religious beliefs and practices of Scientology.  It is also uncontroverted that plaintiff applied to join the Church of Scientology, Mission of Davis, before taking any of the courses offered.  These facts may be highly persuasive evidence of the contention that the courses and auditing plaintiff received were religious in nature and that the statements made regarding their nature and efficacy were religious statements.  There is, however, conflicting evidence which the jury was entitled [***79]  to consider.  Plaintiff presented evidence from which it could be concluded that the courses and auditing were also offered on a wholly secular basis.  Because the statements were not necessarily religious, plaintiff was entitled to have a jury consider, under proper instructions, the question of whether the statements were made for a wholly non-religious purpose.  The trial court was correct, therefore, in refusing to rule before trial as to whether these alleged statements were religious. It was likewise correct in refusing to withdraw the statements from the jury's consideration. 
We turn now to the question of the proper instructions to be given the jury in considering the allegations of fraud in this context. 
FIRST AMENDMENT INSTRUCTION 
Defendants objected to the giving of the following instruction regarding the First Amendment defense: 
"The defendants have asserted as an affirmative defense that the Constitutions of the United States and the State of Oregon provide that religious beliefs and doctrines may not be questioned for truth or falsity. To establish this defense, defendants must prove that each of the acts or representations complained of were religious [***80]  in nature and were held out as such to plaintiff. 
 [*245]  "They must further prove that if the acts and representations complained of were held out as religious in nature, that they were held out by defendants as good faith religious beliefs and doctrine.  Therefore, if you find that the acts or representations complained of were acts or representations religious in nature and held out as such, and held in good faith belief, then you may not inquire into the truth or falsity of such acts or representations.  Your inquiry must end and your verdict shall be for the defendants.  However, should you determine that any of the acts or representations complained of were not religious in nature or were not held out as such to the plaintiff, or were not held to be such in good faith, then you may determine the truth or falsity of such acts or representations."

We find the instruction to be an inaccurate statement of the law as it applies to this case and conclude that reversal of the judgment on the fraud cause of action is required. 
Defendants first object to the submission to the jury of the question of the religious  [**604]  nature of the statements.  That submission [***81]  was not error.  However, the directions for determination of that issue were erroneous.  This record establishes that Scientology is a religion and that the Mission is a religious organization. It also establishes that the courses and auditing which plaintiff was induced to participate in are part of the religious beliefs and practices of the Scientology.  The Mission is, therefore, entitled to the protection of the First Amendment for statements regarding its religious beliefs and practices unless it is shown that the statements made were part of an offer of those services to the public on a wholly secular basis.  The reasonable inference to be drawn from the instruction as given is that a determination should be made for each of the alleged misrepresentations as to whether it was religious and whether it was held out to plaintiff as religious in nature.  This fragments the inquiry inappropriately.  The question which the jury was required to decide in this case was whether, even though the Mission is a religious organization, it offered the services in question here on a wholly non-religious basis.  See Founding Church of Scientology v. United States, supra. It is only upon [***82]  an affirmative finding on that issue that liability can attach for the statements made in this case.  The jury was not correctly instructed in that regard. 
 [*246]  In addition, the instruction that the statements must be held out as religious in good faith is not accurate.  The question of "good faith" belief is quite complicated in this case, for the defendants charged with fraud are not the individuals who made the representations, but the religious organizations themselves.  It is true that in many cases in which free exercise protection has been sought, courts have looked to whether the one seeking the protection is "sincere" in his or her belief in the doctrine at issue.  See, e.g., People v. Woody, supra; Teterud v. Burns, 522 F2d 357 (8th Cir 1975). Those cases, however, involve the sincerity of the individual claiming the protection. 
 United States v. Ballard, supra, has been cited to us for the proposition that the sincerity of the proponents of religious belief is a proper subject for inquiry in an action for fraud.  We do not read Ballard so to hold.  In Ballard, a criminal action for mail fraud, the parties agreed in the trial court that the issue [***83]  of the truth or falsity of the statements at issue would not be submitted to the jury, but only the question of whether the defendants honestly and sincerely believed the statements they made.  After a jury verdict finding them guilty, the defendants contended that it was improper to withdraw from the jury the question of whether the statements made were true or false.  The Circuit Court of Appeals agreed and reversed the conviction.  On appeal, the Supreme Court held that "* * * the District Court ruled properly when it withheld from the jury all questions concerning the truth or falsity of the religious beliefs or doctrines of [the defendants]." The Court then noted that the defendants urged other grounds for supporting the reversal of the convictions, but it refused to consider those contentions before giving the circuit court an opportunity to consider the issues first.  322 U.S. at 88. Ballard did not address the question of the propriety of submitting the issue of the defendants' sincerity to the jury.  In addition, the defendants in Ballard were the very individuals accused of actually making the statements at issue.  The liability of a religious organization for the [***84]  statements of its agents was not discussed. 
In the situation presented here, it is difficult to determine whose sincerity or good faith the jury could be asked to determine.  Is the religious organization to be held  [*247]  liable if one of its ministers is less than a true believer?  Or is it to be saved from liability if the individual who makes the statement truly believes, but others in the church do not? 
In Founding Church of Scientology v. United States, supra, the court suggested that liability might attach if it were shown 
"* * * that an item (book, pamphlet, advertising flier) makes out a self-sufficient non-religious claim for Scientology services, to which a religious appeal has  [**605]  been merely tacked on." 409 F2d at 1165. (Emphasis supplied.)

As we have indicated, defendants could be held liable if the jury found that the courses and services offered by the Mission to plaintiff were offered for a wholly secular purpose.  A wholly secular purpose means that, at the time they were made to this plaintiff, the statements were made for a purpose other than inducing plaintiff to join or participate in defendants' religion. A wholly [***85]  secular purpose, in this regard, would include, but not be limited to, the intention solely to obtain money from plaintiff.  On this record it would have been proper to instruct the jury that it is possible to find that the services were offered on a wholly secular basis, notwithstanding the fact that plaintiff was required to join the Church of Scientology in order to participate and that the materials she was given to read stated that Scientology is a religion. A jury could find that the courses and services were offered on a secular basis and that a religious designation had been merely "tacked on." Phrasing the issue as one of good faith was therefore misleading and erroneous. 
Defendants also contend that the instruction improperly placed on them the burden of proof on the question of the religious nature of the representations.  They contend that it was improper to require that they prove the statements were religious when it was plaintiff's burden to prove knowledge of falsity to recover for fraud.  Defendants confuse the burden of proving fraud with the burden of proving the affirmative defense of freedom of religion. As this instruction indicates, it is appropriate for [***86]  the jury to consider the matter of the defense first, before reaching the issue of the truth or falsity of the statements for deciding  [*248]  the issue of fraud.  That approach makes good sense in this context. 
In summary, we conclude that the motions of all defendants for directed verdicts on the claims for outrageous conduct should have been granted.  The motions of COSOP and Delphian for directed verdicts on plaintiff's action for fraud should have also been granted.  The instruction which was given regarding the Free Exercise defense asserted by the remaining defendants was erroneous and requires reversal. 
Because of the disposition we have made of the causes of action and counts, this case will have to be retried.  We now turn to the assignments of error which raise issues which are likely to arise on re-trial. 
EXHIBITS 
Defendants assign error to the exclusion of three exhibits offered to show the good faith of the individual who informed plaintiff that L. Ron Hubbard had an honorary degree from Sequoia University and a degree from Princeton University.  Those exhibits were photocopies of a telegram and two certificates.  Plaintiff objected to the exhibits on [***87]  the grounds of lack of authentication and hearsay.  The objections were sustained.  Those objections were not well taken.  The exhibits were offered to show the state of mind of the individual who made the representations regarding Hubbard's background to plaintiff.  That individual testified that he had seen the exhibits before talking with plaintiff and believed them to be true.  Neither the truth of the matter contained in the exhibits nor their authenticity was asserted by defendants.  The state of mind of the one accused of making fraudulent representations is clearly at issue where one of the elements to be shown is the speaker's knowledge of the falsity of the representation being made.  See Linebaugh v. Portland Mortgage Co., 116 Or 1, 239 P 196 (1925); Seaside, City of v. Randles, 92 Or 650, 180 P 319 (1919). The exhibits were relevant to that state of mind, and their exclusion was error. 
INSTRUCTIONS 
Defendants assign error to the giving of certain instructions and the failure to give other instructions.  The  [*249]  first assignment we consider is the failure of the trial court to give defendants' requested instruction defining "justifiable reliance"  [***88]  as follows: 
 [**606]  "A party claiming to have been defrauded by a false representation must not only have acted in reliance thereon, but must have been jusified in such reliance, that is, the situation must have been such as to make it reasonable for him, in the light of the circumstances and his intelligence, experience and knowledge, to accept the representation without making an independent inquiry or investigation."
 
The court instructed the jury that to find for plaintiff it must find that "* * * the plaintiff having a right to do so, reasonably relied upon the representation and did not know it was false." We believe the instruction given by the trial court "adequately and accurately state the applicable law." Bowlds v. Taggesell Pontiac, 245 Or 86, 95, 419 P2d 414 (1966); see also Yardley v. Rucker Brothers Trucking, Inc., 42 Or App 239, 600 P2d 485 (1979), rev den 288 Or 335 (1980). It was not error for the trial court to refuse to give the instruction requested by defendants. 
Defendants also assign error to the failure to give their requested instruction defining "material fact." The court instructed the jury that there must have been "a false [***89]  representation of material fact" in order to find for the plaintiff on her fraud claim.  Defendants requested the following instruction defining "material fact": 
"A fact is material if a reasonably prudent person under the circumstances would attach importance to it in determining his course of action."
 
Plaintiff does not contend that this instruction is an incorrect statement of the law, but only that it was unnecessary to instruct the jury on the meaning of the term material because that term was used in its usual and conventional sense.  We disagree that the instruction was unnecessary.  The term "material fact," as it is used as an element of an action for fraud, involves the kind of objective standard included in the requested instruction.  See Milliken v. Green, 283 Or 283, 583 P2d 548 (1978). The dictionary definition of "material," "being of real importance or great consequence," Webster's Third International Dictionary, does not contain that objective element.  [*250]  Defendants were entitled to have the jury instructed on the definition of the term which constitutes an element of the action against which they were defending. 
Defendants also contend that [***90]  the trial court erred in failing to instruct the jury that "fraud is never presumed." Within the context of the instructions as a whole, see Yardley v. Rucker Brothers Trucking, Inc., supra, we believe the jury was adequately instructed in that regard, and the failure to give the instruction was not error. 
Defendants assign error to the failure to give their requested instructions containing the specific language of the First and Fourteenth Amendments to the United States Constitution and Article I, Sections 2 and 3 of the Oregon Constitution. n29 The refusal to give such instructions was not error.  The language of the constitutional provisions is not by itself a statement of the law which was necessary or even particularly helpful to the jury in resolving the issues  [**607]  in this case.  Although it might not have been error to give such an instruction, neither was it error to refuse to do so. 

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n29 Defendants' requested instructions were as follows: 
"The First Amendment to the United States Constitution provides that: 'Congress shall make no law respecting the establishment of religion or prohibiting the free exercise thereof.' 
"The Fourteenth Amendment to the United States Constitution provides that: '* * * No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty or property, without due process of law; nor deny any person within its jurisdiction equal protection of the laws.' 
"Article I, Section 2 of the Oregon Constitution provides under Freedom of Worship: 'All men shall be secure in the natural right, to worship Almighty God according to the dictates of their own consciences.' 
"Article I, Section 3 of the Oregon Constitution under Freedom of Religious Opinion provides: 'No law shall in any case whatever, control the free exercise, and enjoyment of religious opinions, or interfere with the rights of conscience.'"

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Finally, defendants assign error to the refusal to give the following instruction: 
"The parties have stipulated that Scientology is a religion. I instruct you that for all purposes in this case Scientology is a religion and the Church of Scientology, Mission of Davis, and Church of Scientology of Portland are religious institutions."

 [*251]  The first portion of their requested instruction is not correct.  Plaintiff did not stipulate that Scientology is a religion. She chose to approach the problems presented in this litigation on the basis that it did not matter whether Scientology is a religion, because the defendants could be liable in any event.  That does not amount to a stipulation that Scientology is a religion. However, we have determined that the record in this case establishes, as a matter of law, that Scientology is a religion. The jury should have been so informed. 
PUNITIVE DAMAGES 
The final assignment of error we consider n30 is the failure of the trial court, on motion by defendants, to withdraw from the jury the claim for punitive damages. In the trial court and in this court defendants rely on Wheeler v. Green, 286 Or 99, 593 P2d [***92]  777 (1979), for the proposition that imposition of punitive damages is constitutionally impermissible in the context of free speech. n31 Defendants contend that that proposition also applies to the area of free exercise of religion and that statements arguably religious should not subject one to liability for punitive damages because of the "chilling effect" such awards could have on the practice of religion. They make only constitutional arguments and do not argue that the case is otherwise inappropriate for an award of punitive damages. 

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n30 Defendants' other assignments of error are either mooted by our disposition of the issues we have discussed, were not preserved in the trial court, or are, in our estimation, unlikely to arise again on re-trial.
n31 Wheeler v. Green, supra, is based on the Oregon Constitution.  Defendants also rely on Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S Ct 2997, 41 L Ed 2d 789 (1974), for the proposition that punitive damages are constitutionally impermissible for defamation.  Gertz, however, does not hold that punitive damages may never be awarded for defamation.  The Court was concerned with the self-censorship of media defendants which might result from the possibility of punitive damage awards under state laws requiring less than a showing of actual malice.  The Court stated: 
"We also find no justification for allowing awards of punitive damages against publishers and broadcasters held liable under state-defined standards of liability for defamation.  * * * In short, the private defamation plaintiff who establishes liability under a less demanding standard than that stated by New York Times [ Co. v. Sullivan, 376 U.S. 254, 84 S Ct 710, 11 L Ed 2d 686, 95 ALR2d 1412 (1964), that is 'actual malice'] may recover only such damages as are sufficient to compensate him for actual injury." 418 U.S. at 350.

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 [*252]  After the briefs in this case were submitted, the Oregon Supreme Court decided Hall v. May Department Stores Co., supra, in which it held that punitive damages are not available in an action for outrageous conduct in which the only conduct which subjects the defendant to liability is "speech." The court stated: 
"When the cause of defendant's liability is his 'abuse' of speech and expression, as in the case of defamation, Wheeler v. Green holds that the 'responsibility for the abuse' is confined to civil liability for compensation only.  Here the injury was to plaintiff's person rather than her reputation, but as long as it resulted from an 'abuse' of speech only, the principle is the same." 292 Or at 146.
 
It might well be argued on the basis of the above language that any fraud which involves an abuse of speech or expression is similarly exempt from the imposition of punitive damages. The Supreme Court has, however, recognized the possibility of an award of punitive damages in cases involving fraud in several recent opinions.  See, e.g., Schmidt v. Pine Tree Land Dev., 291 Or 462, 631 P2d 1373 (1981); Milliken v.  [**608]  Green, supra;  [***94]   Green v. Uncle Don's Mobile City, 279 Or 425, 568 P2d 1375 (1977). Although we are not certain just what the analytical distinction is, given the broad language in Hall, we do not believe that the Supreme Court intended to prohibit the award of punitive damages in all cases of fraud, and we decline to do so here. 
Defendants, arguing without "benefit" of Hall, do not claim that all fraud is exempt from the imposition of punitive damages, but that "* * * in the sensitive area of First Amendment freedoms, a plaintiff can recover only compensatory damages." They contend that the imposition of punitive damages would have a chilling effect, not only on the exercise of free speech and association, but on the free exercise of religion as well. 
As we have stated, we do not agree that punitive damages are unavailable for fraud merely because the fraudulent representations are "speech." Defendants suggest that because the actions giving rise to this cause of action occurred in the context of a religious organization of which plaintiff was a member, the free exercise of religion would be chilled by the possibility of a punitive damage award.  We do not believe that such a chilling [***95]  effect is a threat  [*253]  to the free exercise of religion. In order to be actionable at all, the statements alleged must be found to have been nonreligious as made.  Defendants' argument seems to lead to is the conclusion that religious organizations should not be made liable for punitive damages because they are religious organizations, even if the content of the statements which they are alleged to have made is not religious. We find no constitutional requirement for such an exemption.  The free exercise of religion is sufficiently protected by the the broad scope of what is protected as religious belief and practice and the fact that the truth or falsity of such religious beliefs may not be determined in an action for fraud.  The trial court properly denied defendants' motion to strike the claim for punitive damages. 
Reversed as to defendants Church of Scientology of Portland and Delphian Foundation; reversed and remanded for a new trial as to defendants Samuels and Church of Scientology, Mission of Davis.