OPERATION CLAMBAKE: SCIENTOLOGY COURT FILES

Part of a public library containing court papers related to lawsuits involving Scientology in some way. Collected to help lawyers and critics of Scientology in future lawsuits from or against this cult. Please report back if this has been of help, or send new contributions to the collection. Thanks. Andreas Heldal-Lund (heldal@online.no)



  RELIGIOUS TECHNOLOGY CENTER, a California non-profit corporation, and Bridge
      Publications, Inc., a California non-profit corporation, Plaintiffs,
                                       v.
      F.A.C.T.NET, INC., a Colorado corporation;  Lawrence Wollersheim, an
            individual;  and Robert Penny, an individual, Defendant.
                             Civ. A. No. 95-K-2143.
                          United States District Court,
                                  D. Colorado.
                                  Oct. 3, 1995.
  In copyright infringement action, alleged infringers filed motion seeking
 compliance with prior order requiring return of previously seized items.  The
 District Court, Kane, Senior District Judge, held that:  (1) order requiring
 nonprofit corporation to return seized materials did not violate corporation's
 First Amendment right to free exercise of religion, and (2) previously seized
 infringing materials related to Church of Scientology, including any computer
 equipment or media of any nature, were required to be placed in custody of
 court so they could be examined by special master for determination of whether
 they were being returned in their original condition.
  Ordered accordingly.

 [1] COPYRIGHTS AND INTELLECTUAL PROPERTY
 Order requiring nonprofit corporation to return previously seized materials in
 copyright infringement action did not violate corporation's First Amendment
 right to free exercise of religion by requiring corporation or members of
 Church of Scientology to violate church tenets forbidding members from
 furnishing any copies of church materials to anyone who had not fulfilled
 required spiritual or ethical prerequisites;  original seizure order required
 allegedly infringing materials to be turned over to corporation's counsel, and
 order requiring return of seized material imposed obligation on counsel, not
 corporation.  U.S.C.A. Const.Amend. 1.

 [2] COPYRIGHTS AND INTELLECTUAL PROPERTY
 Previously seized infringing materials relating to Church of Scientology,
 including any computer equipment or media of any nature, were required to be
 placed in custody of court so they could be examined by special master for
 determination of whether they were being returned in their original condition.
  *1528 Todd P. Blakely, Robert R. Brunelli, Sheridan Ross & McIntosh,
 Denver, CO, Jeffrey A. Chase, Ann B. Frick, Jacobs Chase Frick Kleinkopf &
 Kelley, Denver, CO, Earl C. Cooley, Cooley, Manion, Moore & Jones, P.C.,
 Boston, MA, Helena K. Kobrin, North Hollywood, CA, for Plaintiffs.
  Thomas B. Kelley, Natalie Hanlon-Leh, Faegre & Benson, Denver, CO, for
 Defendant.
                 MEMORANDUM OPINION AND ORDER ON VARIOUS MOTIONS

  KANE, Senior District Judge.
  On August 21, 1995 Religious Technology Center ("RTC"), a California
 non-profit corporation, filed a verified complaint against Lawrence
 Wollersheim, Robert Penny and F.A.C.T.NET, Inc. ("FACTNET") for injunctive
 relief and damages for copyright infringement (17 U.S.C. s 501) and trade
 secrets misappropriation (Colo.Rev.Stat. s 7-74-102).  On October 2, 1995,
 RTC and an additional party, Bridge Publications, Inc., filed an amended
 complaint, but this event has no effect on the pending motions.
  Jurisdiction is based on 28 U.S.C. ss 1331 and 1338(a) and (b) in that
 this is an action for copyright infringement under 17 U.S.C. s 501.
 Supplemental jurisdiction under 28 U.S.C. s 1367 is asserted over the trade
 secrets misappropriation claim, which RTC alleges arises out of the same
 transaction and occurrences.
                              *1529 I. Background.
  On August 21, 1995, Judge Babcock, ruling on ex parte motions, granted a
 temporary restraining order against Defendants.  His order restrained
 Defendants from the unauthorized copying, use or reproduction of the Works
 identified in Exhibit "A" to the complaint or any other part of the works that
 are part of the Advanced Technology, in particular the copying into "any
 computer data base, information service, storage facility, archives, or other
 computerized network or facility."  The order further restrained the
 destruction or concealing by Defendants of such Works in their possession.  It
 also required RTC to file a bond in the amount of $10,000 with the court
 forthwith.  Judge Babcock set a hearing for a preliminary injunction before me
 due to his being unavailable on that date.
  Judge Babcock ordered Defendants to deliver the infringing articles within
 their possession and control into the custody of RTC's counsel.  In this
 regard, he issued a writ of seizure and ordered a portion of the court file
 sealed until execution of the writ of seizure.
  On August 22, 1995, extensive materials, including computer equipment,
 computer software and voluminous documents were seized from Defendants'
 premises pursuant to the writ.  They were placed in the custody of RTC's
 counsel who proceeded to search for allegedly infringing materials.
  The preliminary injunction hearing took place before me on September 8, 11,
 and 12, 1995.  At the termination thereof, I issued an oral ruling.  I denied
 RTC's request for a preliminary injunction and ordered RTC to return and
 restore to the Defendants all seized materials.  I ordered Defendants to
 maintain the status quo as to the possession of all copyrighted materials at
 issue in the case and restricted each of Defendants to making only fair use of
 the materials.  I reserved my right to clarify my oral order with a written
 opinion.  I denied RTC's request for a stay pending its appeal of the order.
  On September 13, 1995, RTC filed an emergency motion with the United States
 Court of Appeals for the Tenth Circuit for a stay pending appeal of the order
 denying preliminary injunction and ordering return of seized materials.  On
 that day, the Tenth Circuit temporarily stayed the September 12, 1995 order and
 directed Defendants to respond to the emergency motion by noon on Friday
 September 15, 1995.
  On September 15, 1995, I clarified my oral order with a written
 memorandum opinion and order.  I memorialized my oral orders denying RTC's
 motion for preliminary injunction;  requiring RTC to return and restore to
 Defendants immediately and at RTC's expense all seized materials in the
 condition they were when taken and to the precise places from which they were
 taken;  ordering Defendants to maintain the status quo as to their possession
 of all copyrighted materials at issue in this case and restricting them to
 making only fair use thereof;  and prohibiting Defendants from making any
 additional copies of the materials or transferring them in any manner or
 publicizing them other than in the context of fair use.  (Mem.Op. & Order at
 18.)
  On September 15 and September 18, 1995, RTC filed supplemental memoranda in
 support of its motion for stay of the order pending appeal.  On September 18,
 1995, the Tenth Circuit granted RTC's motion to place Exhibit 8 of Defendants'
 appendix under seal but dissolved the temporary stay entered on September 13,
 1995 and denied RTC's motion for stay pending appeal.
  RTC filed an application for a stay of my order before the United States
 Supreme Court, Justice Breyer, Circuit Justice for the Tenth Circuit Court of
 Appeals.  On September 20, 1995, Justice Breyer denied the request for a stay.
 On September 21, 1995, RTC renewed its application to the Supreme Court and
 requested it be addressed to Justice Souter.  (To my knowledge no action on
 this application has occurred.)
  On September 22, 1995, RTC's counsel agreed the seized materials would be
 returned on September 25, 1995 at 2:00 p.m.  Defendants demanded that all
 copies made of seized materials be returned as well.  At that scheduled date
 and time, RTC's counsel, two RTC representatives and two of its computer
 experts appeared at the offices of Defendants' counsel.
  *1530 RTC maintains it tendered to Defendants' counsel the remaining [FN1]
 computerized equipment and items in its possession with the exception of:

      FN1. On September 1 and September 5, 1995, RTC tendered certain disks,
     files, hard copy documents and computer equipment to defendants' counsel.

  a. One floppy disk which contained Advanced Technology ("AT") materials.  RTC
 asserts the disk has been copied and a disk with the AT document removed has
 been given to Defendants.
  b. Two computer tapes which contained AT materials.  RTC asserts exact
 duplicate tapes have been given to Defendants with only the AT materials
 deleted.
  c. One computer CD on which AT materials were found.  RTC asserts the CD has
 not been copied as a duplicate CD cannot be made.
  d. The original hard drives of two computers which contained AT materials.
 RTC asserts an identical hard drive has been secured for Wollersheim's hard
 drive, and an equivalent for Penny's.  It maintains the entirety of the
 original two hard drives has been copied into the duplicate hard drives which
 have been installed in their computers and returned to them with only the AT
 materials deleted.
  On September 25, 1995, RTC filed Plaintiff's Motion for an Order Concerning
 Full Compliance with the Court's Order of September 15, 1995, Directing Return
 of Seized Materials and for an Order on New Issue Regarding Relief from
 Violation of First Amendment Ecclesiastical Rights.  On September 26, 1995, RTC
 filed a Motion for Leave to Deposit Disputed Computer Media with Court under
 Seal.  On that day, Defendants' filed Defendants' Application for Issuance of
 an Order to Show Cause re:  Contempt as to Plaintiff's Willful Refusal to
 Comply with this Court's September 15, 1995 Order, and for Seizure of
 Defendants' Computer Hard Drives.
  On September 27, 1995, I ordered RTC to appear on October 2, 1995 at
 9:00 a.m. to show cause why it has not complied with my order of September 15,
 1995 and why it should not be adjudged in contempt for failure to comply with
 the order.  On October 2, 1995, RTC filed Plaintiff's Opposition to Defendants'
 Application for an Order to Show Cause re:  Contempt.  That day an evidentiary
 hearing took place on the contempt issue and I heard oral argument on the
 pending motions.
                                 II. Discussion.
  RTC requests me to order that it has complied with the order of September 15,
 1995 (incorporating my oral ruling of September 12, 1995) and to modify the
 order concerning those items which it has not returned.  RTC also requests
 leave to deposit with the court under seal the "computer media" it has retained
 in its possession contrary to the order.  Defendants on the other hand request
 me to find RTC in contempt for its willful refusal to comply with the order and
 to order the seizure of Defendants' computer hard drives.
  [1] RTC requests me to adjudge it in compliance with my order and to modify
 the order based on First Amendment issues which it submits were not raised or
 addressed at the preliminary injunction hearing.
  RTC argues it is unable to comply with my order insofar as it requires RTC to
 return and restore to Defendants copies of AT materials which were seized
 because to do so would cause RTC's president to violate a fundamental religious
 belief of the Church of Scientology.  RTC asserts a central tenet of the
 Scientology religion forbids all Scientologists from furnishing any copies of
 the AT materials to anyone who has not fulfilled the required spiritual and
 ethical prerequisites and any apostates of the religion.  RTC maintains
 requiring compliance with the September 15, 1995 order would interfere with the
 Scientologists' right to exercise their religion freely as guaranteed by the
 First Amendment of the United States Constitution. [FN2]

      FN2. The First Amendment pertinently provides:  "Congress shall make no
     law respecting an establishment of religion, or prohibiting the free
     exercise thereof...."  U.S. Const. amend I.

  *1531 My order of September 15 (incorporating my oral ruling of September
 12, 1995) stated pertinently:  "Plaintiff is to return and restore to
 Defendants immediately and at Plaintiff's expense all seized materials in the
 condition they were when taken and to the precise places from which they were
 taken."  (Mem Op. & Order September 15, 1995.)
  My order was inaccurate because it was phrased as an order to RTC to return
 the seized materials.  This court has never authorized the possession by RTC of
 the materials.
  Judge Babcock's August 21, 1995 order of seizure stated in pertinent part:
  IT IS ORDERED THAT:
   1. The Clerk of the Court issue a Writ directed to the United States Marshal
 or other on-duty or off-duty federal, state municipal law enforcement officer
 (hereinafter referred to collectively as a [sic] "law enforcement officers")
 assisted by counsel and representatives of the plaintiff, forthwith to seize
 and deliver to the custody of counsel for the plaintiff the articles identified
 in Paragraph 2 below infringing the copyrights in the literary works of L. Ron
 Hubbard or containing trade secret materials belonging to RTC.
   ....
   3. The Writ so issued shall further direct that the law enforcement
 officer(s) shall hold the articles so seized in a safe place and forthwith
 deliver all such articles so seized in a safe place and forthwith deliver such
 articles to the custody of counsel for plaintiff.
  (Order to Clerk to Issue Writ for Seizure of Articles Infringing Statutory
 Copyright and Containing Misappropriated Trade Secrets and Order for
 Impoundment at 1-3) (emphasis added).
  My order of return, although legalistically addressed to RTC, was intended to
 be directed to those persons to whom Judge Babcock had ordered the law
 enforcement officers to deliver the seized articles.  Judge Babcock's order
 required the law enforcement officers to deliver the articles to counsel for
 RTC, rather than RTC itself.  Compliance with my order of return created no
 obligation on the part of RTC to return materials.  Rather, it required counsel
 for RTC, whom this court had authorized to take possession of the seized
 articles from the law enforcement officers, to do so.  Accordingly, my order
 cannot be perceived as requiring RTC or any member of the Church of Scientology
 to violate any religious belief nor constitute a threat to a central tenet of
 the religion.  For this reason, my order did not involve any First Amendment
 issue concerning the free exercise of religion nor can RTC be held in contempt
 for violating that order.
  I expressly disapprove at the conduct of both counsel for Plaintiffs and
 Defendants in not complying with my September 15, 1995 order.  That order
 required counsel for RTC to return and restore to Defendants immediately and at
 RTC's expense all seized materials in the condition they were when taken and to
 the precise places from which they were taken.  Contrary to that order, and
 without requesting a modification thereof, Defendants' counsel suggested and
 Plaintiff's counsel agreed that the surrender be made at the offices of counsel
 for Defendants.  (Mot. Leave Deposit Computer Media under Seal at 4) (Defs.'
 App. Issuance Order Show Cause, Ex. I.)  Such conduct amounts to a disregard of
 court authority.
  At the evidentiary hearing on the issue of contempt, Wollersheim testified he
 has been unable to operate his computer with the replacement hard drive which
 RTC installed in place of his own.  He also stated not all items seized were
 returned to him in the condition in which they were seized.  This testimony was
 contradicted by that of RTC's witnesses including its computer experts who
 maintain the equipment is fully operational.
  Defendants' computer expert, Professor Gary Nutt of the University of Colorado
 Department of Computer Sciences, testified he would be able to copy the
 entirety of the two original hard drives in issue which have not been returned
 into two duplicate hard drives with the AT materials deleted in a manner that
 would result in the computers containing the duplicate hard drives being fully
 operational.
  *1532 RTC's counsel proposed at the hearing that the original hard drives
 be placed under the supervision of this court under seal and that Professor
 Nutt be requested, at RTC's expense, to create two operable new hard drives
 deleting the AT materials at issue, which hard drives could then be provided to
 Wollersheim and Penny for their use pending the outcome of this litigation.
  The matters raised concerning compliance with my September 15, 1995
 involve complicated issues which demand an exceptional knowledge of computer
 expertise for their resolution.  I am concerned that this litigation should
 proceed in an orderly manner in accordance with prevailing law as well as the
 orders of the Tenth Circuit and of this court.
  The Tenth Circuit, in its order of September 18, 1995, granted the motion to
 place exhibit 8 of Defendants' appendix in the documents submitted to that
 court under seal.  As I understand, that exhibit is the same as Defendants'
 Exhibit CC submitted to this court in the course of the preliminary injunction
 proceedings.  It appears that the sealed materials contain, in part some of the
 AT materials at issue.  Those materials are placed under seal in accordance
 with the order of the Tenth Circuit.
  In light of the Tenth Circuit's September 18, 1995 order, any order mandating
 the return of the remainder of the AT materials at issue could have resulted in
 an unintentional disclosure of the information placed under seal.  Further, the
 evidence presented at the October 2 hearing clearly demonstrates that First
 Amendment issues are hovering over pre-trial proceedings.  While not now at
 issue, the concerns for protecting the constitutionally guarded right to the
 free exercise of religion must receive devoted attention.  Allowing counsel for
 any party under these circumstances to have possession or control over the
 items seized and the information contained therein would be imprudent.
  Pursuant to Federal Rule of Civil Procedure 53, I appoint Professor Gary
 Nutt of the University of Colorado as special master in this civil action with
 all and full powers contemplated by the rule.  The reasonable fees of Professor
 Nutt and any expenses he incurs of whatever kind, including the rental or
 purchase of any necessary materials or the retention of any other experts or
 assistants, shall be paid by RTC.  This reference is made based upon the
 exigencies of this case because the issues are complicated and exceptional
 conditions require it.
  [2] I order that all seized materials, including any computer equipment or
 media of any nature, and any copies which have been made thereof, which are
 currently in the possession of either counsel for RTC or counsel for Defendants
 be immediately placed in the custody of this court.  They shall remain in the
 custody of this court until further order.
  Those items which were seized but are currently in the custody of Defendants
 themselves, rather than their counsel, need not be placed in the custody of the
 court but may be retained by Defendants subject to the provisions of my
 September 15, 1995 order.  That order required Defendants to maintain the
 status quo as to their possession of all copyrighted materials at issue in this
 case and restricted them to making only fair use thereof.  It prohibited
 Defendants from making any additional copies of the materials or transferring
 them in any manner or publicizing them other than in the context of fair use.
  Any party may submit requests for materials, in addition to those
 ordered by the Tenth Circuit to be placed under seal to this court.  Any party
 may, through counsel, make specific application for access to the materials
 placed in the court's custody pursuant to this order.  The conditions to which
 such access will be subject will be specified by court order as need arises.
  In his capacity as special master, Professor Nutt shall examine all materials
 placed in the custody of this court, as well as any other materials or
 equipment he deems necessary, and prepare a report concerning the condition in
 which materials were seized and the condition in which they were returned.  He
 shall, inter alia, examine the two original hard drives which were not returned
 to Defendants and take all measures necessary to determine if they have been
 modified in any *1533 manner.  If he is able to create two operable
 replacement hard drives deleting the AT materials at issue, Professor Nutt
 shall do so.  The operational replacement hard drives shall then be provided to
 Wollersheim and Penny for their use pending the outcome of this litigation.
 Additionally, Professor Nutt is directed to restore the complete operations of
 Defendants to the full degree of function that existed immediately before the
 several items were seized using the replacement hard drives and not using or
 permitting access to AT materials at issue.  If Professor Nutt is not able to
 achieve this restoration in an efficient and timely manner, he shall so report
 to the court and further hearings will be scheduled on a priority basis.
  I defer any order on issues of contempt or sanctions until I have considered
 the report of the special master.

End of file...