Lawrence Wollersheim v. Church of Scientology of California

May 4, 2001

Order on Submitted Motions



This action came on regularly before the Court, the Honorable Robert

L. Hess, Judge, presiding, on April 13, 2001, for hearing on selected

preliminary issues raised by respondents in connection with plaintiff's

Motion to Amend the Judgment. Plaintiff was represented by Daniel A.

Leipold, Esq., of Leipold, Donohue & Shipe, LLP, Ford Greene, Esq., of

Hub Law Offices, and Craig J. Stein, Esq., of Gelfand & Stein, LLP;

respondent Church of Scientology International ("CSI") was represented

by William T. Drescher, Esq, and by Gerald L. Chaleff, Esq., of

Orrick, Herrington & Sutcliffe, LLP; and respondent Religious

Technology Center ("RTC") was represented by Samuel D. Rosen, Esq., of

Paul, Hastings, Janofsky & Walker, LLP. Having considered the moving

and opposition papers, and the arguments of counsel, and being fully

advised, the Court rules as follows.



Background



This proceeding arises from plaintiff's attempt to amend his 1986

judgment against the Church of Scientology of California ("CSC") to

add CSI and RTC as judgment debtors. The convoluted history of this

action (and various related actions) will only be mentioned as is

particularly pertinent to the discussion below. The Court requested

oral argument addressed to five specific points, which it conceived to

raise threshold issues. These are:



1. Whether plaintiff's renewed motion to amend the judgment is

foreclosed by what plaintiff knew prior to trial (in 1986) about

respondent's alleged unity of interest with CSC?



2. Whether plaintiff's renewed motion to amend the judgment is

precluded by his alleged untimely delay in moving to amend and/or

collect on his judgment?



3. Whether the doctrine of judicial estoppel precludes respondents

from asserting their untimely delay arguments?



4. Whether plaintiff's alter ego analysis is precluded as a

constitutionally prohibited intrusion into the doctrine, internal

administration and governance of Scientology's ecclesiastical

hierarchy?



5. Whether plaintiff's motion is precluded because the law forbids

imposition of alter ego liability horizontally on sister churches

based on alleged joint control by a common superior ecclesiastical

body or person?



Issue #1



   Respondents primarily rest their argument on this issue upon Jines

v. Abarbanel, 77 Cal. App. 3d 702 (1978). As is pertinent to this

proceeding, Jines holds that where a medical doctor and his

professional medical corporation have been openly conducting

themselves as employee and employer, and plaintiffs counsel were aware

of that fact at all pertinent times but sued only the medica1 doctor,

there was no legal basis for a post-judgment order adding the

corporation as a judgment debtor. In addition, there was no suggestion

of any abuse of the corporate privilege in that case.



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id. At 714-17. The Jines argument fails for three separate reasons.



   The first reason why respondent's argument fails is that the

factual basis for the ruling in Jines is missing here.  The various

Scientology entities have not continuously and unequivocally held

themselves out as having the common identity, or anything even

remotely resembling the employee/employer relationship, which was the

factual underpinning in Jines. Rather, the Scientology entities have

vigorously and vehemently denied that the requisite relationship

actually exists, and have insisted that the various entities are

completely separate. Absent both the fact of and knowledge of the

necessary relationship between the Scientology entities, Jines simply

does not apply. Neither Jines nor the other cases cited by respondents

preclude plaintiff from asserting after the trial later-discovered

facts in support of a post-trial motion to amend the judgment.



The second reason why respondents' argument fails is that it rests in

large part on the notion-stressed at oral argument-that timely inquiry

by plaintiff (before July I986) would have revealed all the facts

necessary to make this motion. The Court is not persuaded that if it

focuses only on the period before July 1986, plaintiff's discovery

would have revealed what he now claims is the true nature of the

relationships between the various scientology persons and entities.

Various courts have already found that individuals and entities under

what might broadly be described as the Scientology umbrella engaged in

a pattern and practice of deception, including creation of fake

documents and the giving of deliberately false and misleading

information, about the control, finances, and organization of various

entities under that umbrella. In large measure, that falsification and

deception may have been undertaken in connection with



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the individuals' and entities' resistance to inquiry by tax

authorities, as documented in such cases as Church of Scientology of

California v. Commissioner of Internal Revenue, 83 T.C. 381 (1984), United

States v. Zolin, 905 F 2d 1334 (9th Cir. 1990), and Church of Spiritual

Technology v. United States, 26 Ct. Cl. 713 (1992).



Nevertheless, because these false statements and deceptions were made

concerning reorganizations and relationships which were actually or

purportedly occurring within the same time frame as those on which

respondents now rely, the Court is not persuaded that prior to 1986,

prompt, full and truthful disclosure would have been made in this case.

Rather, the Court is persuaded that, at that time, whether as a

continuation of the "fair game" policy previously practiced against

plaintiff (Wollersheim v. Church of Scientology of California, 212 Cal.

App. 3d 872,879-86,893 (1989)), or as a necessary adjunct to strategies

being employed in connection with other matters, the details of the true

relationships of persons and individuals under the Scientology

umbrella would not have been disclosed to plaintiff. This conclusion

is not meant to disparage either respondents' present hierarchy or

their counsel; rather, it reflects prior judicial findings that, at an

earlier time which is relevant to events in this case, various

Individuals and entities associated with Scientology engaged in a

calculated program of deception as to these subjects for their own

purposes.



The third reason respondents' argument fails is that the Court is

persuaded that the core evidence on which plaintiff relies in support

of its renewed motion simply was not available prior to the conclusion

of trial. Setting aside the issue of the credibility of the

declarants, the declarations of Vicki Aznaran, Jesse Prince and Joseph

Yanny, for example, which tend to support plaintiff's argument that

persons or



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entities outside CSC controlled CSC's posture in this litigation were

not available until various times the 1990s. In addition, commencing

with the judgment debtor examination of CSC President Neil Levin on

May 31, 1995, other testimony and documentary evidence began to become

available. The general information about organizational structure

which was available to plaintiff prior to trial may have raised

certain suspicions, but it is these later declarations and documents,

among other evidence, which plaintiff relies upon to give substance to

the present motion.



Issue #2



The second issue is whether plaintiff's motion to amend the judgment is

precluded because of his alleged excessive delay in moving to amend or

to collect on his judgment. Both parties have addressed this issue in

detail. Respondents rely primarily on Alexander v. Abbey of the Chimes

104 Cal. App. 3d 39 (1980), for the proposition that an unjustified

seven-year delay precludes an amendment of the judgment here, where

the delay is asserted to be 11 years.



At the threshold, the Court is inclined to agree with respondents on

two preliminary points. First, the Court is not persuaded that

respondents must demonstrate "prejudice" in opposing the due diligence

showing; that is, the test is not the same as laches. While Abbey of

the Chimes emphasizes the equitable nature of the determination

whether to permit the amendment, that decision did not address any

aspect of "prejudice" to the non-moving party except insofar as the

control of the litigation/due process issues implicate prejudice.

Indeed, the Abbey of the Chimes decision clearly implies that there

was no prejudice in that case, although the



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unexplained delay made it an abuse of discretion to grant the

amendment. Nothing in Ukegawa Brothers v. Agricultural Labor Relations

Board, 212 Cal. App. 3d 1314 (1989)is to the contrary.



Second,  the Court rejects what appears to be plaintiff's argument

that respondents are somehow collaterally estopped from raising the

due diligence issue by the outcome of Church of Scientology of

California v. Wollersheim, 42 Cal, App. 4th 628 (1996), and/or by the

unpublished portion of the decision in Wollersheim v, Church of

Scientology International, No. B118114, 2d. Dist., Div. 2, filed Feb.

4, 1999. The due diligence issue presented here is not identical to that in

Church of Scientology v. Wollersheim, nor was it actually or necessarily

decided in that prior action, and the Court of Appeal in last appeal in

this case expressly declined to address this issue.



As a further threshold issue, the question with respect to due

diligence under Abbey of the Chimes is the timeliness of the filing of

a motion to amend the judgment, not to attempts to collect on the

judgment. To the extent respondents argument vacillates between the

two concepts, only diligence in filing the motion to amend is

pertinent.



This case involves an attempt to amend the judgment under C.C.P. §

187. It does not fall within C.R.C. 48(a), which applies in

circumstances such as when a party to an action dies and a personal

representative takes over the litigation. See 9 B. Witkin, California

Procedure, Appeals § 175, at 232 (4th ed. 1997).



Under C.C.P. § 916(a), a perfected appeal generally divests the trial

court of further jurisdiction as to all questions affecting the

validity of the judgment or order being appealed. Thus, the trial

court has no power during. an appeal to correct or



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amend that judgment or order. E.g., Laidlaw Waste Systems, Inc. v.

Bay Cities Services, Inc. 43 Cal. App. 4th 630,641(1996); Elsea v.

Saberi, 4 Cal. App. 4th 625, 629 (1992). However, the trial court

retains jurisdiction to determine ancillary or collateral matters that

do not affect the judgment. People v. Hedge, 72 Cal. App. 4th 1466,

1477 (1999).



The rationale for this rule is simple.



"The purpose of the rule depriving the trial court of jurisdiction

during the pending appeal is to protect the appellate court's

jurisdiction by preserving the status quo until the appeal is decided.

The rule prevents the trial court from rendering an appeal futile by

altering the appealed judgment or order by conducting other

proceedings that may affect it. [Citation omitted.] Accordingly,

whether the matter is 'embraced' in or 'affected' by a judgment within

the meaning of section 916 depends on whether post-judgment trial

court proceedings on the particular matter would have any impact on

the 'effectiveness' of the appeal. If so, the proceedings are stayed;

If not, the proceedings are permitted."



In re Marriage of Vamer, 68 Cal. App. 4th 932,936 (1996), quoting

Elsea v. Saberi, supra. 4 Cal. App, 4th at 629.



This case well illustrates the application of the rule to preclude the

exercise of trial court jurisdiction to amend the judgment while the

appeal was pending. To give but one example, an important issue in the

original appeal was the propriety of the compensatory and punitive

damages awards. Wollersheim v. Church of Scientology of California,

supra. 212 Cal. App. 3d at 905-07. The identity of the parties who

would be subject to any award (as well as its amount) was manifestly

"embraced" in or "affected" by the judgment. The Court therefore

concludes that from the filing of the notice of appeal on or about

September 29,1986, until the conclusion of the direct appeals with the

issuance of the remittitur following final dismissal of the grant of

the



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writ of review by the California Supreme Court on or about March 7,

1994, the trial court had  no jurisdiction to amend the judgment.



In addition, post-trial proceedings with respect to the question of

interest were held in the second half of 1994, during which CSC

claimed that no final judgment existed. The trial court's adverse

determination of those issues was followed by a further notice of

appeal by CSC on or about December 21,1994. That further appeal again

divested the trial court of jurisdiction. The California Supreme Court

's remittitur following denial of CSC's petition for review issued on

or about February 15, 1996, once again restored the trial court's

jurisdiction. The motion to amend the judgment to add RTC and CSI were

filed on or about May 7, 1997.



In addition, there is another set of factors which the Court believes

is pertinent to the due diligence issue: the pendency of other

litigation involving the parties. On or about November 4,1985, prior

to trial in this case, present respondents RTC and CSI filed two suits

(later consolidated) in federal court 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.

Religious Technology Center and Church of Scientology International v.

Wollersheim, U.S.D.C., C.D. Cal. No. CV-85-7191. RTC and CSI sued,

among others, plaintiff Wollersheim, as well as his then-attorneys and

some of Wollersheim's expert witnesses in this action, to prevent the

dissemination and use in this action of certain allegedly stolen

religious materials which were alleged to be "trade secrets." That

case resulted in published decisions in Religious Technology Center v.

Wollersheim, 796 F.2d 1076 (9th Cir. 1986), cert. denied,  479 U.S.

1103 (1987) (reversing a preliminary injunction in favor of RTC and

 

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CSI), Religious Technology Center v. Scott, 869 F.2d 1306 (9th Cir.

1989) (reversing summary denial of renewed application for preliminary

injunction an different grounds),  and Religious Technology Center v.

Wollersheim, 971 F.2d 364 (9th Cir. 1992) (affirming dismissal of the

claims against the attorneys and experts).

   

The next suit was Church of Scientology of California v. Superior

Court, U.S.D.C. C.D. Cal. No. CV 86-1362, which arose after Judge

Swearinger ordered CSC to produce its entire 'auditing" and 'pre-clear

' files on plaintiff for this case. CSC sued Judges Margolis and

Swearinger, as well as the entire Los Angeles Superior Court bench.

That action was dismissed by the federal district court in 1987.

   

While the various proceedings on its direct appeals from the

judgment were still pending, CSC launched a collateral attack on the

judgment by filing Church of Scientology of California v. Wollersheim

on February l6, 1993. It attempted to have the original judgment against

CSC set aside on the grounds of judicial bias. Wollersheim filed a

special motion to strike the complaint based on C.C.P. § 425.16, the

anti-SLAPP suit statute, which was granted, and substantial attorneys

fees were awarded. That decision was affirmed on appeal in a published

decision at 42 Cal. App. 4th, 628 (1996), and review was denied by the

California Supreme Court on May 22,l996 (1996 Cal. Lexis 2783 (May 22,

1996)).

   

On August 21, 1995, after the trial court had dismissed Church of

Scientology v. Wollersheim, but before the Court of Appeals had issued

its decision, yet another action was filed called Religious Technology

Center and Bridge Publications Inc. v. F.A.C.T.N.E.T. and Wollersheim,

et al., U.S.D.C.D. Colo. No. 95 K2143. This suit apparently related to the

alleged wrongful appropriation or dissemination of various



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Scientology documents. Pursuant to a civil writ of seizure, hundreds

of thousands of documents were seized relating to various of

Wollersheim's attorneys, the trial judges in both Wollersheim v.

Church of Scientology of California and --and various other persons,

arguably in violation of C.C.P. § 425.16. The case as to Wollersheim

was apparently settled.



The Court finds this history to be significant because it demonstrates

that, from well prior to trial, Scientology entities-including not

only CSC, but also RTC and CSI-almost continuously were maintaining

one or more separate suits against  Wollersheim. This separate

litigation has been characterized not only by the use of deep pockets

to pursue virtually every possible appeal, but also-until the Colorado

case-by its almost unbroken lack of success on the merits. See Church

of Scientology v. Wollersheim, 42 Cal. App. 4th at 649-50. Under these

circumstances, the Court concludes that the necessary diversion of

Wollersheim's attention, resources and effort caused by these countersuits

constitute valid and persuasive reasons for such delay as has actually

occurred. The Court therefore concludes that respondents (as moving

parties) have not carried their burden of persuasion that this motion to

amend should be precluded under either Abbey of the Chimes or any other

decision cited by respondents.



Issue #3



Plaintiff  has argued that the doctrine of judicial estoppel should

preclude respondents from raising issue # 2. Plaintiff's theory is

that as recently as October l994, CSC's counsel, William Drescher,

argued in submissions in opposition to



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plaintiff's motion for appointment of a receiver that there was no

judgment in effect to enforce. Having taken this position in 1994,

plaintiff argues, respondents cannot now be  heard to claim undue

delay in seeking to amend a judgment they claimed did not exist.



The Court understands the argument, but need not reach it in view of

the fact that respondent's position on Issue # 2 has been rejected on

the merits. The Court therefore need not address two underlying

questions: whether the position taken was an issue of fact, or of law,

or of mixed fact law; and what significance there may be to the fact

the Mr. Drescher asserted one position on behalf of CSC in 1994, and

the contrary position on behalf of CSI in 1997 and subsequently.



Issue #4



Respondents contend that plaintiff's alter ego analysis will

necessarily involve a constitutionally prohibited intrusion by the

Court into the doctrine, internal administration and governance of

Scientology's ecclesiastical hierarchy. The two principal decisions on

which respondents rely are Serbian Eastern Orthodox Diocese v.

Milivojevich, 426 U.S. 696 (1976), and National Labor Relations Board

v. Catholic Bishop of Chicago, 440 U.S. 490 (1979).

   

At the threshold, this argument may seem premature. It is not yet

clear what precise evidence may be proffered in connection with the

hearing, and precisely what subjects will be addressed. Certainly,

respondents have made it known that they believe oral testimony will

be required to reach the merits, notwithstanding the voluminous

exhibits and declarations which have already been tendered.

Nevertheless,



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the Court believes it can now address what it construes as the

functional equivalent to a facial challenge to holding any hearing on

the merits, as opposed to a challenge to the admissibility of

particular pieces of evidence toward the merits.



National Labor Relations Board v. Catholic Bishop of Chicago, supra.

is of little help on these issues. The question in that case was

whether the N.L.R.B. had jurisdiction over private, non-profit

religious schools. The Supreme Court noted the potentially serious

issues raised by the N.L.R.B.'s differentiation between 'completely

religious" and "merely religiously affiliated" (440 U.S. at 495-99)

and the need for an examination into the good faith adherence of religious

beliefs by administrators in the resolution of unfair labor practice

charges (Id at 501-03). The Court concluded that, in the absence of a

clearly expressed Congressional intent that religious schools should be

covered by the National Labor Relations Act, it would construe the Act to

deny jurisdiction rather than be required to confront the constitutional

questions raised by the alternative construction. Id. at 504-07.



Serbian Eastern Orthodox Diocese v. Milivojevich involved a dispute

over control of the American-Canadian Diocese of the Serbian Orthodox

Church. The Holy Assembly of Bishops and the Holy Synod of the Serbian

Orthodox Church (the mother church) suspended and ultimately removed

Milivojevich as Bishop of the American-Canadian Diocese. The mother

church also reorganized the former American-Canadian Diocese into

three dioceses.  Milivojevich refused to recognize these acts by the

authorities of the mother church, and challenged them in Illinois

state court, including seeking a ruling that he was the true Diocesan

Bishop. The Illinois Supreme Court ruled that both Milivojevich's

removal and the reorganization were invalid under its



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interpretation of governing church law. 426 U.S. at 697-708.

   

The Supreme Court reversed. The court quoted Watson v. Jones, 13

Wall. 679 (1872), a diversity case decided before the First Amendment had

been rendered applicable to the States through the Fourteenth Amendment,

for the guiding principles applicable to hierarchical churches.



"[T]he rule of action which should govern the civil courts. is, that,

whenever the question of discipline, or of faith, or ecclesiastical

rule, custom, or law have been decided by the highest of these church

Judicatories to which the matter had been carried, the legal tribunals

must accept such decision as final, and as binding on them, In their

application to the case before them."



426 U.S. at 710, quoting Watson v. Jones, 13 Wall. at 727.

    

This principle means that the court may not decide issues of

theological controversy, review determinations of church members'

moral standing , and similar issues. However, it is well recognized

that the courts may make decisions relating to church property, where

neutral principles of law, developed for use in all property disputes,

are applied, as opposed to having the issue turn on resolution of

controversies over religious doctrine and practice. Presbyterian Church

in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian

Church, 393 U.S. 440,449 (1969) (reversing a Georgia state court

decision where the jury had been instructed to determine whether there

had been a "departure from doctrine" by the mother church), The

Supreme Court expressly reaffirmed the "neutral principles of law"

approach in Jones v. Wolf 443 US. 595,602-06 (1979). Moreover, Hull

Memorial Presbyterian Church  (393 US, at 447, 450-51) mentions a

"fraud, collusion, of arbitrariness" exception, although Serbian

Eastern Orthodox Diocese (426 U.S. at 412-13) points out that its

content has never



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been defined.

   

Respondent's argument that there is a blanket prohibition on any

examination of the structure or operation of any Scientology entity

was squarely rejected by the Tax Court In Church of Scientology of

California v. Commissioner of Internal Revenue,  supra, 83 T.C. at

464-69. The Tax Court used Scientology policy documents, not to

resolve doctrinal issues, but to determine (among other things) its

corporate structure and management practices. The Tax Court

articulated the following principles which may apply to this case:



 1. "The establishment clause does not prevent the government from

making a threshold inquiry into whether or not a given practice is

religious in nature and therefore entitled to First Amendment

protection." Id. at 462.



2. "The establishment clause does not cloak a church in utter secrecy,

nor does it immunize a church from all governmental authority. The

thrust of the entanglement component of the establishment clause is to

keep Government out of the business of umpiring matters involving

religious practice and belief." Id.



3. "[C]ivil authorities are not barred from settling disputes

implicating the secular side of church affairs as long as they rely

upon neutral principles of Law." Id.



4. The state may "examine Church [of Scientology] documents, including

the constitution of a church, provided the documents are scrutinized

in purely secular terms and the facts determined are not attendant on

the resolution of doctrinal issues,' Id. at 463.



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These principles suggest that the inquiry sought by plaintiff is not

barred by the First Amendment. Two examples of possible factual issues

will suffice.  First, a central character In plaintiff's alter ego

theory is David Miscavige. During oral argument, Mr. Drescher advised

the Court that at the time of trial in 1986, Mr. Miscavige was

associated with a for-profit non-church entity called Author Services,

Inc., and he allegedly had no relationship whatsoever with RTC or CSI.

Clearly, to the extent Mr. Miscavige had no ecclesiastical position

prior to or at the time of trial, scrutiny of his role (if any) in

controlling this litigation does not in any sense implicate the First

Amendment. Moreover, as Mr. Drescher further stated at oral argument, when

Mr. Miscavige was Chairman of the Board of Directors of RTC beginning in or

about 1987, he wore two separate hats. He was the senior corporate

administrative officer of RTC, and he was simultaneously serving as the

senior ecclesiastical official of the Scientology religion. Which, if

either, of these two hats Mr. Miscavige wore at any particular time and

with respect to any particular conduct is undoubtedly the appropriate

subject for judicial inquiry.



The second example is also suggested by Mr. Drescher's remarks at oral

argument. He alluded to Mr. Miscavige's membership in something called

the Sea Organization, also known as "Sea Org." This Mr. Drescher

characterized as a "religious order," and analogized it to the

Jesuits. However, in the pre-RTC period, according to Mr. Drescher,

Mr. Miscavige's membership in Sea Org did not put in him a position of

religious authority, and he was not interpreting doctrine.

   

An alternative view of Sea Org is presented in Church of Spiritual

Technology v. United States, supra.



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"After carefully examining the record and attempting to understand the

nominal corporate structure of Scientology,  it is apparent to the

court that it is something of a deceptis visus. Real, control is

exercised less formally, but more tangibly, through an unincorporated

association, the Sea Organization, more commonly referred to as the

Sea Org. This group, in the nature of a fraternity or clan, began with

Scientologists who pledged themselves eternally to Scientology...



"The Sea Org appellation survives in Scientology as a distinction

afforded to those Scientologists who have dedicated themselves to

serving Scientology for the next billion years. It is described by CST

[Church of Spiritual Technology] as a way to distinguish those

Scientologists worthy of great deference and respect.  Sea Org members

are initiates into the highest levels of Scientology, and bear

concomitant responsibilities.



"CST staff and officers are required to be members of the Sea Org.

which gives CST the distinction of being a Sea Org Church. CSI, RTC

The Flag Services 0rg  (which employs over 900 Sea Org members), the

Saint Hill Church, in short all high ranking organizations are Sea Org

Churches. Being a "Sea Org church" means that the church's function is

important enough to Scientology to warrant the attention of a

significant number of Sea Org members.



"Sea Org rank nominally carries with it no ecclesiastical authority in

the sense that Sea Org members still take orders from the

ecclesiastical leaders of whatever Scientology organization they join.

Upon closer analysis, however, this appears to be a distinction

without a difference because in a Sea Org church the ecclesiastical

authority necessarily resides In a Sea Org member.



"Furthermore, the Sea Org appears to have considerable financial

importance. . . . Sea Org members also exercise considerable control

over Scientology money through SOR Management Services, Ltd."



26 Ct. CL at 718-19. SOR Management Services, Ltd., was further

described as a United Kingdom for-profit corporation which acts as an

agent in managing money for, among other organizations, CSI and CSC.

Id. at 724 n.23.



Plaintiff's motion argues that Sea Org members, including Mr.

Miscavige, while having no formal corporate positions in the pertinent

organizations, and while not exercising ecclesiastical functions by

virtue of a specific hierarchical position, have in fact controlled

and directed the activities of CSC, CSI and/or RTC as it relates to

the



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litigation involving plaintiff. Plaintiff apparently further argues

that the conduct of the litigation involving him is a secular

function, rather than a religious function.  Plaintiff urges that,

under all the circumstances, adherence to the fiction of separateness

would sanction a fraud or injustice,



These arguments, if proven, suggests that the corporate formalities

have been disregarded and that there was at pertinent times an

effective unity of control and direction, which might support the

imposition of alter ago liability. This particular issue is

susceptible to examination and analysis using neutral legal

principles, without impermissibly involving the court in issues of

religious practice or belief, faith, doctrine, or ecclesiastical

administration. The First Amendment offers no bar to a properly

structured evaluation of this question.



Issue #5



Respondents' final issue is predicated on principles articulated Roman

Catholic Archbishop of San Francisco v. Superior Court, 15 Cal. App.

3d 405 (1971). In that case, plaintiff had arranged to buy a Saint

Bernard dog in Switzerland from the Canons Regular of St. Augustine, a

Roman Catholic order. When a dispute arose, he sued not only all those

involved in Switzerland, but also "The Roman Catholic Church d.b.a.,

The Roman Catholic Bishop of San Francisco, a corporation sole, the

Bishop of Rome, [and] The Holy See." He alleged essentially that all

the subordinate entities were alter egos of the Roman Catholic Church,

the Bishop of Rome and the Holy See. Id. at 408-09. The Court of

Appeals reviewed the trial court's denial of the Archbishop's motion

for summary judgment. The Court of Appeal held that, regardless

whether the Canons



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Regular of St. Augustine might be an alter ego of the Pope, that there

was no evidence

that the Archbishop was the alter ego of the Canons Regular. Id. at

409-12.



The Court of Appeal pointed out:



The "alter ego" theory makes a "parent" liable for the actions of a

"subsidiary" which it controls, but it does not mean that where a

"parent" controls several subsidiaries each subsidiary then becomes

liable for the actions of all other subsidiaries. There is no

respondent superior between subagents.



Id. at 412.



In order to fall within Roman Catholic Archbishop of San Francisco,

the fundamental claim implicit in respondents' argument must be that

they are really subordinate sister churches with CSC under common,

superior ecclesiastical control. As a factual premise, that remains

unproven.



There are divergent views of the respective roles of the different

Scientology entities. One of these is that Implicit in respondents'

argument. Another is reflected in Church of Spiritual Technology v.

United States, supra.



"Before 1981, the Church of Scientology of California ("CSC") acted as

the mother church for all of Scientology. It was organized as a

non-profit corporation in California, and was responsible for running

all aspects of Scientology with the exception of some specialized

financial arrangements. it had ultimate ecclesiastical authority,

provided all levels of Scientology services, and was the center of

management for all other Scientology organizations . . .



". . . [I]n 1981, Scientology underwent a reorganization. The goal of

the new structure was for Scientology to "simplify its corporate

structure." CSC was broken up and replaced by several new higher level

entities. Church of Scientology International ("CSI"), Religious

Technology Center ("RTC"), Church of Scientology San Francisco, and

Church of Scientology Los Angeles were all products of the

reorganization. . . . CSI became the new mother church of Scientology.

It sits at the top of a complex corporate hierarchy. RTC Is the entity

charged with maintaining doctrinal purity in the church. CSI along with

RTC form the top-level ecclesiastical



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management of Scientology, although there are numerous other churches

and other entities that have a role in management, finance or

spiritual affairs."



26 Ct. Cl. at 716-17. The term "simplify" is in quotes because the

Court of Claims listed separate organizations as constituting the

church of Scientology after the

reorganization. Id. at 717 n.9.



The Court of Claims description is significant because it does not

depict CSC, on the one hand, and CSI and RTC, on the other hand, as

subordinate sister churches, but rather as successive entities at the

top of the pyramid. If this is in fact the case, respondent's entire

argument premised upon Roman Catholic Archbishop of San Francisco

lacks any factual foundation. That, however, is a decision which must

be made on the basis of all the evidence, and not on the basis of a

theoretical construct.



As Church of Scientology of California v. Commissioner of Internal

Revenue, supra, teaches, it is permissible for the Courts to look at

Scientology's corporate structure and management practices, including

through the use of internal documents. The issues can be examined on

purely secular terms, and not to resolve any doctrinal issues. No

preclusion principle acts as a matter of law to bar a properly

structured factual inquiry.



Conclusion



The Court wishes to emphasize that it has not yet decided the

factual issues which will be necessary to address the motion on the

merits. What it has decided is that respondents' preliminary

objections to even conducting a merits inquiry



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are not persuasive.  The Court is cognizant of the volume of

declarations, exhibits, evidentiary objections, and transcripts which

already have been submitted. The Court will address the procedures by

which the evidence is to be evaluated in a separate Order.



The Clerk will give notice.



Dated: May 4,2001



Robert L. Hess

Judge of the Superior Court



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