RELIGIOUS TECHNOLOGY CENTER, Plaintiff,
Arnaldo Pagliarina LERMA, Digital Gateway Systems, The Washington Post, Marc
Fisher, and Richard Leiby, Defendants.
Civ. A. No. 95-1107-A.
United States District Court,
Nov. 29, 1995.
Religious organization brought action against individual, Internet access
provider, newspaper, and reporters, alleging copyright infringement
based on dissemination of works owned by organization. On organization's
motion for reconsideration of motion for preliminary injunction against
newspaper and reporters and motion for preliminary injunction against
individual and access provider, and on individual's motion to vacate order for
seizure of individual's computer files, the District Court, Brinkema, J., held
that: (1) organization's rights under free exercise clause did not negate
newspaper's right to use works; (2) assertion that dissemination would cause
spiritual harm did not warrant injunction against newspaper; (3) economic harm
alleged by organization did not warrant injunction against newspaper; and (4)
organization was not entitled to injunction against individual, in light of
Granted in part and denied in part.
 FEDERAL CIVIL PROCEDURE
Reconsideration motion is typically heard only where court has patently
misunderstood party or where there is significant change in law or facts of
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Religious organization's assertion that secrecy of certain religious works was
central tenet of religion and that dissemination would decimate its religion
did not require court to preliminarily enjoin newspaper from using works, under
free exercise clause, as newspaper was entitled to undertake legally
permissible criticism of religion so long as possession of works was achieved
lawfully, pursuant to First Amendment freedom of the press and fair use
doctrine. U.S.C.A. Const.Amend. 1; 17 U.S.C.A. s 107.
 CONSTITUTIONAL LAW
District court must weigh religious claims, under free exercise clause, against
overriding necessity of enacting neutral and general laws to promote common
good; in evaluating clash of these principles, judiciary must honor legitimate
secular goals, and activities that are otherwise permissible cannot be
prohibited on ground they offend another individual's religious culture or
sensibilities. U.S.C.A. Const.Amend. 1.
 CONSTITUTIONAL LAW
Law satisfies requirement of free exercise clause if it is "neutral" and of
"general applicability." U.S.C.A. Const.Amend. 1.
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Religious organization's claim that dissemination of works owned by
organization would result in spiritual harm to persons who were not members of
religion and to those members who had not attained certain spiritual level did
not require court to preliminarily enjoin newspaper from using works; First
Amendment protected free access to information over paternalistic efforts to
prevent harm caused by such information, newspaper's use was lawful under fair
use doctrine, and court could not accept as truth religious beliefs forecasting
universal harm. U.S.C.A. Const.Amend. 1; 17 U.S.C.A. s 107.
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Economic harm which religious organization claimed would result due to
dissemination of organization's works, including competition from other
churches and potential loss of new parishioners, did not warrant preliminary
injunction preventing newspaper from using legally obtained works, in
organization's copyright infringement action against newspaper, as newspaper's
brief quotes from works were insufficient for creation of rival organization
based on works, and potential loss of parishioners was price paid in society
encouraging open marketplace for ideas.
Whether preliminary injunction should be issued is determined by flexible
interplay of four factors which include risk of irreparable harm to plaintiff
if relief is denied, risk of harm to defendant if relief is granted, likelihood
of plaintiff's success on merits, and interest of public.
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Religious organization could not preliminarily enjoin individual who placed
organization's works on Internet from further disseminating works, in
copyright infringement action; even if individual's conduct did not
necessarily constitute fair use of works, individual was bound by court order
to use information only in manner constituting fair use, individual was
protected by First Amendment freedom of the press, organization's primary goal
was not to protect legal rights but to stifle criticism about religion itself,
and organization did not act appropriately in connection with seizure of
individual's computer files pursuant to initial temporary restraining order.
U.S.C.A. Const.Amend. 1; 17 U.S.C.A. s 107.
 CONSTITUTIONAL LAW
First Amendment's protection of freedom of the press extends to individuals and
groups in addition to commercial news organizations. U.S.C.A. Const.Amend.
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Regardless of whether defendant's use of copyrighted material is fair use,
general discussion of and reporting about contents of any work is
permissible. 17 U.S.C.A. ss 102(b), 107.
*1355 Bruce B. McHale, Alexandria, VA, for Religious Technology Center.
Jay Ward Brown, Washington, DC, for Arnaldo P. Lerma.
Michael A. Grow, Washington, DC, for Digital Gateway Systems.
John P. Corrado, Alexandria, VA, for The Washington Post, Marc Fisher, and
MEMORANDUM OPINION IN SUPPORT OF ORDER OF SEPTEMBER 15, 1995 AND AMENDED ORDER
OF NOVEMBER 29, 1995
BRINKEMA, District Judge.
This matter comes before the Court on plaintiff Religious Technology
Center's ("RTC") Emergency Motion for Reconsideration and Rehearing of RTC's
Motion for Temporary Restraining Order and Preliminary Injunction against
defendants The Washington Post, Marc Fisher and Richard Leiby (collectively,
"The Post"), plaintiff RTC's Motion for a Preliminary Injunction against
defendant Lerma and Digital Gateway System ("DGS") and defendant Lerma's Motion
to Vacate the August 11, 1995 Writ of Seizure and Order for Impoundment and to
Increase the Amount of Plaintiff's Bond. On September 15, 1995 we denied all
of RTC's motions and granted Lerma's motion. The memorandum to support that
ruling was deferred.
I. RTC'S EMERGENCY MOTION FOR RECONSIDERATION AND REHEARING ON RTC'S MOTION
FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION AGAINST DEFENDANTS
THE WASHINGTON POST, MARC FISHER AND RICHARD LEIBY
 At the outset, we caution counsel that this Court seldom revisits
motions upon which it has already ruled. Such an approach fosters efficiency
and finality. A reconsideration motion is typically heard only where the Court
has "patently misunderstood a party" or where there is a "significant change in
the law or facts" of a case. Above the Belt, Inc. v. Mel Bohannan Roofing,
Inc., 99 F.R.D. 99, 101 (E.D.Va.1983). Although neither circumstance is
present here, the Court has permitted reargument because the RTC claims that
the Court's denial of its Temporary Restraining Order has significant First
Amendment implications upon which the RTC had not focused in its first motion.
In the Court's view, these arguments should have been raised in RTC's original
motion against The Post instead of awaiting this second attack. Nevertheless,
in the interests of full consideration of RTC's claims, we granted the
rehearing confident that RTC's future pleadings will address all significant
legal issues in the first instance.
A. The Free Exercise Clause
 The most potent new issue raised by the RTC concerns the alleged
interference that the Court's August 30 Order ("the Order") wreaks upon the
free exercise of the Scientology religion. RTC asserts that
*1356 maintenance of the secrecy and confidentiality of the documents in
question ("AT documents") represents a fundamental and inviolate tenet of the
Scientology religion. Withholding these documents from unprepared or
uninitiated observers was of primary importance to founder L. Ron Hubbard and
is a belief woven throughout his original writings. Thus, for Scientologists
publication of these materials threatens "irreversible alteration of religious
beliefs, including compelled annihilation of a core belief--confidentiality of
the [AT documents]." (RTC's brief at p. 17)
The RTC asserts that the Court's Order by permitting The Post limited and
specified use of the AT documents "imposes a change in religious belief and
practice by judicial fiat ... [It] dictate[s] to Scientologists how to practice
their religion." (RTC's brief at p. 5) The Court thereby places in the
hands of The Post "the authority to decide how the Scientology religion is
practiced." (RTC's brief at p. 14) "Publishing is a literal violation
of ... the very religious beliefs in question." (RTC's brief at p. 17) The
RTC further argues that by denying their request to enjoin The Post and impound
all AT documents in The Post's possession, this Court is placing its imprimatur
on activity which represents "sacrilege" to the religion and "does violence to
everything [Scientologists] believe in ..." (Transcript of September 15, 1995
Hearing at p. 15)
We recognize that the RTC has installed extraordinary measures to
maintain the secrecy of its AT documents and that they have zealously pursued
any reported leaks of information. However, it is a quantum leap to claim that
Scientology's endeavors to enforce the secrecy of these documents thereby
prohibits secular organizations from undertaking legally permissible criticism
of Scientology including quotes from these documents as long as possession of
the documents was achieved lawfully. In their effort to enjoin The Post, the
RTC is essentially urging that we permit their religious belief in the secrecy
of the AT documents to "trump" significant conflicting constitutional rights.
In particular, they ask us to dismiss the equally valid First Amendment
protections of freedom of the press. Furthermore, RTC asks that we allow the
Free Exercise Clause to deflate the doctrine of fair use as embodied in the
copyright statute, one of the very status laws upon which the RTC has based
Were they arguing to a religious council placed within a theocratic
government, RTC's arguments might prevail. But this Court is a secular branch
of a secular democratic government. Our traditional separation of church from
the state, combined with the heterogeneity of religious practices in this
country compel us to reject the RTC's arguments. "While the Free Exercise
Clause clearly prohibits the use of state action to deny the rights of free
exercise to anyone, it has never meant that a majority could use the machinery
of the State to practice its beliefs." Wallace v. Jaffree, 472 U.S. 38, 57,
105 S.Ct. 2479, 2490, 86 L.Ed.2d 29 (1985). In the same vein, RTC may not
employ the machinery of this Court to enforce its religious prescriptions
against The Post by enjoining otherwise permissible activity.
 Ultimately this Court must weigh any religious claims against the
overriding necessity of enacting neutral and general laws to promote the common
good. In evaluating the clash of these principles, the judiciary must honor
legitimate secular goals. Activities that are otherwise permissible cannot be
prohibited on the ground that they offend another individual's religious
culture or sensibilities. The Supreme Court stated this point cogently in
Employment Division, Dept. of Human Resources of Oregon v. Smith, 494 U.S.
872, 885, 110 S.Ct. 1595, 1603, 108 L.Ed.2d 876 (1990):
The government's ability to enforce generally applicable prohibitions of
socially harmful conduct, like its ability to carry out other aspects of public
policy, 'cannot depend on measuring the effects of a governmental action on a
religious objector's spiritual development.' To make an individual's
obligation to obey such a law contingent upon the law's coincidence with his
religious beliefs ...--permitting him, by virtue of his beliefs, 'to become a
law unto himself,'--contradicts both constitutional tradition and common sense.
*1357 (emphasis added) (citations omitted). The opinion concludes:
The rule respondents favor would open the prospect of constitutionally
required religious exemptions from civic obligations of almost every
Id. at 888-89, 110 S.Ct. at 1605.
 It is well-established that a law satisfies the requirement of the Free
Exercise Clause if it is "neutral" and of "general applicability." Church
of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, ---- et seq.,
113 S.Ct. 2217, 2226 et seq., 124 L.Ed.2d 472 (1993). [FN1]
FN1. Using the formula detailed in Lukumi Babalu, the Supreme Court has
repeatedly upheld other secular activities that conflicted with a
petitioner's religious beliefs. See e.g., Lyng v. Northwest Indian
Cemetery Protective Ass'n., 485 U.S. 439, 108 S.Ct. 1319, 99 L.Ed.2d 534
(1988) (permitting government logging and road construction on lands used
for religious purposes by Native Americans); Bowen v. Roy, 476 U.S.
693, 106 S.Ct. 2147, 90 L.Ed.2d 735 (1986) (upholding the assignment of a
social security number despite petitioner's claim that it violated
RTC responds that their claims merit additional weight because the secrecy of
the AT documents is a necessary condition to the operation of Scientology. In
other words, dissemination of the confidential materials threatens to decimate
the religion as opposed to merely offending Scientologists, consequently,
inhibiting their free exercise of their religion. The RTC supports this
argument with the affidavits of various Scientologists. Despite these
affidavits, it would be inappropriate and beyond our capability to assess the
degree of importance which such confidentiality has in the Scientology
It is no more appropriate for judges to determine the "centrality" of
religious beliefs ... in the free exercise field, than it would be for them to
determine the "importance" of ideas ... in the free speech field. What
principle of law or logic can be brought to bear to contradict a believer's
assertion that a particular act is "central" to his personal faith?
Dept. of Human Resources of Oregon v. Smith, 494 U.S. at 886-87, 110 S.Ct.
The RTC attempts to analogize the Court's Order to "an order compelling a
Protestant to dispute the Resurrection, ordering a fundamentalist to read the
Bible [non-literally], compelling an observant Jew to eat pork, or compelling
an observant Catholic to have an abortion." (RTC's brief at p. 5) This
analogy fails because in each hypothetical the judiciary is forcing an
affirmative action upon the religion member. However, the instant case is
distinguishable because the Court, by upholding neutral copyright and First
Amendment law is not compelling any Scientologist to do anything. Instead, the
Order merely permits The Post to utilize the AT documents within the limits of
the fair use exception to the copyright law. In effect, all the Order allows
is the continued operation of established secular law in the neutral fashion
for which it was intended.
B. Spiritual Harm
 A second related argument regards the alleged spiritual harm that will
befall Scientologists and non-Scientologists alike from reading the AT
documents. The RTC claims that premature exposure of the documents to non-
Scientologists (and even to Scientologists who have not reached the requisite
OT level) will result in "devastating, cataclysmic spiritual harm." (RTC's
brief at p. 34) "According to the church's dogma, founder L. Ron Hubbard
taught that disclosure of these documents to anyone who had not progressed
through the necessary spiritual prerequisites could cause profound spiritual
harm to the person prematurely exposed." (Third McShane Declaration, pp 2-3)
Non-Scientologists will also be harmed because premature exposure will
interfere with their "personal spiritual progress." Id. p. 11.
This argument has no merit. We reside in a country which allows
individuals and organizations to confront the risk of harm, spiritual or
otherwise, in the face of protected speech. The First Amendment represents a
conscious and explicit trade-off which the Founding Fathers made between
paternalistic protection from "harmful" thoughts and free access to
information. Where statutorily and constitutionally protected speech is
*1358 concerned, our system permits an individual's fate to be sealed by the
individual's choices rather than governmental monitoring.
The RTC states that "violations of intellectual property rights are not
protected speech within the meaning of the First Amendment." (RTC's brief
at p. 23, emphasis in original). However, this Court has already ruled that
the excerpts appearing to date in The Post constitute fair use under the
copyright statute, and are thus not "violations." We have encountered no
evidence to alter that decision.
In addition to individuals, the RTC also argues that release of the AT
documents could wreak destruction on a planetary scale. One Scientologist
describes how dissemination of the documents might "let loose a hurricane upon
the world through our materials coming into unethical or suppressive or
psychiatric hands ... To place this data near such people as psychiatrists or
even states, places them in a position to enslave people ..." (RTC's brief
at p. 12)
This argument is merely another version of the RTC's first argument. It asks
this Court to accept as truth what is a religious belief of Scientologists and
to make a finding of irreparable harm based on such acceptance. That is not a
proper basis upon which a secular court can base a judicial decision.
For the foregoing reasons, the addition of RTC's free exercise argument does
not warrant reversal of our previous denial of the motion for temporary
restraining order and preliminary injunction against The Post.
C. Economic Harm and Prior Restraint
 In addition to spiritual harm, RTC's Emergency Motion reargues their
position about economic harm from publication of the AT documents. RTC bases
its economic claims upon two types of harm:
1) Competition from rival churches or "splinter groups" which will draw away
future parishioners and potential donations (RTC's brief at pp. 24-43); and
2) The "potential loss of new parishioners through ridicule, by taking
portions of the materials out of context." (RTC's brief at p. 16)
As to the first claim, no reasonable person could find that The Post's brief
quotations from the AT documents could provide sufficient material upon which a
rival church could establish a competing organization. As The Post has argued,
there is no evidence that it intends any more extensive quotations, and indeed
they are under court order to confine their use of the documents to that
permitted by fair use. Moreover, The Post is clearly not in the business of
setting up religions and is not a competitor of Scientology.
Regarding the RTC's concern about potential loss of new parishioners,
this is the price paid in a free society which encourages an open marketplace
for ideas. Free speech protections and the fair use exemption to the copyright
statute exist to permit open and educated debate on matters of public
importance. The RTC must accept the fact that a frank criticism of Scientology
religious tenets may deter some potential parishioners. Harm from legitimate
criticism is not actionable under either the First Amendment or the copyright
laws. New Era Publications Int'l v. Carol Publishing Group, 904 F.2d 152,
160 (2nd Cir.), cert. denied, 498 U.S. 921, 111 S.Ct. 297, 112 L.Ed.2d 251
Thus, the additional arguments presented by RTC regarding alleged economic
harms are unconvincing, and are insufficient to alter the Blackwelder
analysis which prompted this Court's denial of their original motion.
No other arguments in the RTC brief merit any further discussion because they
either merely repeat previous arguments or express disagreement with our
previous ruling. Based on the foregoing, RTC's Emergency Motion for
Reconsideration and Rehearing is DENIED.
II. RTC'S MOTION FOR PRELIMINARY INJUNCTION AGAINST LERMA AND DGS AND LERMA'S
MOTION TO VACATE THE WRIT OF SEIZURE AND INCREASE THE AMOUNT OF PLAINTIFF'S
 The analysis we made concerning The Post is also relevant to RTC's
request for *1359 preliminary injunction against Lerma and DGS as well.
Whether a preliminary injunction should be issued "is determined by the
'flexible interplay' of four factors: the risk of irreparable harm to the
plaintiff if relief is denied, the risk of harm to the defendant if relief is
granted, the likelihood of the plaintiff's success on the merits, and the
interest of the public." Religious Technology Center v. Lerma, 897 F.Supp.
260, 262 (E.D.Va.1995) (quoting Blackwelder Furniture Co. v. Seilig
Manufacturing Co., 550 F.2d 189, 196 (4th Cir.1977)) ("Order").
 Several of the conclusions we reached regarding The Post are applicable
to Lerma. First, we find that the RTC has not made a strong showing of
irreparable harm if the injunction is not granted. Lerma has agreed to abide
by the same court order as has been imposed against The Post. Specifically, he
has agreed to be bound by the fair use provisions of the copyright law and he
has agreed not to transfer the AT documents to anyone.
 Second, the First Amendment's protection of the freedom of the press
extends to individuals and groups in addition to commercial news organizations
such as The Post. As a result, Lerma would also suffer irreparable harm from
the prior restraint which would result from a grant of the injunction.
"[L]iberty of the press is the right of the lonely pamphleteer who uses carbon
paper or a mimeograph just as much as of the large metropolitan publisher who
utilizes the latest photocomposition methods." Branzburg v. Hayes, 408 U.S.
665, 704, 92 S.Ct. 2646, 2668, 33 L.Ed.2d 626 (1972).
Rather than publishing in a newspaper, Lerma has used the Internet,
which is rapidly evolving into both a universal newspaper and public forum.
And although the law has not yet decided how to deal with the Internet, it is
certain that this form of communication will retain First Amendment
protections. Thus, the method of Lerma's publications and the size of his
audience are not reasons for treating him differently from The Post under the
Up to this point, therefore, our analysis and conclusions are the same as
those we reached in the RTC's case against The Post. However, on the
likelihood of success on the merits, the balance tips somewhat more in RTC's
favor because of the degree and surrounding circumstances of Lerma's
publications on the Internet. This Court earlier held that The Post's limited
use of brief quotations amidst extensive original commentary surrounding a
newsworthy event clearly fell within the "fair use" exception of the copyright
statute. See Religious Technology Center v. Lerma, 897 F.Supp. 260, 263
(E.D.Va.1995). Lerma's use of the AT documents is more extensive than The
Post's and may not constitute fair use. The RTC provided numerous examples of
AT Documents or segments thereof copied from Lerma's computer. These excerpts
often constitute much larger quotations from the AT documents than those found
in The Post article. See RTC's Under Seal Exhibit Binder from the September
15, 1995 Hearing. They sometimes represent wholesale copying of a distinct
segment or bulletin from allegedly copyrighted documents. Most importantly,
they appear at times to have been copied without any comment or criticism
Lerma objected to the introduction of these exhibits because a copy had not
been provided to counsel before the hearing. Lerma argued that in discovery he
had asked for just such a comparison; he claimed to be at a disadvantage
because of surprise. The Court quickly reviewed defendant's discovery
requests, found they did not include an explicit request for this comparison
and then reviewed the exhibit. On this preliminary review, we conclude that
Lerma's copying and publishing appears more extensive than The Post's and,
therefore, that the likelihood of RTC succeeding on the merits of the
copyrighted infringement claim is somewhat higher than in its case against The
However, as much as this Court may be concerned about Lerma's use of the AT
documents, it is even more troubled by issues raised in Lerma's Motion to
Vacate. Lerma argues that the RTC cannot avail itself of the equitable power
of the Court because it has unclean hands. Specifically, he attacks: 1) the
bona fide intentions of RTC in bringing *1360 this lawsuit; and 2) the
manner in which the RTC has handled the materials seized from his home on
August 11, 1995.
When the RTC first approached the Court with its ex parte request for the
seizure warrant and Temporary Restraining Order, the dispute was presented as a
straight-forward one under copyright and trade secret law. However, the Court
is now convinced that the primary motivation of RTC in suing Lerma, DGS and The
Post is to stifle criticism of Scientology in general and to harass its
critics. As the increasingly vitriolic rhetoric of its briefs and oral
argument now demonstrate, the RTC appears far more concerned about criticism of
Scientology than vindication of its secrets. RTC's Emergency Motion for
Reconsideration, discussed above, is a clear example of this conduct.
 In that motion, the RTC maligns the "incorrect premise that a
newspaper has a 'right' to report on the content of, let alone quote from,
confidential, unpublished materials." Emergency Motion at p. 33 (emphasis
added). This is not an incorrect premise. Whether or not the extent of The
Post's or Lerma's quotations exceed fair use, it is beyond dispute that general
discussion of and reporting about the "contents" of any work is permissible.
The Copyright Act itself provides:
In no case does copyright protection for an original work of authorship
extend to any idea ... system ... concept, principle, or discovery, regardless
of the form in which it is described, explained, illustrated, or embodied in
17 U.S.C.A. s 102(b). The "idea/expression" distinction in copyright law
is a critical balance which allows a flourishing exchange of ideas while still
protecting a particular author's expression of that idea. The RTC's position
appears to be an attempt to silence comments about the ideas of Scientology and
not just the particular expression of those ideas.
The RTC claims that "The Post's motivation is not so mild. That its intention
in copying the documents from the court file is vicious is underscored by the
contents of the article itself." Id. at p. 35. The Post's use of AT
Document quotations was quite minimal, as this Court earlier held. The
"contents" to which the RTC so vigorously objects, therefore, appear to be
adverse discussion and criticism of Scientology and this related litigation.
Although the RTC may attempt to argue that "any public interest in obtaining
information through media sources ... does not supersede the rights of a
copyright owner," Emergency Motion at p. 44, copyright law, the First
Amendment, and the fair use doctrine prove this is not always the case.
This theme is also demonstrated at oral argument. There were numerous times
when counsel for RTC strayed into issues far beyond the scope of copyright or
trade secret law and were more akin to an objection to criticism of
Scientology. See e.g., Transcript of September 15, 1995, p. 12 (RTC is
concerned about "broadside attacks on the religious practices of Scientology,
broadside attacks on the Scientology and Scientologists"); p. 16 (the reason
the AT Documents are being exposed "is to offend [the] sensibility [of
Scientologists], to offend [their] conviction[s]. These are spiteful
revelations that are being made. These are not being made by anybody in the
interest of news."); pp. 20-21 ("The Church of Scientology has to come in here
and has to be confronted with The Washington Post claim that it has the right
to get those files ... and that their rights are superior ... to the core of
religious convictions and belief of every Scientologist everywhere ..."); p.
24 (that The Post published certain quotes--quotes to which RTC makes no
copyright or trade secret claim--in order to "be offensive to Christians
everywhere ... it's just a vicious, disgusting attack on Jesus Christ made up
for that purpose."); p. 25 (that The Post published some of this "phony"
material "to try to cut the lines of Scientology to their co-religionists in
the Christian religion around the world. It was a vicious thing to do."); p.
25 (that "the attack on the religious beliefs and practices of Scientology is
absolutely repugnant to the Constitution and ought not to be allowed to
stand. [The Post has] mowed down [RTC's] rights with the phony exercise of
their own."); pp. 29, 30, 31 (where RTC makes reference to other "attacks"
unrelated to any copyright infringement). *1361 These repeated excursions
into concerns about attacks on Scientology and its followers, excursions which
the Court had to reign in, reinforce our earlier mentioned concerns regarding
the bona fides of this case. Had the Court been aware of the true motives
behind this litigation, it might not have granted the RTC's initial ex parte
motions for a Temporary Restraining Order and to permit a seizure of Lerma's
The Court's concern is further heightened by the manner in which Lerma's
computer files were seized and subsequently searched. There has been extensive
briefing and argument by all parties on their varying interpretations of the
seizure and search order. Regardless of RTC's attempt to interpret and the
wording of the seizure order, it was this Court's understanding that Lerma's
property would be turned over to an "independent" computer expert who would
conduct independent searches based upon a limited set of search indicia. At
the ex parte hearing the Court expressed concern that the downloading of
Lerma's information might reveal personal and confidential information
irrelevant to this case. (Transcript of Hearing, August 11, 1995 at pp. 14-
15.) This independent review was offered as a safeguard against potential
abuse. We are greatly disturbed to learn that the scope of RTC's involvement
clearly exceeded our intentions for the search. Specifically, we now know that
counsel for RTC determined ex parte what materials would be subject to
impoundment based upon judicial authority.
Moreover, Lerma has effectively demonstrated that--as a direct result of the
seizure and RTC's involvement in the searching--the RTC has acquired
confidential information of great import to them and of secondary (at best)
relevance to this litigation.
We decline to find that RTC's participation in the search and seizure rises to
the level of a "fraud on the Court" as Lerma might have us believe. However,
we do conclude that RTC violated the spirit if not the letter of the seizure
writ, and misled the Court as to the way in which the Lerma materials were
maintained and reviewed.
We therefore conclude that this problem of unclean hands on the part of RTC
mandates denial of the equitable relief they presently seek against Lerma and
DGS. Even without unclean hands, however, the RTC would lose under the
Blackwelder test. The RTC is currently undertaking virtually identical
litigation in the United States District Court for the District of Colorado
involving FACTNet, Lerma's organizational counterpart. That case involves the
same issues and some of the same parties and facts as the instant action.
After three days of hearings on parallel motions filed by the parties in that
jurisdiction, and using a balancing test identical to that found in
Blackwelder, Judge John L. Kane, Jr. denied RTC's Motion for Preliminary
Injunction, granted the defendants' Motion to Vacate the Seizure Order, and
ordered immediate return of all the materials. See Religious Technology
Center v. F.A.C.T.NET, Inc., 901 F.Supp. 1519 (D.Colo.1995). We garner
additional support for our conclusion from this decision.
For the reasons mentioned above, RTC's Motion for Preliminary Injunction
against defendants Lerma and Digital Gateway Systems is DENIED and defendant
Lerma's Motion to Vacate the Writ of Seizure is GRANTED. Because a stay of
this ruling would, in effect, leave Lerma in the same enjoined condition from
which the Court has now found he should be released, RTC's Motions for
Provisional Stays are DENIED.
The September 15, 1995, Order inadvertently omitted defendant, Digital
Gateway Systems ("DGS"). For this reason, that Order is hereby amended to
reflect that the Religious Technology Center's ("RTC") Motion for a Preliminary
Injunction is DENIED against both DGS and Lerma.
For the reasons stated in open Court and in the Accompanying Memorandum
Plaintiff Religious Technology Center's Emergency Motion for Reconsideration
and Rehearing and
*1362 Motion for a Preliminary Injunction Against Defendants Lerma and
Digital Gateway Systems are DENIED.
Defendant Lerma's Motion to Vacate the Writ of Seizure and Order for
Impoundment is GRANTED and it is hereby
ORDERED that RTC shall immediately return and restore to Defendant Lerma all
seized materials in their exact original condition. This includes both Lerma's
hard drives and all floppy disks; and it is further
ORDERED that Defendant Lerma shall maintain the status quo as to possession of
all the allegedly copyrighted materials at issue in this case and is restricted
to employing them only in a fair use capacity. Lerma and his counsel are
specifically prohibited 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.
This action moots the issue of increased bond relating to the seizure, so
Defendant Lerma's Motion to Increase Bond is DENIED.
Plaintiff RTC's Motions for Provisional Stays Pending Appeal to the Fourth
Circuit are DENIED.