Julie CHRISTOFFERSON, Respondent,
v.
CHURCH OF SCIENTOLOGY OF PORTLAND, an Oregon nonprofit corporation, Church of
Scientology, Mission of Davis, a nonprofit California corporation doing
business in Oregon, Delphian Foundation, an Oregon nonprofit corporation, and
Martin Samuels, Appellants.
No. A7704-05184; CA 15952.
Court of Appeals of Oregon.
Argued and Submitted Sept. 3, 1981.
Decided May 3, 1982.
Plaintiff brought action against religious corporations and others to recover
for the tort of outrageous conduct and fraud. The Circuit Court, Multnomah
County, Robert P. Jones, J., entered judgment for plaintiff, and defendants
appealed. The Court of Appeals, Gillette, P. J., held that: (1) evidence was
insufficient as a matter of law to establish the tort of outrageous conduct;
(2) plaintiff could not recover on fraud claim from religious corporation which
did not employ individuals who allegedly made misrepresentations to plaintiff;
(3) plaintiff could not recover on fraud claim from nonprofit educational
institution on basis of misrepresentations allegedly made by agents and
employees of religious corporation; (4) evidence was sufficient for jury on the
issue of whether misrepresentations allegedly made by agents and employees of
one of religious corporations were made for a wholly nonreligious purpose so as
not to come within the rule that the truth or falsity of religious beliefs and
doctrines may not be submitted for determination by jury in action for fraud;
and (5) defendant religious corporation was entitled to the protection of the
First Amendment for statements regarding its religious beliefs and practices
unless it were shown that statements made were part of an offer of those
services to the public on a wholly secular basis; because trial court
erroneously instructed jury in that regard, judgment against one of religious
organizations would be reversed and cause would be remanded for retrial.
Reversed as to certain defendants; reversed and remanded for new trial as to
other defendants.
[1] DAMAGES
In outrageous conduct action, although it is ordinarily for trier of fact to
determine not only historical facts, but also whether offensiveness of
defendant's conduct exceeds any reasonable limit of social toleration, it is
for trial court to determine, in the first instance, whether defendant's
conduct may reasonably be regarded as too extreme and outrageous as to permit
recovery.
[2] DAMAGES
It is only by proof of conduct that is beyond the limits of social toleration
that plaintiff may recover in an action for outrageous conduct, no matter what
defendant may have intended and no matter what the effect on plaintiff may have
been.
[3] DAMAGES
In action brought against religious organization and others by former member of
the organization, evidence was insufficient, as a matter of law, to establish
the tort of outrageous conduct during time that plaintiff was associated with
defendants, since plaintiff joined the religious organization voluntarily,
there was no evidence that plaintiff was threatened or forced to remain
involved in the religious organization, and no evidence that during her
association with the organization, plaintiff was afraid to terminate her
involvement or feared defendants in any way.
[4] DAMAGES
In action brought against religious organization and others by former member of
the organization, evidence was insufficient to establish tort of outrageous
conduct occurring subsequent to plaintiff's deprogramming, since fact that
libel action had been filed by certain of defendants against plaintiff did not
establish outrageous conduct, there was no evidence that defendants informed
plaintiff that she had been declared a "suppressive person" subject to
organization's alleged policy of retribution, and defendants' issuance of
document forbidding persons associated with defendants from communicating with
plaintiff was issued after plaintiff's attorney had demanded that defendants
not contact plaintiff.
[5] FRAUD
Plaintiff could not recover on her cause of action for fraud against religious
corporation, since none of individuals who allegedly made misrepresentations to
plaintiff was claimed to have been an agent or employee of the religious
corporation, and fact that the religious corporation and another religious
corporation which employed individuals who allegedly made the
misrepresentations were organizations of the same religious movement did not by
itself provide a sufficient link to hold defendant religious corporation liable
for what may have been done by the other religious corporation.
[6] CORPORATIONS
Plaintiff could not recover on her fraud claim from nonprofit educational
institution on the basis of alleged misrepresentations made by agents and
employees of religious corporation, since evidence that the two entities shared
a corporate officer and shared facilities did not support "piercing the
corporate veil" so as to permit treating the educational institution and the
religious corporation as one, and there was no evidence that educational
institution had any right to control the actions of the religious corporation
or had any actual control over those actions.
[7] FRAUD
In fraud action brought against religious corporation, its president, and
others, evidence on issue of whether religious corporation's president had
knowledge of misrepresentations allegedly made by religious corporation's
employees and agents was sufficient for jury.
[8] FRAUD
To establish fraud, plaintiff must ordinarily prove that representations made
were false, but when religious beliefs and doctrines are involved, the truth or
falsity of religious beliefs or doctrines may not be submitted for
determination by jury.
[8] FRAUD
To establish fraud, plaintiff must ordinarily prove that representations made
were false, but when religious beliefs and doctrines are involved, the truth or
falsity of religious beliefs or doctrines may not be submitted for
determination by jury.
[9] FRAUD
In action for fraud brought against religious corporation and others, trial
court was required to determine the religious character of alleged
misrepresentations only if it could do so as a matter of law, that is, if there
were only one conclusion to be drawn from the evidence.
U.S.C.A.Const.Amend. 1.
[10] CONSTITUTIONAL LAW
For purposes of rule providing that the truth or falsity of religious beliefs
or doctrines may not be submitted for determination by jury in action for
fraud; while beliefs relating to the existence of, and man's relationship to,
a God are religious, belief in a traditional, or any, "god" is not a
prerequisite to a finding that a belief is religious. U.S.C.A.Const.Amend.
1.
[11] CONSTITUTIONAL LAW
Fact that religion is of relatively recent origin does not mean that it is not
entitled to the protection of the First Amendment. U.S.C.A.Const.Amend. 1.
[12] CONSTITUTIONAL LAW
Organization which was incorporated as a tax-exempt religious organization,
which had ordained ministers and characterized itself as a church, and which
had a system of beliefs, or creed, which encompassed beliefs that were
religious in character was a religious organization entitled to invoke the
protection of the free exercise clause. U.S.C.A.Const.Amend. 1.
[13] FRAUD
A religious organization, merely because it is such, is not shielded by the
First Amendment from all liability for fraud; if statements by agents of
religious organization do not concern the religious beliefs and practices of
the organization, the Free Exercise Clause provides no defense to action for
fraud. U.S.C.A.Const.Amend. 1.
[14] CONSTITUTIONAL LAW
In the context of the establishment clause, the characterization of religious
organization's activity as nonreligious is not a determinative factor, but the
characterization of beliefs as religious by one seeking the protection of the
free exercise clause is not determinative either. U.S.C.A.Const.Amend. 1.
[15] FRAUD
In action for fraud brought against religious corporation, evidence was
sufficient for jury on the issue of whether misrepresentations allegedly made
by religious corporation's agents and employees were made for a wholly
nonreligious purpose so as not to come within the rule that the truth or
falsity of religious beliefs and doctrines may not be submitted for
determination by jury in action for fraud.
[16] APPEAL AND ERROR
In fraud action brought against religious corporation and others, in which
evidence established that defendant was a religious organization and that
courses which plaintiff was induced to participate in were part of religious
beliefs and practices of the religion, religious corporation was entitled to
First Amendment protection for statements regarding its religious beliefs and
practices unless it were shown that statements made were part of an offer of
those services on a wholly secular basis; because trial court erroneously
instructed that a determination should be made for each of alleged
misrepresentations as to whether it was religious was not accurate, judgment
against religious organization would be reversed and cause remanded for
retrial.
[16] CONSTITUTIONAL LAW
In fraud action brought against religious corporation and others, in which
evidence established that defendant was a religious organization and that
courses which plaintiff was induced to participate in were part of religious
beliefs and practices of the religion, religious corporation was entitled to
First Amendment protection for statements regarding its religious beliefs and
practices unless it were shown that statements made were part of an offer of
those services on a wholly secular basis; because trial court erroneously
instructed that a determination should be made for each of alleged
misrepresentations as to whether it was religious was not accurate, judgment
against religious organization would be reversed and cause remanded for
retrial.
[17] FRAUD
State of mind of one accused of making fraudulent representations is at issue
when one of the elements to be shown is speaker's knowledge of the falsity of
the representation being made.
[18] FRAUD
In action for fraud brought against religious corporation and others, trial
court erred in excluding three exhibits offered to show the good faith of one
of the individuals who made an alleged misrepresentation to plaintiff, since
the exhibits were relevant to the issue of the state of mind of the one accused
of making fraudulent representations.
[19] FRAUD
In action for fraud brought against religious corporations and others, trial
court's instruction that, in order to find for plaintiff, jury was required to
find that plaintiff, having a right to do so, reasonably relied upon
representation and did not know it was false, adequately and accurately stated
applicable law, and therefore, trial court did not err in denying defendant's
requested instruction defining "justifiable reliance."--
[20] FRAUD
In action for fraud brought against religious corporation and others, trial
court erred in refusing to submit defendant's requested instruction defining
"material fact," since that term constituted an element of the action.
[21] TRIAL
In action for fraud brought against religious corporation and others, trial
court did not err in failing to instruct jury that "fraud is never presumed,"
since, within context of the instructions as a whole, jury was adequately
instructed in that regard.
[22] FRAUD
In action for fraud brought against religious corporation and others, trial
court did not err in failing to give defendants' requested instructions
containing the specific language of the federal and state constitutional
provisions establishing religious freedom. U.S.C.A.Const.Amends. 1, 14;
Const.Art. 1, ss 2, 3.
[23] FRAUD
In action for fraud brought against religious corporation and others, record
established, as a matter of law, that the beliefs practiced by defendants
constituted a religion, and defendants were entitled to jury instruction to
that effect.
[24] FRAUD
Punitive damages are not unavailable for fraud merely because the fraudulent
representations are "speech." U.S.C.A.Const.Amend. 1.
[25] FRAUD
In action for fraud brought against religious corporations and others,
plaintiff was not precluded from recovering punitive damages, since there is no
constitutional requirement that religious organizations should not be made
liable for punitive damages because they are religious organizations, even if
the content of the statement which they are alleged to have made is not
religious. U.S.C.A.Const.Amend. 1.
*204 **580 Charles J. Merten, Portland, and Emily M. Bass, New York City,
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. Hopps, Portland, Lee Boothby, and Robert W. Nixon, Washington, D. C.,
filed a brief amicus curiae for Americans United for Separation of Church and
State.
Before GILLETTE, P. J., YOUNG, J., and ROBERTS, J. Pro Tem.
*205 GILLETTE, Presiding Judge.
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").[FN1] 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.
FN1. 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.
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 non-profit
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 F.2d 1146, 1151-52, (D.C.Cir.1969), in a
manner which appears to be accurate according to the record before us in this
case:
*206 "The movement 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, 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 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 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 **582
'the ARC Triangle.' " 409 F.2d 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 [FN2] almost immediately upon
arriving in Portland. Her friend Osler *208 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.
FN2. 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.
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 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 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.[FN3]
FN3. 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.
**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 P.2d 398 (1979); compare Turman v. Central
Billing Bureau, 279 Or. 443, 568 P.2d 1382 (1977), with Rockhill v. Pollard,
259 Or. 54, 485 P.2d 28 (1971).
A "special relationship" between the parties has played a role in every case
in this state involving this tort.[FN4] *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, 568 P.2d 1382. See also Brewer v. Erwin, supra (landlord and
tenant); Rockhill v. Pollard, supra (doctor and patient); Fitzpatrick v.
Robbins, 51 Or.App. 597, 626 P.2d 910, rev. den. 291 Or. 151
(1981) (landlord and tenant); Bodewig v. K-Mart, 54 Or.App. 480, 635 P.2d
657 (1981), rev. den. 292 Or. 450 (1982) (employer-employe).[FN5] The role
of that relationship has recently been explored in Hall v. May Department
Stores Co., 292 Or. 131, 637 P.2d 126 (1981), a case involving an employer-
employe relationship, in which the court stated:
FN4. 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.
FN5. 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.
"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 P.2d 682
(1969) )." 292 Or. at 137, 637 P.2d 126.
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.[FN6]
FN6. 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.
*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 s 46 (1965) [FN7] and decided:
FN7. 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, s 46,
comment d (1965), quoted in Rockhill v. Pollard, supra, 259 Or. at 59-
60, 485 P.2d 28.
"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, 485 P.2d 28.
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, 600 P.2d 398; see also, Hall v.
May Department Stores Co., supra, 292 Or. at 137, 637 P.2d 126.
[1] 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, 637 P.2d 126,
"(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, 453 P.2d 682.
*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 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."
[2] 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 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.[FN8]
FN8. 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.
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 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 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 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.[FN9]
FN9. 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.
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. 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 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." [FN10]
FN10. 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.
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, 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 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.[FN11]
FN11. The E-meter was described in United States v. Article or Device,
etc., 333 F.Supp. 357 (D.D.C.1971):
"The E-meter is essentially a simple galvanometer using two tin cans as
electrodes. It is crude, battery-powered, and designed to measure
electrical 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. * * * "
**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 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." [FN12] She described the
musters as follows:
FN12. 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.
*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 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 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."
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 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 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 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 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 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."
[FN13] Plaintiff testified that she had been shown several policy letters
regarding treatment of "suppressive persons." Plaintiff had been told that her
mother was suppressive.
FN13. 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.
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, 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.
[3] 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
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
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.
[4] Count II of the outrageous conduct action [FN14] alleges that:
FN14. 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.
"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 them to liability.
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 P.2d 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, 282 Or. 731, 736, 580 P.2d 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.[FN15]
FN15. 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.
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 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 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 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 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.
"(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 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 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.
" * * *." [FN16]
FN16. Defendants do not argue that these alleged statements may not be
fraudulent, at least under some circumstances.
[5] We first consider the motions for directed verdict made by each of the
parties on other than 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 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.
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.
[6] 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; 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 coincidentally,
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 * * *."
*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.[FN17] 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 P.2d 4
(1978); Schlecht v. Equitable Builders, 272 Or. 92, 535 P.3d 86 (1975);
Wakeman v. Paulson, 257 Or. 542, 480 P.2d 434 (1971); A. J. Rose & Son,
Inc. v. Bd. of Funeral Dir., 31 Or.App. 537, 570 P.2d 1008 (1977).[FN18]
FN17. 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.
FN18. 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.
We also find no evidence to support a finding that the Mission was acting as
the agent of Delphian in making the alleged misrepresentations.[FN19] 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 P.2d 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 P.2d 249 (1960); and see Restatement (Second) of
Agency ss 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; therefore, there could
be no finding of agency.
FN19. Plaintiff does not specifically claim that there was an agency
relationship.
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.
" * * *
"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.
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.[FN20]
FN20. 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.
[7] 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 president of the Mission. The Oregon
Supreme Court held in Osborne v. Hay, 284 Or. 133, 145-46, 585 P.2d 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 P.2d 471 (1943)." And see McDonough v. Jones,
48 Or.App. 785, 617 P.2d 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.[FN21]
FN21. Samuels is alleged to be liable only because he is president 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.
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.[FN22]
FN22. 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.
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.
[FN23] 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
FN23. 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.
" * * * to determine whether the courses, training, studies, and counseling
constitute a part of the religious beliefs and practices of defendants'
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 fraudulent
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.
[8] 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 P.2d 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 (63 S.Ct. 1178, 87 L.Ed. 1628). 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 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 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 (63 S.Ct. 870, 87 L.Ed. 1292). **599 As stated
in Davis v. Beason, 133 U.S. 333, 342 (10 S.Ct. 299, 300, 33 L.Ed. 637), '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, 64 S.Ct. at 886-887.
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 it was not to
determine the truth or falsity of any statements it found to be religious.
[FN24]
FN24. 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.
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 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 F.2d 1144 (4th Cir.
1980); Brown v. Dade Christian Schools, Inc., 556 F.2d 310 (5th Cir. 1977);
United States v. Carroll, 567 F.2d 955 (10th Cir. 1977), but see United
States v. Silberman, 464 F.Supp. 866 (M.D. Fla.1979); People v. Mullins, 50
Cal.App.3d 61, 123 Cal.Rptr. 201 (1975).
In Founding Church of Scientology v. United States, 409 F.2d 1146
(D.C.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 F.2d 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 (D.D.C.1971).
We agree with and adopt this approach.[FN25]
FN25. 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, 92 S.Ct. at 1533, the good
faith religious belief of the parents was not questioned by the state.
There was no fact dispute to be resolved.
[9] 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, 1533, 32 L.Ed.2d 15 (1972). The Mission claims that Scientology is
a religion and that statements regarding its beliefs and practices are
protected.[FN26] 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.
FN26. 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.
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 on matters of conduct in which society as a whole has important
interests." 406 U.S. at 215-16, 92 S.Ct. at 1533. (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 F.2d 1160.
[10, 11- **601 Without attempting an "unprecedented definition of
religion," Malnak v. Yogi, 440 F.Supp. 1284, 1320 (D.N.J.1977), aff'd,
592 F.2d 197 (3d Cir. 1979), we draw guidance from the case law. We find
that, while beliefs relating 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 A.L.R. 1392 (1947);
Washington Ethical Soc. v. District of Columbia, 249 F.2d 127
(D.C.Cir.1957); Malnak v. Yogi, supra; Fellowship of Humanity v.
County of Alameda, 153 Cal.App.2d 673, 315 P.2d 394 (1957). 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 (S.D.Iowa 1979); Malnak v. Yogi, supra; Remmers v.
Brewer, 361 F.Supp. 537 (S.D.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 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, 92 S.Ct. at 1533; see also,
United States v. Seeger, 380 U.S. 163, 176, 85 S.Ct. 850, 859, 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 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 F.2d at 1160.
[12] 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.
[13] 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, 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 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.[FN27]
FN27. 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.
[14] *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.[FN28]
FN28. 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 A.L.R.2d 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, 92 S.Ct. at 1533; Founding Church of Scientology v. United
States, supra; People v. Woody, 40 Cal.Rptr. 69, 394 P.2d 813 (1964);
United States v. Kuch, 288 F.Supp. 439 (D.D.C.1968).
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 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.
[15] 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 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
[16] 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 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 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 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 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 F.2d 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 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,
64 S.Ct. at 887. 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 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 F.2d 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
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 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
[17][18] 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 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
[19] 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" 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 justified 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(d) the applicable
law." Bowlds v. Taggesell Pontiac, 245 Or. 86, 95, 419 P.2d 414 (1966); see
also Yardley v. Rucker Brothers Trucking, Inc., 42 Or.App. 239, 600 P.2d
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.
[20] 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 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 P.2d 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.
[21] Defendants also contend that 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.
[22] 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.[FN29] 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.
FN29. 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.' "
[23] 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 [FN30] 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 P.2d 777 (1979), for the proposition that
imposition of punitive damages is constitutionally impermissible in the context
of free speech.[FN31] 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.
FN30. 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.
FN31. 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 A.L.R.2d 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, 94 S.Ct. at 3012.
*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, 637 P.2d 126.
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 P.2d 1373 (1981); Milliken v. **608 Green, supra; Green v. Uncle
Don's Mobile City, 279 Or. 425, 568 P.2d 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.
[24][25] 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
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 non-
religious as made. Defendants' argument seems to lead to 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 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.