CHURCH OF SCIENTOLOGY, INC. Plaintiff,
v.
ELI LILLY AND CO., Hill & Knowlton, Inc., et al. Defendants.
Civ.A. No. 92-1892.
United States District Court, District of Columbia.
June 8, 1994.
Ronald Kenneth Mundy, Mundy, Holt & Mance, Washington, DC, Anthony Patrick
Bisceglie, Bisceglie & Walsh, Washington, DC, Kendrick Lichty Moxon, Bowles &
Moxon, Hollywood, CA, Edward Copeland, Eric M. Lieberman, Hillary Richard,
Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York City, pro hac
vice, Earle C. Cooley, Cooley, Manion, Moore & Jones, P.C., Boston, MA, pro hac
vice, for Church of Scientology International.
Mark Butler Bierbower, Hunton & Williams, Washington, DC, Thomas G. Slater,
Jr., Hunton & Williams, Richmond, VA, for Eli Lilly & Company.
Vincent Hamilton Cohen, Karen M. Hardwick, David Anthony Hill, Hogan &
Hartson, L.L.P., Washington, DC, Theodore B. Olson, Theodore J. Boutrous, Jr.,
Gibson, Dunn & Crutcher, Washington, DC, Howard J. Rubin, Douglas E. Thea, Lisa
Paddock, Paul F. Corcoran, Davis & Gilbert, New York City, Eric Mark Nelson,
New York City, for Hill & Knowlton Inc., Hill & Knowlton Public Affairs
Worldwide Company, WPP Group, P.L.C., Martin S. Sorrell.
Vincent Hamilton Cohen, Karen M. Hardwick, David Anthony Hill, Hogan &
Hartson, L.L.P., Washington, DC, Howard J. Rubin, Davis & Gilbert, New York
City, pro hac vice, Eric Mark Nelson, New York City, for J. Walter Thompson
Co., Inc.
Vincent Hamilton Cohen, David Anthony Hill, Hogan & Hartson, L.L.P.,
Washington, DC, Theodore B. Olson, Gibson, Dunn & Crutcher, Washington, DC,
Paul F. Corcoran, Davis & Gilbert, New York City, for Hill & Knowlton Public
Affairs Worldwide Company.
PRETRIAL MEMORANDUM I
SPORKIN, District Judge.
*1 The parties came before the Court on June 2 and June 3, 1994 to resolve
a number of outstanding matters before jury selection begins for the trial in
this case on June 13, 1994. The matters will be addressed in the sequence noted
in the agenda distributed to the parties at the June 2, 1994 pretrial hearing.
Initially, it must be stated that most of the motions in question relate to
evidentiary objections, the validity of which will become apparent only in the
context in which the objections are raised at trial. To the extent that this
memorandum makes determinations on such questions, the rulings are of a
preliminary nature only, designed to facilitate preparation for trial by giving
the parties some indication of the way this Court is leaning on the question at
issue.
Outstanding Motion (1)
Motion by Non-Party Robert Dilenschneider for a protective order to prevent
de bene esse deposition in New York.
Non-party Dilenschneider's motion for a protective order will not be granted.
Dilenschneider's deposition will be taken in New York following the procedures
articulated by the parties in Court on June 2, 1994.
Outstanding Motions (2a) (2b) (2c)
(a) Motion in limine of the H&K defendants to strike plaintiff's claim for
punitive damages.
(b) Motion in limine of H&K defendants concerning bifurcation and other
procedures for punitive damage phase of the trial.
(c) Eli Lilly's motion to strike CSI's claim for punitive damages, or in the
alternative, for bifurcation of punitive claim pursuant to F.R.C.P. 42(b).
The in limine motions by the WPP defendants and Eli Lilly to strike CSI's
claim for punitive damages or, in the alternative, to bifurcate the punitive
damages phase of the trial and adopt certain other procedures for that phase of
the trial will be denied at this time. There being no objection by the parties,
the Court further instructs that no evidence of the Defendants' net worth and
other financial information of the Defendants will be entered into the record
on this claim.
Outstanding Motion (3)
WPP defendants' motion in limine to exclude certain evidence pertaining to
compensatory damages as not recoverable under any measure of damages, to wit:
--$4,700,000: paid by CSI to H&K during 3 and 1/2 year period.
--$5,212,343: spent by CSI to counter effects of Time article.
--$191,000: spent by CSI on Fact v. Fiction, to counter Time article.
The Court will reserve judgment at this time on the motions in limine by the
WPP defendants and Eli Lilly to exclude certain evidence pertaining to
compensatory damages. At this point, the Court is not inclined to allow
Plaintiff to obtain return of all monies paid to H&K with respect to services
rendered, assuming liability is proved at trial. Even assuming a finding of
liability, the Court is unconvinced that, under the damages theory espoused,
every dollar CSI paid Hill & Knowlton for services rendered constituted a "lost
investment" which CSI should now recoup. CSI will be permitted to introduce
evidence of the so-called "premium payments" made to H&K pursuant to the
contract, the value of services that CSI claims it was deprived of during the
sixty-day "wind-down" period, the costs of briefing new public relations
counsel, as well as evidence of any other losses incurred as a result of the
alleged breach of contract, breach of fiduciary duty, and tortious interference
with contract. This Court reserves its decision as to the admissibility of
evidence regarding the costs of CSI's response to the Time Magazine article.
Further, it reserves its determination regarding the admissibility of evidence
of damages allegedly suffered by CSI as a result of receiving oral, rather than
written, notice of termination.
Outstanding Motion (4)
*2 Motion in limine by WPP defendants to exclude CSI use of parol evidence
to contradict the terms of the letter agreements between H&K and CSI.
WPP defendants have filed a motion in limine to exclude use of parol evidence
by CSI to contradict the terms of the letter agreements between Hill & Knowlton
and CSI. The Court will reserve judgment on this issue until the time of trial.
Defense counsel will be free to reassert their objections to any parol evidence
testimony at that time.
Outstanding Motion (5)
WPP defendants' motion for reconsideration of allocation of peremptory
challenges.
WPP defendants have filed a motion for reconsideration of allocation of
peremptory challenges. This motion will be granted in part. The Court will
grant Eli Lilly and the WPP defendants 7 strikes each and grant CSI 10 strikes.
The defendants will be permitted to confer on the use of their strikes.
Outstanding Motion (6)
Eli Lilly's motion in limine to exclude improper testimony on alleged "Harms
of Prozac". CSI's cross-motion in limine to exclude testimony of certain Eli
Lilly witnesses on subject of Prozac.
Eli Lilly has filed a motion in limine to exclude testimony on alleged "Harms
of Prozac." CSI has filed a cross-motion in limine to exclude testimony of
certain Eli Lilly witnesses on the subject of Prozac. With regard to Eli Lilly,
this is a lawsuit for damages for interference with business and contractual
relations. The Court recognizes that CSI's opposition to the drug Prozac is
relevant to this litigation. The jury will be instructed that CSI was entitled
to exercise its first amendment right to oppose Prozac. The jury will also be
instructed that statements by CSI officials, or press-releases by CSI-
affiliated organizations on the subject of Prozac will be admitted only for the
purpose of showing that CSI made these statements, not for their truth. The
efficacy of Prozac in treating depression is not an issue in this case, and the
Court will not permit it to become one.
CSI will not be permitted to introduce in its case in chief the testimony of
(1) Dennis Clarke to "testify about the flawed FDA approval process for Prozac;
murders, suicides and maimings brought about by individuals under the influence
of Prozac; including the recent suicide of Washington, D.C. City Councilman
Wilson..." and other witnesses to "testify about the harms of Prozac." The
Court reserves on whether this or other testimony relating to the effectiveness
or dangers of Prozac would be admissible in CSI's rebuttal case for some
limited purpose, in the event that Lilly opens the door to such testimony.
As for CSI's cross-motion to exclude Eli Lilly from introducing testimony as
to the "true facts" about Prozac's efficacy, the Court cannot rule on this
evidence in a vacuum -- without knowledge of the context in which such
testimony will be offered or the purpose for which such statements will be
offered. Said cross-motion will be denied at this time.
Outstanding Motion (7)
*3 CSI has moved in limine to exclude 13 categories of exhibits or
documents.
The Court will address these various categories of documents seriatim.
(a) CSI moves to exclude a number of newspaper articles, magazines, and other
publications relating to the Church of Scientology and its internal practices,
and the controversy over Prozac.
The WPP defendants and Eli Lilly have different purposes for introducing these
exhibits. The WPP defendants generally, and Hill & Knowlton in particular, wish
to introduce these exhibits to counter the breach of fiduciary duty claim
asserted by CSI. According to Hill & Knowlton, the newspaper exhibits detailing
the Church's internal practices and public activities demonstrate that
information compiled by a Hill & Knowlton employee to be conveyed to the
pharmaceutical company SmithKline Beecham was in the public domain. Hill &
Knowlton argues that it committed no breach of fiduciary duty because it did
not convey confidential information to SmithKline.
Eli Lilly wants to introduce these articles as evidence of what it learned of
the Church of Scientology, once Lilly perceived that Prozac was being attacked
by CSI. Lilly desires to demonstrate the reasonableness of the actions it took.
The Court will not at this time deny Lilly and the WPP defendants the use of
these documents, subject to certain restrictions. First, the articles are
hearsay; and it has been represented to the Court that none of these documents
will be introduced for their truth. Second, as stated in court at the pretrial
hearing, unless a witness can testify that he or she read or knew about a
particular document, the fact that the information could be found in the public
domain may not itself be enough to justify admission into evidence. Third, the
Court reserves on whether the probative value of any particular document is
substantially outweighed by the potential for unfair prejudice. Any party that
wishes to introduce documents should be prepared to redact irrelevant or unduly
prejudicial information about the Church of Scientology. It must be kept in
mind that this litigation is not a trial of Lilly's product, Prozac, nor of the
Church of Scientology.
(b) CSI moves to exclude the Time magazine and related articles.
The Court finds that the Time cover story article of May 6, 1991, entitled
"Scientology, the Thriving Cult of Greed and Power" may well be relevant to the
case. Eli Lilly and WPP defendants seek to introduce the article to show the
cause of the termination of the Hill & Knowlton--CSI relationship. Also, Hill &
Knowlton hopes to introduce evidence that much of the work done during the
disputed 60-day termination period was done to combat the effects of the Time
article. The Time article is also related to one of CSI's claims for damages.
The Court will deny CSI's motion at this time.
Certain aspects of the article may however be more prejudicial to CSI than
probative to the issues in this case. The Court will accept reasonable redacted
versions of the article for admission into evidence.
(c) CSI moves to exclude Cooley correspondence with Time.
*4 Hill & Knowlton wishes to introduce this evidence to show that CSI was
ignoring Hill and Knowlton's advice in that CSI's lawyer was leading CSI's
defense against the Time article prior to publication. The Court will reserve
on this issue until trial.
(d) CSI moves to exclude Lilly media responses, press contacts, and public
communication.
CSI objects to these documents as highly and unfairly prejudicial hearsay,
with great potential for jury confusion. Lilly responds that these documents
show its intent in responding to CSI's allegations that Lilly was a purveyor of
a killer drug. The Court will reserve on the question of the admissibility of
these documents until trial.
(e) CSI moves to exclude letters from the Ciba-Geigy Corp. to various news
organizations.
Counsel for Eli Lilly orally withdrew these exhibits at the June 2, 1994
pretrial conference. This motion is therefore moot.
(f) CSI moves to exclude a wide range of documents categorized as "Church
publications."
The documents describe some of the Church of Scientology's policies, doctrine,
and organization. The context in which these documents are offered will govern
their admissibility. The Court will reserve as to the admissibility of these
documents until trial.
(g) CSI moves to exclude its applications for tax exempt status.
Hill & Knowlton hopes to introduce this information to show the size and
sophistication of CSI, in an effort to rebut CSI's claim that it was unfairly
taken advantage of by Hill & Knowlton, who, it is claimed, had a fiduciary duty
vis-a-vis CSI. Hill & Knowlton also desires to introduce this information to
refute CSI's damage claims.
These documents appear probative at this time, but the Court will reserve on
this issue until the documents are offered at trial.
(h) CSI moves to exclude judicial opinions.
The Court is inclined to permit the admission of judicial opinions for
whatever purpose very sparingly, if at all. The potential for unfair prejudice
and confusion of the jury is substantial. The Court will reserve on the
admissibility of specific opinions until they are offered at trial.
(i) CSI moves to exclude the response of Hill & Knowlton's European offices.
These are letters sent from Hill & Knowlton's European operations to Hill &
Knowlton in the United States explaining why the Europeans were uncomfortable
with CSI as a client. Lilly hopes to introduce these documents as evidence that
Lilly was not the proximate cause of the termination of the CSI-Hill & Knowlton
relationship. At this stage, the evidence appears to be probative; the motion
will be denied.
(j) CSI moves to exclude pleadings, interrogatories, statements of fact and
counterstatements.
These documents are admissible if relevant.
(k) CSI moves to exclude the Hill & Knowlton briefing packs given by CSI to
its public relations firm.
These briefing packs were prepared for Hill & Knowlton by CSI in the course of
the exploratory meetings between the two entities and the eight-month study
period during which Hill & Knowlton was evaluating whether it should take on
the Church as a client. While acknowledging that these packs are relevant to
this litigation, CSI moves to exclude the packs as unduly prejudicial.
*5 The Court will reserve on this issue until trial.
(l) CSI moves to exclude material relating to Federal Legislative Associates
and Bain & Associates.
This information is offered to show that CSI was quickly able to find
alternative public relations counsel after termination by Hill & Knowlton. CSI
argues this information is irrelevant. Hill & Knowlton insists that the
documents go directly to the issue of the extent of damages suffered by CSI.
It appears at this point that the evidence is probative of material issues in
this case. The motion is denied at this stage.
(m) CSI moves to exclude certain miscellaneous documents.
(i) Lilly Ex. 222--this exhibit is a draft letter to the Washingtonian
magazine by a Hill & Knowlton employee.
Lilly moves to have it admitted to show that Hill & Knowlton was working on
CSI's anti-psychiatry effort. At this stage, this motion to exclude is denied.
(ii) As to Lilly Ex. 300 & WPP Ex. 155; Lilly Ex. 341; Lilly Ex. 358 & WPP Ex.
180; Lilly Ex. 419; WPP Ex. 7; WPP Ex. 171; WPP Ex. 217; and WPP Ex. 322, the
Court will reserve judgment until trial.
Outstanding Motion (8)
WPP defendants move to exclude certain documentary evidence.
(a) WPP defendants move to exclude CSI Ex. 52 -- Rabin memo dated Jan. 16,
1991.
This memorandum was written by a Hill & Knowlton employee to enhance the
firm's relationship with SmithKline Beecham--a pharmaceutical company--as a
client. The memo outlines a preparedness strategy in the event that CSI should
attack one of SmithKline's drugs. WPP defendants move to have it excluded on
relevancy grounds, as there is no evidence that the document was ever sent to
SmithKline.
Because the author of the memorandum will be testifying at trial, the Court
will defer judgment on the document's admissibility at this time.
(b) WPP defendants move to exclude CSI Ex. 53 -- an undated partial memo.
The Court will defer on this question at this time.
(c) WPP defendants move to exclude CSI Ex. 37 -- an allegedly illegally taped
telephone conversation between CSI's David Miscavige and Hill & Knowlton's
Frank Mankiewicz.
WPP defendants argue that this telephone conversation between CSI's David
Miscavige and Hill & Knowlton's Frank Mankiewicz, dated May 3, 1991, should be
excluded because it was made in violation of California law. WPP defendants
also argue it has never been properly authenticated. Serious questions have
been raised regarding CSI's use of the transcript.
The Court will reserve on this issue until trial.
(d) WPP moves to exclude CSI Ex. 115--Hill & Knowlton's Draft of Conflict of
Interest Policy 1992.
CSI hopes to introduce this evidence to cross-examine WPP defendants' experts
on the issues of conflict of interest in the advertising and public relations
fields. The Court will reserve on this issue until trial.
Pretrial Motion (9)
Eli Lilly moves to exclude CSI Exhibits 29, 32, and 118 designated in CSI's
pretrial statements.
*6 Exhibits 29 and 32 are memoranda from within the J. Walter Thompson
Company ("JWT"). The memoranda include repetition of out-of-court statements
allegedly made by Lilly personnel. Lilly moves to exclude these statements for
use against Lilly as double and triple hearsay not within any exception to the
hearsay rule.
Because the author of these memoranda will testify at trial, the Court will
reserve on the admissibility of these documents.
Counsel for CSI has agreed to withdraw Exhibit 118.
Pretrial Motion (10)
CSI moves in limine to exclude expert witness testimony of four prospective
witnesses. The Court will address these witnesses seriatim.
(a) CSI moves to exclude the testimony of WPP witness Professor John C.
Coffee of Columbia Law School who is to testify on fiduciary relationships in
commercial settings and fiduciary duties of corporate officers under Delaware
law.
Because one of the claims in this case is against Martin Sorrell, head of the
WPP conglomerate which owns both J. Walter Thompson and Hill & Knowlton, the
Court believes that it would be useful for a jury to learn from an expert the
duties and obligations of the chairman of a publicly-held corporation.
Nonetheless, the Court will reserve ruling until trial.
(b) CSI moves to exclude the testimony of Professor Thomas Donaldson, who is
expected to testify on general norms of business ethics for defendant Eli
Lilly.
The Court will reserve judgment on Mr. Donaldson's testimony, after having
heard Mr. Donaldson on voir dire at trial.
(c) CSI moves to exclude the testimony of Ms. Caroline Jones and Mr. Alvin
Achenbaum, offered by Hill & Knowlton as experts in the fields of public
relations and advertising, who are to testify on the issues of conflicts of
interest within these industries and other customs and practices in the
industry.
CSI objects to the substance of Ms. Jones testimony and to Mr. Achenbaum's
qualifications as an expert.
The Court will reserve judgment on these motions until it has heard the
prospective witnesses on voir dire. The Court notes, however, that it is
inclined to not permit Ms. Jones to testify as to her own interpretation or
construction of the contracts at issue.
Outstanding Motion (11)
Motion in limine by Eli Lilly to prohibit testimony of Tom Small, former law
partner at law firm of Baker & McKenzie, relating to prior similar practices by
Eli Lilly.
This motion was rendered moot at the June 2 pretrial hearing, when CSI
withdrew the witness.
Outstanding Motions (12) and (13)
Eli Lilly objects to deposition testimony of a number of witnesses and CSI
objects to the use of deposition testimony of witnesses who are available to
testify.
As to these matters, the Court directs the parties to rely on the oral rulings
issued from the bench at the June 2, 1994 pretrial. To the extent the Court did
not rule on specific objections to depositions, the Court reserves ruling on
those matters until the deposition testimony is offered at trial.
Opening Statements
*7 Plaintiffs will be allotted a total of one hour for opening statements.
WPP defendants will be allotted 45 minutes. Eli Lilly will be allotted 45
minutes.
Conclusion
As a final note, the Court would like to thank all counsel for the
professional and collegial manner in which they addressed the multitude of
motions at the June 2 and June 3 pre-trial hearings. While the Court has
deferred ruling on a number of the motions, the Court is appreciative of
counsel's providing this preview of the evidentiary issues that may arise at
trial over the coming weeks. The Court has deferred ruling because it believes
the questions presented are more appropriately decided in the setting in which
they arise.