OPERATION CLAMBAKE: SCIENTOLOGY COURT FILES

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




                 CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiff,
                                       v.
  TIME WARNER, INC., Time Inc. Magazine Company, and Richard Behar, Defendants.
                             No. 92 Civ. 3024 (PKL).
                          United States District Court,
                                 S.D. New York.
                                 July 16, 1996.
  Religious group which had been subject of magazine article brought libel
 action against magazine, publisher, and author, and defendants moved for
 summary judgment.  After motion was granted with respect to all but one
 statement contained in article, 903 F.Supp. 637, defendants moved for
 reargument and reconsideration, and the District Court, Leisure, J., held that
 statement in article that one source of funds for religious group was
 notorious, self-regulated Canadian stock exchange was subsidiary to larger,
 nonactionable view that purpose of religious group is making money, and was not
 actionable under subsidiary meaning doctrine.
  Motion granted.

 [1] LIBEL AND SLANDER
 "Libel-proof plaintiff doctrine" reasons that when particular plaintiff's
 reputation for particular trait is sufficiently bad, further statements
 regarding that trait, even if false and made with malice, are not actionable
 because, as matter of law, plaintiff cannot be damaged in his reputation as to
 that trait.
 See publication Words and Phrases for other judicial constructions and
 definitions.

 [2] LIBEL AND SLANDER
 "Incremental harm doctrine" reasons that when unchallenged or nonactionable
 parts of particular publication are damaging, another statement, though
 maliciously false, might be unactionable on grounds that it causes no harm
 beyond harm caused by remainder of publication;  doctrine thus measures
 incremental harm inflicted by challenged statements beyond harm imposed by rest
 of publication, and if that harm is determined to be nominal or nonexistent,
 statements are dismissed as nonactionable.
 See publication Words and Phrases for other judicial constructions and
 definitions.

 [3] LIBEL AND SLANDER
 "Subsidiary meaning doctrine" reasons that where maliciously false statement
 implies same ultimate conclusion as that of remainder of publication, which has
 been published without actual malice, plaintiff cannot base his defamation
 action solely on inaccuracies contained within statements subsidiary to those
 larger views, and where court has determined one or more ultimate conclusions
 of publication that those conclusions were not published with actual malice,
 summary judgment must be granted if minor inaccuracies sued upon are subsidiary
 to one of larger views which is nonactionable.
 See publication Words and Phrases for other judicial constructions and
 definitions.

 [4] FEDERAL CIVIL PROCEDURE
 Libel-proof plaintiff doctrine did not warrant dismissal of libel action at
 summary judgment stage, as doctrine requires court to make factual findings
 regarding plaintiff's reputation for particular trait.

 [5] LIBEL AND SLANDER
 Incremental harm doctrine requires court to measure harm flowing from
 challenged statement as compared to harm flowing from rest of publication.

 [6] CONSTITUTIONAL LAW
 As corollary to actual malice requirement of First Amendment, subsidiary
 meaning doctrine bars suit on statements the implication of which, if itself
 published, is nonactionable.  U.S.C.A. Const.Amend. 1.

 [6] LIBEL AND SLANDER
 As corollary to actual malice requirement of First Amendment, subsidiary
 meaning doctrine bars suit on statements the implication of which, if itself
 published, is nonactionable.  U.S.C.A. Const.Amend. 1.

 [7] CONSTITUTIONAL LAW
 Subsidiary meaning doctrine, unlike incremental harm doctrine, does bear on
 First Amendment issue of actual malice, because if minor accuracy could be
 grounds for libel, where ultimate conclusion which inaccuracy supports could
 not be because it is published without actual malice, protection afforded
 freedom of speech by requirement that plaintiff prove actual malice would be
 undermined.  U.S.C.A. Const.Amend. 1.

 [7] LIBEL AND SLANDER
 Subsidiary meaning doctrine, unlike incremental harm doctrine, does bear on
 First Amendment issue of actual malice, because if minor accuracy could be
 grounds for libel, where ultimate conclusion which inaccuracy supports could
 not be because it is published without actual malice, protection afforded
 freedom of speech by requirement that plaintiff prove actual malice would be
 undermined.  U.S.C.A. Const.Amend. 1.

 [8] LIBEL AND SLANDER
 Determination as to whether allegedly defamatory statement which is part of
 larger article is subsidiary to nonactionable views published in larger
 article, so that libel action is barred under subsidiary meaning doctrine, need
 not be based on statements proven, or conceded to be true, but may be based on
 statements that are either unchallenged or nonactionable.

 [9] LIBEL AND SLANDER
 Statement contained in article in news magazine that one source of funds for
 religious group was notorious, self-regulated Canadian stock exchange which
 was "often called the scam capital of the world" was subsidiary to larger,
 nonactionable view expressed in article that purpose of religious group is
 making money by means legitimate and illegitimate, and could not form basis of
 liability in libel action under subsidiary meaning doctrine.
  *590 Morrison Cohen Singer & Weinstein, LLP, New York City (Jonathan W.
 Lubell, of counsel), for Plaintiff.
  Cahill Gordon & Reindel, New York City (Floyd Abrams, Dean Ringel, David G.
 Januszewski, James R. Oswald, of counsel), for Defendants.
                                OPINION AND ORDER

  LEISURE, District Judge:
  Defendants moved for summary judgment in this libel action, which the
 Court granted in part and denied in part.  See Church of Scientology Int'l
 v. Time Warner, Inc., 903 F.Supp. 637 (S.D.N.Y.1995).  Defendants then moved
 for reargument and reconsideration, arguing that the Court should have granted
 summary judgment in full because the sole remaining statement sued upon is
 nonactionable based on the incremental harm doctrine.  After reargument, and
 upon reconsideration, for the reasons stated below, the Court grants summary
 judgment as to the sole remaining statement in the case and dismisses the case
 in its entirety.
                                   BACKGROUND
  In 1992, Time magazine published a 10 page, 7500 word article entitled
 "Scientology:  The Cult of Greed" (the "Article").  The Article was highly
 critical of Scientology, and included such statements as:
   "For nearly 40 years, the big business of Scientology has shielded itself
 exquisitely behind the First Amendment...."
   "In reality the church is a hugely profitable global racket that survives by
 intimidating members and critics in a Mafia-like manner."
   "Many of the group's followers have been accused of committing financial
 scams, while the church is busy attracting the unwary through a wide array of
 front groups in such businesses as publishing, consulting, health care and even
 remedial education."
   *591 "Says Cynthia Kisser, the [Cult Awareness Network's] Chicago-based
 executive director:  'Scientology is quite likely the most ruthless, the most
 classically terroristic, the most litigious and the most lucrative cult the
 country has ever seen.  No cult extracts more money from its members.'  Agrees
 Vicki Aznaran, who was one of Scientology's six key leaders until she bolted
 from the church in 1987:  'This is a criminal organization, day in and day
 out.  It makes Jim and Tammy [Bakker] look like kindergarten.' "  (alteration
 in original)
   "Today the church invents costly new services with all the zeal of its
 founder."
   "To pay their fees, newcomers can earn commissions by recruiting new members,
 become auditors themselves ..., or join the church staff and receive free
 counseling in exchange for what their written contracts describe as a 'billion
 years' of labor.  'Make sure that lots of bodies move through the shop,'
 implored [founder] Hubbard in one of his bulletins to officials.  'Make money.
 Make more money.  Make others produce so as to make money ... However you get
 them in or why, just do it.' "  (second omission in original)
   "To gain influence and lure richer, more sophisticated followers, Scientology
 has lately resorted to a wide array of front groups and financial scams."
   "Over five months, the Gearys say, they spent $130,000 for services, plus
 $50,000 for 'gold-embossed, investment-grade' books signed by Hubbard.  Geary
 contends that Scientologists not only called his bank to increase his credit-
 card limit but also forged his signature on a $20,000 loan application."
   "HealthMed, a chain of clinics run by Scientologists, promotes a
 grueling and excessive system of saunas, exercise and vitamins designed by
 Hubbard to purify the body.  Experts denounce the regime as quackery and
 potentially harmful, yet HealthMed solicits unions and public agencies for
 contracts."
   "Hubbard's purification treatments are the mainstay of Narconon, a
 Scientology-run chain of 33 alcohol and drug rehabilitation centers--some in
 prisons under the name 'Criminon'--in 12 countries.  Narconon, a classic
 vehicle for drawing addicts into the cult, now plans to open what it calls the
 world's largest treatment center...."
   "Three Florida Scientologists, including Ronald Bernstein, a big contributor
 to the church's international 'war chest,' pleaded guilty in March to using
 their rare-coin dealership as a money laundry.  Other notorious activities by
 Scientologists include making the shady Vancouver stock exchange even shadier
 (see box ) and plotting to plant operatives in the World Bank, International
 Monetary Fund and Export-Import Bank of the U.S.  The alleged purpose of this
 scheme:  to gain inside information on which countries are going to be denied
 credit so that Scientology-linked traders can make illicit profits by taking
 'short' positions in those countries' currencies."
   "The Feshbachs command a staff of about 60 employees and claim to have earned
 better returns than the Dow Jones industrial average for most of the 1980s.
 And, they say, they owe it all to the teachings of Scientology, whose 'war
 chest' has received more than $1 million from the family.  The Feshbachs also
 embrace the church's tactics;  the brothers are the terrors of the stock
 exchanges.  In congressional hearings in 1989, the heads of several companies
 claimed that Feshbach operatives had spread false information to government
 agencies and posed in various guises--such as a Securities and Exchange
 Commission official--in an effort to discredit their companies and drive the
 stocks down."
   "Scientology mischiefmaking has even moved to the book industry....
 Scientology has sent out armies of its followers to buy the group's books at
 such major chains as B. Dalton's and Waldenbooks to sustain the illusion of a
 best-selling author.  A former Dalton's manager says that some books arrived in
 his store with the chain's price stickers already on them, suggesting that
 copies are being recycled."
   "Scientology devotes vast resources to squelching its critics."
   *592 "Those who criticize the church--journalists, doctors, lawyers and
 even judges--often find themselves engulfed in litigation, stalked by private
 eyes, framed for fictional crimes, beaten up or threatened with death."
   "One of Scientology's main strategies is to keep advancing the tired argument
 that the church is being 'persecuted' by anti-religionists.  It is supported in
 that position by the American Civil Liberties Union and the National Council of
 Churches.  But in the end, money is what Scientology is all about.  As long as
 the organization's opponents and victims are successfully squelched,
 Scientology's managers and lawyers will keep pocketing millions of dollars by
 helping it achieve its ends."
  The Church of Scientology International ("CSI") filed a complaint for
 libel against defendants, challenging as false and defamatory several
 statements from the Article.  The statements, numbered by the Court but
 otherwise as set forth in the complaint, are as follows:
   1. "[T]he Church ... survives by intimidating members and critics in a Mafia-
 like manner."
   2. "Scientology is quite likely the most ruthless, the most classically
 terroristic ... cult the country has ever seen."
   3. "Those who criticize the church--journalists, doctors, lawyers and even
 judges--often find themselves framed for fictional crimes, beaten up or
 threatened with death."
   4. "Occasionally a Scientologist's business antics land him in jail.  Last
 August a former devotee named Steven Fishman began serving a five-year prison
 term in Florida.  His crime:  stealing blank stock confirmation slips from his
 employer, a major brokerage house, to use as proof that he owned stock
 entitling him to join dozens of successful class-action lawsuits.  Fishman made
 roughly $1 million this way from 1983 to 1988 and spent as much as 30% of the
 loot on Scientology books and tapes.  Scientology denies any tie to the Fishman
 scam, a claim strongly disputed by both Fishman and his longtime psychiatrist,
 Uwe Geertz, a prominent Florida hypnotist.  Both men claim that when arrested,
 Fishman was ordered by the Church to kill Geertz and then do an 'EOC,' or end
 of cycle, which is Church jargon for suicide."
   5. "One source of funds for the Los Angeles-based church is the notorious,
 self-regulated stock exchange in Vancouver, British Columbia, often called the
 scam capital of the world."
   6. "Baybak, 49, who runs a public relations company staffed with
 Scientologists, apparently has no ethics problem with engineering a hostile
 takeover of a firm he is hired to promote."
   7. " 'What these guys do is take over companies, hype the stock, sell their
 shares, and then there's nothing left....' "  " 'They stole this man's
 property.' "  [Referring to William Jordan.]
   8. "THE LOTTICKS LOST THEIR SON, Noah, who jumped from a Manhattan hotel
 clutching $171, virtually the only money he had not yet turned over to
 Scientology.  His parents blame the church and would like to sue but are
 frightened by the organization's reputation for ruthlessness."
   9. "His death inspired his father Edward, a physician, to start his own
 investigation of the church.  'We thought Scientology was something like Dale
 Carnegie,' Lottick says.  'I now believe it's a school for psychopaths.  Their
 so-called therapies are manipulations.  They take the best and brightest people
 and destroy them.' "
   10. "It was too late.  'From Noah's friends at Dianetics' read the card that
 accompanied a bouquet of flowers at Lottick's funeral.  Yet no Scientology
 staff members bothered to show up."
   11. "The next month the Rowes flew to Glendale, Calif., where they shuttled
 *593 daily from a local hotel to a Dianetics center.  'We thought they were
 brilliant people because they seemed to know so much about us,' recalls Dee.
 'Then we realized our hotel room must have been bugged.'  After bolting from
 the center, $23,000 poorer, the Rowes say, they were chased repeatedly by
 Scientologists on foot and in cars."
   12. "In a court filing, one of the cult's many entities--the Church of
 Spiritual Technology--listed $503 million in income just for 1987."
  By Opinion and Order dated November 23, 1992, this Court granted defendants'
 motion to dismiss plaintiff's claims regarding certain statements in the
 complaint, on the grounds that they could not be read as referring to
 plaintiff.  See Church of Scientology Int'l v. Time Warner, Inc., 806
 F.Supp. 1157 (S.D.N.Y.1992).  Specifically, the Court found that parts of
 paragraph 4 and paragraphs 6, 7, 11, and 12 above do not allege statements that
 could reasonably be considered to be of and concerning CSI.
  By Opinion and Order dated November 15, 1995, this Court granted summary
 judgment for defendants as to paragraphs 1-4 and 8-10 above on the grounds that
 no reasonable jury could find that these statements were published with
 malice.  See Church of Scientology Int'l v. Time Warner, Inc., 903 F.Supp.
 637 (S.D.N.Y.1995).  Thus the only statement remaining in the case is paragraph
 5 above.  Defendants moved for reargument of the motion for summary judgment on
 the grounds that the Court overlooked their argument that the claim regarding
 paragraph 5 above should be dismissed based on the incremental harm doctrine.
 The Court granted the motion for reargument and accepted further briefing on
 the question of summary judgment as to paragraph 5 above based on the doctrine
 of incremental harm.
                                   DISCUSSION
  I. Distinctions Between the Libel-Proof Plaintiff, Incremental Harm, and
 Subsidiary Meaning Doctrines
  There are three relevant related doctrines under which courts have granted
 judgment for defendants in libel suits:  (1) the libel-proof plaintiff
 doctrine, (2) the incremental harm doctrine, and (3) the subsidiary meaning
 doctrine.  Because these separate doctrines have not always been distinguished,
 and because the terms are not used consistently, some definition of the
 doctrines for purposes of this Opinion is in order.
  [1] The libel-proof plaintiff doctrine reasons that when a particular
 plaintiff's reputation for a particular trait is sufficiently bad, further
 statements regarding that trait, even if false and made with malice, are not
 actionable because, as a matter of law, the plaintiff cannot be damaged in his
 reputation as to that trait.  See, e.g., Guccione v. Hustler Magazine, Inc.,
 800 F.2d 298, 303 (2d Cir.1986) (holding that plaintiff's reputation regarding
 adultery rendered him libel proof as to allegations of adultery, even though
 allegations related to a time period when plaintiff was no longer married, and
 hence was no longer committing adultery), cert. denied, 479 U.S. 1091, 107
 S.Ct. 1303, 94 L.Ed.2d 158 (1987);  Cardillo v. Doubleday & Co., Inc., 518
 F.2d 638, 639-40 (2d Cir.1975) (holding that plaintiff, a habitual criminal,
 was libel proof as to allegations of criminal activity at issue, because his
 existing reputation created by past indictments and convictions could not be
 worsened by the alleged false statements).
  [2] The incremental harm doctrine reasons that when unchallenged or
 nonactionable parts of a particular publication are damaging, another
 statement, though maliciously false, might be nonactionable on the grounds that
 it causes no harm beyond the harm caused by the remainder of the publication.
 See Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 522, 111 S.Ct. 2419,
 2435-36, 115 L.Ed.2d 447 (1991);  Simmons Ford, Inc. v. Consumers Union of
 U.S., Inc., 516 F.Supp. 742, 750 (S.D.N.Y.1981) (Weinfeld, J.) ("Given the
 abysmal performance and safety evaluations detailed in the article, plaintiffs
 could not expect to gain more than nominal damages based on the addition to the
 article of the misstatement relating to federal safety standards.").  The
 incremental harm doctrine "thus measures the incremental harm inflicted by the
 challenged statements *594 beyond the harm imposed by the rest of the
 publication.  If that harm is determined to be nominal or nonexistent, the
 statements are dismissed as not actionable."  Herbert v. Lando, 781 F.2d
 298, 311 (2d Cir.), cert. denied, 476 U.S. 1182, 106 S.Ct. 2916, 91 L.Ed.2d
 545 (1986).
  [3] The subsidiary meaning doctrine reasons that where a maliciously false
 statement implies the same ultimate conclusion as that of the remainder of the
 publication, which has been published without actual malice, a plaintiff
 cannot "base his defamation action solely on inaccuracies contained within
 statements subsidiary to these larger views."  Id.  Thus, having determined
 one or more ultimate conclusions of the publication, and determined that those
 conclusions were not published with actual malice, a court must grant summary
 judgment for the defendant where the minor inaccuracies sued upon are
 subsidiary to one of the larger views which is nonactionable.  See Jay Framson,
 Note, The First Cut is the Deepest, but the Second May Be Actionable:  Masson
 v. New Yorker Magazine, Inc. and the Incremental Harm Doctrine, 25
 Loy.L.A.L.Rev. 1483, 1516 n. 233, 1517 n. 237 (1992).
  II. Application of the Three Doctrines
  A. The Libel-Proof Plaintiff Doctrine
  [4] Dismissal based on the libel-proof plaintiff doctrine is not appropriate
 at this stage of the litigation, because it requires the Court to make factual
 findings regarding plaintiff's reputation for a particular trait.  In addition,
 the doctrine has been persuasively criticized by then-Judge Scalia's opinion
 in Liberty Lobby, Inc. v. Anderson, 746 F.2d 1563, 1568 (D.C.Cir.1984) ("To
 begin with, we cannot envision how a court would go about determining that
 someone's reputation had already been 'irreparably' damaged--i.e., that no new
 reader could be reached by the freshest libel."  (emphasis in original)),
 vacated on other grounds, 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202
 (1986).
  B. The Incremental Harm Doctrine
  [5] The proposition that the incremental harm doctrine is grounded in the
 First Amendment has been rejected by the Supreme Court in Masson v. New
 Yorker Magazine, Inc., 501 U.S. at 523, 111 S.Ct. at 2436.  In addition, the
 doctrine requires a court to measure the harm flowing from the challenged
 statement as compared to the harm flowing from the rest of the publication,
 see id., and the parties have not yet conducted discovery on the issue of
 damages.
  [6] Because the Court finds, as a corollary to the actual malice
 requirement of the First Amendment to the United States Constitution, that the
 subsidiary meaning doctrine bars suit on statements the implication of which,
 if itself published, is nonactionable, see infra Part II.C, the Court need not
 reach the question of which state law governs this suit, nor the question of
 whether the incremental harm doctrine bars recovery as a matter of state law.
  C. The Subsidiary Meaning Doctrine
  [7] In contrast to the incremental harm doctrine, the subsidiary meaning
 doctrine has not been rejected by the Supreme Court, and thus, under Herbert
 v. Lando, 781 F.2d 298 (2d Cir.), cert. denied, 476 U.S. 1182, 106 S.Ct.
 2916, 91 L.Ed.2d 545 (1986), is still the law in this Circuit.  See also
 Masson v. New Yorker Magazine, Inc., 895 F.2d 1535, 1565-66 (9th
 Cir.1989) (Kozinski, J., dissenting) (stating that the subsidiary meaning
 doctrine set forth in Herbert is "very different" from the "stillborn"
 incremental harm doctrine, "and quite unexceptional"), rev'd, 501 U.S. 496,
 111 S.Ct. 2419, 115 L.Ed.2d 447 (1991);  Liberty Lobby, Inc., 746 F.2d at
 1568 n. 6 (Scalia, J.) ("[A]t some point the erroneous attribution of
 incremental evidence of a character flaw of a particular type which is in any
 event amply established by the facts is not derogatory.").  In addition, unlike
 the incremental harm doctrine, the subsidiary meaning doctrine does bear on the
 First Amendment issue of actual malice, because if a minor inaccuracy could be
 grounds for libel, where the ultimate conclusion which the inaccuracy supports
 could not be because it is published without actual malice, the protection
 afforded to freedom of speech by the requirement that a plaintiff prove actual
 malice would be undermined.  See Erin Daly, *595 The Incremental Harm
 Doctrine:  Is There Life After Masson?, 46 Ark.L.Rev. 371, 385-86
 (1993) (arguing that if one statement were privileged as based on court
 documents, and another minor statement could be sued upon, the privilege would
 be undermined).  Compare Masson, 501 U.S. at 523, 111 S.Ct. at 2436 ("The
 question of incremental harm does not bear upon whether a defendant has
 published a statement with knowledge of falsity or reckless disregard of
 whether it was false or not.").
  [8] Accordingly, the Court must determine whether paragraph 5 above is
 subsidiary to the nonactionable views published in the remainder of the
 Article.  See Herbert, 781 F.2d at 312 ("[W]e hold that if the appellees'
 published view that Herbert lied about reporting war crimes was not actionable,
 other statements--even those that might be found to have been published with
 actual malice--should not be actionable if they merely imply the same view, and
 are simply an outgrowth of and subsidiary to those claims upon which it has
 been held there can be no recovery.").  This determination need not be based on
 statements proven, or conceded, to be true, see id., but may be based on
 statements that are either unchallenged, see Simmons Ford, Inc., 516 F.Supp.
 at 750 (considering the challenged statement in light of the meaning conveyed
 by the remainder of article), or nonactionable, see Herbert, 781 F.2d at
 312 (holding that where implication of challenged statement is same as
 implication of statements which, although possibly false, were not published
 with actual malice, challenged statement is nonactionable under subsidiary
 meaning doctrine).  See Erin Daly, The Incremental Harm Doctrine:  Is There
 Life After Masson?, 46 Ark.L.Rev. 371, 385-86 (1993).
  [9] As demonstrated by the quotations set forth in the Background section of
 this Opinion and Order, the Article, "Scientology:  Cult of Greed" asserts,
 among other things, that Scientology, rather than being a bona fide religion,
 is in fact organized for the purpose of making money by means legitimate and
 illegitimate.  The Article details various alleged schemes that the church
 allegedly uses to increase its revenues, including charging ever-increasing
 fees to its members, deceiving non-members through the use of front groups,
 manipulating securities and currency markets through the use of inside
 information, and evading taxes.  It also criticizes the church on various other
 subjects, including the validity of its belief system, the harmfulness of its
 methods of counseling, and its tactics of combatting critics.  These statements
 were either not challenged by plaintiff or were held to be nonactionable by the
 Court on the grounds that no reasonable jury could find that they were
 published with actual malice.  The sole statement still at issue in the case
 ("One source of funds for the Los Angeles-based church is the notorious, self-
 regulated stock exchange in Vancouver, British Columbia, often called the scam
 capital of the world.") merely implies the same view which this Court has held
 to be nonactionable as not made with actual malice:  that Scientology's purpose
 is making money by means legitimate and illegitimate.  Accordingly, the claim
 based on this statement must be dismissed as subsidiary to a nonactionable view
 expressed in the Article.
                                   CONCLUSION
  For the reasons stated above, upon reconsideration, the Court HEREBY
 GRANTS summary judgment for the defendants on the sole remaining statement sued
 upon.  The action is dismissed.
  SO ORDERED.

End of file...