RELIGIOUS TECHNOLOGY CENTER; Church of Scientology International,
Larry WOLLERSHEIM; Leta Schlosser; Richard Ofshe; Margaret Singer, et al.;
Charles B. O'Reilly, Defendants-Appellees.
United States Court of Appeals,
Argued and Submitted Oct. 8, 1991.
Submission Vacated Oct. 23, 1991.
Resubmitted July 20, 1992.
Decided July 29, 1992.
Religious organization sued parties involved in state court action against
organization alleging Racketeer Influenced and Corrupt Organizations Act (RICO)
violations, and violations of the Copyright Act. The United States District
Court for the Central District of California, James M. Ideman, J., dismissed
the law firm and expert witnesses who had testified on behalf of the plaintiff
in the state tort action, and appeal was taken. The Court of Appeals held
that: (1) organization failed to allege pattern of racketeering activity in
connection with claim that attorneys and expert witnesses had obtained
confidential religious materials and threatened to reveal that confidential
information for litigation leverage, and (2) use of allegedly confidential
documents was "fair use" and not an infringement of organization's copyright.
See also 869 F.2d 1306.
 RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
Allegation of two isolated criminal acts is insufficient to satisfy relatedness
requirement for Racketeer Influenced and Corrupt Organization Act (RICO)
claim. 17 U.S.C.A. s 501(b); 18 U.S.C.A. s 1962.
 RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
Claim by religious organization that attorneys, who successfully represented
party in tort action against church, and expert witnesses who testified on that
party's behalf, violated Racketeer Influenced and Corrupt Organizations Act
(RICO) by obtaining religious materials to prosecute state case and threatening
to reveal that confidential information for litigation leverage, while meeting
RICO relatedness requirement, did not satisfy "continuity" requirement or show
required pattern of racketeering activity; only goal was successful
prosecution of suit so there could be no threat of activity continuing beyond
completion of that suit. 17 U.S.C.A. s 101 et seq.; 18 U.S.C.A. s 1961
 RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
Pattern of activity lasting only a few months does not reflect long-term
criminal conduct to which Racketeer Influenced and Corrupt Organizations Act
(RICO) was intended to apply. 17 U.S.C.A. s 101 et seq.; 18 U.S.C.A. s
1961 et seq.
 COPYRIGHTS AND INTELLECTUAL PROPERTY
Use of allegedly confidential church documents by plaintiff in state tort
action against church was "fair use" and not an infringement of copyright;
documents were provided to expert witnesses for purposes of preparing testimony
in state tort litigation and were not used for any other purpose. 17
U.S.C.A. s 107; Fed.Rules Evid.Rule 501, 28 U.S.C.A.; West's
Ann.Cal.Civ.Code s 47, subd. 2 (1989).
*364 William T. Drescher, Calabasas, Cal., for plaintiffs-appellants.
Michael L. Goldberg, Mandell, Lewis & Goldberg, McLean, Va., for defendants-
Leta Schlosser, pro per.
Charles B. O'Reilly, pro per.
Appeal from the United States District Court for the Central District of
*365 Before BROWNING, ALARCON and T.G. NELSON, Circuit Judges.
Plaintiffs Religious Technology Center and Church of Scientology
International (CSI) [hereinafter collectively RTC] brought two suits against
numerous defendants alleging violations of the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. s 1962; the Copyright Act, 17
U.S.C. s 501(b); and state tort law. The cases were consolidated and referred
to a Special Master who recommended dismissal of the so-called "Greene
defendants." The district judge issued an order adopting the Report and
Recommendations of the Special Master. RTC appeals. We affirm.
The facts are briefly set out below. Additional background can be found in
the opinion in an earlier appeal, Religious Technology Center v.
Wollersheim, 796 F.2d 1076, 1077-79 (9th Cir.1986).
Defendant Wollersheim was the plaintiff in a state tort action against the
Church of Scientology California (CSC), an entity not a party to this appeal,
for intentional infliction of emotional distress. The suit was ultimately
successful. Defendant law firm of Greene, O'Reilly, Broilet, Paul, Simon,
McMillian, Wheeler and Rosenberg, P.C., and individual defendants Leta
Schlosser and Charles B. O'Reilly, were Wollersheim's attorneys. Defendants
Richard Ofshe and Margaret Singer were expert witnesses who testified on
Wollersheim's behalf. These are the "Greene defendants."
RTC, a Scientology affiliate, and CSI then filed this suit alleging that,
during the prosecution of the state court action, Wollersheim's attorneys
obtained copies of stolen religious scriptures from former members of the
Scientology Church and gave them to Wollersheim's expert witnesses. RTC also
alleged the defendants planned to reveal the contents of these scriptures,
which are kept highly confidential by the Church of Scientology, to blackmail
CSC into settling the Wollersheim state case. In addition, RTC alleged
defendant O'Reilly sent an extortionate letter to CSC, a related corporation,
threatening to disclose the contents of the scriptures unless he was paid $10
This case was consolidated with an earlier suit filed against the persons who
allegedly stole the religious scriptures. In due course, the district court
issued an Order to Show Cause why the RICO and pendant state claims should not
be dismissed and referred the case to a Special Master. Based upon the
allegations of the complaint supplemented with RTC's detailed statement of the
facts they relied upon in response to the order to show cause, the Special
Master recommended, inter alia, that the Greene defendants be dismissed. The
court adopted the Special Master's recommendation and entered final judgment in
favor of the Greene defendants pursuant to Rule 54(b). [FN1]
FN1. Appellee Schlosser asserts that RTC is precluded from bringing this
appeal because it did not object to the Order adopting the Special Master's
report. Since the order was final, RTC acted appropriately in seeking
Rule 54(b) certification.
A. RICO CLAIM
The Special Master recommended judgment for the Greene defendants on RTC's
RICO claim [FN2] because RTC failed to allege: (1) an "enterprise"; (2) two
predicate acts; or (3) a "pattern of racketeering activity." We do not reach
the first two grounds of dismissal. We agree with the Special Master *366
that appellants failed as a matter of law to allege a "pattern of racketeering
activity" by the Greene defendants. [FN3]
FN2. 18 U.S.C. s 1962(c) provides:
It shall be unlawful for any person employed by or associated with any
enterprise engaged in, or the activities of which affect, interstate or
foreign commerce, to conduct or participate, directly or indirectly, in the
conduct of such enterprise's affairs through a pattern of racketeering
activity or collection of unlawful debt.
FN3. The parties disagree whether the district court's ruling was based
on Rule 12(b) or Rule 56. The dispute is not relevant to our decision.
RTC does not contend any relevant facts were not before the district court
or that there were any conflicts as to facts relied upon by the district
court in disposing of the issue we decide. We have accepted RTC's
allegations as true and have reviewed their adequacy de novo.
The Special Master concluded the plaintiffs had failed to allege a
violation under 18 U.S.C. s 1962(a). Report and Recommendation at 28.
The appellants claim not to have sought relief under that section.
Appellant's Brief at 20. We therefore assume plaintiffs do not appeal
dismissal of this cause of action.
In H.J., Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 109
S.Ct. 2893, 106 L.Ed.2d 195 (1989), the Supreme Court held that to establish a
"pattern of racketeering activity," plaintiff's allegations must show both
that "the racketeering predicates are related, and that they amount to or pose
a threat of continued criminal activity." Id. at 239, 109 S.Ct. at 2900
(emphasis in original).
 An allegation of two isolated criminal acts is insufficient to satisfy
the relatedness requirement, id.; the predicate offenses are related if
they have "the same or similar purposes, results, participants, victims or
methods of commission." Id. at 240, 109 S.Ct. at 2901 (citation omitted).
 RTC alleged that the Greene defendants obtained the religious materials
to prosecute the state court case, and threatened to reveal this confidential
information for litigation leverage. All of the predicate acts alleged were
directed to these ends. They therefore satisfied the "relatedness"
However, the conduct alleged did not satisfy the "continuity" requirement.
The Supreme Court has held that continuity can be demonstrated by proving
either "a series of related predicates extending over a substantial period of
time" or "past conduct that by its nature projects into the future with a
threat of repetition." Id. at 241-42, 109 S.Ct. at 2901-02.
Since the only goal of the Greene defendants was the successful prosecution of
the Wollersheim state tort suit, there was no threat of activity continuing
beyond the conclusion of that suit. See Medallion Television Enter., Inc.
v. SelecTV of California, Inc., 833 F.2d 1360, 1364 (9th Cir.1987) (where fraud
was a joint venture to obtain broadcast rights, once the rights were obtained
the threat ended).
RTC also failed to allege a series of related predicates extending over a
"substantial" period of time. See 492 U.S. at 242, 109 S.Ct. at 2902.
[FN4] The first predicate offense alleged was the receipt of the documents by
Schlosser in the spring of 1985. [FN5] The last predicate act was defendant
Singer's attempt to introduce the scriptures into evidence in the state tort
suit in October of 1985. Thus the alleged activity continued for six months at
FN4. RTC alleges that the racketeering activity began in 1980 with the
sending of the extortionate letter. The letter was, however, sent to CSC,
not RTC or CSI. Since CSC is not a party to this case, it does not have
standing to assert the wrongs done to another party. The Supreme Court has
held that, under 18 U.S.C. s 1962(c), "the plaintiff only has standing
if, and can only recover to the extent that, he has been injured in his
business or property by the conduct constituting the violation.... [N]or
is the defendant liable to those who have not been injured." Sedima,
S.P.R.L. v. Imrex Co., 473 U.S. 479, 496-97, 105 S.Ct. 3275, 3285, 87
L.Ed.2d 346 (1985) (citation omitted).
FN5. As noted above, we do not reach the issue of whether RTC has
sufficiently alleged predicate acts under RICO; we only assume for
purposes of discussion that they have.
FN6. In its reply brief, RTC argues that the Greene defendants should be
held responsible as co-conspirators for the later actions of other
defendants. There is no evidence this theory was raised in the district
court, and we deem it waived. See Winebrenner v. United States, 924
F.2d 851, 856 n. 7 (9th Cir.1991).
 The Supreme Court in H.J., Inc. held that "[p]redicate acts extending
over a few weeks or months and threatening no future criminal conduct do not
satisfy this [continuity] requirement." 492 U.S. at 242, 109 S.Ct. at
2902. We have found no case in which a court has held the requirement to be
satisfied by a pattern of activity *367 lasting less than a year. [FN7] A
pattern of activity lasting only a few months does not reflect the "long term
criminal conduct" to which RICO was intended to apply. See 492 U.S. at 242,
109 S.Ct. at 2902; see also Feinstein v. Resolution Trust Corp., 942 F.2d
34, 45-46 (1st Cir.1991) (span of 3-4 months, absent a threat of future
criminal activity, is too short to support claim of long term criminal conduct
at which RICO is aimed); Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d
1406, 1418 (3d Cir.1991) (fraudulent scheme lasting 8 months directed at a
single entity did not meet the continuity test); Parcoil Corp. v. Nowsco
Well Serv., Ltd., 887 F.2d 502, 504 (4th Cir.1989) (four months is insufficient
to make out continuity); Sutherland v. O'Malley, 882 F.2d 1196, 1205 (7th
Cir.1989) (five month period is insufficient). [FN8]
FN7. See, e.g., Dana Corp. v. Blue Cross & Blue Shield Mutual of
Northern Ohio, 900 F.2d 882, 887 (6th Cir.1990) (seventeen years);
Fleet Credit Corp. v. Sion, 893 F.2d 441, 447 (1st Cir.1990) (four and a
half years); Walk v. Baltimore and Ohio R.R., 890 F.2d 688, 690 (4th
Cir.1989) (ten years); Jacobson v. Cooper, 882 F.2d 717, 720 (2d
Cir.1989) ("matter of years").
FN8. RTC's second cause of action alleges a conspiracy to violate RICO,
18 U.S.C. s 1962(d), which makes it "unlawful for any person to conspire
to violate any of the provisions of subsections (a), (b), or (c) of this
section." Because we find that RTC has failed to allege the requisite
substantive elements of RICO, the conspiracy cause of action cannot stand.
B. COPYRIGHT CLAIM [FN9]
FN9. The Special Master made no express finding with regard to RTC's claim
of copyright infringement, nor did the district judge. Nonetheless, we may
affirm if there is evidence in the record to support the dismissal.
Jackson v. Southern California Gas Co., 881 F.2d 638, 643 (9th
 The complaint alleges the defendants copied RTC's work, made
unauthorized revisions in the work, and distributed materials that are
substantially similar to it. Complaint P 71. However, the only specific
factual allegation implicating the Greene defendants is found in P 22, which
alleges Leta Schlosser, one of Wollersheim's attorneys, copied and transferred
the stolen documents to Singer and Ofshe, Wollersheim's expert witnesses.
Defendants' answer admitted Schlosser and O'Reilly provided the documents to
the expert witnesses for the purpose of preparing their testimony in the state
tort litigation. RTC does not contend the Greene defendants used the documents
for any other purpose. Moreover, RTC has not contested Leta Schlosser's
assertion that the documents were sealed, marked "Confidential" and never
offered into evidence.
In these circumstances, use of the documents was "Fair use" under 17
U.S.C. s 107, and not an infringement of RTC's copyright. [FN10] See
Jartech, Inc. v. Clancy, 666 F.2d 403, 406-07 (9th Cir.1982) (copying of
allegedly obscene film to be used as evidence in a nuisance abatement action
was "fair use"); 3 Nimmer on Copyright s 13.05[D] at 13-91 (1991) ("works are
customarily reproduced in various types of judicial proceedings, including
obscenity and defamation actions ... and it seems inconceivable that any court
would hold such reproduction to constitute infringement either by the
government or by the individual parties responsible for offering the work in
evidence"); see also Hustler Magazine, Inc. v. Moral Majority Inc., 796
F.2d 1148, 1155 (9th Cir.1986) (" 'use that has no demonstrable effect upon the
market for, or the value of, the copyrighted work need not be prohibited in
order to protect the author's incentive to create' ") (quoting Sony Corp. of
America v. Universal City Studios, Inc., 464 U.S. 417, 450, 104 S.Ct. 774, 792-
93, 78 L.Ed.2d 574 (1984)).
FN10. Defendant Schlosser also argues the suit is barred by a California
litigation privilege. See California Civil Code s 47(2). However, the
federal courts will recognize state privileges only in cases in which
"[s]tate law supplies the rule of decision." Fed.R.Evid. 501. In
federal question cases, the law of privilege is governed by "the principles
of the common law as they may be interpreted by the courts of the United
States in the light of reason and experience." Id. Schlosser cites no
cases, and we have found none, indicating such a privilege has been
recognized as a matter of federal common law.
C. PENDANT STATE CLAIMS
Dismissal of the pendant state claims was not an abuse of discretion. "When
*368 federal claims are dismissed before trial ... pendant state claims also
should be dismissed." Jones v. Community Redev. Agency, 733 F.2d 646, 651
FN11. We deny appellee Schlosser's request for damages under
Fed.R.App.P. 38. This appeal was not wholly frivolous.