Subject: Ninth Cir. Dec(wrapped)1/2 From: mayo@lightlink.com (David Mayo) Date: 1996/04/17 Message-Id: <4l2ae7$gj1@light.lightlink.com> Sender: electra@light.lightlink.com Organization: Art Matrix - Lightlink Electra Gateway v2.4 Newsgroups: alt.religion.scientology N O T F O R P U B L I C A T I O N FILED APRIL 11, 1996 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs-counter-defendants-Appellees v. ROBIN SCOTT, et al., Defendants. And CHURCH OF THE NEW CIVILIZATION; DAVID MAYO, Detendants-counter-claimants-Appellants, CHURCH OF SPIRITUAL TECHNOLOGY, Counter-defendant-Appellee. No. 94-55781 DC No. CV-85-0711-AWT(Bx) -1- RELIGIOUS TECHNOLOGY CENTER; CHURCH OF SCIENTOLOGY OF CALIFORNIA; CHURCH OF SCIENTOLOGY INTERNATIONAL, Plaintiffs- counter-defendants-Appellants, v. LARRY WOLLERSHEIM, et al., Defendants, CHURCH OF SPIRITUAL TECHNOLOGY, Counter - defendant, and CHURCH OF THE NEW CIVILIZATION DAVID MAYO, Defendant-counter-claimants -Appellees No. 94-55920 DC No. CV-85-7197 -AWT (Bx) MEMORANDUM* ) ) ) Appeal from the United States District Court for the Central District of California A. Wallace Tashima, District Judge, Presiding Argued and Submitted November 14, 1995 Pasadena, California Before: HALL and NOONAN, Circuit Judges. SHUBB*, District Judge. Religious Technology Center (RTC), a California corporation, appeals from judgment and imposition of attorneys fees entered against it in two cases it brought against David Mayo (Mayo) and other related defendants. Mayo cross-appeals judgment entered against him on his counterclaims. We affirm the judgment and ------------------------------------------------------------- * This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R 36-3. * The Honorable William B. Shubb, United States District Judge for the Eastern District of California, sitting by designation. -2- award of attorneys fees against RTC. We affirm the dismissal of Mayo's emotional distress counterclaim, but reverse and remand the judgment against Mayo on his remaining counterclaims. PROCEEDINGS In January 1985 RTC sued Mayo and other persons connected with the Church of the New Civilization, a splinter group of the official Church of Scientology, contending that they were making unauthorized use of stolen documents relating to the religion of Scientology. RTC stated that it was "the protector" of the religion of Scientology, its philosophy and its technology "including the Advanced Technology" consisting of "confidential and proprietary information regarding counseling and training," and was the owner of various trademarks registered with the U.S. Patent and Trademark Office protecting the Advanced Technology. The coplaintiffs with RTC were the Church of Scientology International, Inc. and the Church of Scientology of California, Inc., both nonprofit California corporations which RTC stated were authorized by it to use the Advanced Technology in accordance with certain terms and conditions in conjunction with the marks it owns. Thirty-one marks were identified in RTC's complaint, in addition to which there were a number of other marks for which registration was pending or marks owned by RTC but as yet unregistered. RTC sought an injunction against the use of this material by the defendants. In November 1985 RTC filed a second suit, ultimately consolidated with the first. -3- Mayo counter-sued for false designation of origin of the documents and for unfair competition in violation of the Lanham Act, for libel, and for intentional infliction of emotional distress. After 1,825 docket entries and nine years of pretrial litigation involving three discovery magistrates, a special master, the recusal of two district court judges, the denial of five petitions for writ of mandamus, three appeals (Religious Technology Center v. Wollersheim, 796 F.2d 1076 (9th Cir. 1986), cert. denied, 479 U.S. 1103, 107 9. Ct. 1336, 94 L.Ed.2d 187 (1987); Religious Technology Center et al. v. Scott, 869 F.2d 1306 (9th Cir. 1989); Religious Technology Center v. Wollersheim, 971 F.2d 364 (9th Cir. 1992), and three denials of certiorari by the Supreme Court, the third district judge, A. Wallace Tashima, entered Final Judgment. We set out and respond to the issues now raised on these appeals. I. Recusal of Judge Ideman RTC first appeals District Judge Letts' denial of its October 1991 motion to recuse Judge Ideman, the district judge assigned to this case after Judge Pfaelzer had recused herself. In denying RTC's petition for writ of mandamus this court in an unpublished order expressly determined that Judge Letts, denial was "not clearly erroneous." This order is the law of the case, to which subsequent panels should defer unless new evidence or law has bean presented or unless the first panel's ruling was clearly erroneous. See Merritt -4- v. Mackey, 932 F.2d 1317, 1320 (9th Cir. 199l). We find that none of Merritt's exceptions apply in this case. 1/ II. Rule 37 Dismissal RTC mounts two attacks on Judge Ideman's dismissal of its claims as a discovery sanction under Rule 37; it argues: (1) that Judge Ideman simply rubber stamped the special master's recommendation to dismiss without conducting an independent review; and (2) that the dismissal order itself was improper under Rule 37. We will discuss these arguments in turn. A. Rubber Stamping When the case was referred to District Judge Ideman, it was still in a pretrial stage after four years of litigation. Taking note of the complexity of the litigation (which involved the Copyright Act, the Federal Trademark and Patent Infringement Act), the number of parties to the litigation, the large number of motions and motions for reconsideration already characteristic of the litigation, and the need to reduce to manageable proportions what was estimated to be three months' trial time, Judge Ideman referred the consolidated cases to a retired state judge to act as special master to supervise discovery and law and motions practice. 1/Even if Judge Letts mistakenly applied a subjective standard under 544, so that the law of the case doctrine only applies to the first panel's conclusion that Judge Ideman was not subjectively biased, we independently conclude that Judge Ideman's recusal was also not mandated under 544(a)'s objective test. -5- On this appeal, RTC objects to the way the district court treated the special master's recommendations. 2/ In other contexts, we have recognized that while a special master should not be given authority to conduct a full trial, he may be given broad authority to supervise and conduct pretrial matters, including discovery activity, the production and the range of exhibits and stipulations of fact, the power to hear motions for summary judgment or dismissal and to make recommendations thereto. Burlington Northern R,R. Co. v Department of Revenue, 934 F.2d 1064, 1073 (9th Cir. 1991) (quoting In re Armco. Inc., 770 F.2d 103, 105 (8th Cir. 1985)). At the same time we have observed that a district court's rubber- stamping of a special master's order is unacceptable -- even on pretrial matters: "[T]he district court's rubber stamp of the master's order is an inexcusable abdication of judicial responsibility and a violation of article III of the Constitution." Burlington, 934 F.2d at 1072. RTC contends that the district court rubber-stamped the dismissal of RTC's claims as a discovery sanction for noncompliance with court orders. To the contrary, the district court took the position that the special master had no power to order dismissal of the case. In the course of responding to RTC's second petition for mandamus Judge Ideman, on June 21, 1993, filed a declaration with the court ruling in relevant part as follows: 3. The past 8 years have consisted mainly of a prolonged, and ultimately unsuccessful, attempt to persuade or compel the plaintiff to comply with lawful discovery. These efforts have been fiercely resisted by --------------------------------------------------------- 2/RTC does not in this appeal challenge Judge Ideman's initial reference of this litigation's pretrial matters to the special master. RTC's two previous attempts to do so failed and we are given no reason to abandon our prior decisions. -6- plaintiffs. They have utilized every device that we on the District Court have ever heard of to avoid such compliance, and some that are new to us. 4. This noncompliance has consisted of evasions, misrepresentations, broken promises and lies, but ultimately with refusal. As part of this scheme to not comply, the plaintiffs have undertaken a massive campaign of filing every conceivable motion (and some inconceivable) to disguise the true issue in these pretrial proceedings. Apparently viewing litigation as war, plaintiffs by this tactic have had the effect of massively increasing the costs to the other parties, and, for a while, to the Court. The appointment of the Special Master 4 years ago has considerably relieved the burden to this Court. The scope of plaintiff's efforts have to be seen. to be believed. (See Exhibit "A", photo of clerk with filings, and Exhibit "B", copy of clerk's docket with 81 pages and 1,737 filings.) 5. Yet it is all puffery -- motions without merit or substance. Notwithstanding this, I have carefully monitored the Special Master's handling of these motions. I saw no need to try to improve on the Special Master's writings if I agreed with the reasons and the results. However, with respect to the major ruling that I have made during these proceedings, the dismissal of the plaintiff's claims, the following occurred: 6. The Special Master, after years of efforts to compel compliance with discovery, purported to order a dismissal of plaintiff's claims. Although the action was probably long overdue, the Special Master did not have the authority to make such a dispositive order. In reviewing his order, as I did with all of his actions, I saw what he had done and did not approve it. I treated the Special Master's 'order" as a recommendation and gave notice to the parties that they could have a hearing and invited briefs. Only after considering fully the briefs of the parties did I give approval to the dismissal. It is true that I adopted the language chosen by the Special Master, but that was because I fully agreed with his reasoning and saw no need to write further. Judge Ideman's pointed and pungent review of the record is the reverse of a rubber stamp. It is the judge's own heartfelt appraisal of the plaintiffs' actions as meriting dismissal. RTC's claim of violation of the Constitution by unconstitutional delegation fails. -7- B. Propriety of Dismissal Dismissals under Fed.R.Civ.P. 37 are reviewed for abuse of discretion. Anheuser-Busch, Inc. v. Natural Beverage Distributors, 69 F. 3D 337, 348 (9th Cir. 1995). An appellate court should reverse "only if [it has] a definite and firm conviction that [the sanction] was clearly outside the acceptable range of sanctions." Malone v. United States Postal Service, 833 F.2d 128, 130 (9th Cir. 19&7), cert. denied sub nom. Malone v. Frank, 438 U.S. 819 (1988'. Rule 37(b)(2)(C) gives the district court discretion to dismiss a party's claims as a sanction for noncooperation in discovery matters. Fed. R. Civ. P. 37 (b) (2) (C). Dismissal is warranted only if the party facing sanctions acted in bad faith. Anheuser-Busch, 69 F.3d at 348. The district court must also weigh several other factors before imposing the "harsh sanction of dismissal": (1) the public's interest in expeditious resolution of litigation; :2) the court's need to manage its dockets; (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions. Id. (citation omitted). If the district court makes explicit findings as to these factors, as it did in this case, we need not review the record independently to determine if there was an abuse of discretion. Cf. Adriana Int'l Corp. v. Thoeren, 913 F.2d 1406, 1412 (9th Cir. 1990). Notwithstanding our ability to rely on the district court's findings, RTC argues that the dismissal was improper because (l) the district court wrongly denied RTC an -8- evidentiary hearing; and (2) the district court's dismissal was unwarranted because RTC acted in good faith. As to the evidentiary hearing claim, RTC asserts that it did not have certain documents required by discovery so that its compliance was impossible; it contends that it needed an evidentiary hearing to show the nonexistence of the documents. This Circuit has, in dicta, noted that an evidentiary hearing on the matter for which a party is sanctioned might be required before dismissal if the party had sought "to show that it was impossible for them to comply with the discovery orders..." United States v. Westinghouse Elec. Corp., 648 F.2d 642, 652 {9th Cir. 1981); see also Wyle v. R.J. Reynolds Industries. Inc., 709 F.2d 585, 592 (9th Cir. 1983) ("When necessary, the district court may hold an evidentiary hearing on a motion for sanctions. Indeed, that method best determines the appropriate sanctions while protecting a party's due process rights."). No court, however, has said that evidentiary hearings are absolutely required prior to a Rule 37 dismissal; thus, the decision whether to hold an evidentiary hearing is well within the court's discretion. The district court in this case did not abuse its discretion because RTC was given full opportunity to demonstrate the nonexistence of the documents. When RTC was notified of the special master's declared intent to impose a Rule 37 dismissal sanction, it moved for an evidentiary hearing. In its supporting papers, RTC argued that a hearing was necessary because of the alleged lack of credibility of Mayo/CNC's witnesses -- it never -9- argued that the documents it refused to produce never existed. Moreover, RTC's allegations of non-credibility mischaracterized the record. RTC first misrepresented Judge Pfaelzer's finding regarding Mayo's credibility "with respect to his claim that he had authored the NOTs materials and that he had produced the AA5 [sic] materials from memory." While Judge Pfaelzer doubted Mayo's ability to reproduce the materials from memory, she cast no doubt on his authorship claim. In fact, Judge Pfaelzer only found Mayo not credible on the specific narrow "issue of how he and the Advanced Ability Center came to have in their possession the documents in question in this law suit." RTC also misrepresented credibility findings by a U.S. magistrate as to Mayo's wife Julia and another woman, Jan Nash. That non-credibility finding was specifically limited to how one of the women conducted record keeping regarding certain documents and to the other woman's claim that she saw certain notes. Finally, RTC takes the magistrate's statement that "the Court now feels [counsel's testimony on a limited point] lacks a little credibility and needs to be tested" and transforms it into a ruling that attorney Fagelbaum was found "not to be credible." RTC's mischaracterization of the court's credibility findings casts RTC's credibility in doubt. Anheuser-Busch, 69 F.3d at 348 (noting that "the district court's credibility determinations are entitled to special deference" when reviewing dismissal sanctions). Because the special master and Judge Ideman were able to review RTC's claims as to credibility and other matters in light of the entire record before them and in -10 light of the famliarity each had with the parties and their litigation tactics, we do not find that they abused their discretion in denying a hearing on either the credibility or document-existence issues. Nor did the district court err in rejecting RTC's alternative claim that it acted in good faith and was therefore not deserving of sanctions. RTC claims that it believed that the discovery order it disobeyed was stayed pending a ruling on a related summary judgment motion that would have mooted the discovery order. This claim is not supported by the facts of this case. On July 25, l990, the district court issued an order requiring discovery of certain documents related to RTC's antitrust claim. On August 8, 1990, RTC filed a motion for review of the district court's July 25 order. RTC then moved for summary judgment on its antitrust claim. On October 31, 1990, the district court continued its consideration of the August 8 review order pending the master's resolution of RTC's summary judgment motion; the continuance lasted until January 7, 1991. On April 26, 1991, the master reordered discovery (and did not mention the district court's October 31 order). On August 12, 1991, the district court ordered RTC to comply with the discovery order. On April 17, 1992, the master dismissed RTC's claims for violation of the August 12, 1991 and other discovery orders. RTC claims that it believed it did not have to comply with the July 25, 1990 discovery order because of the district court's October 31, 1990 continuance. Even if that were true, the continuance ended on January 7, 1991 -- and RTC was reminded of -11- its obligation to follow the order on April 26. Thus, RTC's confusion should have been dispelled. RTC further argues that the master's April 17, 1992 dismissal order was tainted because it rested on the August 12, 1591 order; the August 12 order, RTC contends, was wrong because it ignored the earlier October 31 order. As we find the August 12, 1991 order proper, the April 17, 1992 dismissal is affirmed. [end part 1/2] Rev. David Mayo (finger for key) PGP ID: 1024/4D5EE559 1996/01/04 David Mayo PGP Fingerprint: 0D 69 92 87 79 2F 38 72 FE 03 CE 51 31 D5 6D E9 "So many have fallen, yet so far left to go." *******************************************************************************