201 1 IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
2
Civil Action No. 95B2143
3
RELIGIOUS TECHNOLOGY CENTER,
4
Plaintiff,
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vs.
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F.A.C.T.NET, INC., et al.,
7
Defendants.
8
9
REPORTER'S TRANSCRIPT
10 MOTION FOR PRELIMINARY INJUNCTION
11
12
13 Proceedings before the HONORABLE JOHN L. KANE, JR.,
14 Judge, United States District Court for the District of
15 Colorado, commencing at 9:30 p.m., on the 11th day of
16 September, 1995, in Courtroom C401, United States Courthouse,
17 Denver, Colorado.
18
19
20
21
22
DEBORAH A. STAFFORD, Official Reporter
23 P.O. Box 3592
Denver, Colorado, 80294
24 (303) 5710530
25 Proceedings Reported by Mechanical Stenography
Transcription Produced via Computer
205
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5 CROSSEXAMINATION
6 BY MR. KELLEY:
7 Q Mr. McShane, as I understand it, you contend that all of
8 the works that are in issue in this case are secret, and there
9 isn't a portion of them that is more secret than any other; is
10 that right?
11 A Well, as I explained earlier, all of the O.T. levels that
12 are relevant to the case at this time, O.T. I through VII, are
13 all trade secret, yes.
14 Q They are secret from start to finish, there is no
15 particular portion of them that you considered secret?
16 A There is no particular portion that we consider secret.
17 Q No particular portion that you consider more secret than
18 any other portion?
19 A No, I don't believe so.
20 Q Likewise, there isn't anything about the copyrighted works
21 that are in issue in this case that you consider to be the
22 heart of the works?
23 A Well, there are concepts within the individual O.T. levels
24 that I would consider our works, yes.
25 Q What do you consider to be the heart of the O.T. III
206
1 level?
2 A The actual technology on how to undo what was done to
3 every spiritual man.
4 Q Sir, let me ask you to take a look at your deposition.
5 A Certainly.
6 MR. KELLEY: Your Honor, the last time I checked, the
7 originals were not on file with the court.
8 THE COURT: No. You can publish the deposition
9 later. Going over this with the witness.
10 BY MR. KELLEY:
11 Q Mr. McShane, do you remember having your deposition taken
12 in this case last Thursday?
13 A Yes.
14 Q At that time you were under the same oath that you are
15 under now?
16 A Of course.
17 Q At that time did I ask you the following question and did
18 you give the following answer at page 20, beginning at line
19 19: "In terms of these materials is there any part of it you
20 would consider to be the heart of it, the most significant
21 part?" Your counsel said, "Part of what." I said, Part of
22 each O.T. level consisting of three basic categories which he
23 has described which you described yesterday?
24 A Right.
25 Q Answer: No. I mean see, I can't categorize them.
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1 It's not like three different parts. It's all together which
2 makes up the level. You can't take one and not the other.
3 What Mr. Hubbard discovered is just as important as to how he
4 discovered to alleviate because you can't do one without the
5 other, true and correct?
6 A Yes, it is. My explanation to that
7 Q Sir, I will ask you to answer my questions.
8 A Can I explain, Your Honor?
9 THE COURT: Your counsel will ask you on redirect.
10 THE WITNESS: Okay.
11 BY MR. KELLEY:
12 Q Now, it's true that R.T.C neither R.T.C. or the church
13 ever intends to publish these materials; is that right?
14 A That's correct.
15 Q Don't you think that if these teachings had substance and
16 were beneficial that they would survive the light of day and
17 in fact do better as far as the credibility of the Scientology
18 religion?
19 A If what? I am not following your question.
20 Q Don't you think that the credibility of the Scientology
21 religion would be improved rather than deprecated if these
22 materials were to see the light of day?
23 A No, not at all.
24 Q You have seen postings of various forms of the O.T.s on
25 the Internet, have you not, over the course of 1995?
208
1 A I have seen snippets and alterations, yes.
2 Q And you heard Professor Cleek state that he had seen all
3 of the O.T.s attached to the Fishman affidavit on the Internet
4 over the course of the year, did you not?
5 A I heard him say that, yes.
6 Q He brought with him exhibits that he downloaded just
7 before trial which contained most of the them, did they not?
8 A I haven't seen them, but he brought them.
9 Q Exhibit A could I ask that the witness be handed
10 Exhibit A?
11 A I have it, Mr. Kelley.
12 Q And that exhibit, sir, is the letter by your counsel to me
13 setting forth the key word list that you used to search my
14 clients' hard drive and other electronic materials?
15 A Yes, it is.
16 Q And it's true that no less than half a dozen names on that
17 list were selected because these were persons posting the
18 O.T.s on the Internet?
19 A I believe I testified in my deposition that they had
20 something to do with posting snippets or parts of the
21 materials, yes.
22 Q In fact Ray Ward had posted all or substantially all of
23 some of the materials; isn't that right?
24 A Well, I believe that from what I remember Ray Ward posted
25 one of the NOTS bulletins.
209
1 Q Once these are posted on the Internet, they can be
2 downloaded in seconds; isn't that right?
3 A I guess that's possible.
4 Q Has it come to your attention that there have been
5 reposting of O.T. I through VII in the last 48 hours?
6 A No.
7 Q Now, I think you testified that you thought someone could
8 do a knockoff or competitive Scientology operation using the
9 FishmanGeertz materials, did you not?
10 A I think I said that somebody could try that, yes.
11 Q But nobody is doing it now?
12 A Not that I am aware of. That's not saying nobody is not,
13 but I am not aware of it.
14 Q And don't you think that putting aside for a minute all of
15 the postings on the Internet, that someone who had access to
16 all the books and newspaper articles that have been written
17 concerning the O.T. material could do the same thing?
18 A Like I said, I think they could try to do that,
19 Mr. Kelley. I don't know if they would succeed or not. They
20 could try it.
21 Q And one of the things that would enable people like that
22 to be successful would be their ability to declare that they
23 have the actual O.T. materials; is that one of the things that
24 you have said on direct examination?
25 A Well, I think what I said was that in order to succeed at
210
1 all they would want to have Mr. Hubbard's works.
2 Q They would want to be able to declare that they actually
3 had them and what they were doing was the real thing; is that
4 right?
5 A Yes, that's the reason they steal the materials because
6 they want to have the real thing.
7 Q If they declare to have the real thing, it's easy for you
8 to identify who was out there doing that, is it not?
9 A Well, they claim they have the real thing, and we
10 investigate and find they do, then we usually take action and
11 we usually end up in litigation unless they agree to stop.
12 Q And there is nobody out there claiming that now?
13 A Not that I am aware.
14 Q Notwithstanding the postings on the Internet over 1995,
15 there hasn't been a new operation in 1995, has there?
16 A Not that I am aware. What I think they are probably
17 waiting for is to see if these materials are going to become
18 public.
19 Q I would rather not have you speculate on what people might
20 be waiting for and answer my questions.
21 A All I am saying is it's possible though that they
22 Q Sir, please just answer my questions.
23 A Okay.
24 Q Now, you testified concerning Exhibit 28 which purports to
25 contain all materials that are unpublished and in which the
211
1 R.T.C. claims copyright; is that correct?
2 A I am not sure which Exhibit 28 that is.
3 Q That is your exhibit. I will ask Mr. Case to hand that to
4 you, if he wouldn't mind.
5 A Okay, I have it. Now, what's your question, Mr. Kelley?
6 Q The question is isn't it true that that exhibit contains
7 every piece of material you contend is infringing regardless
8 of regardless of source?
9 A Yes, we contend this is the materials that we found from
10 the seizure that were infringing, yes, not all of it but it's
11 most of it.
12 Q Some of those include items that contain a very small
13 portion of the work that's in issue; isn't that right?
14 A Yes, there are some we found certain bits on the hard
15 drive because the hard drive was formatted, yes, just a little
16 bit of that.
17 Q Some of those contained things like newspaper articles
18 that have small snippets and quotes from the works, do they
19 not?
20 A No, I don't believe so.
21 Q Would you be surprised if among those there is the
22 Milwaukee Journal article?
23 A I wouldn't be surprised, no.
24 Q And from that exhibit you are not able to tell the source
25 of the materials, are you?
212
1 A From looking at what was in his hard drive?
2 Q Yes.
3 A No, I don't believe so.
4 Q Excuse me.
5 A Unless there was something before it or after it that
6 would identify where it came from.
7 Q You can't tell whether it's an anonymous upload from
8 someone outside the system?
9 A I don't think so.
10 Q Nor can you tell whether or not it's an Email from
11 someone outside the system?
12 A You can't tell, but I don't know what difference it would
13 make. We still consider it an infringement as he is under a
14 confidentiality agreement.
15 Q You don't know how it came onto the system and it could
16 have come in any of these ways?
17 A All we know he would have to put it into the system.
18 Q You know it was on the system and could have come from any
19 of those means; isn't that right?
20 A Many different means, it could be.
21 Q Now, the R.T.C. and the church has been itself outspoken
22 on issues involving Scientology, has it not?
23 A I am not sure what issues you are referring to.
24 Q Well, for example, the church's position on the validity
25 of the world of psychiatry.
213
1 A We are very outspoken on psychiatry the abuses of
2 psychiatry, yes.
3 Q You have been outspoken on what you call apostates such as
4 my clients, have you not?
5 A From time to time, yes.
6 MR. KELLEY: Mr. Case, could I ask you to hand the
7 witness Exhibit JJ. Mr. Case, it's the big folder. The one
8 that wouldn't go in a book. Sort of the tabloid newspaper
9 size.
10 A I have it.
11 Q What is this?
12 A This is a copy of the KSW News. A publication that R.T.C.
13 puts out.
14 Q When did that publication come out?
15 A There is no date on it. I think it was earlier this year.
16 Q What's the audience of that publication?
17 A Scientologists, parishioners, usually people who have
18 taken some form of training or processes within the church.
19 Q And that is prepared in consultation with the Church of
20 Scientology?
21 A I don't mean
22 Q By the Church of Scientology International?
23 A Not necessarily.
24 Q Well, that basically details the raid that was done on
25 Mr. Erlich's premises back in February, does it not?
214
1 A There is an article here regarding that, yes.
2 Q And Mr. Miscavige, your chairman, appeared on Nightline in
3 1992, did he not?
4 A He appeared on Nightline.
5 Q One of the reasons he appeared was to respond to publicity
6 concerning the church which the R.T.C. felt held it up to
7 ridicule; isn't that right?
8 A I think there were a lot of issues that he want to do
9 respond to.
10 Q Including the fact that some amount of quoting of the
11 O.T.s out of context subjected the church to ridicule; isn't
12 that one of the reasons?
13 A I don't believe so.
14 Q In any event, he wanted to respond to what was considered
15 negative publicity about the church; isn't that right?
16 A He wanted the truth to be known to the public.
17 Q Let me ask you to take a look at Exhibit U.
18 A Okay.
19 Q And that is a magazine called Freedom?
20 A Yes, that's published by the Church of Scientology
21 International.
22 Q Yes, that's correct. It's done pursuant insofar as it
23 uses the name Scientology pursuant to the license by R.T.C.
24 A Yes, the Church of Scientology International is licensed
25 to use the trademark, yes.
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1 Q And that has a very large mailing list, does it not?
2 A Yes, it does.
3 Q Incidentally, was it mailed to members of my law firm
4 after we appeared in this case?
5 A I have no idea.
6 Q This addresses various issues concerning Scientology,
7 including the psychiatric profession, the issue of apostates
8 and so forth?
9 A Freedom traditionally reported on various things of social
10 interest and public interests.
11 Q And the Church of Scientology, including the mother church
12 and the others, regularly published advertisements and
13 promotion seeking to proselytize, do they not?
14 A All religions do.
15 Q Could I ask you to take a quick look at Exhibit Q.
16 A Yes, sir.
17 Q And that is the article published in The Washington Post
18 on August 19, 1995?
19 A It is.
20 Q Now, in connection with the continuation of the Fishman
21 litigation after the church dismissed its claims that we have
22 talked about yesterday, did you come become familiar with the
23 document known as the Berger declaration?
24 A I am familiar with the Berger declaration, yes.
25 Q You made a study in that declaration earlier?
216
1 A I didn't consider it a study. I read it.
2 MR. KELLEY: Could I ask that the witness be handed
3 Exhibit N2.
4 A Okay, I have it.
5 Q Does that appear to you to be the Berger declaration that
6 was part of the record in the Fishman case that went up to the
7 Ninth Circuit and was referred to by the Ninth Circuit in its
8 opinion?
9 A Yes, it appears to be the same one.
10 Q The Ninth Circuit also refers to something called the
11 Calhoun declaration. Are you familiar with that?
12 A I have heard of it. I didn't see it to be familiar with
13 it.
14 Q You have never seen it before?
15 A I think I have. I just don't remember.
16 Q I will ask you, Mr. Case, to hand to the witness Exhibit O
17 which is bound like a deposition and see if you can confirm
18 that appears to be the Calhoun declaration.
19 A It appears so, Mr. Kelley.
20 Q Now, referring to Exhibit 28 and all of your review of
21 material seized from my clients' homes I want you to sum up
22 if you can the things we have been over already.
23 First, all of the O.T. material you found is the
24 attachments to the Fishman affidavit plus several pages of
25 O.T. II?
217
1 A Are you talking about during the seizure what we found in
2 Mr. Wollersheim's residence?
3 Q Yes, I am talking about the O.T. material in issue in this
4 case.
5 A Yes.
6 Q And to the extent you found other unpublished materials in
7 which you claim copyright, they are listed on Exhibit double
8 I, the letter from Mr. Blakely to me. If you want to take a
9 look at that to refresh your memory?
10 A I remember him writing that to you, and I remember reading
11 that. That that was true at the time although the search is
12 continuing every day.
13 Q As far as you know, that letter is still up to date?
14 A It was up to date as of the day it was written.
15 Q Have you found any additional materials in which copyright
16 is claimed that are unpublished?
17 A I haven't reviewed the 300 plus infringements that were
18 found over the weekend.
19 Q And as to these materials, you are not in a position to
20 say how my clients got them; is that right?
21 A Well, I can only say that they did not get them from the
22 church, and they were stolen at some point in time.
23 Q Beyond that, you are not in a position you don't have
24 any personal knowledge about how my clients
25 A I think I had to have some personal knowledge, yes.
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1 Q That's based upon the fact that they didn't get them from
2 the church and they were stolen from the church?
3 A It's also based upon my experience in litigating this
4 issue since 1985, and the fact that Mr. Wollersheim's
5 attorneys who represented him in California got them from
6 David Mayo, who got them from the thieves who stole them from
7 the company.
8 MR. KELLEY: Your Honor, I would ask to strike that
9 because it's clearly not personal knowledge.
10 THE COURT: All right. Motion is granted.
11 BY MR. KELLEY:
12 Q Now, just to further sum up, as to all of this material
13 you have no knowledge of no knowledge that my clients,
14 other than through Mr. Lerma at the beginning of August,
15 posted any of these materials to the Internet; is that so?
16 A Yes, Mr. Lerma did so, yes, as a director of F.A.C.T.Net.
17 Q You have no knowledge of any other postings to the
18 Internet by my client?
19 A I believe he did post some things earlier and got a cease
20 and desist letter from one of R.T.C.'s lawyers.
21 Q Who did?
22 A Mr. Wollersheim.
23 Q Posted O.T. materials?
24 A I don't recall. I don't think it was O.T. materials. It
25 was some copyright materials.
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1 Q And you have no evidence of any other transmissions or
2 releases outbound of any of these materials other than the
3 Lerma posting; isn't that right?
4 A Other than I guess what he has testified to in his
5 deposition as to what Mr. Penny has testified to.
6 Q You say I am talking about the O.T. materials in this
7 case.
8 A I am not aware of any, as I said here, no.
9 Q As to those particular materials, you are not aware of any
10 outbound transmissions other than the Lerma posting?
11 A Only that they were contained in his databases. From what
12 I understand, his databases were given and sold to people.
13 Q And you have that understanding from, what, depositions of
14 my client?
15 A Yes, and I believe he testified and Mr. Penny testified to
16 the fact I don't have the transcripts I believe that
17 they sold the materials or gave the materials to other people
18 to either hold or to use.
19 Q I have read those depositions, and I want to know if you
20 are telling the court that you read them and understood them
21 to mean that the O.T. I through VII materials were subject to
22 what you just said?
23 A My understanding is that they were in his databases which
24 were given to people and contained within the databases what
25 we found were the O.T. materials.
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1 Q Now, you have testified that you believe in the teachings
2 of Mr. Hubbard?
3 A Yes, I do.
4 Q You believe that in every respect the teachings of
5 Mr. Hubbard should be followed?
6 A Sure.
7 Q And you have heard Mr. Hubbard counsel Scientologists to
8 lie, if necessary, for the benefit of their religion?
9 A I have never heard that, sir.
10 Q You have heard Mr. Hubbard counsel that the purpose of a
11 lawsuit is to harass and discourage rather than win or words
12 to that effect?
13 A Yes, we discussed that in my deposition.
14 Q Sir, yes or no.
15 A Yes, I heard words to that effect.
16 Q You also heard counsel in words to this effect, "don't
17 ever defend, always attack" in the same context as that prior
18 statement, have you not?
19 A I have heard that, yes.
20 MR. KELLEY: If I could have just one moment, Your
21 Honor? No further questions at this time. Thank you.
22 THE COURT: Redirect, please.
23 REDIRECT EXAMINATION
24 BY MR. COOLEY:
25 Q Mr. McShane, you have been asked a number of questions
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1 about the totality of the material on the O.T. levels and
2 whether any portion of it is considered not to be secret.
3 Let me ask you this. Are you aware that the
4 defendants are in this case making a claim that your upper
5 level materials cannot be treated as trade secrets because of
6 what has been in the media?
7 A I am aware that that's their claim.
8 Q And do you consider that the secret of the upper level
9 materials has at any time been exposed in the media?
10 A No, I do not.
11 Q Why is that?
12 A Well, as I earlier testified to previously, there have
13 been snippets here and there but never the trade secret.
14 There are bits of it that are not trade secret that are known.
15 Q To the extent that there has been a crossover on the
16 lines, have you gone after in litigation anyone who has
17 attempted to publish the actual trade secret?
18 A Yes.
19 MR. KELLEY: Asked and answered, Your Honor.
20 BY MR. COOLEY:
21 Q And what has been the result of that?
22 MR. KELLEY: Asked and answered.
23 MR. COOLEY: I didn't hear the answer. Maybe I am
24 deaf.
25 MR. KELLEY: We went through all that on direct.
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1 THE COURT: You did cover this on direct examination.
2 MR. COOLEY: Now, there has been a whole reopening of
3 this issue.
4 THE COURT: He is saying that you asked on direct and
5 he answered on direct, so there is no reason to be coming back
6 into it now. If you want a little leeway, go ahead.
7 MR. COOLEY: I appreciate that, Your Honor.
8 THE COURT: All right.
9 BY MR. COOLEY:
10 Q Isn't some of the information that Mr. Hubbard discovered
11 about the upper level materials public knowledge?
12 A Yes.
13 Q And is that any part of the secret, the part that is
14 public knowledge?
15 A No, of course not.
16 Q When Mr. Hubbard made the discovery in 1967 of what became
17 O.T. III, did he announce it to Scientologists around the
18 world?
19 A Yes, in a recorded message that went out to all
20 Scientologists.
21 Q What did he say?
22 A Well, Mr. Hubbard explained that there was a great
23 catastrophe that occurred 75 million years ago that left this
24 planet a desert and that he had found the way out to undo
25 that. The fact that he even said that not to worry, that
223
1 the people who caused that great catastrophe were no longer
2 around. And that he had discovered a way to unravel the
3 harmful effects that were done at that time period.
4 Q That has always been broad knowledge?
5 A Of course.
6 Q Has that information ever been confidential that you have
7 just recounted?
8 A No.
9 Q And do the uniforms of the Sea Organization itself reflect
10 that information?
11 A Yes, they do.
12 Q In what way?
13 A Well, the uniforms are designed to reflect the Galactic
14 confederation, which we believe existed many, many years ago.
15 In fact on our hat that we wear have a emblem on it which is
16 published in our technical dictionary. It has a lower wreath
17 with 26 leaves on it and those stand for the 26 planets that
18 existed in this sector of the universe. The star itself
19 that's on the emblem reflects the spirit and we wear those as
20 a symbol of what we stand for, who we are.
21 Q When Mr. Hubbard mentioned in 1967 that this concerned, an
22 event that happened 75 million years ago, was there any
23 concern that this would turn off Scientologists or people
24 because it concerned something that would seem like
25 scientific?
224
1 A No, not at all.
2 Q Why not?
3 A Because it was an event that occurred that he wanted the
4 public to know about. People always asked questions about
5 what happened to man and how man was created and how this
6 planet was created. And talking about that in the past has
7 always been of interest to many, many people.
8 Q Well, now, does any of that tell the actual secret of O.T.
9 III?
10 A No, not at all.
11 Q And do you have in front of you the well, we'll come to
12 that in a moment. Is there any inhibition about talking
13 freely to a Scientologist about the fact that this incident
14 happened 75 million years ago which destroyed this planet
15 without divulging the secret of O.T. III?
16 A No, not at all. It's general knowledge.
17 Q In fact, is there a novel called Revolt in the Stars that
18 was written by Mr. Hubbard as a screen play?
19 A There is a script that's written by Mr. Hubbard, yes.
20 Q And does it talk about events in bringing people to earth
21 and so forth 75 million years ago?
22 A Yes, absolutely.
23 Q Is that a copyrighted unpublished work of Mr. Hubbard?
24 A Yes, it is.
25 Q R.T.C. doesn't own that copyright, I take it?
225
1 A No, we don't.
2 Q And is that the reference and that is that
3 fictionalized version of the events of 75 years ago?
4 A Yes, it is. Mr. Hubbard took the events that occurred
5 and developed a story around it as many novels and movies have
6 done in the past.
7 Q And is that what is set forth in that screen play, O.T.
8 III?
9 A No, absolutely not.
10 Q Could you audit or receive all the auditing or deliver the
11 auditing of O.T. III from that script?
12 A No.
13 Q Could you receive, audit, organize, deliver the auditing
14 on O.T. III from anything that has been published in the
15 newspapers?
16 A No. Like I think I said, I could try, but I wouldn't be
17 very successful.
18 Q Is O.T. III the section O.T. III course itself?
19 A The O.T. III stands for section O.T. III. That is one of
20 the levels, one of the O.T. levels in the church.
21 Q And is it the trade secret in the technology?
22 A Yes, it is.
23 Q And is the reference in the is the recounting in Revolt
24 in the Stars the screen play the exact incident?
25 A No, it's not the exact incident at all.
226
1 Q And is it as I say a fictionalized account?
2 A Yes, it has some names and obviously the events that
3 occurred. Everything else is fiction.
4 Q It has a lot of names of Hubbard?
5 A Absolutely.
6 Q Is it similar to the burning of Atlanta being real with
7 Gone With the Wind, but Rhett Butler and Scarlet O'Hara
8 A Like movies based upon the Bible, The Ten Commandments,
9 the movie The Robe. They were based on actual events that
10 occurred and then fictionalized around it.
11 Q But it doesn't give away the secret?
12 A No, absolutely not.
13 Q Does it cover O.T. III?
14 A No.
15 Q That play?
16 A Not at all.
17 Q Does the public information cover at all what happened to
18 people as spiritual beings at that time?
19 A No. It's fictionalized. That was designated to be a
20 movie at one point and maybe a book and talks about events
21 that occurred, and there is no I don't believe I read it
22 several times. I don't believe even the word spirit is
23 mentioned.
24 Q Is the secret of O.T. III in what happened to you and how
25 to handle it?
227
1 A Not at all.
2 Q It's not in that play?
3 A Not in the book.
4 Q Is that the secret of O.T. III however?
5 A Yes, of course.
6 Q Is that and is that in the material that deals with how
7 to handle it and what happened to you?
8 A That's what O.T. III materials consist of.
9 Q Now, you were asked on direct examination whether you
10 consider all of the materials to be secret and every word to
11 be secret, and then you gave an answer and you wanted to give
12 explanation. Have you now given the explanation or is there
13 something else you would like to explain?
14 A I think there was a little misinterpretation in my
15 deposition. What I testified to was that the O.T. levels vary
16 in size and some of them have instructional material as a
17 separate package. And a person would study that material
18 first and then he would get the second page which was the
19 actual process and what to do with himself. Some of that like
20 the O.T. I is just one package. So I can't say this the heart
21 of the work in there because it's the whole thing. There are
22 other O.T. III, for instance, where there is a or a
23 description for instance in the first paragraph that describes
24 this incident that occurred 75 million years ago. There is a
25 lot more to it but when it gets down to a certain point where
228
1 Mr. Hubbard describes what occurred to the actual person
2 himself, that's where the trade secret is. Then obviously how
3 to undo that the processes on how to do undo that is his
4 major break through. That's of course secret.
5 Q Could you take Exhibit 79 and point out to the court by
6 indicating the portions of O.T. III where the secret is?
7 A I could easily.
8 Q Would do you that, please? Does the court have Exhibit 79
9 there, Your Honor? I think it's in a separate notebook, Your
10 Honor.
11 THE WITNESS: It's a long binder.
12 MR. COOLEY: It's that long binder?
13 THE WITNESS: The one that has "confidential" on it,
14 Your Honor.
15 THE COURT: Okay.
16 BY MR. COOLEY:
17 Q Starting with the opening paragraph and going on, the
18 portions of the opening paragraph and subsequent materials
19 that are contained are secret.
20 BY MR. COOLEY:
21 Q As you go through it, just make sure you specifically
22 inform the court where to turn and what page to look at, so
23 you will both be on the same track.
24 A The very first tab under Tab No. 1. You can see there are
25 references to the Galactic confederation, 76 planets, but
229
1 within that there is information on what are called incidents
2 that you see there, Your Honor, in parentheses. Those itself
3 are trade secret. Any descriptions in that first page which
4 actually described what happened to the individual himself is
5 a trade secret.
6 But it may be easier to explain what's not. The
7 discussion of the of the volcanoes, the explosions, the
8 Galactic confederation 75 million years ago, and a gentleman
9 by the name Xemu there. Those are not trade secrets. The
10 officers mentioned there are not. But the the parts in
11 there that actually described what happened to the individual
12 and how to handle it, especially when it goes onto page 2 from
13 that point forward, that is trade secret.
14 Q Everything thereafter?
15 A Yes.
16 MR. KELLEY: Is page 2 Tab 2?
17 THE WITNESS: Tab 2, I'm sorry.
18 BY MR. COOLEY:
19 Q Mr. McShane, you were asked some questions on
20 crossexamination and the court struck the answer. And it
21 dealt with the O.T. I through VII materials that
22 Mr. Wollersheim says he got from his lawyer, Charles O'Reilly,
23 in the Wollersheim case against Church of Scientology of
24 California back in 19 in the mid 1980s. Those O.T. I
25 through VII materials, do you know for a fact that those never
230
1 came in as exhibits at the Wollersheim trial?
2 A No, they never did.
3 Q And did they surface as deposition exhibits at one point?
4 A Yes.
5 Q And were they placed under protective order?
6 A Yes, I believe Judge Margolis
7 MR. KELLEY: I object to his testifying to court
8 records.
9 THE COURT: Overruled.
10 BY MR. COOLEY:
11 Q And was there a brief period of time, a matter of hours,
12 on November 4, 1985, when the protection was vacated and then
13 reinstated, vacated the morning and reinstated at noon?
14 A I believe I believe it came the sealed order was
15 released I believe like 9:00 in the morning allegedly and
16 resealed at noon.
17 Q During that interim were there 1,500 Scientologists in
18 line to obtain those materials so that they couldn't be
19 released to the public?
20 A Yes, there was.
21 Q Now, sir, have you had the opportunity to compare what
22 Mr. Wollersheim has described as the O.T. I through O.T. VII
23 materials that he got from his lawyer with the materials that
24 were stolen in England and in Denmark?
25 A Yes, I have.
231
1 Q And are they identical?
2 MR. KELLEY: Your Honor, I object. There is no
3 foundation that he knows what the materials are that are
4 claimed by Mr. Wollersheim to be from this case.
5 THE COURT: Sustained for lack of foundation. Go
6 ahead, please.
7 BY MR. COOLEY:
8 Q Are you aware of the O.T. I through O.T. VII materials
9 that Mr. Wollersheim claims he got from his lawyer?
10 A Yes, sir, I am.
11 Q Were you aware of them back in 1985 and in 1986?
12 A Those O.T. materials, yes.
13 Q Were you aware of what Mr. Wollersheim what was
14 involved in the Wollersheim case as to those materials?
15 A Absolutely.
16 Q And did you at that time and subsequently compare those
17 materials with the materials that were stolen in England and
18 in Denmark?
19 A Yes.
20 Q Are they identical?
21 A Substantially identical.
22 Q And in that case, did those materials surface in the
23 Wollersheim case after the materials had been stolen and
24 transported to the United States?
25 A Yes.
232
1 Q And at about the same time was suit brought against David
2 Mayo and the Competing Church of the New Civilization for the
3 possession and use of those materials?
4 A Yes, an injunction issued.
5 Q Now, have you had a have you had an opportunity to
6 compare the materials that Graham Berry, the attorney in
7 California, put into the Fishman affidavit as O.T. I through
8 VII?
9 MR. KELLEY: Assumes facts not in the record.
10 THE COURT: Overruled.
11 A Yes, sir.
12 BY MR. COOLEY:
13 Q So there is no misunderstanding. The Fishman case in
14 the Fishman case, Graham Berry was an attorney for Dr. Geertz,
15 was he not?
16 A That's correct.
17 Q And it was Mr. Berry after the case was dismissed who
18 filed the Fishman affidavit, did he not?
19 A Yes.
20 Q And it was put in ostensibly in support of a post trial
21 motion for cost and fees; is that your understanding?
22 A Yes, as the Berger declaration was.
23 Q Did the court refuse to consider it on those issues?
24 A Yes.
25 Q Were you involved in that litigation?
233
1 A Very much so.
2 Q Did you monitor that litigation from beginning to end?
3 A I did, sir.
4 Q Now, when that material went into the Fishman case, was
5 there a protective order in place?
6 A When the materials came in, the Magistrate put a
7 protective order in place.
8 Q Originally?
9 A Yes.
10 Q And then after the case was dismissed and the protective
11 order disappeared by virtue of the dismissal, was it then that
12 the material was dumped into the record?
13 A Yes.
14 MR. KELLEY: Your Honor, we have gone through this on
15 both direct and crossexamination.
16 THE COURT: All right. Your objection is noted.
17 Overruled. Go ahead.
18 BY MR. COOLEY:
19 Q Was that material the same as the material that
20 Wollersheim was claiming he got from O'Reilly?
21 A Substantially the same, yes.
22 Q Have you examined Mr. Wollersheim's deposition and learned
23 that he acted as a consultant for pay to Mr. Graham Berry in
24 the Fishman case?
25 A That's my understanding, yes.
234
1 Q Have you examined are you aware that Mr. Vaughn Young,
2 who is here as a witness for Mr. Wollersheim, acted as a
3 consultant for pay for Mr. Berry in the Fishman case?
4 A That's correct.
5 Q Now, sir, let me deal, if I may, for a few moments with
6 some other matter that came up. The Fishman file at the court
7 from which this affidavit came, from the time that it was in
8 there unsealed until the present time, has under your
9 supervision and control a daily watch on that file taken
10 place?
11 A Yes, sir, I set up a daily watch.
12 Q Was that until the file was sealed, correct?
13 A Correct.
14 Q And in setting up that daily watch, tell the court what it
15 was that you set up.
16 A Well, when the judge would not seal the record, even
17 though he said he did not rely on any of the affidavits or the
18 attachments, for whatever reason he chose not to, I had
19 Scientologists who were at the correct spiritual level go to
20 the courthouse every morning when it opened. They checked out
21 the file. They went into the viewing room in the court and
22 sat with the file all day. The reason was we didn't want
23 anybody going in taking out the file and copying it. I didn't
24 know what else to do to protect my materials other than to do
25 that. And this was kept up for a little over a year. And it
235
1 was every day, every hour the court was open we had checked
2 out the file. We also were in very good communication with
3 the clerk to ensure that nobody else had requested the file or
4 mailed in requests or anything like that. Because you had to
5 sign in the log every time you went in and showed your ID,
6 your driver's license and that continued on through the time
7 period up until the point where the judge sealed the case
8 sealed the file.
9 Q And during that entire period of time did anyone ever get
10 a copy except the Washington Post?
11 A Not at all.
12 Q Did the court seal it up the day after he learned that the
13 Washington Post got it?
14 A That's correct, sir.
15 Q Was that sealed up before the Washington Post article
16 appeared?
17 A Yes.
18 Q Now, sir, with respect to Fishman, did Fishman ever do the
19 O.T. levels at the Church of Scientology or any Church of
20 Scientology?
21 A No, I think Mr. Fishman was in the church for
22 approximately maybe a month.
23 Q He never received any auditing on O.T. levels?
24 A No, not at all.
25 Q And was in fact Mr. Fishman convicted in San Francisco of
236
1 crimes, including obstruction of justice in attempting to
2 frame the Church of Scientology for his own crimes?
3 A Correct, he was imprisoned, yes.
4 Q For that obstruction of justice?
5 A Yes.
6 Q As well as the substantive underlying crime?
7 A Yes.
8 Q Now, with respect to the O.T. levels you were asked on
9 crossexamination whether in the religion of Scientology and
10 beliefs of Scientology and yourself personally the recount of
11 that incident 75 mill years ago was historical fact, and I
12 believe you said that it was?
13 A Yes.
14 Q In dealing with the effects of that on individuals and how
15 to handle those effects, does the O.T. III level and all O.T.
16 levels for that matter contain the expression of Mr. Hubbard?
17 A His discovery and expression, yes.
18 Q Now, where the O.T. levels because I think on
19 crossexamination there was some discussion about the single
20 copyright number on some of these series on O.T. level
21 containing this series. Is each series listed and is the work
22 issue copyrighted as a series each of which is listed?
23 A Yes, the O.T. levels some of the O.T. levels like O.T.
24 II and O.T. III, there are the level itself is made up of
25 different series of issues. And when we worked this out with
237
1 the copyright office, the copyright office wanted one
2 registration certificate for the level, and as long as we
3 listed out every issue that was contained in there that each
4 of those issues would have protection itself.
5 Q And did the and did the copyrights and were each
6 issue was infringed by material found in Mr. Wollersheim's
7 possession either on his computer or in hard copy?
8 A It varied from level to level but there were infringements
9 on each level, yes.
10 Q Yes. Was the totality of the issue that we claim to be
11 infringed set forth for the court in that book that you have
12 got?
13 A Yes, I believe so.
14 Q Now, how many pages are there, because you were asked
15 this, I think Mr. Kelley wanted to find the masked copy that
16 you gave to show the masked copy from the copyright office.
17 How many pages of trade secret unpublished copyrighted
18 material on O.T. III is there?
19 A There is 67 pages that were filed with the copyright
20 office deposited masked.
21 Q Masked?
22 A Yes.
23 Q I take it that nonconfidential portions of O.T. III were
24 copyrighted as published material strike that as just
25 copyrighted without the claim of
238
1 A There are other materials that are included in the level
2 that are not confidential protected under normal copyright.
3 Q So they were under unmasked normal copyright?
4 A Right, R.T.C. is not the exclusive licensee for that.
5 Q But as to the confidential portions of O.T. III they were
6 copyrighted on a masked basis and consisted of how many pages?
7 A 67 pages for O.T. III.
8 Q How many of those pages are included in the infringing
9 material found in Mr. Wollersheim's computer and in the
10 Fishman affidavit?
11 A In the Fishman affidavit there is a total of I believe 63
12 pages. It might be 69. I am not totally sure. Between 60
13 and 70 pages total.
14 Q Incidentally I don't mean to confine it to Wollersheim's
15 computer. Penny's computer as well and maybe even more so.
16 A Yes.
17 Q So out of the total number of pages copyrighted, how many
18 are included in the infringing material?
19 A Well, we found I think it's 63 or 69 pages.
20 Q Out of?
21 A I don't know the total. The total pages that were
22 dispositive of all the levels.
23 Q No, O.T. III is what I am talking about.
24 A O.T. III.
25 Q Because you were asked specifically about O.T. III last
239
1 week and that's what I am trying to clarify.
2 A Right. What we found on the computer I think it was about
3 40 pages or 44 pages. I am not totally sure on that.
4 Q Out of a total of how many masked and copyrighted?
5 A 67.
6 Q Have you made that count for the other levels O.T. I, II
7 IV?
8 A I haven't, no, sir. I was asked specifically about III.
9 I went back and counted those.
10 Q Where other series have been infringed, each individual
11 series we have claimed to be infringed, you have set forth in
12 its totally for the court?
13 A That's true, yes.
14 MR. COOLEY: May I consult for a moment, Your Honor.
15 THE COURT: Yes.
16 MR. COOLEY: Your Honor, in the light of the
17 crossexamination and the redirect, we have got a couple of
18 additional exhibits I would like to offer. I have copies for
19 everybody. May I approach?
20 THE COURT: All right.
21 BY MR. COOLEY:
22 Q Mr. McShane, you have before you what have now been marked
23 as Exhibits 82 and 94. What is 82?
24 A 82 is a dictionary produced by the church which contains
25 many of the terminology that we used in the administration
240
1 aspect of the church, not the technical aspect.
2 Q Specifically does that exhibit embrace page 467 of the
3 dictionary?
4 A Yes.
5 Q What is there what definition do you want to invite the
6 court's attention to from that?
7 A As you can see, there is the Sea Org symbol on the
8 exhibit. This is what I was referring to before about the 26
9 leaves representing the 26 planets and the star of course
10 representing the spirit. And it says under the definition
11 No. 1 that the Sea Org symbol was adopted and used as the
12 symbol of the Galactic confederation far back in the history.
13 The sector derives much of its power and so forth from that
14 association. The laurel wreath represents victory.
15 Q Is that in any way the secret of O.T. III?
16 A No, sir, it's not.
17 Q Now, Exhibit 94 is Ron's Journal 67, a lecture given on 20
18 September, 1967. Can you tell the court the portion of that
19 you would like to invite the court's attention to?
20 A Certainly. On page 6 I hand wrote in on a page on the
21 bottom there, page 6, the fourth paragraph down from the top
22 of the page it says. "And it's very true that a great
23 catastrophe occurred on this planet and another 75 planets
24 which formed this confederation 75 million years ago, and
25 since that time it has been desert and has been a lot of
241
1 just a handful to try to push its technology to a to a
2 level where someone might venture forward, penetrate the
3 catastrophe and undo it.
4 Q Does that in any way reveal the secrets of O.T. III?
5 A Absolutely not.
6 Q Is the dictionary from which Exhibit 82 is taken a
7 copyrighted publicly available dictionary that anyone can buy
8 at any Scientology book store?
9 A Absolutely.
10 Q And is Ron's Journal 67 also available at any Scientology
11 book store?
12 A Yes, the tapes are available to anyone.
13 MR. COOLEY: That's all, sir.
14 THE COURT: Okay.
15 RECROSSEXAMINATION
16 BY MR. KELLEY:
17 Q On Exhibit 94 could I ask you to turn to page 4.
18 A Okay.
19 Q Let me ask you to look at the last sentence of the third
20 paragraph from the bottom where Mr. Hubbard writes, the
21 material involved in this sector is so vicious that it's
22 carefully arranged to kill anyone if he discovers the exact
23 truth of it?
24 A That's what it says, yes.
25 Q Do you think that was a truthful statement?
242
1 A Absolutely.
2 Q So you are dealing with a fairly dangerous instrumentality
3 here; is that your testimony?
4 A Not at all. It was dangerous to Mr. Hubbard when he
5 discovered it.
6 Q He has taken the danger out of that, so it's benign for
7 those of us that come in contact with it now?
8 A No. I wouldn't call it benign. There is spiritual harm
9 if someone is exposed to it before they are ready to be.
10 Q Now, I recited some of the story of Xemu and the body
11 Thetans from memory of newspaper articles in my opening
12 statements. Is it your testimony that none of that is part of
13 the trade secret that you are seeking to protect here?
14 A When you referred to Xemu 75 million years ago, the
15 volcanoes, that's not the trade secret.
16 Q And body of Thetans and so forth?
17 A Right.
18 Q So you have no idea why your counsel stood up to my
19 disclosing a trade secret here in the courtroom?
20 A Oh, I absolutely do.
21 Q Now, yesterday I asked you the number of pages in each
22 work as set forth in your declaration following the Erlich
23 case?
24 A Yes.
25 Q I asked you if in the case each of the O.T.s that number
243
1 of pages represented what you considered to be the entire work
2 and you said yes; is that your memory?
3 A I believe so, yes.
4 Q And those are the works in their entirety whether masked
5 or unmasked have been registered with the copyright office;
6 isn't that true?
7 A Yes.
8 Q So that the section of the O.T. which you consider not
9 confidential is nonetheless part of the copyright office
10 deposit?
11 A No, it's not. I only deposited what the confidential
12 materials were. I didn't deposit the nonconfidential works
13 because R.T.C. has no exclusive license to that.
14 Q Does it claim copyright in the entirety of the work or
15 not?
16 A We claim a copyright in what has been registered.
17 Q In any event, the entire work consists of the total
18 numbers of pages that you recited yesterday?
19 A It's the entire O.T O.T. III consists of the 67 pages
20 which we registered as unpublished confidential work and
21 other a bunch of other issues on that level.
22 Q The entirety of the work consists of 200 pages?
23 A Yes.
24 Q You considered that the work should be delivered to a
25 parishioner as a whole and not let him take parts of that?
244
1 A Yes, that is right.
2 MR. KELLEY: That's all I have at this time, Your
3 Honor.
4 RECROSSEXAMINATION
5 BY MR. COOLEY:
6 Q Did I stand up and object at a point at which you and I
7 conferred?
8 A Yes, you did.
9 Q And did that I did not object while he was talking
10 about the Xemu and 75 million years ago and the catastrophe,
11 did I?
12 A No, you did not.
13 Q Did my objection come at the point when we considered that
14 he had crossed over the line?
15 A Yes.
16 Q Into materials in that opening paragraph of O.T. III that
17 are secret?
18 A Yes, sir.
19 THE COURT: You may stand down.
20 THE WITNESS: Thank you, sir.
21 THE COURT: Next witness, please.
22 MR. COOLEY: The next thing that I wish to offer,
23 Your Honor, are the depositions of Mr. Lerma, Mr. Wollersheim,
24 and Mr. Penny. I have taken excerpts of those and those are
25 Exhibits 72, 73 and 74 in Your Honor's exhibit book. I want
245
1 to just point out a couple of items. I want to start with the
2 Lerma deposition. I am not going while I am offering all
3 of it, I am only going to deal with a few portions that I want
4 to invite the court's attention to. Page 18, of Exhibit 73,
5 MR. KELLEY: Your Honor, Mr. Lerma's deposition we
6 are raising an objection to. The others I have no objection
7 to but I don't think maybe he ought to go into Mr. Lerma's
8 until that's resolved.
9 Under Rule 30 it was taken in a different case in
10 which none of my clients are parties. I did not have notice.
11 I wasn't there. I think the court can appreciate under the
12 constraints of getting ready for this case, I could not
13 possibly have had a chance to meaningful participate.
14 MR. COOLEY: Let me respond to that as follows. Mr.
15 Lerma is a director of F.A.C.T.Net, having been made a
16 director in mid July 1995. We brought the suit against him
17 because he is the one who posted the materials to the
18 Internet. And after he did that and after we brought the
19 suit, Mr. Wollersheim went on the Internet, claimed that he
20 was acting as director of the F.A.C.T.Net and that his actions
21 were consistent with the policies of F.A.C.T.Net. We took his
22 deposition in that proceeding, asked him where he got the
23 materials, he said he got them from Mr. Wollersheim.
24 Mr. Wollersheim has denied that under oath. He testified when
25 he got them he knew he was expected to scan them and post them
246
1 to the Internet. Mr. Wollersheim has denied that under oath.
2 Mr. Wollersheim has likely denied that he received these
3 materials from Mr. Lerma after they were scanned in and
4 Mr. Wollersheim had sent them to him. But he said he didn't
5 receive them by Email until after they had been posted to the
6 Internet.
7 Our search of Mr. Wollersheim's computer and
8 Mr. Penny's computer reveals that the materials were sent to
9 Mr. Wollersheim ear by Mr. Lerma via Email. The first
10 twofifth of it being sent to Mr. Wollersheim on the 30th of
11 July and the second threefifths being sent to Mr. Wollersheim
12 on Email from Mr. Lerma on the 31st of July. Mr. Lerma
13 posted these documents to the Internet on the 1st and on the
14 2nd of August. What we have done is incidentally, the same
15 insurance company that is affording a defense to
16 Mr. Wollersheim and Mr. Penny and F.A.C.T.Net is affording a
17 defense to Mr. Lerma in the Eastern District of Virginia.
18 Mr. Lerma is represented by counsel assigned by that company
19 down here. Also, Mr. Wollersheim, F.A.C.T.Net and Mr. Penny
20 are being represented by Mr. Kelley who has been assigned
21 here. It seems to me that under the circumstances all of the
22 safeguards of protection are there. And that the effort
23 any effort to conceal from this court the testimony that
24 Mr. Lerma gave simply because it's violently at odds with the
25 testimony that Mr. Wollersheim gave, I think is inappropriate.
247
1 These are at a minimum also admissions against interest as to
2 F.A.C.T.Net and Wollersheim under the federal rules of
3 evidence and ought to come in on that basis alone. Since
4 Mr. Wollersheim has claimed Mr. Penny as his own as his
5 director and as his agent and has admitted in both his
6 deposition by amendment to his response for request for
7 admissions that Mr. Lerma was acting as the agent of
8 F.A.C.T.Net when he posted these materials to the Internet.
9 THE COURT: Mr. Kelley.
10 MR. KELLEY: Your Honor, use of this deposition is
11 governed by Rule 32, and it provides that a deposition so far
12 as otherwise admissible may be used against any party who is
13 present or represented at the taking of the deposition or who
14 had reasonable notice thereof in accordance with any of the
15 following provisions.
16 We were not there. We were not represented. It's
17 true there is one insurance company, but they have these
18 parties represented by separate law firms for a reason. The
19 rule simply hasn't been complied with. That's the only basis
20 for the objection.
21 THE COURT: I think the objection under the rule is
22 valid but I think these are also admissions prior
23 admissions under oath, so I am going to admit them for that
24 reason. Go ahead.
25 MR. COOLEY: Thank you, Your Honor.
248
1 At page 18 of the Lerma deposition he is asked: Are
2 you a director of F.A.C.T.Net? Answer: Yes, sir. Are you
3 being represented in this action by assignment from an
4 insurance career for F.A.C.T.Net? Yes, sir. And what is the
5 name of that carrier? Answer: I don't know the name of the
6 carrier. When did you become a director. Answer: In the
7 first half of July 1995.
8 On pages 19 and 20, starting at line 20 on page 19
9 the testimony asks him his duties as director. He says to
10 further the goals of F.A.C.T.Net. What are those? To make
11 available to the public information concerning groups engaged
12 in coercive mind control. Then he is asked when did he post
13 the Fishman affidavit from the Fishman case to the Internet or
14 did he. He says, yes. He is asked how many times did you do
15 that? He says two. To what points did you post it? He says
16 Alt Religion Scientology. That's the name of the news group
17 on the Internet, and we refer to that as ARS. Did you post it
18 to any FTPs. FTP is an abbreviation for file transfer
19 protocols. These are locations on the Internet where you can
20 put documents that will be picked up later. He says he didn't
21 post them to any FTPs. And he just posted it to Alt Religion
22 Scientology. I asked him whether that Fishman affidavit that
23 he posted included all of the exhibits to the affidavit. He
24 said it did. Do those exhibits include O.T. I, II, III, IV,
25 V, VI, VII? He said, yes, it did. I asked him from whom did
249
1 you obtain that affidavit? He says, to be very frank, I am
2 not quite sure who I got it from. I know where it originated.
3 Then I asked him how did it come to you. He said in the
4 United States mail. I asked him if there was a return
5 address. He says he can't remember, but he said that he knew
6 where it came from. And I asked him what he knew about it.
7 He said, well, I was told that it originated from the
8 F.A.C.T.Net optical archives. I said, Who told you that. He
9 said, Mr. Wollersheim. I asked him how he knew he had
10 received that document. He said that he didn't know
11 specifically, but he knew what Wollersheim told him, and that
12 Wollersheim told him it came from the optical archive of
13 F.A.C.T.Net. And then I asked him over on page I asked him
14 over on page 35, Didn't you testify before that he told you,
15 meaning Wollersheim, told you they came from F.A.C.T.Net
16 optical archive? He says, yes, that's correct. Right.
17 Question: Were there any printouts from F.A.C.T.Net optical
18 archives? He says and were they printouts from F.A.C.T.Net
19 optical archives? He said, that's what I was told.
20 Question: By Mr. Wollersheim. Answer: Yes. I asked him
21 over on page 146, in your statement of position that I read
22 that you posted on August 29, Lerma posted to the Internet.
23 You say, quote: "I acted as a F.A.C.T.Net director when I
24 posted the FishmanGeertz public record from the F.A.C.T.Net
25 archives. Isn't that what you told your fellow netters?
250
1 Answer: That is right. And that's the truth, isn't it?
2 Answer: That's the true. Wollersheim got you to do that
3 posting, didn't he, as a director of F.A.C.T.Net? Answer:
4 No. Question: He didn't? You did it as a director of
5 F.A.C.T.Net? Answer: That's true. But he didn't ask you to
6 do it? I don't recall him specifically asking me to do it.
7 Question: When that came to you, you knew your job was to
8 scan it into your hard drive and post it to the Internet,
9 didn't you? Answer: Yes.
10 MR. COOLEY: Mr. Penny's deposition, Your Honor, we
11 establish at page 6 that his position with F.A.C.T.Net as a
12 member of the board of directors and technical director,
13 describing his function, describes Mr. Wollersheim as the
14 executive director and so that establishes his role.
15 At page 8 we establish that F.A.C.T.Net had a prior
16 name of F.A.C.T. and it's now known as F.A.C.T.Net. I asked
17 him I didn't. He was asked what percentage of
18 F.A.C.T.Net's materials this is at page 10 concern
19 Scientology. He said a majority. But I can't put a number on
20 it. Question: It's probably over 80 percent, wouldn't you
21 say? Wouldn't you estimate it to be over 80 percent? He said
22 that's likely, but I have no actual information about that
23 percentage. And he's asked the purpose of F.A.C.T.Net. He
24 says victim assistance and education. And he says, in my
25 opinion, that isn't the most important function. Well, is
251
1 that what it is he is asked. He says it's a library and
2 archive. We publish newsletters. We respond to queries. And
3 he's asked again, I am trying to put it in a category of what
4 category of organization it is. He says it's a library and
5 the question is it's a library? Yes, and libraries have an
6 educational purpose and so do we.
7 MR. KELLEY: Your Honor, I am going to interpose an
8 objection. These are being offered as an exhibit. The court
9 can read them. I think it's inappropriate for counsel to go
10 through the whole thing and at the same time offer them as an
11 exhibit and ask the court to read them.
12 MR. COOLEY: I don't intend to go through the whole
13 thing.
14 MR. KELLEY: Please don't interrupt. I think that we
15 are going to have a tough time getting through this evidence
16 today. I would ask the court to limit this procedure simply
17 because it's duplicative.
18 MR. COOLEY: I am got going to go through it all,
19 Your Honor.
20 THE COURT: All right. Go ahead. I can read. So
21 that is the presumption any way.
22 MR. COOLEY: Of that I have no doubt. Any way, Your
23 Honor, Mr. Penny goes onto testify to prices charged for what
24 they call library cards and also he testifies to the cost of
25 tapes that are sold, and he talks about the preparation of
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1 CDs, page 13, that he gave to Mr. Wollersheim, ten of them,
2 and never saw them again and doesn't know what was done with
3 them.
4 He testifies Mr. Wollersheim gave testimony in his
5 deposition concerning his activities as a consultant for
6 lawyers engaged in Scientology litigation, including lawyers
7 for Mr. Fishman and Mr. Geertz, that is, Mr. Graham Berry and
8 others, as well as lawyers for Time Magazine and testified
9 that the amount that he was paid he gave paid over 50
10 percent of it to F.A.C.T.Net because he used their database
11 and that F.A.C.T.Net itself consulted for lawyers for Time
12 Magazine using its database on a projectbyproject basis,
13 that is, consulting for lawyers for Time. That they were
14 being paid. Mr. Penny testified that as to the amounts
15 Mr. Wollersheim owed to F.A.C.T.Net for the use of the
16 database what he was really doing was building up
17 liabilities not paying them cash. The testimony of Mr. Penny
18 was that he and Mr. Wollersheim intended not at all to ever
19 violate any copyrights or ever to publish the upper level
20 materials but and at one point they were going through a
21 file or series of files where they had material parked, when
22 it backed up, what their real intention was was to purge it
23 and delete those files from the base, the database because
24 they did not want to use them and they didn't want to infringe
25 copyrights. Mr. Penny testified that he was a party to
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1 confidentiality agreements in the church when he was in the
2 church, never to disclose these materials, and testified that
3 he did not, and that he did not violate those agreements.
4 Mr. Wollersheim likewise testified that they were
5 it was the policy of F.A.C.T.Net not to publish these
6 materials. They had no intention of publishing these
7 materials. That he was merely trying to archive them, and
8 that he was claiming status as an archive.
9 MR. KELLEY: This is summary. He's going from one
10 deposition to the other now.
11 THE COURT: Sustained.
12 MR. COOLEY: I am trying to summarize the testimony.
13 THE COURT: I will read it.
14 MR. COOLEY: In any event, those are the highlights
15 from those two depositions, but there is that and a lot more,
16 particularly the part that pertains to this 501(c)(3) status
17 that Mr. Wollersheim claims for his corporation. And the
18 evidence that reflects commercial activity as a support
19 service for lawyers.
20 I would like to have these exhibits marked.
21 Exhibit 70 is in Your Honor's book is Wollersheim posting to
22 the Internet on 15 August 1995. Do we have a blowup of the
23 portions I want to focus on?
24 MR. KELLEY: We are getting a summation now or
25 closing argument.
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1 MR. COOLEY: I am going to focus on portions of this
2 exhibit for you, Your Honor, that I want to invite your
3 attention to, so that you can focus. If Mr. Kelley wants to
4 refer to other portions, he can.
5 THE COURT: I think you should do that in closing not
6 do that now. In your closing argument. The main thing is to
7 get the exhibits into evidence or get rulings on them and then
8 we'll proceed from there. Mr. Kelley is right. I don't want
9 to be having you tell me what to read right now. I want to
10 get the evidence in.
11 MR. COOLEY: Then let's put in Exhibit 69 which is a
12 posting of July 31.
13 MR. KELLEY: I don't have any objection.
14 THE COURT: It's admitted.
15 MR. COOLEY: And I believe it's a posting of the
16 following day as well, but I am not sure. In any event, that
17 one and Exhibit 70, which is the posting of August 15, 1995 by
18 Mr. Wollershiem.
19 THE COURT: Any objection?
20 MR. KELLEY: No, objection.
21 THE COURT: It's admitted.
22 MR. COOLEY: And Exhibit 88, which we filed this
23 morning, furnished a copy to counsel which is a posting by
24 Mr. Wollersheim while he was under a temporary restraining
25 order here and on the date of August 30, 1995. We offer that.
255
1 THE COURT: Any objection?
2 MR. KELLEY: No. I don't think it's relevant.
3 THE COURT: It's admitted.
4 MR. COOLEY: Exhibit 81 which we offered this morning
5 which was a posting relating by a director of F.A.C.T.Net
6 purporting to pass along a message from Mr. Wollersheim that
7 was posted on the 8th of September 1995 by Kim Baker, a
8 director of F.A.C.T.Net.
9 THE COURT: Any objection?
10 MR. KELLEY: I have never seen the exhibit, Your
11 Honor.
12 THE COURT: Show it to Mr. Kelley, please.
13 MR. KELLEY: No objection, Your Honor.
14 THE COURT: It's admitted.
15 MR. COOLEY: If I may now, all of the exhibits in our
16 book, we have now referred to all of them, and I move them all
17 into evidence before the court in this preliminary injunction
18 hearing, subject to any sealing order on confidential
19 material.
20 THE COURT: They are admitted.
21 MR. KELLEY: Your Honor, I haven't had a chance to
22 look at the whole list and see whether that statement is true,
23 but subject to that, no problem with if there is an
24 objection, I will raise it later.
25 THE COURT: All right. That's fine. They are
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1 admitted. If you want me to reconsider, you move to have me
2 reconsider.
3 MR. COOLEY: I guess I haven't referred to all of
4 them. Mr. Blakely has filed a declaration pertaining to the
5 security conditions at his firm with respect to the search,
6 and there is a Anderson declaration that was submitted and
7 there was a Kobrin declaration. Anderson is 71, and there was
8 a Kobrin declaration related to notice. So I am offering all
9 of the exhibits that are that are on our list and in the
10 court's book subject to confidentiality.
11 MR. KELLEY: Right now I object to the hearsay
12 declaration being filed.
13 THE COURT: We'll look at them first and specify the
14 objection, okay.
15 MR. KELLEY: They are affidavits and they are
16 hearsay, that's all.
17 THE COURT: I don't know which ones you are referring
18 to. You said all of them. So you have the opportunity to
19 reconsider. Is that your evidence now?
20 MR. COOLEY: That's it, Your Honor.
21 THE COURT: Let's take a five minute dare I say
22 potty break?
23 (Recess at 11:20 to 11:25.)