Harassing the Church of Scientology is not Free Entertainment

Amusing facts from In re Henson, 289 B.R. 741 (Bankr. N.D. Cal. 2003):

Before the Court are two matters initiated by Religious Technology Center (“Creditor”), a creditor of H. Keith Henson (“Debtor”), who is the debtor in this Chapter 13 case:

FACTS

It is undisputed that Debtor left California to live in Canada at some point during 2001, shortly prior to being sentenced on criminal charges in Riverside County. Debtor stated in a pre-trial declaration that he had filed a petition for Canadian refugee status and could not leave that country while it was pending, and he filed a motion for leave to appear at trial by “contemporaneous video transmission” because he had moved to Canada and would “likely still be there” at time of trial. Debtor’s motion was denied for lack of the “good cause” and “compelling circumstances” that are required by Rule 43(a) of the Federal Rules of Civil Procedure (incorporated by FRBP 9017).

Debtor has been an outspoken critic of the Church of Scientology since at least 1995. He and his wife clearly believe that the Church is harmful and vindictive in general, and has behaved that way with respect to them in particular. Debtor’s public criticism of the Church has taken the form of standard political action such as picketing, as well as publishing Debtor’s critical views of the Church, its leaders, and at least one of its lawyers on the Internet. Debtor and some of his colleagues also play a form of game in which they rate among themselves the negative reactions they evoke from Church officials and lawyers.

Creditor and its lawyers strike at Debtor with a force and with resources that far exceed those available to Debtor ( e.g., the four different law firms who represent and appear for Creditor in this Chapter 13 *744 bankruptcy), appearing to expend funds that significantly exceed those expended on any Chapter 13 case of which this Court is aware, and far beyond the financial issues at stake. Moreover, the character of the litigation has been highly contentious and personal, unlike most Chapter 13 practice.

Debtor testified in a 1996 videotaped deposition, before commencement of this bankruptcy case, that he had never been a member of the Church, but had participated since at least 1995 in a group known as “alt.religion.scientology”, or “a.r.s.”, which was critical of the Church. The group awarded its members different levels of “status” depending on what kind of response was evoked by their acts toward the Church— e.g., greater status was achieved by being sued for copyright infringement than by being sent “cease and desist” letters. Debtor said in the 1996 deposition that he had made many FN4 postings on the Internet that were “critical or taunting” toward the Church, and considered eliciting responses to be “a major increment in status” within a.r.s., as well as “a great game”, “extremely amusing”, “screamingly funny”, “a lot of fun”, among his “hobbies”, and an activity that “comes off the recreation budget”.

FN4. Debtor testified that he did not know how many such postings he had made on the Internet. When asked a second time by counsel for Creditor to make an estimate, Debtor replied in a facetious tone that the number was 1,228.

In April 1996, Creditor sued Debtor in the United States District Court for the Northern District of California, alleging that Debtor had infringed Creditor’s copyright by posting copies of certain works on the Internet. In April 1997, Creditor received summary judgment finding infringement by Debtor, and a permanent injunction was issued prohibiting further infringement. The issue of whether Debtor’s infringement was willful was set for a jury trial scheduled to begin on December 1, 1997, which was continued by the District Court sua sponte to February 24, 1998; Debtor requested three further continuances, which were not granted. Debtor filed his Chapter 13 petition the day before trial was set to commence.

Two days after filing bankruptcy, Debtor posted a message on the Internet saying that he was prepared to violate the permanent injunction issued by the District Court. Creditor sought and received relief from the automatic stay of § 362(a) in this Court, for the limited purposes of seeking further injunctive relief in the District Court to prevent Debtor from carrying out his stated intention, and also to liquidate Creditor’s claim by proceeding to trial in the District Court. Creditor set a FRBP 2004 examination of Debtor for March 24, 1998, but Debtor filed a “withdrawal” of his Chapter 13 petition on the morning of that day.

On May 12, 1998, the District Court jury found that Debtor’s infringement was willful and awarded Creditor damages of $75,000. Debtor was the only witness at trial—when asked whether he would infringe Creditor’s copyright again, he replied “At least I wouldn’t do it openly”.

Also bizarre:

Debtor acknowledged in a FRBP 2004 examination that he signed the Schedules, Statement of Financial Affairs, and Plan. However, he also said that the forms were completed by a member of Berry’s staff in Los Angeles using some information supplied by Debtor over the telephone, and “a lot of the entries were made just from standard tables that they use”. Debtor also said: he did not review the completed forms before signing them and “I don’t know that I ever looked at those schedules”; “what’s on them is as much of a guess to me as anybody else”; “I don’t deal with our finances, and so those were off-the-top-of-my-head guesses”; “just wild-assed guesses”; “it may not be at all accurate”; but the information was supplied “[t]o the best of my ability”. In contrast to Debtor’s description of the information in the Schedules, Lucas testified at trial that she recalled Debtor spending evenings for three or four days working on the forms at their dining room table, asking her for information as he went along, and seeming “agitated”. Lucas also said that the forms were completed in Debtor’s handwriting, though she thought the writing looked “strange”—upon hearing Debtor’s deposition testimony that the forms were filled out by Berry’s employee, Lucas said that she must have been mistaken.

Lucas’ testimony at trial about the contents of the Schedules was inconclusive at best. She acknowledged that she and Debtor had been married since 1982, but said that, at least since they had been engaged in struggles with the Church, the couple purposely kept their business and financial affairs separate and did not disclose information to each other, in order to shield Lucas from Creditor—as a result, she lacked personal knowledge of many things that a wife might be expected to know about her husband’s property. For example, she expressed ignorance about the extent or value of Debtor’s books and computers as they existed on the date of bankruptcy, knew only that she had recently been packing whatever Debtor left behind when he went to Canada, and had no reliable basis upon which to value that. Further, Creditor learned in discovery that Debtor had a safe and 300–400 pounds of copper in the backyard, but Lucas claimed to know only that she had arranged for a safe to be moved, did not know what the contents were, was unaware of any copper, and did not know what was in “all of the boxes” in the yard.

Note: this post is not intended to harass the Church of Scientology!

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