From: William Bardwell <wbardwel+@CMU.EDU>
Organization: Computer Science Department, Carnegie Mellon, Pittsburgh, PA
Here is the whole appelate decision throughing out a case where the
CoS accuses the gov't of conspiracy against them, and it is dismissed
due to failure of LRH to show up for deposition.
[may have some OCR or such errors]
Cite as 802 F.2d 1448 (D.C. Cir. 1986)
FOUNDING CHURCH OF SCIENTOLOGY OF WASHINGTON, D.C., INC.,
William H. WEBSTER, Director of the Federal Bureau of Investigation
of the United States, et al.
United States Court of Appeals, District of Columbia Circuit.
Argued June 3, 1986:
Decided Sept. 26, 1986.
Appeal from the United States District Court for the District
of Columbia (Civil Action No. 78-0107).
Anthony P. Bisceglie, Washington, D.C., with whom William
C. Walsh and Jeffrey B. O'Toole were on the brief, for appellant.
Freddi Lipstein, Atty., Dept. of Justice, Washington, D.C., with
whom Richard K. Willard, Asst Atty. Gen., Dept. of Justice, Joseph
E. diGenova, U.S. Atty. and Barbara L. Herwig, Atty., Dept. of
Justice, were on the brief, for appellees. Anthony J. Steinmeyer
and E. Roy Hawkens, Attys., Dept. of Justice, also entered
appearances for appellees.
Regina Jackson, Washington, D.C., was on the brief for amici
curiae, American Coalition of Unregistered Churches, et al., urging
Before GINSBURG, STARR, and SILBERMAN, Circuit Judges.
Opinion for the Court filed by Circuit Judge STARR.
STARR, Circuit Judge:
The appeal before us marks the end of a case that has eight years
of litigation in a case that has never passed beyond the stage of
pre-trial discovery. The District Court dismissed the case as a
sanction under Fed-R-Civ-P. 37 for failure to comply with a
discovery Specifically, L. order entered by the courl
Ron Hubbard, the founder of the Church of Scientology, failed to
appear for a court-ordered deposition to inquire into his status
as a managing agent of that organization. We are satisfied that
the District Court acted lawfully within its authority and sound
discretion. We therefore affirm.
In 1978, the Founding Church of Scientology of Washington,
D.C. ("Scientology") filed suit on behalf of itself and a class
composed of all "Churches" and "Missions" of Scientology in the
United States. In its complaint, Scientology named the United
States and numerous federal officals as defendants.1 The
complaint alleged an extensive campaign of government harassment
that included illegal investigative and law enforcement activities,
collection and dissemination of information about Scientology and
other related organizations, and encouragement of hostility toward
the movement inside and outside the federal government.
1. The other defendants, named in their official capacities,
were the Director of the Federal Bureau of Investigation, the
Attorney General Of the United States, the Director of the
Central Intelligence Agency, the Secretary of the Treasury,
the Chief of the United States National Central Bureau of the
International Criminal Police Organization, the Director of the
National Security Agency, the Secretary of the Army and the
Postmaster General. For convenience sake, the various defendants-
appellees will frequently be referred to in our discussion as "the
By virtue of this alleged unlawful activity, Scientology asserted
violations of the First, Fourth and Ninth Amendments to the
Constitution. It sought compensatory and punitive damages under the
Federal Tort Claims, Act; a declatory judgment that the defendants'
actions had violated the Constitution and laws of the United States;
an injunction further law enforcement activities by defendants
directed at the various Scientology "Churches" and their members;
and further injunctive relief to expunge or destroy false and
derogatory information allegedly collected and obtained illegally by
defendants and placed in government records.
In an initial opinion and order dated October 19, 1978, the
District Court dismissed the damage claims for failure to exhaust
administrative remedies under the Federal Tort Claims, and the claim
for injunctive relief from asserted religiously based discrimination
on the grounds that plaintiff had not pursued the exclusive remedy
available under Title VII of the Civil Rights Act of 1964. The trial
court allowed the remainder of the suit to proceed and conditionally
certified a class of all Scientology Churches and Missions for purposes
of seeking declaritory and injuctive relief.
Subsequent developmets in the case followed on the heels of a
criminal prosecuttion, United States v. Mary Sue Hubbard, Crim. No.
78401, slip op. (D.D.C. order enforcing plea agreement Oct. 8, 1979),
brought against nine high ranking officials of the Church of Scientology.
In that case, several defendants stipulated that the network of
Scientology organizations had conducted a broad campaign against U.S.
Government entities and officials, particularly the Internal
Revenue Service.2 This concerted campaign by the Scientology ap-
paratus encompassed a wide range of illegal activities, including
theft of government documents for use in litigation against the
United States, falsification of government identification cards,
wiretapping, infiltration and perjury.
2. See Stipulation of Evidence filed Jan. 7, 1980 as Exhibit
1 to Memorandum of Facts and Activlties in support of
Defendants' Motion for Leave to Answer.
On the basis of this new evidence, the defendants in the
present case sought to amend their answer to the complaint in order
to interpose a defense of "unclean hands." The United States
Magistrate, in a decision affirmed by the District Court, permitted
the defense to be raised and discovery to be conducted without
deciding whether such a defense should in fact be applied in this
case. We pause to observe that "unclean hands" as a defense went
to the injunctive remedy, but not to the request for declaratory
relief. As will be seen, however, the defendants contend on appeal
that the discovery they sought extended beyond this defense to
provide a general, substantive defense to the claims asserted in
3. The undisputed evidence of a campaign of criminal
activity by the Church, the appellees argue, in fact justified
the intensive law enforcement activities that the complaint
attacked. See Transcript of Oral Argument, June 3, 1986, at 18-
On August 21, 1984, as part of a series of discovery requests,
the Government noticed the deposition of L. Ron Hubbard, the
founder of the Church of Scientology, in his capacity as "an
officer, director, or managing agent of plaintiffs." Joint Appendix
("J.A.") at 163. When Hubbard failed to appear for the deposition
on the designated date, defendants moved to dismiss the suit or, in
the alternative, to compel Hubbard's deposition. The court re-
sponded by ordering defendants to renotice the deposition and to
submit a factual proffer as to why Hubbard's deposition was necessary.
J.A. at 262. The court stated that if Hubbard did not appear, the
Government could then renew its alternative motion to compel his
deposition or dismiss the case. The defendants submitted the requested
proffer and renoticed the Deposition. Hubbard again failed to appear
on the appointed date. In the wake of this turn of events,
plaintiffs submitted numerous declarations by officials of the
individual Scientology churches and high officials in the central
Scientology organization denying not only Hubbard's status as
managing agent but any capability of contacting him. J.A. at
271-350. The Government responded with additional declarations and
other evidence in support of Hubbard's status as managing agent. J.A.
In an order issued March 13, 1985, the District Court found that
the Government had established "at least a prima facie case" that
Hubbard was managing agent as of November 19, 1984. To settle this
issue conclusively, the court ordered Hubbard to appear on April
5,- 1985, for a limited-purpose deposition addressed to "the issue
of his relationship to the organization." J.A. at 429. No inquiry
could be made into the facts pertaining to the merits of the suit.
Failure to appear, the court expressly warned, would result in
dismissal of the suit altogether. Id. Submitting several additional
declarations by Church employees and officials, plaintiff moved for
reconsideration. J.A. at 431-72. This the court denied. J.A. at
475. On April 9, 1985, upon notification by counsel that Hubbard
had failed to appear for the limited-purpose deposition as scheduled,
the court dismissed the case with prejudice. J.A. at 488. On July 10,
the court denied the plaintiff's motion to vacate the judgment of
dismissal. Scientology then filed this appeal.
The ultimate question for resolution is whether the District Court
abused its discretion when it dismissed this suit as discovery
sanction under Fed.R.Civ.P. 37. Before we reach that issue, however,
we must first determine whether the District Court properly resolved
the underlying question whether the Government had shown, at least
prima facie, that Hubbard was a managing agent of Scientology and
could therefore be compelled to testify on its behalf.
Fed.R.Civ.P. 26(a) broadly authorizes parties to obtain discovery by
various means, the first of which is "depositions upon oral
examination." Depositions thus rank high in the hierarchy of pre-trial,
truth-finding mechanisms. That is not surprising. Face-to-face
confrontations prior to trial, with such indicia of formality as
administration of the oath, the presence of counsel and stenographic
recording of the proceedings, are a critical component of the tools of
justice in civil litigation. Fed.R. Civ.P. 30(a) thus broadly provides
that any party may take the testimony of any person, including a party,
by deposition upon oral examination." Fed.R.Civ.P. 32(a)(2), governing
the use of depositions in court proceedings, provides that the
deposition "of anyone who at the time of taking the deposition was
an officer, director, or MANAGING AGENT ... may be used by an
adverse party for any purpose." (Emphasis added.) At the same time,
Fed.R.Civ.P. 37(d) authorizes dismissal and other sanctions "[i]f
a party or an officer, director or MANAGING AGENT of a party ...
fails ... to appear before the officer who is to take his deposition,
after being served with a proper notice." (Emphasis added.) The
concept of "managing agent" is thus an integral part of the corpus of
discovery law. See also Fed.R.Civ.P. 30(b)(6).
Federal discovery provisions have tmditionally provided a mechanism
for an adverse party to secure depositions from a public or private
corporation through a managing agent designated by the adverse party.
In 1970, an amendment to the Federal Rules of Civil Procedure replaced
a specific authorization for securing depositions of managing agents
with the current, more general framework, and established a new
mechanism permitting the corporataion (or other entity) itself to
designate managing agents to sit for depositions, see Fed.R.Civ.P.
30(b)(6). When the entity itself makes the designation, subsequent
disputes over the adverse party's use of the deposition "for any
purpose" are avoided. See Fed.R.Civ.P. 30, Advisory Comm. Note to
Subdivision (b)(6), at 92 (1986). However, the language authorizing
the new procedure expressly stated that it "does not preclude
taking a depositionby any other procedure authorized in these rules."
Fed.R.Civ.P. 30(b)(6). The Advisory Committee Note accompanying the
Rule make clear that the new procedure does bot supplant but
"supplements the existing practive whereby the examining party
designates the corporate official to be deposed." The former
procedure, long known to the bar, thus remains available for litigant
to employ if they see fit. Se Atlantic Cape Fisheries v. Hartford
Fire Insurance Co., 509 F.2d 577, 578-79 (1st Cir.1975); 8 C. Wright &
A. Miller, Federal Practice and Procedure sec. 2103, at 373-74 (1970).
It was under this traditional procedure that the Government sought to
We pause at this a stage of our analysis to observe that there
is no doubt, and appellant indeed has not sought to dispute, that
Scientology qualifies under that broad category of organizations which
can be deposed through an adverse party's designation of a managing
agent. Regardless of whether Scientology is a religious organization, a
for-profit private enterprise or something far more extraordinary--an
intriguing question that this suit does not call upon us to examine--the
entities to which the managing-agent concept can be applied include all
manner of public and private corporations and associations, nonprofit
and otherwise. See 4A J. Moore, Moore's Federal Practice para. 30.51,
at 30-41 (2d ed. 1984).
The law concerning who may properly be designated as a managing agent
is sketchy.4 Largely because of the vast variety of factual
circumstances to which the concept must be applied, the standard, like
so many others in the law, remains a funetional one to be determined
largely on a case-by-case basis. See Petition of Manor Investment Co.,
43 F.R.D. 299, 300 (S.D.N.Y.1967); Kolb v. A.H. Bull Steamship Co.,
31 F.R.D. 252, 254 (S.D.N.Y.1962). Nearly all the published cases
relating to the issue are from the district courts, and nearly all of
those decisions concern whether an employee of a corporation should
be designated a managing agent. 4A J. Moore, supra, para. 30-55, at
30-72 n. 15. Only rarely have courts even had occasion to examine
whether a de facto relationship with a corporation rather than a de
jure one, furnishes a basis in law for designating a managing agent.
See, eg., Petition Of Manor Investment Co., supra; Independent Produc-
tions Corp. v. Loew'S, Inc., 24 F.R.D. 19 (S.D.N.Y.1959).
4. In at least one insance, the burden of proof to establish
managing-agent status has been placed on the party seeking
discovery. See Proseus v. Anchor-Line, Ltd., 26 F.R.D. 165, 167
(S.D.N.Y. 1960). Since the ultimate decision whether a deposition
qualifies as a statement by a managing agent must be made by the
trial court in applying Fed.R.Civ.P. 32(a)(2), courts in pretrial
proceedings have resolved doubts under the standard in favor of
the examining party. See Atlantic Coast Insulating Co. v. United
States, 34 F.R.D. 450 (E.D.N.Y.1964); United States v. The
Dorothy McAllister, 24 F.R.D. 316, 318 (S.D.N.Y. 1959); Rubin v.
General Tire & Rubber Co., 18 F.R.D. 51, 56 (S.D.N.Y.1955); Curry
v. States Marine Corp., 16 F.R.D. 376, 377 (S.D.N.Y. 1954); 4A J.
Moore, supra, at para 30.55(1); C. Wright & A. Miller, supra, sec.
2103, at 376.
In the Manor Investment case, the individual designated as a
managing agent was not shown to hold any office or formal position
in the corporation. He did, however, control its affairs, performing
functions; "of a supervisory nature" related to the activities in
question. More generally, the individual exercised "supreme"
authority within the corporation. Id at 301. In addition to
having practical control of the firm's destiny, the individual owned all
the stock in the enterprise. In concluding that the individual was
indeed a "managing agent" of the enterprise, Judge Weinfeld found "such
unity of interest between [the company] and [the owner], that it
may be referred to as his 'alter ego.'" Id. The learned judge thus
drew on the familiar doctrine of law permitting courts, where the result
would otherwise be unjust or inequitable, to pierce the corporate veil,5
a veil that ordinarily shields investors from liability for contractual
obligations or tortious acts by the corporation and that protects the
corporation from being bound by the independent acts of investors. See
Labadie Coal Co. v. Black, 672 F.2d 92, 96-100 (D.C.Cir.1982). See
generally Wormser, The Disregard of the Corporate Fiction and Allied
Corporate Problems (1927); Hamilton, The Corporate Entity, 49 Tex.L.Rev.
979 (1971); Berle, The Theory of the Enterprise Entity, 47 Colum.L.Rev.
342-43 (1947); Latty, Disregarding the Corporate Entity as a Solvent of
Legal Problems, 34 Mich.L.Rev. 597 (1936). Under the alter ego theory,
the court may ignore the existence of the corporate form whenever an
individual so dominates an organization "as in reality to negate its
Separate personality." Quinn v. Butz, 510 F.2d 743, 758 (D.C.Cir.1975).
The test is a practical one, focusing on how active and substantial the
individual's control is. Valley Finance, Inc. v. United States, 629
F.2d 162, 172 (D.C.Cir.1980).
5. "[T]he fiction of corporate entity may be and should be
disregarded in the interest of and to promote justice in such
cases as fraud, violation of law or contract, public wrong, or
to work out the equities among members of the corporation
internally and not involving rights of the public or third
persons." Fletcher Cyclopedia Corporations sec. 25, at 305; see
also W. Cary & M.E. Eisenberg, Cases and Materials on corporations
80-103 (5th ed. 1980).
For the purpose of determining whether an individual is a
"managing agent" within the meaning of the discovery rules, the alter
ego theory provides a useful analogy. As in the arena of corporate
liability, the focus begins with the character of the individual's
control. In addition, we can profitably examine both the degree to
which the interests of the individual and the corporation converge,
and how helpful the individual will be in fact-finding on the matter
at issue, in comparison to others associated with the corporation. As
in all matters appertaining to discovery, it is the ends of justice
that are to be served. See Fed.R.Civ.P. 1 (the Federal Rules "shall be
construed to secure the just, speedy, and inexpensive determination of
L. Ron Hubbard resigned from his official position as Executive
Director of Scientology Churches in 1966, after serving for more than
a decade. He continued thereafter in the ostensibly nominal position
of "Founder." The Government offered abundant evidence in the District
Court, however, that Hubbard played a uniquely prominent role within
Scientology and various affiliated organizations from 1966 until the
early 1980's. As founder of Scientology and the sole source of its
scriptures, Hubbard enjoyed authority difficult for the founder and
owner of a garden-variety private business to attain. Private, secular
concerns may advance beyond the vision of its founder; new talents may
need to be secured as the cycles of the organization's development unfold.
It is not at all an unfamiliar situation for the entrepreneur--the
visionary--to find inhospitable the administration of the vast enterprise
spawned by his experimentation in the laboratory or workshop. But an
organization claiming to be a religion that is built upon the word of a
single individual venerated by the flock of the faithful is, it scarecely
needs to be said, a rather different sort of entity. It is not disputed
that, in the spiritual or ecclesiastical matters the high mission of
Scientology organizations, the word of L. Ron Hubbard has remained
From evidence adduced below, Hubbard appears to have maintained control
in administrative matters through high positions in such entities as the
Sea Organization, "an elite fraternity of Scientologysts." Church of
Scientology v. Comm'r, 83 T.C. 381, 389 (1985).6 Indeed, uncontested
declarations before the District Court leave little doubt about either
the ecclesiastical or administrative dimensions of Hubbard's authority
during the period from 1966 to 1982. The declarations of Diana Sue
Reisdor-Voegeding and John Nelson, associates of Hubbard until 1982,
describe the mechanisms by which Hubbard controlled operation of
Scientology and its related organizations, passed on orders to
subordinates, and sought to avoid prosecution for his ties to the Church.
J.A. at 395-403. Beyond these declarations specifically cited by the
District Court (J.A. at 429), the Government submitted other declarations
bearing on the question of Hubbard's control. Laurel Sullivan, an officer
in the Scientology organizations from 1973 to 1981, asserted that public
pronouncements to the effect that Hubbard had at that time disassociated
himself from the Scientology organizations were "completely untrue," and
that he in fact issued orders that were immediately obeyed. J.A. at 208.
Kima Douglas, who worked at the Church from 1968 through 1980, declared
that Hubbard exercised "complete control over the entire (Church)
organization." J.A. at 216. Gerald Armstrong, another associate, told
of a 1980 meeting to make plans to conceal Hubbard's acknowledged control
over "all aspects of" the Church of Scientology of California. J.A. at
222. The Tax Court decision to which we just alluded, in denying the
California Church of Scientology tax-exempt status for the year, 1970,
1971 and 1972, set forth detailed findings about Hubbard's relation to that
organization along with the numerous other Scientology organizations.
Church of Scientology v. Comm'r, supra. The Tax Court harbored no doubt
that Hubbard "kept control over" the policies, actions, and even the
finances of the California Church. Id. at 389;7 see also n. 6, supra.
6. The Tax Court found that although Hubbard had officially
resigned from his position as Executive Director of Scientology
in 1966, he remained in the "top position." Through the Hubbard
Communications Office Policy Letters, he controlled the basic
administrative policy of the California Church, the "Mother
Church" of all Churches of Scientology in the United States,
81 T.C. at 389, 401. Through various types of policy directives,
including "Flag Orders," "L. Ron Hubbard Executive Directives,"
and "Orders of the Day," Hubbard directed operations in
Scientology's subsidiary organizations. Id. at 389.
Hubbard also retained control over scientology's financial
affairs. He was a signatory on all Scientology bank accounts. His
approval was required for all financial planning. He was the sole
trusty of a major Scientology Fund. He controlled Operation
Transport Corp., Ltd., a sham corporation which purportedly
performed banking services for "Flag," Scientology's administrative
center. Id. at 389, 399, 400.
Further, Hubbard supervised "auditing," the process through
which Scientologists help an individual gain "spiritual competence."
He also continued to develop Scientology doctrine, id. at 385, 389,
as our subsequent discussion in the text will show.
7. To be sure, the findings by various courts which have found
themselves immersed in Scientology-related litigation have not
been entirely uniform in this respect See Church ot Scientology
of Califomia & Founding Churches of Scientology of Washington
D.C. v. Sieggiman, No. 79 Civ. 1166 (S.D.N.Y. order dated Oct.
27, 1980) ("absence of any official connection" to Churches on
the basis of evidence before the court prohibits compulsion of
Hubbard as a witness), J.A. at 271-73.
Beyond the overall dominance that he exercised over the Scientology
organizations during this earlier period, Hubbard was closely linked to,
if not in charge of, the activities for which appellees initially sought
his deposition. The primary evidence about these activities emerges from
the criminal prosecution in which, seven members of the church, including
Hubbard's wife, were found guilty of conspiracy to obstruct justice. In
that trial, one defendant was found guilty of conspiring illegally to
obtain government documents, and another was found guilty of theft of
government property. See United States v. Hubbard, 650 F.2d 293, 301
(D.C.Cir. 1980). In a Stipulation of Evidence submitted in that case,
the defendants recounted a full-fledged campaign mounted by the Church
of Scientology and its affiliated organizations against the United States
Government, particularly the Internal Revenue Service. See Stipulation
of Evidence, supra. The conspiracy, involving all levels of the Church
hierarchy, encompassed theft of government documents for use in litigation
against the United States, falsification of government identification cards,
wiretapping, infiltration and perjury. See id. The Stipulation indicated
that Hubbard "was, by virtue of his role as the founder and leader of
Scientology, overall supervisor of the Guardian's Office," a Scientology
entity which carried out these illicit activities. Id. at 7. Indeed, the
grand jury named Hubbard as an unindicted co-conspirator in that case.
Those indicted and convicted included not only Hubbard's wife, who "as the
second person in the hierarchy of Scientology, had duties which included
supervision of the Guardian's Office," Id. at 8, but several other
officials occupying high posts in the Scientology hierarchy.
The criminal case does not stand alone. The Tax Court decision to which
we previously referred denied the Church tax exempt status in part because
of this conspiracy by the Scientology organizations "beginning in 1969 and
continuing at least until July 7, 1977." Church of Scientology of
California v. Comm'r, supra, 83 T.C. at 505. Finding that the Church of
Scientoloy of California "filed false tax returns, burglarized IRS offices,
stole IRS documents, and harassed, delayed, and obtructed IRS agents who
tried to audit the Church's records," id., the Tax Court held that the
California Church had violated public policy and thereby lost entitlement
to any exemption which it might otherwise have enjoyed. 83 T.C. at 506-09.
Abundant evidence supports the proposition that Hubbard continued in his
de facto position as head of the Church.8 Based on the evidence in the
record, the District Court rightly concluded that Hubbard was in a
position to provide information about the conspiracy on behalf of the
Scientology organizations for this purpose.
8. We observe that other courts have reached inconsistent results
in related cases concerning the managing-agent status of Hubbard in
more recent years. Three decisions, relying on many of the same
decisions and documentary evidence presented in this case, found that
Hubbard could be deposed as a managing agent. Church of Scientology
of Calitornia v. Armstrong, No. C420153 (Cal.Super.Ct. July 20, 1984),
J.A. at 165-93; Church of Scientology of v. Flynn, No. CV 83-5052R
(C.D.Cal. Mar. 20, 1985) (finding Hubbard a managing agent through
March 4, 1985), Supplemental Appendix ("S.A.") at 729-30; Church of
Scientology Int'l v. Elmira Misson ot the Church of Scientology, No.
CV 85-412T (W.D.N.Y. order dated Nov. 26, 1985), J.A. at 732-49. A
fourth court, upholding the finding of a United States Magistrate,
concluded that Hubbard could not be considered a managing agent for
purposes of Fed.R.Civ.P. 30 after December 9, 1983. Religious
Technology Center v. Scott, No. CV 85-711-MRP (C.D.Cal. order dated
Jan. 24, 1986), J.A. at 773-75; see also n. 4, supra.
To designate Hubbard as, at least prima facie, a managing agent, the
District Court had to find it probable that he remained a managing agent
for the Scientology organizations at the time his deposition was sought.
Fed.R.Civ.P. 32(a)(2). 4A J. Moore, supra, para. 32.04. For the first
scheduled deposition, Hubbard must have been, prima facie, managing agent
as of November 1984; for the second, as of April 1985. Faced with
overwhelming evidence of Hubbard's continuing control over Scientology as
of 1982, appellants have sought to raise doubt whether Hubbard remained as
managing agent after that time and specifically at the critical, later
dates of the aborted depositions. First, they emphasize that the
declarants upon whose statements the Government relies held no positions
in Scientology organizations after 1982. Second, Scientology submitted
numerous statements by its high officials to the effect that Hubbard had
engaged in communications with Scientology's official organs only
intermittently since 1982 and that he had not communicated with the
Scientology appamtas since May 1984. See, eg., Declaration of Marc Yager,
J.A. at 437-39; Declaration of Guillaume Lesevre, J.A. at 446-47. Third,
Scientology points to indications of organizational rearrangemnts around
1981-82, when Hubbard hired a law firm and a professional managment agency
to separate from the Scientology network to handle his personal affairs.
See Declaration of Lyman Spurlock, J.A. at 457-58; Declaration of Lawrence
E. Heller, J.A. at 461-64.
The narrow question to be explored is whether the District Court erred
inholding it probable that Hubbard continued to exercise the authority of
a managing agent for Scientology insofar as he retained authority to
determine whether to govern authoritatively in either administrative or
ecclesiastical affairs. As noted above Hubbard's role as managing agent up
to approximately 1982 is well established in the record. A "general
principle" in the law of evidence in such matters is that "a prior or
subsequent existence is evidential of a later or earlier one." 2 Wigmore
sec. 437, at 514 (emphasis in original).9 In addition, the declarations of
the officials themselves, while denying Hubbard's role,10 in fact
implicitly confirmed that Hubbard, even after 1982, remained free at all
relevant times to communicate to them whatever and whenever he wanted.
Indeed, the two times the did communicate with the entire Scientology
apparatus, in December 1983 and January 1984, Scientology dutifully issued
his statements to its members, 11 exactly as if he remained in his
undisputed position of authority. Lesevre Declaration at J.A, 446; Yager
Declaration at J.A. 438-39. As the District Court concluded, it appears
without question that had Hubbard attempted to reassert his authority in
other ways, Scientology officials would have accepted that exercise of
dominion over the flock. So far as we can discern, the record reveals
no evidence that Hubbard intended to end his relationship with Scientology,
but only, that he wanted, in his unfettered discretion, to determine whether
and how to continue that relationship. Ultimate control, we have no doubt,
he possessed until his death.12
9. We recognize that a presumption of continuity in time may not hold
as an absolute rule for relations of authority, see 9 Wigmore on
Evidence sec. 2530 (Chadbourn ed. 1981). "[T]he rulings merely
declare that certain facts are admissible, or that they are sufficie
evidence for the jury's finding ... on such issues...." Id. (citions
10. It cannot go unnoticed that these declarations were provided by
individuals who owe their allegiance to an organization whose offcials
in the past have employed a number of devices, including deception
and falsification, to achieve the organization's goals. But needless
to say, we are not in a position to weigh the veracity of the
numerous declarants whose statements came before the District Court.
11. Rons Journal 38, as the later communication was known, took the
form of a recording distributed to local Scientology Churchs and
Missions. See Transcript, transcribed December 18, 1984, J.A. at
355-93. In this message, apparently recorded on New Year's Day 1984,
Hubbard reported that he was making available "the first accurate
briefing I have had on scientology organizations in several years."
J.A. 356. The transcript suggests the way he continued to exercise
control. He noted that he had not "[f]or a long while ... been
connect" with the "demanding area" of "active management of the Church
or associated organizations." Id. Yet, as the reason for this
seperation, Hubbard contended that he needed time to "complete my
researches and write them up for you," id., an apparent reference to
his pursuit of refinements in Scientlogy doctrine. See also J.A. at
391-92 (announcing "new discoveries"). In the bulk of the 37-page
transcript, Hubbard recounted in greate detail the latest changes in
the Scientology organizations, with comprehensive statistics about the
state of finances, the growth of the organization, and the efforts by
"new executive" in the organization to "rebuild global scientology
in every division and sector, get it back on policy and in tech" after
an alleged attempt by "power crazy people" to take over the
organization. J.A. at 357-58. In this communication, Hubbard alluded
to "Rev. 352," or L.R.H. Ed. 352 J.A. at 358-59. In this statement
from December 1983, Hubbard "gave an inkling" of the recent changes in
the organization that Rons Journal 38 described in detail.
12. On January 77, 1986, over nine months after dismissal of this
suit in the trial court, the Church announced that L. Ron Hubbard had
died on January 24, 1986. See J.A. at 718 (citing account in
Washington Post). As the parties implicitly recognized, Hubbard's
passing has no bearing on the questions before us. We remain obligated
to decide the appeal on the basis of the record before the District
The continued, undisputed possibility that Hubbard might unilaterally
reassert his authority provided adequate justification for the trial
court's holding. Courts have accorded managing agent status to
individuals who no longer exercised authority over the actions in question
(and even to individuals who no longer held any position of authority in a
corporation), so long as those individuals retained some role in the
corporation or at least maintined interests consonant with rather than
adverse to its interests. See, e.g., Independent Productions Corp. v.
Loew's, Inc., supra; Fay v. United States, 22 F.R.D. 28, 31-32 (E.D.N.
Y.1958); Curry v. Marine Corp., supra, 16 F.R.D. 377. But see Proseus v.
Anchor Lines, Ltd., supra, 26 F.R.D. 165.
But we are satisfied that the District Court's holding in this respect
rests on even stronger ground. Hubbard continued through 1984 not only as
the potential leader of the Scientology organization but as the actual
leader. Even as Hubbard may have sought to distance himself, for whatever
reason, from administrative details, and to separate his personal business
afairs from the Scientology appratus, the evidence before the District Court
demonstrated that Hubbard retained preeminence as spiritual or
ecclesiastical head of Scientology. The basic structure of belief for
Scientology dictates that no one can replace him in this role.13 In this
essential sense, Scientology remained his alter ego despite the passive role
he sought to assume. In an organization which claims to derive its purpose
from Hubbard's writings and sayings, the role that Hubbard continued to play
in Scientology affairs could scarcely be viewed in law or in practical
judgment as a figure of lesser status than that of managing agent.
13. We are informed, without contradiction, that Scientologists
uniformly agree that the writings of Hubbard comprise the sole source
of their scriptures, a status equivalent to Judeo-Christian
Scriptures. See Declaration of Heber Jentzsch, J.A at 279; Yager
Declaration, J.A. at 435-36; Lesevre Dclaration, J.A. at 444; Church
of Scentology, Sdentology: A World Religion Emerges in the Space Age
52-55, District Court Exhibit 4(a)-A. As Rons Journal 38 suggests,
Hubbard viewed even his most recent "new discoveries" as authoritaive
truth to be passed on as church doctrine. J.A. at 391-92. The great
detail in which Hubbard recounted in Rons Journal 38 the status of the
church organizations and its membership also suggests the that despite
the declarations of Church officials, Hubbard's rule after 1982 may have
encompassed at least some sort of advisory authority over the
organization; the communications about "dissemination and delivery of
Scientology religious services," Lesevre Declaration at J.A. 446; Yager
Declaration at J.A. 438, which the declarants have not submitted for
the record or described in detail, suggests the same.
We recognize that the District Court's definition of "managing agent"
imposed a greater burden on Hubbard if he truly wished to disassociate
himself from the Scientology organization that might obtain for, say, the
founder of a business enterprise. Yet, Hubbard's status-as founder and
spiritual leader of a movement that lays claim to the status of a
religion presents a unique situation in the application of traditional
legal doctrines governing the relationship of individuals to organizations
or associations with which they are or have been affiliated. While an
entrepreneur might simply terminate all conneetions to the enterprise that
he or she had founded, Hubbard's teachings catapulted him to the epicenter
of Scientology attention and activity. During his lifetime, Hubbard
remained an object of allegiance and veneration even if he did not
maintain regular communication with the organizational vessel. Under
these unusual circumstances, we have no hesitation in upholding the
District Court's finding that the Government had shown, prima facie,
Hubbard's status as managing agent of Scientology at the pertinent times.
The question remains whether the trial court properly dismissed this
suit under Fed.R.Civ.P. 37(b)(2) by virtue of Hubbard's failure to appear
at the April 1985 deposition. As in other cases of dismissal imposed as
a sanction, the applicable standard of review confines appellate inquirey
to whether the District Court abused its discretion. See National
Hocky League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 642, 96
S.Ct. 2778, 2780, 49 L.Ed.2d 747 (1976) (per curiam); Aruba Bonaire
Curacao Trust Co. v. C.I.R. 777 F.2d 38, 44 & n. 7 (D.C.Cir.1985)
(dismissing suit under "analogous" Tax Court Rule 104); Weisberg v.
Webster, 749 F.2d 864 (D.C.Cir.1984) (dismissing suit under 37);
Automated Datatron, Inc. v. Woodcock, 659 F.2d 1168, 1169 (dismissing
counterclaim under Fed.R.Civ.P. 41(b)). That is, needless to say, a rule
of appellate restraint, a principle faithful to the reality that
appellate tributals cannot hope to have the entire range of
considerations as readily at hand as the court charged with the case in
the first instance. We rightly pay great deference as the abuse-of-
discretion standard itself suggests, to the District Court's
determination in such instances. Implicit in that governing standard is
the recognition that the trial court has a better "feel," as it were, for
the litigation and the remedial actions most appropriate under the
circumstances presented. The Court of Appeals enters the fray only at
the end of what may well be--and indeed was here-- a lengthy process that
moved step-by-step toward the disposition that prompts the callenge on
appeal. The abuse-of-discretion standard calls on the appellate
department, in a spirit of humility occasioned by not having participated
in what has gone before, not just to scrutinize but to examine with care
and respect the process that led up to it.
The pertinent text of Rule 37 provides that when "a party or an officer,
director, or managing agent fails ... to appear before the officer who is
to take his deposition, after being serbved with proper notice ... the
court in which the action is pending on motion may make such orders in
regard to the failure as are just," including "dismissing the action or
proceeding or any part thereof." Rule 37(b)(2), (b)(2)(C).
In reviewing dismissals under Fed.R. Civ.P. 37 and the closely analogous
Tax Court Rule 104, we have consistently applied the rule of Societe
Intemationale v. Rogers, 357 U.S. 197, 212, 78 S.Ct. 1087, 1095, 2 L.Ed.2d
1255 (1958), requiring that the dismissal be based on "willfulness, bad
faith, or ... fault" on the part of the plaintiff. See Aruba Bonaire
Curacao Trust Co. v. C.I.R., supra, 777 F.2d at 45; Weisberg v. Webster,
supra, 749 F.2d at 871. While such a finding remains a prerequisite to
imposition of the dismissal sanction, it is by no means the sole
consideration relevant to the determination whether to dismiss the case.
As the Supreme Court has observed, a court does well to consider the
deterrent effect a sanction will have on parties and potential parties in
other cases who might otherwise contemplate abusive actions. See National
Hockey League, supra; see also Shea v. Donohoe Construction Co., 795 F.2d
1071, 1077 (D.C.Cir.1986); Aruba Bonaire, supra 777 F.2d at 44; Weisberg,
supra, 749 F.2d at 870-71. Especially in cases of delay to the orderly
progression of the litigation process, the fundamental concern of avoiding
the squandering of scarece judicial resources (and the resources of other
litigants) in an era of overcrowded dockets and untoward delays in getting
cases decided is highly germane to whether a District Court should dismiss
a case. See Donohoe Construction Co., supra, at 1075-76; Automated
Datatron Inc., supra, 659 F.2d 1168.
In review of past dismissals under Fed.R. Civ.P. 87 and Tax
Court Rule 104, this court has had little trouble in finding the requisite
bad faith or fault where the party has failed to respond to interrogatories,
see Weisberg v. Webster, supra, or failed to appear at depositions without
an attempt at explanation, see Aruba Bonaire, supra. Here, despite the
protestations of Scientology that it could not contact Hubbard, the District
Court took Hubbard's absence at the April deposition to "supply the
requisite element of willfulness or conscious disregard' for the discovery
process which justifies the sanction of dismissal" (citing Dellums v.
Powell, 566 F.2d 231, 235 (D.C. Cir.1977)), J.A. at 475. In our view, this
treatment comported with the status of managing agent that the District
Court Properly attributed, prima facie, to Hubbard. Since Scientology
remained Hubbard's alter ego, notice to the organization could reasonably
be construed as notice to him; in consequence, the Church itself, as the
party for which Hubbard was, prima facie, the managing agent, could be
sanctioned for his failure to appear when ample advance notice was given of
the importance of the deposition and the consequence that would attach from
failure to attend to it.14
14. We are thus not confronted with a sudden or precipitous action
by the District Court, but to the contrary a carefully calibrated
course of action designed to further the progress of prolonged
litigation. Nor are we faced with a situation where an innocent
client may have suffered by virtue of the actions or omissions of an
attorney. See e.g., Shea v. Donohoe Constr. Co., supra; Butler v.
Pearson; 636 F.2d 526 (D.C.Cir. 1980); Jackson v. Washington Monthly
Co., 569 F.2d 119 (D.C.Cir.1977).
The District Court also had ample reason to interpret the failure of
Hubbard to abide by its order as evidence of "willfulness, bad faith or ...
fault" Societe Internationale, supra, 357 U.S. at 212, 78 S.Ct at 1096.
Appellees presented substantial evidence tha the arrangement by which
Hubbard could communicate with the Church only at his initiative was in
fact designed to shield Hubbard from legal process. See Declaration of
Gerald Armstrong, J.A. 222; Declaration of Diana Sue Reisdorf-Voegeding,
J.A. 396-98; Declaration of John Nelson, J.A. 202-03; see also documents at
J.A. 22, 32-36, 237-40. Coupled with representations by Church officials
about their inability to contact Hubbard, this evidence could reasonably be
interpreted by the District Court as indicating that Hubbard and the Church
had structured their relationship to frustrate the orderly process of
Dismissal, as we have had occasion to note, is "an extremely harsh
sanction." Trakas v. Quality Brands, Inc., 759 F.2d 185, 186 (D.C.Cir.
1985). Dismissal before trial is, in many circumstances, "to be taken only
after unfruitful resort to lesser sanctions." Jackson v. Washington
Monthly Co., 569 F.2d 119, 123 (D.C.Cir. 1977). The District Court
nonetheless enjoys authority to impose this sanction even where "a less
drastic sanction might have been entertained," Automated Datatron, Inc.,
supra, 659 F.2d at 1169. But in our view, it is unnecessary to embark upon
a lengthy inquiry into possible alternative sanctions under the
circumstances here. No monetary or other sanction imposed on Scientology
held out any realistic promise of overcoming the barrier Hubbard had chosen
to erect between himself and the Church. Nor would dismissal of a part of
the suit or of the pleadings suffice. The conspiracy the appellees alleged
goes beyond the "unclean hands" defense as initially advanced in the
District Court; mther, the far-reaching conspiracy as alleged by the
Government goes to the very essence of this lawsuit, providing, if true,
the basis for law enforcement activities that Scientology has attacked as
illegal.15 See n. 3, supra,
15. Prior resort to lesser remedies is not in any event required
regardless of the circummnces presented. Here, a clear order of the
court was issued only after the party seeking discovery had been put
to the test of demonstrating a need for the deposition. We emphasize
the importance in our review of the care and deliberativness evidenced
by the District Court in moving to invoke a sanction, expressly
authorized by the Rules, only after a crystal clear warning of the
sanction to be imposed had been provided.
To be sure, had defendants been able to secure the information they
sought from a source other than Hubbard, the sanction of dismissal would
have been less clearly appropriate. But that condition did not obtain here.
Based upon the record before us, we agree with the District Court's
conclusion that Hubbard himself was "uniquely situated to provide
information" relevant to the actions of Scientology against the Government.
J.A. at, 475. We do well to remember that for most of the era--in the
period up to 1978--with which this lawsuit is concerned, there can doubt
that Hubbard was Scientology's managing agent. So long as this was the
case, Hubbard was the one individual most likely to be best informed about
the role that the conspiracy (as chronicled in the documents from United
States v. Mary Sue Hubbard) played in the Scientology organization. Under
those circumstances, his deposition was of critical importance. His failure
to comply with a clear directive of the District Court, an order
accompanied by and express threat of dismissal, warranted the sanction
imposed by the District Judge in the exercise of her sound discretion.