United States District Court Central District of California No. CV 85-711 JMI (Bx) CV 85-7197 JMI (Bx) MEMORANDUM OPINION I. INTRODUCTION Defendants have filed a second motion for dismissal pursuant to Rule 37 of the Federal Rules of Civil Procedure for plaintiffs' failure to provide discovery. The motion requires the Special Master to revisit the long-standing discovery dispute between the parties. In so doing, the Special Master need not address any new issues. The only real difference between this motion to dismiss and the prior motion to dismiss is the increasing degree of bitterness with which each side advances its argument. The parties have staked out their positions. Plaintiffs continue to withhold discovery based upon the argument that, court orders notwithstanding, they need only produce such discovery as relates to the actual claims, affirmative defenses, and counterclaims at issue during trial. Moreover, it is unclear whether plaintiffs view themselves or the courts as the final authority as to what relates to the actual claims, affirmative defenses, and counterclaims. Defendants have made it clear that they will never accede to these terms and consistently and persistently object to plaintiffs' noncompliance with standing discovery orders. The parties have led themselves to an impasse. The case is languishing in preliminary discovery matters. The Special Master was appointed to keep this case moving and prepare the matter for trial. Therefore, judicial intervention will be applied. II. PROCEDURAL HISTORY The first of these consolidated cases began in January, 1985. In the fall of 1989, this case remained so mired in discovery disputes and other preliminary matters that the District Court ordered the appointment of the Special Master over the parties' objection. Defendants, who had previously sought discovery to no avail, filed three motions to compel plaintiffs and church insider Norman Starkey to produce discovery. On March 30, 1990, The Special Master issued an order (hereinafter "the first discovery order") requiring plaintiffs to produce substantial discovery. Plaintiffs applied to the District Court for review of the first discovery order. The District Court "adopted" the first discovery order. (See Order dated April 27, 1990) Plaintiffs then applied for reconsideration, but the District Court denied the application. (See Order dated August 20, 1990.) Discovery was not produced. One of the tactics employed by plaintiffs was to claim that the documents were in the possession, custody, or control of some other Scientology entity or insider. Defendants attempted to overcome this problem by naming CST, the official Scientology archivist, as a counterdefendant. Defendants then filed three more motions to compel production of discovery. Motions four and six were directed to CST. Motion five was directed to plaintiffs. The Special Master held a hearing on April 25, 1990. It was at this hearing that the seed of plaintiffs' mootness argument was planted. Plaintiffs asked the Special Master to forego ruling on the motions to compel until after they had filed a summary judgment motion regarding the anti-trust claims which, they argued, would moot the requested discovery. The Special Master denied the motion to continue the hearing. On July 25, 1990, he issued a discovery order (hereinafter "the second discovery order") ordering plaintiffs and CST to produce most of the requested discovery. Plaintiffs filed a motion for a stay of discovery and an application for review of the second discovery order. Without receiving the stay, both plaintiffs and CST failed to produce discovery. The discovery dispute appeared to wane somewhat when plaintiffs filed a multitude of summary judgment motions and other motions. Defendants filed motions as well. Throughout these motions, defendants objected to plaintiffs' non-compliance with the standing discovery orders. The Special Master declined to sanction plaintiffs for non-compliance, but repeatedly warned them that severe sanctions would be forthcoming if they failed to comply with their discovery obligations. The discovery dispute regained momentum when defendants filed a motion to dismiss plaintiffs' copyright claims for failure to produce discovery regarding NOTs. Plaintiffs opposed the motion in their customary fashion, equivocally asserting that: (1) full discovery had been made; (2) the documents never or no longer existed; and (3) the documents were not in their possession, custody or control. On April 26, 1991 the Special Master issued an order (hereinafter "the sanctions order") holding that plaintiffs had failed to comply with the discovery orders in bad faith. The Special Master declined to dismiss the copyright claim but did impose an issues sanction. Pursuant to the sanctions order, plaintiffs are prohibited from denying that defendant Mayo substantially participated in the drafting of NOTs. Plaintiffs filed a motion for reconsideration of the sanctions order. The Special Master denied the motion, held that it was "patently unreasonable" and imposed monetary sanctions. (See order dated July 2, 1991.) The District Court eventually denied plaintiffs' motion for a stay of discovery and application for review of the second discovery order. (See Order dated August 12, 1991.) The Court noted that "plaintiffs have been extremely evasive with respect to their discovery obligations". Plaintiffs requested a status conference. Defendants moved to dismiss the amended complaints due to discovery non-compliance. The Special Master set both matters for hearing on February 12, 1992. Unbeknownst to the Special Master, plaintiffs and CST intended to use the status conference as an opportunity to relitigate the six motions to compel production. Plaintiffs' lead counsel admitted non-compliance, but argued this was justified. He then advanced the novel argument that the summary judgment litigation had "mooted" many issues and such mootness relieved plaintiffs of their obligation to comply with the standing discovery orders. In light of these statements and upon the motion of defendants, the Special Master continued the status conference to a later date and took up the matter of defendants' motion to dismiss the amended complaints for discovery non-compliance. DISCUSSION Although parties' briefs contain everything but the kitchen sink, the motion involves only two considerations: (1) Have plaintiffs failed to provide discovery due to bad faith, willfulness or fault of their own? and (2) If so, whether dismissal is in order under the "five factors test"? A. BAD FAITH It is well-established that Rule 37 of the Federal Rules of Civil Procedure authorizes the court to dismiss a complaint for non-compliance due to "bad faith, willfulness or the fault of the party". See Wyle v. R. J. Reynolds, Inc., 709 F.2d 585, 589 (9th Cir. 1983); G-K Properties Redevelopment Agency, Etc., 577 F.2d 645 (9th Cir. 1978); As a preliminary mater, it is important to note that the issue of willfulness is being decided based only upon the conduct of the litigants in this case. Defendants have cited to cases holding that other Scientology entities failed to comply with discovery obligations in bad faith. The Special Master need not and will not address these citations because he has considered only the conduct of the Scientology entities involved in this case. The Special Master issued the first discovery order over two years ago. He issued the second discovery order over a year and a half ago. Both discovery orders are straightforward. Any first-year law student who read the orders would understand what must and must not be produced. Yet plaintiffs, who are seasoned litigants armed with clever and experienced counsel, claim they do not understand what must be produced. The professed confusion stems from plaintiffs' assertion that the summary judgment litigation has "mooted" much of the discovery and that they cannot believe that the Special Master or the District Court intended them to produce moot discovery. The Special Master has consistently rejected the mootness argument whenever it was raised and has ordered plaintiffs and CST to produce the discovery. Therefore, a serious question arises as to how plaintiffs and CST could truly believe that mootness relieved them of their duty to comply with the discovery orders. Even if the RICO, antitrust and work-for-hire orders did moot discovery --and the Special Master by no means accepts this proposition--mootness is not a proper basis for refusing to produce ordered discovery. Plaintiffs cite no authority for the proposition that a party may ignore standing discovery orders because subsequent litigation has mooted the issues to which the discovery relates. If this were so, there would be no finality or order to the discovery process. The parties could flout court orders and endlessly relitigate discovery with the filing of each pretrial motion. The law would never countenance such an absurd result. Therefore, plaintiffs' tendered excuse for non-compliance is not a proper basis for non-compliance. Consequently, the Special Master holds that plaintiffs' non-compliance is the result of "bad faith, willfulness or fault of the party". B. THE SANCTIONS ISSUE Because the prerequisite "bad faith, willfulness or fault of the parties" exists, it is appropriate for the Special Master to consider the requested dismissal. As stated in the previous sanction order, the dismissal question is guided by the "five factor test". See Malone v. United States Postal Service, 833 F.2d 128 (9th Cir. 1987); Toth v. Trans World Airlines, Inc., 862 F.2d 1381 (9th Cir. 1988). Each factor is discussed below. 1. The Public's Interest in the Expeditious Resolution of Litigation Both sides have had to suffer the same alleged "confusions" inherent in the various orders. Yet, only one side, Scientology, has failed to make complete discovery after seven years. This is far too long. It violates utterly the public interest in expeditious resolution of litigation. In the issues sanctions order, this factor "strongly favor(ed) dismissal". (See April 26, 1991 order at p 6) It now very strongly favors dismissal. 2. The Court's Need to Manage Its Docket The need to manage a docket focuses on litigation which wastes time and money. The District Court ordered the appointment of the Special Master over the objection of the parties because this case, as litigated, had become unwieldy. The District Court clearly believed that scarce judicial resources were being needlessly wasted by over-litigation, recalcitrance, and a fundamental misuse of the judicial system. Consequently, the District Court directed the Special Master to resolve the discovery problems, decide the law and motions, and otherwise prepare the matter for trial. Sadly, the case remains dead-locked in discovery matters. It is nowhere near ready to proceed to trial. To some extent, both parties are to blame because they excessively litigate before the Special Master, the District Court and the appellate courts. Unfortunately, plaintiffs have done more than overlitigate to waste time and money. Plaintiffs use the authority of the courts to gain advantage over their adversaries through litigation. They have filed a hot of motions, applications, requests for writs and interlocutory appeals. There is nothing wrong with this in and of itself. However, when defendants seek and obtain an advantage against plaintiffs through litigation, plaintiffs literally flout court orders and defy the authority of the courts. This cynical and unfair use of the judicial system is a total waste of time and money. More strongly than any other, this factor favors dismissal. 3. The Risk of Prejudice to Defendants This factor is the simplest and most significant. Plaintiffs have sued defendants, thereby subjecting them to the authority of the court. However, plaintiffs refuse to provide discovery to defendants, as required by the court. By all appearances, plaintiffs do not view themselves as being subjected to the authority of the court. It is difficult to see how one could be prejudiced more, in a legal sense, than to be hailed into court by a party who then defies the authority of the court to manage the case before it. The prejudice to defendants is enormous. This factor strongly favors dismissal. 4. The Public Policy Favoring Disposition of Cases on the Merits In the issues sanctions order, the Special Master stressed that as a general rule courts should allow cases to be disposed of on the merits. (See April 26, 1991 order at p. 8.) While this is true, it is equally true that some cases must be dismissed despite the rule. As the court in Toth wrote, "while the policy in favor of disposition on the merits weighs against dismissal, it is not enough to preclude a dismissal order when the other four factors weigh . . . . heavily in favor of dismissal." 862 F.2d at 1385. 5. The Availability of Less Drastic Sanctions Less Drastic sanctions have been tired to no avail. The Special Master started with warnings that the failure to comply with discovery would be met with harsh sanctions, including dismissal. Plaintiffs did not heed these warnings. The Special Master entertained defendants' motion to dismiss the copyright claims and gave serious consideration to dismissal. The Special Master imposed an issues sanction in lieu of dismissal because, at the time, he believed this less drastic sanction would secure plaintiffs' discovery compliance. It did not. Given the above, the Special Master concludes that no sanction less drastic than dismissal is appropriate. As one court wrote in support of its decision to dismiss a complaint, "no monetary or other sanction imposed on Scientology held any realistic promise of overcoming" the church's discovery recalcitrance. Founding Church of Scientology v. Webster, 802 F.2d 1448, 1454 (D.C. Cir. 1986). Because no less drastic sanction will motivate plaintiffs to comply with the discovery orders, dismissal is appropriate. IV. CONCLUSION The prerequisite bad faith exists. The five factors test overwhelmingly favors dismissal. All but the fourth factor support defendants' claim that the harshest sanction is in order. Indeed, there appears to be no other way to rectify this problem. Plaintiffs have not and will not comply with discovery. The Special Master cannot force them to comply. The Special Master can, however, remedy the resulting unfairness of the non-compliance. A harsh remedy just short of dismissal has been imposed without success. Despite the issues sanction, plaintiffs continue to avoid discovery. Therefore, the only remaining meaningful remedy is dismissal. The time to impose that remedy has come. Therefore, the Special Master will dismiss the amended complaints. An order will follow. * * * ORDER IT IS ORDERED THAT defendants' motion to dismiss the amended complaints is GRANTED. IT IS SO ORDERED. DATED: April 17, 1992 James G. Kolts United States Special Master