------------------------------------------------------------------- F.A.C.T.Net, Inc. (Fight Against Coercive Tactics Network, Incorporated) a non-profit computer bulletin board and electronic library 601 16th St. #C-217 Golden, Colorado 80401 USA BBS 303 530-1942 FAX 303 530-2950 Office 303 473-0111 This document is part of an electronic lending library and preservational electronic archive. F.A.C.T.Net does not sell documents, it only lends them according to the terms of your library cardholder agreement with F.A.C.T.Net, Inc. ===================================================================== \3-8-91\Page.00001 1 No. 89-1361 IN THE Supreme Court of the United States OCTOBER TERM, 1989 CHURCH OF SCIENTOLOGY OF CALIFORNIA, Petitioner, - v. - LARRY WOLLERSHEIM, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE COURT OF APPEAL OF THE STATE OF CALIFORNIA, SECOND DISTRICT PETITIONER'S SECOND SUPPLEMENTAL MEMORANDUM IN SUPPORT OF PETITION FOR A WRIT OF CERTIORALRI ERIC M. LIEBERMAN Counsel of Record DAVID B. GOLDSTEIN RABINOWITZ, BOUDIN, STANDARD, KRINSKY & LIEBERMAN, P.C. 740 Broadway - Fifth Floor New York, New York 10003-9518 (212) 254-1111 MICHAEL LEE HERTZBERG 740 Broadway - Fifth Floor New York, New York 10003 (212) 982-9870 Attorneys for Petitioner Church of Scientology March 8, 1991 of California \3-8-91\Page.00002 TABLE OF CONTENTS PAGE TABLE OF AUTHORITIES .. ii 1. THE DECISION AND OPINIONS IN NASLIP WARRANT THAT CERTIORARI BE GRANTED IN THIS CASE, EITHER FOR THE PURPOSE OF UNDERTAKING PLENARY REVIEW, OR, AT THE LEAST, FOR THE PURPOSE OF REMANDING TO THE COURT OF APPEAL OF CALIFOR- NIA FOR RECONSIDERATION IN LIGHT OF WASLIP ................... ..... .. .. 1 2. WASLIP DID NOT ADDRESS THE QUES- TIONS OF WHETHER THE FIRST AMENDMENT PROSCRIBES PUNITIVE DAMAGE AWARDS FOR SPEECH OR PEACEFUL RELIGIOUS PRACTICES, OR WHETHER IT MANDATES APPLICATION OF MORE PRECISE PROCEDURAL AND SUBSTANTIVE STANDARDS THAN ARE REQUIRED IN AN ORDINARY TORT CASE ............................. ... 6 3. CERTIORARI SHOULD BE C;RANTED ON THE FIRST THREE QUESTIONS RAISED BY THE PETITION. . 7 CONCLUSION 9 \3-8-91\Page.00003 TABLE OF AUTHORITIES Cases PAGE A)lard v. Church of Scientology of California, 58 Cal.App.3d 439, 129 Cal.Rptr. 797 (1976), cert. 5 Bertero v. Nationa) Genera) Corp., 13 Cal.3d 43, 118 Cal.Rptr. 184, 529 P.2d 608 (1974) ............... 4 Brewer v. Second Baptist Church, 32 Cal.2d 791, 197 P.2d 713 (1948) ................................. 4, 6 Co)lins v. Lucky Markets, Inc., 274 Cal.App.2d 645, 5 Curtis Publishing Co. v. Butts, 388 U.S. 130 (1967).. 4 Cunningham v. Simpson, 1 Cal.3d 301, 81 Cal.Rptr. 855, 461 P.2d 39 (1969).......................... 5 Downey Savings ~ Loan Ass'n v. Ohio Casualty Ins. Co., 189 Cal.App.3d 1072, 234 Cal.Rptr. 835 (1987), cert. denied, 486 U.S. 1036 (1988)............. ... 4 Gerard v. Ross, 204 Cal.App.3d 968, 251 Cal.Rptr. 604 (1988) ...................................... 3 Gertz v. Roberl Welch, Inc., 418 U.S. 323 (1974).... 7 Goshgarian v. George, 161 Cal.App.3d 1214, 208 5 Naines v. Parra, 193 Cal.App.3d 1553, 239 Cal.Rptr. 178 (1987) ...................................... 4 Nammond v. City of Gadsden, 493 So.2d 1374 (Ala. 1986)........ ................. .................. 2 Nernandez v. C.I.R., 109 S.Ct. 2136 (1989) ......... 8 Niggins v. Maher, 210 Cal.App.3d 1168, 258 Cal.Rptr. 757 (1989), cert. denied, U.S. , ll0 S.Ct. 1135 (1990) ..................................... 7, 8 \3-8-91\Page.00004 PAGE InternaCional Society for Krishna Consciousness v. George, No. 89-1399 (filed Feb. 28, 1990)......... 6 Liodas v. Sahadi, 19 Cal.3d 278, 137 Cal.Rptr. 635, 5 Little v. Stuyvesant Life Ins. Co., 67 Cal.App.3d 451, 5 Minneapolis, St. Pau) and S.S.M. Ry. Co. v. Moguin, 4 Pacific Mutua) Life Insurance Co. v. Naslip, No. 89- 1279, U.S. (March 4, 1991).......... .passim Rosener v. Sears, Roebuck B Co., llO Cal.App.3d 740, 168 Cal.Rptr. 237 (1980), app. dism'd, 450 U.S. 1051 (1981) ..................................... 5 Windeler v. Scheers Jewelers, 8 Cal.App.3d 844, 88 3 Zhadan v. Downtown Los Angeles Motors, 66 Cal.App.3d 481, 136 Cal.Rptr. 132 (1976)......... 5 Constitutional and Statutory Provisions U.S. Const. Amend. I.................. . . . . . . . . . . . 6, 7 3 3 Trea~ses 6 B. Witkin, Summary of California Law (9th ed. 1988)............. ................... ........... 4 \3-8-91\Page.00005 IN THE Supreme Court of the United States OCTOBER TERM, 1989 No. 89-1361 CHURCH OF SCIENTOLOGY OF CALIFORNIA, Petitioner, v. LARRY WOLLERSHEIM, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE COURT OF APPEAL OF THE STATE OF CALIFORNIA, SECOND APPELLATE DISTRICT PETITIONER'S SECOND SUPPLEMENTAL MEMORANDUM IN SUPPORT OF PETITION FOR A WRIT OF CERTIORARI Petitioner Church of Scientology of California submits this second Supplemental Memorandum in response to this Court's recent decision in Pacific Mutual Life Insurance Co. v. Haslip, No. 89-1279, U.S. (March 4, 1991). 1. The Decision and Opinions in Haslip Warrant That Cer- tiorari Be Granted in This Case, Either for the Purpose of Undertaking Plenary Review, or, at the Least, for the Purpose of Remanding to the Court of Appeal of Califor- nia for Reconsideration in Light of Naslip The Court's opinion in Haslip recognized the importance of reviewing the particular method of taxing and reviewing punitive damages in a given case or jurisdiction. The Court \3-8-91\Page.00006 2 focused on the jury instructions, the presence or absence of meaningful review by the trial court to protect against unrea- sonable punitive damage awards, and the presence or absence of meaningful appellate review of the verdict. In addition, Justice Kennedy's concurrence emphasized: A verdict returned by a biased or prejudiced jury no doubt violates due process, and the extreme amount of an award compared to the actual damage inflicted can be some evidence of bias or prejudice in an appropriate case. Slip op. at 3 (Kennedy, J., concurrinE3. In this case, there was no meaningful review by the trial court, the appellate review was undertaken pursuant to a standard disapproved by this Court in Naslip, and the appel- late court upheld a modified punitive damage (and compensa- tory damage) verdict despite its explicit recognition that the amount of the jury's award ($30,000,000, of which $25,000,000 were punitive damages) actually demonstrated passion or prejudice. Indeed, the court explicitly found the award "not just excessive but preposterous." Pet. at 43a. A. In Haslip, the Court emphasized that the Supreme Court of Alabama had established meaningful "post-trial procedures for scrutinizing punitive awards", slip op. at 17, pursuant to which trial courts are required " 'to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of damages.' " Id. (quoting Hammond v. City of Gadsden, 493 So.2d 1374, ~379 (Ala. 1986)). Indeed, Alabama trial courts are enjoined to consider such factors as culpability, deter- rence, and impact upon the parties and upon third parties. Id. In the present case, the trial court refused to exercise any such responsibilities, and under California law, unlike Ala- bama law, was under no obligation to do so. The Church's motions for new trial and judgment notwithstanding the ver- dict, urging, inler alia, that the $30,000,000 damage award \3-8-91\Page.00007 3 was grossly excessive, were rejected with the simple notation "denied" on a rninute order of the court. Pet. at 45a ' B. In Waslip, this Court relied in major part upon "the detailed substantive standards [the Alabama Supreme Court] has developed for evaluating punitive awards" at the appel- late stage. Slip op. at 17. In doing so, this Court contrasted the Alabama standards for appellate review, which permit the vacating or reduction of a punitive damage award on grounds of mere excessiveness, with the standards applied by the appellate courts in Vermont and Mississippi, which permit an appellate court to set aside an award only when it evinces passion, bias or prejudice (Mississippi) or is manifestly and grossly excessive (Vermont). Id. at 17-18 n.lO. In California, as the Court of Appeal recognized, the appellate courts are limited in the same way as the courts of Mississippi; they may set aside or modify a punitive damage award only if they determine "whether, after reviewing the entire record in the light most favorable to the judgment, the award was the result of passion or prejudice." Pet. at 41a- 42a. 1 In California, unlike Alabama, trial courts need not give any reasons for a decision to deny a post-trial motion based on an excessive award of damages; only if the court grants the motion need it explain its rea- soning. Cal. Code Civ. Pro. ~ 6S7 (West's 1976); Gerord v. Ross, 204 Cal.App.3d 968, 978-79, 2S 1 Cal.Rptr. 604, 610 (19S8). A trial court's unexplained denial of a post-trial motion asserting that damages are excessive is reviewed under the deferential abuse of discretion stan- dard. Winde[er v. Scheers Jewelers, 8 Cal.App.3d 844, 8S4, 88 Cal.Rptr. 39, 45-46 (1970). The trial court's broad discretion is not limited solely to the amount of punitive damages, but also to the melhod by which punitive dam- ages are imposed. Thus, at least according to the results in the instant case, the trial courts in California have the discretion to instruct or to refuse to instruct juries that, pursuant to statute-Cal. Civ. Code ~ 3294(b)-punitive damages may not be awarded on a respondeat slrperior theory. The trial court's refusal to give such an instruction in this case, in apparent open disregard of the statute, was not even addressed by the Court of Appeal. Pet. at 28 n.23. Application of the statutory standard would thus appear to be discretionary. \3-8-91\Page.00008 4 To be sure, as the Court of Appeal noted, the passion and prejudice standard has been "somewhat more refined, employing three factors to evaluate the propriety of the award." Id. at 42a.' The three factors, however, serve only to help define the essential passion and prejudice standard. In sharp contrast to the Alabama practice, but just as in Missis- sippi, without a finding of "passion and prejudice", the Cali- fornia appellate courts are without power to disturb a punitive damage award. Bertero v. Nationa) Genera) Corp., 13 Cal.3d 43, 64-65 gr n.12, 118 Cal.Rptr. 184, 199-200 gr n.12, 529 P.2d 608 (1974); Downey Savings & Loan Ass'n v. Ohio Casualty Ins. Co., 189 Cal.App.3d 1072, 1099, 234 Cal.Rptr. 835, 850 (1987), cert. denied, 486 U.S. 1036 (1988); Pet. at 41a-42a. C. By finding that the verdict in this case was the result of passion or prejudice on the part of the jury, but nevertheless modifying rather than vacating the punitive damage award, the Court of Appeal below reached an anomalous and uncon- stitutional result. As Justice Kennedy emphasized in his con- curring opinion in Haslip, "A verdict returned by a biased or prejudiced jury no doubt violates due process. . . ." Slip op. at 3; see Minneapolis, St. Pau) and S.S.M. Ry. Co. v. Moquin, 283 U.S. 520, 521 (1931); Curtis Publishing Co. v. Butts, 388 U.S. 130, 160 (1967). The passion or prejudice of the jury thus infects not only the amount of the punitive damage award, but also the determination whether to impose punitive damages at all, which, in California at least, is a matter wholly within the discretion of the jury. Brewer v. Second Baptisr Church, 32 Cal.2d 791, 800-01, 197 P.2d 713 (1948); Naines v. Parra, 193 Cal.App.3d 1553, 239 Cal.Rptr. 178 (1987); 6 B. Witkin, Summary of California Law ~ 1373, at 840 (9th ed. 1988). California's system, applied in this case, of affirming but modifying punitive damage awards upon an explicit finding that the jury's discretionary award 2 The three factors-degree of reprehensibility of the defendant's con- duct, relationship between the amount of the award and the actual harm suffered, and relationship to defendant's net worth--are similar to some of the categories applied by the Alabama Supreme Court, but are far less comprehensive. Haslip, slip. op. at 18. \3-8-91\Page.00009 5 of punitive damages was infected by passion and prejudice, violates due process. Indeed, the California system of appellate review is doubly defective under the due process clause because, in cases in which it is found that the punitive damage award is so exces- sive as to evince passion and prejudice on the part of the jury, California appellate courts are permitted to choose either to modify the punitive damage award, to vacate the punitive award, or to vacate the judgment entirely, without meaningful standards or principles to guide that choice. Cun- ningham v. Simpson, 1 Cal.3d 301, 310, 81 Cal.Rptr. 855, 861, 461 P.2d 39, 45 (1969); Zhadan v. Downtown Los Angeles Motors, 66 Cal.App.3d 481, 502, 136 Cal.Rptr. 132, 144 (1976). While one California court has stated that where "the jury arrived at an excessive verdict from passion and prejudice, we doubt the propriety of conditioning the order for new trial on the acceptance of remittitur", Collins v. Lucky Markets, Inc., 274 Cal.App.2d 645, 79 Cal.Rptr. 454, 460 n.3 (1969), and while the California Supreme Court at least once stated that "any doubts should be resolved in favor of granting a new trial", Liodas v. Sahadi, 19 Cal.3d 278, 285-86, 137 Cal.Rptr. 635, 639, 562 P.2d 316 (1977), the cases are legion in which the California appellate courts have, as here, found passion and prejudice but have merely reduced the punitive damage award, without any attempt to explain why outright vacatur is not appropriate or required by due process. See Little v. Stuyvesant Life Ins. Co., 67 Cal.App.3d 451, 470, 136 Cal.Rptr. 653, 664 (1977) Cjury award infected by passion and prejudice; "justice will be best served" by reducing punitive damage award, rather than vacating it, without further explanation); AIIard v. Church of Scientology of California, 58 Cal.App.3d 439, 452-53, 129 Cal.Rptr. 797, 805-06 (1976) (same), cert. denied, 429 U.S. 1091 (1977); Rosener v. Sears, Roebuck & Co., llO Cal.App.3d 740, 753, 168 Cal.Rptr. 237, 244 (1980) (same; "modify . . . to do justice"), app. dism'd, 450 U.S. 1051 (1981); Goshgarian v. George, 161 Cal.App.3d 1214, 1230, 208 Cal.Rptr. 321, 331-32 (1984) (same). \3-8-91\Page.00010 6 Once again, the problem is highlighted by the instant case, where the Court of Appeal chose to modify rather than vacate both the compensatory and punitive damage awards, without a word of explanation as to why it chose that course or pursuant to what standards.' 2. Haslip Did Not Address The Questions of Whether the First Amendment Proscribes Punitive Damage Awards for Speech or Peaceful Religious Practices, or Whether it Mandates Application of More Precise Procedural and Substantive Standards Than Are Required in An Ordinary Tort Case In its petition in this case, the Church argued that the First Amendment imposed substantive and procedural limitations upon the award of punitive damages. See Pet. at 26-29.4 These issues were raised in the Has)ip case in several amicus briefs, including a short amicus brief submitted by the peti- tioner herein.S The Court's opinion in Naslip did not discuss the questions raised under the First Amendment. Justice Scalia's concur- rence, however, did reco~nize "the proposition that punitive damages, despite their historical sanction, can violate the 3 The Court of Appeal made no finding, nor could it reasonably have done so, that the evidence at trial compelled a finding of liability, let alone of punitive damages. Rather, in reviewing the evidence, the Court of Appeal stated that it was doing so in the light moslfavorable to the plaintiff, Pet. at 6a, and held only that there was "substantial evidence" to support the verdict, id. at 10a-11a, not that the evidence mandated a verdict for the plaintiff. With respect to punitive damages, as we have shown, an appellate court can never presume that such an award is compelled, because it is always discretionary with the jury. Brewer v. Second Baptist Church, 32 Cal.2d at 800-01. 4 Similar questions are raised by the pending petition in International Socieiy ~or Krishna Consciousness v. George, No. 89-1399 (filed Feb. 28, 1990). 5 See Brief Amicus Curiae of The National Council of Churches of Christ in the U.S.A., et al.; Brief Amicus Curiae of CBS Inc., el al.; Brief Amicus Curiae of Church of Scientology of California. \3-8-91\Page.00011 7 First Amendment." Slip op. at 15 (citing Certz v. Robert Welch, Inc., 418 U.S. 323, 349-350 (1974)). The questions raised concerning First Amendment limita- tions on the imposition of punitive damages arise frequently, both in cases involving religious free exercise and in cases involving speech. For the reasons stated in the petition herein and in the a,nicus briefs filed in Naslip, the petition should be granted to resolve those questions. 3. Certiorari Should Be Granted on the First Three Questions Raised By The Petition The Haslip case, of course, did not involve the first three questions raised by the petition in this case, concerning First Amendment proscriptions upon the trial, judgment and affirmance of the underlying verdict in this case, which rested upon the plaintiff's voluntary participation in peaceful reli- gious practices. Those questions remain particularly deserving of this Court's attention now, for the reasons stated in the petition. We merely note that the state of uncertainty and chaos in the courts on these questions not only remains unabated, but grows apace. In Niggins v. Maher, 210 Cal.App.3d 1168, 258 Cal.Rptr. 757 (1989), cert. denied, U.S. , 110 S.Ct. 1135 (1990), another district of the Court of Appeal of Cali- fornia dismissed the complaint of a Roman Catholic priest against his Bishop and the Church for his removal from his position, subsequent psychiatric treatment, which included drugs and electroshock therapy,6 and public revelation of alleged private defamatory information. The court found that the complaint adequately alleged "torts of invasion of pri- vacy, defamation, and the intentional and negligent infliction of emotional distress." Id. at 1175, 258 Cal.Rptr. at 761. The 6 Higgins averred that "upon persuasion from the Church," he "underwent a program of rehabilitation with a therapy-oriented orga- nization within the church," during which he was "given various drugs which caused him to become nervous and lose much of his reasoning ability" and that he was "treated with electroshock therapy." 210 Cal.App.3d at 1172, 2S8 Cal. Rptr. at 758. \3-8-91\Page.00012 8 court, however, dismissed the complaint because, even if defendants had engaged in the alleged tortious conduct, "the acts so taken were part and parcel of the Bishop's adminis- tration of his ecclesiastical functions." Id. at 1175-76, 258 Cal.Rptr. at 761. As the court stated: the torts recited are simply too close to the peculiarly religious aspects of the transaction to be segregated and treated separately-as simple civil wrongs. The making of accusations of misconduct; the discussion of same within the order; the recommendation of psychological or medical treatment; the infliction, whether intention- ally or negligently, of emotional distress--these are all activities and results which will often, if not usually, attend the difficult process by which priestly faculties are terminated. Id. at 1176, 258 Cal.Rptr. at 761. The practices in Higgins are in stark contrast to the peace- ful religious practice of auditing7 at issue in this case, where the plaintiff suffered no physical harm. Instead, the plaintiff decided, after ten years of adherence to the Scientolo~y faith, that his participation in auditing caused him emotional harm, for which the jury awarded him the "preposterous" (Pet. at 43a) sum of $30,000,000. Higgins is in fundamental conflict with the decision of the Court of Appeal in this case, and represents yet another example of the varied and unreconcila- ble decisions in the area. Certiorari should be granted to resolve such questions. 7 Auditing consists of a parishioner and auditor sitting in a room while the auditor asks a series of questions to which the parishioner responds. See Pet. at 3; Hernander v. C.I.R., 109 S.Ct. 2136, 2141 & n.2 (1989). \3-8-91\Page.00013 9 CONC~USION For the reasons stated herein, and in petitioner's previously filed petition and briefs, the petition for a writ of certiorari should be granted. Dated: March 8, 1991 Respectfully submitted, ERrc M. LrE~ERMAN Counsel of Record DAVrD B. GOLDSTErN RABINOWrTZ, BOUDIN, STANDARD, KRrNSKY & LIEBERMAN, P.C. 740 Broadway - Fifth Floor New York, New York 10003-9518 (212) 254-1111 MrCHAEL LEE HERTZBERG 740 Broadway - Fifth Floor New York, New York 10003 (212) 982-9870 Attorneys for Petitioner Church of Scientology of California \3-8-91\Page.00013 9 CONC~USION For the reasons stated herein, and in petitioner's previously filed petition and briefs, the petition for a writ of certiorari should be granted. Dated: March 8, 1991 Respectfully submitted, ERrc M. LrE~ERMAN Counsel of Record DAVrD B. GOLDSTErN RABINOWrTZ, BOUDIN, STANDARD, KRrNSKY & LIEBERMAN, P.C. 740 Broadway - Fifth Floor New York, New York 10003-9518 (212) 254-1111 MrCHAEL LEE HERTZBERG 740 Broadway - Fifth Floor New York, New York 10003 (212) 982-9870 Attorneys for Petitioner Church of Scientology of California ================================================================= If this is a copyrighted work, you are acknowledging by receipt of this document from FACTNet that on the basis of reasonable investigation, you have not been to obtain a copy elsewhere at a fair price, and that you are and will abide by the following copyright warning. WARNING CONCERNING COPYRIGHT RESTRICTIONS: The copyright law of the United States (Title 17, United States Code) governs the making of photo copies or other reproductions of copyrighted material. Under certain conditions specified by law, libraries and archives are authorized to furnish a photocopy or other reproduction. 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