388 1 IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

2

Civil Action No. 95B2143

3

RELIGIOUS TECHNOLOGY CENTER,

4

Plaintiff,

5

vs.

6

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 12th 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


466

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25 MR. COOLEY: Warren McShane in rebuttal, Your Honor.


467

1 THE COURT: You are still under oath in this case.

2 (Warren McShane was sworn previously.)

3 DIRECT EXAMINATION

4 BY MR. COOLEY:

5 Q Mr. McShane, I think you have testified that you have done

6 the O.T. levels; is that correct?

7 A Yes, sir.

8 Q Up to what level?

9 A I did it up to the old O.T. VII, and I have done it

10 through the new O.T.V.

11 Q Mr. Wollersheim testified that people go into some kind of

12 a hypnotic trance while doing the O.T. levels; is that true?

13 A Not at all, sir. The O.T. levels are done as all auditing

14 is done in Scientology with the person fully aware of what he

15 is doing. It differs from any other type of counseling,

16 because the person knows exactly what's happening to him.

17 There is no hypnosis whatsoever. It's just Mr. Wollersheim's

18 attempt to degrade our religion.

19 MR. KELLEY: Your Honor, I move to strike the last

20 comment.

21 THE COURT: Sustained.

22 BY MR. COOLEY:

23 Q With respect to hard copy documents seized in the seizure

24 from Mr. Wollersheim's residence and from Mr. Penny's

25 residence, for that matter, did you seize any hard copies


468

1 other than O.T. materials?

2 A No. I went through there must have been 50 boxes of

3 materials he had in his apartment. I went through all of them

4 and only took O.T. materials that I found.

5 Q And were there O.T. materials found in hard copy form at

6 Mr. Wollersheim's residence?

7 A Yes, there was. There was I found the Fishman

8 affidavit. I think I found two copies of it which contains

9 the O.T. materials that are the subject of this litigation,

10 and I take that back. I did find other not confidential

11 material but other copyrighted material of Mr. Hubbard.

12 Q Copyrighted published material?

13 A Yes, published material.

14 Q Mr. Young testified when he was on the witness stand about

15 going to Las Vegas with respect to a newspaper reporter that

16 was doing an article and trying to stop the article, and he

17 said that the reporter had O.T. materials. What can you tell

18 us about that situation?

19 MR. KELLEY: I think there ought to be some

20 foundation. The article was before he started the work he is

21 doing now.

22 THE COURT: Sustained.

23 BY MR. COOLEY:

24 Q Were you in R.T.C. at that time?

25 A Not at that time, no.


469

1 Q Did you read the article that that reporter published?

2 A Yes, absolutely.

3 Q Were there any quotations from the O.T. materials in

4 there?

5 A No, not at all. The article was written by a reporter who

6 was talking to an exmember, and he was quoting from the

7 exmember whatever conversation they had.

8 Q With respect to that incident that Vaughn Young testified

9 about O.T. materials blowing down the street, can you tell us

10 what materials a person on O.T. III was permitted to take home

11 with him?

12 A Sure. As I explained to the court before, there are

13 some of the O.T. materials are divided into two. One is the

14 actual materials that you read. That contains Mr. Hubbard's

15 discoveries. You learn how to counsel on that process. Then

16 there is the second part which is actually the materials you

17 need to take into session with you to actually do the

18 counseling. The only materials that people were allowed to

19 take home in locked briefcases and other security requirements

20 are the materials that they need in session, not the materials

21 that they studied when they were in the church.

22 Q Are those called plattens.

23 A Plattens. They are materials. In fact, if I have the

24 if I could get the exhibit book back.

25 Q Exhibit 79.


470

1 A Yes.

2 Q It's a separately bound long book, sir. Perhaps the

3 Court's could be made available. Be sure you tell the court

4 exactly where you are so the court can be at the same place,

5 otherwise it's a wasted exercise.

6 THE WITNESS: Your Honor, there is a tab called O.T.

7 II. If you go through the one right after tab 46

8 THE COURT: I see. It's right after.

9 THE WITNESS: Right after tab 46 there is a little

10 tab that says O.T. II.

11 THE COURT: Here it is. Okay.

12 MR. COOLEY: Your Honor, if you look at tab No. 5

13 underneath that.

14 THE COURT: All right.

15 THE WITNESS: You will see that there is at least

16 on that page there is a series starting from No. 1 that goes

17 to No. 12.

18 THE COURT: Yes.

19 THE WITNESS: That is what we call a platten. That

20 is something that the parishioner would take with him into a

21 counseling session. This is this is a part of

22 Mr. Hubbard's discoveries as to what occurred to the

23 individual as far as these past traumatic experiences, and

24 this particular platten and on this particular level there are

25 21 of them is the instructions on what to do to undo that


471

1 traumatic experience or whatever it may be.

2 Like I say, there are 26 of them and the parishioner

3 is only allowed to take one at time. He would take this sheet

4 with him, go into a counseling session and with a particular

5 command that he learns on the beginning section of the course,

6 he would then do this with himself in session. When he is

7 done with that, this material would be returned to the church,

8 and he would receive the second one. This is similar to other

9 O.T. materials. And Your Honor, if you would turn to the very

10 beginning of the booklet of this exhibit.

11 MR. COOLEY: What tab, sir?

12 THE WITNESS: Under tab 4. It's part of the

13 handwritten

14 THE COURT: Yes.

15 THE WITNESS: There, Your Honor, it says tech data

16 No. 3 on the top, on the handwritten part.

17 THE COURT: Yes.

18 THE WITNESS: This particular exhibit I am looking at

19 is O.T. III. And as I explained to the court the other day,

20 when we were talking about what's generally known in the 75

21 million years ago and Xemu and the volcanoes, which is

22 knowledge that has been known for years, that is contained in

23 bits and pieces in the first paragraph of page 1. This is

24 page 3. Your Honor, if you look at the first full paragraph,

25 it starts with "one's" on the handwritten part.


472

1 THE COURT: All right.

2 THE WITNESS: First full paragraph where it says

3 "one's body." From that point on at least on that point is

4 what's trade secret. Mr. Hubbard describing what has occurred

5 to the individual, not the general description of what events

6 happened 75 million years ago, but what happened to the

7 individual person. That is a trade secret. That's what's not

8 published in any works. From that point forward is a

9 description of the actual technology itself and how to undo

10 that great catastrophe that occurred. Many of the O.T. levels

11 are exactly set up the same way, Your Honor. The O.T. IV

12 materials and O.T. V materials, these are all specific

13 processes that Mr. Hubbard developed on how to undo the great

14 traumatic experiences that occurred on the individual.

15 BY MR. COOLEY:

16 Q Now, you have given the court an example and shown the

17 court an O.T. III. Could you do the same thing and pick

18 another level, so the court would be sure what you are talking

19 about?

20 A Your Honor, the one that we were on, on O.T. II, if you

21 continue on through the tab right after tab 22 of the

22 second tab 22 on this booklet, there will be a tab called

23 O.T. IV.

24 THE COURT: All right.

25 THE WITNESS: Your Honor, under tab 3, there is a


473

1 page, typewritten page, which is page 4. Do you see that,

2 Your Honor?

3 THE COURT: Yes.

4 THE WITNESS: There is at the top in fact I think

5 it's highlighted in your copy, sir, is a description of what

6 this level was designed to handle which is very confidential.

7 Then the second part under the case supervisor class

8 eight, it talks about the O.T. IV rundown. And it says that

9 is done by the auditor on a case which means a person who is

10 fully set up by various directions. Those things listed

11 underneath, there again, are specific instructions by

12 Mr. Hubbard on how to undo the specific traumatic existence

13 or I'm sorry the incident that has occurred on that

14 particular level.

15 Q Is that secret?

16 A Yes, that is very secret. Then, Your Honor, one other tab

17 I would like to point out to the court. If you keep going

18 down there is a tab called O.T. VI.

19 THE COURT: I have got it.

20 THE WITNESS: Okay. First tab is a handwritten

21 section entitled Section O.T. VI, Section VI, O.T. part one.

22 This again is a specific process. Under you see under

23 paragraph No. 1 that Mr. Hubbard has developed for an

24 individual to do with himself privately in session. It's a

25 secret process. That is designed to incorporate with all


474

1 other processes to achieve a specific spiritual phenomena in

2 an individual. I have highlighted that first two lines there,

3 but it goes onto describe other particular things that the

4 person would have to do with himself. These are all trade

5 secrets and have never been in any newspaper article.

6 BY MR. COOLEY:

7 Q Now, with respect to the theft of the O.T. materials in

8 England and in Denmark, when did that occur?

9 A The first one I think was in April 1983.

10 Q The second one?

11 A December 1983.

12 Q And was it after that that those materials started showing

13 up, for example, in the Wollersheim case and elsewhere?

14 A Yes. One point that I did with Mr. Young, for

15 instance, that this reporter had copies of it, which is not

16 true, the materials

17 MR. KELLEY: Your Honor, the

18 THE WITNESS: The materials that were stolen in 1983

19 were the first instances of a theft of O.T. I, II, and III.

20 Any instances at all before that occurred in a book or

21 newspaper article have always been somebody's interpretation

22 or somebody's memory of it. There have been no quotations. I

23 have seen, I think, every publication, any book. This is what

24 I do to protect the materials. In all instances, there has

25 never been any evidence that the actual materials themselves,


475

1 the physical copy, whatever has been out there.

2 Another example he gave was Bill Robertson. Bill

3 Robertson is an exmember who was I believe he operated in

4 Germany. He had this Galactic Patrol Sector the bulletins

5 that he created. I investigated that specifically right after

6 Mr. Scott was arrested and imprisoned and met with many of

7 Mr. Robertson's people and got copies of all his material.

8 They are psychotic ramblings of persons very sick.

9 Q So Robertson didn't have any of the materials on the above

10 Scientology materials?

11 A That's correct.

12 Q Now, with respect to the Atak book that Mr. Young referred

13 to, what happened to that book?

14 A The book was enjoined was taken off the shelf. And

15 Mr. Atack I don't know if Mr. Atak has ever republished it.

16 Q Has R.T.C. or anyone to your knowledge authorized in the

17 church of Scientology or R.T.C. or anywhere else ever given

18 permission to F.A.C.T.Net to input copyrighted materials into

19 its equipment?

20 A No. He has never gotten permission at all in regard to

21 the O.T. materials. Nobody would ever get permission.

22 Q Have you taken actions against infringers on the Internet?

23 A Yes, we have.

24 Q Is Mr. Lerma one?

25 A He is one.


476

1 Q He has identified himself when he posted without comment?

2 A Yes.

3 Q Anonymous posters, what do you do about them?

4 A Anonymously posters, the first thing we do is deal with

5 the service provider, and there are many service providers in

6 the world, and the majority of them have been very

7 cooperative. When we notified them, they take the infringing

8 materials off their system. Although naturally they don't

9 have a way of identifying because it's anonymous. But they do

10 tell us what remailer was used, where they received the

11 materials from, and we go to the remailer to discover who the

12 actual source of that material is.

13 Q Have you done that?

14 A We have done that on several occasions. In fact, in

15 Finland in cooperation with the local authorities we had a

16 remailer his premises raided by the police, to put it in

17 simple terms, because he refused to give us the identity of a

18 person who had infringed our materials. The authorities went

19 in and made him under threat of taking his whole computer,

20 give us the name. We are getting a lot of cooperation from

21 the industry in this particular matter because they have

22 recognized that intellectual property needs to be protected.

23 MR. KELLEY: Objection, Your Honor.

24 MR. COOLEY: That's all, sir.

25 THE COURT: Any questions?


477

1 MR. KELLEY: I will be very brief.

2 CROSSEXAMINATION

3 BY MR. KELLEY:

4 Q Mr. McShane, is your testimony that the book, Piece of

5 Blue Sky, has been enjoined?

6 A Yes.

7 Q Would you be surprised to know that the copy of that book

8 was bought at the Tattered Cover about two weeks ago?

9 A I would be surprised. Maybe the process is slow coming

10 over from England.

11 Q Mr. McShane, you testified I think that you have taken

12 courses of O.T.s I think you said the old O.T. I through

13 VII. Is that what you said? Straighten me out, please.

14 A I have taken O.T. I, the old O.T. I., which I did back in

15 1975. II and III, and IV, V, VI, and VII at the same time

16 period which is the old VI, V, VI, and VII. Since then I have

17 done the new O.T. IV and the new O.T.V.

18 Q The O.T. IV through VII, the old O.T. IV through VII, are

19 they the ones that are on the attachments to the Fishman

20 affidavit?

21 A Yes, I believe so.

22 Q They are no longer in use, are they?

23 A Bits of them are. And they will be in the future.

24 Q But at the present time for the most part O.T. IV through

25 VII are not in use?


478

1 A They are they are not delivered as they were, no, they

2 are not.

3 Q How about O.T. I, is that still in use in the form that it

4 exists in the attachments to the Fishman affidavit?

5 A O.T. I is revised, some of the same.

6 Q Now, are the plattens that you said were permitted to be

7 taken out overnight or what have you I want to make

8 absolutely clear are these nonconfidential materials that

9 the parishioners get to keep?

10 A No, these are confidential.

11 Q What are the nonconfidential materials?

12 A I am not tracking with you. Nonconfidential materials

13 anywhere or O.T. levels or what?

14 Q Well, let's say O.T. levels. I think you said as far as

15 you are concerned the story of Xemu is nonconfidential.

16 A Well, I said the name Xemu or the 75 million years ago

17 incident is not confidential. Mr. Hubbard has talked about

18 that.

19 Q That is something that would be covered under the

20 nonconfidential nondisclosure part of the agreement that

21 people signed with the church; is that right?

22 A The description of the incident with Xemu is described in

23 very great detail in the O.T. III materials. It's interwoven

24 with what we had done to different people. That whole story,

25 the background materials, et cetera, and what he has done


479

1 which is interwoven into that is trade secret, is

2 confidential.

3 Q So are you saying the entire thing is confidential trade

4 secret or not?

5 A What I am trying to explain, the reference to Xemu or

6 Mr. Hubbard's description of the incidents that happened is

7 not. How it is greater described in the O.T. III material and

8 that description which I pointed out to the court, that first

9 paragraph you look at, it's interwoven with a lot of factual

10 things that have happened to individual persons. That is

11 secret.

12 Q Under your agreements with your parishioners, it would be

13 perfectly okay for someone who had taken O.T. III to go out

14 and tell persons that are not opposed to Scientology that what

15 they were working with involves Xemu and the volcanoes and

16 something that happened 75 million years ago; is that right?

17 A If somebody has taken the level and gone out and talked

18 about the great catastrophe that occurred 75 million years ago

19 and talked about Xemu and volcanoes, that wouldn't be off

20 policy or wouldn't be breaching that agreement.

21 Q Unless it's done with someone who is opposed to

22 Scientology?

23 A Not even then. The volcanoes on the cover of Dianetics,

24 the tape that he talks about the catastrophe is in a tape

25 that is sold to the public.


480

1 Q Are there any parts of the copyrighted works of Ron

2 Hubbard that are not included and I am talking about O.T. I

3 through VII in the registration deposits?

4 A Yes, all of the nonconfidential materials that are

5 included in those levels are not included in deposits.

6 Q As far as you know, they are not part of the registration

7 of copyrighted works through the R.T.C.

8 A That's correct.

9 Q You said that the only materials you took from

10 Mr. Wollersheim's garage were hard copies of the Fishman

11 document.

12 Isn't it true that because of time constraints

13 several large files containing hard copies of documents were

14 taken without going through them?

15 A I scanned through several files. When I discovered any

16 copyrighted material that were affixed to that were bound

17 in some form within the file, I didn't want to undo the

18 binding just because of the allegation we expected

19 Mr. Wollersheim to make, so I kept them intact.

20 Q In addition to the Fishman affidavit, you took his entire

21 file in a 1977 FBI raid of Scientology, did you not?

22 A I don't believe so.

23 MR. KELLEY: If I could just have a few seconds?

24 That's all, Your Honor. Thank you.

25 THE COURT: Any redirect?


481

1 MR. COOLEY: May I consult with my

2 REDIRECT EXAMINATION

3 BY MR. COOLEY:

4 Q With respect to the old O.T. levels, portions of them are

5 still in use in the O.T. level; is that correct?

6 A There is bits of it, yes.

7 Q There is intention to use them again?

8 A Absolutely.

9 Q In any event, all O.T. levels are covered by copyright,

10 are they not?

11 A That's correct, sir.

12 Q Each one having an individual copyright?

13 A Yes.

14 MR. COOLEY: That's all.

15 THE COURT: You may stand down. Thank you.

16 MR. COOLEY: The plaintiff rests, Your Honor.

17 THE COURT: Any surrebuttal?

18 MR. KELLEY: I don't think so, Your Honor. Let me

19 just check.

20 THE COURT: All right.

21 MR. KELLEY: No, Your Honor.

22 THE COURT: We are going to stand in recess. Come

23 back at two o'clock. Each side will have 30 minutes to sum

24 up. We'll be in recess.

25 (Recess at 12:15 to 2:00 p.m.)