United States District Court
Southern District of New York

--------------------------------
)
CHURCH OF SCIENTOLOGY )
INTERNATIONAL, )
)
Plaintiff, )
) 92 Civ. 3024 (PKL)
-against- )
)
TIME WARNER, INC., TIME INC. ) OPINION AND ORDER
MAGAZINE COMPANY, and RICHARD )
BEHAR )
)
Defendants )
________________________________)


APPEARANCES

MORRISSON COHEN SINGER & WEINSTIEN, LLP
750 Lexington Avenue
New York, New York 10022

Jonathan W. Lubell; Esq., of counsel

Attorneys for Plaintiff



CAHILL GORDON & REINDEL
80 Pine Street
New York, New Tork 10005


Floyd Abrams, Esq., of counsel
Dean Ringel, Esq., of counsel
David G. Januszowski, Esq., of counsel
James R. Oswald, Esq., of counsel

Attorneys for defendants


LEISURE, District Judge:

Defendants moved for summary judgement in this libel action,

which the Court granted in part and denied in part. See Church

of Scientology Int'l v Time Warner, Inc., 903 F. Supp. 637

(S>D>N>Y> 1995). Defendants then moved for reargument and

reconsideration, arguing that the Court should have granted

summary judgement in full because the sole remaining statement

sued upon in nonactionable based on the incremental harm

doctrine. After reargument, and upon reconsideration, for the

reasons stated below, the Court grants summary judgement as to the

sole remainaing statement in the case and dismisses the case in

its entirety.


BACKGROUND

In 1992, Time magazine published a 10 page, 7500 word

article entitled Scientology: The Cult of Greed" (the

"Article"). The Article was highly critical of Scientology, and

included such statements as:


"For nearly 40 years, the big business of
Scientology has shielded itself equisitely
behind the First Amendment. . . .


"In reality the church is a hugely profitable global
racket that survives by intimidating members and critics
in a Mafia like manner."

"Many of the groups followers have been
accused of committing financial scams, while
the church is busy attracting the unwary
through a wide array of front groups in such
businesses as publishing, consulting, health
care and even remedial eductaion."

"Says Cynthia Kisser, the [Cult Awareness

2


Networks] Chicago based executive director:
'Scientology is quite likely the most
ruthless, the most classically terroristic
the most litigious and the most lucrative
cult the country has ever seen. No cult
extracts more money from its members.'
Agrees Vickie Aznaran, who was one of
Scientology's six key leaders until she
bolted from the church in 1987: 'This is
a criminal organization, day in and day out.
It makes Jim and Tammy [Bakker] look like
kindergarten.'" (alteration in original)

"Today the church invents costly new services
with all the zeal of its founder."

"To pay off their fees, newcomers can earn
commissions by recruiting new memners, becaome
auditors themselves. . . ., or join the
church staff and receive free counseling in
exchange for what thier written contracts
describe as a 'billion years' of labor.
'Make sure that lots of bodies move through
the shop,' implored [founder] Hubbard in one of
his bulletins to officials. 'Make money.
Make more money. . . However you get them in
or why, just do it.'" (second ommission
in original)

"To gain influence and lure richer, more
sophisticated followers, Scientology has lately
resorted to a wide array of front groups
and financial scams."

"Over five months, the Gearys say, they spent
$130,000 for services, plus 50,000 for
gold-embossed, investment grade' books
signed by Hubbard. Geary contends that
Scientologists not only called his bank to
increase his credit card limit but also
forged his signature on a $20,000 loan
application."


HealthMed, a chain of clinics run by
Scientologists, promotes a grueling and
excessive system of saunas, exercise and
vitamins designed by Hubbard to purify
the body. Experts denounce the regime
as quackery and potentially harmful, yet
HealthMed solicits unions and public agencies
for contracts."

-3-


"Hubbards purification treatments are the
mainstay of Narconon, a Scientology-run chain
of 33 alocohol and drug rehabilitaionm centers
-- some in prisons under the name 'Criminon'
-- in 12 countries. Narconon, a classic
vehicle for drawing addicts into the cult,
now plans to open wwhat it calls the world's
largest treatment center. . . . "

"Three Florida Scientologists, including
Ronald Bernstien, a big contributer to the
church's international 'war chest' pleaded
guilty in March to using thier rare-coin
dealership as a money laundry. Other
notorious activities by Scientologists
include making the shady VAncouver Stock
exchange even shadier (see box) and plotting
to plant operatives in the World Bank,
International Monetary Fund and Export-Import
Bank of the U.S. The alledged purpose of this
scheme: to gain inside information on which
countries are going to be denied credit so
that Scientology linked traders can make
illicit profits by taking 'short' positions
in those countries' currencies."

"The Feshbachs command a staff of about 60
employees and claim to have earned better
returns that the Dow Jones industrial average
for most of the 1980s. And, they say, they
owe it all to the teachings of Scientology,
whose 'war chest' has received more tha $1
million from the family. The Feshbachs also
embrace the church's tactics; the brothers
are the terrors of the stock exchanges. In
congressional hearings in 1989, the heads of
several companies claimed that Feshbach
operatives has spread false information to
government agencies and posed in various
guises -- such as a Securities and Exchange
Commission official -- in an effort to
discredit thier companies and druive the
stocks down."

Scientology mischief making has even moved to
the book industry. . . . SCientology has sent
out armies of its followers to buy the
groups books at such major chains as B.
Dalton's and Waldenbooks to sustain the
illusion of a best selling author. A former
Dalton's manager says that some books arrived
in his store with the chain's price stickers

- 4 -


already on them, suggesting that copies are
being recycled."

Scientology devotes vast resources to squelching its
critics"

"Those who criticize the church -- journalists, lawyers
and even judges -- often find themsleves engulfed in
litigation, stalked by private eyes, framed for fictional
crimes, beaten up or threatened with death"

"One of Scientology's main strategies is to
keep advancing the tired argument that the
church is being 'persecuted' by anti-
religionists. It is supported in that
position by the American Civil Liberties
Union and the National Council of Churches.
But in the end, money is what Scientology is
all about. As long as the organization's
opponents and victims are successfully
squelched, Scientology's managers and lawyers
will keep pocketing millions of dollars by
helping it achieve its ends."

The Church of Scientology International ("CSI") filed a

complaint for libel against defendants, challenged as false and

defamatory several statements from the Article. The Statements,

numbered by the Court but otherwise as set forth in the

complaint, are as follows:

1. " [T]he Church . . . survives by
intimidating members and critics in a Mafia-
like manner."

2. "Scientology is quite likely the most
ruthless, the most classically terroristic
. . . cult the country has ever seen."

3. "Those who criticize the church --
journalists, lawyers and even judges
-- often find themsleves framed for fictional
crimes, beaten up or threatened with death"

4. "Occassionally a Scientologist's business
antics land him in jail. Last August a former
devotee named Steven Fishman began

(end page) -5-

serving a five year prison term in Florida.
His crime: stealing blank stock confirmation
slips from his employer, a major brokerage
house, to use as proof that he owned stock
entitling him to join dozens of successful
class action lawsuits. Fishman made roughly
$1 million this way from 1983 to 1988 and
spent as much as 30% of the loot on
Scientology books and tapes. Scientology denies
any tie to the Fishman scam, a claim
strongly disputed by both Fishman and his
longtime psychiatrist, Uwe Geertz, a
prominent Florida hypnotist. Both men claim
that when arrested, Fishman was ordered by
the Church to kill Geertz and then do an
'EOC' or end of cycle, which is Church
jargon for suicide."

5. "One source of funds for the Los Angeles-
based church is the notorious, self-regulated
stock exchange in Vancouver, British Columbia,
often called the scam capital of the world."

6. "Baybak, 49, who runs a public relations
company staffed with Scientologists,
apparently has no ethics problem with
engineering a hostile takeover of a firm
he is hired to promote."

7. "what these guys do is take over companies
hype the stock, sell their shares, and then
there's nothing left. . . '" "'They stole
this mans property.'" [Referring to William
Jordan.]

8. "THE LOTTICKS LOST THIER SON, Noah, who
jumped from a Manhattan hotel clutching $171,
virtually the only money he had not yet
turned over to Scientology. His parents
blame the church and would like to sue but
are frightened by the organization's ruthlessness."

9. "His death inspired his father Edward, a
physician, to start his own investigation of
the church. 'We thought Scientology was
something like Dale Carnegie.' Lottick says.
'I now believe it's a scool for psychopaths.
Thier so=called therapies are manipulations.
They take the best and the brightest people
and destroy them.'"

page6

10. "It was too late. 'From Noah's friends
at Dianetics' read the card that accompanied
a bouquet of flowers at Lottick's funeral.
Yet no Scientology staff members bothered
to show up "


11. "The next month the Rowes flew to
Glendale, Calif., where they were shuttled daily
from a local hotel to a Dianetics center.
'We thought they were brilliant people
because they seemed to know so much about
us,' recalls Dee. 'Then we realized our
hotel room must have been bugged.' After
bolting from the center, $23,000 poorer, the
Rowes say, they were chased repeatedly by
Scientologists on foot and in cars."

12. In a court filing, one of the cult's
many entities - the Church of Spiritual
Technology - listed $503 million in income
just for 1987."

By Opinion and Order dates November 23, 1992, this Court

granted defendants' motion to dismiss plaintiff's claims

regarding certain statements in the complaint, on the the grounds

that they could not be read as referring to plaintiff. See

Church of Scientology Int'l v. Time Warner. Inc., 806 F Supp.

1157 (S.D.N.Y. 1992). Specifically, the Court found that parts

of paragaph 4 and paragraphs 6, 7, 11, and 12 above do not

allege statements that could reasonably be considered to be of

and concerning CSI.

By Opinion and Order dated November 15, 1995, this Court

granted summary judgement for defendants as to paragraphs 1-4 and

8-10 above on the grounds that no reasonable jury could find that

these statements were publiched with malice. See Church of

Scientology Int'l v. Time Warner, Inc., 903 D. Supp.. 637

(S.D.N.Y. 1995) Thus the only statement remaining in the case

(end of page) -7-


in paragraph 5 above. Defendants moved for reargument of the

motion for summary judgement on the grounds that the Court

overlooked thier argument that the claim regarding paragraph 5

above should be dismissed based on the incremental harm doctrine.

The Court granted the motion for reargument and accepted further

briefing on the question of summary judgement as to paragraph 5

above based on the doctrine of incremental harm.

DISCUSSION

I. Distinctions Between the Liebl-Proof Plaintiff, Incremental
Harm, and Subsidiary Meaning Doctrines


There are three relevant related doctrines under which

courts have granted judgement to defendants in libel suits: (1)

the libel-proof plaintiff doctrine, (2) the incremental harm

doctrine, and (3) the subsidiary meaning doctrine. Because these

separate doctrines have not always been distinguished, and because

the terms are not used consistently, some definition of

the doctrines for purposes of this Opinion is in order.

The libel-proof plaintiff doctrine reasons that when a

particular plaintiff's reputation for a particular trait is

sufficiently bad, further statements regarding that trait, even

if false and made with malice, are not actionable because, as a

matter of law, the plaintiff cannot be damaged in his reputation

as to that trait. See, e.g., Guccione v. Hustler Magzine, inc.,

800 F.2d 298, 303 (2d Cir. 1986) holding that plaintiff's

reputaion regarding adultry rendered him libel proof as to

allegations of adultry, even though allegation related to a

(end of page) -8-



time period when plaintiff was no longer married, and hence was

no longer committing adultery), cert denied, 479 U.S. 1091

(1987); Cardillo v. Doubleday & Co., Inc., 518 F.2d 638, 639-40

(2nd Cir. 1975) (holding that plaintiff, a habitual criminal, was

libel proof as to allegations of criminal activity at issue,

because his existing reputation created by past indictments and

convictions could not be worsened by the alleged false statements).

The incremental harm doctrine reasons that when unchallenged

or nonactionable parts of a particular publications are damaging,

another statement, though maliciously false, might be

non-actionable on the grounds that it causes no harm beyond the

harm caused by the remainder of the publication. See Masson v.

New Yorkers Magazine,. INc. 501 U.S. 496, 522 (1991); Simmons

Ford, Inc. V. Consumers Union of US., Inc., 516 F. Supp. 742,

750 (S>D>N>Y> 1981) (Weinfeld, J.) ("Given the abysmal

performance and safety evaluations detailed in the article,

plaintiffs could not expect to gain more than nominal damages

based on the addition to the article of the misstatement relating

to federal safety standards.") The incremental harm doctrine

"thus measures the incremental harm inflicted by the challenged

statements beyond harm imposed by the rest of the publication.

If that harm is determined to be nominal or nonexistent, the statements are dismissed as not actionable."

Herbert vs Lando, 781 F.2d 298, 311 (2nd Cir.), cert denied, 476

U.S. 1182 (1986)

(end of page) -9-

The subsidiary meaning doctrine reasons that where a

maliciously false statement implies the same ultimate conclusions

as that of the remainder of the publication, which has been

published without actual malice, a plaintiff cannot "base his

defamation action solely on inaccurancies contained within

statements subsidiary to these larger views." Id. Thus, having

determined that those conclusions of the publication,

and determined that those conclusions were not published with

actual malice, a court must grant summary judgement for the

defendant where the minor inaccuracies sued upon are subsidiary

to one or more larger views which is nonactionable. See Jay

Framson, Note, The First Cut is the Deepest, but the Second May

be Actionable: Masson v. New Yorker Magazine, Inc. and the

Incremental Harm Doctrine, 25 Loy. L.A. L. Rev. 1483, 1516 n.233,

1517 n.237 (1992).


II. Application of the Three Doctrines

A. The Libel Proof Plaintiff Doctrine

Dismissal based on the libel-proof plaintiff doctrine is not

appropriate at this stage of the litigation, because it requires

the Court to make factual findings regarding plaintiff's

reputation for a particular trait. In addittion, the doctrine has

been persuasively criticized by then-Judge Scalia's opinion in

Liberty Lobby, Inc. vs Anderson, 746 F.2d 1565, 1568 (D.C. Cir.

1984) ("To begin with, we cannot envision how a court would go

about determining that someones reputaion had already been

(end of page) -10-



'irreparably' damaged -- i.e., that no new reader could be

reached by the freshest libel." (emphasis in original)), vacated

on other grounds, 477 U.S. 242 (1986)


B. The incremental Harm Doctrine

The proposition that the incremental harm doctrine is

grounded in the First Amendment has been rejected by the Supreme

Court in Masson v. New Yorker Magazine, Inc., 501 U.S. at 523.

In addition, the doctrine requires a court to measure the harm

flowing from the challenged statement as compared to the harm

flowing from the rest of the the publication, see id. and the

parties have not yet conducted discovery on the issue of damages.

Because the Court finds, as a corollary to the actual malice

requirement of the First Amendment to the United States

Constitution; that the subsidiary meaning doctrine bars suit on

statements the implication of which, if itself published, is

not actionable, see infra Part II.C, the Court need not reach the

questions of whether the incremental harm doctrine bars recovery as a

matter of state law.

C. The Subsidiary Meaning Doctrine

In contrast to the incremental harm doctrine, the subsidiary

meaning doctrine has not been rejected by the Supreme Court, and thus,

under Herbert v. Lando, 781 F.2d 298 (2d Cir.), cert.

denied, 476 U.S. 1182 (1986), is still the law in this Circuit

(end of page) -11-



See also Masson v. New Yorker Magazine, INc., 895 F.2d 1535,

1565-66 (9th Cir. 1989) (Kozinki, J. dissenting) (stateing that

the subsidiary meaning doctrine set forth in Herbert is "very

different" from the 'stillborn" incremental harm doctrine, "and

quite unexceptional"), rev'd, 501 U.S. 496 (1991); Liberty Lobby

Inc., 746 F.2d at 1468 n.6 (Scalia, J.) ("[A]t some point the

erroneous attribution of incremental evidence of a character flaw

of a particular type which is in any event amply established by

the facts is not derogatory."). IN addition, unlike the

incrimental harm doctrine , the subsidiary meaning doctrine does

bear on the First Amendment issue of actual malice, because if a

minor inaccuracy could be grounds for libel, where the ultimate

conclusion which the inaccuracy supports could not be because if a

minor inaccuracy could be grounds for libel, where the ultimate

conclusion which the inaccuracy supports could not be because it

is published without actual malice, the protection afforded to

freedom of speech by the requirement that a plaintiff prove

actual malice would be undermined. See Erin Daly, The

Incremental Harm doctrine: Is There Life After Masson?, 46 Ark.

L. Rev 371, 385-86 (1993) (arguing that if one statement were

privileged as based on court documents, and another minor

statement could be sued upon, the privilege would be undermined).

Compare Masson, 501 US. at 523 ("the questions of incremental

harm soed not bear upon whether a defendant has published a

statement with knowlege of falsity or reckless diregard of

whether it is false or not.")

Accordingly, the Court must determine whether paragraph 5

above is subsidiary to the nonactionable views published in the

(end of page) -12-


remainder of the Article. See Herbert, 781 F.2d at 312 ("[W]e

hold that if the appellees' published view that Herbert lied

about reporting war crimes was not actionable, other statements

-- even those that might be found to have been published with

actual malice -- should not be actionable if they merely imply

the same view, and are simply an outgrowth of and subsidiary to

thosie claims upon which it has been held there can be no

recovery."). This determination need not be based on statements

proven, or conceded, to be true, see id., but may be based on

statements that are either unchallenged, see Simmons Ford, Inc.,

516 F. Supp. at 750 (considering the challenged statement in

light if the meaning conveyed by the remainder of the article), or

nonactionable, see Herbert, 781 F. 2d at 312 (holding that where

implication of challenged statement is nonactionable

under subsidiary meaning doctrine). See Erin Daly, Incremental

Harm doctrine: Is there Life After Masson?, 46 Ark. L. Rev. 371,

385-86 (1993).

As demonstrated by the quotations set forth in the

Background section of this Opinion and Order, the Article,

"Scientology: Cult of Greed" asserts, among other things, that

Scientology, rather than being a bona fide religion, is in fact

organized for the purpose of making money by means legitimate and

illegitimate. The Article detailes various alleged schemes that

the church allegedly uses to increase its revenues, including

(end of page) -13-


charging ever increasing fees to its members, deceiving non-

members through the use of front groups, manipulating securities

and currency markets through the use on inside information, and

evading taxes. It also criticizes the church on various other

subjects, including the validity of its belif system, the

harmfulness of its methods of counseling, and its tactics of

combatting critics. These statements were either not challenged

by plaintiff or were held to be non actionable by the Court on the

grounds that not reasonable jury could find that they were

published with actual malice. The sole statement still at issue

in the case ("one source of funds for the Los Angeles-based

church is the notorious, self regulated stock exchange in

Vancouver, British Columbia, often called the scam capital of the

world.") merely implies that the same view which this Court has

held to be non-actionable as not made with actual malice: that

Scientology's purpose is making money by means legitimate and

illegitimate. Accordingly, the claim based on this statement

must be dismissed as subsidiary to a nonactionable view expressed

in the Article.

(end of page) -14-


CONCLUSION

For the reasons stated above, upon reconsideration, the court
HEREBY GRANTS Summary judgement for the defendants on the
sole remaining statement sued upon. The action is dismissed.



SO ORDERED New York NY July 16th 1996