Why Scientology settles costly cases

by anonymous@electra.lightlink.com
Jeff Jacobsen wrote:

>   A Tampa Tribune article dated 8/17/86 titled "Scientologists settle 
>costly lawsuits out of court" it names 4 suits the church settled.
[re: Cazares, Burden, McLeans, Wakefield suits]
>   My question is; why would the church not take these cases to trial?  
>Were they afraid they would lose?  Were they just accepting that they 
>were guilty as charged?  Why were the plaintiffs happy with the outcome, 
>but the church sought to seal the documents?

There are several reasons why Scientology did not take these cases to trial. Hubbard and Scientology were not afraid of losing. Heck, they were counting on losing! They knew they were guilty of the atrocities for which they were being sued! Winning litigation on the merits has never been Hubbard's nor Scientology's strategy. He had a different and "better" plan.

The four cases above (plus Gerald Armstrong, Homer Schomer and a few others) were all represented by Boston lawyer, Mike Flynn. These cases were known within Scientology top management circles as "the Flynn litigation." For some years, Flynn was "Scientology Enemy No. One."

Most of these "Flynn cases" had started in the 1970s -- when the GO was in charge of handling legal matters and conducting litigation. These cases continued on for years consuming a lot of Scientology time and money but Hubbard (and the GO operating on his instructions and policies) preferred to continue those cases dragging them out as long as possible, even though they knew they would ultimately lose most or all of them, if they came to trial.

At that time, Hubbard's reasoning was that it was better to stall the inevitable losses as long as possible, by prolonging the litigation and by making it as costly as possible to the plaintiffs suing Scientology and him. He hoped that these plaintiffs would run out of money and give up. Even if any of them did get as far as a trial and win, Scientology could delay having to pay out for years with motions for reconsideration, appeals and other delays. In the unlikely event that Scientology did finally have to pay out, Hubbard wanted to ensure that the costs of anti-Scientology litigation would be greater than the amount of the judgment. Thus Hubbard intended to establish that "it did not pay to sue Scientology."

Hubbard also feared that if any of these litigants were successful in collecting from Scientology, then that money would be used by Flynn to finance other cases by Flynn against Scientology. Worse yet, Hubbard thought: other persons who had been harmed by Scientology would feel that they, too, could successfully litigate and collect from Scientology; in other words, Scientology would be viewed as "a deep pocket."

Should Hubbard's strategy be successful, victims of Scientology and their lawyers would not dare to sue Scientology. The financial costs, harassment and length of time involved would be too formidable. Hubbard would have defeated the judicial system, using the system against itself and against his "enemies".

In those days, Hubbard had an older and more powerful foe than Flynn: the IRS. Although Hubbard was sure he could defeat civil litigants by using the tactics described above, something more was needed to thwart the tax collectors of the world, who had the power of their governments behind them.

In around 1980, Hubbard (with the help of Pat Broeker) finalized the plan to gut the main Scientology corporations and bankrupt them to evade paying taxes to the IRS.

This plan had been described earlier by Hubbard in briefings to the GO. The idea was to split Scientology up into lots of different "separate" corporations. If it looked like the IRS would obtain a judgment against any Scientology corporation, that corporation could be gutted in advance. This same strategy could also be used if a civil litigant managed to overcome the obstacles above.

Only one problem remained. Hubbard was deathly afraid of criminal prosecution, not just by the IRS and their counterparts in other governments for tax fraud and tax evasion but also as an unindicted co-conspirator in the "DC-9" and "UK-2" cases. (Eleven members of the GO including Mary Sue Hubbard were caught and prosecuted for burglarizing and stealing documents from US government offices.) Hubbard also faced criminal prosecution for fraud and other offenses in the U.K., Canada, France, Italy, Spain, Denmark, etc.. How could Hubbard stay out of prison?

This is where David Miscavige rose to fame, glory and power. The cunning little lad, dreaming and scheming of the day when Hubbard would die and only Hubbard's wife Mary Sue would stand between Miscavige and all that money and power, hatched a plot and sold it to "the Old Man." Scapegoat Mary Sue and the GO! Blame them for all the criminal actions that Hubbard had originated and the CMO (Commodore's Messenger Organization) had relayed to and supervised the GO's execution of and that would get put Hubbard and the CMO in the clear AND get rid of Mary Sue. Hubbard loved it. Miscavige ran the GO takeover mission. He PRed the government (and incidentally, Scientology's more law abiding members) that he had "cleaned house" of all the "GO crims". Internally though, Miscavige called it the Whitewash" -- sometimes "Snow Job," naming it after Snow White."

Miscavige and the two Broekers, having now been appointed by Hubbard as Scientology's trustees, were set to "inherit" it all! Just one snag. The IRS still refused Scientology tax exemption and was preparing to collect back taxes. Having purged the "GO crims" (who had broken into IRS offices) would look good on a renewed application for tax exemption but being a vicious litigant contradicted Scientology's desired public relations image -- a church devoted to good works and public service. Norman Starkey, in charge of Scientology litigation and Lyman Spurlock, in charge of Scientology "Legal, Corporate" made themselves indispensable and hacked out a chunk of the pie by (temporarily) softening the appearance of Scientology's litigousness.

The "bright idea" was to get rid of at least some of the lawsuits in a show of good nature. The main litigation going on at that time was: the Flynn cases, the Wollersheim case and the Mayo cases. The question was, which to get rid of.

Wollersheim was going for big bucks, his lawyers were working on contingency and neither he nor his lawyers were likely to settle cheap.

There were orders from Hubbard to destroy Mayo utterly, which had not yet been complied with. RTC had forced Mayo out of operation with a wrongfully gained injunction and OSA's "Seeds of Doubt" program had turned many of the "freezoners" against Mayo. Without support and with an injunction against him Mayo, would not last more than a few months. Besides, Hubbard had told Miscavige and Spurlock that Mayo was the single biggest competitive threat to Scientology, elevating him to the position of "Scientology Enemy No. One" in place of Flynn.

Flynn after many years Scientology litigation and harassment was getting tired of it all. His funds had run out. He represented several lawsuits and so settling with Flynn would get rid of several lawsuits at the same time. For less than ten million, they could forge a global settlement with the Flynn cases, PR the IRS about Scientology's willingness to settle cases and at the same time free up more of their own manpower to pour onto the Mayo and Wollersheim cases and wipe them out faster! Spurlock and Starkey chose the "Flynn cases" to settle. A wonderful PR move -- and, they could always come back and pick off the individuals Flynn had represented later, e.g., Gerry Armstrong, this year.

Pfeffer and Yingling helped with the IRS and Scientology got its tax exemption.

Gentle reader, you may wonder if that is really why Scientology settled the "Flynn cases." Whether it was just to look good on their tax exemption applications? For about 8 million when they would have had to pay out many times that amount in taxes, it made good sense to Miscavige, Starkey, Spurlock & Company.

>Jeff Jacobsen         SP4, Scientology critic
>PO Box 3541           http://www.primenet.com/~cultxpt/demo.htm
>Scottsdale AZ  85271  Picket Scientology March 9, 1996 Worldwide!
>USA                   "Stop the harassment, Scientology"

Scientology is now trying to settle lawsuits, in the UK, in their
latest attempt to get tax exemption over here.

The Sword of Justice