UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

RTC, et al., Plaintiffs, v. ROBIN SCOTT, et al., Defendants.

No. 85-711-JMI (Bx)
       85-7197-JMI (Bx)

MEMORANDUM OF DECISION

I.

INTRODUCTION

	On the heels of the order dismissing plaintiffs' 
amended complaints for discovery misconduct, defendants-
counterclaimants ("defendants") have moved for an order 
awarding them 2.9 million dollars in attorneys' fees.  
Defendants argue that they are entitled to all fees incurred 
in defending the dismissed cases, citing the Lanham Act (15 
U.S.C.   1170, the copyright statute (17 U.S.C.   505), 
California contract law, and the court's inherent power to 
sanction bad faith conduct.

	Plaintiffs-counterdefendants ("plaintiffs") have 
opposed the motion.  After the motion was submitted, 
plaintiffs requested that the Special Master defer ruling on 
the motion for attorneys' fees until after they produced the 
court-ordered discovery and conducted their own discovery 
regarding the attorneys' fees.

II.

DISCUSSION

A.  DEFENDANTS ARE ENTITLED TO ATTORNEYS' FEES
UNDER THE LANHAM ACT

	Defendants have requested attorneys' fees pursuant to 
the Lanham Act, which authorizes the court to award such 
fees in an "exceptional case".  See  15 U.S.C.   1117.  
Courts have found an "extraordinary case" where the 
"opposing party is guilty of 'extraordinary, malicious, 
wanton and oppressive conduct'".  Academy of Motion Picture 
Arts v. Creative House, 944 F.2d 1446, 1457 (9th Cir.  
1991), citing Transgo, Inc. v. Ajac Transmission Parts 
Corp.,  768 F.2d 1001, 1026 (9th Cir. 1985).

	Plaintiffs have abused the federal court system by 
using it, inter alia, to destroy their opponents, rather 
than to resolve an actual dispute over trademark law or any 
other legal matter.  This constitutes "extraordinary, 
malicious, wanton and oppressive conduct".  As such, this 
case qualifies as an "exceptional case" and fees should be 
awarded pursuant to the Lanham Act.

B.  DEFENDANTS ARE ENTITLED TO ATTORNEYS' FEES
UNDER THE COPYRIGHT STATUTE

	Defendants have requested attorneys' fees pursuant to 
the copyright stature, 17 U.S.C.   505.  The statute reads 
as follows:

In any civil action under this title, the court in its 
discretion may allow the recovery of full costs by or 
against any party other than the United States or an 
officer thereof.  Except as otherwise prohibited by 
this title, the court may also award a reasonable 
attorney's fee to the prevailing party as part of the 
costs.  See  17 U.S.C.   505.

	Despite this broad language, the Ninth Circuit has 
consistently held that a prevailing defendant must show that 
the plaintiffs' action was frivolous or brought in bad faith 
in order to recover attorneys' fees.  Jartech, Inc. v. 
Clancy, 666 F. 2d 403, 407, (9th Cir. 1982), cert. denied, 
459 U.S. 879, reh'q denied, 459 U.S. 1059, second reh'q 
denied, 463 U.S. 1237 (1983); see also, Bibbero Systems, 
Inc. v. Colwell, 893 F.2d 1104, 1108 (9th Cir. 1990) 
(reaffirming the validity of the Jartech standard and 
applying it to pretrial dismissals).

	Defendants [ed. Mayos] have met their burden under the 
Jartech standard.  Plaintiffs' complaints were not 
frivolous, but they were brought in bad faith.  It is 
abundantly clear that plaintiffs sought to harass the 
individual defendants and destroy the church defendants 
through massive overlitigation and other highly questionable 
litigation tactics.  The Special Master has never seen a 
more glaring example of bad faith litigation than this.  
Therefore, it is appropriate to award attorneys' fees 
pursuant to the copyright statute.

C.  THE COURT WILL NOT AWARD ATTORNEYS' FEES
BASED ON CALIFORNIA STATUTORY LAW

	Plaintiffs [ed. Scientology] have argued that 
California statutory law authorizing an award of attorneys 
fees for the prevailing party on contract claims should not 
be applied where, as here, the contract claims were 
dismissed as non-justiciable under the first amendment 
freedom of religion clauses.

	Plaintiffs' argument is not without merit.  Applying 
state statutory law might impinge upon important 
constitutionally guaranteed individual rights.  California 
contract law might collide with the first amendment in this 
particular context.

	Nevertheless, the court clearly has the power to award 
attorneys' fees for the contract claims, and all other 
claims, based upon its inherent power to sanction bad faith 
litigation conduct.  See, infra at 5-6.  As set forth below, 
the court will exercise that power.  Therefore, the Special 
Master need not, and will not, address this unsettled and 
complex constitutional question.

D.  DEFENDANTS ARE ENTITLED TO AN AWARD OF
ATTORNEYS' FEES UNDER THE BAD FAITH EXCEPTION
TO THE AMERICAN RULE

	It is well established that, under the "American rule", 
courts ordinarily will not award the prevailing party 
attorneys' fees absent statutory authority to do so.  See 
e.q., Hensley v. Eckerhart, 461 U.S. 424, 429 (1983).

	It is equally well established that there is an 
exception to the American rule when the losing party has 
engaged in bad faith or oppressive litigation tactics.  See, 
Alyeska Pipeling Service Co.v. Wilderness Society, 421 U.S 
240, 258 (1975) ("Also, a court may assess attorneys' fees 
for the willful disobedience of a court order . . . or when 
the losing party has 'acted in bad faith, vexatiously, 
wantonly, or for oppressive reasons'."); see also, Chambers 
v. NASCO, Inc., _U.S._, 111 S.Ct. 2123, 2135 (1991) ("There 
is, therefore, nothing in the other sanctioning mechanisms 
or prior cases interpreting them that warrants a conclusion 
that a federal court may not, as a matter of law, resort to 
its inherent power to impose attorney's fees as a sanction 
for bad faith conduct.")

	As already stated, the Special Master finds that 
plaintiffs engaged in egregious bad faith litigation 
conduct.  Therefore, to the extent that fees are not awarded 
pursuant to the court's inherent power to sanction such bad 
faith conduct.

E.  THE SUBMITTED ATTORNEYS' FEES ARE FAIR
AND REASONABLE

	The Special Master has reviewed the attorneys' bills 
submitted by defendants with an eye towards the twelve 
factors enunciated in Kerr v. Screen Extras Guild, Inc., 526 
F.2d 67, 70 (9th Cir. 1975) -- the cornerstone "lodestar" 
for attorneys' fees motions.

	The defendants submission passes muster under this 
lode-star test.  The submission reflects that many attorneys 
worked many, many hours on this case.  However, the hours 
are reasonable given the plethora of constitutional issues, 
discovery stand-offs, appeals and, most importantly, 
plaintiffs' practice of endlessly litigating issues.
	
	The hourly rates are reasonable for federal civil 
practice within the Central District of California.  The 
submission is complete and accurate.  It does not contain 
billings for the pending counterclaims or extraneous 
matters.  Redactions due to privileges are at a minimum and 
appear fair.  Overall, the submission is extensive and 
convincing.

	The Special Master has considered plaintiff's numerous 
objections to the submission in writing and at the hearing 
on the motion, but finds that these objections are 
meritless.  Therefore, the court will award the requested 
amount of 2.9 million dollars.

	A recommended order will follow.

*	*	*

IT IS ORDERED THAT plaintiffs' motion to defer ruling on
the motion for attorneys fees is DENIED.  IT US FURTHER
ORDERED THAT defendants motion for attorneys' fees is GRANTED
and plaintiffs are to pay defendants 2.9 million dollars for 
attorneys' fees.

	IT IS SO ORDERED.

DATED:  January 20, 1993

JAMES G. KOLTS
U.S. Special Master