I don't know if I posted, was hoping to get the orders first but Judge
Whyte tossed both of RTC's request to get the bankruptcy withdrawn and
to recuse the Judge.
So here is the latest. For some odd reason I seem to be missing a
page, but it hardly matters.
Elaine M. Seid, SBN 72588 FILED
MCPHARLIN, SPRINKLES & THOMAS LLP
Ten Almaden Blvd., Ste. 1460 2001
San Jose, CA 95113 AUG 2 3
Telephone: (408) 293-1900
Thomas RUnited States Bankruptcy r San Jose, California
. Hogan, SBN 042048 .. ours
Leslie Holmes, SBN 192608
LAW OFFICES OF THOMAS R. HOGAN
Ten Almaden Blvd., Ste. 535
San Jose, CA 95113
Telephone: (408) 292-7600
Samuel D. Rosen, Es q.
PAUL, HASTINGS, Esq.
& WALKER LLP
75 East 55' Street
New York, NY 10022-3206
Telephone: (212) 318-6000
Helena K. Kobrin, SBN 152546
MOXON & KOBRIN
3055 Wilshire Blvd., Suite 900
Los Angeles, CA 90010
Telephone: (213) 487-4468
Attorneys for Creditor
RELIGIOUS TECHNOLOGY CENTER
UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA
CASE NO.: 98-51326ASW-13 In re H. KEITH HENSON, (Chapter 13) Debtor. CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION PURSUANT TO THE FUGITIVE DISENTITLEMENT DOCTRINE Date: October 1, 2001 )
Time: 2:00 p.m. Ctrm: Hon. Arthur S. Weissbrodt issued a preliminary injunction against another infringer for violating RTC's copyright rights. Henson publicly announced that his infringement and the ensuing copyright infringement action filed against him by RTC was "sport," and that he was financing his defense from his "entertainment budget." Henson considered that the suit against him by RTC was "part of this game" and that it increased his "status" among like-minded anti-Scientology religious bigots. Just after the verdict of $75,000 for his infringing activity, Henson violated an order issued by the district court by posting sealed pages of the trial transcript to the Internet and was adjudicated to be in contempt of court for doing so. Henson then revived this bankruptcy proceeding naming RTC as his primary creditor, and while this case has been pending, he increased his campaign of the hate crime conduct against Scientologists and Scientology churches such as RTC which has now led to his state court conviction. Now, rather than appearing for sentencing, he has fled. He is a fugitive from justice in Canada, and subject to arrest upon apprehension. He was also arrested and incarcerated in Canada for entering the country without informing the government of his criminal conviction, and is currently under supervised release, one condition of which is a stay away order as to Churches of Scientology and Scientologists. (McShane Decl. 126 and Ex. BB.) Henson's pervasive disregard for the lawful processes of the federal and state courts in this country is documented and undeniable. He uses the courts as his platform for promoting his anti-religious agenda, manipulating the law and the orders of the courts when it suits him, and disregarding them altogether at his pleasure. His conduct eloquently establishes that he regards this and every other court to be subject to his whim, and that both the courts and his adversary have and will continue to be subjected to his caprice in violation of federal civil statutes, state criminal statutes, and lawful orders of state and federal judges. On this record, Henson has lost the right of access to the courts he disrespects, and in particular to this Bankruptcy Court to pursue a Chapter 13 "superdischarge," which must be premised upon an honest debtor's good faith. It would be difficult to imagine a more blatant example of bad faith and dishonesty than fleeing from a criminal conviction arising from his harassment of his creditor and from his responsibilities to that creditor, the Chapter 13 trustee, and the Court under his Chapter 13 CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION 2 petition and plan. Under the long-established fugitive disentitlement doctrine, this case should be dismissed and his attempt to use this Court any further as his shield against his creditor/target RTC should be terminated forthwith. 11. STATEMENT OF FACTS Henson's attacks upon the Scientology religion and its adherents generally, and RTC particularly, began in 1996. At that time, Henson was a self-employed, reasonably successful computer consultant' who had no prior contact with either RTC or the Scientology religion. (McShane Decl. 12 and Ex. A, pp. 16-17.) RTC obtained a preliminary injunction from Judge Whyte on April 4, 1996, by which another copyright infringer named Grady Ward was foreclosed from further infringing upon RTC's copyrighted materials by posting them to the Internet. By his own admission, it was as a direct result of that injunction that Henson made the deliberate decision to launch a campaign against the Scientology religion and RTC, which he commenced by posting to the Internet an infringing copy of one of the very copyrighted works he heard Judge Whyte enjoin Ward from posting earlier that same day. (McShane Decl. 13 and Ex. C.) RTC's counsel sent a cease and desist letter to Henson immediately upon discovering his infringement. Henson's response, plainly a harbinger of Henson's reaction to all of the legal obligations he has chosen to ignore, was to write back, telling RTC's counsel to "take your demand, fold it till it is all corners, and stick it where `the Sun don't shine."' (McShane Decl. 14 and Ex. D.) RTC's copyright infringement action followed, and Henson was preliminarily enjoined from further infringing activity on April 12, 1996. (McShane Decl. 15 and Ex. E.) During the course of that litigation, Henson repeatedly displayed his disdain for the law, the courts, and the process. He pronounced the suit a "great game" and "entertainment" and Furthermore, even if this chapter 13 were to proceed, Henson would not achieve a "fresh start" as he has now been sued by some of the victims of his criminal activities in Riverside County for damages inflicted by Henson post-petition.
FN-- Henson's tax returns show that in 1996, Henson earned $132,540 and in 1997, he earned $88,755. (McShane Decl. 12 and Ex. B.)
CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION 3 bragged of the pleasure and enjoyment he derived from causing RTC's expenditure of hundreds of thousands of dollars tying to maintain the integrity of the copyrights it held as part of its ecclesiastical mission within the Scientology religion. (McShane Decl. Ex. A, pp. 63, 64 and Ex. F.) He also boasted that RTC's infringement suit had garnered him an enhanced reputation among other anti-Scientology religious bigots who posted infringements, hate comments, and even threats of violence to Scientologists, to leaders of the religion, and to Scientology churches.. (Id. at 94-97.) On April 15, 1997 the district court entered an order granting summary adjudication of liability for copyright infringement against Henson, and set the issues of willfulness and damages for jury trial. With trial set for December 1, 1997, Henson prepared and was poised to file a Chapter 13 bankruptcy petition solely to stop the trial pursuant to the automatic stay provisions of the statute, 11 U.S.C. §362. (McShane Decl 16 and Ex. G.) Before he could file it, however, Judge Whyte sua sponte rescheduled the trial to commence on February 24, 1998. The day before, on February 23, Henson did, in fact, file the very Chapter 13 petition he had prepared in December and proudly advised Judge Whyte of it and that the copyright trial was stayed under law. (McShane Decl. 17 and Ex. H.) Two days after filing his petition, and while the automatic stay prevented RTC from seeking relief in the district court, Henson threatened to publicly present RTC's confidential copyrighted work - the very one he had been found to have infringed - to the United States Food and Drug Administration in direct violation of Judge Whyte's preliminary injunction pendente lite, provided, according to Henson, that a television network was willing to broadcast his threatened further infringement actions. Henson boasted that after committing that threatened violation of the district court's injunction, he would report with toothbrush in hand to the district court and go to jail for contempt. (McShane Decl. 18 and Ex. 1.) Upon receiving Henson's Chapter 13 petition, RTC had immediately moved for relief from the automatic stay imposed by Henson's filing of a Chapter 13 petition. At the hearing of !, that motion, the bankruptcy court granted the relief from stay. However, as an accommodation to Henson, it stayed the lifting of the stay for 10 days, up to and including March 23, 1998, to CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION permit Henson to file a paper addressing the relief from stay. Consequently, RTC had to incur additional fees and costs to obtain ex parse relief from this Court so that it could bring Henson's threatened contempt before the district court. On March 23, 1998, the district court granted RTC's ex parte motion and ordered Henson to delete the work he was threatening to infringe from his computer and turn over all copies that he had of the work. (McShane Decl. 19 and Ex. J.) Because this Court had lifted the automatic stay, and the bankruptcy therefore no longer served Henson's purpose, he withdrew his petition. (McShane Decl. 110 and Ex. K.) Trial finally commenced on May 5, 1998. On May 12, 1998, a federal jury found Henson to be a willful infringer and awarded RTC $75,000 in damages, believed to be the largest verdict ever rendered for an infringement of a single work. (McShane Decl. 11 1 and Ex. L.) Henson later revived his Chapter 13 petition listing RTC as his only creditor, but not before defying a specific order of the district court regarding confidentiality by posting sealed trial transcript pages to the Internet. For that defiance, Henson was found in civil contempt and fined $7,500. (McShane Decl. 112 and Ex. M.) Once he had invoked the jurisdiction of this Court, Henson escalated his attacks against RTC, Scientologists, and the Scientology religion. He increased his picketing activities of churches of Scientology around the country, not in a peaceful or orderly manner, but in a confrontational way, with signs designed to denigrate the religion and to threaten with violence those who would peaceably practice the Scientology religion. (McShane Decl. 113.)3 As a result, Henson found himself the subject of anti-harassment injunctions in both California and Florida. (McShane Decl. 113 and Exs. O & P.) Undeterred, during a deposition, Henson testified that he would accept five million dollars from RTC in exchange for his agreement to FN--------- ' Henson's offensive conduct was not directed only at Scientologists. Shortly after the jury verdict in the copyright infringement case, Henson picketed on the main thoroughfare of San Jose in full view of women and children passing by in front of the offices of RTC's San Jose attorney, with a sign that identified that attorney's name, address and telephone number and advised the reader that the attorney was a "legal whore." (McShane Decl. 113 and Ex. N.) CREDITOR'S MOTION TO DISMISS DEBTOR'S CI IAPTER 13 PETITION 5 cease his harassment and threats against the Scientology religion, its churches and members. (McShane Decl. 1 14 and Ex. Q.) RTC refused to pay what can only be described as outright extortion. Then, in May of 2000, Henson escalated his misconduct beyond infringement, contempt, harassment and extortionate demands. At that time, Henson made repeated trips to a Scientology religious facility in Riverside County, California. On as many as 50 occasions, Henson picketed the property, followed Scientology religious workers from their homes to work, from work to their homes, and stalked the entrance to the religious facility with hateful signs and anti-religious sloganing. He lurked outside religious workers' residences, taunting and harassing them, taking their photographs and recording their license plate numbers, and began making threats of destruction of the religious facility he was targeting. (McShane Decl. 115 and Ex. S.) Henson went so far, in conjunction with one of his cronies, as to use a Global Positioning System ("GPS") device, to plot the satellite coordinates of several buildings located on the religious grounds he stalked - sufficient information to launch an accurate missile strike on such targets - and posted those coordinates to the Internet with a suggestion as to how such a missile strike might be made by using them. (McShane Decl. 1 16 and Ex. S.) These were no idle threats and were not perceived as such. Henson is a self-proclaimed munitions and explosives expert with a three-decade history of creating explosives allegedly for "recreation." (McShane Decl. 117 and Ex. T.) He is also the holder of a patent for a missile launching system. (McShane Decl. x[18 and Ex. U.) Indeed, during the pendency of RTC's j copyright infringement action against him, Magistrate Judge Edward A. Infante issued an order I altering the deposition schedule for an RTC executive based upon disturbing, threatening comments overheard and reported by representatives of Southwest Airlines that Henson talked about the use of bombs as he was about to board a plane en route to the deposition. (McShane Decl. 119 and Ex. V.) Ultimately, after a thorough investigation by the Riverside County Sheriff's Department and the Riverside County District Attorney's Office, Henson was charged, and on April 26, 2001, was convicted by a jury for violating California Penal Code § 422.6, for intimidating, CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION 6 threatening, and oppressing Scientologists on account of their religious beliefs. (McShane Decl. 1120-21 and Ex. W.) After his conviction, Henson was released on his own recognizance until his scheduled appearance for sentencing on May 16, 2001. (Id.) Between conviction and the scheduled sentencing hearing, Henson continued his harassing activities, focusing his attention on the courthouse in which he had been convicted, the judge who had presided at the trial, and the prosecutor who had tried the case. (McShane Decl. 120 and Ex. X.) Then he fled to Canada. On May 13, 2001, from his refuge in Canada, Henson publicly announced, on the Internet, his intention to join the ranks of fugitives from justice: "I will not be in Riverside May 16. In fact I would have to be a complete idiot to be in Riverside May 16! Bon Soire! Eh? Keith Henson." (McShane Decl. 123 and Ex. Y.) On May 15, 2001, the eve of the sentencing hearing, Henson iterated the above statements, making it clear he would remain in Canada and not return for sentencing. He also had the temerity to claim he was entitled to seek political asylum from the Canadian government on the grounds that the United States and the State of California had persecuted him. (McShane Decl. 124 and Ex. Z.) When Henson failed to appear for his sentencing on May 16, 2001, the court revoked his personal recognizance status, filed an additional criminal charge arising from Henson's failure to appear (Penal Code § 1320), and issued a bench warrant without bail for his arrest. (McShane Decl. 125 and Ex. AA.) Henson has since made further postings signaling that he intends to remain in Canada, including a posting of a letter to the judge in the criminal case, informing him that he is staying in Canada and seeking refugee status, a process that is likely to take at least two years. (McShane Decl. 127 and Ex. DD.) He was also arrested in Canada and detained for several days, and was released on various conditions. (Id. 126 and Exs. BB & CC.) Henson has also now been sentenced, in absentia, to a term of 365 clays, to be suspended if he agrees to serve 180 days and be on probation for three years, phis a $2,700 fine. (Id. 128 and Ex. EE.) Once he is returned to California, Henson will also be tried in Riverside County on the CREDITOR'S MOTION TO DISMISS DEBTOR'S CIIAPTER 13 PETITION 7 additional criminal charge, lodged against him by that Court, for jumping bail and failing to appear on May 16, 2001. It may be fairly anticipated that Henson will be convicted on that charge and sentenced to an additional period (up to 6 months) of incarceration. III. DISCUSSION DISMISSAL OF DEBTOR'S CHAPTER 13 PETITION IS MANDATED UNDER THE FUGITIVE DISENTITLEMENT DOCTRINE. Federal courts have the inherent authority and the obligation to "disentitle" a party from asserting a claim when he becomes a fugitive under the law. This doctrine, known as the "fugitive disentitlement doctrine" has been well-established for over a hundred years. Prevot v. Prevot, 59 F.3d 556, 562 (6th Cir. 1995), cert. denied, 516 U.S. 1161, 116 S.Ct. 1048 (1996). See, Smith v. United States, 94 U.S. 97, 24 L.Ed. 32 (1876). The doctrine is an equitable one which "limits access to courts in the United States by a fugitive who has fled a criminal conviction in a court in the United States." Id. at 562. It has been uniformly and routinely used by federal courts in civil cases to sanction or enter judgment against parties on the basis of their fugitive status. Id. at 564-65. Indeed, the Ninth Circuit has held that the disentitlement doctrine may be even more applicable to civil cases because a defendant's liberty is not at stake, therefore less harm can come from the refusal to entertain his case. Conforte v. Commissioner, 692 F.2d 587, 589 (9th Cir. 1982). Thus, federal courts have applied the doctrine in a variety of civil settings where a party is a fugitive to foreclose access to such a transgressor. ,See, e.g., In re Donald Sheldon & Co., Inc., 1997 WL 728415 (S.D.N.Y. 1997) (debtor's appeal of the Bankruptcy Court's denial of his request for a stay of a $9 million judgment against him was dismissed under the "fugitive disentitlement doctrine" where debtor failed to appear for his deposition and in fact disappeared for two years), aff d, 166 F.3 d 1200 (2d CIT. 1998); Schuster v. United States, 765 F.2d 1047 (1 lth Cir. 1985) (affirming the dismissal of a petition by a fugitive for review of a tax i assessment); Dcnvkins v. Mitchell, 437 F.2d 646 (D.C. Cir. 1970) (affirming dismissal of a civil suit by a fugitive to enjoin enforcement of a warrant). Historically, the doctrine has sewed several laudable purposes, in recognition of the CREDITOR'S MOTION TO DISMISS DEBTOR'S CfiAPTER 13 PETITION 8 difficulty of enforcement against one not willing to subject himself to the court's authority; the inequity of allowing a fugitive to use court resources only if the outcome is an aid to him; and the need to avoid prejudice to the nonfugitive party. Degen v. United States, 517 U.S. 820, 82425, 828, 116 S.Ct. 1777 (1996); Smith v. United States, 94 U.S. 97; Pesin v. Rodriguez, 244 F.3d 1253 (11' Cir. 2001); Conforte v. Commissioner, 692 F.2d at 589-590. The doctrine has an unassailable rationale - "the fugitive from justice has demonstrated such disrespect for the legal processes that he has no right to call upon the court to adjudicate his claim." Ortega-Rodriguez v. United States, 507 U.S. 234, 245, 113 S.Ct. 1199, 1206 (1993) (citations omitted). Simply put, a "fugitive from justice should not be able to use the judicial system while at the same time avoiding it." Andra v. Erickson, 1995 WL 555276 (D. Mont. 1995) (dismissal of plaintiff's civil rights action under the fugitive disentitlement doctrine where plaintiffs fled the jurisdiction after being indicted and summoned to appear); Empire Blue Cross and Blue Shield v. Finkelstein, 111 F.3d 278 (2nd Cir. 1997) (appellate court dismissed defendants' appeal under the fugitive disentitlement doctrine because of their failure to comply with court order to attend their depositions in aid of plaintiff's efforts to collect on a judgment against them and their 17-month disappearance). The dismissal of a civil action on fugitive disentitlement grounds requires that "(1) the plaintiff is a fugitive; (2) his fugitive status has a connection to his civil action; and (3) I the sanction employed by the district court, dismissal, is necessary to effectuate the concerns underlying the fugitive disentitlement doctrine." Maglnta v. Samples, 162 F.3d 662, 664 (11th Cir. 1998); Ortega-Rodriguez v. United States, supra, at 242-49. As one court has recently said, the fugitive disentitlement doctrine is addressed to "the kind of practical considerations that inform the decision whether to dismiss a suit with prejudice as a sanction for mistakes, omissions, or misconduct," Sarlund v. Anderson, 205 F.3d 973, 974 (7th Cir. 2000). The Sarlund case presents all of the elements necessary for dismissal when a fugitive from justice tries to exploit the court and his self-imposed exile: . . the fugitive status places [the pasty] entirely beyond judicial control, thus creating a situation severely prejudicial to his adversaries. Since his whereabouts are unknown, he cannot be deposed by the defendants or made to pay costs (should he lose) or CREDITOR'S MOTION TO DISMISS DEDTOR'S CHAPTER 13 PETITION 9 attorneys' fees (should he lose and his suit be adjudged sanctionably frivolous). There is nothing to prevent him from using the litigation process to harass the defendants with impunity, and no measure that we can think of short of dismissal of his suit that will protect the defendants from harassment. Id. at 975 (affirming dismissal of plaintiff's civil rights action because of plaintiffs fugitive status). Prevot v. Prevot, supra, is instructive here. In Prevot, the appellate court held that the trial court had abused its discretion in failing to invoke its equitable powers to "disentitle" the plaintiff to access to the district courts to pursue a civil claim because he was a fugitive. In Prevot, plaintiff owned a restaurant in Texas. Shortly after his marriage, he was arrested and convicted of theft and was sentenced to ten years probation on the condition that he make monthly restitution for the money he had stolen. Thereafter, he and his wife opened a restaurant in Memphis, where they also had two children. During that time the IRS came after him for $125,000 in taxes he owed to the IRS. Plaintiff later fled, with his wife and children, to France and warrants were issued against him for violation of his probation. His wife eventually left France and moved back to Memphis with their children. Plaintiff thereafter filed for divorce in France and instituted a federal action under 42 U.S.C. § 1601, et seq., the International Child Abduction Remedies Act, to regain physical custody of his children. Mrs. Prevot moved to dismiss the case on the basis of the fugitive disentitlement doctrine, which the trial court rejected, primarily on the grounds that her husband's violation of his terms of probation was unrelated to the federal claim at issue. The Sixth Circuit emphatically rejected this argument, stating: Assuming a nexus was required between the district court proceeding and the Texas conviction, it was present. Mr. Prevot's flight and his subsequent invocation of ICARA were . . . "related components of a general scheme." He fled to escape his criminal conviction and other responsibilities to court, probation officers, victim and government . . . Flight was but one step, and [his federal claim] the latest link, in a chain of proximately related events . . . . Id. at 566-67 (citation omitted). Similarly, in Pesin v. Rodriguez, 244 F.3d at 1253, the fugitive disentitlement doctrine correctly applied where one party CREDITOR'S MOTION TO DISMISS DEBTOR'S CHAPTER 13 PETITION 10 repeatedly defied court orders and ignored contempt sanctions and . . . continued to evade arrest. Her behavior to date leaves little doubt that she would defy an adverse ruling. Moreover, it would be inequitable to allow [her] to use the resources of the courts only if the outcome is a benefit to her. We cannot permit [her] to reap the benefits of a judicial system the orders of which she has continued to flaunt. The principles articulated in Prevot and Pesin apply directly here and compel the conclusion that Henson, the fugitive, is disentitled from further access to this Court. From the start of this saga (Henson's willful copyright infringement), to his most recent defiance of the courts and the processes of justice (his failure to appear for sentencing and flight), Henson has repeatedly and persistently engaged in contumacious behavior, harassment, stalking, terrorist threats, criminal behavior, and a persistent refusal to accept adverse rulings coupled with the attitude that judicial access and process is a "sport" and "entertainment." He has done so consistently to RTC's prejudice, is undeterred by lesser sanctions and willing to defy court orders as a matter of habit. Now Henson is a fugitive, and he is therefore disentitled. Strong practical considerations in the continued litigation of Henson's chapter 13 case militate in favor of that conclusion. The next major action in this case is an evidentiary hearing on: (1) whether to confirm Henson's plan; (2) RTC's objections to confirmation; and (3) RTC's motion to dismiss Henson's chapter 13, or in the alternative to convert it to a chapter 7. Such a hearing cannot be held in Henson's absence; Henson is the debtor, he would have to testify on his own behalf, and even if, for some inexplicable reason, he chose not to, RTC would certainly be entitled to demand its right to question him concerning his finances. Thus, as a practical matter, the evidentiary hearing cannot be held while Henson is a fugitive, which at the very least will be two years if he continues to pursue his Canadian refugee petition, and potentially far longer. Nor may this Court delay that hearing until Henson returns (or is returned) to California. For to afford Henson a continuance while he is not here is to give aid and comfort to a lawbreaker and a fugitive, disregard the requirements that chapter 13 debtors conduct themselves honestly and in good faith, and would be an unseemly accommodation for a federal court to make. CREDITOR'S MOTION TO DISIMISS DEBTOR'S CHAPTER 13 PETITION 11 IV. CONCLUSION Keith Henson has disentitled himself from recourse to this Court and the benefits available to honest debtors seeking a superdischarge in good faith. Now that he has fled after a criminal conviction, he cannot pursue his remedies here while avoiding the judgment of another court which has addressed and condemned his conduct with respect to the target of his crimes, the victim of his torts, and the sole creditor whose rights he seeks to abridge. This case, accordingly, should be dismissed. Dated: August 23, 2001 Respectfully submitted, LAW OFFICES OF THOMAS R. HOGAN THOMAS R. HOGAN Attorneys for Creditor RELIGIOUS TECHNOLOGY CENTER