fact remain. Synanon relies principally on two arguments: first, that in Synanon's "gaming community," statements cannot be taken at face value but rather are often intended to polarize, exaggerate, distort, and outrage (Plaintiff's Statement of Material Facts, Vol. III); and, second, that any violence that occurred was not a product of the organization's policy but of individual actors, albeit in some instances high-ranking Synanon officials. The government vigorously disputes both of these contentions. Plaintiff also objects to the government's characterization of its financial operations, although it does not challenge the accuracy of the material facts.
It is fundamental that a party cannot avoid summary judgment by mere conclusory denials in its pleadings. Tarpley v. Greene, 221 U.S. App. D.C. 227, 684 F.2d 1, 6-7 (D.C. Cir. 1982); Crooker v. Bureau of Alcohol, Tobacco & Firearms, 216 U.S. App. D.C. 232, 670 F.2d 1051, 1054 n.7 (D.C. Cir. 1981). In addition, Local Rule 1-9(h) requires that the party opposing a summary judgment motion file a "concise statement of genuine issues" and provides that the court may take the moving party's factual claims as true without such a statement. Gardels v. CIA, 205 U.S. App. D.C. 224, 637 F.2d 770, 773 (D.C. Cir. 1980). The plaintiff here has attempted to contravert defendant's evidence with its "gaming" explanation, its denial of corporate complicity in acts of violence, and its "deferred compensation" explanation for the distribution of substantial corporate assets to its members, and has submitted a voluminous statement and affidavits to that effect. It is not necessary to decide whether these self-serving affidavits are sufficient to withstand defendant's motions for summary judgment, however, in light of the result reached herein on other grounds.
II. THIS CASE MUST BE DISMISSED BECAUSE OF SYNANON'S FRAUD UPON THE COURT
Although summary judgment is not necessary given the posture of this case, the action must be dismissed due to plaintiff's wilful, systematic, and extensive destruction and alteration of documents and tapes relevant to a determination of Synanon's tax-exempt status. This "egregious misconduct" amounts to "a scheme to interfere with the judicial machinery performing the task of impartial adjudication, . . . by preventing the opposing counsel from fairly presenting . . . [its] case or defense." Pfizer, Inc. v. International Rectifier Corp., 538 F.2d 180, 195 (8th Cir. 1976). More than mere fraud between the parties, or an isolated instance of perjury, plaintiff has compounded its "unconscionable plan," England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960), by its indisputable misconduct before this court, as outlined below.
A. Plaintiff Is collaterally Estopped From Denying Its Systematic Destruction and Alteration of Records by the Bernstein Decision of Judge Braman of District of Columbia Superior Court
In Synanon Foundation, Inc. v. Bernstein, et al., Superior Court of the District of Columbia, Civil Action No. 7189-78, Judge Braman found by clear and convincing evidence that Synanon engaged in a "wilful, deliberate and purposeful scheme to . . . destroy extensive amounts of evidence and discoverable materials which probably would have had a dispositive bearing upon Synanon's . . . non-profit status . . . . The scheme further had as its purpose to cover up and conceal this destruction of evidence and discoverable materials . . ." (T. at 42.)
The destruction and alteration of tapes, a computer inventory, and transcript index was aimed at "materials not only related to violence, but also to money, to sexual subjects, to guns, and to others matters." (T. at 13). This destruction and cover-up were conducted under the direction of Steve Simon, Synanon's "Archivist," (T. at 13) with the "knowledge and approval of . . . [Synanon's] legal department," including Philip Bourdette, its general counsel, Board of Directors' member, and Secretary.
(T. at 15, 39). Judge Braman found that the destruction took place in three "waves:" the first beginning in October 1978 and continuing through December (T. at 13-15); the second in 1979 (T. at 15-17); and a third in 1980 (T. at 17).
The doctrine of collateral estoppel bars relitigation of an issue by the losing party once it has been actually and necessarily determined, expressly or by implication, by a court of competent jurisdiction. Montana v. United States, 440 U.S. 147, 153, 59 L. Ed. 2d 210, 99 S. Ct. 970 (1979); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 58 L. Ed. 2d 552, 99 S. Ct. 645 (1979); Jack Faucett Associates, Inc. v. AT&T Co., 566 F. Supp. 296, 298-99 (D.D.C. 1983). The doctrine will be applied only when the issue is "substantially the same as the issue previously litigated," Schneider v. Lockheed Aircraft Corp., 212 U.S. App. D.C. 87, 658 F.2d 835, 851 (D.C. Cir. 1981), cert. denied, 455 U.S. 994, 71 L. Ed. 2d 855, 102 S. Ct. 1622 (1982); Carr v. District of Columbia, 207 U.S. App. D.C. 264, 646 F.2d 599, 608 n.47 (D.C. Cir. 1980), and when the party who is estopped had a full and fair opportunity to litigate, id. at 602.
The prerequisites for invoking collateral estoppel are satisfied here. The court in Bernstein was faced with the question of whether Synanon was a "non-profit corporation" under the District of Columbia zoning laws, and therefore examined "whether its corporate policy contravened fundamental public law policy" in light of "the claimed illegality of Synanon's corporate policy . . . of terror and violence." (T. at 5.) The defendant also claimed that Synanon was not "non-profit" because "the corporate monies were deflected to private usages." (T. at 6.) These issues are substantially identical to the government's arguments for summary judgment against Synanon: that its corporate policy of violence violates the public policy standard of Bob Jones as well as the "exclusive operation" test of § 501(c)(3), and that private inurement bars tax exemption under § 501(c)(3). The Bernstein court also devoted meticulous attention to the issue of plaintiff's destruction and alteration of documents and tapes. (T. at 11-44.) It was on the basis of that destruction, not because of Synanon's alleged corporate policies of violence or its use of funds, that Judge Braman decided to dismiss Bernstein. (T. at 11, 42.)
Before rendering his decision in Bernstein, Judge Braman heard eleven witnesses and received seventy-eight exhibits into evidence over twelve days of hearings; eight of the eleven witnesses were called by Synanon. Substantial discovery had occurred over the preceding five years since Synanon's filing its complaint. (Memorandum for the United States in Reply to Synanon's Opposition to the Government's Second Motion for Summary Judgment at 18.) This amounts to a full and fair opportunity to litigate, despite Synanon's frivolous protests.
See Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 333, 28 L. Ed. 2d 788, 91 S. Ct. 1434 (1971). Synanon clearly had the incentive to litigate the Bernstein case and was hampered only by the choice of its own top officials to invoke their fifth amendment privilege against self-incrimination rather than to testify. (T. at 11-12.)
Synanon's other objections to the application of collateral estoppel are without merit. First, the fact that Bernstein has been appealed is without significance for collateral estoppel. The rule for both District of Columbia and federal courts is that the pendency of an appeal does not impair the conclusiveness of a final judgment. Mahoney v. Campbell, 209 A.2d 791, 794 (D.C. 1965). See also Huron Holding Corp. v. Lincoln Mine Operating Co., 312 U.S. 183, 85 L. Ed. 725, 61 S. Ct. 513 (1941). It is also clear that a judgment of the Superior Court of the District of Columbia is entitled to full faith and credit under 28 U.S.C. § 1738. Carr, 646 F.2d at 605-07; see also United States Jaycees v. The Superior Court of the District of Columbia, 491 F. Supp. 579, 581-82 (D.D.C. 1980). Finally, Synanon offers no persuasive precedents or reasoning to support its argument that the doctrine of collateral estoppel ought not to apply in a tax case. The purposes of the doctrine -- conserving judicial resources, protecting adversaries from vexatious litigation, and fostering reliance on prior judicial action by minimizing the possibility of inconsistent decisions -- are served by its application here as in other contexts. See Montana, 440 U.S. at 153-54.
B. Synanon's Fraud Upon the Court Mandates the Dismissal of this Case
"Fraud upon the court" is a distinct subclass of the broader category of "fraud." Professor Moore's definition has been adopted by a number of courts:
"Fraud upon the court" should, we believe, embrace only that species of fraud which does or attempts to, subvert the integrity of the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication, and relief should be denied in the absence of such conduct. Fraud inter partes, without more, should not be a fraud upon the court . . . .