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Scientology Church to Face Hill & Knowlton in Court

March 26, 1994 GMT

WASHINGTON (AP) _ A federal judge says a jury should decide whether public relations giant Hill & Knowlton Inc. improperly quit representing the Church of Scientology.

Scientology officials claim the company broke the law when it canceled its contract with the church in May 1991 because of pressure from Eli Lilly and Co., manufacturer of the antidepressant drug Prozac.

U.S. District Judge Stanley Sporkin rejected Hill & Knowlton’s request to dismiss the case, saying a jury should decide whether the company acted improperly.

The church, which says its suit asks for more than $40 million, also named Lilly, J. Walter Thompson Co. and Hill & Knowlton’s parent WPP Group PLC in the lawsuit. J. Walter Thompson and Hill & Knowlton are both owned by WPP, a British corporation.

The church, a longtime opponent of psychiatric treatment, began a nationwide campaign against Prozac in 1989. Although Prozac is one of the most widely prescribed antidepressants, Scientologists claim it is a deadly drug that may lead people to commit mass murders and suicide.

Hill & Knowlton terminated the contract only days after the publication of ″Scientology, the Thriving Cult of Greed,″ a Time magazine cover story highly critical of the church. The church contends that it never received written notice of the termination.

The church is asking Hill & Knowlton for $4.7 million in compensatory damages - the amount it paid for services performed over nearly five years - and $10 million in punitive damages for each of four counts.

Hill & Knowlton has filed a counterclaim, saying the church still owes $333,216.30 in unpaid bills.

The trial is scheduled to begin June 13.

Hill & Knowlton began representing the church in 1987 to help improve its image. Scientology officials had become concerned about how the controversial group was viewed by the public and perceived in the media.

In its suit, filed in U.S. District Court in Washington, the church claimed agreements it signed with the company assured it that Hill & Knowlton was accustomed to controversy and would not terminate services because of outside pressure.

″Often is the case that principled clients conducting honest operations toward laudable and legitimate ends come to us when they are much misunderstood and maligned in the marketplace,″ the company’s December 1987 agreement said. ″We believe these clients deserve the best, most reputable counsel and are willing to commit our reputations and credibility toward that effort.″

The church also paid higher fees because of its controversial reputation.

In a 30-page order released Monday, however, the judge noted that the agreement also included a provision that allowed either party to terminate the relationship if it wished after giving 60 days’ written notice.

Trouble began in late 1989, when the church began its anti-Prozac campaign, publishing articles, putting out press releases and appealing to members of Congress. The campaign affected both sales of Prozac and Lilly’s stock price, the judge said.

Lilly threatened to terminate its public relations contract with J. Walter Thompson because of the church’s relationship with Hill & Knowlton.

Although the firms consider themselves independent, Lilly said the companies were violating a contract provision that bars J. Walter Thompson from doing business with a Lilly competitor without permission.

Hill & Knowlton at first resisted Lilly’s pressure, but later terminated the church’s contract after other drug companies began refusing to do business with the public relations firm because of its links to the church.