Judge rules in favor of JZK, Inc. in JZ Knight YouTube video case

Case will not proceed to trial

Nisqually Valley News, Washington/June 28, 2013

A judge ruled in favor of JZK, Inc.'s lawsuit against former Ramtha School of Enlightenment student Virginia Coverdale Friday morning. The case will not proceed to a trial.

Thurston County Superior Court Judge Gary Tabor granted a motion for summary judgment filed by JZK, Inc., and ruled against a motion from the defense.

Coverdale's lawyer, Breckan Scott, said her client intends to appeal the ruling.

Tabor also made permanent a temporary injunction imposed against Coverdale prohibiting the release of the initial video she posted, as well as any other proprietary material from the school.

The ruling concludes seven months of court proceedings, at times seeming to defy what Tabor has referred to as a "simple breach of contract case," with almost 375 court documents filed since the lawsuit was initiated, and consisting of "more hearings than I can count," he said.

Tabor said none of the issues brought up by Scott in her arguments were "legally sufficient" to grant the defense's motion.

He ruled Coverdale violated the Conditions of Participation contracts she signed as an RSE student in 2006 and 2007 when, in October 2012, she uploaded videos of Yelm channeler and JZK, Inc. President JZ Knight making disparaging remarks about Catholics, Jews and gays. The company has maintained that the remarks were taken out of context.

Tabor said the language of the contract was "sufficient to prevent this type of disclosure" of the company's proprietary material.

Tabor said protecting one's proprietary information is an important concern that may be addressed in a contract. Coverdale agreed not to disclose such information when she signed the contracts, he said.

Scott's motion for summary judgment centered on three claims: The Conditions of Participation contract is unconscionable; Coverdale didn't breach the contract; and JZK, Inc., breached the contract first, thereby excusing Coverdale from it.

Scott cited McKee v. AT&T Corporation, a Washington State Supreme Court ruling, as evidence that the court held "confidentiality provisions in consumer contracts are, as a matter of law, substantively unconscionable."

Tabor said McKee doesn't apply "to this particular situation."

Scott argued Coverdale never breached the contract, because it states that the prohibition on disseminating the school's material applies to "information and techniques taught here are for your knowledge only," and prohibits dissemination of "any information or techniques that you learn or are taught at the School … nor will you assist or facilitate other persons in doing so without the prior written consent of the School."

Scott said Coverdale did not receive the video from the school — Coverdale has said she received it anonymously in the mail on a flash drive — as she never attended an RSE event after 2010. The contract therefore doesn't apply, she argued.

She also argued that because the school's online live video streams — referred to as "livestreams" — didn't exist when Coverdale signed the contracts, they don't apply to the video Coverdale uploaded, which was a copy of a livestream event.

Tabor said Coverdale was an RSE student and signed a contract with the school, and agreed not to disseminate information from the school.

He also said whether the livestreams existed when Coverdale signed the contracts doesn't affect the validity of the contracts.

Scott argued Coverdale was no longer bound by the contract because she was removed from the school in 2008.

She cited an email sent Nov. 2, 2008, by RSE Event Services Manager Steve Klein on behalf of Knight to Coverdale.

vThe email read, "You are out of School. You will not be allowed to attend this Event (Nov. 5 Fall Follow-up or an Follow-up). Your School record indicates you have not paid any money for any 2008 Fall Follow-up and you will not be permitted to do so. You have achieved your goal. You got your Card. You made it to The Void. You took my sweet guy away from me. Congratulations. JZ Knight."

However, Coverdale attended RSE events after the email was sent — both in person and online — in 2009 and 2010.

Scott argued Coverdale was not informed the Conditions of Participation still applied when she began attending RSE events again, and was never asked to sign another one.

Tabor said the fact that Coverdale attended RSE events after the email indicated there was a still relationship between she and the school, and the contract still applied.

"We think the ruling was the right one, that what was at issue here was the contract itself and that Ms. Coverdale acknowledged that she broke it when she disseminated materials that belonged to the plaintiff," McNeely said. "We also feel very vindicated that this contract is fair — that's what the court said today — and that it's reasonable, and that it's a reasonable expectation for the school to expect people to abide by their promise when they go there."

Scott said she believes "this case has been tainted by JZK, Inc.'s clear misrepresentations since the beginning."

"Unfortunately the ruling today did not examine and recognize the true undisputed facts," she continued. "The contract says it is limited to information received while participating in events. It is undisputed that Virginia did not participate in the February 2012 (livestream) event. For that reason, and many other reasons, we are excited and confident bringing the issue before the court of appeals."

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