True the Vote, Inc. v. Internal Revenue Service

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 14, 2016 Decided August 5, 2016

No. 14-5316

TRUE THE VOTE, INC.,

APPELLANT

v.

INTERNAL REVENUE SERVICE, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-00734)

John C. Eastman argued the cause for appellant. With him

on the briefs were Kaylan L. Phillips, Noel H. Johnson, Cleta

Mitchell, Michael J. Lockerby, William E. Davis, and Mathew

D. Gutierrez.

Judith A. Hagley, Attorney, U.S. Department of Justice,

argued the cause for appellees United States of America and

Internal Revenue Service. With her on the brief were Gilbert S.

Rothenberg and Teresa E. McLaughlin, Attorneys.

Eric R. Nitz argued the cause for Individual Defendant-

Appellees. With him on the briefs were Jeffrey A. Lamken,

Brigida Benitez, and Catherine Cockerham.

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No. 15-5013

LINCHPINS OF LIBERTY, ET AL.,

APPELLANTS

v.

UNITED STATES OF AMERICA, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:13-cv-00777)

Carly F. Gammill argued the cause for appellants. With her

on the briefs were Jay Alan Sekulow, Stuart J. Roth, Jordan A.

Sekulow, Abigail A. Southerland, Miles L. Terry, Andrew J.

Ekonomou, and Julian A. Fortuna.

Judith A. Hagley, Attorney, U.S. Department of Justice,

argued the cause for appellees United States of America and

Internal Revenue Service. With her on the brief were Gilbert S.

Rothenberg and Teresa E. McLaughlin, Attorneys.

Brigida Benitez argued the cause for Individual Defendant-

Appellees. With her on the brief were Catherine Cockerham,

Jeffrey A. Lamken, and Eric R. Nitz.

Before: HENDERSON, Circuit Judge, and GINSBURG and

SENTELLE, Senior Circuit Judges.

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Opinion for the Court filed by Senior Circuit Judge

SENTELLE.

SENTELLE, Senior Circuit Judge: Although these cases are

not officially consolidated, they were separately argued before

the same panel on the same day and are governed by the same

legal principles on decision. We have therefore determined that

a single opinion is sufficient for the disposition of both.

Although there are differences in factual detail, those differences

are immaterial to our ultimate decision on all issues, and

therefore, all our statements of law hereinafter are applicable to

both.

I. BACKGROUND

Appellants appeal from judgments of the district court

dismissing some of their claims under Rule 12(b)(6) for failure

to state a claim for relief, and others under Rule 12(b)(1) for

lack of jurisdiction, by reason of mootness. See True the Vote,

Inc. v. IRS, 71 F. Supp. 3d 219 (D.D.C. 2014); Linchpins of

Liberty v. United States, 71 F. Supp. 3d 236 (D.D.C. 2014).

Each of the above-named appellants together with numerous co-

plaintiffs in the Linchpins of Liberty litigation, filed applications

with the Internal Revenue Service for recognition of tax

exemption as charitable or educational organizations pursuant to

26 U.S.C. § 501(c)(3), (4). As to what happened thereafter, we

construe the complaints in the light most favorable to the

plaintiffs, see Missel v. DHSS, 760 F.3d 1, 4 (D.C. Cir. 2014),

although there is very little factual dispute between the parties

as to the conduct committed by the IRS.

Instead of processing these applications in the normal

course of IRS business, as would have been the case with other

taxpayers, the IRS selected out these applicants for more

rigorous review on the basis of their names, which were in each

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instance indicative of a conservative or anti-Administration

orientation, as we will set out in more detail below, and as was

admitted by the Department of Treasury in the 2013 report of

the Treasury Inspector General for Tax Administration

(TIGTA).

The appellants before us, plaintiffs below, are applicants

who were afforded this unequal treatment. They brought the

present actions against the IRS and several of its individual

employees, seeking money damages by way of relief under

Bivens v. Six Unknown Named Agents of Fed. Bureau of

Narcotics, 403 U.S. 388 (1971), and equitable relief by way of

injunction and declaratory judgment. Additionally, the

complaints alleged that the IRS invaded the plaintiffs’ statutory

rights by violating 26 U.S.C. § 6103, by conducting

unauthorized inspection and/or disclosure of tax return

information from their applications and the other information

improperly obtained from them. The district court held that the

Bivens action would not lie against the individual defendants or

the Service, and granted a Rule 12(b)(6) motion for dismissal as

to that relief. See True the Vote, 71 F. Supp. 3d at 229-32;

Linchpins of Liberty, 71 F. Supp. 3d at 242-44. The district

court also dismissed the claims for violation of § 6103 under

Rule 12(b)(6) for failure to state a claim for relief. See True the

Vote, 71 F. Supp. 3d at 232-35; Linchpins of Liberty, 71 F. Supp.

3d at 247-50.

After the initiation of the suits, the Internal Revenue Service

took action to end some unconstitutional acts against at least a

portion of the plaintiffs. Based on these actions, the district

court dismissed the equitable claims as moot. See True the Vote,

71 F. Supp. 3d at 226-29; Linchpins of Liberty, 71 F. Supp. 3d

at 244-47. True the Vote and Linchpins of Liberty were decided

by the same district court judge on the same day and rely on the

same reasoning. Going forward, we will only cite to the

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Linchpins of Liberty decision.

We review the district court’s Rule 12(b)(6) dismissals

of the Bivens actions de novo, taking as true the allegations of

the complaint. See Layman v. Zuckerberg, 753 F.3d 1354, 1357

(D.C. Cir. 2014). However, our review of the district court’s

Rule 12(b)(1) dismissals for mootness depends on “[t]he posture

in which the motion[s] [were] presented to [the] trial court . . . .”

Herbert v. Nat’l Acad. of Sciences, 974 F.2d 192, 197 (D.C. Cir.

1992). When a district court relies either “on the complaint

standing alone” or on “the complaint supplemented by

undisputed facts evidenced in the record,” our review is de novo.

Id. “If, however, the trial court rests not only upon undisputed

statements, but determines disputed factual issues, we will

review its findings as we would any other district court’s factual

determinations: accepting them unless they are clearly

erroneous.” Id. (citation and internal quotation marks omitted).

Accordingly, we affirm the district court’s decisions as to

the Bivens actions and statutory claims, but hold that the

equitable actions are not moot. Even if we accord deference to

the district court, the government has not carried its heavy

burden of showing mootness under the voluntary cessation

doctrine. We therefore vacate and remand for further

proceedings with respect to the equitable claims of the plaintiff-

appellants.

II. ANALYSIS

We once again consider the implications of the Internal

Revenue Service affording unequal treatment in the processing

of applications for tax exempt status by applicants whose names

might suggest certain political orientations. Cf. Z St. v.

Koskinen, 791 F.3d 24, 28 (D.C. Cir. 2015) (concerning

allegations that the IRS had an Israel-special policy “delay[ing]

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the processing of section 501(c)(3) applications from

organizations whose views on Israel differ from the

administration’s”). This time, appellants allege that their

applications for tax exempt status were selected out on the basis

of an “IRS targeting scheme” that identified for enhanced

scrutiny the applications of applicants with names associated

with “conservative” causes, such as “Tea Party” and “patriot,”

and perhaps “liberty.” According to the complaint, this

enhanced examination involved, “among other things, a multi-

tier review process, . . . harassing and unconstitutional questions

and requests for information that often required applicants to

disclose donor lists, communications with members, and internet

passwords and usernames.” Linchpins of Liberty, Pl.-

Appellants’ Br. at 4 (citing Second Am. Compl. at 32-56).

Perhaps most tellingly, the Service sorted the “targeted” names

of organizations to be subjected to the allegedly unconstitutional

treatment through the use of a “Be-On-The-Lookout” list

referred to as BOLO. Because their applications were subjected

to extended delay and were not receiving the same processing as

those of other organizations, and as they learned from other

sources that the IRS might be employing improper and

unconstitutional criteria, several applicants brought the present

actions.

Also in May of 2013, the Department of the Treasury

received what is referred to by the government as the “TIGTA”

Report, for the Treasury Inspector General for Tax

Administration. See J.A. in Linchpins of Liberty, at 87-140.

That report, which we will often refer to as the Inspector

General’s Report, to avoid overburdening our opinion with

acronyms, from Michael E. McKenney, Acting Deputy

Inspector General for Audit, to the Acting Commissioner for

Tax-Exempt and Government Entities Division of the Internal

Revenue Service, bore the principal heading “Inappropriate

Criteria Were Used to Identify Tax-Exempt Applications for

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Review.”

The Inspector General’s Report was produced in response

to requests by members of Congress resulting from what had

become fairly high profile complaints against the apparently

improper failure to normally process exemption applications by

applicants like or including appellants. The district court

disposed of the action in a judgment supported by a reported

opinion, Linchpins of Liberty v. United States, 71 F. Supp. 3d

236 (D.D.C. 2014).

A. The Bivens Claims

The court first took up the government’s motion to dismiss

the Bivens actions under Rule 12(b)(6). As to those claims, the

district court rightly deemed itself bound by our decision in Kim

v. United States, 632 F.3d 713 (D.C. Cir. 2011). As we had held

in Kim that no action would lie against IRS employees in their

individual capacities because “no Bivens remedy [is] available

in light of the comprehensive remedial scheme set forth by the

Internal Revenue Code,” Kim, 632 F.3d at 717, the district court

dismissed the present action as required by circuit precedent,

Linchpins of Liberty, 71 F. Supp. 3d at 244. For this reason, as

more fully set out in the district court’s opinion, see id. at 241-

44, we affirm the dismissal of the Bivens actions.

B. The Claims Under 26 U.S.C. § 6103

As the district court viewed the statutory claims, the

plaintiffs were attempting to turn their grievances for the

discriminatory acquisition of information into a claim that the

information was improperly “inspected” by one or more IRS

employees who had no need to inspect it because the

information was not material to their applications for tax exempt

status. See Linchpins of Liberty, 71 F. Supp. 3d at 247. There

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is no controlling appellate decision concerning the application

of § 6103 to a comparable situation, perhaps in part because

there is no factual history of such discriminatory acquisition of

taxpayer information prior to the events giving rise to these

cases and the Z Street decision, supra. However, there is one

unpublished district court decision which, while obviously not

controlling, is nonetheless instructive.

Both parties rely on the decision of the Southern District of

Ohio in NorCal Tea Party Patriots v. IRS, No. 1:13-cv-341,

2014 WL 3547369, at *11-14 (S.D. Ohio July 17, 2014). Both

parties are correct that the decision contains a careful analysis of

the governing law, though they come to opposite conclusions as

to its effects. In NorCal, the plaintiffs raised similar claims to

those we consider today. As in the cases before us, the IRS

moved to dismiss the statutory claims under Rule 12(b)(6). The

NorCal court considered the relevant sections of the IRS Code,

26 U.S.C. §§ 6103, 7431, and noted correctly that “Section

[6103] requires that tax ‘returns and return information shall be

confidential.’” 2014 WL 3547369, at *11.

The statute defines “return information” as including the

following:

a taxpayer’s identity, the nature, source, or amount of his

income, payments, receipts, deductions, exemptions,

credits, assets, liabilities, net worth, tax liability, tax

withheld, deficiencies, overassessments, or tax payments,

whether the taxpayer’s return was, is being, or will be

examined or subject to other investigation or processing, or

any other data, received by, recorded by, prepared by,

furnished to, or collected by the Secretary with respect to a

return or with respect to the determination of the existence,

or possible existence, of liability (or the amount thereof) of

any person under this title for any tax, penalty, interest,

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fine, forfeiture, or other imposition, or offense . . . .

26 U.S.C. § 6103(b)(2)(A). As the Ohio district court further

noted, 26 U.S.C. § 7431 creates a private cause of action for

violations of § 6103. That section provides:

If any officer or employee of the United States knowingly,

or by reason of negligence, inspects or discloses any return

or return information with respect to a taxpayer in violation

of any provision of section 6103, such taxpayer may bring

a civil action for damages against the United States in a

district court of the United States.

26 U.S.C. § 7431(a)(1).

However, we further note, as did the Ohio district court, that

§§ 6103 and 7431 provide exceptions. Specifically,

§ 6103(h)(1) permits “inspection by or disclosure to officers and

employees of the Department of the Treasury as official duties

require such inspection or disclosure for tax administration

purposes.” The term “tax administration” is defined broadly as

“the administration, management, conduct, direction, and

supervision of the execution and application of the internal

revenue laws or related statutes (or equivalent laws and statutes

of a State) and tax conventions to which the United States is a

party . . . .” Id. § 6103(b)(4).

The NorCal court denied the Rule 12(b)(6) motion, but did

so noting:

Plaintiff Groups will have to establish that the IRS officials

who inspected or disclosed the return information did so

knowing that the information was not necessary for tax

administration purposes, regardless of whether the IRS

officials who requested the information knew or believed it

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was necessary for the § 501(c)(4) application.

NorCal, 2014 WL 3547369, at *13.

While the question may be a close one, review of the

complaints in the district court in this case does not reveal

allegations sufficient to support the statutory requirements

which were set forth, we believe correctly, by the NorCal court.

As the district court correctly noted, unlike in NorCal, the

complaint in this case makes only conclusory allegations and

“general averments” regarding the handling of tax return

information. See Linchpins of Liberty, 71 F. Supp. 3d at 248

n.18 (observing that “the plaintiffs admit that certain individual

defendants were using tax return information ‘to conduct official

IRS business,’” and paragraph 296 of the complaint “does not

allege that any of the defendants improperly inspected or

disclosed the plaintiffs' tax return information . . .”). Further,

“[b]ecause § 7431 represents a waiver of sovereign immunity,

it must be ‘strictly construed, in terms of its scope, in favor of

the sovereign.’” Snider v. United States, 468 F.3d 500, 509 (8th

Cir. 2006) (quoting Lane v. Pena, 518 U.S. 187, 192 (1996)).

Therefore, we affirm the dismissal of the section 6103

counts of the complaints by the district court.

C. The Other Equitable Claims

None of the above disposes of the other equitable claims of

appellants for violation of their constitutional rights by the

viewpoint based targeting of their applications by the IRS. The

district court concluded that those claims were moot, depriving

it of jurisdiction, and therefore dismissed the claims pursuant to

Rule 12(b)(1). We disagree with this conclusion and reverse the

district court’s judgments on those claims.

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As the district court rightly recognized, see Linchpins of

Liberty, 71 F. Supp. 3d at 244, the courts of the United States,

pursuant to Article III of the Constitution, have no jurisdiction

to act unless there is “a case or controversy.” See, e.g., Clarke

v. United States, 915 F.2d 699, 700-01 (D.C. Cir. 1990). The

IRS has not disputed that this litigation began with a case or

controversy. The government contends, however, and the

district court agreed, that the case has become moot and

therefore no longer comes within the jurisdiction of Article III

courts. As the district court properly noted, “[e]ven where a

case once posed ‘a live controversy when filed, the [mootness]

doctrine requires’ the Court ‘to refrain from deciding it if events

have so transpired that the decision will neither presently affect

the parties’ rights nor have a more-than-speculative chance of

affecting them in the future.’” 71 F. Supp. 3d at 244 (quoting

Clarke, 915 F.2d at 701) (second alteration the district court’s)

(additional citations and internal quotation marks omitted).

Here the IRS contended, and the district court agreed, that

plaintiffs’ claims have become moot because the IRS has

stopped using its admittedly improper discriminatory criteria

and handling of applications by taxpayers with politically

disfavored names. For a fuller understanding of the IRS’s claim

of mootness based on its putative voluntary cessation, we need

to make a rather full examination of the Inspector General’s

Report.

1. The Inspector General’s Report

At the outset, we note that the Inspector General’s Report

was properly before the district court in its consideration of the

motions to dismiss, and is properly before this court in our

consideration of the appeal. In both actions, the plaintiffs

attached and incorporated the full report with their complaints.

The IRS has, obviously, taken no action to disavow or discredit

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the report of investigation by its parent department.

On May 14, 2013, the Treasury Inspector General for Tax

Administration issued the audit report styled “Inappropriate

Criteria Were Used to Identify Tax-Exempt Applications for

Review,” and bearing the reference number: 2013-10-053

(citations to the report will be shown as “TIGTA”).

The gist of the Inspector General’s Report is clear from its

name. The first sentence of the 25-page “Results of Review”

states, “The Determinations Unit [of the IRS] developed and

used inappropriate criteria to identify applications from

organizations with the words Tea Party in their names.” TIGTA

at 5. Elucidating on that point, the audit determined that

“according to the IRS, a Determinations Unit specialist was

asked to search for applications with Tea Party, Patriots, or 9/12

in the organization’s name as well as other ‘political-sounding’

names.” Id. at 6.

Indeed, officials from the IRS function in charge of exempt

organizations stated to the Inspector General that

in May 2010, the Determinations Unit began developing a

spreadsheet that would become known as the “Be On the

Look Out” listing (hereafter referred to as the BOLO

listing), which included the emerging issue of Tea Party

applications. In June 2010, the Determinations Unit began

training its specialists on issues to be aware of, including

Tea Party cases. By July 2010, Determinations Unit

management stated that it had requested its specialists to be

on the lookout for Tea Party applications.

Id. (citation omitted).

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The report goes on to remind the IRS that its function is to

help American taxpayers to “understand and meet their tax

responsibilities and” to “apply[] the tax law with integrity and

fairness to all.” Id. In recognizing that the IRS’s handling of

exemption applications from persons of disfavored viewpoints

utterly failed that mission, the report states, “the criteria

developed by the Determinations Unit gives the appearance that

the IRS is not impartial in conducting its mission. The criteria

focused narrowly on the names and policy positions of

organizations instead of tax-exempt laws and Treasury

Regulations.” Id. at 6-7.

Although the TIGTA reports that some change was made in

the criteria in June of 2011, the report goes on to observe that by

January 2012, “criteria again focused on the policy positions of

organizations instead of tax-exempt laws and Treasury

Regulations.” Id. at 7. In the meantime, the employees using

these improper criteria delayed, denied, and generally

mishandled the applications of disfavored applicants. “As of

December 17, 2012, many organizations had not received an

approval or denial letter for more than two years after they

submitted their applications. Some cases ha[d] been open

during two election cycles (2010 and 2012).” Id. at 11.

The audit report is replete with details of discriminatory

processing and delay. For example, “[t]he Determinations Unit

sent requests for information that we later (in whole or in part)

determined to be unnecessary for 98 (58 percent) of 170

organizations that received additional information request

letters.” Id. at 18.

The TIGTA includes specific examples, e.g.:

1. The names of the donors, contributors, and grantors. If

the donor, contributor, or grantor has run or will run for

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a public office, identify the office. If not, please

confirm by answering this question “No.”

2. The amounts of each of the donations, contributions,

and grants and the dates you received them.

3. How did you use these donations, contributions, and

grants? Provide the details.

Id. at 19.

The Inspector General went on to list “seven questions

identified as unnecessary by the [exempt organization]

function.”

1 Requests the names of donors.

2 Requests a list of all issues that are important to the

organization and asks that the organization indicate its

position regarding such issues.

3 Requests 1) the roles and activities of the audience and

participants other than members in the activity and 2)

the type of conversations and discussions members and

participants had during the activity.

4 Asks whether the officer, director, etc., has run or will

run for public office.

5 Requests the political affiliation of the officer, director,

speakers, candidates supported, etc., or otherwise refers

to the relationship with identified political

party–related organizations.

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6 Requests information regarding employment, other

than for the organization, including hours worked.

7 Requests information regarding activities of another

organization – not just the relationship of the other

organization to the applicant.

Id. at 20.

2. Viewpoint Discrimination

To place in context our discussion of TIGTA’s findings,

we recall that under the First Amendment, the government “has

no power to restrict expression because of its message, its ideas,

its subject matter, or its content.” Reed v. Town of Gilbert, Ariz.,

135 S. Ct. 2218, 2226 (2015) (quoting Police Dep’t of Chicago

v. Mosley, 408 U.S. 92, 95 (1972)). “Content-based laws—those

that target speech based on its communicative content—are

presumptively unconstitutional and may be justified only if the

government proves that they are narrowly tailored to serve

compelling state interests.” Reed, 135 S. Ct. at 2226. A “more

blatant” and “egregious form of content discrimination” is

viewpoint discrimination, which occurs when a government

regulation “targets not subject matter, but particular views taken

by speakers on a subject . . . .” Rosenberger v. Rector &

Visitors of Univ. of Va., 515 U.S. 819, 829 (1995). Viewpoint

discrimination is based on “the specific motivating ideology or

the opinion or perspective of the speaker[,]” id., and, therefore,

“plainly offend[s]” the First Amendment, First Nat’l Bank of

Boston v. Belloti, 435 U.S. 765, 785-86 (1978).

Just last term, we stated directly that, “in administering

the tax code, the IRS may not discriminate on the basis of

viewpoint . . . .” Z St., 791 F.3d at 30. We went on to say that

“to process exemption applications pursuant to different

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standards and at different rates depending upon the viewpoint of

the applicants” is “a blatant violation of the First Amendment.”

Id. at 32. The tax code may not “discriminate invidiously . . .

in such a way as to aim at the suppression of dangerous ideas.”

Regan v. Taxation with Representation of Wash., 461 U.S. 540,

548 (1983) (internal quotation marks and alteration omitted).

3. The Mootness Ruling

It being plain to the Inspector General, the district court,

and this court that the IRS cannot defend its discriminatory

conduct on the merits, the governing issue is now whether the

controversy is moot. The district court held that it was; we

conclude that it is not. The fundamental concept of mootness is

quite straightforward. As applied in the context of injunctive

litigation, if there remains no conduct to be enjoined, then

normally there is no relief that need be granted, the case or

controversy has ceased, and the jurisdiction of the court has

expired under Article III. However, there is a difference

between the controversy having gone away, and simply being in

a restive stage. This difference gives rise to the concept of

“voluntary cessation.” That concept governs the case in which

the defendant actor is not committing the controversial conduct

at the moment of the litigation, but “the defendant is ‘free to

return to [its] old ways’—thereby subjecting the plaintiff to the

same harm but, at the same time, avoiding judicial review.”

Qassim v. Bush, 466 F.3d 1073, 1075 (D.C. Cir. 2006) (quoting

United States v. W.T. Grant Co., 345 U.S. 629, 632 (1953))

(additional citations omitted). For a defendant to successfully

establish mootness by reason of its voluntary cessation of the

controversial conduct, the defendant must show that “(1) there

is no reasonable expectation that the conduct will recur and (2)

interim relief or events have completely and irrevocably

eradicated the effects of the alleged violation.” Id. at 1075

(quoting Motor & Equip. Mfrs. Ass’n v. Nichols, 142 F.3d 449,

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459 (D.C. Cir. 1998)). Both the district court and the

government acknowledge that the defendant has the burden of

establishing that these criteria have been met, and that it is a

“heavy burden.” 71 F. Supp. 3d at 245; Appellee United States

Br. in Linchpins of Liberty, at 13.

Here, voluntary cessation has never occurred. The IRS

has admitted to the Inspector General, to the district court, and

to us that applications for exemption by some of appellant-

plaintiffs have never to this day been processed. The IRS

proudly boasts that “no more than ‘two’ applications for

exemption remain pending with the IRS.” Appellee United

States Br. in Linchpins of Liberty, at 14. Further, they claim,

“the vast majority of the plaintiffs lack a personal stake in the

outcome of the lawsuit . . . .” Id. We would advise the IRS that

a heavy burden of establishing mootness is not carried by

proving that the case is nearly moot, or is moot as to a “vast

majority” of the parties. Their heavy burden requires that they

establish cessation, not near cessation.

The IRS offers a rather puzzling explanation for why the

continued failure to afford proper processing to at least some of

the victim applicants should not prevent a finding of cessation.

That explanation is that the organizations whose applications

were still pending “were involved in ‘litigation’ with the Justice

Department . . . .” Id. at 27. The Service’s brief further

illuminates this point with a footnote explaining that “[u]nder

long-standing procedures, administrative action on an

application for exemption is ordinarily suspended if the

applicant files suit in court.” Id. at 28 n.4. It is not at all clear

why the IRS proposes that not ceasing becomes cessation if the

victim of the conduct is litigating against it. The IRS position is

reminiscent of Catch-22 from the novel of the same name.

Under that “catch,” World War II airmen were not required to

fly if they were mentally ill. However, anyone who applied to

18

stop flying was evidencing rationality and therefore was not

mentally ill. See Joseph Heller, Catch-22 (1971). “You are

entitled to an exemption from flying,” the government said, “but

you can’t get it as long as you are asking for it.”

Parallel to Joseph Heller’s catch, the IRS is telling the

applicants in these cases that “we have been violating your

rights and not properly processing your applications. You are

entitled to have your applications processed. But if you ask for

that processing by way of a lawsuit, then you can’t have it.” We

would advise the IRS: if you haven’t ceased to violate the rights

of the taxpayers, then there is no cessation. You have not

carried your burden, be it heavy or light.

The IRS’s only further attempt to justify the lack of

cessation as to some of the applicants is to refer to its Catch-22

litigation rule as a “longstanding policy.” To this we would

advise the IRS: if you haven’t ceased discriminatory conduct,

the fact that you have been failing to cease it for a long time

does not create cessation. You still have not carried your

burden.

The IRS further calls our attention to a later follow-up

report from the Treasury Inspector General for Tax

Administration. The IRS argues, with support in the text of the

document, that this report evidences further progress toward

alleviation of the past discriminatory actions in the processing

of the targeted applications. That second report, dated March

27, 2015, is not a part of the record before us. Indeed, it did not

exist until over five months after the issuance of the district

court opinion under review. While the IRS may be correct that

we could consider this extra-record evidence by granting judicial

notice to the official document, that does not in itself make the

document ripe for consideration in our review. As noted, it is

not part of the record. As further evident from the date of the

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document and the date of the opinions under review, it was not

before the district court.

As we noted above, a dismissal under Rule 12(b)(1),

unlike a dismissal under Rule 12(b)(6), is not reviewed de novo

in its entirety, but only as to legal conclusions. Where, as here,

the jurisdictional question before the court is fact-dependent, the

first step of the review is a clear-error review regarding the

factual decision of the district court. It is hardly possible for

this court to determine whether a clear error occurred based on

evidence that the district court did not consider, and that indeed

did not exist at the time of the decision. Aside from that rather

obvious proposition, it is also true that judicially-noticed

evidence, like any other evidence, is subject to a trial court’s

determination as to its weight, effect, and consistency with other

evidence. That the evidence in question is documentary rather

than testimonial does not change the standard of review. See

Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985).

The 2015 report may be noticeable, see Fed. R. Evid. 201(b), but

its evidentiary use is not ripe. As we will be remanding this case

for further proceedings, the government is free to offer the

document in the district court.

Even if we assumed there was voluntary cessation, we

would still conclude that the government has not carried its

burden to establish mootness because it has not demonstrated

that “(1) there is no reasonable expectation that the conduct will

recur [or] (2) interim relief or events have completely and

irrevocably eradicated the effects of the alleged violation.”

Qassim, 466 F.3d at 1075 (quoting Motor & Equip. Mfrs. Ass’n,

142 F.3d at 459). As to element 2, it is absurd to suggest that

the effect of the IRS’s unlawful conduct, which delayed the

processing of appellant-plaintiffs’ applications, has been

eradicated when two of the appellant-plaintiffs’ applications

remain pending. Nor can the government satisfy element 1 in

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light of the IRS’s own language, which condemns it. As the

district court observed, the IRS relied upon its announcement

that “[w]e have suspended the use of ‘be-on-the-lookout,’ or

BOLO, lists in the application process for tax exempt status,” to

show “that there is no reasonable expectation that the alleged

conduct will recur . . . .” 71 F. Supp. 3d at 245 (emphasis

added).

The IRS’s response to the Inspector General’s Report

further caused the Service to announce that it “specifically . . .

has suspended the use of BOLO lists in the application process

for tax-exempt status . . . .” Id. (internal punctuation omitted)

(emphasis added). And most tellingly, the IRS announced that

“[e]ffective immediately, the use of watch lists to identify cases

or issues requiring heightened awareness is suspended until

further notice . . . .” Id. (emphasis added).

A violation of right that is “suspended until further

notice” has not become the subject of voluntary cessation, with

no reasonable expectation of resumption, so as to moot litigation

against the violation of rights. Rather, it has at most advised the

victim of the violation – “you’re alright for now, but there may

be another shoe falling.”

To this point, we, like the Inspector General, have

focused on the BOLO segment of the targeting scheme. We

note that the complaints alleged extensive discriminatory

conduct including “delayed processing . . . harassing, probing,

and unconstitutional requests for additional information that . . .

required applicants to disclose, among other things, donor lists,

direct and indirect communications with members of legislative

bodies, Internet passwords and user names, copies of social

media and other Internet postings, and even the political and

charitable activities of family members.” Linchpins Sec. Am.

Compl. at ¶ 2. While the Inspector General’s Report references

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many of these discriminatory actions, neither it nor anything else

presented by the government meets the heavy burden of

establishing that “interim relief or events have completely and

irrevocably eradicated the effects of the alleged violation.”

Qassim, 466 F.3d at 1075 (citation omitted). While a court’s

inquiry into possible mootness in response to a Rule 12(b)(1)

violation has, as we have noted, a factual component,

nonetheless the norm is that at the Rule 12 stage, the allegations

of a complaint are taken as true, absent some reason for a

rejection. In these cases, as the government has not carried its

heavy burden of establishing mootness by voluntary cessation,

we apply that normal presumption. The allegations of the

complaint are quite sufficient to warrant a merits disposition

based on adjudication of substantive evidence, not simply a

dismissal at the pleadings stage.

Finally, although not addressed by the district court, the

void-for-vagueness challenges raised by appellants in Linchpins

of Liberty, to 26 C.F.R. § 1.501(c)(4)-1 and Revenue Procedure

86-43 are not moot for the same reasons as above—i.e, they

continue to affect those plaintiff-organizations with pending

applications and are amply supported by allegations in the

complaint. See Linchpins Sec. Am. Comp. ¶¶ 298-308, 385-88,

399-401.

In short, the district court correctly identified the nature

of this controversy and the nature of the government conduct

subject to equitable relief. However, the court erred in

concluding that the litigation over that conduct had been mooted

by the government’s putative voluntary cessation of the conduct.

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III. CONCLUSION

For the reasons set forth above, we affirm the district

court’s dismissal of appellants’ Bivens actions and statutory

claims, but reverse the district court’s dismissal of the actions

for injunctive and declaratory relief and remand for further

proceedings consistent with this opinion.

So ordered.