Petition — United States v. Janis

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Supreme Court, U. S.

, es Ee

FFR 3 1975

—— +,

MICHAEL RODAK, JR., CLERK

No.7 4-958 '

Inthe Supreme Court of the Bnited States

OcToBER TERM, 1974

UnitTep StaTes OF AMERICA, ET AL., PETITIONERS

Vv.

Max JANIS

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

ROBERT H. BORK,

Solicitor General,

4 SCOTT P. CRAMPTON,

Assistant Attorney General,

STUART A. SMITH,

Aassisiant tu the Solicitor General,

CROMBIE J. D. GARRETT,

CARLETON D. POWELL,

Attorneys,

Department of Justice,

Washington, D.C. 20530.

Page

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Constitutional provision involved___..___...........---- 2

AE SORE IE SRE Do ee 2

Reasons for granting the writ____-..._.........._-____- 5

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CITATIONS

Cases:

Aquilar v. Texas, 378 U.S. 108............._..----- 5

Birens ve Sir Unknown Named Agents of the Fedeval

Bureau of Narcoties, 405 U.s. 388_......-.-.------ s

Botany Mills v. United States, 278 U.S. 282_____--- 7

Cleary v. Bolger, 371 U.S. 392. .........-..--.-.--- )

Compton v. United States, 334 F. 2d 212_...__.______- th

Elkins v. United States, 364 U.S. 206__....--------- 8,11

Lewis v. Reynolds, 284 U.S. 281.......-..--...-.--- 7

Lucas v. Structural Steel Co., 281 U.S. 264....-.-__-- 8

Mapp v. Ohio, 367 U.S. 643..............-----..--- S

Michigan v. Tucker, 417 U.S. 433_.....-.-.--------- 11

Pizzarello v. United States, 408 F. 2d 579... __-_- ” 10

Plymouth Sedan v. Pennsylvania, 380 U.S. 693- -— —- a Q

Reinecke v. Spalding, 280 U.S. 227,-_------ eae 7

Silverthorne Lumber Co. v. United States, 251 U.S. 385. 9,10

Spinelli v. United States, 393 U.S. 410___---_---- a. &8

Stone v. White, 301 U.S. $382. ............-...- a 7

Suarez v. Commissioner, 58 T.C’. 792_...-.--_- _-- . id

United States v. Calandra, 414 U.S. 338_____- ——— |

United States v. Harris, 403 U.S. 573... ---- eas li

United States v. Rerach, 482 F. 2d 10, certiorari

a 8

567-816—75——1

Cases—Continued Page

Weeks v. United States, 232 U.S. 383..........----- 8

Welch v. Helvering, 290 U.S. 111......---------. wound 8

Wickwire v. Reinecke, 275 U.S. 101........--.------ s

Constitution and statute:

U.S. Constitution, Fourth Amendment- - --- - - -- 2, 5, 6, 8, 10

Internal Revenue Code of 1954 (26 U.S.C.):

SA Tc, i os ica satan a ahaa adnan ieldiiaaiiaie eubeinerts 3

Inthe Supreme Court of the Gnited States

OcTOBER TERM, 1974

No.

UNITED STATES OF AMERICA, ET AL., PETITIONERS

Max JANis

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

The Solicitor General, on behalf of the United

States of America and Frank S. Schmidt, District

Director of Internal Revenue for the District of Los

Angeles, California, petitions for a writ of certiorari

to review the judgment of the United States Court of

Appeals for the Ninth Circuit in this case.

OPINIONS BELOW

The findings of fact, conclusions of law and order

of the district court (App. A, infra) are not officially

reported. The memorandum of affirmance of the court

of appeals (App. B, infra) is not officially reported.

JURISDICTION

The juagment of the court of appeals ( App. C, infra)

was entered July 22, 1974. A petition for rehearing

was denied on September 5, 1974 (App. D, infra). By

(1)

order dated November 27, 1974, Mr. Justice Douglas

extended the time for filing a petition for a writ of

certiorari to and including February 2, 1975 (a Sun-

day). The jurisdiction of this Court is invoked under

28 U.S.C. 1254(1).

QUESTION PRESENTED

Whether a federal civil tax assessment is invalid

when the Internal Revenue Service’s knowledge of the

taxpayer’s liability and its computation of the amount

due are based upon evidence seized by local law en-

forcement officers pursuant to a defective search war-

rant.

CONSTITUTIONAL PROVISION INVOLVED

The Fourth Amendment to the United States Con-

stitution provides:

The right of the people to be seeure in their

persons, houses, papers, and effects, against un-

reasonable searches and seizures, shall not be

violated, and no warrants shall issue, but upon

probable cause, supported by oath or affirma-

tion, and particularly describing the place to be

searched, and the persons or things to be seized.

STATEMENT

On November 26, 1968, the Los Angeles Police

Department obtained a warrant directing a search for

bookmaking paraphernalia on the persons of respond-

ent and of Morris Levine, and at certain specified lo-

cations. The warrant was issued by a judge of the

Municipal Court of the Los Angeles Judicial District

and was based upon the affidavit of a police officer that

he had received information from a confidential and

reliable informant that respondent and Levine were

engaged in taking bets on certain telephone numbers

(App. A, infra, p. 3A; Pitf. Exs. 1, 2; I-R.

111-117).'

In the ensuing search, conducted pursuant to the

warrant by Los Angeles police officers on Novem-

ber 30, 1968, respondent and Levine were arrested and

certain property was seized. The seized property in-

cluded $4,940 in cash and wagering records that be-

longed to respondent. Shortly thereafter, the Los An-

geles police officers who had prepared the affidavit in

support of the search warrant notified a revenue agent

of the Internal Revenue Service that respondent had

been arrested for bookmaking activity. Together with

a Los Angeles police officer, the revenue agent ana-

lyzed the wagering records obtained pursuant to the

search warrant and determined the gross volume of

respondent’s gambling enterprise for the five days

immediately preceding his arrest. The Los Angeles

police officer further informed the revenue agent that

he had conducted a surveillance of respondent's activi-

ties for the 77-day period from September 14, 1968,

through November 30, 1968, the day of respondent’s

arrest (App. A, infra, pp. 3A-5A).

Respondent had not filed any federal or state tax

returns pertaining to his bookmaking activities for

the period from September 14, 1968, through Novem-

ber 30, 1968. Based upon an examination of the

evidence obtained by the Los Angeles police, the In-

ternal Revenue Service made an assessment for civil

wagering taxes imposed by Section 4401 of the In-

ternal Revenue Code of 1954 against respondent in

the amount of $89,026.09 plus $123.97 of interest.

'*Exs.” and “R.” references are to the exhibits and to the

three-volume record filed in the court of appeals, respectively.

The amount of the assessment was computed by

determining respondent’s daily gross proceeds for

the five-day period covered by the wagering records

analyzed by the revenue agent and multiplying the

resulting figure by 77, the period of the police surveil-

lance of respondent’s activities. Pursuant to this as-

sessment, the Internal Revenue Service levied upon

the $4,940 in cash that had been seized by the Los An-

geles police, in partial satisfaction of respondent's tax

liability (App. A, infra, pp. 5A-6A).

Respondent and Levine were prosecuted for viola-

tion of local gambling laws. On February 18, 1969,

they moved to quash the search warrant before the

same Municipal Court judge who had issued the war-

rant. They urged that the affidavit in support of the

warrant did not set forth in sufficient detail the reli-

ability of the information supplied by the confidential

informant, so that the issuing magistrate was unable

to judge independently the reliabilitv of the informa-

tion. The motion was granted, and the court ordered

that all items taken pursuant to the search warrant be

returned to respondent and Levine, except the cash

taken by the Internal Revenue Service (App. A,

infra, pp. 3A-4A).

On December 9, 1970, respondent commenced this

refund suit in the United States District Court for the

Central District of California, seeking a refund of the

#4,940 levied upon by the Internal Revenue Service in

partial satisfaction of the $89,026.09 assessment (I-R.

28-31). In response, the government filed a counter-

claim against respondent in the amount of $84,210.06,

seeking to reduce to Judgment the unpaid portion of

the assessment (I-R. 48-51).

At the outset of a hearing, the district court noted

that it was ‘reluctantly holding that the affidavit sup-

porting the search warrant [was] insufficient under

the Spinelli [Spinelli v. United States, 393 U.S. 410]

and Aguilar [Aguilar v. Teras, 378 U.S. 108] doe-

trines” (III-R. 3). The district court thereupon found

that all of the evidence underlying the tax assessment

was “obtained directly or indirectly as a result of the

search pursuant to the defective search warrant * * *,”

so that such evidence was obtained “in violation of

[respondent’s] Fourth Amendment rights to be free

from unreasonable searches and seizures” (App. A,

infra, p. TA).

The district court thereupon upheld respondent's

refund claim and dismissed the government’s counter-

elaim with prejudice, stating that ‘‘substantially all,

if not all” of the evidence utilized by the Internal

Revenve Service in making its assessment was ille-

gally obtained, ‘‘and, as such, the assessment was in-

valid.” In the district court’s view, once it concluded

that the assessment was based upon illegally obtained

evidence, respondent “[was] not required to prove the

extent of the refund to which he claims he is entitled”

(App. A, infra, p. TA). The court of appeals af-

firmed on the basis of the district court’s findings of

fact and conclusions of law (App. B, infra, p. 124).

REASONS FOR GRANTING THE WRIT

In holding that a federal civil tax assessment is

invalid because it was based upon evidence obtained

by local law enforcement officers pursuant to a cefec-

tive search warrant, the decision below, upholding re-

spondent’s claimed refund on that ground, creates a

contlict among the circuits that should be resolved by

this Court. Moreover, the invalidation of a civil tax

assessment in these circumstances represents a drastic

and unwarranted extension to civil proceedings of the

Fourth Amendment exclusionary rule, which this

Court has thus far applied to bar the use of illegally

obtained evidence in criminal proceedings. Thus, this

case raises a question of the utmost importance con-

cerning the scope of the exclusionary rule as a deter-

rent to effectuate the guarantee of the Fourth Amend-

ment against unreasonable searches and ‘seizures and

as an impediment to the enforcement of civil claims.

1. The decision below directly conflicts with Comp-

tou Vv. United States, 334 *. 2d 212 (C.A. 4). There,

on essentially parallel facts, the Fourth Cireuit held

that a civil wagering tax assessment is not invalid

despite the fact that it was based almost entirely upon

evidence obtained in an illegal search conducted by

local police officers, the fruits of which were made

available to agents of the Internal Revenue Service.

As in this case, the illegality of the search in Compton

arose on account of a defect in the warrant. But,

contrary to the decision of the courts below, the

Fourth Circuit rejected the taxpayer’s refund claim,

observing that the fact that the assessment was prem-

ised upon the fruits of an illegal search was “not

decisive of the issues here’’ (334 F. 2d at 215-216).

In upholding respondent’s refund claim on the

ground that the Service’s assessment was based upon

illegally seized evidence, the district court concluded

that respondent ‘‘[was] not required to prove the

extent of the refund to which he claims he is entitled”

(App. A, infra, p. 7A). In so holding, the court re-

fused to follow the longstanding rule established by

decisions of this Court, to which the Fourth Circuit

adhered in Compton, that in a refund suit the tax-

payer bears the burden of proving the exact amount

that he is entitled to recover. See, e.g., Botany Mills

v. United States, 278 U.S. 282, 289-290; Reinecke v.

Spalding, 280 U.S. 227, 232-233; Lewis v. Reynolds,

284 U.S. 281; see also Stone v. White, 301 U.S. 532.

As those decisions make clear, the reason for this

rule is that a suit for refund of taxes paid is analo-

gous to an equitable action for money had and re-

ceived. The taxpayer’s entire liability is at issue, and

he cannot prevail if the government is entitled to

retain the amount claimed under any theory.

Thus, it is not enough for the taxpayer to show, as

we concede respondent has done here, that the assess-

ment was based upon the fruits of an illegal search. In

order to recover, he must introduce evidence showing

his correct liability and that he has in fact overpaid

his taxes by the amount claimed. Indeed, in rejecting

the claimed refund in Compton, where the taxpayer,

like respondent, did nothing more than establish that

the assessment was based upon illegally seized evi-

dence, the Fourth Circuit stated, in terms particularly

appropriate to the decision below: **The difficulty with

plaintiff’s position is that she apparently misconceives

the burden of proof imposed upon her and which

she must sustain in order to establish her claim of

entitlement to a refund”’ (334 F. 2d at 216).

* The same considerations apply to the government's counter-

claim, which was erroneously dismissed by the courts below.

When the government counterclaims in a tax refund suit, it

presents the certificate of assessment, which is presumed to be

correct and is sufficient to meet the government's initial burden

of coming forward. Thereupon, the taxpayer has the burden

567-816—75——2

2. The radical departure from the requirements of

proof in tax refund suits by the decision below ap-

pears to have been predicated upon an extension of

the Fourth Amendment exclusionary rule first enun-

ciated by this Court in Weeks v. United States, 232

U.S. 383. Under that rule, evidence obtained in viola-

tion of the Fourth Amendment cannot be used in a

criminal proceeding against the victim of the illegal

search and seizure. See also Mapp vy. Ohio, 367 U.S.

643. In holding that the assessment ‘‘must be sup-

pressed and quashed as being violative of the plain-

tiff’s Fourth Amendment rights to be free from un-

reasonable search and seizure’’ (App. A, infra, p. 8A),

the district court apparently concluded that collection

of the tax due under the assessment would abridge

respondent’s constitutional rights.

As the Court explained in Elkins v. United States,

364 U.S. 206, 217, the purpose of the exclusionary rule

is to deter unlawful police conduct. But whatever the

extent to which the exclusionary rule may arguably

accomplish its deterrent objective in criminal cases,"

the Court has never extended the exclusionary rule

of proving that the assessment is incorrect and that he owes

no additional tax. See, e.g., Lucas vy. Structural Steel Co., 281

U.S. 264, 271; Wickwire v. Reinecke, 275 U.S. 101, 105; Welch

v. Helvering, 290 U.S. 111, 115; United States v. Rexach, 482

IF. 2d 10, 15-17 (C.A. 1), certiorari denied, 414 U.S. 1039, and

cases cited therein.

* The practical effect of the rule upon unlawful police be-

havior has been broadly disputed. See Bivens v. Six Unknown

Named Agents of the Federal Bureau of Narcotics, 403 U.S.

388, 424-427 (appendix to dissenting opinion of Chief Justice

Burger).

to civil eases. Thus, for example, in Plymouth Sedan

v. Pennsylvania, 380 U.S. 693, where the rule was

invoked to exclude illegally obtained evidence in a

forfeiture proceeding, the Court was careful to note

that ‘‘a forfeiture proceeding is quasi-criminal in

character’’ because ‘*[i]ts object, like a criminal pro-

ceeding, is to penalize for the commission of an offense

against the law’’ (380 U.S. at 700). See also Cleary v.

Bolger, 371 U.S. 392, 408 (coneurring opinion of Mr.

Justice Goldberg).

In extending the application of the exclusionary

principle to a civil case, the decision below runs coun-

ter to the analytical framework adopted by this Court

only last Term in United States v. Calandra, 414 U.S.

338.* There, this Court declined to apply the exclu-

sionary rule to grand jury proceedings, concluding

that the potential injury to the function of the grand

jury far outweighed any benefit to be derived from

an application of the rule in that context. In so hold-

ing, the Court noted that the broad dictum of Silver-

thorne Lumber Co. v. United States, 251 U.S. 385,

392—that the ‘essence of a provision forbidding the

acquisition of evidence in a certain way is that not

merely evidence so acquired shall not be used before

the Court but that it shall not be used at all’’—had

*Strictly speaking, this case does not involve an applica-

tion of the conventional exclusionary rule, which comes into

play only at the time illegally seized evidence is sought to be

introduced at trial. The district court here utilized, and the

court of appeals approved, a much more radical sanction—

summary judgment against the government because its cause

of action was deemed tainted. ©

been “substantially undermined by later cases” (414

U.S. at 352-353, n. 8)."

Employing the Calandra analysis and balancing the

potential harm resulting from exclusion against the

benefit to Fourth Amendment values of applying the

exclusionary principle, it becomes plain that it was

improper to resolve this litigation in respondent’s

favor. The effect of the application of the rule in this

case would be to foreclose for all practical purposes

respondent’s payment of a tax for which he would

otherwise be liable. Given the widespread uncertain-

ty over the utility of the exclusionary rule, the sanc-

tion of defeating the collection of the revenues should

be imposed, if ever, only when it is beyond question

that such an extension of the rule would further its

broad rationale of deterrence. As a general proposi-

tion, the extension of the exclusionary rule to invali-

date a tax assessment that is purely civil in character

would seem to be unrelated to the goal of preventing

future unlawful police conduct. As the Court stated

in Calandra: ‘‘{T]he need for deterrence and hence

the rationale for excluding the evidence are strongest

where the Government’s unlawful conduct would re-

sult in imposition of a criminal sanction on the victim

of the search” (414 U.S. at 348; emphasis supplied).

Indeed, the inapplicability of the deterrence theory

is especially evident here, since it is wholly unrealistic

‘In applying the exclusionary rule in civil cases, the lower

courts have heavily relied upon the Silverthorne dictum. See,

e.g., Pizzarello v. United States, 408 F. 2d 579, 585 (C.A. 2);

Suarez vy. Commissioner, 58 T.C. 792, 802.

to assume that local police officers would be deterred

from illegal searches and seizures because a possible

federal civil tax liability might be rendered uncol-

lectable. The connection between the illegal search

conducted by the Los Angeles police and the civil fed-

eral tax assessment made against respondent is so

indirect and attenuated that reliance upon the deter-

rence rationale would at best involve hazardous spec-

ulation. Compare Elkins v. United States, 364 U.S.

206, 211-214, and cases cited therein.

Finally, extension of the exclusionary principle is

particulary unwarranted in the context of this case,

where the illegality of the search derived from a de-

fect in a search warrant issued by a judge. As the

Court recently stated in Michigan v. Tucker, 417 U.S.

433, 447: “The deterrent purpose of the exclusionary

rule necessarily assumes that the police have engaged in

willful, or at the very least negligent, conduct which

has deprived the defendant of some right.” However,

where the official action is taken in complete good

faith, the Court indicated that ‘‘the deterrence ration-

ale loses much of its force” (tbid.).° Under these cir-

cumstances, the use of the exclusionary principle to

punish the federal tax collector for local police con-

duct calls for review by this Court.

¢ There can be little doubt that the actions of the Los Angeles

police in this case were done in good faith. Indeed, the difficulty

of applying the rule of Spinelli v. United States, 393 U.S. 410,

the basis on which the search warrant against respondent was

held +o be defective, is amply illustrated by the proliferation of

views in United States v. Harris, 403 U.S. 573, which was accom-

panied by five separate opinions.

CONCLUSION

For the reasons stated, the petition for a writ of

certiorari should be granted.

Respectfully submitted. [Filed: February 27, 1973; Clerk, U.S. District Court,

Rosert H. Bork, Central District of California by Deputy]

Solicitor General.

Scortr P. CRAMPTON,

Assistant Attorney General.

Stuart A. SMITH, No. 70-13838—-MML

‘Assistant to the Solicitor General.

CroMBIE J. D. GARRETT,

APPENDIX A

United States District Court, Central District of

California

Max JANIS, PLAINTIFF

eT ee

CarLeToN D. POoweELL, v.

Attorneys. Unitep States oF AMERICA, AND FRANK S. SCHMIDT,

FEBRUARY 1975. Disrrict DrrectToR OF INTERNAL REVENUE, DEFENDANTS

Findings of Fact and Conclusions of Law

Sherman and Sturman, 8500 Wilshire Boulevard,

Suite 908, Beverly Hills, Calif. 90211, (213) 655-8862.

Attorneys for Plaintiff Max Janis.

The above-entitled cause came on regularly for

hearing on the plaintiff’s motions and trial on Feb-

ruary 13, 1973, before the Honorable Malcolm M.

Lucas, United States District Judge; Sherman and

Sturman, by Richard G. Sherman, Esq. and Herbert

D. Sturman, Esq., appearing as counsel for plaintiff,

and William D. Keller, United States Attorney: for

the Central District of California, Charles H. Mag-

nuson, Assistant United States Attorney, Chief, Tax

Division, and Mason C. Lewis, Assistant United States

Attorney, appearing as counsel for the defendants;

the Court having considered all of the pleadings and

files in this matter, the plaintiff’s motions with an-

nexed exhibits and the defendant’s responses thereto,

the stipulated facts in the Pre Trial Conference

(1A)

Order, the arguments of counsel, and being fully ad-

vised in the premises, makes the following findings

of fact:

1. This is an action for the refund of internal reve-

nue taxes. The plaintiff herein is one Max Janis; the

defendants herein are Frank 8S. Schmidt, District

Director of Internal Revenue, and the United States

of America, a sovereign body politic. The plaintiff

seeks the recovery of $4,940.00, together with inter-

est thereon as provided by law. The defendants have

counterclaimed for the recovery of taxes allegedly

due and owing from the plaintiff to the defendants

in the net sum of $84,210.06, together with interest

thereon as provided by law. The pleadings which raise

the issues are as follows:

A. Amended Complaint for Refund of Taxes.

B. Amended Answer and Counterclaim.

2. Federal jurisdiction and venue are invoked upon

the following grounds:

A. Plaintiff is a citizen of the United States

and resides in the County of Los Angeles in the

Central District of California.

B. Defendant, Frank S. Schmidt, is, and at all

times relevant hereto was, the District Director

of Internal Revenue for the Los Angeles District

of California.

C. The defendant, United States of America,

is a sovereign body politic.

D. The Court has jurisdiction and venue of

this action for refund of internal revenue taxes

pursuant to 26 U.S.C. Section 7422, 28 U.S.C.

Sections 1346(a)(1), 1391(b) and 1402(a) (1),

and the internal revenue laws of the United

States.

E. The Court has jurisdiction of the counter-

claim hereof pursuant to 28 U.S.C. Sections 1340

and 1346(c).

3. On December 5, 1968, defendants by and through

their agents, assessed an excise tax deficiency against

plaintiff in the sum of $89,026.09, plus interest in the

sum of $123.97.

4. The items upon which the defendants based their

assessment against plaintiff were originally obtained

by officers of the Los Angeles Police Department

pursuant to Search Warrant 1878, issued on Novem-

ber 26, 1968, by the Honorable Xenophon F. Lang,

Judge of the Municipal Court of the Los Angeles

Judicial District, County of Los Angeles, State of

California. Said search warrant was issued by Judge

Lang on the basis of an affidavit in support of said

search warrant, executed by one Leonard Weissman,

a Los Angeles Police Officer attached to the Admin-

istrative Vice Division.

5. The aforementioned search warrant, in turn, was

acted upon by the Los Angeles Police Department on

November 30, 1968, at which time the plaintiff and

one Morris Aaron Levine were arrested and the

premises in which the plaintiff and Mr. Levine were

found were searched.

6. At the time of the arrests and search, to wit,

on November 30, 1968, certain property of the plain-

tiff and the said Morris Aaron Levine was seized by

the Los Angeles police officers. Included within the

seized property was cash in the sum of $4,940.00,

which such cash constituted the property of the plain-

tiff. In addition thereto, certain betting markers and