Opposition Brief — Judicial Watch, Inc. v. Rossotti

No. 02-1849

Jn the Supreme Court of the Guited States

JUDICIAL WATCH, INC., PETITIONER

Us

CHARLES O. ROSSOTTI, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

EILEEN J. O’>CONNOR

Assistant Attorney General

JONATHAN S. COHEN

GRETCHEN M. WOLFINGER

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

> ie

WV

QUESTION PRESENTED

Whether, on the facts of this case, petitioner pos-

sesses a cause of action for damages against individual

officers and employees of the Internal Revenue Service

under Bivens v. Six Unknown Named Agents of Fed-

eral Bureau of Narcotics, 403 U.S. 388 (1971), based on

allegations of a retaliatory federal income tax examina-

tion.

(I)

TABLE OF CONTENTS

Page

TEIN tilsshicnsietcceniheribviialieidiessapbaisipaiie cic 1

one pea ge TTT ORCI ES ETT 1

Statement ......... pane enmeadenatnnnestupenevenjadnsinnsnendsnatanatoateniseenticubeseieoseninees, 2

RNY tiiiraseeerniehinteinseciabituiscieliibecessvtsleiecicodtes Siculccc cig! 7

PIO esncasichaancehssnrnrsnnnseeereptesisbsonnnoscomosavsoevininanssaaracsacicees, 11

TABLE OF AUTHORITIES

Cases:

Bivens v. Six Unknown Named Agents of Federal

Bureau of Narcotics, 403 U.S. 388 (1971) ceeccccccoccoooose..... 4,6

Bush v. Lucas, 462 U.S. 367 (1988) c.ccccccccscsssseseeeeeccce.. 5, 6, 7,8

Carlson v. Green, 446 U.S. 14 Ea eee ea Fj

Correctional Servs. Corp. v. Malesko, 534 U.S. 61

BO er ieinsteeceneasdiscsshbiccentobtbaiscbubisisreiSdececsictatesooein... 4

Davis v. Passman, 442 U.S. 228 SE tcididcdal a 7

National Commodity & Barter Ass’n v. Archer,

31 F.3d 152) (10th Cir. 1994) oi... ccceseccscsssssssssssccssssssesoccss. 6, 9, 10

Schweiker v. Chilicky, 487 U.S. 412 (1988) ............... - 6,6,7,8

Shreiber v. Mastrogiovanni, 214 F.3d 148 (3d Cir.

INTE NN ntti edie tashehansndinesasdcnbdehsieiids as aiasssnece cca

Western Ctr. for Journalism v. Cederquist,

235 F.3d 1153 (9th Cir, 2000) ..ccccccccsssseecscsssssesccseseeeecccscccc. 6.9

Constitution and statute:

U.S. Const.:

Amend V (Due Process Clause) w.escesecsesessesessseoeeecceoecccee... 7

Amend. VIII (Cruel and Unusual Punishment

I Nellie tena ci ieadnnsavncssrtereccsases. 7

Internal Revenue Code (25 U.S.C.):

Sp NIINION -ahcnsetidsinersicincScsiecsananaieaphessiensinsstessmsssessneases, c,... 2

I td die loaiiNewirrinsinicnne-ocbionnicieisonersaiaceic 5, 6, 8, 9, 10

SN daria abcd ccthiscsantncabiticsicareaisas:casksociosaysesicc. 5

(IIT)

IV

Miscellaneous: Page

Judicial Watch, Inc., Interim Report: Crimes and

Other Offenses Committed by President Bill

Clinton Warranting His Impeachment and

Removal from Elected Office (Sept. 1998) .........seseseseees 2,4

In the Supreme Court of the Gnited States

No. 02-1849

JUDICIAL WATCH, INC., PETITIONER

Vv.

CHARLES O. ROSSOTTI, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1-28) is

reported at 317 F.3d 401. The opinion of the district

court (Pet. App. 31-50) is reported at 217 F. Supp. 2d

618.

JURISDICTION

The judgment of the court of appeals was entered on

January 24, 2003. A petition for rehearing was denied

on March 24, 2003. Pet. App. 29-30. The petition for a

writ of certiorari was filed on June 23, 2003 (a Monday).

The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

(1)

2

STATEMENT

1. Petitioner describes itself as a “non-partisan legal

‘watchdog’ organization” that seeks to “protect the

American people from, and educate them about, corrup-

tion in government and abuses of power, and to enforce

the principle that ‘no one is above the law.’” Pet. App.

3. Since 1995, petitioner has operated as a tax-exempt

organization under the provisions of 26 U.S.C. 501(c)(8).

To qualify under that provision, “no substantial part” of

its activities can be devoted to ti iad 26 USS. ©.

501(c)(3); see Pet. App. 3.

During the late 1990’s, petitioner filed a number of

lawsuits against President Clinton and Mrs. Clinton.

Pet. App. 4. In September 1998, during impeachment

proceedings against President Clinton, petitioner sub-

mitted a report to Congress entitled Interim Report:

Crimes and Other Offenses Committed by President

Bill Clinton Warranting His Impeachment and Re-

moval from Elected Office (Interim Report). Ibid.

Several days after submitting the Interim Report,

petitioner received a letter from the Internal Revenue

Service stating that it had been selected for audit. /bid.

2. In September 2001, petitioner filed this action in

federal district court against former Commissioner’ of

! Section 501(c)(3) provides tax-exempt status for an otherwise

qualified organization if:

no substantial part of [its] activities * * * is carrying on

propaganda, or otherwise attempting, to influence legislation

(except as otherwise provided in subsection (h)), and [if the

organization] does not participate in, or intervene in (including

the publishing or distributing of statements), any political

campaign on behalf of (or in opposition to) any candidate for

public office.

26 U.S.C. 501(¢)(3).

3

Internal Revenue Charles Rossotti, four individual

Internal Revenue Service (IRS) agents, and the United

States. Pet. App. 5." The complaint, as amended,

alleged that the IRS audit was “retaliatory, politically-

motivated, and unconstitutional,” in violation of peti-

tioner’s “First Amendment free speech rights, Fifth

Amendment due process rights, and Fifth Amendment

right to be free from selective prosecution.” Jbid. The

complaint sought an injunction prohibiting the defen-

dants from proceeding with the audit. It also sought

the production of various documents pursuant to the

Freedom of Information Act (FOIA) and compensatory

and punitive damages against the Commissioner and

the IRS employees. /bid.

3. The district court granted the motion to dismiss

filed by the individual defendants. Pet. App. 31-50.°

The court first held that the plain text of the Anti-

Injunction Act bars it from exercising jurisdiction over

petitioner’s request for injunctive relief. Jd. at 39-43.

The court then held that the claim for money damages

2 Petitioner filed an amended complaint in January 2002, with-

drawing its claims against the United States, and adding the De-

partment of the Treasury and the IRS as defendants. Pet. App. 5.

3 The motion to dismiss filed by the individual defendants did

not address the FOIA claims. Those claims had been brought

against the IRS itself. Pet. App. 38 n.6. In a subsequent order,

the district court granted judgment in favor of the IRS on those

claims. An appeal of that decision is currently pending before the

Fourth Circuit. No. 03-1160 (filed Mar. 26, 2003).

In January 2002, the IRS served petitioner with an administra-

tive summons demanding the production of documents relating to

the pending tax audit. Pet. App. 38. Petitioner filed a motion to

stay or enjoin enforcement of that administrative summons. /d. at

32, 38. For the same reasons that the court dismissed petitioner’s

claims for injunctive relief, it also dismissed the motion to stay

enforcement of the summons. /d. at 43.

4

must also be dismissed because, even assuming that a

Bivens remedy is available for a retaliatory tax audit

(id. at 44-45), the individual defendants are entitled to

qualified immunity from such a claim. Jd. at 46-49.

4. The court of appeals affirmed. The court agreed

with the district court that the plain text of the Anti-

Injunction Act bars the injunctive relief requested by

petitioner. Pet. App. 7-17.* The court then further held

that a Bivens action is not available for an allegedly

retaliatory tax audit. Jd. at 17-27. Because it concluded

that no Bivens action exists in this context, the court

found it unnecessary to address whether qualified

immunity would apply in this case. Jd. at 17 n.4.

The court of appeals noted that, in recognizing in

Bivens an implied private cause of action for damages

against federal agents who allegedly conduct an illegal

search and seizure, this Court emphasized that this

constitutional cause of action would be recognized

because there was “‘no explicit congressional declara-

tion’ prohibited it, and ‘no special factors [counselling]

hesitation [by the Court] in the absence of affirmative

action by Congress.’” Pet. App. 17 (quoting Bivens v.

Six Unknown Named Agents of Federal Bureau of

Narcotics, 403 U.S. 388, 396-397 (1971)). The court of

4 The court also made clear that it found petitioner’s allegations

of a retaliatory audit to be less than persuasive (Pet. App. 10):

The initial difficulty with this argument is that, although the

amended complaint contains general allegations of retaliatory con-

duct by IRS agents based on the factual chronology outlined

above, the complaint does not allege that the individual IRS agents

even knew that Judicial Watch had filed various lawsuits, much

less its Interim Report, explicitly targeting the Clinton admini-

stration. Nor does Judicial Watch dispute that the Inspector

General conducted two investigations and twice exonerated the

individual IRS employees involved in the audit decision.

5

appeals emphasized that this Court has been reluctant

to create other causes of action for money damages

based on Bivens, especially in circumstances involving

complex statutory schemes in which Congress has

provided meaningful avenues for redress. /d. at 18-19

(citing Bush v. Lucas, 462 U.S. 367 (1983), and

Schweiker v. Chilicky, 487 U.S. 412 (1988)). In con-

cluding that a Bivens action does not lie for the

allegations of retaliatory tax audits asserted in this

case, the court of appeals noted that “[i]t would be

difficult to conceive of a more comprehensive statutory

scheme, or one that has received more intense scrutiny

from Congress, than the Internal Revenue Code.” Jd.

at 20.

The court of appeals explained that the Internal

Revenue Code provides numerous methods for peti-

tioner to challenge the conduct of the agency. Pet. App.

21. In particular, with respect to actions of individual

IRS employees, Congress enacted 26 U.S.C. 7433 in

1988 to establish a civil damages action against the

United States for individual misconduct in the collec-

tion (but not the investigation or determination) of

taxes.” Pet. App. 22. See note 5, supra. The court

noted that the legislative history of this statute makes

5 26 U.S.C. 7433(a) provides in pertinent part:

If, in connection with any collection of Federal tax with

respect to a taxpayer, any officer or employee of the Internal

Revenue Service recklessly or intentionally, or by reason of

negligence, disregards any provision of this title, or any regu-

lation promulgated under this title, such taxpayer may bring a

civil action for damages against the United States in a district

court of the United States. Except as provided in section 7432

[civil damages for failure to release lien], such civil action shall

be the exclusive remedy for recovering damages resulting

from such actions.

6

clear that “Congress did not act inadvertently in failing

to create an action for damages allegedly arising from

the investigation or determination of tax liability.” Id.

at 23. The court explained that “Congress’s consider-

able attention to the rights and remedies available to

taxpayers and [this Court’s] hesitancy in creating

Bivens remedies in such circumstances provide strong

support for the conclusion that no Bivens remedy lies in

this case.” Id. at 24.

The court of appeals emphasized that no other appel-

late court has dealt with the precise question whether a

Bivens action is available for an allegedly retaliatory

tax audit. Pet. App. 25. The court noted that Judge

Reinhardt, in his concurrence in Western Center for

Journaiism v. Cederquist, 235 F.3d 1153 (9th Cir. 2000)

(per curiam), expressed the view that such a remedy

should be available. It also noted that, in National

Commodity & Barter Ass’n v. Archer, 31 F.8d 1521

(1994) (NCBA), the Tenth Circuit concluded that a

Bivens remedy would lie in situations involving

unwarranted searches and seizures for which the

Internal Revenue Code provided no mechanism for

compensation. See Pet. App. 25-26. The court of

appeals observed, however, that neither the Western

Center nor NCBA opinions considered the enactment of

Section 7433 in 1988 or the legislative history of that

statute. Jd. at 26. The court of appeals stated in

conclusion that “[w]le * * * decline ‘to create a new

substantive legal liability * * * because we are

convinced that Congress is in a better position to decide

whether or not the public interest would be served by

creating it.’” Jd. at 27 (quoting Schweiker v. Chilicky,

487 U.S. at 426-427, and Bush v. Lucas, 462 U.S. at

390).

7

ARGUMENT

The decision of the court of appeals is correct and

does not conflict with any decision of this Court or any

other court of appeals. Further review is therefore not

warranted.

1. The court of appeals correctly recognized that this

Court’s precedents reflect a strong reluctance to

recognize new Bivens actions. As the court of appeals

noted, since the decision in Bivens, this Court had

recognized only two additional categories of Bivens

actions: in Davis v. Passman, 442 U.S. 228 (1979), the

Court found such an action under the due process

clause of the Fifth Amendment; and, in Carlson v.

Green, 446 U.S. 14 (1980), the Court found such an

action under the cruel and unusual punishment clause

of the Eighth Amendment. Pet. App. 17-18. Moreover,

as this Court emphasized in Schweiker v. Chilicky, 487

U.S. 412 (1988), cases arising from complex statutory

schemes are particularly inappropriate candidates for a

Bivens action (id. at 423):

the concept of “special factors counselling hesitation

in the absence of affirmative action by Congress”

has proved to include an appropriate judicial

deference to indications that congressional inaction

has not been inadvertent. When the design of a

Government program suggests that Congress has

provided what it considers adequate remedial

mechanisms for constitutional violations that may

occur in the course of its administration, we have

not created additional Bivens remedies.

Indeed, petitioner acknowledges that both Schweiker

and Bush v. Lucas, 462 U.S. 367 (1983), “hold that,

when Congress affords a remedy for a particular harm,

a court may not judicially create an additional remedy,

OO —————

8

even if the congressionally-created remedy does not

afford complete relief.” Pet. 18. See Schweiker v.

Chilicky, 487 U.S. at 425 (Congress need not provide

“complete” relief but only “meaningful safeguards or

remedies”). The Court expressed that same view in

Correctional Services Corp. v. Malesko, 534 U.S. 61, 69

(2001) (“So long as the plaintiff had an avenue for some

redress, bedrock principles of separation of pewers

foreclosed judicial imposition of a new substantive lia-

bility.”).°

With these guiding principles in mind, the court of

appeals properly determined that the “vast and exceed-

ingly complex statutory apparatus” of the Internal

Revenue Code provides taxpayers with a variety of

safeguards and remedies against the misconduct of the

IRS and its individual agents. Pet. App. 20-22. As the

court emphasized, the text and history of Section 7433

of the Code reflect that Congress carefully considered,

and rejected, a damages remedy that would have

encompassed wrongful tax audit proceedings. Jd. at 23-

24. The detailed history of this statute amply estab-

lishes that the legislative determination that money

damages are not an appropriate remedy in this context

was not inadvertent. Jd. at 27. See Shreiber v. Mastro-

giovanni, 214 F.3d 148, 152-153 (3d Cir. 2000) (declining

to extend Bivens remedy in connection with assessment

of tax liability in light of Section 7433). The court of

appeals correctly followed and applied this Court’s

precedents in Bush and Schweiker in determining, in

this detailed statutory context, that it was for Con-

6 Petitioner thus errs in claiming (Pet. 15-27) that the decision

in this case conflicts with the decisions of this Court in Bush v.

Lucas, 462 U.S. 367 (1983), and Schweiker v. Chilicky, 487 U.S. 412

(1988).

9

gress, rather than for the court, to determine the scope

and availability of a damages remedy for allegedly

retaliatory tax audits.

2. Petitioner errs in claiming (Pet. 27-28) that the

decision in this case conflicts with the Western Center

and NCBA cases. In Western Center, the Ninth Circuit

held that any Bivens suit that might exist would be

barred by the statute of limitations. 235 F.3d at 1158.

The court had no occasion to, and therefore properly did

not, address whether the plaintiff’s asserted Bivens

claim stated a valid cause of action. Instead, the court

“dismiss[ed] the action on the ground that, whether or

not a Bivens remedy is available, [the putative] action is

time-barred.” Jd. at 1157. And, as the court of appeals

noted in this case (Pet. App. 26), the concurring opinion

of Judge Reinhardt in Western Center—which con-

cluded that a Bivens action would exist for “a retalia-

tory audit on account of the expression of one’s political

views” (235 F.3d at 1159)—fails to give any considera-

tion to the text or clear history of Section 7433. In any

event, the dictum contained in the concurring opinion of

a single judge does not establish the views of the Ninth

Circuit and does not establish a conflict between the

circuits on the question presented in this case.

There is also no conflict between the decision in this

case and the decision of the Tenth Circuit in the NCBA

case. As the court of appeals noted below (Pet. App. 26),

the court in NCBA had no occasion to consider or

discuss Section 7433 or its clear history because the

events at issue in NCBA occurred between January

1984 and October 1985 and thus preceded the enact-

ment of Section 7433 by several years. See NCBA, 31

F.3d at 1525-1526. And, in NCBA, the court allowed a

Bivens claim to stand only for allegedly unconstitu-

tional searches and seizures that assertedly sought in-

_

10

formation in a manner that interfered with associational

rights. .:d. at 1530-1532. The narrow holding. of that

case plainly does not stand for the broad proposition

advanced by petitioner in this case that a Bivens

remedy is available for a “retaliatory” tax audit.

Especially in light of the fact that the Tenth Circuit

in NCBA had no occasion to consider the role of Section

7433 in its analysis, there is no reason to assume that, if

the Tenth Circuit were presented with a case involving

an allegedly retaliatory audit occurring after the

enactment of Section 7433, it would reach a decision

contrary to the decision reached by the court in this

case. There is thus no present conflict among the

circuits that would warrant review by this Court at this

time.

3. There is also no merit to petitioner’s assertion

that the question whether a Bivens remedy is available

for an allegedly retaliatory tax audit is of sufficient

importance to merit certiorari in the absence of a

conflict. Pet. 27. Only a handful of cases have raised or

addressed this issue even indirectly. Review by this

Court would thus be premature, for it would preclude

initial consideration and development of the relevant

issues in the various courts of appeals.

Review in this case is also unnecessary because, as

the district court correctly concluded, petitioner could

not prevail even if a Bivens remedy existed. Because

respondents’ conduct did not violate any clearly estab-

lished constitutional right, they would be entitled to

qualified immunity even if a Bivens cause of action

might otherwise exist. Pet. App. 46-49.

11

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

EILEEN J. O'CONNOR

Assistant Attorney General

JONATHAN S. COHEN

GRETCHEN M. WOLFINGER

Attorneys

AUGUST 2003