Privacy Act Page2

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[Concurring Opinion]

TJOFLAT, Circuit Judge, specially concurring:

I agree that the Privacy Act claims in this case should be remanded to the district court for further consideration; I write separately to emphasize my understanding of the court's decision. ¹

In addressing the breadth of the exception in subsection (e)(7) of the Privacy Act ² for records "pertinent to and within the scope of an authorized law enforcement activity," the court holds "that to the extent that the IRS has engaged in the practice of collecting protected information, unconnected to any investigation of past, present, or anticipated violations of the statutes which it is authorized to enforce, subsection (e)(7) of the Act has been violated." Ante, p. 1781. I agree with this holding; subsection (e)(7)'s prohibition against collecting records that describe how an individual exercises his first amendment rights should not be circumvented by fishing expeditions disguised as "law enforcement activity." I wish to emphasize, however, that the district court must have broad discretion in determining whether an agency's record collection is part of a law enforcement activity; in actually reviewing the records and the circumstances surrounding their collection, the district court is in the best position to determine the applicability of the (e)(7) law enforcement exception. Thus, while the determination of the applicability of the exception is a mixed question of law and fact, its factual character predominates and our review of a district court's finding on this issue should so recognize.

The inquiry into the law enforcement exception's relevance in a given case must, of course, depend on the facts and circumstances. In the case before us, the defendant is a tax protester. Tax protesters often set out to violate the law, see, e.g., United States v. Douglass [73-1 USTC ¶9334], 476 F. 2d 260 (5th Cir. 1973), and the IRS may therefore be entitled to greater leeway in maintaining records on their activities. In my view, Clarkson's status as a tax protester is a factor the district court may consider in determining the exception's applicability. As the court notes, the law enforcement exception was designed "to make certain that political and religious activities are not used as a cover for illegal or subversive activities," ante, p. 1780, citing 120 Cong. Rec. H10,892 (daily ed. Nov. 20, 1974 ). This concern seems especially relevant when the record collection involves tax protesters.

I also add a comment to the court's holding that a plaintiff who proves a subsection (e)(7) violation "may be entitled to have the offending records amended or expunged even if the records are not maintained within the agency's system of records." Ante, p. 1783. On the facts of this case, where the IRS has admitted the existence of (e)(7) material outside of its records system, I agree that Clarkson may be entitled to relief if the law enforcement exception is found not to apply. I express no view, however, as to whether a plaintiff's bare allegation that an agency is maintaining records in violation of subsection (e)(7) is sufficient to require the agency to search beyond its system of records for potentially offensive material. I am concerned that such a holding could

cause an enormous burden to be placed upon agencies that maintain records. For each Privacy Act request, a staff would have to cull and screen the countless, potentially millions of pages of documents, regardless of how labelled, indexed, or stored, in order to discover materials pertaining to the requestor. Such a ruling would be contrary to the purpose of the statute and to sound public policy.

Grachow v. United States Customs Service, 504 F. Supp. 632, 636 (D. D. C. 1980).

Thus, while on the facts of this case Clarkson may be entitled to relief, this does not necessarily mean that every plaintiff who alleges agency maintenance of first amendment material will be entitled to a judicially enforced scavenger hunt through that agency's records.

CLARK, Circuit Judge, specially concurring: I enthusiastically concur in Judge Tuttle's opinion which admirably and painstakingly analyzes a citizen's First Amendment protection of his freedom of speech rights as amplified by the Privacy Act. However, once again I take issue with the holding that a pro se litigant who substantially prevails cannot recover attorney fees, as I did in Lovell v. Alderete, 630 F. 2d 428, 434 (5th Cir. 1980). I recognize that precedent binds us as a panel and therefore under the law the instant opinion is correct.

Nevertheless, I continue to speak out against an interpretation of the statute that permits reimbursement for money spent for attorney fees but denies it for time spent to accomplish the same result. Time is precious to everyone. Taking time away from gainful employment or enjoyable leisure to enforce one's rights is a valuable consideration for which reimbursement should be obtainable, and is just as much "a stock in trade" as is an attorney's time. There is nothing in the Act or Congressional history to suggest that Congress intended to favor a person with money who could afford an attorney over a poorer person who could not, and who could not enlist free legal services.

Therefore, I register my disagreement with this holding, while recognizing that we as a panel are bound by Lovell.

¹ I do not address the issue of costs in the FOIA case or the applicability of subsections (e)(1) and (e)(5) of the Privacy Act.

² 5 U. S. C. §552a(e)(7) (1976) provides:

(e) . . . Each agency that maintains a system of records shall--

* * *

(7) maintain no record describing how any individual exercises rights guaranteed by the First Amendment unless expressly authorized by statute or by the individual about whom the record is maintained or unless pertinent to and within the scope of an authorized law enforcement activity.

(Emphasis supplied.)

 

 

 

 

[81-1 USTC ¶9366]Anthony Lobosco and Sally Lobosco, Plaintiffs v. Internal Revenue Service, Defendant

U. S. District Court, East. Dist. N. Y., 77 Civ. 1464, 1/14/81

[Freedom of Information Act and Privacy Act]

Freedom of Information Act: Tax audit files: Privacy Act: Record amendment request: Exempted system of records: Attorneys' fees.--The court upheld the IRS determination on summary judgment that the audit administrative files of the taxpayer and his corporation that the taxpayer sought to amend by deleting all references connecting the taxpayer and his corporation to an organized crime family were exempt from the amendment provision of the Privacy Act under 5 U. S. C. 552a(k)(2) because they were within systems of records comprising investigatory material compiled for law enforcement purposes. The court rejected the taxpayer's challenge to the exemption based on claims of noncompliance with the notice requirements and that the exemption was of limited duration. The taxpayer failed to substantiate the claim that disclosure was required under the Privacy Act because they had been denied any right, privilege, or benefit to which he would otherwise be entitled as a result of the maintenance of the files and a claimed disclosure to other governmental agencies. The plaintiff was found to have substantially prevailed in the Privacy Act suit, and the initial motion by the government for summary judgment on the application for attorneys' fees was denied. The plaintiff failed to file any application for such fees as directed by the court and thus the court dismissed the complaint. The court held also that the plaintiff's renewed FOIA request was already disposed of in a prior order (78-2 USTC ¶9578) and no new legal or factual developments warranted reconsideration.

Hyman Bravin, for plaintiffs. Edward R. Korman, United States Attorney, Herbert G. Johnson, Assistant United States Attorney, Brooklyn, N. Y. 11201, Beth A. Kaswan, for defendant.

Memorandum Decision and Order

SIFTON, District Judge:

This motion, brought originally by the defendant, Internal Revenue Service ("IRS"), as a motion to dismiss plaintiffs', Anthony Lobosco and Sally Lobosco, amended and supplemental complaint pursuant to Rule 12(b) of the Federal Rule of Civil Procedure, is now being considered, pursuant to that Rule, as a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56, after an adjournment pursuant to Rule 56(f) to permit discovery to be completed. ¹

This action began in 1977, when plaintiffs petitioned this Court under the Freedom of Information Act ("FOIA"), 5 U. S. C. 552, and under the Privacy Act ("PA"), 5 U. S. C. 552a, to order the defendant to produce certain documents relating to a tax audit by the IRS of Ascor Scrap Iron, Inc. ("Ascor"), a corporation controlled by one of the two plaintiffs, Anthony Lobosco, and to order the defendant to delete all references in those documents and in other documents already disclosed by defendant connecting Anthony Lobosco and Ascor to an organized crime family. Plaintiffs sought attorneys' fees in connection with both claims.

In a Memorandum Decision and Order dated June 23, 1978 [78-2 USTC ¶9578], this Court granted defendant's motion for summary judgment in the FOIA claim on the ground that the documents whose disclosure plaintiffs sought, which had not been voluntarily already disclosed by the IRS, were exempted from the disclosure provisions of the FOIA. The exemptions at issue were 5 U. S. C. 552(b)(3), which encompasses information "specifically exempted from disclosure by statute;" 5 U. S. C. 552(b)(7) which relates, inter alia, to investigatory records compiled for law enforcement purposes, the disclosure of which would constitute an unwarranted invasion of personal privacy; and those portions of 5 U. S. C. 555(b)(3), (5), and (7) which exempt from disclosure certain work product information.

Defendant's motion for summary judgment was denied with respect to the PA claim. However, before considering the merits of the claim, the Court directed the plaintiffs to exhaust their administrative remedies by seeking correction of the records from the IRS itself, as required by 5 U. S. C. 552a(d)(2) and (3). When they had exhausted their administrative remedy, plaintiffs filed an amended and supplemental complaint indicating that they had made an unsuccessful request to the IRS, and, therefore, were resuming their action in this Court.

Plaintiffs alleged in their new complaint that defendant had violated its continuing obligation under 5 U. S. C. 552a(e)(1) "to maintain in its records only such information about an individual as is relevant and necessary to accomplish a purpose of the agency" by failing to expunge those parts of the record which tend to connect plaintiff Anthony Lobosco's corporation to an organized crime family. In addition, plaintiffs alleged that defendant has released to other federal agencies, New York State agencies and departments, the District Attorney of Queens County, and the Bureau of Consumer Affairs of the City of New York information allegedly linking Ascor and the plaintiff Anthony Lobosco to an organized crime family and to Joseph Laratro, an organized crime figure. Plaintiffs' prayer requested that this Court issue an injunction under 5 U. S. C. 552 ordering defendant to cease withholding the heretofore undisclosed documents pertaining to plaintiff Anthony Lobosco or Ascor, that the Court issue an injunction ordering the defendant to expunge the references to organized crime in the plaintiff's records and in any records pertaining to Ascor, and that the Court grant reasonable attorneys fees to the plaintiffs on both FOIA and PA claims, as authorized by 5 U. S. C. 552(a)(4)(E) and 5 U. S. C. 552a(g)(2), respectively.

Defendant then filed this motion to dismiss the amended and supplemental complaint. In support of its motion, defendant contends that (1) the documents plaintiffs seek to amend are within systems of records exempted from the amendment provisions of the PA under 5 U. S. C. 552a(k)(2); (2) the records plaintiffs seek to amend are records pertaining exclusively to Ascor and, as corporate records, are not subject to the PA amendment provisions; and (3) information has not been transferred by the IRS to any other agency so that further disclosure is not warranted.

Before considering these arguments, plaintiffs' apparently renewed request for disclosure under the FOIA may be disposed of without further discussion. This issue was decided in this Court's Memorandum Decision and Order dated June 23, 1978 . No new legal or factual developments warrant reconsideration.

Pursuant to 5 U. S. C. 552a(g)(1)(A), this Court has jurisdiction to hear plaintiffs' PA claim since the IRS has made a determination not to amend plaintiff's record.

Plaintiffs' request for relief in the form of amendment under the PA requires examination of defendant's claimed exemption from compliance with the amendment provisions of the PA.

Section 552a(g)(2)(A) allows the court in any suit brought under the provisions of subsection (g)(1)(A) to "order the agency to amend the individual's record in accordance with his request or in such other way as the court may direct [;and i]n such a case, the court shall determine the matter de novo."

Plaintiffs' application for an order directing the IRS to amend the records pertaining to plaintiff Anthony Lobosco and to Ascor is based on a claimed violation of section 552(a)(e)(1) of the PA, which provides in pertinent part:

"Each agency that maintains a system of records shall

(1) maintain in its records only such information about an individual as is relevant and necessary to accomplish a purpose of the agency required to be accomplished by statute or by executive order of the President."

5 U. S. C. 552a(e)(1).

If subsection (e)(1) is applicable to these proceedings, a disputed question of fact exists concerning the relevancy of the information which plaintiffs seek to expunge from the records which would bar summary judgment. However, if defendant is correct in its contention that, pursuant to 5 U. S. C. 552a(k)(2), the records in question are exempted from the amendment provisions of the PA, subsection (e)(1) does not apply. 5 U. S. C. 552a(k)(2) provides:

"The head of any agency may promulgate rules in accordance with the requirements (including general notice) of sections 553(b)(1)(2), and (3), (c), and (e) of this title, to exempt any system of records within the agency from subsections (c)(3), (d)(e)(1), (e)(4)(G), (H), and (I), and (f) of this section if the system of records is

"(2) investigatory material compiled for law enforcement purposes, other than material within the scope of subsection (j)(2) of this section. . . ."

In support of its position that section 552a(k)(2) of the PA applies to the records plaintiffs seek to amend, defendant has filed an affidavit stating that all of the documents in question are contained in the audit administrative files of Anthony and Sally Lobosco or of Ascor and that those files have been exempted by the Treasury Department from the requirements of the PA. Audit administrative files, known as Privacy Act System Treasury/IRS 42.001, have been classified by the Treasury Department as a system of records comprising "investigatory material compiled for law enforcement purposes," qualifying for the exemption provided in 5 U. S. C. 552a(k)(2).

Plaintiffs do not dispute that the Treasury Department has exempted audit administrative files from the amendment provisions of the PA or that the files at issue are part of that exempted system of records, but they challenge the claim of exemption on other grounds. First, they allege that they did not receive timely notice of the exemption. 5 U. S. C. 553(b) requires:

"General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or have actual notice thereof in accordance with law."

Plaintiffs allege that notice of the exemption of systems of records was not published in the Federal Register until September 26, 1977 , a date subsequent to the commencement of this action and that, therefore, defendant's files and records pertaining to plaintiff are not exempt under 5 U. S. C. 552a(k)(2). They argue that exempt status cannot be conferred on the files retroactively.

It is unnecessary to decide this issue here, because plaintiffs' argument is based on a mistaken belief as to the date of publication of notice of the exemption.

Defendant, in an affidavit submitted subsequent to plaintiffs' objection, has corrected that error, pointing out that the Treasury Department published its "Notice of Exempt Systems of Records" as early as April 26, 1975 , in 40 Fed. Reg. 37613 and that "Final Notice of Regulations Exempting Systems of Records" was published on October 2, 1975 . 40 Fed. Reg. 45695. The notice published on September 26, 1977 , on which plaintiffs rely for their argument, was published in compliance with the requirements of 5 U. S. C. 552a(e)(4), which mandates annual publication of notice of exempt systems of records. Accordingly, it must be concluded that defendant has complied with the notice requirements of 5 U. S. C. 552a(k).

Plaintiffs next argue that the exemption under 552a(k)(2) of the PA remains in effect with regard to particular records only until the records have been evaluated with respect to their necessity, accuracy, timeliness, completeness, and relevancy and that with regard to timeliness, at least, the records are no longer exempted since all criminal proceedings involving plaintiff have terminated. In support of this argument plaintiffs point to statements as to the basis for the republication of the exemption appearing at 42 Fed. Reg. 49404-07 to the effect that the kind of immediate evaluation of timeliness, completeness, necessity, accuracy, and relevancy required by the PA cannot be made in the case of tax audit files. Plaintiffs read this to mean that at some given date later on in an investigation when such an evaluation can be made the exemption must terminate because it no longer has a basis. The problem with plaintiffs' argument seeking to impose a "condition subsequent" or limited duration on the section 552a(k)(2) exemption is that it was considered by Congress and rejected.

The legislative history of the PA makes it clear that Congress did not intend to impose any restrictions on the duration of the exemption given investigative records under 5 U. S. C. 552a(k)(2). The Senate's bill did contain a provision mandating that investigative records may not be exempted for longer than is necessary to commence criminal prosecution. S. Rep. No. 43-1183, 93rd Cong., 2d Sess. (1974), reprinted in [1974] U. S. Code Cong. & Admin. News pp. 6916, 6989. However, the final version of the PA, presented on the floor of Congress without committee consideration or report, eliminated this restriction. 120 Cong. Rec. 40400-09. Thus, the fact that the initial reason for classifying the documents as exempt may no longer apply does not deprive them of protected status. See, e.g., Irons v. Bell , supra, 596 F. 2d at 471; Pacheo v. FBI, 456 F. Supp. 1024, 1035 (D. C. P. R. 1978).

Although plaintiffs have been allowed time for discovery in order to challenge defendant's statements, that the records in question were investigative materials of the type which would be exempted under 5 U. S. C. 552a(k)(2), they have failed to do so. Consequently, the only remaining basis upon which to challenge defendant's claim of exemption under subsection (k)(2) of the PA is a possible application of the proviso contained in 5 U. S. C. §552a(k)(2), which requires disclosure (but not amendment) if any individual is denied any right, privilege, or benefit to which he would otherwise be entitled by federal law or for proviso contained in 5 U. S. C. 552a(k)(2), a result of the maintenance of such material.

Plaintiffs have not alleged that files pertaining to them resulted in the denial of any right, privilege, or benefits to which they would have been otherwise entitled under federal law. They claim, however, that the IRS transferred information from its files to the New York City Bureau of Consumer Affairs and to the Queens County District Attorney, resulting in a denial of a municipal license.

This claim is made on the present motion simply by cross-reference in plaintiffs' attorney's affidavit to an earlier affidavit filed by the attorney in connection with plaintiffs' FOIA claims which in turn refers the reader to a still earlier affidavit of plaintiff stating that "the Internal Revenue Service has released to other governmental agencies information attempting to link Ascor and/or myself to an organized crime family." Although the affidavit of plaintiffs' attorney sought discovery at the time the earlier affidavits were filed to obtain what was then concededly lacking, namely, "evidence . . . to substantiate my client's statement" and although plaintiffs have been allowed ample opportunity to establish that the transfer of information took place and that it resulted in denial of a right, privilege or benefit to which plaintiffs would otherwise be entitled or for which they would otherwise be eligible, no substantiation has been offered on this motion. No disputed issue of fact exists requiring trial. Accordingly, defendant is entitled to summary judgment.

Plaintiffs' request for attorney's fees in connection with both the FOIA and PA claims remains to be considered.

Subsection (a)(4)(E) of the FOIA provides:

"The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed."

5 U. S. C. 552(a)(4)(E).

It is the law of this Circuit that a judgment favoring the plaintiff is not an absolute prerequisite to an award of attorney fees under the FOIA. Vermont Law Income Advocacy Council v. Usery, 546 F. 2d 509, 513 (2d Cir. 1976). Furthermore, a plaintiff may be deemed to have "substantially prevailed" in his action if, during the pendency of the action, the government voluntarily discloses the material sought in the complaint. Kaye v. Burns, 411 F. Supp. 897 (S. D. N. Y. 1976).

To be said to have substantially prevailed in the absence of a judgment in his favor, a plaintiff "must show at minimum that the prosecution of the action could reasonably have been regarded as necessary and that the action had substantial causative effect on the delivery of the information." Vermont Law Income Advocacy Council v. Usery, supra, at 513.

Defendant concedes that in accordance with the standards set forth in Vermont Law v. Usery, supra, plaintiffs could be deemed to have "substantially prevailed" on their FOIA claim, but argues that, because defendant's refusal to disclose the requested records had a reasonable basis in law, attorney fees should not be awarded plaintiffs. I agree that plaintiffs' request for attorney fees meets the test set forth in Vermont Law, but I do not accept the second part of defendant's argument.

Although the determination that an agency's refusal to disclose information had a reasonable basis in law is one factor for the Court to consider in exercising its discretion to grant or deny attorney fees under the FOIA, it is not a sufficient basis alone upon which to deny the award. As noted in Kay v. Burns, supra, 411 F. Supp. at 905, two factors are required to be considered before an award of attorney fees can be denied. These are: the reasonable basis of the government's refusal to disclose and the private commercial nature of the benefit sought by the plaintiff. Id. The presence of both these factors has been required to deny an otherwise permissible award of attorney fees in virtually every case where the matter was considered. See, e.g., Polynesian Cultural Center, Inc. v. NLRB, 600 F. 2d 1327 (9th Cir. 1979); Long v. U. S. Internal Revenue Service, 596 F. 2d 362 (10th Cir. 1979); Chamberlain v. Kurtz, 589 F. 2d 827 (4th Cir. 1979); Blue v. Bureau of Prisons, 570 F. 2d 529 (5th Cir. 1978); Nationwide Bldg. Maintenance Inc. v. Sampsen, 559 F. 2d 704 (D. C. Cir. 1977); James v. U. S. Secret Service, 81 F. R. D. 700 (D. D. C. 1979); Shermco Industries Inc. v. Secretary of U. S. Air Force, 452 F. Supp. 306 (D. C. Tex. 1978); MCA Inc. v. Internal Revenue Service, 434 F. Supp. 212 (C. D. Cal. 1977).

Attorney fees in a PA action are governed by 5 U. S. C. 552a(g)(2)(B), which provides:

"The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this paragraph in which the complaint has substantially prevailed."

Since the language of this section is virtually identical to subsection (a)(4)(E) of the FOIA and since there is no case law indicating the contrary, plaintiffs' request for attorney fees under the PA will be treated in the same manner as their request under the FOIA.

Although plaintiffs' request for further amendment of the IRS file pertaining to them has been denied, the IRS did voluntarily amend those records by including on every page containing a reference connecting plaintiff Anthony Lobosco to an organized crime family the following statement:

"There is absolutely no evidence of any connection between Anthony Lobosco, M. Lobosco Baling Co., Inc. (also known as Ascor Scrap Iron, Inc.), and any organized crime family."

This is sufficient to deem the plaintiffs to have "substantially prevailed" in their PA suit. Plaintiffs must, however, still show that their action has benefitted the public, and that it was not brought primarily for their own, private commercial gain.

Since plaintiffs' application for attorney fees cannot be disposed of as a matter of law, summary judgment on that issue in defendant's favor must be denied. Plaintiffs are directed to serve and file any application for attorney fees which it intends to make, returnable February 24, 1981 , at 4:30 p. m., within 20 days of the date of filing of this decision. Defendant's motion for summary judgment is granted with respect to plaintiffs' PA claim and denied with respect to plaintiffs' request for attorney fees.

The Clerk is directed to mail a copy of the within to all parties.

SO ORDERED.

¹ Plaintiffs question the Court's application of Rule 56 of the Federal Rules of Civil Procedure. They argue that, since no reference was made to Rule 12(b)(6) or 12(c) indefendant's motion to dismiss the amended complaint, this Court may not apply the provisions of Rule 12 to treat the motion as one pursuant to Rule 56.

There is no question that defendant's application in substance seeks relief under Rule 12(b)(6) and 12(c). Moreover, the parties were advised that the application would be so treated, and on that basis plaintiffs obtained an extensive adjournment of the motion to complete discovery. Accordingly, the matter is ripe for consideration on the IRS's motion.

SIFTON, District Judge:

By Memorandum Decision and Order dated January 13, 1981 , I denied the motion of defendant for summary judgment with respect to plaintiff's claim for attorney's fees and directed plaintiff to file any application for such fees which it intends to make within twenty (20) days, returnable February 24, 1981 . No such motion has been filed, and no request for an extension of time has been made. Accordingly, the Clerk is directed to enter judgment in accordance with this Court's Memorandum Decision and Order of June 23, 1978 , and January 13, 1981 , dismissing plaintiff's complaint in its entirety.

 

 

[83-1 USTC ¶9396]Dorothy M. Lilienthal and Herbert E. Lilienthal v. Charles A. Parks, District Director of IRS

U. S. District Court, Eastern Dist. Ark. , Jonesboro Div., No. J-C-82-91, 574 FSupp 14

[Code Secs. 6103 and 7213]

Freedom of Information Act: Exhaustion of administrative remedies: Privacy Act: Unauthorized disclosure of information.--The taxpayers, who filed suit under the Freedom of Information Act and the Privacy Act in order to compel the IRS to produce certain documents relating to them, failed to comply with IRS procedures requiring that requests made pursuant to the FOIA and the Privacy Act be accompanied by either a "signature, address and one other identifier which contains the requester's signature, such as a photocopy of a driver's license," or a "notarized statement swearing or affirming their identity." As a consequence, they failed to exhaust the administrative remedies required by the FOIA and the Privacy Act, and their claims had to be dismissed. Further, the taxpayers' First Amendment claim for redress of grievances and Fifth Amendment claim of denial of due process were dismissed for failure to state a claim upon which relief could be given.

herbert E. Lilienthal, Box 126, Maynard, Ariz. 72444, pro se. Diane S. Mackey, Assistant United States Attorney, Little Rock Ark. 72203, Paige E. Refee, Department of Justice, Washington, D. C. 20530, for IRS.

Memorandum and Order

EISELE, District Judge:

Plaintiffs have filed suit pro se pursuant to the Freedom of Information Act (FOIA), 5 U. S. C. §552, the Privacy Act, 5 U. S. C. §552a, the First & Fifth Amendments to the United States Constitution, and 28 U. S. C. §1361, in order to compel the Internal Revenue Service (IRS) to produce certain documents relating to the plaintiffs. The defendant has moved to dismiss the complaint. For the reasons set forth below, the motion is granted.

Facts

The plaintiffs are two Arkansas citizens who seek to review records and all agency requests for information about them, as contained in tax files held by the IRS. Defendant is Director of the IRS office for the State of Michigan . ¹ In their April 8, 1982 , complaint, the plaintiffs state that they had written the defendant on two occasions to obtain the information they seek, but that the defendant failed to respond to their requests within the ten-day time limitation specified in 5 U. S. C. §552(a)(6)(A)(i). They also contend that they have exhausted their administrative remedies and are consequently entitled to both affirmative injunctive relief--i.e., an order from this Court compelling the production of the documents--as well as attorneys fees.

The defendant admits that written requests were received, but states that the plaintiffs have not exhausted their administrative remedies. Specifically, the defendant contends that plaintiffs have failed to submit "proper" requests, since the written requests received by the IRS failed to identify properly the requesting parties in accordance with agency regulations.

The record indicates that in a letter dated March 5, 1982 , plaintiff Herbert Lilienthal requested the information from the Michigan office of the Department of the Treasury. His wife and co-plaintiff, Dorothy Lilienthal, made an identical request in a letter dated March 8, 1982 . Both letters were received in the District Director's office on March 11, 1982 .

On March 12, 1982 , the defendant wrote both plaintiffs and informed them that their requests were inadequate. Defendant stated that the plaintiffs must: provide a more detailed description of the records they sought; provide their "taxpayer identification number" (e.g., their social security number); and provide adequate verification of their identity. The Court observes that although the defendants's instructions were contained in a form letter, the form clearly indicated the steps the plaintiffs must take to comply with the IRS's requirements.

On March 23, 1982 , the plaintiffs each mailed letters to the defendant in an apparent attempt to comply with the requirements outlined in the defendant's March 12, 1983 , letters. This time, the plaintiffs more clearly identified the information they sought and provided their social security numbers. They did not, according to the defendant, comply with the requirements for the verification of their identity. Therefore, on March 26, 1982 , the defendant again wrote both of the plaintiffs to inform them of their requests' remaining deficiency. As the defendant's letters disclosed, the plaintiffs could meet the identification requirement by either of two means: submitting their "signature, address and one other identifier which contains the requester's signature such as a photocopy of a driver's license,"; or by presenting "a notarized statement swearing to or affirming" their identity.

The plaintiffs never submitted such information. Instead, they filed the pending suit on April 18, 1982 , and requested the relief noted above.

Applicable Law

1. FOIA Issue. Under 5 U. S. C. §552(a)(4)(B), a federal district court may "enjoin [an] agency from withholding agency records and . . . order the production of any agency records improperly withheld from the complainant." It may also award attorneys fees to a complainant who has substantially prevailed in its effort to obtain information, 5 U. S. C. §522(a)(4)(E). See Ginter v. Internal Revenue Service [81-1 USTC ¶9417], 648 F. 2d 469 (8th Cir. 1981).

Yet it is axiomatic that the federal court may not act if it lacks subject matter jurisdiction. Before a court may review administrative actions (or inaction), it must first determine whether the statute under which the claim is brought requires exhaustion of administrative remedies. If the statute requires such exhaustion and the Court finds the plaintiff has not exhausted his remedies, then the Court lacks jurisdiction and the case must be dismissed.

The Fifth Circuit addressed the exhaustion issue in connection with the FOIA and determined:

Although these sections do not expressly require that a claimant exhaust his administrative remedies prior to requesting judicial relief, they clearly do imply that exhaustion is required. Exhaustion of administrative remedies is a general prerequisite to judicial review of any administrative action. * * * We conclude that the FOIA should be read to require that a party must present proof of exhaustion of administrative remedies prior to seeking judicial review.

Hedley v. United States, 594 F. 2d 1043, 1044 (5th Cir. 1979) (citations omitted).

This Court believes that Hedley is well-founded. wellfounded.

Perhaps in an effort to ensure that the exhaustion requirement not be too onerous, Congress provided in 5 U. S. C. §522(a)(6)(C) that with certain exception:

Any person making a request to any agency for records . . . shall be deemed to have exhausted his administrative remedies with respect to such request if the agency fails to comply with the applicable time limit provisions. . . .

Thus, if the defendant failed to comply with the applicable deadlines, the plaintiffs' administrative remedies could be deemed exhausted.

In this case, the defendant comply with the applicable deadlines. Under 5 U. S. C. §522(a)(6)(A)(i), the agency must determine within ten days after receipt of a request whether to comply with the request. ² It must then immediately notify the person making the request of its decision. The defendant responded to each of the plaintiffs' requests within ten days of receipt. Therefore, section 552(a)(6)(C) is unavailing to the plaintiffs. Cf. Jencks v. United States Marshals Service, 514 F. Supp. 1383, 1387 (S. D. Ohio 1981) (remedies deemed exhausted under section 552(a)(6)(C) because defendant failed to make a determination within deadline).

The Court must thus determine whether the plaintiffs have otherwise exhausted their administrative remedies. It is clear they have not. Although the FOIA vests individuals with a means of obtaining certain government records from federal agencies, the Act contemplates the creation of procedures that individuals must follow if they seek to obtain such information. See 5 U. S. C. §§ 522(a)(1), (4). The IRS has promulgated regulations that describe the applicable procedures for an FOIA request. See 26 C. F. R. §601.702 (1982). For purposes of this lawsuit, the most critical are those that outline the means by which a person establishes his identity. For one who, like plaintiffs, requests documents by mail, he may normally meet the identification requirement through:

The submission of the requester's signature, address, and one other identifier (such as a photocopy of a driver's license) bearing the requester's signature, in the case of a request by mail, or

. . . The presentation . . . of a notarized statement swearing to or affirming such person's identity.

26 C. F. R. §§ 601.702(c)(4)(ii)(B), (C) (1982). ³

It is clear from the copies of the correspondence between plaintiffs and defendant, that plaintiffs provided neither "one other identifier" nor a "notarized statement swearing to or affirming [their] identity." The defendant thus acted properly in not granting the plaintiffs' request. ⁴

Since the plaintiffs must follow the procedure set forth in the regulations, see Powell v. Kopman [81-1 USTC ¶9383], 511 F. Supp. 700, 703 (S. D. N. Y. 1981); Reith v. Internal Revenue Service, Stand. Fed. Tax. Rep. (CCH) (¶9705) at p. 85,321) (N. D. Ind. 1980); White v. Loury, Stand. Fed. Tax. Rep. (CCH) (¶9512 at p. 84,606) (N. D. Ohio 1978), and have not done so, they have failed to make a proper request under the FOIA. ⁵ As a consequence, they have failed to exhaust their administrative remedies and the FOIA claim must be dismissed. See id. at p. 84,608 (claim must be dismissed since plaintiff did not properly identify himself in accordance with the FOIA and the IRS regulations).

2. Privacy Act Claim. In concert with their FOIA request, the plaintiffs also invoke the Privacy Act, 5 U. S. C. §522a, as grounds for relief. The pleadings are unclear as to the nature of the plaintiffs' claim. Yet construing the pro se claim liberally, it is possible to infer that the plaintiffs were seeking to determine to what agency, if any, the IRS had released any information regarding the plaintiffs. ⁶

As in requests pursuant to the FOIA, requests made under the Privacy Act must comport with the IRS's procedures. Such procedures are set forth in 31 C. F. R. §1.26(d)(1) (1982). An individual's request must, inter alia, clearly state that it is a "Request for accounting of disclosures" or a "request for notification and access". It must include the individual's social security number and specify the name and location of the particular system of records sought. An individual must also provide "such identification . . . as may be specified in the appropriate appendix to this subpart. . . ." 31 C. F. R. §1.26(d)(v) (1982). That appendix--"Appendix B"--sets forth the requirements an individual must meet to appropriately verify his identity. 31 C. F. R. App. B, §(c)(8). Those requirements are identical to those established under FOIA regulations. Compare id. with 26 C. F. R. §601.702(c)(4)(ii) (1982). As with the plaintiffs' FOIA requests, their Privacy Act requests must be accompanied by either "one other identifier" or "a notorized statement swearing or affirming to such individual's identity." See C. F. R. App. B §(c)(8)(ii) & (iii) (1982).

The plaintiffs did not comply with this requirement. Therefore, the defendant was under no duty to grant the plaintiffs' requests. ⁷ The plaintiffs' Privacy Act claim must therefore be dismissed for failure to exhaust their administrative remedies.

3. First & Fifth Amendments Claims. The plaintiffs' complaint contains no clues as to the factual bases underlying their First and Fifth Amendment claims. Their memorandum in opposition to the defendant's motion to dismiss contains several vague references to the Amendments. It appears that their First Amendment claim rests on the contention that under the Amendment they are entitled to seek redress of grievances; and that the defendant must provide them with such redress. Their Fifth Amendment claim appears to be that by not turning over the files they have requested, the defendant has deprived them "of Life, Liberty , or Property without due process of law." The Court has already determined that the plaintiffs have failed to exhaust their administrative remedies. Even if plaintiffs were to prove the facts averred, it does not appear that they give rise to a violation of constitutional rights. The claims must be dismissed for failure to state a claim upon which relief can be given. See Reith, at p. 85,323 (dismissing First and Fifth Amendment claims on similar grounds). See also Bennett v. Berg, 685 F. 2d 1053, 1056-58 & n. 4 (8th Cir. 1982).

4. Section 1361 Claim. Construing their complaint liberally, it could be inferred that plaintiffs attempt to raise a claim under 18 U. S. C. §1361. That statute is a jurisdictional statute that vests the district courts with jurisdiction to compel an officer or employee of the United States to perform a duty owed to an individual. The statute does not, however, create special liability or an independent cause of action. Carter v. Seamans, 411 F. 2d 767 (5th Cir. 1969), cert. denied, 397 U. S. 941 (1970); White v. Administrator of General Services Administration, 343 F. 2d 444, 447 (9th Cir. 1965). Furthermore, an individual must exhaust his administrative remedies before invoking section 1361. Beale v. Blount, 461 F. 2d 1133, 1137 (5th Cir. 1972). As noted above, the plaintiffs have not exhausted their administrative remedies and therefore the claim must be dismissed.

Conclusion

It is therefore Ordered that the defendant's motion be, and it is hereby, granted, and that the complaint be dismissed without prejudice.

Judgment

Pursuant to the Memorandum and Order filed in this matter this date, it is Considered, Ordered and Adjudged that this case be, and it is hereby dismissed without prejudice.

¹ Defendant contends that since he is merely an officer of the IRS, he is not a proper party defendant to an action brought under the FOIA or the Privacy Act. Instead, he asserts that the agency is the proper party defendant. Since the Court dismisses the case on other grounds, it need not reach this issue.

² In "unusual circumstances", the period may be extended for up to ten more days. See 5 U. S. C. §552(a)(6)(B).

³ In some cases, the IRS may require additional means of verifying the requester's identity. See 26 C. F. R. §601.702(c)(4)(ii) (1982) ("Additional proof of a person's identity shall be required . . . if it is determined that additional proof is necessary to protect against unauthorized disclosure of information in a particular case.")

⁴ Indeed, income tax returns and return information are confidential and may be disclosed by federal officers only under limited circumstances. See 26 U. S. C. §6103. Improper disclosure can result in criminal and civil liability. See 26 U. S. C. §§ 7213, 7431.

⁵ In addition, they have not appealed the defendant's decision administratively, pursuant to 5 U. S. C. §522(a)(6)(A)(ii). Such an appeal of an adverse decision by the IRS is a precondition to filing suit in federal court, at least where the IRS has complied with the applicable time limit provisions. See Reith at p. 85,323. See also Jenks, 514 F. Supp. at 1386-87.

⁶ Although the plaintiffs' complaint is not so cryptic as certain others, see, e.g., Norman v. Reagan, 95 F. R. D. 476 (D. Ore. 1982), it nevertheless is impossible to determine on what factual basis they are making their Privacy Act claim. However, in their Memorandum in Opposition to Defendant's Motion to Dismiss they state: "Under the Privacy Act of 1974, 5 U. S. C. Sec. 552(a) [sic] what agency they may have released any information from the files they keep on the Plaintiffs. . . ." This apparently is meant to suggest that they seek to know whether the IRS has released any information contained in IRS files to other agencies.

⁷ The IRS must act upon valid Privacy Act requests within thirty days of their receipt. 31 C. F. R. §1.26(g) (1982). Since the requests were not in proper form, they were not technically "received". As subsection 1.26(f) provides, a request is deemed "received" only as of the date that all requirements listed in subsection 1.26(d) have been satisfied. The plaintiffs' failure to furnish adequate verification of their identity resulted in their noncompliance with subsection 1.26(d).

 

 

[85-2 USTC ¶9855]John T. Dowd, Helen Dowd, and Intergold Corporation, Plaintiffs-Appellants v. Internal Revenue Service, Defendant-Appellee

(CA-2), U.S. Court of Appeals, 2nd Circuit, 85-6156, 776 F2d 1083, 11/13/85 , Affirming unreported District Court decision

[Privacy Act 5 U.S.C. §552(a)]

Suits by taxpayers: Privacy Act: Destruction of records.--The Court of Appeals affirmed the dismissal of a Privacy Act suit, which was brought by the taxpayer after his FOIA request revealed that cancelled checks, bank deposit tickets, and affidavits from business associates were missing from the taxpayers' IRS file and apparently had been destroyed. The actions of IRS employees which resulted in the destruction of the documents were correctly characterized by the District Court an negligent, and there was no evidence of willful or intentional conduct, which is necessary to support a Privacy Act suit.

Richard V. D'Allesandro, 111 Washington Ave. , Albany , N.Y. 12210 , for plaintiffs-appellants. Frederick J. Scullin, Jr., United States Attorney, Utica , N.Y. 13503 , Glenn L. Archer, Jr., Assistant Attorney General, Michael L.Paup, Richard W. Perkins, Patricia M. Bowman, Department of Justice, Washington , D.C. 20530 , for defendant-appellee.

Before FRIENDLY, KAUFMAN, and PRATT, Circuit Judges.

PER CURIAM:

Appellants John and Helen Dowd and their wholly owned company, the Intergold Corporation, were the subjects of both criminal and civil investigations by the Internal Revenue Service. The criminal investigation ended without action being taken. The civil inquiry, however, resulted in the assessment of deficiencies, which the Dowds are now contesting in a separate action.

Pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. §552, the Dowds requested their files from the IRS. A subsequent attempt to locate the files revealed that certain documents--cancelled checks, bank deposit tickets, and affidavits from business associates--were missing and had apparently been destroyed. The Dowds thereupon filed a complaint pursuant to the FOIA and, later, a companion complaint pursuant to the Privacy Act of 1974, 5 U.S.C. §552a. The two actions were consolidated in the district court.

The Dowds then engaged in extensive discovery, deposing all twelve IRS employees who had personal knowledge concerning the missing records. In the Albany Federal Building , where the documents had been stored, documents to be destroyed were put in cartons marked "Destroy" and stacked in one specific area of the floor. The employee charged with removing the cartons marked for destruction, Francis Goodall, testified he generally did not inspect them. Instead, he merely checked whether the number of cartons placed in the appropriate area tallied with the number his supervisor had directed should be destroyed.

Arguing that the depositions foreclosed any factual dispute, the government moved for summary judgment. After carefully reviewing the record, Judge Miner granted the government's motion and dismissed the two complaints. The Dowds appeal only from the dismissal of the Privacy Act suit. Essentially for the reasons proffered by the district court, we now affirm.

To prevail in a Privacy Act suit, a plaintiff must prove "the agency acted in a manner which was intentional or willful." 5 U.S.C. §552a(g)(4). The legislative history describes this standard as "somewhat greater than gross negligence." Analysis of House and Senate Compromise Amendments to the Federal Privacy Act, 120 Cong. Rec. 40406 , 40882 (1974). In the instant case, however, the district court correctly characterized the agency's actions as negligent. There is no evidence the employees willfully or intentionally violated the strictures of the Privacy Act. See Albright v. United States , 732 F.2d 181, 189 (D.C. Cir. 1984). Indeed, the appellants failed to demonstrate the IRS had any purpose for destroying these particular files. We find ourselves in agreement with the District of Columbia Circuit, and are unwilling to predicate liability on a finding of mere administrative error. Perry v. Block, 684 F.2d 121, 129 (D.C. Cir. 1982).

Having correctly resolved the legal question, the district court also properly determined the case presented no issue of material fact. The appellants had deposed every employee with firsthand knowledge of the records, and all uniformly denied ordering the destruction of the records. Judge Miner reasoned that, at trial, the Dowds would be forced to rely solely no negative inferences derived from the demeanor of the witnesses. We have found the vague hope of such negative inferences, standing alone, insufficient to present a triable issue of fact. Radix Organization, Inc. v. Mack Truck, Inc., 602 F.2d 45, 48 (2d Cir. 1979); Modern Home Institute, Inc. v. Hartford Accident & Indemnity Co., 513 F.2d 102, 110 (2d Cir. 1975) Therefore, Judge Miner properly granted summary judgment.

In view of this conclusion, we need not consider whether the Dowds would have had any cause of action under the Privacy Act even if the destruction of the records had been intentional.

Accordingly, the judgment of the district court is affirmed.

 

 

[86-1 USTC ¶9162] Joseph U. Alt, Plaintiff v. Commissioner of Internal Revenue, et al., Defendants

U.S. District Court, Dist. Neb., 85-0-160, 12/2/85

[Code Secs. 7213 and 7402 ]

Privacy Act: Disclosure of information: Summary judgment.--An action filed by a taxpayer pursuant to the Privacy Act, that sought a court order compelling the IRS to produce records pertaining to him that were maintained by the IRS in its Audit Information Management System was dismissed. Since it was clear as a matter of law that the records requested by the taxpayer were exempt from disclosure (under §552a(k)(2) of the Privacy Act) and that the taxpayer's complaint failed to state a claim upon which relief could be granted, the government's motion for summary judgment was granted.

Joseph U. Alt, Box 16, Cotesfield, Neb. 68829, pro se. Paul W. Madgett, Assistant United States Attorney, Omaha, Neb. 68101, Karen L. Elias, Department of Justice, Washington, D.C. 20530, for defendants.

Memorandum and Order

STROM, District Judge:

This matter is before the Court on defendants' motion for summary judgment (Filing No. 10). Plaintiff filed this action pursuant to the Privacy Act, 5 U.S.C. §552a, seeking a court order compelling the Internal Revenue Service to produce records for inspection and copying. For the reasons stated below, the Court sustains defendants' motion for summary judgment and dismisses this action pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted.

Also pending is plaintiff's motion to amend his complaint and attached proposed amendment (Filing No. 12). The Court finds that the proposed amendment makes no material changes in plaintiff's substantive complaint, and will allow the amendment to be filed. The complaint, as amended, fails to state a claim upon which belief can be granted.

Summary judgment should be granted "only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In passing upon a motion for summary judgment, the district court must view the facts most favorably to the party opposing the motion. Vette Co. v. Aetna Casualty & Surety Co., 612 F.2d 1076, 1077 (8th Cir. 1980). Viewed in that light, the Court finds that plaintiff fails to state a claim upon which relief can be granted.

In his complaint, as amended, plaintiff alleges that he was denied access to documents pertaining to him maintained by the Internal Revenue Service in systems of records known as "Audit Information Management System, IRS 42.008" and Classification and Examination Selection Files-Treasury/IRS 42.016" for the years 1977 through 1984. Plaintiff bases his claim upon the Privacy Act, 5 U.S.C. §552a, which provides, inter alia, that:

[e]ach agency that maintains a system of records shall . . . (1) upon request by an individual to gain access to his record or any information pertaining to him which is contained in the system, permit him . . . to review the record and have a copy made of all or any portion thereof in a form comprehensible to him . . .

5 U.S.C. §552a(d)(1).

However, the documents requested by plaintiff are exempt from the access provisions of the Privacy Act under 5 U.S.C., Section 552a(k)(2) which provides in pertinent part, that:

The head of any agency may promulgate rules, in accordance with the requirements (including general notice) of sections 553(b)(1) , (2) and (3), (c) and (e) of this title, to exempt any system, of records within the agency from [subsection] . . . (d) . . . of this action, if the system of records is--

* * *

(2) investigatory material, compiled for law enforcement purposes . . .

In accordance with subsection (k)(2) of the Privacy Act, systems of records 42.008 and 42.016 have been properly exempted from the access provisions of the Privacy Act. Treas. Reg. §1.36 (1975), 31 C.F.R. §1.36 (1985). Lobosco v. Internal Revenue Service, 81-1 USTC (C.C.H.) ¶9366 (E.D.N.Y. 1981).

The Court finds that it is clear as a matter of law that the records requested by plaintiff are exempted from disclosure by the Privacy Act, 5 U.S.C. §552a(k)(2), and that plaintiff's complaint thus fails to state a claim upon which relief can be granted. Accordingly,

IT IS HEREBY ORDERED that:

(1) Plaintiff's motion for leave to file an amended complaint (Filing No. 12) is granted;

(2) Defendants' motion for summary judgment (Filing No. 10) is granted; and plaintiff's complaint is dismissed.

 

 

[86-2 USTC ¶9761] Donald W. MacPherson, Plaintiff-Appellant v. Internal Revenue Service and Department of Justice, Defendants-Appellees

(CA-9), U.S. Court of Appeals, 9th Circuit, 85-2576, 10/24/86 , Affirming an unreported District Court decision

[Code Secs. 7213 and 7852 ]

Maintenance of taxpayer records: Privacy Act: Applicability of: Pertinence to law enforcement activities: Tax protestor: Public speeches.--Maintenance by the government of records of a tax protestor's activities fell within the "law enforcement activities" exception to the Privacy Act, 5 U.S.C. §552a, which prohibits government agencies from collecting and maintaining some kinds of information about individuals. The court ruled, in affirming the district court's decision, that because the taxpayer's speeches were given in public and were distributed to all interested parties, the materials were not protected by the First Amendment. In addition, because the taxpayer did not allege that the government was using the records for any other purpose than to describe the events of the conference at which the speech was delivered, the court ruled that the government's maintenance of the materials was not violative of the Privacy Act.

Donald W. MacPherson, MacPherson & McCarville, 10220 North 31st Ave., Phoenix, Ariz. 85021, for plaintiff-appellant. Jonathan Cohen, Department of Justice, Washington , D.C. 20530 , for defendants-appellees.

Before GOODWIN, HUG and WIGGINS, Circuit Judges.

Opinion

WIGGINS, Circuit Judge:

Plaintiff Donald W. MacPherson (MacPherson) appeals from a summary judgment entered by the district court on his claims that the IRS violated his rights under the Privacy Act, 5 U.S.C. §552a(b), (e)(1), and (e)(7) (1982). We affirm.

FACTS

The parties have detailed their respective versions of the facts at length in their briefs. Only a few facts, however, are relevant to the issue presented in this appeal, and those are undisputed.

Over the course of several years in the early 1980's, the IRS conducted surveillance of individuals and organizations it felt were connected with the "tax protester" movement. As part of this surveillance, IRS agents anonymously attended several conferences and conventions at which MacPherson was a speaker. The agents took notes of MacPherson's speeches and purchased tapes (later transcribed) of these speeches that were for sale by the sponsoring organizations. These notes and tapes were maintained in a "Tax Protest Project File" in the Phoenix and Houston district offices of the IRS. The materials in the file were later distributed to IRS offices in Denver , Austin , and Fort Worth , to the Department of Justice, and to third parties (defendants and counsel in a criminal trial).

The surveillance was intended to identify to the IRS the leaders of the tax protest organizations and to determine current tax protester strategies. Investigation of several specific individuals has been initiated as a result of the surveillance at issue. The surveillance did not reveal any illegal conduct by MacPherson, and MacPherson is not suspected or accused of any past, present, or anticipated illegal conduct or of the advocacy of illegal acts or violence.

On learning of the IRS file materials from an unidentified third party, MacPherson filed suit alleging seven counts of violation of the Privacy Act, 5 U.S.C. §552a. After