Opinion
CIV. 03-4002-KES
June 27, 2003
ORDER
Defendants move to substitute the United States in place of the named defendants and to dismiss the case under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6)for lack of jurisdiction. Defendants further move to strike plaintiffs' second and third responses to defendants' motion to substitute and dismiss. Plaintiffs oppose the motions and move for default judgment.
BACKGROUND
Defendants Griff Anderson and Patrick Doyle are employees of the Internal Revenue Service (IRS). When the IRS commenced an audit of plaintiffs, Anderson and Doyle issued a summons dated April 4, 2002, to plaintiffs requesting books, papers, records. and other data related to plaintiffs' tax liability for the years 1997 through 2000. The summons instructed plaintiffs to appear before Anderson on April 16, 2001. Plaintiffs did not appear. Z\ petition to enforce IRS summons was then issued on July 26, 2002. Plaintiffs failed to respond to the petition. On October 10, 2002, Chief District Judge Lawrence Piersol ordered plaintiffs to appear at the IRS office on November 7, 2002, to testify and produce the requested documents. Judge Piersol's order stated that failure to comply may result in a finding of contempt, a fine, or other possible sanctions, including arrest.
On January 6, 2003, plaintiffs filed an action against Judge Piersol, United States Attorney James McMahon, Assistant United States Attorney Jan Holmgren, Anderson, and Doyle in their "personal and private" capacities. Plaintiffs requested a declaratory judgment that the district court and its officers lack judicial authority, that the defendants lack the authority to act in the name of the United States, that no federal law requires plaintiffs to involuntarily comply with the summons or petition, and that the summons violates plaintiffs' rights to due process and equal protection. Plaintiffs further request injunctive relief and a judgment to quash the summons.
Defendants filed a motion on February 12, 2003, to substitute the United States as a party defendant for all named defendants. Defendants also contend that the relief sought is not available against the named defendants because Judge Piersol is absolutely immune from suit and because the law does not allow such suits against IRS agents for tax assessment. Defendants also move to dismiss the action under Rules 12(b)(1) and (6) for lack of jurisdiction. Plaintiffs filed three responses opposing the motions on March 7, 21, and 31, 2003. Defendants move to strike plaintiffs' second and third responses as violating Local Rule 7.2(a).
Plaintiffs moved for default judgment on May 20, 2003. They argue default judgment is warranted because the defendants have not entered any testimony, affidavits, or depositions from competent fact witnesses. Defendants also failed to rebut any of plaintiffs' claims. Plaintiffs describe defendants' arguments as frivolous and as failing to present a rational argument based on the evidence. In their motion for default judgment, plaintiffs request $500,000 for damages, $1 million for punitive damages, and $2,500 for expenses.
STANDARD OF REVIEW
A court should not dismiss a complaint for failure to state a claim unless it is evident. beyond a doubt, that no set of facts would support plaintiffs' claim from which relief could be granted. Parnes v. Gateway 2000, Inc., 122 F.3d 539, 546 (8th Cir. 1997). "Thus, . . . a dismissal under Rule 12(b)(6) is likely to be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief." Id. At the least, the complaint must contain facts that state a claim as a matter of law and are not conclusory. Briehl v. General Motors Corp., 172 F.3d 623, 677 (8th Cir. 1999). When a party also challenges subject matter jurisdiction, a court can consider matters outside of the pleadings on a motion to dismiss. Deuser v. Vecera, 139 F.3d 1190, 1191 n. 3 (8th Cir. 1998).
DISCUSSION
A. Motion to Dismiss — Defendant Piersol
"A judge is entitled to absolute immunity for all judicial actions that are not taken in complete absence of all jurisdiction." Penn v. United States, 324 F.3d 992, 995 (8th Cir. 2003). A judge will not lose this immunity even for acts taken in excess of jurisdiction. Penn at 996. "If that were the case, every appellate invalidation of an order based upon lack of jurisdiction would expose the trial judge to a suit for damages."Id. Furthermore, Congress granted district courts jurisdiction over any civil action arising under any Act providing for internal revenue. 28 U.S.C. § 1340.
Judge Piersol has authority over actions arising from collecting taxes. He had jurisdiction to issue the order requiring plaintiffs to appear at the IRS for the audit. See 26 U.S.C. § 7604 (a). He therefore enjoys absolute immunity from suit for issuing this order. Even if he did not have the authority to issue the order, his official judicial action would be immune from suit. Because absolute judicial immunity shields defendant Piersol from the current lawsuit, he is dismissed as a defendant.
"Jurisdiction of district court. If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, records, or other data, the United States district court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records, or other data." 26 U.S.C.A. § 7604.
B. Motion to Substitute — Defendants McMahon, Holmgren, Anderson Doyle
Suits seeking specific relief, such as injunctive or declaratory relief, against a named officer of the United States are suits against the sovereign. Wyoming v. United States, 279 F.3d 1214, 1225 (10th Cir. 2002) (citing Larson v. Domestic Foreign Commerce Corp., 337 U.S. 682, 687-88, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949)). Thus, when the desired judgment "would expend the public treasury, restrain the government from acting, or compel it to act," the suit is against the sovereign entity. Coleman v. Espy, 986 F.2d 1184, 1189 (8th Cir. 1993).
Here, plaintiffs named defendants in their "personal and private capacities" rather than their official capacities. Plaintiffs, however, seek relief that affects only the United States — an injunction, a declaratory judgment, and quashing of the summons. The complaint does not seek money damages from defendants. Despite the inclusion of "personal and private capacities" in the caption, this suit essentially seeks to restrain the government from acting:
The addition of a desultory phrase in the caption of a case cannot stem the inexorable flow of the sovereign immunity tide; whether or not plaintiff[s] can reasonably be viewed as seeking relief from the state is a matter not of semantics but of substance. A wolf with an appetite to shackle the operation of. government is none the less lupine when garbed in the sheep's clothing of an "individual capacity' action.Healey v. Bendick, 628 F. Supp. 681, 696 (D.R.I. 1986). See Newhouse v. Probert, 608 F. Supp. 978, 981 (W.D. Mich. 1985) (where plaintiff filed suit against an IRS agent and an Assistant United States Attorney, the court must go the beyond nominal defendants to determine whether the suit is against the sovereign and barred by sovereign immunity). "Generally a suit for specific relief— e.g., injunctive or declaratory relief— against a named government official of the United States is deemed to be a suit against the sovereign." Davis v. Rucker, 2002 WL 31235735, *4 (M.D. Fla. 2002) (citing Larson, 337 U.S. at 687-88). As a result, the named defendants McMahon, Holmgren, Anderson, and Doyle are dismissed and the United States is substituted in their place.
C. Motion to Dismiss
1. United States
As a sovereign, the United States may be sued only when it consents by statute to waive its sovereign immunity, and it is free to set the terms and limits of that consent. United States v. Mitchell, 445 U.S. 535, 538, 100 S.Ct. 1349, 63 L.Ed.2d 607 (1980); Bellecourt v. United States, 994 F.2d 427, 430 (8th Cir. 1993). Suits against the United States require express consent. Coleman, 986 F.2d at 1189. Such consent must be clear, unequivocal, and not implied. Id. Waivers of sovereign immunity are strictly construed in favor of the sovereign. Miller v. Tony and Susan Alamo Foundation, 134 F.3d 910, 915 (8th Cir. 1998). Where Congress does not consent to suit, district courts lack subject matter jurisdiction over claims against the government. Id. at 916.
The United States has neither expressly consented to this suit nor waived sovereign immunity. See Erickson v. Commissioner of Internal Revenue, 1996 WL 454931, *3 (D. Minn. 1996) (where United States did not consent to be enjoined from collecting taxes, suit could not proceed). Indeed, no applicable statutes indicate that Congress intended to waive sovereign immunity in these circumstances. See, e.g., Murray v. United States, 686 F.2d 1320, 1324 (8th Cir. 1982) (although 28 U.S.C. § 1340 gives district courts jurisdiction over any act providing for the internal revenue, it does not waive sovereign immunity). In fact, the statutes indicate to the contrary. The Anti-Injunction Act bars a suit for restraining the assessment or collection of any tax. 28 U.S.C. § 7421 (a). See also Bob Jones Univ. v. Simon, 416 U.S. 725, 736, 94 S.Ct. 2038. 40 L.Ed.2d 496 (1974) (Congress sought to ensure "the protection of the Government's need to assess and collect taxes as expeditiously as possible with a minimum of pre-enforcement judicial interference[.]"). The Declaratory Judgment Act's federal tax exception explicitly prohibits declaratory judgments "with respect to Federal Taxes." 26 U.S.C. § 2201. Accordingly, sovereign immunity protects the United States from the present suit. See Erickson, 1996 WL 454931, at *3 n. 5 (plaintiff presented no evidence that the United States consented to being prospectively enjoined from collecting taxes); Larson v. Domestic Foreign Commerce Corp., 337 U.S. 682, 687, 69 S.Ct. 1457, 1461, 93 L.Ed. 1628 (1949) (suit for specific relief against officers was suit against United States, over which, in the absence of consent, the court had no jurisdiction).
Plaintiffs can avoid a sovereign immunity bar by proving that the officers' individual conduct is not within their statutory powers or that those powers are unconstitutional. Wyoming, 279 F.3d at 1225; Larson, 69 S.Ct. at 1461. Then, the officers' actions are ultra vires and not immune from suit. Id. "In order to plead successfully that the acts of a government officer exceed his statutory authority a plaintiff must do more than simply allege that the actions of the officer are illegal or unauthorized." Alabama Rural Fire Ins. Co. v. Naylor, 530 F.2d 1221, 1226 (5th Cir. 1976). Plaintiffs do not meet that burden in this case. Plaintiffs' complaint alleges only actions taken in defendants' official capacities as agents of the United States that were within their statutory powers. Thus, this court has no jurisdiction to enjoin the defendants' actions or to issue declaratory relief as requested by plaintiffs.
Plaintiffs also seek to quash the IRS summons. Plaintiffs had twenty days from notice of the summons to file a petition to quash. 26 U.S.C. § 7609 (b)(2)(A). The summons was served on April 4, 2002, and plaintiffs filed the petition to quash on January 6, 2003. This lapse in time. in excess of a year. precludes the current relief plaintiffs seek. "The plaintiffs failure to sue within the period of limitations is not simply a waivable defense; it deprives the court of jurisdiction to entertain the action." Loudner v. United States, 108 F.3d 896, 900 n. 1 (8th Cir. 1997); Shisler v. United States, 199 F.3d 848, 852 (6th Cir. 1999) (petition to quash that was filed more than twenty days after the IRS gave notice of the summons must be dismissed for lack of jurisdiction). Thus, this court is without jurisdiction to hear a motion to quash. All the remedies sought by plaintiffs in their complaint are barred from relief. As a result, plaintiffs' complaint is dismissed.
2. Bivens Actions
If plaintiffs' complaint could be construed to constitute a Bivens action against defendants McMahon, Holmgren, Anderson, and Doyle in their personal capacities, it would still be dismissed. The remedy provided byBivens does not extend to "contexts in which it may be inferred that Congress has spoken to the contrary." Sinclair v. Hawke, 314 F.3d 934, 939 (8th Cir. 2003). Congress intended to preclude such taxpayer suits by providing specific and meaningful remedies for taxpayers who wish to challenge the activities associated with the collection and assessment of taxes. Vennes v. An Unknown Number of Unidentified Agents of the United States, 26 F.3d 1448, 1454 (8th Cir. 1994). "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." Id. at 1453 (quoting Schweiker v. Chilicky, 487 U.S. 412, 423, 108 S.Ct. 2460, 2468, 101 L.Ed.2d 370 (1988)). Parties cannot avoid administrative remedies and review simply by alleging constitutional claims against individual officers. Sinclair, 314 F.3d at 940.
Vennes clearly precludes a Bivens actions against IRS agents Doyle and Anderson. This rationale similarly prevents suit against defendants Holmgren and McMahon. Holmgren and McMahon issued the petition to enforce the summons as a part of the process of assessing and collecting taxes.See Vennes, 26 F.3d at 1454 (court correctly dismissed Bivens claim for tax assessment and collection activities). Holmgren and McMahon simply sought to enforce the protected actions of IRS agents. Accordingly, plaintiffs are barred from filing a Bivens action against defendants.
Furthermore, by providing a comprehensive scheme of taxpayer remedies, Congress precluded a Bivens action against any of the named defendants in this case. Specific avenues of relief remain open to plaintiffs. They can file a petition to quash the summons. They can challenge a tax assessment both judicially and administratively and can sue the government for a refund. Vennes, 26 F.3d at 1454. Plaintiffs can bring actions against the United States to recover damages resulting from specific types of misconduct by IRS employees. Id. Because plaintiffs have several available avenues of relief, they cannot file a Bivens action. Plaintiffs, therefore, have no claim against Holmgren, McMahon, Doyle, and Anderson, and this court will dismiss the action against them in their personal capacities.
D. Motion to Strike Second and Third Responses
Local Rule 7.2(a) requires parties to file a brief containing the basis for a motion and the supporting points of law. The opposing party then has twenty days to respond and state their opposition and authority to support it. The moving party may submit a reply brief within ten days following service of the opposition brief. The Rule does not permit further filings without leave of court. A "District Court has considerable leeway in the application of its local rules." Martinez v. Union Pacific Railroad Co., 82 F.3d 223, 227 (8th Cir. 1996).
Dismissal of this case is appropriate because this court does not have subject matter jurisdiction over this case and because the complaint fails to state a claim. This conclusion is evident despite plaintiffs' second and third responses. Plaintiffs' disregard of Local Rule 7.2(a) is, therefore, largely irrelevant. Accordingly, this court will deny defendants' motion to strike plaintiffs' responses from the record.
E. Motion for Default Judgment
A default judgment is justified when a party against whom a judgment is sought fails to plead or otherwise defend as permitted by the rules. Fed.R.Civ.P. 55(a). A responsive pleading includes motions to dismiss under Rule 12(b). Although defendants did not file an answer, they defended their case by filing a motion to dismiss under Rules 12(b) and 12(b)(6). This motion to dismiss qualifies as a responsive pleading, and therefore, precludes an entry of default judgment.
CONCLUSION
This court does not have subject matter jurisdiction over the named defendants, and sovereign immunity prevents suit against the United States and the named defendants. Plaintiffs have also failed to state a claim for which relief can be granted. Dismissal is therefore warranted.
Accordingly, it is hereby
ORDERED that defendants' motion to dismiss Judge Piersol as a party defendant (Docket 6) is granted.
IT IS FURTHER ORDERED that defendants' motion to substitute the United States as defendant for McMahon, Holmgren, Anderson, and Doyle (Docket 6) is granted.
IT IS FURTHER ORDERED that defendants' motion to dismiss the complaint for lack of jurisdiction (Docket 6) is granted.
IT IS FURTHER ORDERED that defendants' motion to strike plaintiffs' second (Docket 13) and third responses and briefs (Docket 16) is denied.
IT IS FURTHER ORDERED that plaintiffs' motion for default judgment (Docket 17) is denied.