Opinion
Case No. 97-CV-76329-DT
September 25, 2001
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' SECOND SUPPLENENTAL MOTION TO DISMISS COUNT IV
Pending before the court is the "Second Supplemental Motion to Dismiss Count IV" filed by Defendants Internal Revenue Service ("IRS") and Department of Justice on November 7, 2000. Plaintiff William L. Comer filed his opposition to the instant motion on December 4, 2000. The matter is fully presented on the briefs; oral argument is not necessary to resolve the contested issues. E.D. Mich. LR 7.1(e)(2). For the reasons set forth, the court will grant in part and deny in part Defendants' motion.
I. BACKGROUND
This litigation, which commenced on December 30, 1997, stems from Plaintiff's extensive requests under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552. At this stage of litigation, only Count IV remains, which is based on Plaintiff's request for documents that memorialize or support the following notations, which for purposes of further clarification, are lettered by the court as subparts of Count IV:
A. "TB has $ in Cayman Islands"
B. "believe t/p understating income, has sev trusts that probably show the income, but they are not part of OIC pkg";
C. Larry Sharp and/or Bill Fleck believed or knew there existed "foreign bank accounts that the IRS knows exist but have no idea how to reach" and that "gold mining in Argentina — etc. etc."
D. Larry Sharp and/or Bill Fleck believed or knew there existed "foreign bank acts — Fleck said he had CBRS reports — 500k — 1 million sent on to Panama or Costa Rica";
E. Bill Fleck believed or knew that "TB anticipated safety deposit box as soon as audit deficiency notices were received, so that, after 10 years of renting the box, the only thing in it when Fleck seized it and had it opened was a mint coin";
F. Larry Sharp and/or Bill Fleck believed or knew that "T/p will try to distort written or spoken communication by service employees."
On August 17, 2000, the court issued an order in which, among other things, Defendants' first supplemental motion to dismiss Count IV was denied. Defendants were directed to conduct an adequate search for the documents listed in Count IV:
[T]he IRS will be ordered to conduct a further search, which should include discussions with Messrs. William Fleck, Ralph Suchyta, and Larry Sharp, or any other appropriate individuals, to determine where any such documents pertaining to Count IV might be found, as contrasted with simply where they should be found (such as in the purportedly searched examination file)
(8/17/00 Order at 3.)
In the instant motion, Defendants contend that they have complied with the court's August 17th directive. They assert that "the IRS has produced all responsive, non-exempt documents at issue in Count IV of [P]laintiff's complaint." (Defs.' 2d Supplemental Mot. to Dismiss at 1.) Plaintiff opposes Defendants' motion, asserting primarily that "Defendants have failed to show that any search was made for, or of, Bob Smith's or his successor's files." (Resp. Mem. at 4.)
II. ANALYSIS
FOIA provides that "the district court in which the complainant resides . . . has jurisdiction to enjoin the agency from withholding agency records and to order production of any agency records improperly withheld from the complainant." 5 U.S.C. § 552(a)(4)(B). Thus, if all records responsive to the plaintiff's request have been released or cannot be located after a reasonable search, then the case must be dismissed for lack of jurisdiction. See Tijerina v. Walters, 821 F.2d 789, 799 (D.C. Cir. 1987); Debold v. Stimson, 735 F.2d 1037, 1040 (7th Cir. 1984). As the court stated in the August 17th order, FOIA does not require an agency to search the ends of the earth for requested documents; it only requires that the agency conduct a reasonable and adequate search.
A. "TP Has $ in Cayman Islands"
The statement "TB has $ in Cayman Islands" was attributed to a telephone call from Peggy Pirhonen, a Revenue Officer for the IRS. In her declaration, Ms. Pirhonen states that she does not have any documents in her possession or control supporting or establishing the truthfulness of this statement. (Pirhonen Decl. ¶ 3, attached to Defs.' 2d Supplemental Mot. to Dismiss.) Moreover, Ms. Pirhonen, who did not create the notation, cannot recall who authored the statement. ( Id. ¶ 2.) Because the attributed source of the statement does not have any documents relating to the contested notation, the court finds that Defendants have conducted an adequate search for this aspect of Plaintiff's FOIA request.
The relevant typewritten notation states as follows:
Phone call from Peggy Pirhonen (RO) TP IS AN ACTIVE PROTESTOR AND HEADS UP A GROUP CALLED FINANCIAL FREEDOM CONSULTANTS. Larry Sharp revenue agent is presently auditing TP. TP has $ in Cayman Islands most likely. TP has sued IRS a couple of times and there are court cases[.]
( See Pirhonen Decl. Ex. A, attached to Defs.' 2d Supplemental Mot. to Dismiss.)
B. "Believe T/P Understating Income, Has Sev Trusts That Probably Show the Income, but They Are Not Part of OIC Pkg"
The handwritten statement "believe t/p understating income, has sev trusts that probably show the income, but they are not part of OIC pkg" was written by Marcia Pratt, a Revenue Officer for the IRS. In her declaration, Ms. Pratt avers that, to the best of her recollection, this notation was based on information provided to her by William Fleck during a telephone conversation. (Pratt Decl. ¶ 4, attached to Defs.' 2d Supplemental Mot. to Dismiss.)
The court finds that Defendants have not conducted an adequate search with respect to this notation. Despite Ms. Pratt's identification of Mr. Fleck as the source of her information, Defendants have not presented the court with any statement from Mr. Fleck regarding his search, if any, for this aspect of Plaintiff's FOIA request.
C. "Foreign Bank Accounts That the IRS Knows Exist but Have No Idea How to Reach" and "Gold Mining in Argentina — etc., etc."
Larry Sharp, a Revenue Agent for the IRS, contends that he is familiar with the notations dealing with foreign bank accounts and gold mines. (2d Sharp Decl. ¶ 1, attached to Defs.' 2d Supplemental Mot. to Dismiss.) He asserts that, to the best of his recollection, he was aware both of Plaintiff's foreign bank accounts and of Plaintiff's gold mining interests because Plaintiff told him of the bank accounts and gold mining interests during interviews. ( Id. ¶¶ 2, 3) Sharp avers that he is not aware of any documents that memorialize or support either of these notations. ( Id.)
He also states that the gold mine might have been located in Costa Rica, not in Argentina, and that Plaintiff may have given him invoices relating to the gold mine. ( Id.) Mr. Sharp alleges that any invoices given to him would be in the examination file and that he is not aware of any other documents supporting this notation. ( Id.) Finally, Mr. Sharp states that he has "placed all records pertaining to [his] examination of Plaintiff's tax liability in the examination file" and that he does "not have any records responsive to Plaintiff's FOIA request or concerning Plaintiff in [his] `desk, brief case, cabinet, or any other place within [his] control.'" ( Id. ¶ 4.)
The court notes that Defendants recently "searched Plaintiff's examination file again for documents relating to foreign bank accounts, business transactions in Costa Rica or Equador, and mining operations." (Defs.' 2d Supplemental Mot. to Dismiss at 5; Marchant Decl. ¶ 6 attached to Defs.' 2d Supplemental Mot. to Dismiss.) As a result of this search, Defendants located and released 31 pages of documents to Plaintiff, all of which had already been released to Plaintiff on August 16, 1995. (Marchant Decl. ¶ 6 attached to Defs.' 2d Supplemental Mot. to Dismiss.)
Given that Mr. Sharp has placed all documents relating to Plaintiff in the examination file, which appears now to have been thoroughly searched twice, and given further that Mr. Sharp is not aware of any other documents relating to these notations, the court finds that Defendants have conducted a reasonable search with respect to this aspect of Plaintiff's FOIA request.
D."Foreign Bank Acts — Fleck Said He Had CBRS Reports — 500k — 1 Million Sent on to Panama or Costa Rica"
William Fleck, a Revenue Agent for the IRS, is familiar with the notation dealing with CBRS reports. (2d Fleck Decl. ¶ 1, attached to Defs.' 2d Supplemental Mot. to Dismiss.) Fleck indicates that, to the best of his knowledge, the "500K — 1 million figures were not derived from any information on a CBRS report." ( Id. ¶ 4) Instead, Mr. Fleck believes that he based his statement on information provided to him over the telephone by his former Branch Chief, Bob Smith. ( Id. ¶ 4). Mr. Fleck did not receive any CBRS reports in connection with this conversation. ( Id.) Mr. Fleck does not know whether Bob Smith read the information to him from a printed document or from a computer screen. ( Id.). Bob Smith is no longer working for the IRS, as he has retired. ( Id.) Mr. Fleck did direct a search of the CBRS database in an attempt to locate any relevant documents, but the search was unsuccessful. ( Id. ¶ 5).
This notation, as well as the remaining two notations dealing with the safety deposit box and distorting communications, are handwritten notations dated August 20, 1993. Despite the fact that Marcia Pratt was the author of the handwritten notations, the notations dated August 20, 1993, were based on information given by William Fleck. ( See Pratt Decl. Ex. B, attached to Defs.' 2d Supplemental Mot. to Dismiss.)
Mr. Fleck explains that the phrase "CBRS reports" refers "to a report generated from the Currency and Banking Retrieval System. The CBRS is a computer database that maintains, inter alia, reports by financial institutions of cash transactions over $10,000." (2d Fleck Decl. ¶ 6, attached to Defs.' 2d Supplemental Mot. to Dismiss.)
The court finds that Defendants' have not conducted an adequate search with respect to this portion of Plaintiff's FOIA request. Mr. Fleck identified Bob Smith as the source of this notation, yet no attempt to locate or question Bob Smith has been made.
Although it is true that FOIA does not require an agency to search to the ends of the earth for requested documents, it is not unreasonable to attempt to question a former employee about the possible existence of documents related to one request. It is possible that Bob Smith will not recollect this document, or Defendants will be unable to locate him. It is just as possible, however, that Bob Smith will be found relatively easily and can direct the agency to the requested document. Either way, FOIA requires the Defendants to make reasonable efforts to search for the requested documents and, in the court's opinion, a reasonable effort in this regard requires attempting to question Bob Smith.
E."TP Anticipated Safety Deposit Box As Soon As Audit Deficiency Notices Were Received, So That, After 10 Years of Renting The Box, The Only Thing in It When Fleck Seized It and Had It Opened Was a Mint Coin"William Fleck is also familiar with the following notation:
TP anticipated safety deposit box as soon as audit deficiency notices were received, so that, after 10 years of renting the box, the only thing in it when Fleck seized it and had it opened was a mint coin.
Mr. Fleck based this statement on "conclusions [he] drew from [his] knowledge of when audit deficiency notices were issued, an oral statement made to [him] by the bank manager regarding when the safety deposit box was last accessed by Plaintiff and [his] observation of the opening of the safe deposit box." (2d Fleck Decl. ¶ 6, attached to Defs.' 2d Supplemental Mot. to Dismiss.) Mr. Fleck did not, however, rely on any documents as the basis for this statement. ( Id.) Thus, since Mr. Fleck did not rely on any documents in making this statement, the court finds that Defendants have conducted an adequate search for this portion of Plaintiff's FOIA request.
F. "T/p will try to distort written or spoken communication by service employees"
This notation was based on information provided to Ms. Pratt in a telephone call from Mr. Fleck. Mr. Fleck made this statement purely as "an observation based on prior experience with Plaintiff." (2d Fleck Decl. ¶ 7, attached to Defs.' 2d Supplemental Mot. to Dismiss.) Further, Mr. Fleck "did not rely on any documents or records as the basis of [this] statement." ( Id.) Because Mr. Fleck did not rely on any documents in making this statement but relied instead on his past encounters with Plaintiff, the court finds that Defendants have conducted an adequate search for this final aspect of Plaintiff's FOIA request.
III. CONCLUSION
For the reasons stated above,
IT IS ORDERED that Defendants' "Second Supplemental Motion to Dismiss Count IV" is DENIED IN PART AND GRANTED IN PART as follows:
A. "TP has $ in Cayman Islands" MOTION TO DISMISS IS GRANTED;
B. "believe t/p understating income, has sev trusts that probably show the income, but they are not part of OIC pkg" MOTION TO DISMISS IS DENIED;
C. Larry Sharp and/or Bill Fleck believed or knew there existed "foreign bank accounts that the IRS knows exist but have no idea how to reach" and that "gold mining in Argentina — etc. etc." MOTION TO DISMISS IS GRANTED;
D. Larry Sharp and/or Bill Fleck believed or knew there existed "foreign bank acts — Fleck said he had CBRS reports — 500k — 1 million sent on to Panama or Costa Rica" MOTION TO DISMISS IS DENIED;
E. Bill Fleck believed or knew that "TP anticipated safety deposit box as soon as audit deficiency notices were received, so that, after 10 years of renting the box, the only thing in it when Fleck seized it and had it opened was a mint coin" MOTION TO DISMISS IS GRANTED;
F. Larry Sharp and/or Bill Fleck believed or knew that "T/p will try to distort written or spoken communication by service employees." MOTION TO DISMISS IS GRANTED;IT IS FURTHER ORDERED that Defendants conduct additional efforts within the next 90 days to search for documents that support or memorialize the two remaining aspects of Plaintiff's FOIA request, i.e., "believe t/p understating income, has sev trusts that probably show the income, but they are not part of OIC pkg," and Larry Sharp and/or Bill Fleck believed or knew there existed "foreign bank acts — Fleck said he had CBRS reports — 500k — 1 million sent on to Panama or Costa Rica." Specifically, Defendants are directed to question or attempt to question William Fleck and Bob Smith about their knowledge of any documents supporting or memorializing the remaining notations.
IT IS FURTHER ORDERED that Defendants file either a Third Supplemental Motion to Dismiss or a Status Report with the court on or before December 20, 2001, based upon the results of the additional search ordered herein.