Opinion
No. CIV 01-486-TUC-RCC.
January 29, 2002
ORDER
Pending before the Court is Defendants' December 4, 2001 Motion to Dismiss or, in the Alternative, to Transfer Case to Judge Rosenblatt. Defendants contend that the complaint in this case is essentially the same as that filed in Callies, et al. v. United States, CV 00-708-PHX-PGR, currently pending before Judge Rosenblatt in the Phoenix division of this Court. Plaintiffs indicate in their motion that they have no objection to consolidation of this case with the Callies case, but assert that they raise sufficiently different claims from Callies to preclude dismissal. After review and comparison of the complaints filed in this case and the Callies case, the Court will grant Defendants' motion to dismiss.
Factual and Procedural Background
On April 19, 2000, Plaintiffs Debra Sue Callies, Roger Caster, Dolores Fraijo, and others, filed a proposed class action in the Phoenix division. The complaint alleged that Certified Public Accountant D. William Wewee, received, without proper authorization, tax return information relating to 1,391 individuals and encompassing 2,862 tax years. Plaintiffs in Callies seek damages for the Defendants' violations of 26 U.S.C. § 6103 pursuant to 26 U.S.C. § 7431 in the form of actual and punitive damages. Specifically, the Callies plaintiffs claim that the IRS violated 26 U.S.C. § 6103 by disclosing tax return information without authorization. The class to be represented in Callies includes those individuals "who did not provide authority for Mr. Wewee to request or receive their tax return transcripts from the IRS, but whose tax return transcripts were nevertheless provided to Mr. Wewee without request." ( Callies Compl., p. 4.) The Phoenix District Court approved notice of the class action on June 20, 2001 and Plaintiffs Caster and Fraijo, among others, were named as class representatives. All of the plaintiffs in this case are included in the certified class of plaintiffs in the Callies case.
On October 23, 2000, Norris Ganson, attorney for Callies Plaintiffs, withdrew as counsel for Callies representatives Caster and Fraijo. In August and September of 2001, attorney Edmund Kahn entered an appearance on behalf of Plaintiffs Caster and Fraijo and other class members including Shirley Wewee and Richard Viau. On August 29, 2001, Defendants moved for removal of plaintiffs Caster and Fraijo as class representatives for failure to cooperate with discovery requests and actively pursue the class litigation. In an order dated October 4, 2001, Judge Rosenblatt granted Defendants' motion to remove Caster and Fraijo as class representatives and removed attorney Edmund Kahn as class counsel from the Callies action.
Plaintiffs in the instant case filed their complaint on September 20, 2001 alleging violations of 26 U.S.C. § 6301 and 7431 arising out of the same disclosures of tax return information at issue in the Callies class action and against the same Defendants. Named Plaintiffs in this case include former Callies representatives Caster and Fraijo, as well as Shirley Wewee and Richard Viau. The class of plaintiffs to be certified in this case are the same class of plaintiffs already certified in the Callies action. Defendants filed the pending Motion to Dismiss or in the Alternative to Transfer to Judge Rosenblatt on December 4, 2001.
Local Rule 1.2 provides that a motion to transfer a related case to a single District Court judge shall "be filed in each affected case, but shall contain the caption of the case with the lowest number and shall be heard by the District Judge to whom that case is assigned." Accordingly, Judge Rosenblatt entered an order denying Defendants' alternative motion to transfer, with leave to reinstate, on December 20, 2001. This Court need only consider the motion to dismiss.
Legal Standard
"There is a generally recognized doctrine of federal comity which permits a district court to decline jurisdiction over an action when a complaint involving the same parties and issues has already been filed in another district court." Pacesetter Systems Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982); Church of Scientology of California v. United States Dept. of the Army, 611 F.2d 738, 749 (9th Cir. 1979). In most cases, "[s]ound judicial administration would indicate that when two identical actions are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction should try the lawsuit and no purpose would be served by proceeding with a second action." Pacesetter, 678 F.2d. at 95. The concern is to avoid the waste of duplication, to avoid rulings which may trench upon the authority of other courts, and to avoid piecemeal resolution of issues that call for a uniform result. Colorado River Water Conser. Dist. v. United States, 424 U.S. 800, 818-20.
Discussion
Plaintiffs in this case contend that their cause of action differs from Callies primarily in two respects: 1) Plaintiffs in this case allege multiple unauthorized disclosures of tax return information by the IRS while Plaintiffs in Callies allege only one unauthorized disclosure, and 2) Plaintiffs in this case seek statutory and punitive damages while Plaintiffs in Callies seek actual and punitive damages. ( Wewee Pl.'s Opp'n to Def.'s Mot. to Dismiss, p. 2-3.)
The complaint filed by Plaintiffs in this case describes the unauthorized disclosures to Mr. Wewee in greater detail by identifying the IRS employee who inspected and disclosed the IRS transcripts, and by alleging unauthorized disclosures on multiple occasions between October 12, 1999 and February 2, 2000. ( Wewee Compl., p. 3.) Plaintiffs contrast this with the Callies complaint which alleges "during the period from October 12, 1999 through February 2, 2000, Mr. Wewee received transcripts which he was not authorized to receive which related to 1,391 individuals and encompassed 2,862 tax years." ( Callies Compl., p. 4.) The Court finds this contrast to be legally insignificant for the purposes of maintaining a separate case.
Indeed, the similarities in the factual allegations in Callies and Wewee overwhelm the minor differences in the pleadings which Plaintiffs rely on. Specifically, both cases: 1) allege unauthorized disclosures to Mr. Wewee during the period from October 12, 1999 to February 2, 2000, 2) allege that the information of approximately 1,390 individuals was disclosed relating to approximately 2,900 tax years, 3) identify and define the same class of Plaintiffs, and 4) base their claims for relief on 26 U.S.C. § 6103 and 7431. The more detailed allegations of the Wewee case do not create a legal claim separate from that stated in Callies nor does the more broad description of facts in Callies necessarily preclude Wewee's allegations. The issue of how many unauthorized disclosures actually occurred is relevant to damages in the original class action and is not a sufficient ground for maintaining a separate law suit.
As with their factual allegations, Plaintiffs' reliance on their request for statutory damages is insufficient to differentiate their cause of action from that in Callies. Title 26 U.S.C. § 7431 (c), provides for damages for violations of 26 U.S.C. § 6103 in the following manner:
(A) $1,000 for each act of unauthorized disclosure of a return or return information with respect to which such defendant is found liable, or —
(B) the sum of —
(i) the actual damages sustained by the plaintiff as a result of such unauthorized disclosure, plus
(ii) in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages, plus
(2) the costs of the action plus . . . (emphasis added).
That the Callies complaint seeks actual damages and failed to claim statutory damages does not support Plaintiffs' ability to maintain a separate suit in another division of the District Court in order to recover damages they may not be entitled to recover in the original class action. The plain language of § 7431 clearly indicates the disjunctive nature of damages that plaintiffs may recover; plaintiffs may seek actual and punitive damages or statutory damages, but may not recover both. Plaintiffs have failed to suggest any case law supporting a departure from this interpretation. To allow Plaintiffs in this case to proceed would be to potentially allow precisely the same class of plaintiffs to recover twice (actual and punitive damages in one case, and statutory damages in the other) for the same claims arising out of identical facts. Plaintiffs cannot circumvent the damages provisions of 26 U.S.C. § 7431 by filing a virtually identical cause of action before a different District Court judge. If Plaintiffs believe statutory damages to be greater than their actual and punitive damages, FED.R.CIV.P. Rule 23(c)(2)(A) allows Plaintiffs to "opt out" of the class in Callies such that they may pursue their claim, on their own behalf, outside of the class action.
Moreover, Plaintiffs' willingness to transfer this case Judge Rosenblatt for consolidation with the Callies case, and failure to opt out of the Callies litigation, suggests Plaintiffs desire to reinstate their status as class representatives. Transfer and consolidation of this matter would effectively negate Judge Rosenblatt's October 4, 2001 order which removed Plaintiffs Caster and Fraijo as class representatives. A challenge to a court order is properly brought through a motion to reconsider or through an appeal. Plaintiffs may not regain their status as class representatives by filing a new class action and seeking consolidation with the initial class action.
After consideration of the pleadings filed in Callies and Wewee, the Court finds Plaintiffs' claims to be sufficiently similar to those in Callies such that no purpose would be served by proceeding with this second action. To allow this case to go forward would entail an effort duplicative of Callies and constitute a waste of judicial resources.
Accordingly,
IT IS ORDERED that Defendants' December 4, 2001 Motion to Dismiss [Doc. 6] is GRANTED. The Clerk of the Court is directed to close the case and enter judgment.