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United States v. Cobb

June 15, 2009

UNITED STATES, PETITIONER,
v.
SALLY DAWN COBB, RESPONDENT.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

Order Granting Government's Motion for Contempt Sanctions

The IRS has filed a motion for contempt sanctions based upon Respondent Sally Dawn Cobb's refusal to comply with the Court's August 19, 2008 order compelling her to produce documents and appear and give testimony in response to four administrative summonses. Respondent has filed an opposition to the government's motion, and the government has filed a reply.

A hearing was held before Chief Judge Irma E. Gonzalez on Monday, June 15, 2009. For the reasons set forth herein, the Court GRANTS the government's motion.

Background

The factual background underlying the issuance of the August 19, 2008 order compelling Ms. Cobb to appear to produce documents and give testimony is fully set forth in that order and need not be restated here. In short, the IRS issued four administrative summonses to Ms. Cobb in furtherance of its investigation of her income tax liability for the years 2001, 2005 and 2006, as well as its investigation of the income tax liability of Ms. Cobb's brother, Michael Scott, for the tax year 2001.

In the August 19, 2008 order, the Court rejected as frivolous Ms. Cobb's arguments that

(1) the IRS lacks jurisdiction over her because of her Private status as a non-taxpayer, (2) the revenue laws apply only to taxpayers and not to non-taxpayers such as herself, and (3) the family's Pure Trusts have foreign status and therefore are not subject to any tax filing requirement. The August 19, 2008 order required Ms. Cobb to appear before IRS Revenue Agent Michael Delgado of his designee on September 22, 2008, to produce documents and give testimony as directed in the summonses.

Ms. Cobb appealed the August 19, 2008 order. Ms. Cobb moved for a stay of the August 19, 2008 order pending appeal, but the Ninth Circuit denied that motion. As a result, Assistant United States Attorney Raven Norris sent a letter to Ms. Cobb on December 31, 2008, requesting that Ms. Cobb appear before Revenue Agent Delgado on January 21, 2009 to produce documents and provide testimony as required by the Court's August 19, 2008 order.

On January 21, 2009, Ms. Cobb appeared at the IRS office. Ms. Cobb produced none of the documents called for by the summonses and as required by the Court's August 19, 2008 order. Ms. Cobb answered preliminary questions confirming her current address, how long she had lived at the address, and that she leased the property. Ms. Cobb also stated the property was owned by Oasis Pure Trust, and entity for which her brother Michael Alan Scott is the managing trustee. [Transcript of January 21, 2009 Examination, filed as Exhibit A to the Declaration of Revenue Agent Michael Delgado in Support of Motion for Contempt Sanctions (Doc. 25-3), pp. 2-8.] Thereafter, Ms. Cobb refused to answer any additional questions, instead asserting her Fifth Amendment right to remain silent. [Id., pp. 9-36.] The government's motion followed.

Standard on Motion for Contempt Sanctions

A district court has the inherent authority to enforce its orders through civil contempt. Shillitani v. United States, 384 U.S. 364, 370 (1966).

The standard for finding a party in civil contempt is well settled: The moving party has the burden of showing by clear and convincing evidence that the contemnors violated a specific and definite order of the court. The burden then shifts to the contemnors to demonstrate why they were unable to comply.

FTC v. Affordable Media LLC, 179 F.3d 1228, 1239 (9th Cir. 1999) (quoting Stone v. City and County of San Francisco, 968 F.2d 850, 856 n. 9 (9th Cir.1992)). "A party's actions 'need not be willful' and there is no good faith exception to the requirement of obedience to a court order." Go-Video, Inc. v. Motion Picture Ass'n of America, 10 F.3d 693, 695 (9th Cir. 1993) (quoting In re Crystal Palace Gambling Hall, Inc., 817 F.2d 1361, 1365 (9th Cir.1987)). A party may not, however, be held in civil contempt if she "has taken 'all reasonable steps' to comply with the court order." General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986).

Courts have the power to impose a conditional period of imprisonment for the purpose of coercing an individual to obey its validly entered order. Uphaus v. Wyman, 360 U.S. 72, 81 (1959). Courts may also impose a monetary sanction either for purposes of coercing compliance or to compensate the moving party for its ...


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