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Donald R. Huene v. U.S. Department of the Treasury


May 11, 2012


The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge


Presently before the court is defendant Internal Revenue Service's ("IRS") motion for judgment on the pleadings, which seeks the dismissal of plaintiff's claims on the grounds that plaintiff failed to state a claim on which relief can be granted (Dkt. No. 23).*fn1 Plaintiff opposes the IRS's motion (Dkt. No. 32).

Because oral argument would not materially aid the resolution of the pending motion, this matter is submitted on the briefs and record without a hearing. See Fed. R. Civ. P. 78(b); E. Dist. Local Rule 230(g). The undersigned has considered the briefs and appropriate portions of the record in this case and, for the reasons stated below, recommends that the IRS's motion be granted in part and denied in part.


Generally, plaintiff's complaint concerns the actions of the IRS and its agents in connection with a continuing tax audit of plaintiff. Plaintiff alleges that the IRS had "previously ordered Plaintiff for examinations of scheduled [sic] F filings on numerous occasions," and "decided to renew their examination." (Compl. ¶ 7.) Plaintiff alleges that on December 14, 2010, he "granted permission for Richard Holland and Necia Wollerman to represent [him] and they were given power of attorney to contact and complete the audit." (Id.) Plaintiff identifies Hollerman as a certified public accountant (see id. ¶ 10), but it is unclear who is Wollerman and what roles he or she played in the events alleged in the complaint.

Plaintiff alleges that two agents of the IRS, defendant Anthony Shelly and Siu Chan, requested voluminous records in connection with the audit. (See Compl. ¶¶ 6, 8.) Plaintiff alleges that because of the volume of documents at issue, he ultimately decided to represent himself before the IRS. (Id. ¶ 8.) Accordingly, plaintiff alleges that he advised the IRS, through a letter to Chan dated April 7, 2011, that Holland was no longer representing plaintiff, that the power of attorney previously granted to Holland had been rescinded, that plaintiff would be representing himself, and that plaintiff should be the only person contacted by the IRS in connection with the audit. (See id. ¶¶ 8-9.)

Plaintiff alleges that on or about June 6, 2011, he received an e-mail from Holland indicating that Holland had been contacted by Shelly, and further alleges that Shelly did not advise plaintiff of that contact. (Compl. ¶ 10.) Plaintiff alleges that in response to Shelly's contact with Holland, plaintiff again advised the IRS, in a letter dated June 7, 2011, that plaintiff had completely rescinded Holland's authority to represent plaintiff, that plaintiff was representing himself, that plaintiff had found out about Shelly's contact with Holland, and that plaintiff was being billed by Holland for Shelly's unauthorized contact with Holland. (See id. ¶ 11.) Plaintiff asserts that the letter characterized Shelly's contact with Holland as a violation of Internal Revenue Code § 6103(a), which designates tax returns and return information as confidential and restricts the disclosure of such information.*fn2 (Id.)

Plaintiff alleges that he subsequently sent a letter to Shelly in which plaintiff stated that if Shelly's contact or contacts with Holland were merely a mistake, plaintiff would accept an apology, sent within five days, explaining such inadvertent contact. (Compl. ¶ 14.) Plaintiff suggests that he advised Shelly that Shelly's failure to timely respond to plaintiff's letter would confirm for plaintiff that Shelly's contact or contacts with Holland, and any related disclosures of information, constituted "willful, wanton, and malicious" disclosures of tax information in violation of Internal Revenue Code § 6103(a). (Compl. ¶ 14.) Shelly allegedly never responded. (Id. ¶ 15.)

Plaintiff alleges that despite his previous letters, Shelly directly contacted Holland again on July 6, 2011. (Compl. ¶ 16.) Plaintiff alleges that in a letter dated July 11, 2011, he again informed Shelly of Shelly's willful and malicious conduct that constituted a "serious breach of the law." (Id. ¶ 17.) Plaintiff alleges that his letter advised Shelly, yet again, that plaintiff was being billed by Holland for Shelly's unauthorized contacts with Holland, all of which did nothing to resolve the underlying tax issues. (See id. ¶¶ 17-18.)

Plaintiff alleges that despite his myriad letters to the IRS, Shelly "nonetheless continued to contact" Holland knowing that such contact was not authorized and that plaintiff was being billed for Holland's time. (See Compl. ¶ 19.) Plaintiff alleges that Shelly's continued, unauthorized contacts with Holland constituted not only a violation of Internal Revenue Code § 6103(a), but also a violation of plaintiff's rights secured by the Fourth Amendment to the United States Constitution. (Id. ¶¶ 19, 31.) He further alleges that Shelly's unlawful contacts caused him "monetary and time damages" and "adverse and harmful effects" including mental distress, emotional distress, embarrassment, and humiliation. (Id. ¶¶ 23, 28.)

Plaintiff filed his complaint on August 5, 2011, naming the IRS and Shelly as defendants. Plaintiff identifies three claims for relief and seeks injunctive relief, declaratory relief, and damages. First, plaintiff alleges that defendants' denial of plaintiff's access to plaintiff's tax records violated the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, and the Privacy Act, 5 U.S.C. § 552a. (Compl. ¶ 26.) Second, plaintiff alleges that defendants' dissemination of plaintiff's private tax information to third parties without plaintiff's consent or authorization violated the Privacy Act. (Id. ¶¶ 27-28.) Finally, plaintiff alleges a claim pursuant to 42 U.S.C. § 1983, asserting that defendants violated his Fourth Amendment rights. (Id. ¶¶ 29-32.)

Meanwhile, on June 8, 2011, plaintiff filed a second lawsuit entitled Huene v. IRS, 2:11-cv-02109 JAM KJN PS (E.D. Cal.) ("Huene I"), in which plaintiff asserts a single claim for relief pursuant to FOIA. In Huene I, plaintiff seeks the release of records in the IRS's possession that are responsive to FOIA requests served by plaintiff.


Federal Rule of Civil Procedure 12(c) authorizes a party to move for judgment on the pleadings. "A judgment on the pleadings is properly granted when, taking all the allegations in the non-moving party's pleadings as true, the moving party is entitled to judgment as a matter of law." Ventress v. Japan Airlines, 603 F.3d 676, 681 (9th Cir. 2010) (citation and quotation marks omitted). When a party uses a motion for judgment on the pleadings to raise the defense of failure to state a claim, the motion "faces the same test as a motion under Rule 12(b)(6)." McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988); accord Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011) (stating that "that Rule 12(c) is 'functionally identical' to Rule 12(b)(6) and that 'the same standard of review' applies to motions brought under either rule") (citations omitted).

A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1109 (E.D. Cal. 2009). Under the "notice pleading" standard of the Federal Rules of Civil Procedure, a plaintiff's complaint must provide, in part, a "short and plain statement" of plaintiff's claims showing entitlement to relief. Fed. R. Civ. P. 8(a)(2); see also Paulsen v. CNF, Inc., 559 F.3d 1061, 1071 (9th Cir. 2009). "A complaint may survive a motion to dismiss if, taking all well-pleaded factual allegations as true, it contains 'enough facts to state a claim to relief that is plausible on its face.'" Coto Settlement v. Eisenberg, 593 F.3d 1031, 1034 (9th Cir. 2010) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)). "'A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Caviness v. Horizon Cmty. Learning Ctr., Inc., 590 F.3d 806, 812 (9th Cir. 2010) (quoting Iqbal, 129 S. Ct. at 1949). The court accepts all of the facts alleged in the complaint as true and construes them in the light most favorable to the plaintiff. Corrie v. Caterpillar, 503 F.3d 974, 977 (9th Cir. 2007). The court is "not, however, required to accept as true conclusory allegations that are contradicted by documents referred to in the complaint, and [the court does] not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations." Paulsen, 559 F.3d at 1071 (citations and quotation marks omitted).

The court must construe a pro se pleading liberally to determine if it states a claim and, prior to dismissal, tell a plaintiff of deficiencies in his complaint and give plaintiff an opportunity to cure them if it appears at all possible that the plaintiff can correct the defect. See Lopez v. Smith, 203 F.3d 1122, 1130-31 (9th Cir. 2000) (en banc); accord Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990) (stating that "pro se pleadings are liberally construed, particularly where civil rights claims are involved"); see also Hebbe v. Pliler, 627 F.3d 338, 342 & n.7 (9th Cir. 2010) (stating that courts continue to construe pro se filings liberally even when evaluating them under Iqbal.).

In ruling on a motion to dismiss pursuant to Rule 12(b)(6), the court "may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899 (9th Cir. 2007) (citation and quotation marks omitted); see also Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 980 n.18 (9th Cir. 1999) ("When considering a motion for judgment on the pleadings, [the] court may consider facts that are contained in materials of which the court may take judicial notice.") (citation and quotation marks omitted). Although the court may not consider a memorandum in opposition to a defendant's motion to dismiss to determine the propriety of a Rule 12(b)(6) motion, see Schneider v. Cal. Dep't of Corrections, 151 F.3d 1194, 1197 n.1 (9th Cir. 1998), it may consider allegations raised in opposition papers in deciding whether to grant leave to amend, see, e.g., Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003).


The IRS moves for judgment on the pleadings in regards to plaintiff's claims alleged pursuant to FOIA, the Privacy Act, and 42 U.S.C. § 1983, and plaintiff's request for damages, costs, and attorney's fees. The undersigned first addresses the IRS's challenge to plaintiff's Section 1983 claim, and then addresses the IRS's remaining arguments in turn.

A. Plaintiff's Civil Rights Claim

The IRS seeks judgment on the pleadings as to plaintiff's claim alleged pursuant to 42 U.S.C. § 1983 on the ground that the IRS is a federal agency, and not a state actor.*fn3 (IRS's Memo. of P. & A. In Supp. of Mot. for J. on the Pleadings ("IRS's Memo.") at 4, Dkt. No. 24.) In his opposition brief, plaintiff states that he "agrees that the Civil Rights action can and should be stricken." (Pl.'s Opp'n at 2.) In opposing another motion to dismiss filed in this case, plaintiff further stated: "This plaintiff agrees with defendant's position on the civil rights allegation and stipulates in opposition to the motion for judgment on the pleadings that this allegation can be dismissed. (See this plaintiff's Opposition Points and Authorities to that motion.)[.]" (Pl.'s Opp'n to Mot. to Dismiss Does I-X at 2, Dkt. No. 33.) In light of plaintiff's concession or stipulation that his civil rights claim should be dismissed or stricken, the undersigned recommends that the IRS be granted judgment on the pleadings as to plaintiff's claim alleged pursuant to 42 U.S.C. § 1983.

B. Plaintiff's FOIA Claim

The IRS seeks the dismissal of plaintiff's FOIA claim on the ground that plaintiff's FOIA claim in this case "is duplicative of the claims raised in the Plaintiff's FOIA suit, No. 2:11-cv-2109, which is pending before this Court." (IRS's Memo. at 3.) Plaintiff's opposition brief does not address the IRS's argument in this regard.

Before turning to the applicable legal standards, the undersigned notes that the IRS represents in its moving papers that it "has filed a motion for summary judgment on this date in the FOIA suit [i.e., Huene I], and this Count is more properly addressed in that case." (IRS's Memo. at 3.) No such motion for summary judgment appears on the court's docket in Huene I.

The Ninth Circuit Court of Appeals has stated that "[p]laintiffs generally have no right to maintain two separate actions involving the same subject matter at the same time in the same court and against the same defendant." Adams v. Cal. Dep't of Health Servs., 487 F.3d 684, 688 (9th Cir. 2007) (citation and quotation marks omitted), cert. denied 552 U.S. 1076 (2007); accord Kahre v. Damm, 342 Fed. Appx. 267, 268-69 (9th Cir. 2009) (affirming dismissal of later-filed case where that case contained claims that were almost entirely duplicative of claims asserted in an earlier-filed case). In order to determine whether a later-filed lawsuit is duplicative of an earlier lawsuit, the court applies the test for claim preclusion and, therefore, examines "whether the causes of action and relief sought, as well as the parties or privies to the action, are the same." Adams, 487 F.3d at 688-89.

Plaintiff's FOIA claim asserted in this case is identical to the claim raised in Huene I, and the defendants that are the subject of plaintiff's FOIA claims in each case overlap. In regards to the nature of plaintiff's FOIA claims, plaintiff alleges in this case that Shelly and the IRS violated FOIA by denying plaintiff access to his own tax records relative to the renewed tax audit. (See Compl. ¶ 26.) In Huene I, plaintiff alleges that the IRS failed to timely respond to plaintiff's FOIA request, which sought the release of plaintiff's tax records in connection with the same renewed tax audit. (See Huene I, Compl. ¶¶ 1, 7, 9.) Indeed, the complaint in Huene I is actually far more detailed than the complaint in this case, which further favors adjudicating the FOIA claim in Huene I instead of this case.*fn4 As to the identity of parties, plaintiff sued the IRS in both cases for the same alleged violation of FOIA. In this case, plaintiff also sued Shelly, but the undersigned has recommended that plaintiff's FOIA claim be dismissed with prejudice as to Shelly because plaintiff cannot maintain a FOIA claim against an individual defendant. (See Findings & Recommendations, Apr. 10, 2012, at 7-9, Dkt. No. 30.)*fn5 In light of the foregoing facts, which demonstrate the duplicative nature of plaintiff's FOIA claims in this case and Huene I, the undersigned recommends that plaintiff's FOIA claim alleged in this case be dismissed as to the IRS. Such dismissal should be with prejudice. See Adams, 487 F.3d at 692 (affirming dismissal of duplicative action with prejudice, noting that "[d]ismissal of the duplicative lawsuit, more so than the issuance of a stay or the enjoinment of proceedings, promotes judicial economy and the comprehensive disposition of litigation") (citation and quotation marks omitted).

C. Plaintiff's Privacy Act Claims

The IRS next contends that plaintiff's "Privacy Act Count" should be dismissed as to the IRS because "5 U.S.C. § 552a(d)(1) cannot apply to the [IRS]." (IRS's Memo. at 3.) The IRS's argument is under-developed as a factual, legal, and analytical matter, and is rather difficult to understand. However, the IRS appears to argue that although plaintiff alleges that the IRS "failed to secure written authorization to request information" "in violation of 5 U.S.C. § 552a(d)(1), plaintiff's citation to 5 U.S.C. § 552a(d)(1) does not relate to the alleged failure. (See IRS's Memo. at 3-4.) The IRS's argument too narrowly focuses on a fragment of an allegation in the complaint and fails to consider plaintiff's myriad factual allegations regarding how the IRS allegedly violated the Privacy Act. Whether intentionally or by inadvertence, the IRS's argument obscures what plaintiff actually alleged in his complaint. At bottom, plaintiff properly alleges two different claims premised on violations of the Privacy Act, and the undersigned recommends that the IRS's motion for judgment on the pleadings be denied insofar as plaintiff's Privacy Act claims are concerned.

At the outset, the undersigned corrects the IRS's implied suggestion that plaintiff has only alleged one "Privacy Act Count." (See IRS's Memo. at 3, 4.) Plaintiff actually alleges two different claims premised on violations of the Privacy Act. In his first claim for relief, which includes the phrase "DENIAL OF ACCESS TO RECORDS" in the title, plaintiff alleges that he requested but was denied access to "all information maintained about Plaintiff" pursuant to the Privacy Act. (Compl. ¶ 26.) In regards to plaintiff's claim that he was denied access to his own tax records in violation of the Privacy Act, 5 U.S.C. § 552a(d)(1):

(d) Access to records.--Each agency that maintains a system of records shall--

(1) upon request by any individual to gain access to his record or to any information pertaining to him which is contained in the system, permit him and upon his request, a person of his own choosing to accompany him, to review the record and have a copy made of all or any portion thereof in a form comprehensible to him, except that the agency may require the individual to furnish a written statement authorizing discussion of that individual's record in the accompanying person's presence.

5 U.S.C. § 552a(d)(1). The IRS has offered no legal authority or other persuasive basis for its argument that "5 U.S.C. § 552a(d)(1) cannot apply to the [IRS]." (IRS's Memo. at 3 (emphasis added).)

In his second claim for relief, which includes the phrase "IMPROPER DISSEMINATION" in the title, plaintiff alleges that the IRS disseminated plaintiff's personal tax information to plaintiff's former accountant, Holland, without plaintiff's consent or authorization, in violation of the Privacy Act. (Compl. ¶¶ 27-28.) As to plaintiff's wrongful disclosure claim, the Privacy Act provides that, subject to several exceptions not raised by the IRS, "[n]o agency shall disclose any record which is contained in a system of records by any means of communication to any person, or to another agency, except pursuant to a written request by, or with the prior written consent of, the individual to whom the record pertains."

5 U.S.C. § 552a(b). As with plaintiff's "denial of access" claim, the IRS cites no legal authority suggesting that the prohibitions against wrongful disclosure provided in 5 U.S.C. § 552a(b) "cannot" apply to the IRS.

The IRS's argument in support of dismissal of plaintiff's Privacy Act claims appears to be that plaintiff cited the wrong statute in regards to his "denial of access" claim. But plaintiff readily appears to have cited the correct provision of the Privacy Act in regards to his access claim, as 5 U.S.C. § 552(d)(1) precisely addresses the denial of access to records by an agency. In any event, the IRS has cited no authority for the proposition that plaintiff was required to cite a specific statute in his complaint in the first place. Indeed, as a general matter, a plaintiff need not include citations to specific statutes in his or her complaint in order to state a claim on which relief can be granted. See, e.g., Alvarez v. Hill, 518 F.3d 1152, 1157 (9th Cir. 2008) ("Notice pleading requires the plaintiff to set forth in his complaint claims for relief, not causes of action, statutes or legal theories. . . . A complaint need not identify the statutory or constitutional source of the claim raised in order to survive a motion to dismiss.") (citations omitted). Accordingly, the undersigned recommends that the IRS's motion for judgment on the pleadings be denied insofar as it challenges plaintiff's Privacy Act claims.

D. Plaintiff's Request for Damages, Costs, and Attorney's Fees Finally, the IRS makes several arguments in support of the dismissal of plaintiff's requests for damages, costs, and attorney's fees. (IRS's Memo. at 4-5.) The undersigned addresses each argument in turn. The undersigned notes that the IRS's separate challenge to plaintiff's requests for relief are largely premature or redundant because they rise or fall with plaintiff's substantive claims.

First the IRS argues that although plaintiff seeks damages pursuant to the Privacy Act, plaintiff is not entitled to damages under the Privacy Act because the IRS "did not violate the Privacy Act." (IRS's Memo. at 4.) As discussed above, and assuming the district judge assigned to this case adopts the undersigned's recommendations, plaintiff will be permitted to pursue two Privacy Act claims in this case and, therefore, attempt to prove that the IRS violated the Privacy Act. Accordingly, the IRS's argument is presumptuous and premature.

Second, the IRS argues that plaintiff is not entitled to costs or attorney's fees under FOIA because plaintiff's FOIA claim is duplicative of the claim asserted in Huene I. (IRS's Memo. at 4-5.) Because the undersigned recommends the dismissal of plaintiff's FOIA claim in this case, it follows that plaintiff cannot seek costs or attorney's fees under FOIA in this case.

Third, the IRS argues that plaintiff is not entitled to costs or attorney's fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412 because plaintiff is not a prevailing party in this case. (IRS's Memo. at 5.) Again, whether plaintiff is a prevailing party in this case remains to be determined and, accordingly, the IRS's argument is not well-taken. Indeed, given the lack of authority and substance supporting the IRS's arguments challenging plaintiff's Privacy Act claims, plaintiff may ultimately be entitled to EAJA fees. See 28 U.S.C. § 2412(d)(1)(A).

Fourth, the IRS argues that plaintiff is not entitled to costs or attorney's fees in regards to plaintiff's Section 1983 claim. (IRS's Memo. at 5.) Because plaintiff agreed to the dismissal of this claim, the IRS's argument is moot.


For the foregoing reasons, IT IS HEREBY ORDERED that the Internal Revenue Service's motion for judgment on the pleadings is submitted without a hearing, and the May 17, 2012 hearing on plaintiff's motion is VACATED.


1. Defendant Internal Revenue Service's motion for judgment on the pleadings (Dkt. No. 23) be granted in part and denied in part.

2. Plaintiff's claims brought pursuant to 42 U.S.C. § 1983 and the Freedom of Information Act, and plaintiff's related requests for attorney's fees and costs under those statutes, be dismissed with prejudice.

3. The motion for judgment on the pleadings be denied in all other respects. These findings and recommendations are submitted to the United States District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within fourteen days after being served with these findings and recommendations, any party may file written objections with the court and serve a copy on all parties. Id.; see also E. Dist. Local Rule 304(b). Such a document should be captioned "Objections to Magistrate Judge's Findings and Recommendations." Any response to the objections shall be filed with the court and served on all parties within fourteen days after service of the objections. E. Dist. Local Rule 304(d). Failure to file objections within the specified time may waive the right to appeal the District Court's order. Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 (9th Cir. 1991).


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