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Ireland v. Internal Revenue Service

United States District Court, C.D. California

May 1, 2017

I MIKE IRELAND
v.
INTERNAL REVENUE SERVICE

          Present: Honorable CHRISTINA A. SNYDER

          CIVIL MINUTES - GENERAL

         Proceedings: DEFENDANT INTERNAL REVENUE SERVICE'S MOTION FOR SUMMARY JUDGMENT (Dkt. 24, filed January 30, 2017)

         I. INTRODUCTION

         On April 26, 2016, plaintiff Mike L. Ireland filed this action under the Freedom of Information Act ("FOIA") seeking to compel the Internal Revenue Service ("IRS") to release records and information requested by plaintiff under FOIA. Dkt. 1 ("Compl.").

         Plaintiff seeks records relating to the IRS's determination that plaintiff was a "responsible person" in connection with trust fund recovery penalties assessed against him pursuant to 26 U.S.C. § 6672. Specially, plaintiff requested the following records and information: (1) "IRS internal manuals or procedures relating to responsible person determinations in connection with the trust fund recovery penalty"; (2) "any documents relating to the IRS finding that Mike Ireland is a responsible person in connection with the trust fund recovery penalty for the 6/30/08, 9/30/08, and 3/31/09 tax periods"; (3) "all correspondence, communications, and interviews (including 4180 interviews) conducted in connection with the IRS finding that Mike Ireland is a responsible person in connection with the trust fund recovery penalty for the 6/30/08, 9/30/08, and 3/31/09 tax periods"; and (4) "any documents relating to Micro Capital Limited Partnership and any IRS inquiries relating to responsible persons associated with Micro Capital Limited Partnership in connection with the trust fund recovery penalty." Compl. Ex. 1.

         On January 30, 2017, the IRS filed the instant motion for summary judgment with respect to Items 1, 2, and 3 of plaintiff s FOIA request.[1] Dkt. 24 ("MSJ"). On March 1, 2017, plaintiff filed his opposition to the IRS's motion. Dkt. 28 ("Opp'n"). The IRS filed its reply on March 15, 2017. Dkt. 31 ("Reply"). On April 21, 2017, the IRS manually filed a declaration and a brief for the Court's in camera review. See dkt. 34.

         Having carefully considered the parties' arguments, the Court finds and concludes as follows.

         II. BACKGROUND

         The following facts are not in dispute.

         Plaintiffs counsel sent a FOIA request to the IRS on September 29, 2015 and submitted a valid Form 2848 (power of attorney form) on October 6, 2015. Dkt. 28, Plaintiffs Statement of Genuine Issues ("SGI") at nos. 4-7; dkt. 24-4, Declaration of David S. Nimmo ("Nimmo Decl.") ¶¶ 6-8.

         Plaintiffs FOIA request was assigned to Disclosure Specialist Marian O. Hale, who began her search for responsive records on October 16, 2015. SGI at nos. 5, 8; Nimmo Decl. ¶¶ 9. Hale searched the Integrated Data Retrieval System ("IDRS")-the IRS's computerized database linked to each taxpayer's master file-using plaintiffs Taxpayer Identification Number along with a series of command codes. SGI at nos. 8-9; Nimmo Decl. ¶¶ 9-10. Hale also searched the IRS's Integrated Collection System ("ICS")-where history notes and actions taken by the Collection Field Function are stored. SGI at no. 10; Nimmo Decl. ¶ 10. Hale received 68 pages of potentially responsive records through her IDRS search. SGI at no. 10; Nimmo Decl. ¶ 10.

         On October 22, 2016, Hale reviewed plaintiffs ICS history and identified Margaret Tobin, a Tax Examining Technician with the IRS's Small Business/Self Employed Division, as the point of contact for the geographic area where the physical trust fund recovery penalty file pertaining to plaintiff was located. SGI at no. 11; Nimmo Decl. ¶11. Hale requested plaintiff's trust fund recovery penalty file from Tobin. SGI at no. 13; Nimmo Decl. ¶11. After following up with Tobin and her colleague Vicky Karas, Hale received the plaintiff's physical trust fund recovery penalty file on November 17, 2015. SGI at nos. at 14-21; Nimmo Decl. ¶¶ 12-16. Hale removed from this file 60 pages pertaining to another taxpayer because plaintiff was not entitled to that information. SGI at no. at 22; Nimmo Decl. ¶ 16. Hale's notes do not indicate she attempted to obtain from plaintiff or his counsel proof of authorization to obtain records pertaining to Micro Capital Limited Partnership. SGI at no. at 23; Nimmo Decl. ¶ 16. Hale began reviewing plaintiffs records on December 8, 2015 and continued to do so through January 2016. SGI at nos. at 24-27; Nimmo Decl. ¶¶ 17-18.

         By letter dated January 20, 2016, David S. Nimmo-Disclosure Manager in the Disclosure Field West Area of the Disclosure Office for the IRS-responded to plaintiffs FOIA request. SGI at no. at 28; Nimmo Decl. ¶ 19. Nimmo stated that 215 pages of records were located in response to plaintiff's request, 198 of which were being released. Of the responsive records, 87 pages were partially withheld and 17 pages were withheld in full. SGI at no. at 32; Nimmo Decl. ¶ 20.

         Nimmo's letter did not address Item 4 of plaintiff's FOIA request, which sought "any documents relating to Micro Capital Limited Partnership and any IRS inquiries relating to responsible persons associated with Micro Capital Limited Partnership in connection with the trust fund recovery penalty." SGI at no. at 29; Nimmo Decl. ¶ 21.

         Hale did not perform a search for documents listed in Item 1 of plaintiff s request because the IRS's policies and procedures are set forth in the Internal Revenue Manual, which the IRS has made publicly available in its electronic reading room. SGI at nos. at 30-31; Nimmo Decl. ¶22.

         III. LEGAL STANDARDS

         FOIA establishes "a judicially enforceable right to secure [government] information from possibly unwilling official hands." Dep't of Air Force v. Rose, 425 U.S. 352, 361 (1976) (citing S. Rep. No. 813, 89th Cong. (1st Sess. 1965)); see also Lahr v. Nat'l Transp. Safety Bd., 569 F.3d 964, 973 (9th Cir. 2009). The aim of these disclosure requirements is to "ensure an informed citizenry, vital to the functioning of a democratic society, needed to check against corruption and to hold the governors accountable to the governed." NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242 (1978).

         At the same time, FOIA contemplates that some information can legitimately be kept from the public through the invocation of nine "exemptions" to disclosure. See 5 U.S.C. § 552(b)(1)-(9); Torres Consulting & Law Grp., LLC v. NASA, 666 F.App'x 643, 644 (9th Cir. 2016); ("Section (a) of FOIA generally obligates the government to disclose information to the public; section (b) contains nine exemptions to this general disclosure obligation."). An agency may withhold only information to which the asserted exemption applies and must provide all "reasonably segregable" portions of that record to the requester. IcL § 552(b). "These limited exemptions do not obscure the basic policy that disclosure, not secrecy, is the dominant objective of the Act." Dep't of Interior v. Klamath Water Users Protective Ass'n, 532 U.S. 1, 7-8 (2001) (quotation marks omitted). "Consistently with this purpose, as well as the plain language of the Act, the strong presumption in favor of disclosure places the burden on the agency to justify the withholding of any requested documents." Dep't of State v. Ray, 502 U.S. 164, 173 (1991); Lewis v. IRS, 823 F.2d 375, 378 (9th Cir. 1987) (agency seeking to withhold information has burden of proving the information falls under the claimed exemption).

         "Most FOIA cases are resolved by the district court on summary judgment, with the district court entering judgment as a matter of law." Animal Legal Def. Fund v. FDA (ALDF), 836 F.3d 987, 989 (9th Cir. 2016) (en banc).

         Historically, in the Ninth Circuit, "[u]nlike the typical summary judgment analysis, " "in a FOIA case, [courts did] not ask whether there [was] a genuine issue of material fact, because the facts are rarely in dispute." Minier v. CIA, 88 F.3d 796, 800 (9th Cir. 1996). However, it has now been made clear in this circuit that usual summary judgment standards apply and that "if there are genuine issues of material fact in a FOIA case, the district court should proceed to a bench trial or adversary hearing." Animal Legal Def. Fund, 836 F.3d at 990; see also Cameranesi v. Dep't of Def, 839 F.3d 751, 762 (9th Cir. ...


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