Minda v. United States
2017 U.S. App. LEXIS 5194
| 2d Cir. | 2017Background
- In 2009 the IRS prepared an 11‑page examination report proposing changes to Minda and Frost’s 2007 tax return; the report contained names, SSNs, and multiple items of financial "return information."
- In October 2010 the IRS mistakenly mailed nine pages of that report to an unrelated third party (Robert M.), who alerted the IRS and the taxpayers; Minda and Frost learned of the disclosure when they received the third party’s attorney’s letter.
- The Treasury IG investigated and concluded the report was likely commingled with another taxpayer’s report, printed by different units on different printers; the specific IRS employee responsible could not be identified.
- The government conceded liability under 26 U.S.C. § 6103/§ 7431 and agreed each taxpayer was entitled to $1,000 in statutory damages; Minda and Frost sought additional statutory damages (one $1,000 award per item disclosed) and punitive damages.
- The district court granted summary judgment for the United States, awarding $1,000 to each taxpayer and denying punitive damages; Minda appealed as to additional statutory awards and punitive damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of § 7431(c)(1)(A) statutory damages — whether damages are $1,000 per item of return information or $1,000 per disclosure act | Minda: each discrete item in the report is a separate disclosure, so statutory damages apply per item | Government: statute provides $1,000 for each act of unauthorized disclosure; one mailing is one act regardless of number of items | Court: $1,000 per act of disclosure (the single erroneous mailing), not per item disclosed |
| Availability of punitive damages under § 7431(c)(1)(B)(ii) — whether gross negligence or willfulness exists | Minda: IRS conduct showed a disregard for confidentiality amounting to gross negligence | Government: the disclosure resulted from ordinary negligence, not gross negligence or willfulness | Court: no reasonable jury could find gross negligence or willfulness on this record; punitive damages denied |
Key Cases Cited
- Smith v. United States, 507 U.S. 197 (use of ordinary meaning for undefined statutory term)
- Taniguchi v. Kan Pac. Saipan, Ltd., 566 U.S. 560 (same rule on undefined statutory terms)
- Dean v. United States, 556 U.S. 568 (courts should not read words into an unambiguous statute)
- Bates v. United States, 522 U.S. 23 (interpretation principles against reading extra terms into statutes)
- Rorex v. Traynor, 771 F.2d 383 (8th Cir. 1985) (single communication with multiple items yields one § 7431 award)
- Siddiqui v. United States, 359 F.3d 1200 (9th Cir. 2004) (focus on act of disclosure rather than number of recipients)
- AMW Materials Testing, Inc. v. Town of Babylon, 584 F.3d 436 (2d Cir. 2009) (definition and standards for gross negligence/reckless disregard)
- Curley v. AMR Corp., 153 F.3d 5 (2d Cir. 1998) (gross negligence requires aggravated conduct beyond ordinary care)
- Barrett v. United States, 100 F.3d 35 (5th Cir. 1996) (discussing standard for gross negligence and punitive damages under § 7431)