Stonehill v. United States Department of Justice Criminal Division
Civil Action No. 2022-0311
D.D.C.Jul 21, 2023Background
- In 1962 Philippine police seized over a million documents from Harry Stonehill’s businesses; many were transferred to the U.S. and used in civil tax proceedings against him. Stonehill’s 1967 motion to suppress was denied and a final civil tax judgment was entered in 1976.
- In 2000–2002 litigation, DOJ Tax Division submitted documents that had come from DOJ Criminal Division holdings labeled NARA Accession No. 60-90-467 ("Box 1"). Stonehill sought Box 1 by FOIA in February 2001 and sued in January 2002.
- In February–March 2002, Criminal Division records consultant Leslie Rowe told Stonehill the Criminal Division could not find Box 1 and suggested it may have been lost during a 2000 move. Relying in part on those representations, Stonehill agreed to a stipulated dismissal with prejudice in April 2002 that barred reopening the FOIA request.
- In 2018 Pauline Stonehill (executrix) submitted a new FOIA request seeking documents barred by the 2002 settlement; after waiting over three years, she sued in February 2022 and moved to amend her complaint in May 2023 to add the previously barred records.
- A 2023 NARA response showed Box 1 exists and had moved between Criminal Division and NARA multiple times and revealed Rowe had withdrawn twelve containers from NARA in October 1999—facts that suggest possible misrepresentations to the 2002 court and form the basis for alleged fraud.
- The Criminal Division opposes amendment as futile on res judicata and statute-of-limitations grounds; the Court granted leave to amend, reserving judgment on those defenses because of the fraud allegations and equitable tolling issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2002 stipulated dismissal precludes amendment under res judicata | Fraud on the court (Criminal Division misled re: Box 1) vitiates the 2002 judgment and permits amendment | The stipulated dismissal with prejudice is a final adjudication that bars relitigation of the same FOIA claims | Court refused to treat res judicata as dispositive at this stage; reserved judgment and allowed amendment given evidence of possible fraud |
| Whether the proposed amendment is time-barred by 28 U.S.C. § 2401(a) (six-year limit) | Fraudulent concealment and equitable tolling prevented discovery, so the limitations period should be tolled | Claims are barred by the six-year statute of limitations | Court declined to resolve the statute-of-limitations defense now, finding the fraud/tolling question requires further briefing and may permit tolling |
| Whether Plaintiff may bring a Rule 60(b) motion in this case to vacate the 2002 judgment | Plaintiff intends to seek Rule 60(b) relief from the 2002 judgment | Relief from the 2002 judgment must be sought in the original case in which that judgment was entered | Court instructed that any Rule 60(b) must be filed in the prior litigation, not in this FOIA case |
Key Cases Cited
- United States v. Estate of Stonehill, 660 F.3d 415 (9th Cir. 2011) (background on Stonehill’s long-running litigation and Rule 60 proceedings)
- Foman v. Davis, 371 U.S. 178 (1962) (Rule 15 leave-to-amend factors and principle that leave should be freely given)
- Firestone v. Firestone, 76 F.3d 1205 (D.C. Cir. 1996) (district court abuse-of-discretion standard for denying leave to amend)
- In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213 (D.C. Cir. 2010) (futility as a basis to deny leave to amend where amended complaint could not survive a motion to dismiss)
- Smalls v. United States, 471 F.3d 186 (D.C. Cir. 2006) (elements of claim preclusion/res judicata)
- Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313 (1971) (res judicata doctrine overview)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (federal courts’ inherent power to vacate judgments procured by fraud upon the court)
- Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944) (fraud on the court as extraordinary circumstance justifying relief)
- Smith-Haynie v. District of Columbia, 155 F.3d 575 (D.C. Cir. 1998) (equitable tolling standard: inability to obtain vital information despite due diligence)
- Amobi v. D.C. Dept. of Corr., 755 F.3d 980 (D.C. Cir. 2014) (fraudulent concealment requires that fraud actually prevented plaintiff from discovering material facts)