376 F. Supp. 3d 1290
S.D. Fla.2019Background
- The United States sued Michael Meyer under 26 U.S.C. §§ 7402, 7407, and 7408 seeking injunctive relief and disgorgement for an alleged decades-long abusive charitable contribution tax scheme causing at least $35 million in harm.
- Meyer answered, asserted four affirmative defenses (including laches, estoppel, statute of limitations), and demanded a jury trial for claims and defenses.
- The Government moved to strike Meyer's jury demand and to strike the challenged affirmative defenses (ECF Nos. 33, 34).
- Magistrate Judge Alicia O. Valle recommended granting both motions: concluding disgorgement under § 7402 is equitable (no jury right) and that Meyer's laches and statute-of-limitations defenses fail as a matter of law; estoppel was insufficiently pled and struck without prejudice.
- No objections were filed to the Report and Recommendation; District Judge Beth Bloom adopted it and entered an order striking the jury demand and striking the affirmative defenses as recommended.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the disgorgement claim requires a jury trial | Disgorgement under § 7402 is equitable, so no jury right | Disgorgement is akin to a legal penalty (citing Kokesh) and thus demands a jury | Court: Disgorgement under § 7402 is equitable; jury demand stricken |
| Whether Kokesh requires treating § 7402 disgorgement as a penalty | Kokesh concerns SEC disgorgement and § 2462; it is inapplicable here | Kokesh casts doubt on disgorgement and supports jury/limitations arguments | Court: Kokesh is inapposite to § 7402 disgorgement; it does not control |
| Whether laches is a viable defense against the United States | Not applicable/unspecified by Plaintiff (Government argues laches unavailable) | Laches should preclude relief due to delay | Court: Laches unavailable against the U.S. in this enforcement action; defense stricken with prejudice |
| Whether estoppel and statute-of-limitations defenses bar disgorgement | Estoppel and limitations fail because disgorgement under § 7402 is equitable and governmental enforcement suits lack a general limitations bar | Estoppel based on alleged IRS resolutions; limitations based on § 2462 (Kokesh) | Court: Estoppel insufficiently pled (stricken without prejudice); statute-of-limitations defense fails as a matter of law (stricken with prejudice) |
Key Cases Cited
- Weinberger v. Romero-Barcelo, 456 U.S. 305 (Equitable injunctions are not triable by jury)
- United States v. Stinson, [citation="729 F. App'x 891"] (11th Cir. 2018) (disgorgement is an equitable remedy to prevent unjust enrichment)
- S.E.C. v. Levin, 849 F.3d 995 (11th Cir. 2017) (disgorgement characterized as equitable relief)
- Williams v. McNeil, 557 F.3d 1287 (11th Cir. 2009) (standards for district court review of magistrate judge recommendations)
- United States v. Summerlin, 310 U.S. 414 (United States not generally subject to laches in enforcement actions)