JUDICIAL WATCH, INCORPORATED, Plaintiff-Appellant, v. Charles ROSSOTTI; United States of America; Donna Dorsey; M. Peter Breslan; Wayne Hampel; Steven T. Miller; Department of the Treasury; Internal Revenue Service, Defendants-Appellees. Judicial Watch, Incorporated, Plaintiff-Appellant, v. Charles Rossotti; United States of America; Donna Dorsey; M. Peter Breslan; Wayne Hampel; Steven T. Miller; Department of the Treasury; Internal Revenue Service, Defendants-Appellees.
Nos. 02-1413, 02-1462
United States Court of Appeals, Fourth Circuit
Argued Dec. 3, 2002. Decided Jan. 24, 2003.
317 F.3d 401
Before NIEMEYER, LUTTIG, and MOTZ, Circuit Judges.
Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge NIEMEYER and Judge LUTTIG joined.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge.
In this interlocutory appeal, Judicial Watch, Incorporated, challenges the district court‘s dismissal of its claims for injunctive relief and money damages against the Internal Revenue Service (IRS) and certain IRS employees. Judicial Watch contends that the IRS initiated a retaliatory tax audit, intended to punish the organization for its political speech. Because the Anti-Injunction Act bars the requested injunctive relief and the law provides no damages remedy for the wrongs alleged here, we affirm.
I.
Founded in 1994, Judicial Watch describes itself as a “non-partisan legal ‘watchdog’ organization that relies on the Freedom of Information Act (“FOIA”), the civil discovery process, and court litigation, among other tools, to protect the American people from, and educate them about, corruption in government and abuses of power, and to enforce the principle that ‘no one is above the law.‘”
Since 1995, Judicial Watch has operated as a tax-exempt,
During the late 1990s, Judicial Watch filed a number of lawsuits against President and Mrs. Clinton. On September 28, 1998, in the midst of the impeachment proceedings against President Clinton, Judicial Watch submitted a report entitled
Several days later, Judicial Watch received a letter from the IRS, signed by Agent Donna Dorsey, stating that it had been selected for an audit. The letter was accompanied by an IRS Form 4564 Information Document Request, which requested information pertaining to the political affiliations of Judicial Watch directors. After receiving the audit letter, Judicial Watch resisted IRS efforts to proceed with the audit by filing FOIA requests, meeting with IRS officials, refusing IRS document requests, and asserting throughout that the audit constituted politically motivated retaliation.
In July 1999, the IRS informed Judicial Watch that the Service was withdrawing the audit pending an investigation by the Treasury Inspector General for Tax Administration, the independent internal monitor of IRS activities. The IRS contends, and Judicial Watch does not dispute, that the Inspector General then conducted two investigations into the asserted illegitimacy of the audit and found no evidence of impropriety by the IRS or any of the IRS employees involved in the decision to audit Judicial Watch.
Nevertheless, in September 2001, Judicial Watch filed this action in the United States District Court for the District of Maryland against former IRS Commissioner Rossotti, four individual IRS agents (Donna Dorsey, Peter Breslan, Wayne Hampel, and Steven T. Miller), and the United States. In January 2002, Judicial Watch filed an amended complaint, withdrawing its claims against the United States, but adding the Department of the Treasury and the Internal Revenue Service as defendants.
The amended complaint alleges that the audit is “retaliatory, politically-motivated, and unconstitutional,” violating Judicial Watch‘s First Amendment free speech rights, Fifth Amendment due process rights, and Fifth Amendment right to be free of selective prosecution. The amended complaint seeks an injunction against all defendants from proceeding with the audit and compensatory and punitive damages against ex-Commissioner Rossotti and the individual agents. It also includes claims for relief in connection with Judicial Watch‘s FOIA requests.
In support of its constitutional claims, Judicial Watch alleges that the timing of the audit letter (four days after the Interim Report was made an official part of Congress‘s impeachment proceedings), the timing of several subsequent IRS document requests pursuant to the audit, and the fact that it received final notice of its exempt status at roughly the same time that it received the audit letter, create a strong inference of retaliatory motive. Similarly, Judicial Watch cites the “extraordinary demand” contained in the IRS Form 4564 Information Document Request that Judicial Watch provide information on the political affiliations of its directors and the alleged refusal of the IRS to respond to Judicial Watch‘s various FOIA requests as evidence of bad faith and improper motive.
Finally, Judicial Watch refers to comments by various IRS agents that, in its
On January 18, 2002, more than three years after sending the initial audit letter, the IRS served Judicial Watch with an administrative summons pursuant to the audit demanding production of documents within eight business days. Judicial Watch refused to comply with the summons, but instead filed another action in the district court seeking to stay or enjoin any attempt to enforce the summons. The court subsequently consolidated the new action with the original action.
After full briefing, the district court denied Judicial Watch‘s motion to stay or enjoin the administrative summons and granted the defendants’ motion to dismiss all claims. Because the court did not resolve the FOIA claims, Judicial Watch moved for certification of the case for immediate appeal. The district court entered the requested certification order and we, in turn, granted Judicial Watch‘s petition for interlocutory review. See
II.
The district court denied Judicial Watch‘s request for injunctive relief on the ground that the Anti-Injunction Act (sometimes herein, “the Act“),
The Anti-Injunction Act provides in relevant part that:
no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.
As the Supreme Court has emphasized, the language of the Act “could scarcely be more explicit,” reflecting its overarching objective of protecting “the Government‘s need to assess and collect taxes as expeditiously as possible with a minimum of pre-enforcement judicial interference.” Bob Jones University v. Simon, 416 U.S. 725, 736, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974); see also Sigmon Coal Co. v. Apfel, 226 F.3d 291, 299 (4th Cir.2000) (“The Act has two primary objectives:‘efficient and expeditious collection of taxes with a minimum of preenforcement judicial interference, and protection of the collector from litigation pending a refund
Judicial Watch maintains that the Act does not apply to its motion to enjoin the audit (and stay or enjoin enforcement of the administrative summons issued pursuant to the audit) because an audit conducted for unlawful purposes does not constitute “assessment or collection” of a tax. Alternatively, it argues that even if the Act does apply to its request for injunctive relief, the present action falls within the judicially crafted exceptions to the Act. Both arguments fail.
A.
First, it is clear that the Anti-Injunction Act extends beyond the mere assessment and collection of taxes to embrace other activities, such as an audit to determine tax liability, that may culminate in the assessment or collection of taxes.
In Bob Jones, for example, the Supreme Court refused to enjoin the IRS from revoking the plaintiff‘s
Judicial Watch attempts to distinguish these cases on the ground that in them the IRS acted on the basis of good faith tax enforcement purposes, while the audit at issue here was, according to Judicial Watch, a product of bad faith non-tax related motives. Judicial Watch further maintains that because these bad faith motives assertedly drove the decision to initiate the audit, enjoining the audit (and any judicial enforcement of the administrative summons) would not constitute an interference with the assessment or collection of taxes.
The initial difficulty with this argument is that, although the amended complaint contains general allegations of retaliatory conduct by IRS agents based on the factual chronology outlined above, the complaint does not allege that the individual IRS agents even knew that Judicial Watch had filed various lawsuits, much less its Interim Report, explicitly targeting the Clinton administration. Nor does Judicial Watch dispute that the Inspector General conducted two investigations and twice exonerated the individual IRS employees involved in the audit decision.
More importantly, Judicial Watch misunderstands the impact of allegations that the IRS acted with bad faith, non-tax related motives. Such allegations do not render the Anti-Injunction Act inapplicable. In Bob Jones itself, the taxpayer contended, when seeking to enjoin the IRS, that “the Service‘s threatened action was outside its lawful authority and would violate petitioner‘s rights to the free exercise of religion, to free association, and to due process and equal protection of the laws.” Bob Jones, 416 U.S. at 736, 94 S.Ct. 2038. The Supreme Court recognized this “attribution of non-tax-related motives to the Service,” but concluded that the attribution “ignore[d] the fact that the [taxpayer] ha[d] not shown that the Service‘s action was without an independent basis in the requirements of the Code.” Id. at 740, 94 S.Ct. 2038 (emphasis added).
Accordingly, unless Judicial Watch qualifies for one of two exceptions to the Anti-Injunction Act, the district court properly concluded that the Act stripped it of jurisdiction necessary to issue the requested injunctive relief.
B.
The Supreme Court established the first exception to the Act in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962), “the capstone to judicial construction of the Act.” Bob Jones, 416 U.S. at 742, 94 S.Ct. 2038. In Williams Packing, the taxpayer requested an injunction to prevent the IRS from collecting past due social security and unemployment taxes. Although the Supreme Court reversed a lower court‘s grant of injunctive relief, the Court held that such actions could proceed, despite the Anti-Injunction Act, if, but only if, the plaintiff could show that (1) “under no circumstances could the Government ultimately prevail,” and (2) “equity jurisdiction otherwise exists.” Williams Packing, 370 U.S. at 7, 82 S.Ct. 1125. Moreover, the Court directed that in analyzing the initial factor, a court must determine, “on the basis of the information available to [the Government] at the time of the suit,” whether, “under the most liberal view of the law and the facts, the United States cannot establish its claim.” Id.; see also Estate of Michael, 173 F.3d at 506.
Judicial Watch simply cannot establish that “under no circumstances could the Government ultimately prevail.” Williams Packing, 370 U.S. at 7, 82 S.Ct. 1125.
Nor can Judicial Watch find refuge in the other exception to the Anti-Injunction Act, that created in South Carolina v. Regan, 465 U.S. 367, 375, 104 S.Ct. 1107, 79 L.Ed.2d 372 (1984). There, South Carolina sought an injunction against a tax on the ground that a provision of the Code regarding state-issued bonds violated the Constitution. The Supreme Court held that if the Anti-Injunction Act applied,
Of course, the basis of the Regan exception is not whether a plaintiff has access to a legal remedy for the precise harm that it has allegedly suffered, but whether the plaintiff has any access at all to judicial review. As the Regan Court explained, “the indicia of congressional intent—the [Anti-Injunction] Act‘s purposes and the circumstances of its enactment—demonstrate that Congress did not intend the Act to apply where an aggrieved party would be required to depend on the mere possibility of persuading a third party to assert his claims.” Id. at 381, 104 S.Ct. 1107. The Act does apply, however, whenever Congress has provided “an alternative avenue for an aggrieved party to litigate its claims on its own behalf.” Id.
This case differs markedly from Regan. Judicial Watch does not challenge the validity of any provision of the Code, but only seeks to avoid an audit to determine its tax liability. Judicial Watch need not depend on third parties to pursue this claim, a fact reflected in its efforts to resist the audit in the summons enforcement proceedings in the District of Columbia. See supra n.1. Moreover, the Code also provides that organizations whose exempt status under
In sum, the claims for injunctive relief asserted by Judicial Watch do not fall within the narrow exceptions carved out in Williams Packing or Regan. Strong policy reasons support this result. Extending the recognized exceptions to the Anti-Injunction Act to include requests for injunctive relief like that of Judicial Watch would threaten a flood of lawsuits brought against the IRS by those seeking to enjoin an audit they believed to be wrongful, creating precisely the kind of judicial interference with the assessment and collection of taxes that the Act was designed to prevent.
III.
Judicial Watch also contends that the district court erred in dismissing its Bivens action for money damages against the individual defendants. See Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388, 396-97, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971).4
In the more than thirty years since Bivens, the Court has been very hesitant to imply other private actions for money damages. Indeed, the Court has only recognized two other such actions—one under the Due Process Clause of the Fifth Amendment, Davis v. Passman, 442 U.S. 228, 245-49, 99 S.Ct. 2264, 60 L.Ed.2d 846 (1979) (finding Bivens remedy for alleged violation of due process rights because of gender discrimination by United States Congressman in terminating petitioner‘s employment), and one under the Cruel and Unusual Punishment Clause of the Eighth Amendment, Carlson v. Green, 446 U.S. 14, 18-23, 100 S.Ct. 1468, 64 L.Ed.2d 15 (1980) (finding Bivens remedy for federal prisoner who was allegedly deprived of potentially life-saving treatment in violation of his Eighth Amendment rights). Instead, the Court has directed its attention to cabining the Bivens doctrine. See Correctional Services Corp. v. Malesko, 534 U.S. 61, 122 S.Ct. 515, 520, 151 L.Ed.2d 456 (2001) (“Since Carlson we have consistently refused to extend Bivens liability to any new context or new category of defendants.“).
The Court‘s refusal to extend Bivens has been especially apparent in cases involving complex statutory schemes in which Congress has considered and created meaningful avenues for redress. Thus, in Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983), the Court refused to find an implied Bivens remedy for federal employees alleging that their supervisors violated their First Amendment rights. Because these claims arose out of a “relationship ... governed by comprehensive procedural and substantive provisions giving meaningful remedies against the United States,” the Court concluded that “it would be inappropriate ... to supplement that regulatory scheme with a new judicial remedy.” Id. at 368, 103 S.Ct. 2404.
Similarly, in Schweiker v. Chilicky, 487 U.S. 412, 108 S.Ct. 2460, 101 L.Ed.2d 370 (1988), the Court declined to find a new Bivens remedy for claimants whose Social Security disability benefits had been improperly terminated. Given the “elaborate remedial scheme devised by Congress” to deal with the improper denial or termination of disability benefits, the Court saw no reason to tread on congressional prerogatives by creating a new judicial remedy for the particular harm suffered by the claimants. Id. at 414, 91 S.Ct. 1999. In reviewing the development of Bivens jurisprudence, the Court concluded:
the concept of “special factors counseling hesitation in the absence of affirmative action by Congress” has proved to include an appropriate judicial deference to indications that congressional inaction has not been inadvertent. When the design of a Government program suggests that Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of its administration, we have not created additional Bivens remedies.
Id. at 423, 91 S.Ct. 1999. Thus, in Chilicky, even though “Congress ha[d] failed to provide for ‘complete relief‘” for the
Following these precedents, we too have refused to extend Bivens. See, e.g., Hall v. Clinton, 235 F.3d 202, 204 (4th Cir.2000) (declining to create a Fifth Amendment Bivens remedy for White House employee because Congress had already established an exclusive statutory remedy); Zimbelman v. Savage, 228 F.3d 367, 371 (4th Cir.2000) (finding that special factor of federal employment counseled against creating a Bivens remedy for Air Force personnel alleging unfair termination of employment based on false accusations). In adjudicating claims requesting the creation of new Bivens remedies, we have gleaned from the above Supreme Court precedent a three-part test:
[i]n order for a Bivens remedy to be available, a court must determine that (1) Congress has not already provided an exclusive statutory remedy; (2) there are no “special factors counseling hesitation in the absence of affirmative action by Congress“; and (3) there is no “explicit congressional declaration” that money damages not be awarded.
Hall, 235 F.3d at 204 (citations omitted). Moreover, we have noted that “[t]he ‘special factors’ concept’ include[s] an appropriate judicial deference to indications that congressional inaction has not been inadvertent.” Id. (citations omitted). Accordingly, we apply these factors to this case to determine whether Congress has sufficiently attended to the rights and remedies available to taxpayers in the context of the Internal Revenue Code to foreclose judicial creation of additional remedies.
It would be difficult to conceive of a more comprehensive statutory scheme, or one that has received more intense scrutiny from Congress, than the Internal Revenue Code. In constructing this vast and exceedingly complex statutory apparatus, moreover, “Congress has given taxpayers all sorts of rights against an overzealous officialdom.” Cameron v. Internal Revenue Service, 773 F.2d 126, 129 (7th Cir. 1985); see also McMillen v. United States, 960 F.2d 187, 190 (1st Cir.1991). Thus, the Code provides Judicial Watch with a number of ways to challenge actions of the IRS as well as those of individual agents.
As noted above, in response to an audit or other activities involved in the investigation of its tax liability, Judicial Watch could simply resist the audit, force the IRS to initiate a summons enforcement proceeding, and then challenge the validity of the audit in that forum. See
With respect to alleged misconduct by individual IRS employees, Congress has also provided for a variety of “safeguards and remedies.” Chilicky, 487 U.S. at 425, 108 S.Ct. 2460. Specifically, Congress cre-
Moreover, Congress has also provided a civil damages action for misconduct by IRS employees in connection with the collection of taxes. See
If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Except as provided in section 7432, such civil action shall be the exclusive remedy for recovering damages resulting from such actions.
To be sure, § 7433 provides for a “civil action” only for damages arising from the “collection” of taxes, not for damages arising from the investigation and determination of tax liability. That Congress chose not to create certain remedies as part of the complex statutory scheme regulating the relationship between taxpayers and the IRS lends Judicial Watch little support, however. As the Supreme Court put the matter,
[t]he question is not what remedy the court should provide for a wrong that would otherwise go unredressed. It is whether an elaborate remedial system that has been constructed step by step, with careful attention to conflicting policy considerations, should be augmented by the creation of a new judicial remedy for the constitutional violation at issue. That question obviously cannot be answered simply by noting that existing remedies do not provide complete relief for the plaintiff.
Bush, 462 U.S. at 388, 103 S.Ct. 2404.
The legislative history of § 7433 further suggests that Congress did not act inadvertently in failing to create an action for damages allegedly arising from the investigation or determination of tax liability. As originally introduced into the Senate, the draft provision that ultimately became § 7433 contained broader language permitting civil damages actions “in connection with any determination or collection of Federal tax” and in violation of “any provision of Federal law.” S. 2223, 100th Cong., 2d Sess. § 123 (1988). The Conference Report regarding § 7433 explained that the final version was
limited to reckless or intentional disregard in connection with the collection of tax. An action under this provision may not be based on alleged reckless or intentional disregard in connection with the determination of a tax.... [T]he provision is limited to reckless or intentional disregard of the Internal Revenue Code and the regulations thereunder. An action may not be brought under this provision based on an alleged violation of a Federal law other than the Internal Revenue Code or a regulation promulgated thereunder.
Taken together, therefore, Congress‘s considerable attention to the rights and remedies available to taxpayers and the Supreme Court‘s hesitancy in creating Bivens remedies in such circumstances provide strong support for the conclusion that no Bivens remedy lies in this case. This conclusion comports with the view of a number of our sister circuits. See, e.g., Shreiber v. Mastrogiovanni, 214 F.3d 148, 152-53 (3d Cir.2000) (declining to extend a Bivens remedy to tax-payer who allegedly suffered violation of constitutional rights in connection with assessment of tax liability); Dahn v. United States, 127 F.3d 1249, 1254 (10th Cir.1997) (stating that “in light of the comprehensive administrative scheme created by Congress to resolve tax-related disputes, individual agents of the IRS are also not subject to Bivens actions“); Fishburn v. Brown, 125 F.3d 979, 982-83 (6th Cir.1997) (declining to create Bivens action against IRS agents for alleged due process violations during property seizure); Vennes v. An Unknown Number of Unidentified Agents of the United States, 26 F.3d 1448, 1454 (8th Cir.1994) (declining to create Bivens action against IRS agents for alleged violation of due process rights during seizure of business and jeopardy assessment).
Judicial Watch, however, correctly notes that none of these cases address whether a Bivens action is available for damages arising from an allegedly retaliatory audit, and contends that such an audit presents a far stronger claim to Bivens relief. In support of this contention, Judicial Watch cites our decision in White v. Boyle, 538 F.2d 1077 (4th Cir.1976). There, we suggested in dicta that a Bivens remedy should be available to a taxpayer alleging a retaliatory investigation of his tax liability. Id. at 1079 (“Clearly, if [the taxpayer] can demonstrate an injury consequent upon the violation by federal agents of his constitutionally protected rights, absent official immunity, he is entitled to recovery.“). But we decided White more than a decade before Chilicky, and did not attempt to analyze whether the factors explicated in Bivens and Chilicky counseled recognition of a Bivens action for damages assertedly arising from a retaliatory audit.
Indeed, no appellate court has ever reached that question. Recently, the Ninth Circuit specifically declined to do so because limitations barred the claim in any event. See Western Center for Journalism v. Cederquist, 235 F.3d 1153 (9th Cir. 2000). In that case, Judge Reinhardt issued a concurring opinion explaining that he believed a Bivens action did lie for damages resulting from a retaliatory audit. Id. at 1159 (distinguishing Chilicky and Bush because in those cases Congress afforded some, even if not complete, relief for constitutional violations, while in the case of an assertedly discriminatory audit, “Congress has created no remedy at all“). This view finds some support in National Commodity & Barter Ass‘n v. Archer, 31 F.3d 1521 (10th Cir.1994), which allowed a Bivens action on claims that harassment by IRS agents violated the plaintiffs’ First and Fourth Amendment rights. Employing reasoning similar to that of Judge Reinhardt, the Tenth Circuit concluded that in situations where the Code does not provide any mechanism for compensation, IRS agents are not shielded from liability simply because the Code contains remedies for other, unrelated violations. Id. at 1530-32.
But neither Cederquist nor Archer contains any discussion of § 7433, much less its legislative history evidencing Con-
Our view seems consistent with Supreme Court teaching in this field. We note that the Court has never required that the remedies available in the context of a larger statutory scheme be perfect; just that they be “meaningful.” See Chilicky, 487 U.S. at 428, 108 S.Ct. 2460 (recognizing that although “suffering months of delay in receiving the income on which one has depended for the very necessities of life cannot be fully remedied by the belated restoration of back benefits” the fact that Congress had made compromises involved in administering a vast and complex government program meant that there was no basis for judicial intervention (internal quotation marks omitted)). Even if “Congress has provided a less than complete remedy for the wrong,” any decision to create a new judicial remedy must be “exercised in the light of relevant policy determinations made by the Congress.” Bush, 462 U.S. at 373, 103 S.Ct. 2404; see also Malesko, 122 S.Ct. at 520 (“So long as the plaintiff had an avenue for some redress, bedrock principles of separation of powers foreclosed judicial imposition of a new substantive liability.” (citations omitted)). That Judicial Watch considers its existing remedies insufficient is simply irrelevant. See Zimbelman, 228 F.3d at 371 (“It is not relevant that plaintiffs believe the procedures governing their employment relationship were insufficient.“).
We conclude, therefore, that in this case “it would be inappropriate to supplement [the] regulatory scheme with a new judicial remedy” for alleged retaliatory tax audits. Bush, 462 U.S. at 368, 103 S.Ct. 2404. As in Chilicky, although “[t]he creation of a Bivens remedy would obviously offer the prospect of relief for injuries that must now go unredressed,” the fact that Congress “has not failed to provide meaningful safeguards or remedies for the rights of persons” similarly situated counsels against any judicial extension of Bivens liability. Chilicky, 487 U.S. at 425, 108 S.Ct. 2460. Indeed, the fact that Congress explicitly considered allowing damages claims under § 7433 for misconduct in connection with the determination of taxes but decided to restrict those actions to the collection of taxes strongly suggests “that congressional inaction has not been inadvertent.” Id. at 423, 108 S.Ct. 2460. We thus decline “to create a new substantive legal liability ... because we are convinced that Congress is in a better position to decide whether or not the public interest would be served by creating it.” Id. at 426-27, 108 S.Ct. 2460 (quoting Bush, 462 U.S. at 390, 103 S.Ct. 2404).
IV.
For the reasons set forth within, the judgment of the district court is
AFFIRMED.