Neonatology Associates, P.A. v. Commissioner

293 F.3d 128 | 3rd Cir. | 2002

Before: ALITO, Circuit Judge(cid:13) (cid:13) (Opinion Filed: May 20, 2002)(cid:13) David R. Levin, Esq.(cid:13) Wiley, Rein & Fielding, LLP(cid:13) 1776 K Street, N.E.(cid:13) Washington, DC 20006(cid:13) Counsel for Appellant(cid:13) Kenneth L. Greene, Esq.(cid:13) Robert W. Metzler, Esq.(cid:13) Tax Division(cid:13) Department of Justice(cid:13) P.O. Box 502(cid:13) Washington, DC 20044(cid:13) Counsel for Appellee(cid:13) Steven J. Fram, Esq.(cid:13) Archer & Greiner, P.C.(cid:13) One Centennial Square(cid:13) Haddonfield, NJ 08033(cid:13) Counsel for Amicus Curie(cid:13) ____________________(cid:13) (cid:13) OPINION OF THE COURT(cid:13) ____________________(cid:13) ALITO, Circuit Judge:(cid:13) Before me is a motion under Rule 29(b) of the Federal Rules of Appellate(cid:13) Procedure for leave to file a brief as amicus curiae over the opposition of the appellants. (cid:13) The motion has been referred to me as a single judge under our Internal Operating(cid:13) Procedure 10.5.1. Because it appears that the criteria set out in Rule 29(b) are met, i.e.,(cid:13) that the amici have a sufficient "interest" in the case and that their brief is "desirable" and(cid:13) discusses matters that are "relevant to the disposition of the case," the motion is granted. (cid:13) I.(cid:13) This is an appeal from a decision of the Tax Court. See Neonatology(cid:13) Associates, P.A. v. Commissioner, 115 T.C. 43 (2000). The appeal has been taken by(cid:13) two professional medical corporations (Neonatology Associates, P.A. and Lakewood(cid:13) Radiology, P.A.), physicians who owned the corporations, and spouses who signed joint(cid:13) tax returns. The appellants participated in the Southern California Voluntary Employees’(cid:13) Beneficiary Association ("SC VEBA"), which was promoted by certain insurance(cid:13) brokers. The Commissioner of Internal Revenue determined that the professional(cid:13) corporations had erroneously claimed deductions on their income tax returns for(cid:13) payments made to plans set up under the SC VEBA and that the individual taxpayers had(cid:13) failed to report on their income tax returns income arising from certain related(cid:13) transactions. The appellants filed a petition in the Tax Court challenging the deficiencies(cid:13) and associated penalties. After a trial, the Tax Court sustained the Commissioner’s(cid:13) determinations, and this appeal followed. (cid:13) The motion for leave to file an amicus brief in support of the(cid:13) Commissioner was submitted by five other physicians who also participated in same(cid:13) plan. In the statement of interest in their proposed amicus brief, these five physicians(cid:13) ("the amici") state:(cid:13) During pre-trial proceedings in the Tax Court, the Appellants(cid:13) in this case entered into a Settlement Agreement and Release(cid:13) with Commonwealth Life Insurance Company(cid:13) ("Commonwealth") pursuant to which Commonwealth(cid:13) agreed to defend this case at its expense and to pay certain(cid:13) portions of Appellants’ tax liabilities in the event of an(cid:13) unfavorable outcome. Appellants (hereafter "the Settling(cid:13) Physicians") then proceeded to trial in what was designated(cid:13) as a "test" case for all of the parties who had challenged the(cid:13) IRS’s position. Pursuant to Appellants’ settlement with(cid:13) Commonwealth, Commonwealth now controls and is funding(cid:13) the appeal in this litigation.(cid:13) Unlike Appellants, amici declined to release their claims and(cid:13) have filed litigation against Commonwealth and its related(cid:13) parties to recover the losses they suffered through their(cid:13) participation in the "VEBA scheme" condemned by the Tax(cid:13) Court in this case. An Amended Complaint in the proposed(cid:13) class action in which amici are plaintiffs, Sankhla v.(cid:13) Commonwealth Life Ins. Co., No. 01-CV-4761 (D.N.J.)(cid:13) (AET), was filed on March 20, 2002 (the "Sankhla(cid:13) Litigation").(cid:13) Amici have an interest in the outcome of this case because it(cid:13) has become apparent that Commonwealth, through its control(cid:13) of this appeal, will attempt to induce this Court to address(cid:13) certain non-tax law issues that will impact the rights of amici(cid:13) against Commonwealth and related parties. (cid:13) Amicus Br. at 1-2. Specifically, the amici are concerned that the appellants have argued(cid:13) that the Employee Retirement Income Security Act ("ERISA") applies to the plan and(cid:13) that our court’s discussion of this issue will have a bearing in their litigation on the(cid:13) question whether the plaintiffs’ claims against Commonwealth are preempted by ERISA. (cid:13) Amicus Br. at 2. The amici also wish to preserve the factual findings of the Tax Court(cid:13) concerning the roles of various parties in the underlying events because the amici hope to(cid:13) prove that Commonwealth and its agents controlled the Tax Court litigation on behalf of(cid:13) the appellants and that Commonwealth and its agents are therefore bound by those(cid:13) findings. (cid:13) The appellants argue that the amici do not satisfy the standards for filing a(cid:13) brief as amici. Among other things, the appellants contend that an amicus must be "’an(cid:13) impartial individual’" and not a person who is "partial to the outcome" or who has "a(cid:13) pecuniary interest in the outcome." Opposition to Motion for Leave to File Amicus Brief(cid:13) ("Opp.") at 2-4 (quoting Leigh v. Engle, 535 F. Supp. 418, 420 (N.D. Ill. 1982)). The(cid:13) appellants also argue that leave to file an amicus brief should not be granted unless the(cid:13) party to be supported is either unrepresented or inadequately represented. Opp. at 5-6. (cid:13) In making these arguments, the appellants cite a small body of judicial opinions that look(cid:13) with disfavor on motions for leave to file amicus briefs. See, e.g., National Org. for(cid:13) Women, Inc. v. Scheidler, 223 F.3d 615 (7th Cir. 2000); Ryan v. CFTC, 125 F.3d 1062(cid:13) (7th Cir. 1997) (single judge opinion); Liberty Lincoln Mercury, Inc. v. Ford Marketing(cid:13) Corp., 149 F.R.D. 65, 82 (D.N.J. 1993); Yip v. Pagano, 606 F. Supp. 1566, 1568 (D.N.J.(cid:13) 1985). The appellants argue that restrictive standards espoused in these opinions(cid:13) represent the views of "the judiciary" and are "settled law" "in this jurisdiction." Opp. 3-(cid:13) 4.(cid:13) II.(cid:13) The standards for filing an amicus brief are set out in Rule 29. Under Rule(cid:13) 29(a), a private amicus may file if all parties consent or if the court grants leave. When a(cid:13) party objects to filing by a private amicus and leave of court is sought, Rule 29(b)(cid:13) provides that the motion for leave to file must be accompanied by the proposed brief and(cid:13) must state:(cid:13) (1) the movant’s interest; and (cid:13) (2) the reason why an amicus brief is desirable and why the(cid:13) matters asserted are relevant to the disposition of the case. (cid:13) (cid:13) Although the Rule does not say expressly that a motion for leave to file should be denied(cid:13) if the movant does not meet the requirements of (a) an adequate interest, (b) desirability,(cid:13) and (c) relevance, this is implicit. With these requirements in mind, I turn to the(cid:13) restrictive standards that the appellants urge us to apply. (cid:13) A. I begin with the appellants’ argument that an amicus must be "an(cid:13) impartial individual who suggests the interpretation and status of the law, gives(cid:13) information concerning it, and whose function is to advise in order that justice may be(cid:13) done, rather than to advocate a point of view so that a cause may be won by one party or(cid:13) another." Opp. at 3-4. This description of the role of an amicus was once accurate and(cid:13) still appears in certain sources, see 3A C.J.S. Amicus Curiae (cid:21)2 at 422-23 (1973), but this(cid:13) description became outdated long ago. See Samuel Krislov, The Amicus Curiae Brief:(cid:13) From Friendship to Advocacy, 72 Yale L. J. 694, 703 (1962). (cid:13) Today, as noted, Rule 29 requires that an amicus have an "interest" in the(cid:13) case, see Fed. R. App. Proc. 29(b)(1) and (c)(3), and the appellants’ argument that an(cid:13) amicus must be "impartial" is difficult to square with this requirement. An accepted(cid:13) definition of the term "impartial" is "disinterested," Black’s Law Dictionary 752 (6th(cid:13) ed. 1990), and it is not easy to envisage an amicus who is "disinterested" but still has an(cid:13) "interest" in the case. (cid:13) It is particularly difficult to reconcile impartiality and interestedness if the(cid:13) latter requirement is interpreted as a panel of our court did in American College of(cid:13) Obstetricians & Gynecologists v. Thornburgh, 699 F.2d 644 (3d Cir. 1983). In that case,(cid:13) the sharply divided panel denied a motion for leave to file an amicus brief because the(cid:13) proposed amici, a group of law professors, "d[id] not purport to represent any individual(cid:13) or organization with a legally cognizable interest in the subject matter at issue, and(cid:13) [gave] only their concern about the manner in which this court will interpret the law."(cid:13) Id. at 645 (emphasis added). It would be virtually impossible for an amicus to show that(cid:13) it is "an impartial individual . . . whose function is to advise in order that justice may be(cid:13) done" but not a person who is "only . . . concern[ed] about the manner in which [the](cid:13) court will interpret the law." In any event, whether or not the American College panel(cid:13) was correct in its narrow interpretation of Rule 29’s "interest" requirement, the "interest"(cid:13) requirement weighs strongly against the appellants’ argument. (cid:13) The appellants suggest, however, that the very term "amicus curiae"(cid:13) suggests a degree of impartiality. The appellants quote the comment that "[t]he term(cid:13) ’amicus curiae’ means friend of the court, not friend of a party." Opp. at 3 (quoting (cid:13) Ryan, 125 F.3d at 1063). The implication of this statement seems to be that a strong(cid:13) advocate cannot truly be the court’s friend. But this suggestion is contrary to the(cid:13) fundamental assumption of our adversary system that strong (but fair) advocacy on(cid:13) behalf of opposing views promotes sound decision making. Thus, an amicus who makes(cid:13) a strong but responsible presentation in support of a party can truly serve as the court’s(cid:13) friend. (cid:13) The argument that an amicus cannot be a person who has "a pecuniary(cid:13) interest in the outcome" also flies in the face of current appellate practice. A quick look(cid:13) at Supreme Court opinions discloses that corporations, unions, trade and professional(cid:13) associations, and other parties with "pecuniary" interests appear regularly as amici. (cid:13) (Some of the Supreme Court cases in which the greatest number of amici have filed(cid:13) illustrate this point. See, e.g., Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 3 n.*(cid:13) (1991); Container Corp. of America v. Franchise Tax Bd., 463 U.S. 159, 161 n.*(cid:13) (1983).) Parties with pecuniary, as well as policy, interests also appear as amici in our(cid:13) court. See, e.g., South Camden Citizens in Action v. New Jersey Dep’t of Envtl.(cid:13) Protection, 274 F.3d 771, 773 (3rd Cir. 2001). I thus reject the appellants’ argument(cid:13) that an amicus must be an impartial person not motivated by pecuniary concerns. (cid:13) C. I also disagree with the appellants’ argument that an amicus seeking(cid:13) leave to file must show that the party to be supported is either unrepresented or(cid:13) inadequately represented. Rule 29 does not contain any such provision, and therefore if(cid:13) the requirement is valid it must represent an elaboration on the requirement of(cid:13) "desirability" set out in Rule 29(b)(2). In my view, however, such a requirement is most(cid:13) undesirable. To be sure, an amicus brief may be particularly helpful when the party(cid:13) supported is unrepresented or inadequately represented, but it does not follow that an(cid:13) amicus brief is undesirable under all other circumstances. (cid:13) Even when a party is very well represented, an amicus may provide(cid:13) important assistance to the court. "Some amicus briefs collect background or factual(cid:13) references that merit judicial notice. Some friends of the court are entities with particular(cid:13) expertise not possessed by any party to the case. Others argue points deemed too far-(cid:13) reaching for emphasis by a party intent on winning a particular case. Still others explain(cid:13) the impact a potential holding might have on an industry or other group." Luther T.(cid:13) Munford, When Does the Curiae Need An Amicus?, 1 J. App. Prac. & Process 279(cid:13) (1999). Accordingly, denying motions for leave to file an amicus brief whenever the(cid:13) party supported is adequately represented would in some instances deprive the court of(cid:13) valuable assistance. Moreover, requiring a prospective amicus to undertake the(cid:13) distasteful task of showing that the attorney for the party that the amicus wishes to(cid:13) support is incompetent is likely to discourage amici in instances in which the party’s brief(cid:13) is less than ideal and an amicus submission would be valuable to the court. See Robert(cid:13) L. Stern, Appellate Practice in the United States 306 (2d ed. 1989) (The lawyer(cid:13) preparing an amicus brief "would normally be unwilling to state, except in most unusual(cid:13) circumstances, that the counsel for the party being supported will do an inadequate(cid:13) job."). The criterion of desirability set out in Rule 29(b)(2) is open-ended, but a(cid:13) broad reading is prudent. The decision whether to grant leave to file must be made at a(cid:13) relatively early stage of the appeal. It is often difficult at that point to tell with any(cid:13) accuracy if a proposed amicus filing will be helpful. Indeed, it is frequently hard to tell(cid:13) whether an amicus brief adds anything useful to the briefs of the parties without(cid:13) thoroughly studying those briefs and other pertinent materials, and it is often not feasible(cid:13) to do this in connection with the motion for leave to file. Furthermore, such a motion(cid:13) may be assigned to a judge or panel of judges who will not decide the merits of the(cid:13) appeal, and therefore the judge or judges who must rule on the motion must attempt to(cid:13) determine, not whether the proposed amicus brief would be helpful to them, but whether(cid:13) it might be helpful to others who may view the case differently. Under these(cid:13) circumstances, it is preferable to err on the side of granting leave. If an amicus brief that(cid:13) turns out to be unhelpful is filed, the merits panel, after studying the case, will often be(cid:13) able to make that determination without much trouble and can then simply disregard the(cid:13) amicus brief. On the other hand, if a good brief is rejected, the merits panel will be(cid:13) deprived of a resource that might have been of assistance. (cid:13) A restrictive policy with respect to granting leave to file may also create at(cid:13) least the perception of viewpoint discrimination. Unless a court follows a policy of(cid:13) either granting or denying motions for leave to file in virtually all cases, instances of(cid:13) seemingly disparate treatment are predictable. A restrictive policy may also convey an(cid:13) unfortunate message about the openness of the court. (cid:13) Those favoring the practice of restricting the filing of amicus briefs suggest(cid:13) that such briefs often merely duplicate the arguments of the parties and thus waste the(cid:13) court’s time, and I do not doubt that some amicus briefs make little if any contribution. (cid:13) However, a restrictive practice regarding motions for leave to file seems to be an(cid:13) unpromising strategy for lightening a court’s work load. For one thing, the time required(cid:13) for skeptical scrutiny of proposed amicus briefs may equal, if not exceed, the time that(cid:13) would have been needed to study the briefs at the merits stage if leave had been granted. (cid:13) In addition, because private amicus briefs are not submitted in the vast majority of court(cid:13) of appeals cases, and because poor quality briefs are usually easy to spot, unhelpful(cid:13) amicus briefs surely do not claim more than a very small part of a court’s time. For all(cid:13) these reasons, I think that our court would be well advised to grant motions for leave to(cid:13) file amicus briefs unless it is obvious that the proposed briefs do not meet Rule 29’s(cid:13) criteria as broadly interpreted. I believe that this is consistent with the predominant(cid:13) practice in the courts of appeals. See Micael E. Tigar and Jane B. Tigar, Federal(cid:13) Appeals -- Jurisdiction and Practice 181 (3d ed. 1999)("Even when the other side(cid:13) refuses to consent to an amicus filing, most courts of appeals freely grant leave to file,(cid:13) provided the brief is timely and well-reasoned."); Robert L. Stern, supra, at 307-08. (cid:13) III. (cid:13) Turning to the circumstances of the present case, I believe that the amici(cid:13) have stated an "interest in the case,"and it appears that their brief is "relevant" and(cid:13) "desirable" since it alerts the merits panel to possible implications of the appeal. The(cid:13) appellants charge that the amici wish to inject new issues into the case, but it does not(cid:13) appear to me that the amici are attempting to do that. Rather, as I understand their(cid:13) position, they are primarily interested in making sure that our court does not(cid:13) inadvertently stray into issues that need not be decided in this case. Finally, the(cid:13) appellants contend that the proposed amicus brief is full of "spleen" and "invective,"(cid:13) Opp. at 10, but no specifics are cited. My reading of the amicus brief did not spot any(cid:13) violations of our LAR 28.1(c), which requires that briefs be phrased in appropriate,(cid:13) professional terms, but if the merits panel views the matter differently, it can of course(cid:13) take appropriate action at that time. (cid:13) For the reasons noted above, the motion for leave to file the brief as amici(cid:13) curiae over the objection of the appellants is granted. (cid:13) (cid:13) TO THE CLERK OF THE COURT:(cid:13) Kindly file the foregoing Opinion.(cid:13) /s/Samuel A. Alito Jr. (cid:13) Circuit Judge(cid:13)