Johnson v. Sawyer

• Decision Date: 16 March 1995
• Docket Number: No. 91-2763,91-2763
• Citation: 47 F.3d 716
• Parties: -1418, 63 USLW 2589, 95-1 USTC P 50,159 Elvis E. JOHNSON, Plaintiff-Appellee, v. Robert SAWYER, et al., Defendants, United States of America, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 716

47 F.3d 716

75 A.F.T.R.2d 95-1418, 63 USLW 2589,

95-1 USTC P 50,159

Elvis E. JOHNSON, Plaintiff-Appellee, v. Robert SAWYER, et al., Defendants, United States of America, Defendant-Appellant.

No. 91-2763.

United States Court of Appeals, Fifth Circuit.

March 16, 1995.

Ronald G. Woods, U.S. Atty., Houston, TX, Michael J. Salem, Tax Div., Dept. of Justice, Jonathan S. Cohen, Atty., Gary R. Allen, Chief, Joy L. Pritts, Atty., Appellate Section, Tax Div., Dept. of Justice, Robert S. Greenspan, Asst. Director, and Jacob M. Lewis, Atty., Appellate Staff, Dept. of Justice, Washington, DC, for appellant.

Larry A. Campagna and Robert I. White, Chamberlain, Hrdlicka, White, Williams & Martin, Houston, TX, for Elvis E. Johnson.

Appeal from the United States District Court for the Southern District of Texas.

Before POLITZ, Chief Judge, KING, JOHNSON, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHE, WIENER, BARKSDALE, EMILIO M. GARZA and DeMOSS, Circuit Judges. ^*

GARWOOD, Circuit Judge:

In this Federal Tort Claims Act (FTCA) ¹ suit, Elvis Johnson (Johnson) was awarded a ten million dollar judgment against the United States for the issuance by Internal Revenue Service (IRS) personnel of two press releases concerning Johnson's recent conviction for filing a false and fraudulent federal income tax return contrary to 26 U.S.C. Sec. 7201. Johnson claimed, and the district court found, that issuance of the press releases violated 26 U.S.C. Sec. 6103(a)(1), which proscribes disclosure of tax return information by federal employees, and caused him to lose his job as the senior executive vice president of American National Insurance Company, one of the largest life insurance companies in the United States. Johnson v. Sawyer, 760 F.Supp. 1216 (S.D.Tex.1991). See also id., 640 F.Supp. 1126 (S.D.Tex.1986). On the government's appeal, a divided panel of this Court affirmed the determination of liability. Johnson v. Sawyer, 980 F.2d 1490, 4 F.3d 369 (5th Cir.1993). ² We voted the case en banc, and now reverse. The panel majority held that the issuance of the press releases violated section 6103(a) and that this violation established the FTCA required liability under local law, either under the Texas invasion of privacy tort, which denounces the public disclosure of embarrassing private facts about another, although none of the facts so disclosed were private, or under the Texas negligence per se doctrine. We reject the reasoning of the panel majority, because it ultimately grounds the duty not to disclose on federal law, and under the FTCA recovery may only be had on the basis of local law, here that of Texas.

Facts and Proceedings Below

Factual Context

Johnson, a long-time American National executive, was assigned to its headquarters in Galveston, Texas, in 1972, and he and his wife bought a home there at 25 Adler Circle one or two years later. By 1976 he had become senior executive vice president and a member of American National's board of directors. The board varied in size from ten to twelve members. By the time of the events in issue, Johnson had become the company's number two executive, second only to the president, and both he and the president reported directly to the board. In the late 1970s, the IRS began detailed examination of the income tax returns of Johnson and his wife for the years 1972 through 1975. The examining agent referred the matter to the IRS Criminal Investigation Division, which ultimately assigned it to Special Agent Robert Stone (Stone). Following the criminal investigation, the Department of Justice reviewed the matter and recommended prosecution for tax evasion for the years 1974 and 1975 under section 7201, which then provided for a maximum prison term of five years and a $10,000 fine for "[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title." The case was assigned to Assistant United States Attorney Powers.

Johnson had kept the company lawyers, the president, and one or two other directors informed of his problems with the IRS. He was also represented by his own counsel. On January 9, 1981, Powers wrote Johnson's lawyer that the Department of Justice, after review by its Tax Division, had directed that an indictment be sought against both Mr. and Mrs. Johnson. On February 4, 1981, Powers again wrote Johnson's attorney stating that he planned to seek an indictment of Mr. and Mrs. Johnson under both section 7201 and 26 U.S.C. Sec. 7206(1) (filing false return), but that if Johnson pleaded guilty to a one-count section 7201 information the government would forego prosecution of Mrs. Johnson and would recommend a probated sentence. A February 13, 1981, letter from Johnson's lawyer to Johnson stated that Powers and the lawyer agreed they would seek the district judge's authorization to have a presentence investigation performed before charges were filed, which would "involve contacts with ... a select group of individuals to find out whether you are a good citizen." The letter also references "fifty or so statements" that had been submitted to the government on Johnson's behalf. After the presentence investigation report (PSR) was reviewed, there would be a meeting with the judge to discuss probation and an offer to enter a nolo contendere plea. After the meeting with the judge, they would decide whether "we would rather try the case." The plea would be entered about 5:00 p.m. some afternoon, to a one count information.

By March 18, 1981, Johnson and his counsel had filed with the court consents to institution of the presentence investigation, and the PSR was ultimately delivered to the district court on April 2, 1981. On March 31, 1981, Johnson's counsel wrote the district clerk "Re: E.E. Johnson" confirming that "this captioned matter" would be heard "Friday, August 10, at 4:00 p.m. in the courtroom in Galveston," Texas. On April 3, 1981, Johnson's attorney wrote Powers stating that "we request" that the information be filed at the time of the hearing, that the waiver of indictment and the "Plea Bargain Agreement" would "be filed at the same time," and that "the 'Defendant's Information Sheet' prepared by your office reflect Mr. Elvis Johnson's address c/o 28th Floor, 1100 Milam Street, Houston, Texas 77002, which is our office address." This letter also enclosed "a proposed information." In that document, the defendant is said to be "Elvis Johnson, A/K/A 'Gene' Johnson," and no reference is made to the defendant's address.

At approximately 4:00 p.m. Friday, April 10, 1981, Johnson's lawyer and Powers met with the district judge in his office. When they came out, Johnson's lawyer informed him that the judge would not accept a nolo contendere plea. Thereafter, at 4:10 p.m. proceedings on the record were commenced in open court in the Galveston federal courtroom before the district judge. Johnson signed and filed a waiver of indictment. ³ An information was filed charging Johnson as follows:

"That on or about April 15, 1976, in the Southern District of Texas, the defendant ELVIS JOHNSON, a resident of Galveston, Texas, did willfully and knowingly attempt to evade and defeat a large part of the income tax due and owing by him to the United States for the calendar year 1975, by preparing and causing to be prepared, by signing and causing to be signed, and by mailing and causing to be mailed, in the Galveston Division of the Southern District of Texas a false and fraudulent income tax return, which was filed with the Internal Revenue Service, wherein he stated and represented that his taxable income for said calendar year was $53,589.00 and that the amount of tax due and owing thereon was the sum of $18,374.50, whereas, as he then and there well knew, his taxable income for 1975 was $59,784.18 upon which said taxable income he owed to the United States an income tax of $21,849.47. (Violation: Title 26, United States Code, Section 7201)."

Johnson then also signed and swore to a written "Plea of Guilty," also signed "approved" by Powers, which was then filed. This document concludes by stating:

"After consulting with my attorney, I have entered into the following agreement, in the nature of 'plea bargaining' with the United States Attorney to this effect, and no further: In the event I enter a plea of guilty to this Information, I will not be prosecuted for violation of Title 26, for the year 1974. Further, Mrs. Johnson will not be prosecuted for either of the years 1974 or 1975. Finally, the Government will not oppose a probated sentence." ⁴

Being informed that Johnson desired to plead guilty, the district court (Judge Gibson) advised Johnson of his rights, examined him and his counsel in accordance with FED.R.CRIM.P. 11 to insure that the plea was entirely knowing and voluntary, ascertained that the terms of the plea agreement were as above set out, had Powers recite the factual basis of the offense, ⁵ and had the information read in full. On inquiry of the court, Johnson stated that he pleaded "guilty," and the court accepted the plea. After Johnson and his counsel declined the court's invitation to say anything about sentencing or the PSR, ⁶ the court proceeded to sentence Johnson to six months' confinement with execution of the sentence suspended for a one-year probationary period. The court stated on the record that the probation would be "supervised," but the supervision would be relaxed so it would "not interfere with the performance of your duties as an executive for the American National Insurance Company." ⁷

On Monday, April 13, 1981, Stone, who was stationed in Houston and had talked to Powers on the telephone concerning what happened at the courthouse on Friday, called Sally Sassen (Sassen), the IRS District Public Affairs Officer who was based in Austin, ⁸ and gave her information to prepare a press release. Based on what Powers told her, Sassen drafted a release and called Stone and read it to him and he approved...