993 F.2d 1111 (4th Cir. 1993), 92-1982, Mallas v. United States

Docket Nº:92-1982, 92-2027.
Citation:993 F.2d 1111
Party Name:25 Fed.R.Serv.3d 977 James G. MALLAS; Robert V. Jones, Jr., Plaintiffs-Appellants, and John W. Flint; Perry Brunk; Peoples Supply Company, Incorporated; Omega Energy, Incorporated; Revel, Incorporated; Trinity Properties, Incorporated; Genesis Leases, Incorporated; Star Cross Properties, Incorporated, Plaintiffs, v. UNITED STATES of America, Defend
Case Date:May 20, 1993
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 1111

993 F.2d 1111 (4th Cir. 1993)

25 Fed.R.Serv.3d 977

James G. MALLAS; Robert V. Jones, Jr., Plaintiffs-Appellants,

and

John W. Flint; Perry Brunk; Peoples Supply Company,

Incorporated; Omega Energy, Incorporated; Revel,

Incorporated; Trinity Properties, Incorporated; Genesis

Leases, Incorporated; Star Cross Properties, Incorporated, Plaintiffs,

v.

UNITED STATES of America, Defendant-Appellee,

and

Alvin H. Kolak; Joanne D. Miller; William H. Ball; Paul

G. Topolka; Jack D. Yarbrough; Fred T. Goldberg, Jr.;

Alan I. Weinberg; Larry L. Davis; Robert Forrest;

Internal Revenue Service, Defendants.

James G. MALLAS; Robert V. Jones, Jr., Plaintiffs-Appellees,

and

John W. Flint; Perry Brunk; Peoples Supply Company,

Incorporated; Omega Energy, Incorporated; Revel,

Incorporated; Trinity Properties, Incorporated; Genesis

Leases, Incorporated; Star Cross Properties, Incorporated, Plaintiffs,

v.

UNITED STATES of America, Defendant-Appellant,

and

Alvin H. Kolak; Joanne D. Miller; William H. Ball; Paul

G. Topolka; Jack D. Yarbrough; Fred T. Goldberg, Jr.;

Alan I. Weinberg; Larry L. Davis; Robert Forrest;

Internal Revenue Service, Defendants.

Nos. 92-1982, 92-2027.

United States Court of Appeals, Fourth Circuit

May 20, 1993

Argued March 1, 1993.

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[Copyrighted Material Omitted]

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Georg Nicholas Herman, argued (Steven A. Bernholz, on brief), Bernholz & Herman, Chapel Hill, NC, for appellant.

Bruce Raleigh Ellisen, Tax Div., U.S. Dept. of Justice, Washington, DC, argued (James A. Bruton, Acting Asst. Atty. Gen., Gary R. Allen, Janet A. Bradley, Tax Div., U.S. Dept. of Justice, Washington, DC, and Robert H. Edmunds, Jr., U.S. Atty., Greensboro, NC, on brief), for appellee.

Before LUTTIG, Circuit Judge, MACKENZIE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation, and WILLIAMS, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

LUTTIG, Circuit Judge:

The Internal Revenue Service, without explanation, continued to disseminate reports to tax shelter investors of plaintiffs James G. Mallas and Robert V. Jones, Jr., describing Mallas' and Jones' criminal convictions, even after a panel of this court had unanimously reversed those convictions. Mallas, Jones, and several corporations of which they are the sole shareholders, brought the instant action for damages against the United States under 26 U.S.C. § 7431, alleging that the reports constituted the unauthorized disclosure of their tax return information in violation of 26 U.S.C. § 6103. The district court dismissed the corporate plaintiffs but awarded Mallas and Jones $73,000 each in damages.

Three of the companies contest their dismissal and join with Mallas and Jones in challenging the court's dismissal of their claims for punitive damages. The Government cross-appeals, arguing that the district court erred in finding liability and in calculating the number of unauthorized disclosures. We reject both of the Government's arguments and affirm the finding of liability under section 7431. Because we conclude that only Mallas properly noted appeal, we dismiss the other plaintiffs for lack of jurisdiction. We agree with Mallas, however, that the district court erred in dismissing his punitive damages claims and therefore remand for a determination of whether such damages are warranted in his action.

I.

Beginning in 1977, two North Carolina investment counselors, James G. Mallas and Robert V. Jones, Jr., designed and promoted a tax shelter program based on deductions from participation in coal mining and leasing enterprises. They incorporated several companies for this purpose, including Omega Energy, Inc. ("Omega"), Trinity Properties, Inc. ("Trinity"), and Star Cross Properties, Inc. ("Star Cross"). A criminal investigation by the Internal Revenue Service ("IRS") led to indictments of Mallas and Jones on thirty-five counts of fraud and tax evasion. On January 30, 1984, a jury convicted the two men of fourteen of those counts. Following their convictions, the IRS prepared and disseminated to investors in the Mallas-Jones tax shelter program "pro forma revenue agent reports" ("RARs"), describing Mallas and Jones' "financing scheme" and their convictions, and advising that losses claimed

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through the program were disallowed. See J.A. at 432-35, 438-39. 1 On May 20, 1985, a unanimous panel of this court reversed all of Mallas' and Jones' convictions as founded upon "an unsubstantiated theory of tax law." United States v. Mallas, 762 F.2d 361, 363 (4th Cir.1985). Despite this decision, the IRS continued to disseminate the RARs without modification or amendment to reflect our reversal of Mallas' and Jones' convictions. See J.A. at 439.

On October 28, 1988, the plaintiffs brought the instant action against the Government, alleging violations of their constitutional rights under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), violations of the Privacy Act, see 5 U.S.C. § 552a, and unauthorized disclosures of their tax return information under 26 U.S.C. § 7431. 2 The district court dismissed all but the section 7431 claims. See Mallas v. Kolak, 721 F.Supp. 748 (M.D.N.C.1989). It also dismissed the plaintiffs' claims for actual and punitive damages (allowing them to seek only $1,000 per disclosure under section 7431(c)(1)(A)) and dismissed the corporate plaintiffs. See J.A. at 165, 188-92. The court then found the Government liable for seventy-three unlawful disclosures about each of Mallas and Jones, and awarded them $73,000 apiece. See id. at 443-46. This appeal, and the Government's cross-appeal, followed.

II.

The Government, as a threshold matter, argues that the notice of appeal filed by

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plaintiffs was defective, depriving us of jurisdiction over all of the plaintiffs except Mallas. We agree, and therefore dismiss those plaintiffs.

Federal Rule of Appellate Procedure 3(c) provides: "The notice of appeal shall specify the party or parties taking the appeal...." Although the Rule also provides that "[a]n appeal shall not be dismissed for informality of form or title of the notice of appeal," the Supreme Court recently held that "[t]he failure to name a party in a notice of appeal is more than excusable 'informality'; it constitutes a failure of that party to appeal." Torres v. Oakland Scavenger Co., 487 U.S. 312, 314, 108 S.Ct. 2405, 2407, 101 L.Ed.2d 285 (1988) (emphasis added).

The notice of appeal in the instant case is captioned "JAMES G. MALLAS, et al., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant" and states: "Plaintiffs, by and through their undersigned counsel, give notice of appeal to the United States Court of Appeals for the Fourth Circuit to the Judgment of the Honorable Richard C. Erwin entered and filed June 23, 1992." J.A. at 447. Jones, Omega, Trinity, and Star Cross contend that although their notice of appeal did not specifically name anyone but Mallas, it provided sufficient notice to comply with Rule 3(c) because it used the phrase "et al." in its caption and the plural "Plaintiffs" in its body.

The Supreme Court rejected an almost identical argument in Torres:

Petitioner urges that the use of "et al." in the notice of appeal was sufficient to indicate his intention to appeal. We cannot agree. The purpose of the specificity requirement of Rule 3(c) is to provide notice both to the opposition and to the court of the identity of the appellant or appellants. The use of the phrase "et al.," which literally means "and others," utterly fails to provide such notice to either intended recipient.... The specificity requirement of Rule 3(c) is met only by some designation that gives fair notice of the specific individual or entity seeking to appeal.

487 U.S. at 317-18, 108 S.Ct. at 2409 (emphases added). 3

The plaintiffs attempt to avoid the brunt of Torres by relying on the Court's comment that "if a litigant files papers in a fashion that is technically at variance with the letter of a procedural rule, a court may nonetheless find that the litigant has complied with the rule if the litigant's action is the functional equivalent of what the rule requires." Id. at 317, 108 S.Ct. at 2409. The use of "et al." and "Plaintiffs," they argue, represents the "functional equivalent" of a name-by-name listing. While the Supreme Court's "functional equivalence" language may seem hard to reconcile with its otherwise strict construction of the Rule, see id. at 318-19, 108 S.Ct. at 2409-10 (Scalia, J., concurring in judgment), it is of no avail to the plaintiffs in this case. In the paragraph immediately following the passage quoted by the plaintiffs, the Court explained that despite Torres' use of the phrase "et al.," he "did not file the functional equivalent of a notice of appeal." Id. at 317, 108 S.Ct. at 2409 (emphasis added). Under Torres and Rule 3(c), therefore, we obtain jurisdiction over the only party specified as an appellant in the notice of appeal: James G. Mallas.

In reaching this conclusion, we join at least six other circuits. See Colle v. Brazos County, 981 F.2d 237, 240-42 (5th Cir.1993) (use of "et al." and plural "Plaintiffs" did not satisfy Fed.R.App.P. 3(c)); Adkins v. Safeway Stores, Inc., 968 F.2d 1317, 1318-19 (D.C.Cir.1992) (same), cert. denied, --- U.S. ----, 113 S.Ct. 968, 122 L.Ed.2d 123 (1993); Pontarelli v. Stone, 930 F.2d 104, 108-09 (1st Cir.1991) (same); Laidley v. McClain, 914 F.2d 1386, 1388-89 (10th Cir.1990) (same); Pride v. Venango River Corp., 916 F.2d 1250, 1251-53 (7th Cir.1990) (same, even where collateral document listed all plaintiffs), cert. denied, --- U.S. ----, 111 S.Ct. 1696, 114 L.Ed.2d 89 (1991); Minority Employees...

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