American Stores Co. v. C.I.R., 97-9025

• Decision Date: 09 March 1999
• Docket Number: No. 97-9025,97-9025
• Parties: -1337, 99-1 USTC P 50,326, 23 Employee Benefits Cas. 1337, Pens. Plan Guide (CCH) P 23951V, 1999 CJ C.A.R. 2010 AMERICAN STORES COMPANY and subsidiaries, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1267

170 F.3d 1267

83 A.F.T.R.2d 99-1337, 99-1 USTC P 50,326,

23 Employee Benefits Cas. 1337,

Pens. Plan Guide (CCH) P 23951V,

1999 CJ C.A.R. 2010

AMERICAN STORES COMPANY and subsidiaries, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.

No. 97-9025.

United States Court of Appeals, Tenth Circuit.

March 9, 1999.

Paul J. Sax (Richard E.V. Harris and Richard A. Gilbert with him on the briefs), Orrick, Herrington & Sutcliffe, LLP, San Francisco, California, for petitioner.

Kenneth L. Greene (Steven W. Parks with him on the brief), Tax Division, United States Department of Justice, Washington, D.C., for respondent.

Before ANDERSON, HOLLOWAY, and BALDOCK, Circuit Judges.

ANDERSON, Circuit Judge.

American Stores Company and Subsidiaries (American) appeals the decision of the United States Tax Court sustaining the Commissioner's disallowance of deductions on its 1988 tax return for more than 12 months' contributions to qualified multiemployer defined-benefit pension plans, and deductions on its 1987 and 1988 tax returns for certain amounts attributed to vacation pay. It also alleges that the Tax Court erred when it denied American's motions for reconsideration, judicial notice of various administrative materials, and a hearing on those motions. We affirm.

I. BACKGROUND

American Stores is an accrual-method taxpayer, using a 52-53 week taxable year ending on the Saturday nearest the last day of January. Upon audit of its returns for the years 1987 and 1988, the Commissioner of Internal Revenue, among other things, disallowed certain deductions for contributions to multiemployer defined-benefit pension plans for 1988, and for certain alleged vacation pay liabilities for 1987 and 1988. Thereafter, the Commissioner issued a statutory notice of deficiency, proposing additional taxes resulting from these disallowed deductions. American filed a petition in the Tax Court seeking a redetermination of the proposed deficiencies, and the case was submitted on facts which were fully stipulated by the parties.

The Tax Court issued an opinion upholding the position of the Commissioner. American Stores Co. and Subsidiaries v. Commissioner, 108 T.C. No. 12 (Mar. 31, 1997). The court held that pension contributions made pursuant to collective bargaining agreements that were based on units of service worked after the close of American's 1988 fiscal taxable year were not "on account of" that year, as required by § 404(a)(6) of the Internal Revenue Code (Code), and therefore were not deductible in that year. ¹ In addition, the court held that vacation pay based on units of service worked after the close of American's 1987 and 1988 fiscal taxable years, respectively, had not been "earned" in those years, as required by § 463 of the Code.

On May 30, 1997, American filed a motion for reconsideration and a request for judicial notice of various memoranda, rulings, and other Internal Revenue Service materials allegedly supporting American's position regarding the deductibility of pension plan contributions. Those motions were denied, without a hearing, on June 10, 1997, and the Tax Court entered its decision on October 8, 1997.

On appeal, American reurges the arguments it advanced in the Tax Court, and requests this court independently to take judicial notice of the materials unsuccessfully proffered to the Tax Court after its decision.

II. DISCUSSION

Our review of the issues relating to the pension plan and vacation pay deductions is de novo, requiring only determinations of law. See Schelble v. Commissioner, 130 F.3d 1388, 1391 (10th Cir.1997). Our review of the Tax Court's denial of American's post-trial motions is essentially for abuse of discretion, see York v. American Tel. & Tel. Co., 95 F.3d 948, 958 (10th Cir.1996) (judicial notice); Herr v. Heiman, 75 F.3d 1509, 1515 n. 1 (10th Cir.1996) (reconsideration), although American also contends that under the Federal Rules of Evidence and the Due Process Clause of the Constitution the Tax Court erred as a matter of law in its post-trial rulings, including its refusal to hold a hearing.

A. Pension Plan Contributions

American Stores has filed a motion asking this court to take judicial notice of various documents, including redacted copies of unpublished Private Letter Rulings and unpublished Technical Advice Memoranda issued by the IRS to other taxpayers; ² documents purporting to identify the taxpayers and pension plans involved; excerpts from IRS manuals and other IRS administrative materials; declarations signed by counsel for American; and legal correspondence with counsel for the Commissioner. American asks us to take judicial notice that these materials demonstrate that IRS administrative practice has been consistent with American's position in this litigation, and that the IRS is guilty of various misrepresentations regarding its administrative practice. Because of American's heavy reliance on this material through its briefs and in oral argument, we are constrained to address the motion as a threshold matter.

"A judicially noticed fact must be one not subject to reasonable dispute," in that it is either "generally known" or that it is "capable of accurate and ready determination." Fed.R.Evid. 201(b). American's characterizations of IRS administrative practice are certainly not such facts. Nor are its allegations of misconduct. Furthermore, the rulings and memoranda which allegedly support these supposed facts are themselves inappropriate for judicial notice, in that by their very nature they are unpublished rulings issued to private taxpayers. See 21 Charles Alan Wright and Kenneth W. Graham, Jr., Federal Practice and Procedure § 5106, at 500 (1977) ("ready determination" means source of judicially noticed facts must be "widely available"); cf. United States v. Judge, 846 F.2d 274, 276-77 (5th Cir.1988) (refusing to take judicial notice of excerpts from DEA Manual).

American's request for judicial notice is essentially an attempt to introduce evidence after judgment. As indicated, American argues that the private rulings and memoranda constitute evidence of administrative practice, evidence of the reasonableness of its interpretation of the law, and evidence usable for impeachment and rebuttal. Appellant's Reply Br. at 7-8. If so, it was American's obligation to offer them in evidence in the Tax Court, and to subject them to argument and rulings as part of its case. Judicial notice is "not [a] talisman[ ] by which gaps in a litigant's evidentiary presentation ... may be repaired on appeal." City of New Brunswick v. Borough of Milltown, 686 F.2d 120, 131 n. 15 (3d Cir.1982); see also Melong v. Micronesian Claims Comm'n, 643 F.2d 10, 12 n. 5 (D.C.Cir.1980).

Furthermore, American concedes that the Code prohibits the use or citation of Private Letter Rulings and Technical Advice Memoranda as precedent. See I.R.C. § 6110(k)(3). It is well settled that they do not bind the Commissioner or this court. See ABC Rentals of San Antonio, Inc. v. Commissioner, 142 F.3d 1200, 1207 n. 5 (10th Cir.1998); cf. Dickman v. Commissioner, 465 U.S. 330, 343, 104 S.Ct. 1086, 79 L.Ed.2d 343 (1984). Accordingly, we deny American's motion for judicial notice and decline to consider the proffered rulings and memoranda in evaluating the legal arguments of the parties.

In a related argument, American contends that the Tax Court abused its discretion when it denied American's motions for reconsideration, for judicial notice, and for a hearing, all relating to these same documents and the same arguments based on them made by American here. These were post-trial motions made two months following the Tax Court's opinion. In support, American argued that the material was necessary not only as evidence of administrative practice and the correctness of its legal position at trial, but to rebut allegedly misleading and improper statements by counsel for the Commissioner in a reply brief.

In addition to the same points made above regarding when judicial notice is proper, limitations on the use of private rulings and memoranda, and the obligation to introduce evidence during trial and not afterward, American's argument has three defects. First, it was generally on notice of the Commissioner's position regarding these rulings prior to the reply brief in question, since the subject was at least broached in the Commissioner's opening brief. See R. Vol. I, Doc. 19 at 135. Second, whatever counsel for the Commissioner may have represented or argued in a brief, it was not evidence. It was only argument, and the Tax Court was obligated to treat it as such, i.e., not part of the evidentiary record. Finally, and most significantly, after the Tax Court received the post-trial motions, it was in a position to exercise discretion as to whether, considering the materials, it must reconsider its decision. It did not deem reconsideration warranted, or the materials proper for addition to the trial record after a decision was issued. We decline to call its denial of the motions an abuse of its discretion.

Nor did the court err by refusing to hold a formal hearing on the matter. Fed.R.Evid. 201(e) provides as follows:

A party is entitled upon timely request to an opportunity to be heard as to the propriety of taking judicial notice and the tenor of the matter noticed. In the absence of prior notification, the request may be made after judicial notice has been taken.

Two factors lead us to conclude that American was not entitled to a hearing as a matter of law. First, the rule by its terms does not specify that the "opportunity to be heard" means, under all circumstances, a formal hearing. Second, although "[t]he Rule as written is not limited to a party who is opposing the taking of judicial notice," 21 Wright & Graham § 5109, at 516, the last sentence of the rule implies special concern with the right to object, which must be honored even after the fact if the court has acted...