Brune v. I.R.S., 88-5025

Decision Date02 December 1988
Docket NumberNo. 88-5025,88-5025
Citation274 U.S.App.D.C. 89,861 F.2d 1284
PartiesJerard M. BRUNE, Appellant v. INTERNAL REVENUE SERVICE, et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (Civil Action No. 86-00194).

Cary P. Sklar, with whom Gregory O'Duden, Washington, D.C., was on the brief for appellant. Lois G. Williams, Washington, D.C., also entered an appearance for appellant.

Murray S. Horwitz, Attorney, Dept. of Justice, with whom Jay B. Stephens, U.S. Atty., William S. Rose, Jr., Asst. Atty. Gen., Gary R. Allen and Jonathan S. Cohen, Attorneys, Dept. of Justice, Washington, D.C., were on the brief for appellees.

Before EDWARDS, WILLIAMS and D.H. GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge D.H. GINSBURG.

D.H. GINSBURG, Circuit Judge:

Section (e)(2) of the Privacy Act provides: "Each agency that maintains a system of records shall ... (2) collect information to the greatest extent practicable directly from the subject individual when the information may result in adverse determinations about an individual's rights, benefits, and privileges under Federal programs...." 5 U.S.C. Sec. 552a(e)(2).

Appellant, Jerard M. Brune, sued his employer, the Internal Revenue Service, for damages on the ground that the agency violated this provision when it contacted third parties in the course of investigating whether Brune had made false statements on his travel expense vouchers. The district court granted summary judgment to the government. Previously, the court also denied appellant's motion to compel discovery of documents relating to the IRS's conduct of investigations of other employees on similar charges, and awarded attorney's fees to the government for the necessity of opposing the motion. We affirm in all respects.

I. BACKGROUND

In 1983, appellant Brune was an IRS Revenue Agent. His Group Manager, Roland Buehrer, undertook a routine review of his time sheets and case files. Buehrer became suspicious about appellant's time entires, which reported what seemed like inordinately numerous and lengthy visits to two taxpayers and their accountants; he contacted the taxpayers in question and they reported that appellant's visits had in fact been fewer and shorter than he had indicated on his time sheets. Based on this inquiry, Buehrer advised the IRS Regional Inspector of his suspicions that Brune had falsified the travel vouchers he submitted in connection with these visits.

Special Agent Daniel Day, a criminal investigator in the Internal Security Division of the IRS Regional Inspector's office, reviewed Buehrer's report and initiated a criminal investigation under 18 U.S.C. Sec. 1001, which makes it a felony to make false or fraudulent statements to a government agency. Special Agent Day first interviewed Buehrer and then, having determined that interviews with the taxpayers and their accountants were necessary in order to verify or refute the allegations against appellant, contacted those third parties. When they corroborated Buehrer's suspicion of Brune, Special Agent Day referred the matter to the United States Attorney.

The prosecutor declined to bring a criminal case because too small an apparent overcharge (less than $20) was involved, so the IRS treated the matter as an administrative misconduct case under internal regulations governing false statements. See IRS Handbook of Employee Responsibilities and Conduct at 0735.1-18 Sec. 225.5 (1980). In May 1983, IRS officials interviewed appellant, who stated that he could not recall the details of the visits in question. A month earlier, however, in a performance review, he had explained his time entries by reference to his understanding that it was office policy not to record "split days," i.e., not to claim time for more than one case per day. Brune had then said that, pursuant to such policy, he charged the full work day to the case on which he had spent the most time each day, and that his travel vouchers reflected this practice. The IRS determined that, in fact, there never was any policy against recording "split days." The administrative investigation resulted in the IRS giving Brune an "oral admonishment" in October 1983.

In January 1986, Brune filed a complaint in the district court alleging that the IRS investigation violated section (e)(2) of the Privacy Act because the agency had contacted third parties before seeking information directly from him. Specifically, appellant argued that section (e)(2) means that a government investigator, in order to determine whether to contact a suspect before talking to third parties, must make "a 'practicability' assessment ... on a case-by-case basis, and must weigh [the suspect] individual's privacy interests as well as any possible impediments to the government's ability to carry out its investigation as expeditiously as it would like." Appellant alleged that Special Agent Day's contacts with the taxpayers' accountants had injured his professional reputation.

Each side moved for summary judgment, which the district court granted in favor of the government. The court held that section (e)(2) "prescribes no order in which an agency must consult the various sources of information it collects about an individual, nor does it prohibit an agency from consulting other sources until it has exhausted the subject individual's recollection." The district court added that it is "generally impracticable to conduct an investigation into possible wrongdoing--even petty wrongdoing--by relying upon the suspect himself as either the initial or primary source," since "[s]uspects cannot be assumed to be altogether reliable sources of derogatory information about themselves, and once alerted to the fact that there are suspicions, have both incentive and opportunity to assure that subsequent sources likely to be consulted are as exculpatory as possible."

II. MERITS

Appellant maintains that section (e)(2) of the Act requires the government, in light of the circumstances of each case, to weigh the suspect's privacy interests against concerns of practicability--limited, at places in appellant's brief, to the government's interest in expedition--in order to determine the sequence in which the investigation shall proceed. In response, the government places special emphasis on the criminal character of its initial investigation of appellant, citing guidelines issued by the Office of Management and Budget shortly after passage of the Privacy Act, in which "investigations of possible criminal misconduct" are given as an example of situations where "the kind of information needed can only be obtained from a third party." 40 Fed.Reg. 28,960 at 28,961 (1975).

We conclude, however, that the government's distinction between civil and criminal investigations is not tenable, as a matter either of logic or, in light of the legislative history of section (e)(2), of law. First an individual's privacy interest in suppressing widespread knowledge of an investigation is not primarily a function of whether civil or criminal charges are being pursued at the moment. Civil investigations may evolve into criminal investigations, and vice versa, in mid-course. See, e.g., United States v. John Doe, Inc. I, 481 U.S. 102, 107 S.Ct. 1656, 95 L.Ed.2d 94 (1987). Civil charges involving moral turpitude and potentially significant sanctions may implicate much weightier privacy interests than an investigation looking toward criminal prosecution for a misdemeanor or a regulatory offense involving only a technical mens rea.

Second, the Senate Committee on Government Operations amended the bill that became the Privacy Act by appending to section (e)(2) the final limiting phrase ("about an individual's rights, benefits, and privileges under Federal programs") specifically "[i]n order to meet agency objections about the needs of certain civil and criminal law enforcement programs requiring ... investigative information to be collected from other sources...." S. Rep. No. 1183, 93rd Cong. 47 (1974) (emphasis added), U.S.Code Cong. & Admin.News 1974, pp. 6916, 6962. Such objections could, and presumably would, have been disregarded if section (e)(2) were not applicable to both civil and criminal law enforcement efforts in the first place. That the alleged violation occurred in the course of a criminal investigation, therefore, cannot be dispositive of plaintiff's claim, else the effect would be to exempt criminal proceedings entirely from the reach of the section.

No further interpretation of section (e)(2) is necessary to resolve the present case, however; for even under appellant's suggested approach, it was self-evidently impracticable for the government first to contact the suspect IRS agent in an investigation into possibly false statements he made in the course of his official activities. The investigator, viewing the case ex ante, could reasonably infer that there was nothing to gain (by way of protecting the suspect's privacy) and much to lose (in terms of ascertaining the truth) by contacting the suspect before contacting the third party.

First, as to the potential gain, investigations of false statement charges, by their nature, involve a suspect who has already given the government his version of the facts. The probability that, when confronted, he will advance an explanation of his own suspect statement sufficient to obviate the need to contact third parties is minimal; when the statement in question is facially unambiguous, as in this case, the probability is vanishingly small.

Second, as to the potential loss, the affidavit of Special Agent Day adequately identifies the risks involved. As he e...

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