Cardwell v. Kurtz

• Decision Date: 08 July 1985
• Docket Number: Nos. 83-5665,83-5866,s. 83-5665
• Citation: 765 F.2d 776
• Parties: -5513, 85-2 USTC P 9528 James CARDWELL, et al., Plaintiffs-Appellants, v. Jerome KURTZ, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 776

765 F.2d 776

56 A.F.T.R.2d 85-5513, 85-2 USTC P 9528

James CARDWELL, et al., Plaintiffs-Appellants, v. Jerome KURTZ, et al., Defendants-Appellees.

Nos. 83-5665, 83-5866.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 6, 1985.

Decided July 8, 1985.

Kevin Finck, E.O.C. Ord, Law Offices of E.O.C. Ord, San Francisco, Cal., and Lynn Hall, Los Angeles, Cal., for plaintiffs-appellants.

Thomas Preston, Michael L. Paup, Chief, Dept. of Justice, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before SCHROEDER, FLETCHER, and FARRIS, Circuit Judges.

FARRIS, Circuit Judge:

FACTS

Midwest Growers Cooperative Corporation, two of its officers, James Cardwell and Marvin Martin, and three other corporations of which Cardwell and Martin were officers filed this civil suppression action against the United States and the Commissioner, the District Director, and a number of agents of the Internal Revenue Service. The plaintiffs alleged, inter alia, that the IRS had engaged in "fraud, deceit, and trickery" in obtaining Midwest's consent to a 1976 audit and that the IRS's search of Midwest's offices on January 12, 1977 was illegal because it was based on a general warrant. Having earlier dismissed two other claims and the United States as a defendant, the district court granted the defendants' motion for summary judgment and dismissed the action.

In an unpublished memorandum opinion, we dismissed the plaintiffs' appeal as interlocutory In the criminal action, the district court refused to suppress the fruits of the challenged IRS audit and search. Cardwell and Martin were convicted on stipulated facts. Without reaching the issue of whether consent to the IRS audit was obtained through "fraud, deceit, and trickery," we reversed their convictions solely on the ground that the search warrant did not satisfy the particularity requirement of the fourth amendment. United States v. Cardwell, 680 F.2d 75 (9th Cir.1982). The government later dismissed the indictments.

                because Cardwell and Martin had been indicted on federal criminal charges.  We remanded the case to the district court to "address the question of Cardwell's entitlement to return of ... copies [of the documents seized during the search of Midwest's offices] to the extent that such documents were not before the court in the criminal proceeding."   Cardwell v. Kurtz, 672 F.2d 921, slip op. at 2 (9th Cir.1982)
                

Because we did not reach the audit fraud, deceit, and trickery issue in the criminal case, the plaintiffs requested the district court to expand the scope of the remand proceedings to address that issue, upon which it had granted summary judgment in favor of the defendants three years earlier. Finding that "[t]he injury complained of by the plaintiffs ... [was] speculative, unripe and possibly nonexistent," the court denied the motion and dismissed the remand proceedings.

Subsequently, the plaintiffs filed a motion for attorney's fees under the Equal Access to Justice Act, 28 U.S.C. Sec. 2412. In denying that motion, the district court found that even if the plaintiffs were "prevailing parties" within the meaning of the EAJA, they were not entitled to attorney's fees because the position of the United States was substantially justified. The plaintiffs appeal from the denial of both of their motions. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. See VonderAhe v. Howland, 508 F.2d 364, 368 (9th Cir.1974).

STANDARDS OF REVIEW

We review the district court's denial of the motion for attorney's fees under the abuse of discretion standard. Beach v. Smith, 743 F.2d 1303, 1306 (9th Cir.1984).

"The granting of a summary judgment is reviewable de novo." Haluapo v. Akashi Kaiun, K.K., 748 F.2d 1363, 1364 (9th Cir.1984). "In reviewing a grant of summary judgment, our task is identical to that of the district court. The district court's grant of summary judgment will be affirmed if, viewing the evidence and the inferences therefrom in the light most favorable to the party opposing the motion for summary judgment, there are no genuine issues of material fact in dispute and the moving party is entitled to judgment as a matter of law." RFD Publications, Inc. v. Oregonian Publishing Co., 749 F.2d 1327, 1328 (9th Cir.1984).

DISCUSSION

I. Refusal to Expand the Scope of the Remand Proceedings

The plaintiffs' primary argument in favor of expanding the scope of the remand proceedings was that "the ['fraud, deceit, and trickery'] issue [had] never been resolved" because "the Ninth Circuit [had] never addressed" that issue in either this action or the related criminal case. The short answer to this contention, although not the one offered by the district court, is that that issue had been resolved when the district court granted the government's motion for summary judgment. Under the "law of the case" doctrine, the district court did not err in refusing to reexamine an issue it already had decided, particularly when the plaintiffs presented no new evidence or arguments on the fraud, deceit, and trickery issue on remand. However, the fact that the district court was correct in not re-examining this issue does not preclude us from evaluating the district court's original grant of summary judgment.

II. Summary Judgment: Fraud, Deceit, and Trickery Issue

A. Ripeness and Mootness

In denying the plaintiffs' motion to expand the scope of the remand proceedings the district court held that the audit fraud, deceit, and trickery issue had become moot because the statute of limitations for possible criminal charges had run and the government's counsel "ha[d] informed plaintiffs' counsel that the government [had] no intention of using the materials in question at [that] time." The court further reasoned that "the absence of tangible evidence" created by the government's return of all documents seized during the January, 1977 search of Midwest's offices made "[t]he injury complained of by plaintiffs ... speculative, unripe and possibly nonexistent." Only if it could effect "a total purge of all memory," the court stated, could it grant the plaintiffs further relief.

With respect to the audit fraud, deceit, and trickery count, the plaintiffs prayed for, inter alia, return of "all schedules, lists, notes, extracts or other memoranda made by defendants from plaintiffs' books, records and documents" and an injunction against the government's use of such materials. The plaintiffs contend that the government still possesses a detailed report based upon the 1976 audit of Midwest. The defendants neither admit nor deny that allegation. They argue that we should not address the fraud, deceit, and trickery issue because no criminal or civil tax proceedings are pending against any of the plaintiffs and that injunctive relief is barred by the Anti-Injunction Act, 26 U.S.C. Sec. 7421(a).

The absence of a criminal or civil proceeding against any of the plaintiffs does not render the fraud, deceit, and trickery issue moot or unripe. Under similar circumstances in VonderAhe v. Howland, 508 F.2d 364 (9th Cir.1975), we directed the district court to grant part of the injunctive relief sought by the plaintiffs in a civil suppression action. In the instant case, the plaintiffs allege that during the 1976 audit, the IRS illegally took something belonging to Midwest, namely, information contained in Midwest's business records, and incorporated it into one or more audit reports. Part of the relief requested by the plaintiffs is that the government simply give back what it took illegally. Cf. Linn v. Chivatero, 714 F.2d 1278, 1283 (5th Cir.1983) (in holding that district court should have exercised federal question jurisdiction over the plaintiffs' request for return of documents allegedly seized and retained in violation of fourth amendment, court noted that "in the absence of a pending criminal proceeding, the possibility of eventual suppression affords little solace"). If the 1976 audit was illegal, the district court's inability to effect complete relief, which would include purging the memories of government agents, would not justify a refusal to grant as much relief as possible--ordering the government to divest itself of the embodiment of the illegally seized information that could be used to refresh those memories.

A number of problems may arise from allowing the government to retain the report embodying the illegally-obtained information. For example, the IRS might share the report with other government agencies, perhaps influencing them to make some decision to the detriment of the victim of the illegal search and seizure. It could be difficult, if not impossible, for the victim to determine that the second agency relied upon the illegally-obtained information. One of the plaintiffs asserts that it was a victim of precisely this kind of scenario.

To the extent that the plaintiffs seek the return of information allegedly seized in violation of their fourth amendment rights, it is not particularly relevant that the government agents who took the information were IRS agents. The Anti-Injunction Act, which prohibits suits intended to "restrai[n] the assessment or collection of any tax," 26 U.S.C. Sec. 7421(a), does not bar us from granting this form of relief. See Linn, 714 F.2d at 1282-83. We therefore need not reach the question of the applicability of the Act to the various forms of injunctive relief sought by the plaintiffs. Compare Linn, 714 F.2d at 1285 (to extent plaintiff sought to enjoin IRS's use of information on fifth amendment grounds, it was arguable that Anti-Injunction Act prohibited requested relief but court held that primary dispute was over retention of records in violation of fourth amendment) with VonderAhe, 508 F.2d at 370 (granting plaintiffs forms of injunctive relief similar to those sought by plaintiffs in the instant case without discussing ...