Church of Scientology of Celebrity Centre v. Egger

• Decision Date: 20 May 1982
• Docket Number: Civ. A. No. 81-1952.
• Citation: 539 F. Supp. 491
• Parties: The CHURCH OF SCIENTOLOGY OF CELEBRITY CENTRE, LOS ANGELES, et al., Plaintiffs, v. Roscoe L. EGGER, Jr., et al., Defendants.
• Court: U.S. District Court — District of Columbia

539 F. Supp. 491

The CHURCH OF SCIENTOLOGY OF CELEBRITY CENTRE, LOS ANGELES, et al., Plaintiffs, v. Roscoe L. EGGER, Jr., et al., Defendants.

Civ. A. No. 81-1952.

United States District Court, District of Columbia.

May 20, 1982.

Stephen H. Glickman, Ronald R. Massumi, Jennifer E. Gold, Zuckerman, Spaeder, Taylor & Kolker, Washington, D. C., for plaintiffs.

John J. McCarthy, Tax Div., Dept. of Justice, Mitchell R. Berger, Asst. U. S. Atty., Washington, D. C., for defendants.

MEMORANDUM

JOHN LEWIS SMITH, Jr., Chief Judge.

A Scientology church incorporated in California, four ordained ministers affiliated with other Scientology churches and a nonminister member of an unspecified Scientology church bring this action against the Commissioner of the Internal Revenue, Roscoe L. Egger, Jr., and several present and former employees of the Internal Revenue Service (IRS). The action, which plaintiffs attempt to bring as a class action, is before the Court on defendants' motion to dismiss for failure to state a claim upon which relief can be granted.

I.

According to allegations in the complaint, from 1971 until 1974 defendants discriminatorily and illegally held in abeyance and did not rule on applications for exemption from self-employment tax properly filed by Scientology ministers pursuant to section 1402(e) of the Internal Revenue Code, 26 U.S.C. § 1402(e) (1976). In 1974, in response to the filing of a petition for a writ of mandamus by Scientology ministers, see Sorenson v. Alexander, No. 74-2168 (C.D. Cal.1974), defendants denied, without specification of reasons, all pending applications for exemption from self-employment tax filed by Scientology ministers. Beginning the following year, presumably on the basis of Revenue Ruling 76-415, 1976-2 C.B. 255, defendants again held in abeyance and did not rule on many of the applications for exemption from self-employment tax filed by Scientology ministers. Defendants also denied, without specification of reasons but again presumably on the basis of Revenue Ruling 76-415, all of the applications not held in abeyance.

According to further allegations in the complaint, since 1971 defendants have blocked every attempt of Scientology ministers to obtain a judicial resolution of their entitlement to exemption from self-employment tax. Defendants have refused to assess Scientology ministers for self-employment tax and, at the same time, have refused to contest requests for refunds filed by Scientology ministers who voluntarily paid the self-employment tax.

Plaintiffs set forth their claims in four counts. In Count One, plaintiffs assert a right of judicial review under the Administrative Procedure Act, 5 U.S.C. § 702 (1976), and seek declaratory and injunctive relief from two practices employed by defendants in violation of section 1402(e) of the Internal Revenue Code. The two practices challenged include, first, defendants' practice of holding in abeyance and not ruling on Scientology ministers' applications for exemption from self-employment tax, and, second, defendants' practice of denying Scientology ministers applications for exemption from self-employment tax on the basis of Revenue Ruling 76-415. In Count Two, plaintiffs proceed 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), and seek declaratory, injunctive and monetary relief from three practices employed by defendants, with the exception of defendant Egger, in violation of section 1402(e) and various provisions of the Constitution. The three practices challenged include the two that are the subject of Count One and, as well, defendants' practice of not including a statement of reasons with denials of Scientology ministers' applications for exemption from self-employment tax.

In Counts Three and Four, plaintiffs proceed under sections 1985 and 1986 of title 42, respectively, and seek declaratory, injunctive and monetary relief arising out of a conspiracy in which defendants, with the exception of defendant Egger, discriminatorily and illegally denied Scientology ministers' applications for exemption from self-employment tax.

Defendants, in their motion to dismiss, argue that all of plaintiffs' claims are barred by either the Declaratory Judgment Act, 28 U.S.C. § 2201 (Supp. III 1979), or the Anti-Injunction Act, 26 U.S.C. § 7421(a) (Supp. III 1979). The Declaratory Judgment Act restricts this Court's power to grant declaratory relief by providing that federal courts shall grant declaratory relief

except with respect to Federal taxes other than in actions brought under section 7428 of the Internal Revenue Code of 1954 or a proceeding under section 505 or 1146 of title 11.

28 U.S.C. § 2201 (emphasis added). The Anti-Injunction Act restricts this Court's power to grant injunctive relief by providing that

except as provided in sections 6212(a) and (c), 6213(a), 6672(b), 6694(c), 7426(a) and (b)(1), and 7429(b) of the Internal Revenue Code, no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

26 U.S.C. § 7421(a) (emphasis added). Although the two acts are not similarly worded, in this Circuit the two acts are interpreted coterminously. Investment Annuity, Inc. v. Blumenthal, 609 F.2d 1, 4 (D.C.Cir. 1979), cert. denied sub nom. First Investment Annuity Co. v. Miller, 446 U.S. 981, 100 S.Ct. 2961, 64 L.Ed.2d 837 (1980); Eastern Kentucky Welfare Rights Organization v. Simon, 506 F.2d 1278, 1283 (D.C.Cir.1974), rev'd on other grounds, 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976); "Americans United" Inc. v. Walters, 477 F.2d 1169, 1175-76 (D.C.Cir.1973), rev'd on other grounds sub nom. Alexander v. "Americans United" Inc., 416 U.S. 752, 94 S.Ct. 2053, 40 L.Ed.2d 518 (1974). Thus, despite its broad language, the Declaratory Judgment Act bars only declaratory relief sought "for the purpose of restraining the assessment or collection of any tax."

II.

In the first of their claims under Count One, plaintiffs request that this Court declare unlawful and enjoin defendants' practice of holding in abeyance and not ruling on Scientology ministers' applications for exemption from self-employment tax. Affirmatively, plaintiffs request that this Court order defendants to rule promptly on all of the Scientology ministers' applications currently pending. In opposing defendants' motion to dismiss, plaintiffs argue that this claim falls outside the jurisdictional bar imposed by the Declaratory Judgment Act and the Anti-Injunction Act.

As the Court of Appeals for this Circuit has explained, the Declaratory Judgment Act and the Anti-Injunction Act "did not contemplate barring actions ... where the litigation did not threaten to deny anticipated tax revenues to the Government." Eastern Kentucky Welfare Rights Organization v. Simon, 506 F.2d at 1284. Accord, Investment Annuity, Inc. v. Blumenthal, 609 F.2d at 4-5; McGlotten v. Connally, 338 F.Supp. 448, 453-54 (D.D.C.1972) (three-judge court). Under this interpretation of the Declaratory Judgment Act and the Anti-Injunction Act, plaintiffs' claim cannot be characterized as "for the purpose of restraining the assessment or collection of any tax" and thus falls outside the jurisdictional bar imposed by the acts.

Plaintiffs do not request that this Court order defendants to grant all of the Scientology ministers' applications for exemption from self-employment tax currently pending. Cf. Bob Jones University v. Simon, 416 U.S. 725, 738-42, 94 S.Ct. 2038, 2046-48, 40 L.Ed.2d 496 (1974); Alexander v. "Americans United" Inc., 416 U.S. 752, 760-61, 94 S.Ct. 2053, 2058, 40 L.Ed.2d 518 (1974); Investment Annuity, Inc. v. Blumenthal, 609 F.2d at 4-5; Oldland v. Kurtz, 528 F.Supp. 316, 320 n.5 (D.Colo.1981). Rather, plaintiffs request only that this Court order defendants, as in an action for a writ of mandamus, to rule on all of the Scientology ministers' applications currently pending. If the Court were to grant this request for relief, the IRS would not be precluded from assessing and collecting self-employment taxes from Scientology ministers. See Fisher v. Secretary of United States Department of Health, Education and Welfare, 522 F.2d 493, 504 (7th Cir. 1975); Oldland v. Kurtz, 528 F.Supp. at 320-21; Lugo v. Simon, 453 F.Supp. 677, 689-90 (N.D.Ohio 1978), rev'd on other grounds sub nom. Lugo v. Miller, 640 F.2d 823 (6th Cir. 1981).

In the second of their claims under Count One, plaintiffs request that this Court declare unlawful and enjoin defendants' practice of denying Scientology ministers' applications for exemption from selfemployment tax on the basis of Revenue Ruling 76-415. As plaintiffs concede, this claim falls within the jurisdictional bar imposed by the Declaratory Judgment Act and the Anti-Injunction Act. Plaintiffs nevertheless insist that this Court should exercise equitable jurisdiction over this claim in accordance with the judicially created Williams Packing exception. Under this exception, first enunciated by the Supreme Court in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7, 82 S.Ct. 1125, 1129, 8 L.Ed.2d 292 (1962), plaintiffs must demonstrate that under no circumstances could the Government prevail on the merits and that a basis for equity jurisdiction otherwise exists. For equity jurisdiction to exist, plaintiffs must demonstrate both irreparable injury and the unavailability of an adequate remedy at law. Id. See Bob Jones University v. Simon, 416 U.S. at 745-46, 94 S.Ct. at 2050; Alexander v. "Americans United" Inc., 416 U.S. at 761-62, 94 S.Ct. at 2058-59.

Despite plaintiffs' contentions to the contrary, this Court lacks jurisdiction to grant the relief requested in this claim because the requirements of the Williams Packing exception are not satisfied. Specifically, plaintiffs have not met their burden of...