Hawkes v. Internal Revenue Service

• Citation: 467 F.2d 787
• Decision Date: 25 September 1972
• Docket Number: No. 71-1633.,71-1633.
• Parties: A. Kenneth HAWKES, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

467 F.2d 787 (1972)

A. Kenneth HAWKES, Plaintiff-Appellant, v. INTERNAL REVENUE SERVICE, Defendant-Appellee.

No. 71-1633.

United States Court of Appeals, Sixth Circuit.

September 25, 1972.

COPYRIGHT MATERIAL OMITTED

B. C. Clifton, Memphis, Tenn., for plaintiff-appellant; Saul C. Belz, Burch, Porter & Johnson, Memphis, Tenn., on brief.

Dane M. Scaccia, Love, Balducci & Scaccia, Syracuse, N. Y., on brief for amicus curiae.

Richard Halberstein, Atty., Tax Div., Dept. of Justice, Washington, D. C., for defendant-appellee; Fred B. Ugast, Acting Asst. Atty. Gen., Meyer Rothwacks and Bennet N. Hollander, Attys., Tax Div., Dept. of Justice, Washington, D. C., on brief; Thomas F. Turley, Jr., U.S. Atty., J. N. Raines, Asst. U.S. Atty., Memphis, Tenn., of counsel.

Before CELEBREZZE, MILLER and KENT, Circuit Judges.

CELEBREZZE, Circuit Judge.

This is an appeal from a District Court's refusal to order disclosure to Appellant of certain information possessed by the Internal Revenue Service. Appellant's request for such disclosure order was based upon the "Freedom of Information Act," 5 U.S.C. § 552.

Our consideration of this appeal necessarily leads us to construe portions of the Act and in so doing to consider the fundamental problems of public access to government information with which the Act dealt. The facts which give rise to the present dispute are not complicated.

Kenneth A. Hawkes was indicted for criminal tax fraud in June, 1970. As part of his effort to prepare a defense against the charges Hawkes sought to obtain information and documents held by the Internal Revenue Service. He sought some of the desired material through the regular discovery procedures provided by Rules 16 and 17(c) of the Rules of Criminal Procedure. Additionally, however, he also sought materials and information directly from the Revenue Service.

In July, 1970 a letter was sent to the Assistant Commissioner of Internal Revenue formally requesting: (1) copies of Forms 899 and 4340 recording past assessments and payments relevant to Hawkes' federal tax obligations; (2) copies of IRS documents pertaining to the "closing" of an audit of Hawkes' 1965 tax returns; (3) specified portions¹ of the Internal Revenue Manual relating to the examination of returns, interrogation of taxpayers by agents of the Service and other matters which Hawkes felt would be useful in preparing a defense. While the first two sets of material had also been requested in the motion for discovery,² the Manual was requested for the first time in the letter to the Assistant Commissioner.

The Assistant Commissioner replied to Hawkes' requests in a letter dated July 17, 1970. The Internal Revenue Service official ordered that relevant 4340 Forms be made available to Hawkes; he declined to release the requested portions of the Internal Revenue Service Manual or the material pertaining to the closing of the 1965 audit, however. Hawkes appealed to the Commissioner of Internal Revenue seeking disclosure of all the materials originally requested. The Commissioner rejected the appeal and affirmed the decision of his subordinate on September 24, 1970.

Thereafter, on October 27, 1970, while the criminal charges were still pending, Hawkes returned to the District Court and commenced this separate civil suit, seeking an order requiring the Internal Revenue Service to disclose all materials requested in Hawkes' letter to the Assistant Commissioner. He predicated his complaint upon the provisions of 5 U.S.C. § 552. The case was assigned to the District Judge who was presiding over Hawkes' criminal case.

The Internal Revenue Service moved to dismiss the civil suit on the grounds that: (1) Hawkes' failure to seek the I. R.S. Manual through criminal discovery processes barred resort to the equity powers of the Court under the Freedom of Information Act and (2) Even if the Court were free to exercise its powers with respect to the documents the Manual was excluded from the general disclosure requirements of the Freedom of Information Act by 5 U.S.C. § 552(b)(2).

The District Court apparently accepted one or both of these arguments. The substantive portion of its brief Memorandum Decision is reproduced in its entirety below:

This action is before the Court on the Government\'s motion to dismiss. In the action, plaintiff seeks, in aid of his defense against a pending criminal income tax fraud indictment, a copy of the handbooks and manuals outlining procedures for I.R.S. agents to follow in investigating the financial affairs of taxpayers. The basis of the motion to dismiss is that plaintiff can get all to which he is entitled through discovery in the criminal case and also that this material is exempt under the terms of the Freedom of Information Act, upon which Act plaintiff relies. Both parties have filed ample memoranda and, therefore, we do not believe that oral argument is necessary.

We conclude that the Government\'s motion to dismiss is well taken and that the action should be dismissed.

Upon entry of this decision Hawkes filed a notice of appeal.³

Even a cursory comparison of the facts set forth thus far in this opinion with the Memorandum Decision of the District Court reveals a significant problem. Appellant's complaint in this case sought disclosure of three distinct sets of materials: Certain I.R.S. forms relating to the assessment and payment of taxes by Appellant; information respecting a survey and audit of his 1965 tax returns; and portions of the I.R.S. Manual. The District Court's decision mentions only the Manual, however. The I.R.S. arguments⁴ accepted in the decision were directed only toward preventing the disclosure of the Manual; they did not deal with the other items. Thus neither explicitly nor implicitly through the adoption of the I.R.S. arguments did the District Court deal with the propriety of releasing the other documents sought in the complaint; nevertheless it dismissed the complaint in its entirety. This obvious failure to consider certain elements of the complaint requires a remand to enable the District Court to consider the propriety of a disclosure order respecting the documents other than the Manual.⁵

The parties' attention on appeal, as below, has of course been focused upon the question of whether or not disclosure of the designated portions of the Internal Revenue Service Manual is required by the Freedom of Information Act. It is to a consideration of that question that we now turn.

The Freedom of Information Act, under which disclosure of the Manual is sought and under which this suit was commenced, became effective in 1967. Though there has been considerable dispute as to the meaning of specific portions of the Act, there can be no question as to the overall intent of the Congress in passing the Act. Chief Judge Bazelon of the United States Court of Appeals for the District of Columbia put matters succinctly when he said: "The legislative history establishes that the primary purpose of the Freedom of Information Act was to increase the citizen's access to government records." Bristol-Myers Co. v. Federal Trade Commission, 138 U.S.App.D.C. 22, 424 F.2d 935, 938 (1970) cert. den. 400 U.S. 824, 91 S.Ct. 46, 27 L.Ed.2d 52 (1970). The Act, as codified (5 U.S.C. § 552) is divided into three major subsections. Subsection (a) describes those documents which must be made available to the public. Subsection (b) specifically exempts certain materials from compulsory disclosure under the Act, while subsection (c) announces that the Act:

"* * * does not authorize with-holding of information or limit the availability of records to the public, except as specifically stated in the Act."

Force is given to the disclosure requirements by subsection (a)(3) which provides:

Each agency, on request for identifiable records made in accordance with published rules stating the time, place, fees to the extent authorized by statute, and procedure to be followed, shall make the records promptly available to any person. On complaint, the district court of the United States in the district in which the complainant resides, or has his principal place of business, or in which the agency records are situated, has jurisdiction to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant. In such a case the court shall determine the matter de novo and the burden is on the agency to sustain its action. In the event of noncompliance with the order of the court, the district court may punish for contempt the responsible employee, and in the case of a uniformed service, the responsible member.

The Internal Revenue Service recognized that under the statute it had the burden of proof before the District Court and was obligated to show why disclosure should not be ordered if it wished to protect its records against public revelation.

It offered the District Court two arguments designed to avoid issuance of a disclosure order and repeats them now before us in seeking to justify the District Court's dismissal of Appellant's action.

The first argument proceeds on the assumption that a District Court dealing with a Freedom of Information case and possessing the power to issue injunctive orders under the Act is bound by those rules which traditionally governed a chancellor sitting in equity. Among the traditional restrictions on the exercise of equity power is the rule that equitable relief not be granted where an adequate remedy at law exists. See Vuin v. Burton, 327 F.2d 967, 970 (6th Cir. 1964). The Internal Revenue Service contends that at the time this suit was commenced Appellant had just such remedy at law available to him had he chosen to seek the Manual through the ordinary discovery process. For this reason, Appellee urges, the District Court was correct in dismissing the complaint and this Court properly should affirm that decision.

We cannot agree that affirmance is...