Huene v. U.S. Dep't of the Treasury

• Decision Date: 09 April 2012
• Docket Number: No. 2:11-cv-02110 JAM KJN PS,2:11-cv-02110 JAM KJN PS
• Parties: DONALD R. HUENE, Plaintiff, v. U.S. DEPARTMENT OF THE TREASURY, INTERNAL REVENUE SERVICE; and ANTHONY SHELLY, Defendants.
• Court: U.S. District Court — Eastern District of California

DONALD R. HUENE, Plaintiff,

v. U.S. DEPARTMENT OF THE TREASURY,INTERNAL REVENUE SERVICE; and ANTHONY SHELLY, Defendants.

No. 2:11-cv-02110 JAM KJN PS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

DATED: April 9, 2012

FINDINGS AND RECOMMENDATIONS

Presently before the court is defendant Anthony Shelly's motion to dismiss plaintiff's claims against Shelly for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) (Dkt. Nos. 14-15).¹ Shelly moves to dismiss plaintiff's claims brought pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, and the Privacy Act, 5 U.S.C. § 552a, for lack of subject matter jurisdiction and for failure to state a claim.² Shellymoves to dismiss plaintiff's claim asserted pursuant to 42 U.S.C. § 1983 for failure to state a claim on the grounds that Shelly is not a state actor and did not act under color of state law. Plaintiff opposes Shelly's motion to dismiss (Dkt. Nos. 19-20).

Because oral argument would not materially aid the resolution of the pending motion, this matter is submitted on the briefs and record without a hearing. See Fed. R. Civ. P. 78(b); E. Dist. Local Rule 230(g).

The undersigned has considered the briefs and appropriate portions of the record in this case and, for the reasons stated below, recommends that Shelly's motion to dismiss be granted. Specifically, the undersigned recommends that plaintiff's FOIA claim be dismissed with prejudice as to Shelly because Shelly is not a proper defendant as to such a claim. Additionally, the undersigned recommends that plaintiff's Privacy Act claims be dismissed with prejudice as to Shelly because Shelly is not a proper defendant in regards to such claims. Finally, the undersigned recommends that plaintiff's Section 1983 claim be dismissed with prejudice as to Shelly because Shelly is not a state actor and did not act under color of state law. However, the undersigned recommends that plaintiff be granted leave to file an amended complaint that attempts to assert a proper claim or proper claims against Shelly as a federal actor.

I. BACKGROUND

Generally, plaintiff's complaint concerns the actions of the IRS and its agents in connection with a continuing tax audit of plaintiff. Plaintiff alleges that the IRS had "previously ordered Plaintiff for examinations of scheduled [sic] F filings on numerous occasions," and "decided to renew their examination." (Compl. ¶ 7.) Plaintiff alleges that on December 14, 2010, he "granted permission for Richard Holland and Necia Wollerman to represent [him] and they were given power of attorney to contact and complete the audit." (Id.) Plaintiff identifies Wollerman as a certified public accountant (see id. ¶ 10), but it is unclear who Wollerman is and what roles he or she played in the events alleged in the complaint.

Plaintiff alleges that two agents of the IRS, defendant Anthony Shelly and SiuChan, requested voluminous records in connection with the audit. (See Compl. ¶¶ 6, 8.) Plaintiff alleges that because of the volume of documents at issue, he ultimately decided to represent himself before the IRS. (Id. ¶ 8.) Accordingly, plaintiff alleges that he advised the IRS, through a letter to Chan dated April 7, 2011, that Holland was no longer representing plaintiff, that the power of attorney previously granted to Holland had been rescinded, that plaintiff would be representing himself, and that plaintiff should be the only person contacted by the IRS in connection with the audit. (See id. ¶¶ 8-9.)

Plaintiff alleges that on or about June 6, 2011, he received an e-mail from Holland indicating that Holland had been contacted by Shelly, and plaintiff further alleges that Shelly did not advise plaintiff of that contact. (Compl. ¶ 10.) Plaintiff alleges that in response to Shelly's contact with Holland, plaintiff again advised the IRS, in a letter dated June 7, 2011, that plaintiff had completely rescinded Holland's authority to represent plaintiff, that plaintiff was representing himself, that plaintiff had found out about Shelly's contact with Holland, and that plaintiff was being billed by Holland for Shelly's unauthorized contact with Holland. (See id. ¶ 11.) Plaintiff asserts that the letter characterized Shelly's contact with Holland as a violation of Internal Revenue Code § 6103(a), which designates tax returns and return information as confidential and restricts the disclosure of such information.³ (Id.)

Plaintiff alleges that he subsequently sent a letter to Shelly in which plaintiff stated that if Shelly's contact or contacts with Holland were merely a mistake, plaintiff would accept an apology, sent within five days, explaining such inadvertent contact. (Compl. ¶ 14.) Plaintiff suggests that he advised Shelly that Shelly's failure to timely respond to plaintiff's letter would confirm for plaintiff that Shelly's contact or contacts with Holland, and any related disclosures of information, constituted "willful, wanton, and malicious" disclosures of tax information in violation of Internal Revenue Code § 6103(a). (Id.) Shelly allegedly never responded. (Id. ¶ 15.)

Plaintiff alleges that despite his previous letters, Shelly directly contacted Holland again on July 6, 2011. (Compl. ¶ 16.) Plaintiff alleges that in a letter dated July 11, 2011, he again informed Shelly of Shelly's willful and malicious conduct that constituted a "serious breach of the law." (Id. ¶ 17.) Plaintiff alleges that his letter again advised Shelly that plaintiff was being billed by Holland for Shelly's unauthorized contacts with Holland, all of which did nothing to resolve the underlying tax issues. (See id. ¶¶ 17-18.)

Plaintiff alleges that despite his myriad letters to the IRS, Shelly "nonetheless continued to contact" Holland knowing that such contact was not authorized and that plaintiff was being billed for Holland's time. (See Compl. ¶ 19.) Plaintiff alleges that Shelly's continued, unauthorized contacts with Holland constituted not only a violation of Internal Revenue Code § 6103(a), but also a violation of plaintiff's rights secured by the Fourth Amendment to the United States Constitution. (Id. ¶¶ 19, 31.) He further alleges that Shelly's unlawful contacts caused him "monetary and time damages" and "adverse and harmful effects" including mental distress, emotional distress, embarrassment, and humiliation. (Id. ¶¶ 23, 28),

Plaintiff filed his complaint on August 5, 2011, naming the IRS and Shelly asdefendants.⁴ Plaintiff identifies three claims for relief and seeks injunctive relief, declaratory relief, and damages. First, plaintiff alleges that defendants' denial of plaintiff's access to plaintiff's tax records violated FOIA and the Privacy Act.⁵ (Compl. ¶ 26.) Second, plaintiff alleges that defendants' dissemination of plaintiff's private tax information without plaintiff's consent or authorization violated the Privacy Act. (Id. ¶¶ 27-28.) Finally, plaintiff alleges a claim pursuant to 42 U.S.C. § 1983, asserting that defendants violated his Fourth Amendment rights. (Id. ¶¶ 29-32.)

II. LEGAL STANDARDS

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

A motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) or 12(h)(3) challenges the court's subject matter jurisdiction. Federal district courts are courts of limited jurisdiction that "may not grant relief absent a constitutional or valid statutory grant of jurisdiction," and "[a] federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." A-Z Int'l v. Phillips, 323 F.3d 1141, 1145 (9th Cir. 2003) (citations and quotation marks omitted); see also Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject matter jurisdiction, the court must dismiss the action."). When ruling on a motion to dismiss for lack of subject matter jurisdiction, the court takes the allegations in the complaint as true. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). However, the court is not restricted to the face of the pleadings and "may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction." McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988); see also Warren v.Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) ("A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence."). "When subject matter jurisdiction is challenged under Federal Rule of Procedure 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion." Tosco Corp. v. Communities for a Better Env't., 236 F.3d 495, 499 (9th Cir. 2001) (per curiam), abrogated on other grounds by Hertz Corp v. Friend, 130 S. Ct. 1181 (2010); see also Colwell v. Dep't of Health & Human Servs., 558 F.3d 1112, 1121 (9th Cir. 2009) ("In support of a motion to dismiss under Rule 12(b)(1), the moving party may submit 'affidavits or any other evidence properly before the court . . . . It then becomes necessary for the party opposing the motion to present affidavits or any other evidence necessary to satisfy its burden of establishing that the court, in fact, possesses subject matter jurisdiction." (citation omitted, modification in original)).

B. Motion to Dismiss for Failure to State A Claim

A motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the sufficiency of the pleadings set forth in the complaint. Vega v. JPMorgan Chase Bank, N.A., 654 F. Supp. 2d 1104, 1109 (E.D. Cal. 2009). Under the "notice pleading" standard of the Federal Rules of Civil Procedure, a plaintiff's complaint must provide, in part, a "short and plain statement" of plaintiff's claims showing entitlement to relief. Fed. R. Civ. P. 8(a)(2); see also Paulsen v. CNF, Inc., 559 F.3d...