Johnson v. Sawyer, 91-2763

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore JOHNSON, GARWOOD, and WIENER; WIENER; GARWOOD
Citation980 F.2d 1490
Parties-598, 61 USLW 2431, 93-1 USTC P 50,065 Elvis E. JOHNSON, Plaintiff-Appellee, v. Robert SAWYER, et al., Defendants, United States of America, Defendant-Appellant.
Docket NumberNo. 91-2763,91-2763
Decision Date29 December 1992

Page 1490

980 F.2d 1490
71 A.F.T.R.2d 93-598, 61 USLW 2431,
93-1 USTC P 50,065
Elvis E. JOHNSON, Plaintiff-Appellee,
Robert SAWYER, et al., Defendants,
United States of America, Defendant-Appellant.
No. 91-2763.
United States Court of Appeals,
Fifth Circuit.
Dec. 29, 1992.

Page 1491

Ronald G. Woods, U.S. Atty., Houston, Tex., Michael J. Salem, Tax Div., Dept. of Justice, Jonathan S. Cohen, Gary R. Allen, Chief, Joy L. Pritts, Atty., Appellate Section, Tax Div., Dept. of Justice, Robert S. Greenspan, Asst. Director, Appellate Staff,

Page 1492

Dept. of Justice, Jacob M. Lewis, Atty., Washington, D.C., for defendant-appellant.

Larry A. Campagna, Robert I. White, Chamerlain, Hrdlicka, White, Johnson & Williams, Houston, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before JOHNSON, GARWOOD, and WIENER, Circuit Judges.

WIENER, Circuit Judge:

In this suit for damages under the Federal Torts Claims Act (FTCA or the Act), 1 the United States as Defendant-Appellant appeals the decision of the district court in favor of the Plaintiff-Appellee Elvis E. Johnson. His FTCA action arises from the public dissemination of private taxpayer information about Johnson by agents of the IRS. Finding no reversible error on the issue of liability, we affirm that part of the judgment of the district court as well as special damages albeit with a modification of the pension loss element. But in the absence of any explanation by the district court of how it calculated damages for emotional distress and mental anguish, we reverse and remand for further explanation or re-calculation of the quantum of damages awarded for that aspect of Johnson's injuries.


The facts of this case are reported in considerable detail in the published opinions of the district court. 2 We therefore set out in this opinion only those facts required to give necessary perspective of the issues of significance presented by the instant appeal.

Elvis Johnson began selling insurance for a branch of the American National Life Insurance Company (American National) in the early 1950s. Johnson was a proficient salesman who advanced up the company ladder, eventually becoming one of its sales leaders. In 1972, Johnson moved from Missouri, where he was head of a sales region, to American National's headquarters in Galveston, Texas.

After the move to Galveston, Johnson continued to advance. Eventually, he became the Senior Executive Vice President, the Chief Marketing Officer, and a member of the Board of Directors. At the time of his forced resignation, he was in line to become the company's next Chief Executive Officer.

In the late 1970s, the Internal Revenue Service (IRS) began looking into Mr. and Mrs. Johnson's tax returns. Discrepancies were discovered in the Johnsons' records. The discrepancies were due, in large part, to the erroneous (or as the district court characterized them, "eccentric") bookkeeping practices of Mrs. Johnson, to whom Johnson had delegated his personal expense record keeping, in large measure to familiarize his wife with family business matters in case of his unexpected demise. 3 An IRS examining agent referred the case to the IRS Criminal Investigation Division, which eventually assigned the case to Special Agent Stone. After the criminal investigation was completed, the United States Department of Justice recommended that Johnson and his wife to be prosecuted for tax evasion. 4

During the course of the investigation, Mrs. Johnson had disclosed her part in the matter by submitting to a deposition at the office of the assistant U.S. Attorney assigned to the case, James Powers. Johnson did not want the IRS to upset his wife further regarding their taxes and was adamant that she not be indicted. Eager to work out an arrangement that would ensure his wife's noninvolvement, Johnson

Page 1493

agreed to Powers's plea bargain offer: In exchange for Johnson's plea of guilty to one count of tax evasion, the government would recommend probation for him and would not indict or further trouble Mrs. Johnson. As a part of the plea agreement the government also accepted inclusion of several measures designed to keep the prosecution from becoming known to the general public. The agreement provided that:

(1) all papers filed in the case would give plaintiff's name as "Elvis Johnson" rather than "E.E. 'Johnny' Johnson," by which he is normally known;

(2) papers requiring Johnson's street address would give it as 1100 Milam Street in Houston, which was the address of his attorney, and no reference to his address at 25 Adler Circle, Galveston would be made;

(3) the Government would seek to have the presentence investigation completed before the criminal information was filed so that the probation officer's recommendation could be made known to the judge by the time the information was filed;

(4) the information would be filed late on a Friday afternoon, and the case would be brought before the judge immediately, so that arraignment and sentencing could be completed that same afternoon; and

(5) the U.S. Attorney's office would publish no press release.

Powers also agreed to recommend probation, and not to oppose a plea of nolo contendere. 5

Faithful to that arrangement, the government filed a Criminal Information charging Johnson with but a single count of tax evasion on his 1975 return. 6 To minimize the chance of accidental publicity, the filing was timed for late on the afternoon of Friday, April 10, 1981. Although the court refused to accept a nolo plea, it was satisfied to assess a probated sentence on Johnson's plea of guilty. In a courtroom devoid of spectators, Johnson entered his guilty plea and received a probated sentence; no fine was imposed.

In the instant FTCA case, the district court found, among other facts regarding the plea arrangement, that Johnson had kept his closest business associates and superiors apprised of his problems with the IRS; and that his position with the company was secure, regardless of the guilty plea, as long as there was no public scandal regarding Johnson's tax problems. American National was a publicly held corporation, and Johnson's superiors did not want it known outside the company that the second most senior officer of the corporation had pleaded guilty to a criminal tax charge.

Despite the extraordinary measures that both the United States Attorney and Johnson's counsel had taken, however, public knowledge followed quickly on the heals of Johnson's plea. Without advising or consulting Powers or anyone else at the Department of Justice, the IRS issued a news release on Wednesday, April 15, 1981--the third business day after Johnson's plea--that went well beyond the provisions of the plea agreement and, more significantly, disclosed vital information that was not contained in the records of the court in which Johnson had pleaded guilty. 7

When Johnson learned of the release, he immediately contacted his attorney, who just as immediately called Powers. Johnson's lawyer was told by Powers that he

Page 1494

was not responsible for the release and that Johnson's lawyer should speak to someone with the IRS. Counsel then called the IRS and informed officials there that the release contained information that was not supposed to be disclosed as well as erroneous information. Compounding the damage, and over the strenuous objections of Johnson's counsel, the IRS issued a second release on April 17, 1981, 8 which corrected an error regarding the exact charge to which Johnson had pleaded guilty and restated the specific facts about Johnson and his tax problems.

Once the information about Johnson's guilty plea in the tax evasion case became so widely and publicly known, the effects on his career were tragic and swift. He was "asked" to resign from his positions at American National; the CEO and other senior officials with the company had been willing to allow Johnson to keep his position and his career track, but only as long as his tax problem was kept within the company and not made known to the public at large. Johnson and his wife left Galveston and returned to the Missouri branch office where he had begun his career with American National. There Johnson worked as a salesman for American National until he was forced to retire at the age of sixty-five, the mandatory retirement age for all company employees other than the few topmost executives, who were permitted to serve actively until age 70.

Johnson sued several of the IRS officials involved in the press release, claiming that the release of disclosed tax information violated 26 U.S.C. § 6103. Johnson subsequently amended his complaint to include an FTCA claim against the United States. The FTCA claim was severed from those against the individual defendants and tried to the court without a jury. At the conclusion of the bench trial, the court granted Johnson a judgment against the United States in the amount of $10,902,117. The United States timely appealed that judgment.


A. Johnson's Claim Under the FTCA

The FTCA constitutes a general waiver of the federal government's sovereign immunity from tort claims. 9 Under the Act, suits against the United States are authorized

for injury or loss of property, or personal injury or death caused by negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. 10

The Act also provides that the United States will be liable in tort "in the same manner and to the same extent as a private individual under like circumstances." 11

To recover under the FTCA, Johnson must be able to succeed against the government in a state law tort cause of action. Johnson's theory of...

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26 cases
  • Johnson v. Sawyer, 91-2763
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 16, 1995
    ...(S.D.Tex.1986). On the government's appeal, a divided panel of this Court affirmed the determination of liability. Johnson v. Sawyer, 980 F.2d 1490, 4 F.3d 369 (5th Cir.1993). 2 We voted the case en banc, and now reverse. The panel majority held that the issuance of the press releases viola......
  • Carcamo–Lopez v. Does
    • United States
    • United States District Courts. 5th Circuit. Western District of Texas
    • September 2, 2011
    ...the very purposes that motivated enactment of the FTCA-a classic example of the exception swallowing the rule.Johnson v. Sawyer, 980 F.2d 1490, 1502 (5th Cir.1992), vacated on other grounds,47 F.3d 716 (5th Cir.1995) (quoting Collins v. United States., 783 F.2d 1225, 1233 (5th Cir.1986)). S......
  • Johnson v. Sawyer, 96-20667
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • August 21, 1997
    ...$10 million. Johnson v. Sawyer, 760 F.Supp. 1216, 1233 (S.D.Tex.1991). Initially, our court affirmed the judgment, Johnson v. Sawyer, 980 F.2d 1490 (5th Cir.1992) and 4 F.3d 369 (5th Cir.1993), but our en banc court reversed and remanded with directions to dismiss the FTCA claim. Johnson, 4......
  • Johnson v. Sawyer, 91-2763
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • October 14, 1993
    ...GARWOOD, Circuit Judge, dissenting: I continue to dissent because, for the reasons explained in my prior opinion, Johnson v. Sawyer, 980 F.2d 1490 at 1506 et seq. (5th Cir.1992), recovery herein is based on federal, not Texas, law, contrary to the Federal Tort Claims Act (FTCA), and no mate......
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