Judicial Watch, Inc. v. Rossotti

• Citation: 217 F.Supp.2d 618
• Decision Date: 27 March 2002
• Docket Number: No. Civ.A. WMN-01-2672.,Civ.A. WMN-01-2672.
• Parties: JUDICIAL WATCH, INC. v. Charles O. ROSSOTTI, et al.
• Court: U.S. District Court — District of Maryland

217 F.Supp.2d 618

JUDICIAL WATCH, INC. v. Charles O. ROSSOTTI, et al.

No. Civ.A. WMN-01-2672.

United States District Court, D. Maryland.

March 27, 2002.

David Barmak, Joanne B. Jarquin, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, Reston, VA, for plaintiff.

Stuart D. Gibson, United States Department of Justice, Washington, DC, for defendants.

MEMORANDUM

NICKERSON, District Judge.

Before the Court are Plaintiff's Motion to Stay or Enjoin Enforcement of Administrative Summons (Paper No. 11) and a Motion to Dismiss filed by Defendants Rossotti, Dorsey, Breslan, Hampel, and Miller ("Individual Defendants" or "Defendants") (Paper No. 13). The motions have been exhaustively briefed and are ripe for decision. Upon review of the pleadings and applicable case law, the Court determines that no hearing is necessary (Local Rule 105.6), and that Plaintiff's motion will be denied and Defendants' motion will be granted.

I. BACKGROUND

This is a highly unusual case that, at its heart, is about an organization seeking to stop the Internal Revenue Service from auditing it. The claims set forth in Plaintiff's Amended Complaint¹ are in the form of a detailed chronology of events, much of which is recited here in order to provide context for this dispute.

Plaintiff describes itself as a "non-partisan legal `watchdog' organization that relies on the Freedom of Information Act (`FOIA'), the civil discovery process, and court litigation, among other tools, to protect the American people from, and educate them about, corruption in government and abuses of power, and to enforce the principle that `no one is above the law.'" Amended Complaint at ¶ 2. Judicial Watch was founded in 1994, and in 1995 obtained a ruling from the I.R.S. that it met the requirements for tax exemption as an organization described in 26 U.S.C § 501(c)(3).² See, Amended Complaint at Exh. B.

In the amended complaint, Plaintiff describes some of its activities, stating that "Judicial Watch has filed over eighty public interest lawsuits concerning the President, Mrs. Clinton, and/or the Clinton Administration, and other high government officials of all political parties." Amended Complaint at ¶ 13. Plaintiff further states that its activities "are not limited to the Clinton Administration." Id. at ¶ 14. The complaint describes an alleged "pattern of abuses of power" by the Clinton Administration, which Judicial Watch says it uncovered, including the administration's manipulation of I.R.S. officials to retaliate against its political enemies by auditing them. Id. at ¶¶ 15, 16. These alleged abuses were documented by Judicial Watch in a September, 1998, report entitled "Crimes and Other Offenses Committed by President Bill Clinton Warranting His Impeachment and Removal from Elected Office." Id. at ¶ 17. Judicial Watch submitted the report to members of the U.S. House of Representatives Committee on the Judiciary, during impeachment proceedings against President Clinton in October, 1998. Id.

Just a few days later, Judicial Watch received a letter, signed by Defendant Dorsey, an I.R.S. agent, informing Plaintiff that it had been selected for an audit. Id. at ¶ 20. The letter explains that the purpose of the audit is, inter alia, "to determine that the organization is operating in the manner stated and for the purpose set forth in its application for recognition of exemption." Id. at Exh. A (October 5, 1998 Letter). Plaintiff claims that the document request accompanying the letter asking Judicial Watch to reveal the names, addresses, and political affiliations of its directors, was an "extraordinary demand" evidencing the retaliatory nature of the audit. Id. at ¶ 21. Plaintiff alleges that the audit letter was sent at the request of President Clinton's Executive Office, in retaliation for Judicial Watch's accusations. Id. at ¶ 23.

Since the receipt of the audit letter, Plaintiff has resisted the I.R.S.'s efforts to conduct the audit. On October 14, 1998, Plaintiff sent comprehensive FOIA requests to the I.R.S., seeking access to all documents that "refer or relate" to Judicial Watch or its founder "in any way." Id. at ¶ 25. According to Plaintiff, the I.R.S. has not fully responded to these requests. Id. Plaintiff also met with various I.R.S. officials, including some of the Defendants, in late 1998 and early 1999, to discuss the audit. At a November, 1998, meeting, Plaintiff alleges that Defendant Dorsey said the audit was "a hot potato" and that she had received phone calls from I.R.S. "higher ups" about it. Id. at ¶ 26. Plaintiff also claims that at a January, 1999 meeting, Defendant Breslan, another I.R.S. agent, told Judicial Watch representatives, "What do you expect when you sue the President?" and commented that if Judicial Watch scrutinizes the government, the government will scrutinize Judicial Watch. Id. at ¶¶ 27, 28.

In May, 1999, the I.R.S. refused Judicial Watch's request to meet with then-Commissioner Rossotti. Id. at ¶ 33. Plaintiff was also informed that its concerns about the audit being retaliatory had been forwarded to the Treasury Inspector General for Tax Administration (TIGTA), the internal monitor of I.R.S. activities. Id. At a later meeting with the Acting Director for Exempt Organizations, Defendant Steven Miller, Plaintiff claims that Mr. Miller "conceded that the I.R.S.'s conduct had created at least the appearance of a `problem'." Id. at ¶ 35. Approximately one month later, in July of 1999, Plaintiff was informed by Defendant Agent Hampel that the audit was being withdrawn pending the TIGTA investigation.³

The next sequence of events set forth in the Amended Complaint describes a proceeding in litigation filed by Judicial Watch, in which a White House employee testified about the White House's failure to provide incriminating email evidence in response to subpoenas. Id. at ¶ 37. Plaintiff describes the result of this testimony as "a barrage of very negative press and legal ramifications for President and Mrs. Clinton and the White House." Id. at ¶ 39. According to Plaintiff, Defendant Hampel then "immediately" contacted Judicial Watch's outside counsel to "remind" him that Plaintiff was still on the "radar screen" for an audit. Id. at ¶ 40. Defendant Hampel allegedly issued another reminder a few months later, shortly after a court in the above-mentioned proceedings issued a ruling that was adverse to the Clinton administration. Id. at ¶ 43.

Following more correspondence⁴ between Plaintiff and the I.R.S. during 2000, Defendant Miller agreed to further delay consideration of the audit until President Clinton left office on January 20, 2001. Id. at ¶¶ 45-48. On January 8, 2001, however, the I.R.S. sent Judicial Watch a letter stating that the audit was continuing, and asking that documents be submitted to the I.R.S. by January 30, 2001. Id. at Exh. I (January 8, 2001, Letter). Judicial Watch did not comply with this request, and proceeded to submit third, fourth, and fifth FOIA requests to the I.R.S., essentially requesting any and all documents related to Judicial Watch. Id. at ¶¶ 51, 52, and 54. Then, according to Plaintiff, the I.R.S. sent another document request to Judicial Watch in August, 2001, approximately three weeks after the organization filed suit against then-Commissioner Rossotti in a separate action. Id. at ¶ 56.

In September, 2001, Plaintiff filed the instant action against then-Commissioner Rossotti, four individual I.R.S. agents (Donna Dorsey, M. Peter Breslan, Wayne Hampel, and Steven T. Miller), and the I.R.S. itself.⁵ The crux of Plaintiff's claims is that the I.R.S. audit is "retaliatory, politically-motivated, and unconstitutional." Amended Complaint at ¶ 1. Count 1 alleges that the audit violates Plaintiff's freedom of speech and association guaranteed by the First Amendment of the United States Constitution, by punishing Plaintiff for its political speech. Count 2 asserts a violation of Plaintiff's Fifth Amendment rights to due process, and Count 3 brings a selective prosecution claim. These three counts name each of the Individual Defendants, and in them Plaintiff seeks monetary and injunctive relief.⁶ More specifically, Plaintiff requests that "Defendants be preliminarily and permanently enjoined from pursuing the proposed retaliatory, politically-motivated audit and their other retaliatory actions." Amended Complaint, p. 23-24. Plaintiff identifies its damages as including the loss of staff hours and resources in responding to the proposed audit. Id.

On January 18, 2002, Judicial Watch was served by the I.R.S. with an administrative summons demanding production of documents within eight business days. Plaintiff did not comply with the summons, and has filed the instant motion to stay or enjoin any attempt by the I.R.S. to initiate administrative enforcement proceedings against Judicial Watch. A few days later, the Individual Defendants filed the instant motion to dismiss all claims against them.

II. LEGAL STANDARD FOR MOTION TO DISMISS

When reviewing a motion to dismiss, the court must assume all of the allegations to be true, must resolve all doubts and inferences in favor of the plaintiff, and must view the allegations in a light most favorable to the plaintiff. Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999). The complaint should not be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Finally, in ruling on the motion, the Court should consider only the allegations contained in the complaint, the exhibits to the complaint, matters of public record, and other similar materials that are subject to judicial notice. Anheuser-Busch, Inc. v. Schmoke, 63 F.3d 1305, 1312 (4th Cir. 1995), vac. on other grounds, 517 U.S. 1206, 116 S.Ct. 1821, 134 L.Ed.2d 927 (1996).

III. DISCUSSION

A. Injunctive Relief

The...