Kenny v. United States
| Decision Date | 19 July 2012 |
| Docket Number | No. 10-4432,10-4432 |
| Parties | ROBERT KENNY, Appellant v. UNITED STATES; STEVEN WALD; MARK TRYBA; ANDRIA GREENIDGE |
| Court | U.S. Court of Appeals — Third Circuit |
NOT PRECEDENTIAL
On Appeal from the United States District Court
for the District of New Jersey
(Honorable Garrett E. Brown, Jr.)
Submitted Pursuant to Third Circuit LAR 34.1(a)
June 4, 2012
Before: SCIRICA, GREENAWAY, JR. and NYGAARD, Circuit Judges.
Robert Kenny appeals the dismissal and denial of leave to amend his complaint against the Internal Revenue Service (IRS) and several IRS employees for alleged statutory and constitutional violations. We will affirm.
From 2004 to 2007, Kenny, a tax attorney authorized to practice before the IRS, filed three administrative complaints with the Treasury Inspector General for Tax Administration (TIGTA) against IRS collection officer Steven Wald, alleging interference with taxpayers' representation. The Inspector General referred the complaints to Andria Greenidge, Wald's supervisor, who dismissed the complaints and, according to Kenny's allegations, recommended that Wald file a practitioner misconduct complaint against Kenny, which he did. The Office of Professional Responsibility (OPR) then opened an investigation into Kenny's potential misconduct. In the course of its investigation, the OPR examined Kenny's tax returns and discovered he had twice filed late without an extension. In May 2008, OPR sent Kenny a letter alleging he committed misconduct under 31 C.F.R. § 10.51(a) by failing to file timely returns, and by giving false information and attempting to coerce an IRS officer through false accusations in connection with his complaints against Steven Wald.
In August 2008, Kenny filed suit in the United States District Court for the District of New Jersey, seeking monetary and injunctive relief. He alleged (1) retaliation in violation of 26 U.S.C. § 7804, (2) an unauthorized collection action in violation of 26 U.S.C. § 7433, (3) unauthorized inspections of return information in violation of 26 U.S.C. § 7431, and (4) violation of his First and Fourth Amendment rights, seeking damages under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971). On the government's motion, the District Court dismissed all four counts without prejudice and denied Kenny's motion for a preliminary injunction asmoot. Kenny v. United States, No. 08-3921, 2009 WL 276511 (D.N.J. Feb. 5, 2009). Kenny appealed, but we dismissed for lack of appellate jurisdiction on the ground that a dismissal without prejudice is a non-final order unless the plaintiff intends to stand on his complaint. Kenny v. United States, 373 F. App'x 259 (3d Cir. 2010). We directed Kenny to our precedent for the correct procedure to amend his complaint. Id. (citing Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 251-52 (3d Cir. 2007)).
On remand, the government requested the District Court to enter an order dismissing the case, while Kenny moved for leave to amend his complaint, on the ground that our dismissal mandated amendment. He proposed to amend his complaint by adding an OPR employee as a defendant, as well as by alleging that Collection personnel investigated his tax records to find violations and that Greenidge's report recommended filing a misconduct complaint against Kenny. Upon referral, the Magistrate Judge denied Kenny's motion for failure to satisfy the requirements of Fed. R. Civ. P. 60(b), and the District Court subsequently dismissed Kenny's suit. Kenny timely appealed the District Court's dismissal of his claims under 26 U.S.C. § 7431 and Bivens and the denial of leave to amend.1
We review the dismissal of a complaint under Fed. R. Civ. P. 12(b)(6) de novo andaffirm only if, accepting all factual allegations as true and construing the complaint in the light most favorable to the plaintiff, the plaintiff is not entitled to relief under any reasonable reading of the complaint. McMullen v. Maple Shade Twp., 643 F.3d 96, 98 (3d Cir. 2011). We review a district court's denial of leave to amend a complaint for abuse of discretion.2 Renchenski v. Williams, 622 F.3d 315, 324-25 (3d Cir. 2010). Abuse of discretion occurs when "the district court's decision rests upon a clearlyerroneous finding of fact, an errant conclusion of law or an improper application of law to fact." Malack v. BDO Seidman, LLP, 617 F.3d 743, 745 (3d Cir. 2010) (quoting In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d Cir. 2008)).
26 U.S.C. § 7431 provides a cause of action for damages against the United States for unauthorized access to tax return information. To establish a claim under § 7431, Kenny must demonstrate (1) a violation of 26 U.S.C. § 6103 and (2) that the violation resulted from knowing or negligent conduct. Venen v. United States, 38 F.3d 100, 104 (3d Cir. 1994).
26 U.S.C. § 6103 specifies that tax "[r]eturns and return information shall be confidential" and bars disclosure by U.S. employees, but provides a number of exceptions. Relevant here are those permitting "inspection by or disclosure [of returns] to officers and employees of the Department of the Treasury whose official duties require such inspection or disclosure for tax administration purposes,"3 id. § 6103(h)(1), and authorizing disclosure to "officers and employees of the Department of the Treasury for use in any action or proceeding described in subparagraph (A) [concerning legal practice before the Department under 31 U.S.C. § 330] . . . to the extent necessary to advance or protect the interests of the United States." id. § 6103(l)(4)(B).
The inspections Kenny alleges were authorized under both of these provisions.Because the Office of Professional Responsibility is responsible for "matters related to practitioner conduct and discipline, including disciplinary proceedings and sanctions," 31 C.F.R. § 10.1(a)(1), and because practitioners' failure to comply with federal tax law, including late filing, could constitute disreputable conduct subject to sanction and disbarment, id. § 10.51(a)(6); Dir., OPR v. Kevin Kilduff, Complaint No. 2008-12 (Sec'y of the Treasury Appellate Authority Jan. 20, 2010), available at http://www.irs.gov/pub/irs-utl/kilduff.pdf, the investigation of Kenny's returns by employees of OPR fell within their official tax administration duties under § 6103(h).4 Moreover, this investigation was permitted under § 6103(l)(4)(B) because OPR employees investigated Kenny's returns in preparation for a proceeding under 31 U.S.C. § 330(b) to "suspend . . . disbar . . . or censure[] a representative who . . . is disreputable."
In short, because the facts Kenny alleges do not establish a violation of § 6103, he cannot sustain a claim under § 7431.
In certain circumstances, the Constitution itself affords a cause of action for damages against individual federal officers for violations of constitutional rights. Bivensv. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971). Courts will not infer a Bivens remedy, however, when Congress "has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of [a government program's] administration." Schweiker v. Chilicky, 487 U.S. 412, 423 (1988). We have declined to permit Bivens suits against IRS agents when Congress had chosen "to provide certain remedies, and not others, as part of the complex statutory scheme which regulates the relationship between the IRS and taxpayers." Schreiber v. Mastrogiovanni, 214 F.3d 148, 152-55 (3d Cir. 2000); see also McMillen v. U.S. Dep't of Treasury, 960 F.2d 187, 190-91 (1st Cir. 1991).
Here, Kenny alleges violations of his First Amendment free speech and Fifth Amendment due process rights in connection with the OPR disciplinary proceedings. Yet Congress and the Department of the Treasury have created a detailed scheme to address accusations of practitioner misconduct. By statute, all suspensions and disbarments must be preceded by notice and opportunity for a proceeding. 31 U.S.C. § 330(b). Treasury regulations contain twenty-two rules governing disciplinary proceedings, 31 C.F.R. §§ 10.60-10.82, including provisions guaranteeing practitioners the right to counsel at a hearing before an administrative law judge, id. § 10.69; the right to conduct discovery and take depositions, id. § 10.71; the right to a transcript, sworn testimony, and cross-examination during the hearing, id. § 10.72; the right to a decision stating findings and conclusions, id. § 10.76; and the right to appeal to the Secretary of the Treasury, id. § 10.77. A practitioner may then appeal an adverse determination to the federal district and circuit courts for further review. Harary v. Blumenthal, 555 F.2d1113, 1115 n.1 (2d Cir. 1977); Lopez v. United States, 129 F. Supp. 2d 1284, 1288 (D.N.M. 2000). These provisions have been held to satisfy the requirements of procedural and substantive due process. Hubbard v. United States, 496 F. Supp. 2d 194, 201-02 (D.D.C. 2007); Washburn v. Shapiro, 409 F. Supp. 3, 9-13 (S.D. Fla. 1976).
The provisions governing potential disbarment or suspension before the IRS create a comprehensive remedial scheme for addressing allegations of practitioner misconduct, including any constitutional concerns raised by practitioners. Because Congress and the Department of the Treasury have elected to provide this scheme to regulate the relationship between the IRS and practitioners, we decline to infer a Bivens remedy in this instance.
While ordinarily leave to amend is governed by Fed. R. Civ. P. 15, "[a]fter judgment dismissing the complaint is entered, a party may seek to amend the complaint (and thereby disturb the judgment) only through Federal Rules of Civil Procedure 59(e) and 60(b)." Fletcher-Harlee Corp., 482 F.3d at 252. We directed Kenny to this procedure in our earlier decision in...
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