Linn v. Chivatero

• Decision Date: 19 September 1983
• Docket Number: No. 82-3309,82-3309
• Citation: 714 F.2d 1278
• Parties: , 83-2 USTC P 9588 Kenneth H. LINN, International Marketing and Development Corporation and John A. Stassi, II, Plaintiffs-Appellants, v. Jack CHIVATERO, District Director of Internal Revenue Service, New Orleans, La., Bruce Milburn, etc., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1278

714 F.2d 1278

71 A.L.R.Fed. 834, 83-2 USTC P 9588

Kenneth H. LINN, International Marketing and Development

Corporation and John A. Stassi, II, Plaintiffs-Appellants, v. Jack CHIVATERO, District Director of Internal Revenue

Service, New Orleans, La., Bruce Milburn, etc., et

al., Defendants-Appellees.

No. 82-3309.

United States Court of Appeals, Fifth Circuit.

Sept. 19, 1983.

Chamberlain, Hrdlicka, White, Johnson & Williams, Robert I. White, Houston, Tex., Stassi & Rausch, Jos. W. Rausch, New Orleans, La., for plaintiffs-appellants.

Michael L. Paup, Chief, Glenn L. Archer, Jr., Asst. Atty. Gen., James P. Springer, Appellate Section, Tax Div., Dept. of Justice, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before CLARK, Chief Judge, THORNBERRY and RANDALL, Circuit Judges.

RANDALL, Circuit Judge:

Kenneth Linn is an officer and the majority stockholder of International Marketing and Development Corporation. Linn, his corporation, and one of his attorneys, John Stassi, II, brought this action seeking an injunction ordering several Internal Revenue Service agents to return certain documents accidentally produced in response to an IRS summons and further seeking an injunction against the use of any information gathered from examination of the documents. The district court dismissed the action and Linn ¹ timely appealed. For the reasons set forth below, we reverse and remand with instructions.

I. FACTUAL AND PROCEDURAL BACKGROUND.

Linn is the subject of an ongoing investigation by the IRS. In furtherance of that investigation, the special agent in charge of the case, Elizabeth Wigginton, had a summons served on Linn. The summons ordered Linn to give testimony at his residence, and to produce the records of International Marketing and Development Corporation. ²

Linn engaged Robert White and John Stassi as his attorneys. White and Wigginton agreed to postpone the date initially set for appearances. Some confusion ensued, and White allegedly did not become aware of the exact date for appearance until the morning of the appointed day. By that time, it was too late to comply fully with the summons. Linn, White and Stassi were all out of town, but the records were at Stassi's office in New Orleans. In an effort to comply partially with the summons, Stassi and White agreed to send the records to Wigginton's office.

Stassi possessed not only the corporate records sought by the IRS, but several of what are asserted to be Linn's personal financial records. Stassi inadvertently sent all of the records to Wigginton. When he realized his mistake, he informed Wigginton of the error, first by telephone, then by hand-delivered letter, and finally in person. He stated that some of the furnished documents were Linn's personal records, as to which Linn wished to assert a fifth amendment privilege. Stassi and Wigginton agreed to go through all of the records on the following day and separate the corporate from the allegedly privileged personal documents. Wigginton, working until midnight, continued to copy the documents after Stassi's late afternoon visit, even though Stassi had allegedly asked that they be kept in a secure place overnight.

The next morning, Stassi and Wigginton segregated the documents into three groups. The first group included documents that the IRS was not interested in. The second group contained all of the documents that were undisputedly within the scope of the summons. The third group consisted of those documents that the IRS contended were covered by the summons, but that Stassi claimed were privileged. When Wigginton refused to relinquish the documents in the third group, Linn, his corporation, and Stassi brought this action.

Linn petitioned the district court for an injunction to prevent the IRS agents from examining or copying the disputed documents or using any information that the agents might have gathered by examining the documents. He also sought an injunction directing the IRS agents to return all of the disputed documents, as well as all copies made and memoranda compiled from those documents.

The court dismissed Linn's petition without prejudice. It determined that, because Linn was attempting to restrain the assessment and collection of a tax, his action was barred by the Anti-Injunction Act, 26 U.S.C. § 7421(a) (Supp. V 1981). Appealing from that judgment, Linn argues that the district court had jurisdiction to enter the requested injunction. In reply, the IRS agents contend that Linn's action is barred by the Anti-Injunction Act, the lack of anomalous jurisdiction, and the doctrine of sovereign immunity.

II. APPELLATE JURISDICTION.

As an initial matter, the IRS suggests that we lack jurisdiction to decide this appeal because the district court's order was not a final one, as required by 28 U.S.C. § 1291 (1976). Linn petitioned for a temporary restraining order and an injunction, and nothing else. The court denied his petition in its entirety. This is not a case of piecemeal review, as there is nothing left to decide. Because the district court fully disposed of Linn's claim, there can be no doubt that Linn is "effectively out of court." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., --- U.S. ----, 103 S.Ct. 927, 933, 74 L.Ed.2d 765 (1983) (quoting Idlewood Liquor Corp. v. Epstein, 370 U.S. 713, 715 n. 2, 82 S.Ct. 1294, 1296 n. 2, 8 L.Ed.2d 794 (1962)). See United States v. Mississippi Power & Light Co., 638 F.2d 899, 903 (5th Cir.1981), cert. denied, 454 U.S. 892, 102 S.Ct. 387, 70 L.Ed.2d 206 (1982); Richey v. Smith, 515 F.2d 1239, 1242-43 (5th Cir.1975).

The IRS points to the district court's language dismissing Linn's petition "without prejudice to adjudication of plaintiff's claims in an appropriate future proceeding" as support for its contention that the district court's judgment is not an appealable order. This language did not alter the finality of the court's order. To say that Linn may bring a different action in the future is not to say that this action was not fully and finally disposed of below. The court's remark in no way detracts from the fact that its order has rejected every issue raised in Linn's complaint. The appealability of an order depends on its effect, not its language. LeCompte v. Mr. Chip, Inc., 528 F.2d 601, 603 (5th Cir.1976). The district court's order was a final one, and this court has jurisdiction to hear the appeal.

III. FEDERAL COURT JURISDICTION.

The primary issue before us is whether the Anti-Injunction Act precludes the federal courts from entertaining Linn's suit. The Act "withdraw[s] jurisdiction from the state and federal courts to entertain suits seeking injunctions prohibiting the collection of federal taxes." Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 5, 82 S.Ct. 1125, 1128, 8 L.Ed.2d 292 (1962); accord, Lange v. Phinney, 507 F.2d 1000, 1003 (5th Cir.1975). Our first task is to determine the nature of the jurisdiction to be withdrawn.

In the past, we have relied on the exercise of "anomalous jurisdiction" in ordering the return of property unlawfully seized by federal officers. See Mason v. Pulliam, 557 F.2d 426, 429 (5th Cir.1977); Richey v. Smith, 515 F.2d 1239, 1243 (5th Cir.1975) (Fed.R.Crim.P. 41(e) and "general equitable jurisdiction of the federal courts"). The doctrine of anomalous jurisdiction is based on the court's inherent power to police the actions of officers of the court; this power has been extended to cover the actions of IRS agents. Lord v. Kelley, 223 F.Supp. 684, 689 (D.Mass.1963); see also Richey, supra, 515 F.2d at 1244; Mason v. Pulliam, 402 F.Supp. 978, 981 (N.D.Ga.1975), aff'd, 557 F.2d 426, 428 (5th Cir.1977). ³ Anomalous jurisdiction is exercised with "caution and restraint," however, and it is "subject to equitable principles." Hunsucker v. Phinney, 497 F.2d 29, 34 (5th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975) (footnotes and citations omitted). Further, the courts have generally deemed important a showing of "callous disregard for constitutional rights" before they will exercise this somewhat unusual jurisdiction. Id.; accord, Richey, supra, 515 F.2d at 1243; Mason, supra, 402 F.Supp. at 980. The IRS vigorously denies that its agents have acted in callous disregard of Linn's constitutional rights.

The development of the doctrine of anomalous jurisdiction was necessitated, at least in part, by the amount-in-controversy requirement for federal question jurisdiction, 28 U.S.C. § 1331 (1976) (superseded). See, e.g., Hunsucker, supra, 497 F.2d at 36. Congress' repeal of this requirement in 1980 has eliminated the monetary barrier to judicial review of cases such as this one. See 28 U.S.C. § 1331 (Supp. V 1981). Although the plaintiffs did not specifically mention section 1331 in their pleadings, the district court properly assumed that they had stated a claim under 28 U.S.C. § 1331, as well as under the anomalous jurisdiction doctrine, because it is clear from the face of their complaint, which seeks recovery under the fourth and fifth amendments to the United States Constitution, that they have alleged federal question jurisdiction. See Bell v. Hood, 327 U.S. 678, 681-82, 66 S.Ct. 773, 775-76, 90 L.Ed. 939 (1946) (specific mention of jurisdictional statute not necessary where complaint alleges claims arising under Constitution); Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir.1980) (failure to cite jurisdictional statute does not "defeat jurisdiction if the facts alleged in the complaint satisfy the jurisdictional requirements of the statute"). Since we conclude that, were it not for the existence of the Anti-Injunction Act, the federal courts would normally have jurisdiction over this action under 28 U.S.C. § 1331, we need not determine whether the plaintiffs have met the strict requirements for the exercise of anomalous jurisdiction as...