Nat'l Org. for Marriage, Inc. v. United States
| Decision Date | 03 June 2014 |
| Docket Number | No. 1:13cv1225 JCC/IDD.,1:13cv1225 JCC/IDD. |
| Citation | 24 F.Supp.3d 518 |
| Court | U.S. District Court — Eastern District of Virginia |
| Parties | The NATIONAL ORGANIZATION FOR MARRIAGE, INC., Plaintiff, v. The UNITED STATES of America, Internal Revenue Service, Defendant. |
Jason Brett Torchinsky, Shawn Toomey Sheehy, Holtzman Vogel Josefiak PLLC, Warrenton, VA, for Plaintiff.
David Moskowitz, U.S. Attorney's Office, Alexandria, VA, Christopher David Belen, U.S. Department of Justice, Washington, DC, for Defendant.
Plaintiff The National Organization for Marriage, Inc. (“NOM”) has filed this action alleging that the United States of America, through agents of the Internal Revenue Service (“IRS”), violated 26 U.S.C. § 6103 by improperly disclosing its confidential tax return information. (Compl. [Dkt. 1] at 1–2.) Currently before the Court is the Government's Motion for Summary Judgment. (Summ. J. Mot. [Dkt. 67] at 1.) For the reasons set forth below, the Court will grant in part and deny in part the Government's motion.
NOM is a social welfare association purportedly organized “to protect marriage and the faith communities that sustain it across the United States.” (Pl.'s Opp'n [Dkt. 73] at 1.) As a tax-exempt organization, NOM must file a Form 990 annually with the IRS. See 26 U.S.C. § 6033. Schedule B to Form 990 (“Schedule B”) lists donors who have contributed $5,000 or more during the reporting period.
In January 2011, Matthew Meisel (“Meisel”) submitted an application to the IRS for copies of NOM's publicly available tax returns. (Pl.'s Opp'n at 4–5.) Outside of the fact that Meisel identified himself as a member of the media, the specifics of his request are unknown because, pursuant to IRS policy, his request was destroyed after forty-five days. (Id. at 4.) Meisel's application was forwarded to Wendy Peters (“Peters”), a clerk in the IRS's Return and Income Verification Services unit (“RAVIS unit”). (Gov't's Mem. [Dkt. 68] at 5; Pl.'s Opp'n at 4–5.)2
On January 19, 2011, Peters emailed Peggy Riley (“Riley”), an IRS media relations specialist, to verify Meisel's status as a member of the media because it was then IRS policy to expedite media requests. (Gov't Ex. 3.) Riley responded that she would look into the matter. (Id. ).
On January 21, 2011, Peters printed copies of NOM's 2007 Form 990 and the original and amended Form 990 for 2008. (Gov't Ex. 8.) When Peters accessed and viewed these documents, a unique tracking number was created in an IRS database called the Statistics of Income Exempt Organizations Return Image Network (“SEIN”). (Gov't's Mem. at 5–6.) This tracking number was also imprinted as a watermark on each page of the printed copies. (Id. ) Peters claims that she did not alter this watermark. (Id. at 6.)
On January 24, 2011, Peters again emailed Riley regarding Meisel's claimed status as a member of the media. (Gov't Ex. 3.) It is unclear whether Riley ever responded.
On January 31, 2011, Peters accessed the IRS's Integrated Data Retrieval System (“IDRS”) and created an “IRS 3983C letter.” (Gov't's Mem. at 6–7; Pl.'s Opp'n at 6.) An IRS 3983C letter is the standard reply to public requests for information. (Id. ) The Government contends that this letter was produced in response to Meisel's application. (Gov't Mem. at 7.) NOM, however, disagrees with this position because IDRS records do not identify the recipient of a 3983C letter or the documents attached thereto. (Pl.'s Opp'n at 6.) Nevertheless, it is undisputed that an unredacted copy of NOM's amended 2008 Form 990 bearing the above mentioned watermark was thereafter sent to Meisel along with such a letter. (Gov't's Mem. at 6–7; Pl.'s Opp'n at 6.)
The parties agree that, in response to public requests for tax information, IRS procedures require the omission of donor information listed in Form 990. (Gov't's Mem. at 7; Pl.'s Opp'n at 7.) Here, the Government contends that Peters forgot to redact the names and addresses of NOM's donors before sending the amended 2008 Form 990 to Meisel. (Gov't's Mem. at 7.) NOM disputes this assertion, claiming the record is unclear regarding “who was responsible for sending [Meisel] an redacted copy of NOM's Schedule B, and why any transmittal from the IRS to [Meisel] occurred.” (Pl.'s Opp'n at 7.)
On March 28, 2012, Meisel sent Kevin Nix (“Nix”), a Campaign Media Director for the Human Rights Campaign (“HRC”), a copy of NOM's amended 2008 Form 990, Schedule B. (Gov't's Mem. at 7.) The copy sent to Nix contained a redaction of the numerical watermark discussed above. (Pl.'s Opp'n at 7.) The HRC then forwarded the Schedule B to a journalist at the Huffington Post, who published it along with an article focusing on the fact that an Alabama state political action committee associated with Mitt Romney made a $10,000 donation to NOM in 2008. (Gov't's Mem. at 8.)
The Treasury Inspector General for Tax Administration was able to digitally un-redact the watermark, revealing that the number 100560209 was imprinted on each page of the Schedule B published by the Huffington Post. (Gov't's Mem. at 8; Pl.'s Opp'n at 7.) Querying this number in the SEIN database allowed IRS administrators to identify Peters as the individual who accessed and printed the document at issue. (Id. ) At the time of the disclosure, Peters was unaware of NOM's mission or those of its political opponent, the HRC. (Gov't's Mem. at 9; Pl.'s Opp'n at 7.) Peters had also never heard of Meisel. (Id. ).
On May 15, 2012, Fred Karger (“Karger”), a self-proclaimed opponent of NOM, filed a complaint with the State of California's Fair Political Practices Commission (“FPPC”), alleging that NOM violated various state election laws during 2008. (Gov't's Mem. at 10–11.) Karger's claims were based, at least in part, on information garnered from NOM's Schedule B. (Pl.'s Opp'n at 8.) Indeed, his original complaint contained screen shots of NOM's Schedule B, as published by the HRC. (Id. ) NOM hired legal counsel to protect the confidential donor information disclosed by Karger, and ultimately NOM was absolved of any wrongdoing. (Id. at 8–10.)
On October 3, 2013, NOM instituted the instant action, “seeking damages pursuant to 26 U.S.C. § 7431 for unlawful inspection and disclosure of confidential tax information ... in violation of 26 U.S.C. § 6103.” (Compl. at 1.) According to NOM, the disclosure discussed above was “part of a deliberate attempt to chill the First Amendment activity of NOM, its donors, and others who associate with NOM.” (Id. ) NOM is seeking actual damages in the form of lost contributions and legal fees incurred in investigating the disclosure and preventing further dissemination of its donor information. (Compl. at 22–23.) NOM is also claiming punitive damages because, according to its reading of the above facts, the IRS's disclosure was done “willfully or as a result of gross negligence.” (Id. at 21.)
Presently before the Court is the Government's Motion for Summary Judgment. Although the Government admits that an IRS staff member improperly disclosed an unredacted copy of NOM's Schedule B in violation of § 7431, the following issues are now in dispute: (1) whether NOM is entitled to punitive damages; (2) whether the examination of NOM's confidential tax information by Peters and others were “authorized” inspections under the statute; (3) whether NOM's legal expenses for investigating the disclosure are recoverable damages; and (4) whether NOM's claimed damages are subject to an offset against donations received because of the publicity surrounding this case. (Gov't's Mem. at 1–4.)
Having been fully briefed, the Government's motion is now before the Court.
It is well settled that a motion for summary judgment should be granted only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c) ; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden is on the moving party to establish that there are no genuine issues of material fact in dispute and that it is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Where, as in this case, the nonmoving party has the burden of proof at trial, the moving party need only demonstrate that there is a lack of evidence to support the non-movant's claim. See Celotex, 477 U.S. at 323–25, 106 S.Ct. 2548. In response to such a showing, the party opposing summary judgment must go beyond the pleadings and proffer evidence that establishes each of the challenged elements of the case, demonstrating that genuine issues of material fact do exist that must be resolved at trial. See id. at 324, 106 S.Ct. 2548 ; Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
In reviewing the record on summary judgment, the Court “must draw any inferences in the light most favorable to the non-movant” and “determine whether the record taken as a whole could lead a reasonable trier of fact to find for the non-movant.” Brock v. Entre Computer Ctrs., Inc., 933 F.2d 1253, 1259 (4th Cir.1991) (citations omitted). “[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249, 106 S.Ct. 2505.
The nonmoving party, however, must show more than some metaphysical doubt as to the material facts. “[T]he non-moving party ‘may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.’ ” Hughes v. Bedsole, 48 F.3d 1376, 1381 (4th Cir.1995) (quoting Anderson, 477 U.S. at 256, 106 S.Ct. 2505 ). Conclusory allegations,...
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