Public.Resource.Org v. U.S. Internal Revenue Serv.
| Decision Date | 20 June 2014 |
| Docket Number | Case No. 13–cv–02789–WHO WHO |
| Citation | 50 F.Supp.3d 1212 |
| Court | U.S. District Court — Northern District of California |
| Parties | Public.Resource.Org, Plaintiff, v. United States Internal Revenue Service, Defendant. |
Thomas R. Burke, Davis Wright Tremaine LLP, San Francisco, CA, Ronald G. London, Davis Wright Tremaine LLP, David E. Halperin, Washington, DC, Daniel A. Laidman, Davis Wright Tremaine LLP, Los Angeles, CA, for Plaintiff.
Christopher Sanders, Yonatan Gelblum, U.S. Department of Justice, Washington, DC, for Defendant.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS
Re: Dkt. No. 14
This motion to dismiss presents the question of whether the Freedom of Information Act (“FOIA”) is superseded by section 6104 of the Internal Revenue Code, a previously enacted disclosure statute concerning Form 990 filings. Public.Resource.org (“PRO”) seeks the tax return data of several nonprofit organizations in “machine-readable format.” The United States Internal Revenue Service (“IRS”) refuses because it contends that FOIA is superseded by section 6104 and its internal rules for releasing the requested data. Because of the breadth of FOIA's disclosure requirements, which has been repeatedly upheld by the courts, and the inapplicability of the cases on which the IRS relies, there is no basis to conclude that FOIA is superseded by section 6104. The IRS's motion is DENIED.
On March 11, 2013, PRO submitted a request for tax return data to the IRS pursuant to FOIA, 5 U.S.C. § 552. PRO requested the Form 990 filings of nine tax-exempt organizations from 2011, specifically in Modernized e-File (MeF) format or “any other machine-readable format.” Complaint, Ex. F. The IRS uses the MeF format for all Forms 990 filed electronically.
The IRS responded to PRO on March 19, 2013, indicating that data are “excluded from disclosure in response to a written FOIA request” if such data are otherwise available through an established agency procedure. Compl., Ex. G at 1. The IRS directed PRO to Form 4506–A, which the IRS developed exclusively for requesting copies of tax-exempt organizations' annual Form 990 filings. Id. Form 4506–A allows the public to request digital copies of tax information on either CDs or DVDs, and in either “Alchemy” or “raw” format. Id. at 2–3. Discs with Alchemy-formatted data contain image files that are searchable in a database using Alchemy software. Discs with raw data contain image files in Tagged Image File (“TIF”) format.
PRO contends that neither format satisfies its request for “machine-readable” data, and that Form 4506–A is therefore “inadequate” to satisfy PRO's FOIA request. Compl., Ex. H at 1. On April 12, 2013, PRO's counsel wrote to the IRS to request that it reconsider its position. In response, the IRS stated in a letter dated May 1, 2013, that it was unable to comply with PRO's FOIA request because Forms 990 in MeF format contain data that are protected from disclosure by section 6103(a) of the Internal Revenue Code, and because the existing process for releasing electronically filed Forms 990 is to convert MeF data into a Portable Document Format (“PDF”) replica of the paper form, then redact the protected information. Compl., Ex. I.
PRO then filed this action on June 18, 2013, seeking declaratory and injunctive relief under both FOIA and the Administrative Procedure Act (“APA”), 5 U.S.C. § 703. Compl. ¶¶ 61–62, 67–68. I heard argument on the IRS's motion to dismiss on June 18, 2014.
Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This “facial plausibility” standard requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in the plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987). However, the court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.2008).
The IRS seeks dismissal of both the FOIA and the APA causes of action for failure to state a claim. First, the IRS contends that section 6104 of the Internal Revenue Code, 26 U.S.C. § 6104, supersedes FOIA and precludes a FOIA claim. Def.'s Mot. to Dismiss at 7. Second, the IRS contends that the A PA claim must be dismissed “by necessity” as the corollary of a favorable ruling on the FOIA claim. Id. at 8.
FOIA requires that a federal agency, upon receipt of a valid FOIA request, “provide the record in any form or format requested by the person if the record is readily reproducible by the agency in that form or format.” 5 U.S.C. § 552(a)(3)(B). The scope of FOIA's disclosure requirements is broad, and courts have repeatedly declined to impose limits on FOIA that the statute itself does not expressly admit. Envtl. Prot. Agency v. Mink, 410 U.S. 73, 79–80, 93 S.Ct. 827, 35 L.Ed.2d 119 (1973), superseded by statute on other grounds ; Dep't of Interior v. Klamath Water Users Protective Ass'n, 532 U.S. 1, 7, 121 S.Ct. 1060, 149 L.Ed.2d 87 (2001) ; Maricopa Audubon Soc. v. U.S. Forest Serv., 108 F.3d 1082, 1085 (9th Cir.1997). Although FOIA provides enumerated exemptions to disclosure, these exemptions “are ‘explicitly made exclusive,’ meaning that information not falling within any of the exemptions has to be disclosed.” Yonemoto v. Dep't. of Veterans Affairs, 686 F.3d 681, 687 (9th Cir.2012) (citations omitted) (quoting Mink, 410 U.S. at 79, 93 S.Ct. 827 ); see also 5 U.S.C. § 552(b).
FOIA's breadth reflects its “central purpose of exposing to public scrutiny official information that sheds light on an agency's performance of its statutory duties.” U.S. Dep't of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 750, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989). As this purpose cannot be served by a disclosure scheme relying solely on ad hoc agency consent, FOIA establishes a “comprehensive scheme,” U.S. Dep't of Justice v. Tax Analysts, 492 U.S. 136, 153, 109 S.Ct. 2841, 106 L.Ed.2d 112 (1989), that aims to “provide a ‘workable formula’ that ‘balances and protects all interests.’ ” Mink, 410 U.S. at 80, 93 S.Ct. 827. This formula is backstopped by the courts, which provide individuals an opportunity to vindicate their “judicially enforceable public right to secure ... information from possibly unwilling official hands.” Id. ; see also 5 U.S.C. § 552(a)(4)(B).
In its motion, the IRS does not dispute that it is an agency subject to FOIA, that the data in question qualify as “records” under the definition of the statute, or that the records were withheld. Rather, the IRS argues that FOIA has no application because the requested documents fall within section 6104, which provides the exclusive means by which Form 990 data are releasable. Def.'s Mot. to Dismiss at 1. For the reasons discussed below, I reject the IRS's argument.
The IRS contrasts FOIA's broad language mandating disclosure with the “comprehensive nondisclosure paradigm anchored by [s]ection 6103 of the Internal Revenue Code.” Def.'s Mot. to Dismiss at 4. Under section 6103, all tax returns are presumptively confidential “except as authorized by [title 26].” 26 U.S.C. § 6103(a). Section 6104 provides one of several exceptions to this general nondisclosure rule, requiring, in relevant part, that Form 990 data “be made available to the public at such times and in such places as the Secretary may prescribe.” 26 U.S.C. § 6104(b). However, section 6104(b) does not “authorize the Secretary to disclose the name or address of any contributor to any organization or trust” required to file a Form 990. Id. According to the IRS, section 6103 and 6104 operate jointly as a “controlling statutory scheme” for the release of Form 990 data, with each imposing complementary “nondisclosure mandates” on the IRS. Def.'s Mot. to Dismiss at 4, 5. The IRS also notes that the Treasury has issued a regulation specifically governing disclosure under section 6104, which describes how the Form 990 data may be viewed or obtained. 26 C.F.R. § 301.6104(b)–1 to (d) –1.
The IRS argues that the specific and detailed statutory scheme governing disclosure of Forms 990 supersedes the more general requirements of FOIA.1 Here the IRS relies on the “well settled rule of statutory construction” that “a specific statute will not be controlled by a general statute” unless there is clear legislative intent to the contrary. Def.'s Mot. to Dismiss at 7; Donaldson v. U.S., 653 F.2d 414, 418 (9th Cir.1981). The IRS points to two lines of cases finding FOIA's general disclosure requirements superseded by more specific alternatives—the first dealing with section 6110 of the Internal Revenue Code, and the second dealing with the Presidential Recordings and Materials Preservation Act of 1974. Pub.L. 93–526, title I, §§ 101–106, 88 Stat. 1695–1698 (hereinafter “Materials Act”).
The IRS reads both the canon and the cases too broadly. The textual touchstone for evaluating...
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