Terry v. Yellen
| Decision Date | 09 March 2022 |
| Docket Number | 3:21-cv-33 |
| Court | U.S. District Court — Southern District of Ohio |
| Parties | CAMILIA T. TERRY, Plaintiff, v. JANET YELLEN, et al., Defendants. |
REPORT AND RECOMMENDATIONS [1]
Plaintiff Camilia Terry was an inmate at Dayton Correctional Institution (DCI) when the Economic Impact Payments (EIPs) were disbursed under the Coronavirus Aid Relief, and Economic Security Act (CARES Act), Pub. L. 116-136; the Consolidated Appropriations Act, 2021 (CAA), Pub. L. 116-260; and the American Rescue Plan of 2021 (ARPA), Pub. L. 117-2. Plaintiff, however, did not receive the payments. Plaintiff brings this case, alleging that Defendants Janet Yellen Secretary of the United States Department of Treasury, and Charles P. Rettig, Commissioner of Internal Revenue Service (IRS), [2] failed to issue the payments to her despite a federal court holding that they could not deny the funds to incarcerated individuals. (Doc. #8, PageID #s 95-96). Furthermore, Plaintiff alleges that Defendant Annette Chambers-Smith, Director of the Ohio Department of Rehabilitation and Correction, unlawfully refused to disburse the funds to her. Id. at 95.
This case is presently before the Court upon Defendant Annette Chambers-Smith's Motion to Dismiss (Doc. #20); Plaintiff Camilia T. Terry's Response to Defendant Annette Chambers-Smith's Motion to Dismiss (Doc. #24); Defendant Chambers-Smith's Reply (Doc. #25); Defendant Janet Yellen and Charles Rettig's Motion to Dismiss Plaintiffs Amended Complaint (Doc. #23); Plaintiffs Response (Doc. #27); and Defendants' Reply (Doc. #28).
The Federal Rules of Civil Procedure provide that a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief....” Fed.R.Civ.P. 8(a)(2). While Fed.R.Civ.P. 8 “does not require ‘detailed factual allegations' ... it demands more than an unadorned the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Pleadings offering mere “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.” Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955).
A motion to dismiss filed pursuant to Fed.R.Civ.P. 12(b)(6) operates to test the sufficiency of the complaint and permits dismissal for “failure to state a claim upon which relief can be granted.” In order “[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. A claim is plausible where “plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Plausibility “is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged- but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679, 129 S.Ct. 1937 (alteration in original) (citing Fed.R.Civ.P. 8(a)(2)). In determining a motion to dismiss, “courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.'” Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). Further, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id.
While pro se parties must satisfy basic pleading requirements, Wells v. Brown, 891 F.2d 591, 594 (6th Cir. 1989), their pleadings must be liberally construed and are “held to less stringent standards than formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007). Nevertheless, “even a pro se complaint ‘must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Ogle v. Columbia Gas Transmission, LLC, 513 Fed.Appx. 520, 522 (6th Cir. 2013) (citing Iqbal, 556 U.S. at 678, 129 S.Ct. 1937).
Plaintiff alleges that Defendants Janet Yellen and Charles Rettig failed to issue three EIPs to Plaintiff “despite a federal court ruling that the IRS cannot deny the incarcerated advance refunds.” (Doc. #8, PageID #s 95-96). Plaintiff alleges this constitutes deliberate indifference and denied her due process under the Fifth Amendment and Fourteenth Amendment. Id. Furthermore, Plaintiff alleges that Defendant Annette Chambers-Smith failed to act on information that unconstitutional acts were/are occurring-specifically, prison officials refusing to credit inmates with EIPs from the IRS. Id. at 95. In addition, Defendant Chambers-Smith was “grossly negligent in supervising prison employees who committed the unlawful acts by [withholding] funds …” Id. Plaintiff alleges this constitutes deliberate indifference and violates her rights to due process under the Fifth Amendment and Fourteenth Amendment. Id. Plaintiff requests compensatory and punitive damages. Id. at 96. She also requests this Court issue injunctive relief orderings Defendants to “[r]efrain from withholding any funds issued to inmates in the State of Ohio by the IRS or any other outside [] source, and order the IRS to issue inmate(s) including Plaintiff funds from the EIP Cares Act that were not issued immediately.” Id. at 97.
EIPs were disbursed to eligible individuals under the Coronavirus Aid Relief, and Economic Security Act (CARES Act), Pub. L. 116-136; the Consolidated Appropriations Act, 2021 (CAA), Pub. L. 116-260; and the American Rescue Plan of 2021 (ARPA), Pub. L. 117-2. Specifically, the CARES Act established a tax credit for eligible individuals in the amount of $1, 200 ($2, 400 if filing a joint return), plus $500 multiplied by the number of qualifying children. 26 U.S.C. § 6428(a). The tax credit was authorized to be distributed as an advance refund on 2020 taxes. 26 U.S.C. § 6428(f). The CAA authorized a second tax credit of $600, which also was authorized to be paid as an EIP. 26 U.S.C. § 6428A(a), (f). Finally, the ARPA directed EIPs in the amount of $1, 400 to eligible individuals. 26 U.S.C. § 6428B(a)-(d).
Shortly after the CARES Act was signed into law, the IRS indicated that it would calculate and automatically issue an EIP to eligible individuals. Scholl v. Mnuchin, 494 F.Supp.3d 661, 670 (N.D. Cal. 2020) (“Scholl II”), appeal dismissed (Dec. 11, 2020). The IRS later explained, in response to a “frequently asked question[], ” that individuals who are incarcerated do not qualify for EIPs. Id. at 670-71 (citation omitted). Shortly thereafter, the IRS updated its internal procedures manual to reflect this policy. Id. at 671 (citation omitted).
After the IRS determined that incarcerated individuals were not eligible for EIPs, several incarcerated and formerly incarcerated individuals filed suit and eventually sought to certify a class. Scholl v. Mnuchin, 489 F.Supp.3d 1008, 1020 (N.D. Cal. 2020), appeal dismissed, No. 20-16915, 2020 WL 9073361 (9th Cir. Nov. 20, 2020). The court held that the CARES Act “does not authorize [the IRS] to withhold advance refunds or credits from class members solely because they are or were incarcerated.” Scholl II, 494 F.Supp.3d at 692. Further, the court entered a permanent injunction enjoining defendants from withholding benefits based on class members' incarcerated status. Id. at 692-93. The court, however, took no position as to whether the class members were in fact owed the payments. Id. at 691. Instead, it was “incumbent on the IRS, as the agency charged by Congress, to make individual determinations whether an individual is an ‘eligible individual' and meets the various criteria delineated in the Act.” Id.
Defendants Yellen and Rettig move to dismiss Plaintiffs Amended Complaint because Plaintiff cannot state a claim upon which relief can be granted. (Doc. #23, PageID #173). In Plaintiff s Amended Complaint, she alleges that Defendants Yellen and Rettig failed to issue three EIPs to her despite a federal court-the Scholl court-holding that the IRS cannot deny EIPs to incarcerated individuals. (Doc. #8, PageID #s 95-96). To the extent that Plaintiff argues that she was denied EIPs because of her incarcerated status, she is already a member of the Scholl class, so she is not entitled to separate individual relief. Walters v. Mnunchin, No. 3:21-CV-275-JD-MGG, 2021 WL 2105387, at *3-4 (N.D. Ind. May 25, 2021); (citing McNeil v. Guthrie, 945 F.2d 1163, 1165-66 (10th Cir. 1991); Gillespie v. Crawford, 858 F.2d 1101, 1103 (5th Cir. 1988) ( ); Byrd v. O'Grady, 1990 WL 114616, *2 (N.D. Ill. July 27, 1990)); see also Stevens v. Internal Revenue Serv., No. 21-CV-00573-PJH, 2021 WL 827578, at *3 (N.D. Cal. Mar. 4, 2021) (citing Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013)) (other citation omitted); Phelps v. Mnuchin, No. 3:21-CV-327-JD-MGG, 2021 WL 2138506, at *4 (N.D. Ind. May 26, 2021).
Similarly to the extent she asks the Court to compel Defendants to provide her EIPs pursuant to the Scholl case or the CARES Act, she is not entitled to that relief either. As explained above, the ...
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