True the Vote, Inc. v. Internal Revenue Serv.

• Decision Date: 05 August 2016
• Docket Number: No. 14-5316, No. 15-5013,14-5316
• Citation: 831 F.3d 551
• Parties: True the Vote, Inc., Appellant v. Internal Revenue Service, et al., Appellees. Linchpins of Liberty, et al., Appellants v. United States of America, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

831 F.3d 551

True the Vote, Inc., Appellant

v.Internal Revenue Service, et al., Appellees.

Linchpins of Liberty, et al., Appellants

v.United States of America, et al., Appellees.

No. 14-5316

No. 15-5013

United States Court of Appeals, District of Columbia Circuit.

Argued April 14, 2016

Decided August 5, 2016

John C. Eastman, Orange, CA, argued the cause for appellant. With him on the briefs were Kaylan L. Phillips, Noel H. Johnson, Terre Haute, IN, Cleta Mitchell, Michael J. Lockerby, William E. Davis, Washington, DC, and Mathew D. Gutierrez, Miami, FL.

Judith A. Hagley, Attorney, U.S. Department of Justice, argued the cause for appellees United States of America and Internal Revenue Service. With her on the brief were Gilbert S. Rothenberg and Teresa E. McLaughlin, Attorneys.

Eric R. Nitz, Washington, DC, argued the cause for Individual Defendant-Appellees. With him on the briefs were Jeffrey A. Lamken, Brigida Benitez, and Catherine Cockerham, Washington, DC.

Carly F. Gammill argued the cause for appellants. With her on the briefs were Jay Alan Sekulow, Washington, DC, Stuart J. Roth, Mobile, AL, Jordan A. Sekulow, Abigail A. Southerland, Miles L. Terry, Andrew J. Ekonomou, and Julian A. Fortuna, Atlanta, GA.

Judith A. Hagley, Attorney, U.S. Department of Justice, argued the cause for appellees United States of America and Internal Revenue Service. With her on the brief were Gilbert S. Rothenberg and Teresa E. McLaughlin, Attorneys.

Brigida Benitez, Washington, DC, argued the cause for Individual Defendant–Appellees. With her on the brief were Catherine Cockerham, Jeffrey A. Lamken, and Eric R. Nitz, Washington, DC.

Before: Henderson, Circuit Judge, and Ginsburg and Sentelle, Senior Circuit Judges.

Sentelle

, Senior Circuit Judge:

Although these cases are not officially consolidated, they were separately argued before the same panel on the same day and are governed by the same legal principles on decision. We have therefore determined that a single opinion is sufficient for the disposition of both. Although there are differences in factual detail, those differences are immaterial to our ultimate decision on all issues, and therefore, all our statements of law hereinafter are applicable to both.

I. BACKGROUND

Appellants appeal from judgments of the district court dismissing some of their claims under Rule 12(b)(6) for failure to state a claim for relief, and others under Rule 12(b)(1) for lack of jurisdiction, by reason of mootness. See True the Vote, Inc. v. IRS , 71 F.Supp.3d 219 (D.D.C. 2014)

; Linchpins of Liberty v. United States , 71 F.Supp.3d 236 (D.D.C. 2014). Each of the above-named appellants together with numerous co-plaintiffs in the Linchpins of Liberty litigation, filed applications with the Internal Revenue Service for recognition of tax exemption as charitable or educational organizations pursuant to 26 U.S.C. § 501(c)(3), (4)

. As to what happened thereafter, we construe the complaints in the light most favorable to the plaintiffs, see

S

issel v. DHSS , 760 F.3d 1, 4 (D.C. Cir. 2014), although there is very little factual dispute between the parties as to the conduct committed by the IRS.

Instead of processing these applications in the normal course of IRS business, as would have been the case with other taxpayers, the IRS selected out these applicants for more rigorous review on the basis of their names, which were in each instance indicative of a conservative or anti-Administration orientation, as we will set out in more detail below, and as was admitted by the Department of Treasury in the 2013 report of the Treasury Inspector General for Tax Administration (TIGTA).

The appellants before us, plaintiffs below, are applicants who were afforded this unequal treatment. They brought the present actions against the IRS and several of its individual employees, seeking money damages by way of relief under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics , 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971)

, and equitable relief by way of injunction and declaratory judgment. Additionally, the complaints alleged that the IRS invaded the plaintiffs' statutory rights by violating 26 U.S.C. § 6103, by conducting unauthorized inspection and/or disclosure of tax return information from their applications and the other information improperly obtained from them. The district court held that the Bivens action would not lie against the individual defendants or the Service, and granted a Rule 12(b)(6) motion for dismissal as to that relief. See

True the Vote , 71 F.Supp.3d at 229–32 ; Linchpins of Liberty , 71 F.Supp.3d at 242–44. The district court also dismissed the claims for violation of § 6103 under Rule 12(b)(6) for failure to state a claim for relief. See

True the Vote , 71 F.Supp.3d at 232-35 ; Linchpins of Liberty , 71 F.Supp.3d at 247–50.

After the initiation of the suits, the Internal Revenue Service took action to end some unconstitutional acts against at least a portion of the plaintiffs. Based on these actions, the district court dismissed the equitable claims as moot. See True the Vote , 71 F.Supp.3d at 226–29

; Linchpins of Liberty , 71 F.Supp.3d at 244–47. True the Vote and Linchpins of Liberty were decided by the same district court judge on the same day and rely on the same reasoning. Going forward, we will only cite to the Linchpins of Liberty decision.

We review the district court's Rule 12(b)(6) dismissals of the Bivens

actions de novo, taking as true the allegations of the complaint. See

Kl

ayman v.

Zuckerberg , 753 F.3d 1354, 1357 (D.C. Cir. 2014). However, our review of the district court's Rule 12(b)(1) dismissals for mootness depends on “[t]he posture in which the motion[s] [were] presented to [the] trial court....” Herbert v. Nat'l Acad. of Sciences , 974 F.2d 192, 197 (D.C. Cir. 1992). When a district court relies either “on the complaint standing alone” or on “the complaint supplemented by undisputed facts evidenced in the record,” our review is de novo. Id. “If, however, the trial court rests not only upon undisputed statements, but determines disputed factual issues, we will review its findings as we would any other district court's factual determinations: accepting them unless they are clearly erroneous.” Id. (citation and internal quotation marks omitted).

Accordingly, we affirm the district court's decisions as to the Bivens

actions and statutory claims, but hold that the equitable actions are not moot. Even if we accord deference to the district court, the government has not carried its heavy burden of showing mootness under the voluntary cessation doctrine. We therefore vacate and remand for further proceedings with respect to the equitable claims of the plaintiff-appellants.

II. ANALYSIS

We once again consider the implications of the Internal Revenue Service affording unequal treatment in the processing of applications for tax exempt status by applicants whose names might suggest certain political orientations. Cf. Z St. v. Koskinen , 791 F.3d 24, 28 (D.C. Cir. 2015)

(concerning allegations that the IRS had an Israel-special policy “delay[ing] the processing of section 501(c)(3) applications from organizations whose views on Israel differ from the administration's”). This time, appellants allege that their applications for tax exempt status were selected out on the basis of an “IRS targeting scheme” that identified for enhanced scrutiny the applications of applicants with names associated with “conservative” causes, such as “Tea Party” and “patriot,” and perhaps “liberty.” According to the complaint, this enhanced examination involved, “among other things, a multitier review process, ... harassing and unconstitutional questions and requests for information that often required applicants to disclose donor lists, communications with members, and internet passwords and usernames.” Linchpins of Liberty , Pl.-Appellants' Br. at 4 (citing Second Am. Compl. at 32-56). Perhaps most tellingly, the Service sorted the “targeted” names of organizations to be subjected to the allegedly unconstitutional treatment through the use of a “Be-On-The-Lookout” list referred to as BOLO. Because their applications were subjected to extended delay and were not receiving the same processing as those of other organizations, and as they learned from other sources that the IRS might be employing improper and unconstitutional criteria, several applicants brought the present actions.

Also in May of 2013, the Department of the Treasury received what is referred to by the government as the “TIGTA” Report, for the Treasury Inspector General for Tax Administration. See J.A. in Linchpins of Liberty , at 87–140. That report, which we will often refer to as the Inspector General's Report, to avoid overburdening our opinion with acronyms, from Michael E. McKenney, Acting Deputy Inspector General for Audit, to the Acting Commissioner for Tax-Exempt and Government Entities Division of the Internal Revenue Service, bore the principal heading “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.”

The Inspector General's Report was produced in response to requests by members of Congress resulting from what had become fairly high profile complaints against the apparently improper failure to normally process exemption applications by applicants like or including appellants. The district court disposed of the action in a judgment supported by a reported opinion, Linchpins of Liberty v. United States , 71 F.Supp.3d 236 (D.D.C. 2014)

.

A. The Bivens Claims

The court first took up the government's motion to dismiss the Bivens

actions under Rule 12(b)(6). As to those claims, the district court rightly deemed itself bound by our decision in Kim v. United States , 632 F.3d 713 (D.C. Cir. 2011). As we had held in Kim that no action would lie against IRS employees in their individual capacities because “no Bivens remedy [is] available in light of the comprehensive remedial scheme set forth by the ...