W. Center for Journalism v. Cederquist

Decision Date20 December 2000
Docket NumberNo. 99-35377,99-35377
Citation235 F.3d 1153
Parties(9th Cir. 2000) WESTERN CENTER FOR JOURNALISM, d/b/a Western Journalism Center, Plaintiff-Appellant, v. THOMAS CEDERQUIST, and MARGARET MILNER RICHARDSON, Defendants-Appellees
CourtU.S. Court of Appeals — Ninth Circuit

Larry Klayman, Washington D.C., for the plaintiff-appellant.

Joan I. Oppenheimer, Tax Division, U.S. Department of Justice, Washington, D.C., for the defendants-appellees.

Appeal from the United States District Court for the Eastern District of California Garland E. Burrell, District Judge, Presiding. D.C. No.CV-98-00872-GEB

Before: Stephen Reinhardt, Melvin Brunetti and Pamela Ann Rymer, Circuit Judges.

Per Curiam Opinion; Concurrence by Judge Reinhardt

PER CURIAM:

The plaintiff in this case, Western Center for Journalism, d/b/a/ Western Journalism Center (WJC), is a tax exempt media foundation that specializes in investigative journalism. WJC alleges that the defendants, two officers of the Internal Revenue Service (IRS), conducted an audit to review its tax exempt status in order to retaliate against it for its First Amendment activity. The defendants moved to dismiss the matter, or in the alternative, for summary judgment, and the district court granted the motion to dismiss and entered a judgment for the defendants. We affirm the judgment, on the ground that the plaintiff's complaint was not filed within the period authorized by the applicable statute of limitations.

I. BACKGROUND

When reviewing motions to dismiss, we must "accept all factual allegations of the complaint as true and draw all reasonable inferences in favor of the nonmoving party, " which is WJC. Two Rivers v. Lewis, 174 F.3d 987, 991 (9th Cir. 1999). Similarly, when we review motions for summary judgment, we consider the facts in the light most favorable to the non-moving party. See Balint v. Carson City, Nevada, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc).1 Therefore, we present the facts below from WJC's perspective. We need not, and do not, speculate as to the plausibility of WJC's allegations, because we need only consider whether, even if they are correct, WJC is entitled to prevail in this action.

The dispute arose at a time when the Clinton Administration was under heavy attack from conservative political forces, including some media outlets. The White water controversy had erupted and was being vigorously pursued. Tensions in Washington, D.C. were high and each side suspected the other of multifarious illicit deeds. Accusations ranged from murder, to sexual misconduct to unlawful real estate transactions. Partisans of the Administration suspected the existence of a "vast right-wing conspiracy" designed to bring down the Presidency through false accusations. It was in that context that WJC apparently drew the attention of some in the White House.

WJC is a controversial media organization that funded an investigative journalist's pursuit of the answer to "significant problems" concerning the death of Vincent Foster. It claims that it was identified in an internal White House report, entitled "Communication Stream of Conspiracy Commerce," as part of the process through which the "right wing " conveys "fringe" stories to the mainstream media. In July 1996, WJC learned that the IRS was auditing it for the 1995 tax year to determine whether it properly was classified as a tax-exempt organization. Later that year, WJC claims, an internal memorandum written by a White House official became public that identified WJC as an organization to be monitored. After learning of this memorandum, WJC believed that the IRS was auditing its tax status in retaliation for its journalism; on October 22 1996, WJC's founder, Joseph Farah, published an oped piece in the Wall Street Journal postulating that "the unconstitutional harassment of [WJC] is a smoking gun that proves that the White House is manipulating the IRS for political purposes." A year and a half later, on May 13, 1998, WJC filed this action against two Internal Revenue Service (IRS) officials: Thomas Cederquist, the IRS agent assigned to the WJC audit, and Margaret Milner Richardson, Commissioner of the IRS from May 1993 through May 1997.

As part of the audit, Agent Cederquist sent WJC extensive document requests, which included requests for information concerning the process through which WJC selected its investigative reporters and the topics to be probed. WJC alleges that on two occasions, Cederquist made statements indicating that the tax audit was in retaliation for WJC's journalism. While interviewing WJC's accountant, Cederquist was asked by him why he was requesting certain materials. According to WJC, he replied "Look, this is a political case and the decision is going to be made at the national level." WJC claims Cederquist told the accountant that WJC exceeded its authority by publishing information during an election year that was unfavorable to the President, and that he "made reference to the `political' nature of the audit."

Furthermore, WJC claims that when it went public concerning the retaliatory tax audit in October 1996, the IRS enlarged its review. In December 1996, Cederquist informed WJC that the audit would include the 1994 tax year as well as the 1995 tax year, and over the next few months, WJC learned that its two largest individual charitable donors were also being audited by the IRS.

According to WJC, in February 1997, IRS Commissioner Margaret Milner Richardson, who WJC claims is a friend of the First Lady, announced her resignation, and her last day working at the IRS was May 23, 1997. WJC does not specifically allege that the resignation was in any way related to this case (or, for that matter, that it had anything to do with politically motivated tax audits). In an uncontradicted affidavit, Richardson declares that she had no role whatsoever in the WJC audit, and that she had never heard of WJC until its founder published his op-ed piece in the Wall Street Journal. Furthermore, she declares that the IRS has no policy of undertaking politically inspired or retaliatory tax audits.

On April 29, 1997, the IRS reassigned the audit from Cederquist to Agent Grisso, and Grisso conducted a two-day examination of documentation at WJC's offices on April 30 and May 1.2 Cederquist was present on the first day but did not accompany Grisso on the second day. WJC's complaint states that before he left on May 1, Grisso said:

he did not understand why so much time and energy had been devoted to the WJC audit because "there was nothing there." Agent Grisso advised [WJC ] that he would recommend that a "no change" letter be issued.

WJC does not allege that any tortious conduct took place after Grisso was assigned to the case, and, according to WJC, later that month, on May 28, 1997, Grisso issued a report recommending that WJC's tax-exempt status be continued.

WJC seeks damages in excess of $10 million, claiming that Cederquist and Richardson violated its First and Fourth Amendment rights by conducting a politically-motivated tax audit, and that consistent with Bivens v. Six Unknown Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388 (1971), it is entitled to compensation. The defendants subsequently filed a motion to dismiss, or, in the alternative, summary judgment, arguing that: 1) the complaint failed to state a claim under Bivens; 2) the action was time-barred; and 3) they were entitled to qualified immunity from suit. The district court granted the defendants' motion to dismiss on the first ground, and this appeal follows.

II. ANALYSIS
A. Availability of a Bivens Remedy

The district court granted the defendants' motion to dismiss on the theory that the complaint did not state a cause of action under Bivens. According to the district court, because the Internal Revenue Code (IRC) contains an extensive remedial scheme for taxpayers, "a Bivens action is unavailable." WJC argues on appeal that a Bivens remedy is available because it is the only way that WJC can be compensated for its injuries.

Bivens provides that federal courts have the inherent authority to award damages against federal officials to compensate plaintiffs for violations of their constitutional rights. Bivens, 403 U.S. at 394; see Carlson v. Green, 446 U.S. 14, 23 (1980) (authorizing Bivens remedy to compensate for constitutional injury even though state tort law and Federal Tort Claims Act authorized award of damages caused by same conduct). However, Bivens remedies are not available to compensate plaintiffs for all constitutional torts committed by federal officials. One circumstance in which a Bivens remedy is unavailable is when "Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur" in the course of administering a federal program. Schweiker v. Chilicky, 487 U.S. 412, 423 (1988).3

It is a question of first impression in this Circuit whether or not a Bivens remedy is available to compensate a non-profit organization for a retaliatory tax audit to determine the entity's tax status. In this case, however, we need not determine whether a Bivens remedy is available for the type of violation at issue because, as we explain below, we must affirm the district court on the ground that WJC's complaint was not filed within the time permitted by the statute of limitations.

B. Statute of Limitations

The district court did not consider the defendants' alternative argument that the complaint is barred by the statute of limitations. There is no dispute that the appropriate statute of limitations period in this matter is one year. See Van Strum v. Lawn, 940 F.2d 406, 408-10 (9th Cir. 1991) (state's personal injury statute of limitations applies in Bivens actions); Cal. Civ. Proc. Code 340(3) (one year statute of limitations for personal injury actions). While the statute of limitations period is...

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