United States District Court, Middle District of Pennsylvania
September 30, 2002
THURSTON P. BELL, PLAINTIFF,
CHARLES ROSSOTTI, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Yvette Kane, United States District Judge
MEMORANDUM AND ORDER
Before this Court is Defendants' motion to dismiss and/or for summary
judgment (Doc. No. 12). The motion has been fully briefed, and is ripe
for disposition. For the reasons that follow, the motion will be
On September 10, 2001, Plaintiff Thurston Bell, proceeding pro se,
filed a complaint against IRS Commissioner Charles Rossotti in his
official capacity, and IRS agents Chris Roginsky and Kathleen Lennon in
their official and individual capacities. In his suit, Bell seeks (1) a
declaratory judgment that his websites and their content are protected by
the First Amendment to the United States Constitution, (2) an injunction
against Defendants preventing them from approaching him and his family,
and (3) compensatory damages in the amount of $30,000 and punitive
damages of $1,000,000 from each of the Defendants sued in their
individual capacities for violations of his First Amendment rights.
Bell founded the National Institute for Taxation Education ("NITE") in
November, 1997. Through NITE, Plaintiff owns and maintains two websites
which expound Plaintiff's views of tax law: http://www.nite.org and
http://www.tax-gate.com. Plaintiff asserts that the content on these
websites is protected by the First Amendment. In addition to providing
the information on the websites, Plaintiff assists NITE members by
drafting letters on their behalf and attending meetings with IRS
Ultimately, Plaintiff's complaint alleges that an IRS investigation of
his websites violates his First Amendment rights. However, the complaint
first details a number of alleged wrongs to others that have heightened
Plaintiff's fear of imminent IRS action against him.*fn1 These events
include raiding the business office of Plaintiff's former associate, Nick
Jesson, and the investigation of Plaintiff's associates Darlow Thomas
Madge and Hal Hearn. Plaintiff offers these events as evidence of his
fear that the IRS will undertake similar actions against him.
On September 4, 2001, Plaintiff received a letter from the IRS stating
that he and his websites were under investigation for possible violation
of 26 U.S.C. § 6700*fn2 and 7408.*fn3 The letter stated that a
possible consequence of the investigation would be an injunction.
Furthermore, the letter notified Plaintiff that he was required to
cooperate with the investigation. Plaintiff asserts that the IRS
investigative activity violates his First Amendment right to free
A. Standard of Review
The Court will consider the pending motion as a motion to dismiss.
Defendants move to dismiss Plaintiff's complaint under Fed.R.Civ.P.
12(b)(1) and 12(b)(6). A Rule 12(b)(1) motion may be treated either as a
facial or factual challenge to the court's subject matter jurisdiction.
Gould Electronics, Inc. v. United States, 220 F.3d 169, 177 (3d Cir.
2000). When reviewing a facial attack, the Court considers only the
allegations in the complaint, documents referenced therein, and documents
attached thereto. Id. These must be read in the light most favorable to
the plaintiff. Id. Only when reviewing a factual attack may the court
consider evidence outside the pleadings. Id.
As with a Rule 12(b)(1) facial attack, when considering a Rule 12(b)(6)
motion to dismiss, the Court considers only the
allegations within the
complaint, any documents referred to in the complaint, and documents
attached to the complaint. "A motion to dismiss pursuant to Rule 12(b)(6)
may be granted only if, accepting all well pleaded allegations in the
complaint as true, and viewing them in the light most favorable to
plaintiff, plaintiff is not entitled to relief." In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal
citation omitted). Therefore, when analyzing Defendants' Motion to
Dismiss, this Court construes all facts alleged in the complaint as
true, and draws all reasonable inferences in the plaintiff's favor. Trump
Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478
(3d Cir. 1998). This Court will only grant Defendants' Motion to Dismiss
if there is clearly no remedy available for the Plaintiff's claim, or if
Plaintiff has no right or power to assert the claim. Melo-Sonics Corp.
v. Cropp, 342 F.2d 856, 859 (3d Cir. 1965).
On the face of his complaint, Plaintiff seeks to enjoin the IRS
investigation of whether his websites violate United States law.
Plaintiff also seeks an injunction
prohibiting Defendant Commissioner and all of his
agents (defined as those executing the orders of
Defendant Commissioner or operating in any form of
cooperation or collusion) from physically approaching
Plaintiff, His Family, and the Offices of NITE, at a
distance of less than 300 feet, without prior approval
from Plaintiff or non ex parte order of this Court.
Compl, p. 3.
The Tax Anti-injunction Act, however, states, with certain exceptions
not applicable here, "no suit for the purpose of restraining the
assessment or collection of any tax shall be maintained in any court by
any person." 26 U.S.C. § 7421(a). Information gathering that may lead
to the assessment or collection of taxes falls within this tax
anti-injunction provision. Linn v. Chivatero, 714 F.2d 1278, 1281-82 (5th
Cir. 1983). Since the IRS investigation into Plaintiff's websites may
ultimately lead to the assessment and collection of taxes from
individuals using Plaintiff's methods, the investigation falls under this
anti-injunction provision. This Court is prohibited from entering any
injunction against the IRS and its agents for allegedly harassing
activities when those activities fall within the scope of a valid
investigation. Black v. United States, 534 F.2d 524, 526-27 (2d Cir.
1976); Graham v. United States, 528 F. Supp. 933 (E.D.Pa. 1981).
Plaintiff argues that his case fits into a narrow, judicially
recognized, exception to the anti-injunction provision. A court may enter
an injunction against the collection of any tax already assessed if (1)
it is clear that under no circumstances could the government ultimately
prevail and (2) the taxpayer shows that "`equity jurisdiction' otherwise
exists, i.e., the taxpayer shows that he would otherwise suffer
irreparable injury." C.I.R. v. Shapiro, 424 U.S. 614, 627 (1976); Sokolow
v. United States, 169 F.3d 663 (9th Cir. 1999). To show irreparable
injury, the taxpayer must "plead and prove facts establishing that his
remedy in the Tax Court or in a refund suit is inadequate to repair any
injury that might be caused by an erroneous assessment or collection of
an asserted tax liability." Id. at 628. This extremely narrow exception
to the Tax Anti-injunction act is applicable to situations where
irreparable injury may result from a deprivation of property pending
final adjudication of the rights of the parties. Id. The exception was
created because the
"Due Process Clause requires that the party whose
property is taken be given an opportunity for some kind of predeprivation
or prompt post-deprivation hearing at which some showing of the probable
validity of the deprivation must be made." Id.
Plaintiff, however, does not present a scenario where this narrow
exception would apply since the government has not assessed a tax penalty
against the Plaintiff and therefore has nothing to collect. Plaintiff is
attempting to enjoin the IRS from an investigation that may lead to the
assessment or collection of taxes from him or from others using the
information Plaintiff provides on his websites and to NITE members. He is
not requesting an injunction to prevent the collection of taxes already
assessed. Plaintiff, therefore, can not plead the irreparable harm
created by the depravation of property the exception requires since there
has been no attempt to collect any taxes in this case.
It is clear that the anti-injunction provision of the Internal Revenue
Code applies here. Where the Anti-injunction Act applies, and the cause
of action does not fall into one of the statutory or judicially
recognized exceptions, the claim must be dismissed for lack of subject
matter jurisdiction. Sokolow, 109 F.3d at 665. Therefore, Plaintiff's
claim for injunctive relief will be dismissed pursuant to Fed.R.Civ.P.
C. Declaratory Judgment
Plaintiff asks this Court to declare "that his individual speech as
well as forms thereof posted on [his websites] is protected by the First
Amendment to the United States Constitution guaranty of Free Speech and
does not violate any provisions of the Internal Revenue Code or Treasury
Regulations. . . ." Compl., p. 2. However, this Court does not have
jurisdiction over Plaintiff's request for declaratory judgment. The
Declaratory Judgment Act grants federal courts jurisdiction to hear
declaratory judgment actions:
In a case of actual controversy within its
jurisdiction, except with respect to Federal taxes
other than actions brought under section 7428 of the
Internal Revenue Code of 1986, . . . any court of the
United States, upon the filing of an appropriate
pleading, may declare the rights and other legal
relations of any interested party seeking such
declaration, whether or not further relief is or could
be sought. Any such declaration shall have the force
and effect of a final judgment or decree and shall be
reviewable as such.
28 U.S.C. § 2201(a) (emphasis added). It is clear from the face of
the statute that this Court cannot enter judgment with respect to
Plaintiff's assertions of tax law as they appear on his websites. Gattuso
v. Pecorella, 733 F.2d 709 (9th Cir. 1984) (discussing inapplicability of
Declaratory Judgment Act to actions relating to federal taxes).
Plaintiff is also ostensibly seeking declaratory judgment with respect
to his First Amendment claims. However, this is not the proper forum for
this claim. The question of whether the content of Plaintiff's website is
protected by the First Amendment is inextricably intertwined with the
question of whether Plaintiff's website and the services it advertises
violate the Internal Revenue Code. While not deciding the nature of
Plaintiff's speech here, the Court notes that the First Amendment does
not protect "commercial speech which promotes an illegal activity or
transaction." United States v. White, 769 F.2d 511, 516 (8th Cir. 1985);
United States v. Kaun, 827 F.2d 1144, 1165 (5th Cir. 1985); Nat'l
Commodity and Barter Ass'n v. United States, 843 F. Supp. 655, 665 (D.
Col. 1993) aff'd, 42 F.3d 1406 (10th
Cir. 1994). Accordingly, if the tax
advice posted Plaintiff's websites is legal, he may be entitled to First
Amendment protections. If, however, the tax advice posted on Plaintiff's
websites is commercial speech advocating actions that violate the
Internal Revenue Code, he would not enjoy the protections of the First
Amendment. Plaintiff's First Amendment claims are, therefore,
inextricably intertwined with his tax law claims, and this Court cannot
decide the issues separately. Any declaratory judgment in this case would
amount to a judgment "with respect to Federal Taxes" and is therefore
barred by the Declaratory Judgment Act.*fn4 28 U.S.C. § 2201(a).
Plaintiff's claim for declaratory judgment with respect to his
assertion of tax law is barred by the Declaratory Judgement Act.
Furthermore, Plaintiff's request for declaratory judgment on his First
Amendment claim is inextricably intertwined with the Plaintiff's
assertion of his tax law claims and cannot be decided separately.
Therefore, the Court will dismiss Plaintiff's claims for declaratory
judgment pursuant to Fed.R.Civ.P. 12(b)(1).
D. Compensatory and Punitive Damages
1. Claims against Defendants in their official capacities
"It is axiomatic that the United Sates may not be sued without its
consent and that the existence of consent is a prerequisite for
jurisdiction." United States v. Mitchell, 463 U.S. 206, 212 (1983).
Sovereign immunity is not defeated by the act of naming officers and
employees of the United States as defendants in a suit that properly is
against the United States. Larson v. Domestic & Foreign Commerce
Corp., 337 U.S. 682, 688 (1949); Gilbert v. DaGrossa, 756 F.2d 1455, 1458
(9th Cir. 1985). It is well-settled that "a suit against IRS employees in
their official capacity is essentially a suit against the United States."
Gilbert, 756 F.2d at 1458. Absent express statutory consent to sue, this
Court must dismiss the claims barred by sovereign immunity. Id.; see also
United States v. Shaw, 309 U.S. 495, 500-01 (1940); Radin v. United
States, 699 F.2d 681, 684 (4th Cir. 1983). There is no applicable express
statutory consent to sue for Plaintiff's claims. Accordingly, this Court
has no jurisdiction over Defendants in their official capacities. The
Court, therefore, will dismiss the claims brought against Defendants in
their official capacities pursuant to Fed.R.Civ.P. 12(b)(1).
2. Claims against Roginsky and Lennon in their individual capacities
Plaintiff has also sued Roginsky and Lennon in their individual
capacities for violations of his First Amendment right through their
investigation of his websites under Bivens v. Six Unknown Named Agents of
Fed. Bureau of Narcotics. 403 U.S. 388 (1971). Federal officers,
operating under the color of federal law, can be sued for monetary damages
for violations of constitutional rights. See Bivens, 403 U.S. 388
Plaintiff, however, has failed to state a Bivens claim for damages. A
Bivens action "should not be inferred to
permit suits against IRS agents
accused of violating a taxpayer's constitutional rights in the course of
making a tax assessment." Shreiber v. Mastrogiovanni, 214 F.3d 148, 153
(3d Cir. 2000).*fn5 The reasoning behind these cases flows directly from
Bivens and its progeny. In Bivens, the Supreme Court held that an
individual alleging violation of Fourth Amendment rights could sustain a
complaint for money damages against police officers. Bivens, 403 U.S. at
397. The Supreme Court has stated that one of the factors to consider
when determining whether to permit a Bivens action is whether Congress
provided an alternative remedy. Schweiker v. Chilicky, 487 U.S. 412, 420
(1988). "When the design of a Government program suggests that Congress
has provided what it considers adequate remedial mechanisms for
constitutional violations that may occur in the course of its
administration, we have not created additional Bivens remedies." Id. at
423. In the tax arena, Congress has provided meaningful safeguards and
remedies. As the Third Circuit explained:
Congress chose to provide certain remedies, and not
others, as part of the complex statutory scheme which
regulates the relationship between the IRS and
taxpayers. We will not create a remedy where Congress
has chosen not to.
Shreiber, 214 F.3d at 152-53.
Therefore, no Bivens action should be implied against agents of the IRS
in the course of investigating and making tax assessments. Shreiber, 214
F.3d at 152-53 (3d Cir. 2000).
Plaintiff argues that a Bivens action should exist since the remedial
mechanisms provided by tax law are inadequate remedies for his First
Amendment claims. The Third Circuit has addressed this concern. In
Shreiber, the Third Circuit noted that even in a case where a plaintiff
cannot recover completely absent a Bivens claim, the Supreme Court has
where Congress has provided meaningful remedies we
should exercise extreme caution in creating additional
relief. As with the administration of welfare
benefits, the organization of the tax system, and the
balancing of governmental efficiency and individual
rights, is best left to Congress.
Schweiker v. Chilicky, 487 U.S. 412
Since it is clear that a Bivens action for alleged violations of
constitutional rights should not be inferred against IRS agents,
Plaintiff has failed to state a Bivens claim. The Court will, therefore,
dismiss his claims pursuant to Fed.R.Civ.P. 12(b)(6).
AND NOW, therefore, IT IS ORDERED THAT Defendant's motion to dismiss
(Doc. No. 12) is GRANTED. All other pending motions are DENIED as moot.
The Clerk of Court shall close the file.