Nemlowill v. United States of America

Filing 4

ORDER denying Plaintiff's 3 Motion for TRO. Court declines to issue an order to show cause as to why a preliminary injunction should not issue. Signed by Judge Michael M. Anello on 6/29/2016. (jah)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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v.

ORDER DENYING MOTION FOR
TEMPORARY RESTRAINING
ORDER

UNITED STATES OF AMERICA,

[Doc. No. 3]

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Case No.: 16CV1642-MMA (WVG)

JIM NEMLOWILL,
Plaintiff,

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Defendant.

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On June 28, 2016, Plaintiff Jim Nemlowill filed this action against the United

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States seeking injunctive relief pursuant to section 502(a)(3) of the Employee Retirement

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Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(3). [Doc. No. 1.] Plaintiff

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contemporaneously filed an ex parte motion requesting the Court issue a temporary

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restraining order (“TRO”) and an order to show cause as to why the Court should not

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grant a preliminary injunction. [Doc. No. 3.] For the following reasons, the Court

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DENIES Plaintiff’s motion.

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BACKGROUND
Plaintiff is a trustee of the Jim Nemlowill Hay Contracting Profit Sharing Trust,

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which contains Plaintiff’s retirement funds and those of 80 employees and former

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employees of Jim Nemlowill Hay Contracting (“JNHC”) pursuant to a pension plan. The

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Internal Revenue Service (IRS) has assessed tax liens against Plaintiff and JNHC and has

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filed a Notice of Levy against the pension plan. Plaintiff seeks to enjoin the Internal
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Revenue Service from levying against the pension plan pursuant to ERISA section

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502(a)(3). 29 U.S.C. § 1132(a)(3).

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LEGAL STANDARD
The standard for issuing a TRO is similar to the standard for issuing a preliminary

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injunction and requires that the party seeking relief show either “(1) a combination of

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likelihood of success on the merits and the possibility of irreparable harm, or (2) that

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serious questions going to the merits are raised and the balance of hardships tips sharply

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in favor of the moving party.” Homeowners Against the Unfair Initiative v. Calif.

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Building Industry Assoc., 2006 WL 5003362, at *2 (S.D. Cal. Jan. 26, 2006) (citing

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Immigrant Assistance Project of the L.A. County of Fed’n of Labor v. INS, 306 F.3d 842,

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873 (9th Cir. 2002)). Under either formulation, a movant must at minimum show “a fair

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chance of success on the merits, or questions serious enough to require litigation,” and “a

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significant threat of irreparable injury.” Arcamuzi v. Continental Air Lines, Inc., 819

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F.2d 935, 937 (9th Cir. 1987); see also Dep’t Parks & Rec. of Calif. v. Bazaar Del

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Mundo, Inc., 448 F.3d 1118, 1123 (9th Cir. 2006). The underlying purpose of a TRO is

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to preserve the status quo and prevent irreparable harm before a preliminary injunction

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hearing may be held. Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck

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Drivers, 415 U.S. 423, 439 (1974); see also Reno Air Racing Ass’n v. McCord, 452 F.3d

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1126, 1130–31 (9th Cir. 2006).

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Federal Rule of Civil Procedure 65(b) provides that a court may issue a TRO

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without notice to the adverse party in limited circumstances where “specific facts in an

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affidavit or a verified complaint clearly show that immediate and irreparable injury, loss,

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or damage will result to the movant . . . .” Fed. R. Civ. P. 65(b)(1)(A). The movant must

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also certify in writing any efforts made to give notice and the reasons why it should not

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be required. Fed. R. Civ. P. 65(b)(1)(B). Although the restrictions imposed are stringent,

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they “reflect the fact that our entire jurisprudence runs counter to the notion of court

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action taken before reasonable notice and an opportunity to be heard has been granted

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both sides of a dispute.” Granny Goose Foods, 415 U.S. at 438–39 (1974). This Court
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hears motions for temporary restraining orders ex parte only “in extraordinary

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circumstances.” Civil Chambers Rule No. V.

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DISCUSSION
The Court denies Plaintiff’s motion for three reasons: (1) Plaintiff has not

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established that this Court has subject matter jurisdiction over this action; (2) Plaintiff has

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not established that the Anti-Injunction Act, 26 U.S.C. § 7421, does not bar this action;

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and (3) Plaintiff has not satisfied the Federal Rule 65(b) standard applicable to unnoticed

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TROs.

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First, federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life

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Ins. Co. of Am., 511 U.S. 375, 377 (1994). It is presumed that federal courts do not have

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jurisdiction unless the party asserting jurisdiction demonstrates otherwise. Id.

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“Sovereign immunity is an important limitation on the subject matter jurisdiction of

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federal courts.” Vacek v. U.S. Postal Serv., 447 F.3d 1248, 1250 (9th Cir. 2006). The

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United States may not be sued unless it has waived its sovereign immunity. Id. Courts

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may not imply the government’s waiver; rather, the government must have unequivocally

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expressed it. United States v. Mitchell, 445 U.S. 535, 538 (1980).

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Here, Plaintiff does not address the issue of sovereign immunity. Plaintiff sues the

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United States pursuant to ERISA section 502(a)(3) which allows participants,

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beneficiaries, or fiduciaries of retirement plans to file a civil action seeking to “enjoin any

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act or practice which violates any provision of this subchapter or the terms of the plan” or

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“obtain other appropriate equitable relief.” 29 U.S.C. § 1132(a)(3). While this provision

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may allow Plaintiff to commence a civil action, it does not provide a waiver of sovereign

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immunity, such that Plaintiff may seek to enjoin an “act or practice” of the United States

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through one of its agencies. See Shanbaum v. United States, 32 F.3d 180, 182 (5th Cir.

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1994) (noting that the only waiver of sovereign immunity in 29 U.S.C. § 1132 is an

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inapplicable provision allowing some actions against the Secretary of Labor).

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Accordingly, Plaintiff has not demonstrated that this Court has subject matter jurisdiction

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over this action.
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Second, in order to obtain a TRO or a preliminary injunction, a movant must show

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(1) some degree of probability of success on the merits or serious questions requiring

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litigation, and (2) demonstrate a serious threat of irreparable harm. Arcamuzi, 819 F.2d at

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937; Bazaar Del Mundo, Inc., 448 F.3d at 1123. A movant cannot satisfy the first prong

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where the movant’s action is barred by the Anti-Injunction Act. The Anti-Injunction Act

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provides that “no suit for the purpose of restraining the assessment or collection of any

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tax shall be maintained in any court by any person, whether or not such person is the

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person against whom such tax was assessed.” 26 U.S.C. § 7421. “The principal purpose

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of the Anti-Injunction Act is to preserve the Government’s ability to assess and collect

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taxes expeditiously with ‘a minimum of preenforcement judicial interference’ and ‘to

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require that the legal right to the disputed sums be determined in a suit for refund.’”

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Church of Scientology of California v. United States, 920 F.2d 1481, 1484–85 (9th Cir.

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1990) (quoting Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974)). Plaintiff argues the

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Act does not bar this action because an exception applies for “unusual and extraordinary

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circumstances” pursuant to Monge v. Smyth, 229 F.2d 361 (9th Cir. 1956).1 Plaintiff

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contends that such circumstances exist because “the IRS’s refusal to recognize the funds

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as a retirement account are [sic] harming 79 individuals other than the taxpayer whose tax

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liabilities they are assessing.” [Doc. No. 3.]

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However, Plaintiff’s reliance on Monge is misguided because Monge “was decided

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prior to prior to the 1962 Supreme Court decision in Enochs v. Williams Packing &

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Navigation Co.” Church of Scientology, 920 F.2d at 1485 (citing Enochs, 370 U.S. 1

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(1962)). “Rather than providing a separate and independent exception to the Anti–

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Injunction Act, the Supreme Court has instructed that [Monge and other decisions] are

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part of an earlier generation of dissonant case law which was harmonized in the Williams

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Packing decision.” Id. Pursuant to Williams Packing, there now exists only one narrow,

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judicially created exception to the Anti-Injunction Act, which allows an injunction

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Plaintiff does not contend that any statutory exceptions apply.
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against the collection of a tax where (1) it is clear that the government could not prevail

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under any circumstances, and (2) the taxpayer demonstrates that he or she will otherwise

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suffer irreparable harm. Id.

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Applying the correct formulation to Plaintiff’s proffered set of facts, the Court

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finds Plaintiff’s case does not fall within the Williams Packing exception. Plaintiff has

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not satisfied either prong of the exception. First, Plaintiff has not shown that the

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government could not prevail under any circumstances. Without citing any supporting

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authority, Plaintiff merely argues that the government has mistakenly failed to recognize

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Plaintiff’s retirement fund as such. Second, Plaintiff has not demonstrated that he will

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suffer irreparable harm if the Court does not provide injunctive relief because Plaintiff

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has the option of suing for a refund.2 See Obermann v. United States, 917 F.2d 28, No.

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90-15063, 1990 WL 163556 at *1 (9th Cir. 1990) (“Oebermann is not facing ‘irreparable

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harm’ because he could sue for a refund pursuant to 26 U.S.C. § 7422.”); Petrie v. C.I.R.,

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686 F. Supp. 1407, 1416 (D. Nev. 1988) (“The financial difficulties which plaintiff may

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encounter pending a refund suit, do not establish irreparable harm.”). After all, the

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purpose of the Anti-Injunction Act is to minimize interference with the assessment and

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collection of taxes and require taxpayers to file claims first with the IRS and then, if they

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do not succeed, to file lawsuits seeking refunds in the federal district courts. See Church

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of Scientology, 920 F.2d at 1484–85; Johnson v. United States, No. 99-S-1840, 2000 WL

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637338, at *2 (D. Colo. Apr. 11, 2000).

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Lastly, to obtain a TRO without notice to the adverse party, the movant must

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“clearly show that immediate and irreparable injury, loss, or damage will result to the

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movant . . . .” Fed. R. Civ. P. 65(b)(1)(A). Here, Plaintiff concedes that he moves for an

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unnoticed TRO. As discussed, Plaintiff has not shown a threat of irreparable harm.

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//

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//

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Plaintiff does not argue that he is precluded for any reason from suing for a refund.
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For the foregoing reasons, the Court DENIES Plaintiff’s motion seeking a TRO

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and DECLINES to issue an order to show cause as to why a preliminary injunction

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should not issue. [Doc. No. 3.]

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IT IS SO ORDERED.

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Dated: June 29, 2016
_____________________________
Hon. Michael M. Anello
United States District Judge

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