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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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 v. ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER UNITED STATES OF AMERICA, [Doc. No. 3] 10 11 12 Case No.: 16CV1642-MMA (WVG) JIM NEMLOWILL, Plaintiff, 13 Defendant. 14 15 16 On June 28, 2016, Plaintiff Jim Nemlowill filed this action against the United 17 States seeking injunctive relief pursuant to section 502(a)(3) of the Employee Retirement 18 Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(3). [Doc. No. 1.] Plaintiff 19 contemporaneously filed an ex parte motion requesting the Court issue a temporary 20 restraining order (“TRO”) and an order to show cause as to why the Court should not 21 grant a preliminary injunction. [Doc. No. 3.] For the following reasons, the Court 22 DENIES Plaintiff’s motion. 23 24 BACKGROUND Plaintiff is a trustee of the Jim Nemlowill Hay Contracting Profit Sharing Trust, 25 which contains Plaintiff’s retirement funds and those of 80 employees and former 26 employees of Jim Nemlowill Hay Contracting (“JNHC”) pursuant to a pension plan. The 27 Internal Revenue Service (IRS) has assessed tax liens against Plaintiff and JNHC and has 28 filed a Notice of Levy against the pension plan. Plaintiff seeks to enjoin the Internal -1- 16CV1642-MMA (WVG) 1 Revenue Service from levying against the pension plan pursuant to ERISA section 2 502(a)(3). 29 U.S.C. § 1132(a)(3). 3 4 LEGAL STANDARD The standard for issuing a TRO is similar to the standard for issuing a preliminary 5 injunction and requires that the party seeking relief show either “(1) a combination of 6 likelihood of success on the merits and the possibility of irreparable harm, or (2) that 7 serious questions going to the merits are raised and the balance of hardships tips sharply 8 in favor of the moving party.” Homeowners Against the Unfair Initiative v. Calif. 9 Building Industry Assoc., 2006 WL 5003362, at *2 (S.D. Cal. Jan. 26, 2006) (citing 10 Immigrant Assistance Project of the L.A. County of Fed’n of Labor v. INS, 306 F.3d 842, 11 873 (9th Cir. 2002)). Under either formulation, a movant must at minimum show “a fair 12 chance of success on the merits, or questions serious enough to require litigation,” and “a 13 significant threat of irreparable injury.” Arcamuzi v. Continental Air Lines, Inc., 819 14 F.2d 935, 937 (9th Cir. 1987); see also Dep’t Parks & Rec. of Calif. v. Bazaar Del 15 Mundo, Inc., 448 F.3d 1118, 1123 (9th Cir. 2006). The underlying purpose of a TRO is 16 to preserve the status quo and prevent irreparable harm before a preliminary injunction 17 hearing may be held. Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck 18 Drivers, 415 U.S. 423, 439 (1974); see also Reno Air Racing Ass’n v. McCord, 452 F.3d 19 1126, 1130–31 (9th Cir. 2006). 20 Federal Rule of Civil Procedure 65(b) provides that a court may issue a TRO 21 without notice to the adverse party in limited circumstances where “specific facts in an 22 affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, 23 or damage will result to the movant . . . .” Fed. R. Civ. P. 65(b)(1)(A). The movant must 24 also certify in writing any efforts made to give notice and the reasons why it should not 25 be required. Fed. R. Civ. P. 65(b)(1)(B). Although the restrictions imposed are stringent, 26 they “reflect the fact that our entire jurisprudence runs counter to the notion of court 27 action taken before reasonable notice and an opportunity to be heard has been granted 28 both sides of a dispute.” Granny Goose Foods, 415 U.S. at 438–39 (1974). This Court -2- 16CV1642-MMA (WVG) 1 hears motions for temporary restraining orders ex parte only “in extraordinary 2 circumstances.” Civil Chambers Rule No. V. 3 4 DISCUSSION The Court denies Plaintiff’s motion for three reasons: (1) Plaintiff has not 5 established that this Court has subject matter jurisdiction over this action; (2) Plaintiff has 6 not established that the Anti-Injunction Act, 26 U.S.C. § 7421, does not bar this action; 7 and (3) Plaintiff has not satisfied the Federal Rule 65(b) standard applicable to unnoticed 8 TROs. 9 First, federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life 10 Ins. Co. of Am., 511 U.S. 375, 377 (1994). It is presumed that federal courts do not have 11 jurisdiction unless the party asserting jurisdiction demonstrates otherwise. Id. 12 “Sovereign immunity is an important limitation on the subject matter jurisdiction of 13 federal courts.” Vacek v. U.S. Postal Serv., 447 F.3d 1248, 1250 (9th Cir. 2006). The 14 United States may not be sued unless it has waived its sovereign immunity. Id. Courts 15 may not imply the government’s waiver; rather, the government must have unequivocally 16 expressed it. United States v. Mitchell, 445 U.S. 535, 538 (1980). 17 Here, Plaintiff does not address the issue of sovereign immunity. Plaintiff sues the 18 United States pursuant to ERISA section 502(a)(3) which allows participants, 19 beneficiaries, or fiduciaries of retirement plans to file a civil action seeking to “enjoin any 20 act or practice which violates any provision of this subchapter or the terms of the plan” or 21 “obtain other appropriate equitable relief.” 29 U.S.C. § 1132(a)(3). While this provision 22 may allow Plaintiff to commence a civil action, it does not provide a waiver of sovereign 23 immunity, such that Plaintiff may seek to enjoin an “act or practice” of the United States 24 through one of its agencies. See Shanbaum v. United States, 32 F.3d 180, 182 (5th Cir. 25 1994) (noting that the only waiver of sovereign immunity in 29 U.S.C. § 1132 is an 26 inapplicable provision allowing some actions against the Secretary of Labor). 27 Accordingly, Plaintiff has not demonstrated that this Court has subject matter jurisdiction 28 over this action. -3- 16CV1642-MMA (WVG) 1 Second, in order to obtain a TRO or a preliminary injunction, a movant must show 2 (1) some degree of probability of success on the merits or serious questions requiring 3 litigation, and (2) demonstrate a serious threat of irreparable harm. Arcamuzi, 819 F.2d at 4 937; Bazaar Del Mundo, Inc., 448 F.3d at 1123. A movant cannot satisfy the first prong 5 where the movant’s action is barred by the Anti-Injunction Act. The Anti-Injunction Act 6 provides that “no suit for the purpose of restraining the assessment or collection of any 7 tax shall be maintained in any court by any person, whether or not such person is the 8 person against whom such tax was assessed.” 26 U.S.C. § 7421. “The principal purpose 9 of the Anti-Injunction Act is to preserve the Government’s ability to assess and collect 10 taxes expeditiously with ‘a minimum of preenforcement judicial interference’ and ‘to 11 require that the legal right to the disputed sums be determined in a suit for refund.’” 12 Church of Scientology of California v. United States, 920 F.2d 1481, 1484–85 (9th Cir. 13 1990) (quoting Bob Jones Univ. v. Simon, 416 U.S. 725, 736 (1974)). Plaintiff argues the 14 Act does not bar this action because an exception applies for “unusual and extraordinary 15 circumstances” pursuant to Monge v. Smyth, 229 F.2d 361 (9th Cir. 1956).1 Plaintiff 16 contends that such circumstances exist because “the IRS’s refusal to recognize the funds 17 as a retirement account are [sic] harming 79 individuals other than the taxpayer whose tax 18 liabilities they are assessing.” [Doc. No. 3.] 19 However, Plaintiff’s reliance on Monge is misguided because Monge “was decided 20 prior to prior to the 1962 Supreme Court decision in Enochs v. Williams Packing & 21 Navigation Co.” Church of Scientology, 920 F.2d at 1485 (citing Enochs, 370 U.S. 1 22 (1962)). “Rather than providing a separate and independent exception to the Anti– 23 Injunction Act, the Supreme Court has instructed that [Monge and other decisions] are 24 part of an earlier generation of dissonant case law which was harmonized in the Williams 25 Packing decision.” Id. Pursuant to Williams Packing, there now exists only one narrow, 26 judicially created exception to the Anti-Injunction Act, which allows an injunction 27                                                                   28 1 Plaintiff does not contend that any statutory exceptions apply. -4- 16CV1642-MMA (WVG) 1 against the collection of a tax where (1) it is clear that the government could not prevail 2 under any circumstances, and (2) the taxpayer demonstrates that he or she will otherwise 3 suffer irreparable harm. Id. 4 Applying the correct formulation to Plaintiff’s proffered set of facts, the Court 5 finds Plaintiff’s case does not fall within the Williams Packing exception. Plaintiff has 6 not satisfied either prong of the exception. First, Plaintiff has not shown that the 7 government could not prevail under any circumstances. Without citing any supporting 8 authority, Plaintiff merely argues that the government has mistakenly failed to recognize 9 Plaintiff’s retirement fund as such. Second, Plaintiff has not demonstrated that he will 10 suffer irreparable harm if the Court does not provide injunctive relief because Plaintiff 11 has the option of suing for a refund.2 See Obermann v. United States, 917 F.2d 28, No. 12 90-15063, 1990 WL 163556 at *1 (9th Cir. 1990) (“Oebermann is not facing ‘irreparable 13 harm’ because he could sue for a refund pursuant to 26 U.S.C. § 7422.”); Petrie v. C.I.R., 14 686 F. Supp. 1407, 1416 (D. Nev. 1988) (“The financial difficulties which plaintiff may 15 encounter pending a refund suit, do not establish irreparable harm.”). After all, the 16 purpose of the Anti-Injunction Act is to minimize interference with the assessment and 17 collection of taxes and require taxpayers to file claims first with the IRS and then, if they 18 do not succeed, to file lawsuits seeking refunds in the federal district courts. See Church 19 of Scientology, 920 F.2d at 1484–85; Johnson v. United States, No. 99-S-1840, 2000 WL 20 637338, at *2 (D. Colo. Apr. 11, 2000). 21 Lastly, to obtain a TRO without notice to the adverse party, the movant must 22 “clearly show that immediate and irreparable injury, loss, or damage will result to the 23 movant . . . .” Fed. R. Civ. P. 65(b)(1)(A). Here, Plaintiff concedes that he moves for an 24 unnoticed TRO. As discussed, Plaintiff has not shown a threat of irreparable harm. 25 // 26 // 27                                                                   28 2 Plaintiff does not argue that he is precluded for any reason from suing for a refund. -5- 16CV1642-MMA (WVG) 1 For the foregoing reasons, the Court DENIES Plaintiff’s motion seeking a TRO 2 and DECLINES to issue an order to show cause as to why a preliminary injunction 3 should not issue. [Doc. No. 3.] 4 IT IS SO ORDERED. 5 6 7 8 9 Dated: June 29, 2016 _____________________________ Hon. Michael M. Anello United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- 16CV1642-MMA (WVG)

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