Roberts et al v. Internal Revenue Service

Filing 36

ORDER: Defendant Internal Revenue Service's Motion to Dismiss 19 is DENIED. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 3/17/2014. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
JOHN and JOANNA ROBERTS,
Plaintiffs,
v.

Case No. 8:13-cv-1731-T-33TBM

INTERNAL REVENUE SERVICE,
Defendant.
______________________________/
ORDER
This cause is before the Court pursuant to Defendant
Internal Revenue Service’s Motion to Dismiss (Doc. # 19),
which was filed on January 3, 2014.

In the Motion, the IRS

seeks the dismissal of one count of Plaintiffs John and Joanna
Roberts’ four count Complaint. Plaintiffs filed a Response in
Opposition to the Motion (Doc. # 30) on February 28, 2014. For
the reasons that follow, the Motion to Dismiss is denied.
I.

Background
Plaintiffs have a long history of litigation with the IRS

regarding Plaintiffs’ 2000 and 2001 jointly filed tax returns,
as well as with respect to subsequent returns.

In 2004, the

IRS commenced a criminal investigation against John Roberts
related to the 2000 and 2001 tax returns. (Doc. # 1 at ¶ 9).
On May 22, 2007, John Roberts was indicted for tax fraud
regarding the 2000 and 2001 tax returns in the United States
District Court for the Middle District of Florida in United

States v. John M. Roberts, 8:07-cr-181-T-23TBM. (Id. at ¶ 11).
However, on September 29, 2010, the Honorable Steven D.
Merryday,

United

States

District

Judge,

dismissed

the

indictment with prejudice on the Government’s motion. (Id. at
¶ 19).
Since that time, Plaintiffs and the IRS have engaged in
litigation in the IRS Appeals Office regarding Plaintiffs’
2006 tax return (Id. at ¶ 38), and the IRS has undertaken an
audit of Plaintiffs’ tax returns for 2000, 2001, 2008, and
2009. (Id. at ¶ 39).
Notice

of

In addition, the IRS has initiated a

Deficiency

action

against

Plaintiffs

for

“Plaintiffs’ conduct dating back to 2000 and 2001,” asserting
that

the

fraud

penalty,

26

Plaintiffs’ conduct. (Id. at

U.S.C.

§

6663,

applies

to

¶¶ 146-147).

In connection with the foregoing, Ron Wise, Plaintiffs’
tax consultant and forensic accountant, submitted a request
regarding Plaintiffs’ “return information” to the IRS pursuant
to the Freedom of Information Act, 5 U.S.C. § 552, et seq.
(“FOIA”), dated July 1, 2011. (Id. at ¶ 56).

“Mr. Wise

requested the return information from Defendant to demonstrate
that

Defendant

instituting

a

had

severely

criminal

abused

prosecution

its

discretion

against

in

Plaintiffs.”

(Id. at ¶ 58). Specifically, Plaintiffs requested that the IRS
2

provide the following documents:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

•

Forms 3949
Forms 5043
Forms 4930
Forms 6082
Forms 6083
Forms 6084
Forms 6085
Special Agents’ Time/Activity Reports
Special Agents’ Diaries
Notes, Transmittals, and Correspondence to and/or from
case reviewers and related responses
Notes, Transmittals, and Correspondence to and/or from CT
Counsel and related responses
Notes, Transmittals, and Correspondence to and/or from
Department of Justice, Tax Division and related responses
Notes, Transmittals, and Correspondence to and/or from
the Office of the U.S. Attorney and related responses
Special Agent’s Report recommending prosecution including
all appendices
Special Agents’ Report recommending discontinuing of
investigation; Form 10273, Discontinued Investigation
Report
Affidavits, Memoranda of Interview, Question and Answer
Statements, Transcripts of Interviews with all witnesses,
whether included as exhibits with Special Agent’s Report
or retained in the Special Agent’s files
Affidavits, Memoranda of Interview, Question and Answer
Statements, and Transcripts of Interviews with John
and/or Joanna Roberts, whether included as exhibits with
Special Agent’s Report or retained in the Special Agent’s
files.

(Id. at ¶ 59).
On September 12, 2011, the IRS responded to Plaintiffs’
FOIA

request

by

stating

that

several

of

the

requested

documents did not exist and claiming that the responsive
documents that did exist were subject to FOIA exemptions and
would not be produced. (Id. at ¶ 62). On March 6, 2013,
3

Plaintiffs renewed their prior FOIA request and also requested
additional documents. (Id. at ¶ 80).

On April 8, 2013, the

IRS denied the renewed FOIA request, reiterating various FOIA
exemptions. (Id. at ¶¶ 83-84).

On May 6, 2013, Plaintiffs

submitted an appeal of the IRS’s FOIA denials. (Id. at ¶ 86).
On May 22, 2013, the IRS denied Plaintiffs’ appeal. (Id. at ¶
90).
On July 3, 2013, Plaintiffs filed a four count complaint
against the IRS alleging violation of the FOIA and the
Administrative
(“APA”).
the

FOIA

Procedures

Act,

5

U.S.C.

§

702,

et

seq.

Counts one through three are asserted pursuant to
and

are

titled

“Production

of

Agency

Records

Improperly Withheld by Defendant” (count one); “Inadequate
Search for Previously Requested Records” (count two); and
“Violation of Segregation Requirements” (count three).

Count

four, subject to the IRS’s Motion to Dismiss, is asserted
pursuant to the APA and is titled “Arbitrary and Capricious
Agency Action or Agency Finding.”
The IRS seeks the dismissal of the APA claim asserted in
count four pursuant to Rule 12(b)(1), Fed. R. Civ. P., arguing
that this Court lacks jurisdiction over the APA claim because
it is “duplicative of the [P]laintiffs’ claims” under the FOIA

4

and is “therefore barred.”1

As explained below, the Motion is

denied.
II.

Legal Standard
Federal

courts

are

courts

of

limited

jurisdiction.

“[B]ecause a federal court is powerless to act beyond its
statutory grant of subject matter jurisdiction, a court must
zealously insure that jurisdiction exists over a case, and
should

itself

raise

the

question

of

subject

matter

jurisdiction at any point in the litigation where a doubt
about jurisdiction arises.” Smith v. GTE Corp., 236 F.3d 1292,
1299 (11th Cir. 2001).
Motions

to

dismiss

for

lack

of

subject

matter

jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) may attack
jurisdiction facially or factually.
323

F.3d

920,

924

n.5

(11th

Cir.

Morrison v. Amway Corp.,
2003).

On

a

facial

1
The IRS’s motion focuses on the relationship between
the FOIA and the APA, and asserts arguments in support of the
dismissal of the APA claim only. However, in the Motion’s
“wherefore” clause, the IRS seeks the dismissal of the entire
Complaint based on Plaintiffs’ “failure to effect proper
service of process.” (Doc. # 19 at 4).
Because there is no
discussion of defective service of process in the Motion to
Dismiss, the Court assumes that the IRS’s request for a
dismissal based on defective service was included due to a
scrivener’s error. However, in the instance that the IRS does
contend that the action is subject to dismissal on the basis
of defective service, the IRS may raise this issue in a
separate Motion to be filed by March 27, 2014.

5

challenge, such as in the present case, the plaintiff enjoys
safeguards similar to those provided in the context of a Rule
12(b)(6) motion to dismiss. Sea Vessel Inc. v. Reyes, 23 F.3d
345, 347 (11th Cir. 1994)(“[T]he non-moving party receives the
same protection as it would defending against a motion brought
under Rule 12(b)(6).”)(internal citations omitted). Thus, the
Court accepts as true all the allegations in the complaint and
construes them in the light most favorable to the plaintiff.
Id.
III. Analysis
A.

The APA

The APA provides this Court with jurisdiction to review
“final agency action for which there is no other adequate
remedy in a court.” 5 U.S.C. § 704.

“The reviewing court

shall . . . hold unlawful and set aside agency action,
findings, and conclusions found to be . . . arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law [or found to be] without observance of
procedure required by law.” 5 U.S.C. § 706(2).
This standard is “exceedingly deferential.” Fund for
Animals, Inc. v. Rice, 85 F.3d 535, 541 (11th Cir. 1996). The
Court’s limited role is to ensure that the agency came to a
rational conclusion, “not to conduct its own investigation and
6

substitute its own judgment for the administrative agency’s
decision.” Preserve Endangered Areas of Cobb’s History, Inc.
v. U.S. Army Corps of Eng’rs, 87 F.3d 1242, 1246 (11th Cir.
1996).
The APA defines “agency action” as including “the whole
or part of an agency rule, order, license, sanction, relief,
or the equivalent or denial thereof, or failure to act.” 5
U.S.C. § 551(13).

In addition, the APA requires that to

achieve standing to obtain judicial review of agency action,
a party must be “adversely affected or aggrieved by agency
action within the meaning of a relevant statute.” 5 U.S.C. §
702.
B.

The FOIA

The FOIA was enacted to open the administrative process
to the scrutiny of the press and the general public. Fed.
Labor Relations Auth. v. U.S. Dep’t of Defense, 977 F.2d 545,
547 (11th Cir. 1992)(“FOIA’s central purpose is to ensure that
the Government’s activities be open to the sharp eye of public
scrutiny.”)(internal citation omitted). “By its terms, the
FOIA applies to every agency in the federal government.”
Amparo v. INS, 32 F. Supp. 2d 1337, 1345 (S.D. Fla. 1998).

As

stated in Pacific Molasses Co. v. NLRB, 577 F.2d 1172, 1178
(5th Cir. 1978), “The FOIA was broadly conceived
7

. . . to

permit

access

to

official

information

unnecessarily from public view.

long

shielded

The legislative history of

the Act indicates intent by Congress to reflect a general
philosophy of full agency disclosure unless the information is
exempted under clearly delineated statutory language.”2

The

FOIA “create[s] a judicially enforceable right to secure such
information from possibly unwilling official hands.” Amparo,
32 F. Supp. 2d at 1345. “[T]he disclosure requirements of the
FOIA

must

be

construed

broadly,

[and]

the

exemptions

narrowly.” Cochran v. United States, 770 F.2d 949, 954 (11th
Cir. 1985).
C.

Is the APA Claim Duplicative?

The IRS seeks dismissal of Plaintiffs’ APA claim based on
the argument that the APA claim “is the same as that sought
under the FOIA.” (Doc. # 19 at 1).

Plaintiffs “agree” that

“an APA claim is precluded when an adequate remedy exists
under the FOIA.” (Doc. # 30 at 2).

However, Plaintiffs

contend that they “seek remedies under the APA that are not
available under the FOIA.” (Id.).

Plaintiffs also bring to

the Court’s attention several cases in which APA and FOIA

2

In Bonner v. City of Prichard, 661 F.2d 1206, 1209
(11th Cir. 1981), the Eleventh Circuit adopted all cases
decided by the Fifth Circuit Court of Appeals prior to the
close of business on September 30, 1981, as binding precedent.
8

claims were simultaneously prosecuted in the same action. See,
e.g., Cent. Platte Natural Res. Div. v. USDA, 643 F.3d 1142,
1149 (8th Cir. 2011)(“FOIA bars judicial review of an APA
claim where the claimant seeks a ‘court order’ to produce the
same documents under both the FOIA and the APA.

A claimant

may simultaneously pursue claims under the APA and the FOIA,
however, if the requested remedy under the APA includes more
than disclosure of documents, such as vindication for a First
Amendment violation.”)(internal citation omitted).
The Court’s evaluation of the Complaint reveals that
Plaintiffs do, in fact, request relief pursuant to the APA
that is distinct from the relief requested pursuant to the
FOIA.

In their APA count, Plaintiffs allege that the IRS has

arbitrarily and capriciously interpreted the FOIA exemptions
in order to withhold agency records and to retaliate against
and

“reprosecute”

Plaintiffs

for

conduct

the

government

previously agreed to dismiss. (Id. at ¶ 155).
The APA count specifically alleges, inter alia, that:
Defendant has initiated a Notice of Deficiency
action against Plaintiff. Defendant asserts in the
Notice of Deficiency action that the fraud penalty,
26 U.S.C. § 6663, applies to Plaintiffs’ conduct
dating back to 2000 and 2001. . . . Under 26 U.S.C.
§ 6663, unlike federal criminal tax statutes, the
fraud penalty has no statute of limitations.
Defendant, through its agents and employees, has
engaged in agency action which is arbitrary and
9

capricious by repeatedly denying Plaintiffs’ FOIA
Requests and Appeal[.] Defendant has employed an
arbitrary and capricious interpretation of the
exemptions under 5 U.S.C. § 552 and 26 U.S.C. §
6103 to support Defendant’s repeated denials of
Plaintiffs’ FOIA Requests and Appeal. . . .
Defendant has interpreted the exemptions under 5
U.S.C. § 552 and 26 U.S.C. § 6103 arbitrarily and
capriciously to conceal the fact that Defendant’s
ongoing Notice of Deficiency action against
Plaintiffs is a reprosecution and reindictment of
Plaintiffs
for
allegations
that
Defendant
previously agreed to dismiss.
(Doc. # 1 at ¶¶ 146-154).
As detailed in the Complaint, Plaintiffs request separate
findings pursuant to the APA, specifically, that the agency
action

was

retaliatory

arbitrary

and

“reprosecution”

capricious,
of

a

and

constitutes

previously

a

dismissed

indictment, a remedy facially distinct from that which the
Plaintiffs request under the FOIA.

At this juncture, and

based on the Court’s analysis of the four corners of the
Complaint, the Court finds that Plaintiffs’ FOIA and APA
claims are sufficiently distinct and non-duplicative. The
Court accordingly denies the Motion to Dismiss.

The Court

determines that it has jurisdiction over Plaintiffs’ APA claim
asserted in count four.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendant Internal Revenue Service’s Motion to Dismiss
10

(Doc. # 19) is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this
17th day of March, 2014.

Copies: All Counsel of Record

11