Widtfeldt v. United States et al

Filing 29

MEMORANDUM OPINION on the Defendants' Motion to Dismiss 23 and Motion to Strike 27 . A separate order will be entered in accordance with this memorandum opinion. Ordered by Senior Judge Lyle E. Strom. (Copy mailed to pro se party)(MKR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JAMES WIDTFELDT,

)
)
Plaintiff,
)
)
v.
)
)
UNITED STATES, INTERNAL
)
REVENUE SERVICE, ARTHUR WELP, )
IRS APPEALS AGENT, SUCCESSOR )
IRS AGENT TO ARTHUR WELP, and )
UNITED STATES TREASURY,
)
)
Defendants.
)
)

8:12CV306

MEMORANDUM OPINION

This matter is before the Court on defendants’ Motion
to Dismiss (Filing No. 23) and Motion to Strike (Filing No. 27).
For the reasons set forth below, the Court will grant the Motion
to Dismiss and deny the Motion to Strike as moot.
BACKGROUND
On August 28, 2012, plaintiff filed a complaint
alleging that he and Internal Revenue Service (“IRS”) Appeals
Agent Arthur Welp settled a tax dispute in approximately 2002,
but the IRS and the United States Treasury have refused to honor
the settlement.

(See generally Filing No. 1.)

Plaintiff also

alleges that the IRS has concealed documents related to the
settlement.

(See id. at CM/ECF pp. 1-2.)

Plaintiff seeks an

order requiring defendants, and any other agents who might be
aware of the settlement, to produce all records of the
settlement.

(Id. at CM/ECF pp. 3-4.)

He also seeks an order

directing the IRS “to appoint a successor to Appeals Agent Arthur
Welp,” who has retired from the IRS.

(Id. at CM/ECF p. 4.)

Plaintiff’s cause of action is based on the Freedom of
Information Act (“FOIA”), 5 U.S.C. § 552.

(Id. at CM/ECF p. 1.)

On November 29, 2012, defendants moved to dismiss the action
“because Plaintiff has not exhausted his administrative remedies
by filing a FOIA claim with the agency.”
CM/ECF p. 1.)

(Filing No. 25 at

In support of the Motion to Dismiss, defendants

submitted a declaration signed by Franklin Weber, who has served
as “a Program Analyst in the Disclosure Office Headquarters of
the Internal Revenue Service” since August 2003 (Filing No. 241).

Weber states that, as a Program Analyst, he has “access to

the IRS’s Automated Freedom of Information Act System (AFOIA),
which is the inventory control and case management system that
the IRS uses to track and process requests for agency records
under the FOIA” and other statutes.

(Id.)

On September 11,

2012, Weber used the AFOIA system to determine whether plaintiff
had submitted a FOIA request to the IRS Disclosure Office.

He

found “no record that James Widtfeldt has ever submitted a FOIA
request to the IRS.”

(Id.)

On February 7, 2013, plaintiff filed a Brief in
Opposition to Defendants’ Motion to Dismiss (Filing No. 26).
February 19, 2013, defendants moved for an order striking

-2-

On

plaintiff’s Brief because it was untimely under Nebraska Civil
Rule 7.1(b)(1)(B) (Filing No. 27).
ANALYSIS
I.

Defendants’ Motion to Strike
Defendants correctly argue that plaintiff’s response to

defendants’ Motion to Dismiss was untimely.

However, the Court

has carefully reviewed plaintiff’s Brief and finds that it need
not be stricken.

As explained below, none of the arguments set

forth in the Brief are sufficient to overcome the complaint’s
deficiencies.

Therefore, defendants’ Motion to Strike (Filing

No. 27) will be denied as moot.
II.

Defendants’ Motion to Dismiss
Defendants argue that the complaint must be dismissed

pursuant to Federal Rule of Civil Procedure 12(b)(1) because this
Court lacks subject matter jurisdiction over the action (Filing
No. 23).

In the alternative, they submit that the complaint must

be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6)
because it fails to state a claim upon which relief may be
granted.
A.

(Id.)
Standard of Review
1.

Rule 12(b)(1)

A motion to dismiss for lack of subject matter
jurisdiction under Rule 12(b)(1) may challenge either the factual
truthfulness or the facial sufficiency of a plaintiff’s
-3-

jurisdictional allegations.

Stalley v. Catholic Health

Initiatives, 509 F.3d 517, 520-21 (8th Cir. 2007) (citing Osborn
v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990)).

In a

facial attack, the standard of review is the same standard that
applies to motions brought pursuant to Federal Rule of Civil
Procedure 12(b)(6).

That is, a court must “accept as true all

factual allegations in the complaint, giving no effect to
conclusory allegations of law,” and must determine whether the
plaintiff has asserted “facts that affirmatively and plausibly
suggest that the pleader has the right he claims (here, the right
to jurisdiction), rather than facts that are merely consistent
with such a right.”

Stalley, 509 F.3d at 521.

In contrast,

“[w]hen a district court engages in a factual review, it inquires
into and resolves factual disputes.”

Faibisch v. Univ. of

Minnesota, 304 F.3d 797, 801 (8th Cir. 2002).

Under these

circumstances, the plaintiff is not entitled to the benefit of
the assumption that his factual allegations are true, and “the
court may receive competent evidence such as affidavits,
deposition testimony, and the like in order to determine the
factual dispute.”

Titus v. Sullivan, 4 F.3d 590, 593 & n.1 (8th

Cir. 1993).
In this case, defendants submitted evidence outside the
pleadings for the Court’s consideration (see generally Filing No.
24), but this evidence does not challenge the truthfulness of
-4-

plaintiff’s factual allegations.

Instead, the evidence has been

offered to establish that plaintiff never submitted a FOIA
request to the IRS.

Insofar as defendants’ Motion to Dismiss is

based on Rule 12(b)(1), the evidence submitted by defendants will
be considered.
2.

Rule 12(b)(6)

As noted above, in order to survive a motion to dismiss
under Rule 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)).

“A pleading that offers ‘labels and conclusions’ or ‘a

formulaic recitation of the elements of a cause of action will
not do.’”

Id. (quoting Twombly, 550 U.S. at 555).

“Nor does a

complaint suffice if it tenders ‘naked assertion[s]’ devoid of
‘further factual enhancement.’”
at 557).

Id. (quoting Twombly, 550 U.S.

Also, although a court must accept as true all factual

allegations when analyzing a Rule 12(b)(6) motion, it is not
bound to accept as true legal conclusions that have been framed
as factual allegations.

See id. (“[T]he tenet that a court must

accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions.”).

-5-

B.

Exhaustion of Remedies
Defendants argue that the complaint must be dismissed

because plaintiff failed to exhaust his administrative remedies
(Filing No. 25).

The Court agrees.

FOIA grants “any person” a right to request records
held by a federal agency.

5 U.S.C. § 552(a)(3)(A).

“No reason

need be given for a FOIA request, and unless the requested
materials fall within one of the Act’s enumerated exemptions, the
agency must make the records promptly available to the
requester.”

Taylor v. Sturgell, 553 U.S. 880, 885 (2008)

(citations and quotation marks omitted).

“If an agency refuses

to furnish the requested records, the requester may file suit in
federal court and obtain an injunction ‘order[ing] the production
of any agency records improperly withheld.’”
U.S.C. § 552(a)(4)(B)).

Id. (quoting 5

It is well settled, however, that before

bringing such a suit, a person must first exhaust his
administrative remedies.

E.g., Elnashar v. United States Dep’t

of Justice, 446 F.2d 792, 796 (8th Cir. 2006); Brumley v. United
States Dep’t of Labor, 767 F.2d 444, 445 (8th Cir. 1985) (per
curium) (citing, inter alia, Hedley v. United States, 594 F.2d
1043, 1044 (5th Cir. 1979)); Lilienthal v. Parks, 574 F. Supp.
14, 16-17 (E.D. Ark. 1983) (quoting Hedley, 594 F.2d at 1044).
FOIA contemplates that agencies will create and publish
procedures that individuals must follow in order to obtain the
-6-

records in the agencies’ possession.
(4).

See 5 U.S.C. § 552(a)(1),

The IRS’s regulations governing FOIA requests are published

at 26 C.F.R. § 601.702.

Subsection (c)(4)(i) states,

“[r]equesters are advised that only requests for records which
fully comply with the requirements of this section can be
processed in accordance with this section.”

It adds, among other

things, that an initial request for records must “[b]e made in
writing and signed by the individual making the request,”
“[s]tate that it is made pursuant to [FOIA],” and “[b]e addressed
to and mailed to the office of the IRS official who is
responsible for the control of the records requested.”

26

C.F.R. § 601.72(c)(4)(i).
The complaint does not allege that plaintiff submitted
to the IRS a FOIA request that complies with the aforementioned
requirements.

Moreover, defendants have submitted evidence

showing that plaintiff has never submitted such a request.
generally Filing No. 24-1.)

(See

Thus, plaintiff has failed to

exhaust his administrative remedies under FOIA before filing his
complaint.
Circuits are split on the question of whether a failure
to exhaust administrative remedies constitutes a true
jurisdictional bar to FOIA claims or merely provides prudential
grounds for declining to exercise judicial review.

See, e.g.,

Hull v. Internal Revenue Serv., United States Dep’t of Treasury,

-7-

656 F.3d 1174, 1181-82 (10th Cir. 2011) (citing Hidalgo v. FBI,
344 F.3d 1256, 1258 (D.C. Cir. 2003) (holding that the exhaustion
requirement is not jurisdictional); Taylor v. Appleton, 30 F.3d
1365, 1367 n.3 (11th Cir. 1994) (same); McDonnell v. United
States, 4 F.3d 1227, 1240 n.9 (3d Cir. 1993) (same); Matter of
Lawrence, 4 F.3d 996, 1993 WL 360952, at *2 n.3 (7th Cir. 1993)
(unpublished table decision) (same); In re Steele, 799 F.3d 461,
466 (9th Cir. 1986) (holding that a failure to exhaust deprives
the court of jurisdiction); Reisman v. Bullard, 14 F. App’x 377,
379 (6th Cir. 2001) (same)).
While the Eighth Circuit has not squarely addressed
this question, courts in the Eighth Circuit have concluded that a
plaintiff’s failure to exhaust his administrative remedies under
FOIA deprives this Court of subject matter jurisdiction over the
complaint.

See, e.g., Giaimo v. Internal Revenue Serv., No.

4:94CV2463, 1996 WL 249362, at *2 (E.D. Mo. Feb. 23, 1996)
(holding that because the plaintiffs failed to exhaust their
administrative remedies under FOIA, the court lacked subject
matter jurisdiction over the action); Lilienthal v. Parks, 574 F.
Supp. 14, 16-18 (E.D. Ark. 1983) (same).
Assuming for the sake of argument that a failure to
exhaust administrative remedies under FOIA does not operate as a
jurisdictional bar, it is nevertheless well-established that such
a failure may preclude judicial review of a FOIA action.
-8-

Elnashar, 446 F.2d at 796; Brumley, 767 F.2d at 445.

See also

Hull, 656 F.3d at 1183 (explaining that although a failure to
exhaust does not represent “a jurisdictional hurdle,” it is a
“prudential doctrine” that may preclude judicial review).
Indeed, “FOIA’s administrative scheme favors treating failure to
exhaust as a bar to judicial review.”

Hidalgo, 344 F.3d at 1259.

Moreover, allowing plaintiff to circumvent the IRS’s regulations
concerning FOIA requests would undercut the purposes of
exhaustion by causing premature interference with the agency’s
process for resolving FOIA requests, depriving the Court of the
benefit of the agency’s experience and expertise in resolving
requests for its records, and frustrating the compilation of a
record adequate for judicial review.

In short, the FOIA’s

administrative structure and the purposes of the exhaustion
requirement weigh strongly in favor of treating a failure to
exhaust as a bar to judicial review.

Therefore, even if

dismissal were not appropriate under Rule 12(b)(1), and even if
the Court disregards the index of evidence submitted along with
its Motion to Dismiss, the complaint would be subject to
dismissal under Rule 12(b)(6) because plaintiff failed to allege
that he exhausted his administrative remedies under FOIA.
In opposition to defendants’ Motion to Dismiss,
plaintiff argues that because he has subpoenaed defendants for
the documents he seeks, both in the instant case and in “US Tax

-9-

Court case 15907-10,” defendants cannot reasonably claim that he
has failed to make a proper request for the records under FOIA
(Filing No. 26 at CM/ECF p. 3-4).

See also id. at 4-7, 9-10,

12.)
In Coolman v. Internal Revenue Serv., 1999 WL 675319,
at *5 (W.D. Mo. July 12, 1999), the Court concluded that “the
purposes underlying the exhaustion requirement” had been
satisfied because after the plaintiff filed his FOIA suit, the
“defendant obtained a photocopy of his June 13 [FOIA] request and
since that time has completely processed the request.”

Thus, the

defendant was “afforded an adequate opportunity to conduct a
search for documents and establish the appropriate FOIA
exemptions to the documents requested by plaintiff.”

Id.

However, unlike Coolman, here there is no evidence suggesting
that plaintiff provided the IRS with a proper FOIA request at any
time, either during the course of this case or a previous one.
Furthermore, the Court is not persuaded that unsuccessful
attempts to obtain documents via subpoena are adequate to satisfy
the purposes underlying the exhaustion requirement in FOIA cases.
Plaintiff also implies that he should not be bound by
the IRS’s FOIA procedures because they are “hidden by and known
only to the IRS.”

(Filing No. 26 at CM/ECF p. 6.)

This argument

is without merit, as the IRS’s regulations governing FOIA
requests are published at 26 C.F.R. § 601.702.

-10-

Finally, plaintiff argues that Franklin Weber’s search
of the AFOIA system amounts to a sufficient FOIA request on
plaintiff’s behalf (Filing No. 26 at CM/ECF pp. 9-10).

The Court

finds, however, that Weber’s search of the AFOIA using
plaintiff’s name cannot be said to satisfy the requirements of 26
C.F.R. § 601.702, and Weber’s declaration is not contradicted by
any evidence in the record.

In short, the Court remains

persuaded that plaintiff has failed to satisfy the exhaustion
requirement, and the complaint should be dismissed.

A separate

order will be entered in accordance with this memorandum opinion.
DATED this 16th day of May, 2013.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

*This opinion may contain hyperlinks to other documents or
Web sites. The U.S. District Court for the District of Nebraska
does not endorse, recommend, approve, or guarantee any third
parties or the services or products they provide on their Web
sites. Likewise, the Court has no agreements with any of these
third parties or their Web sites. The Court accepts no
responsibility for the availability or functionality of any
hyperlink. Thus, the fact that a hyperlink ceases to work or
directs the user to some other site does not affect the opinion
of the Court.
-11-