United States of America v. Reeves et al

Filing 82

ORDER that 80 Motion to Vacate Minute Order (#79) and Reset Hearing is DENIED. Signed by Magistrate Judge George Foley, Jr on 3/31/14. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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UNITED STATES OF AMERICA,

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Plaintiff,
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vs.
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WAYNE REEVES, et. al.,
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Defendants. )
__________________________________________)

Case No. 2:12-cv-01916-RCJ-GWF
ORDER
Motion to Vacate (Dkt. #79) and
Reset Hearing (#80)

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This matter is before the Court on Defendants Wayne Reeves’ and Diane Vaoga’s Motion to
Vacate the Court’s Minute Order (Dkt. #79) and Reset Hearing (#80), filed on March 26, 2014.
In their Motion (#80), Defendants Reeves and Vaoga contend that the Court does not have

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subject matter jurisdiction over them, therefore, Defendants’ second Motion to Dismiss for Lack of

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Jurisdiction (#74) must be adjudicated before the Court can proceed with the hearing set forth in Minute

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Order (#79).

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The Complaint underlying this litigation seeks to enjoin Defendants from allegedly promoting a

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tax-fraud scheme and from preparing tax returns for others. See Comp., Doc. #1. Defendant Reeves

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filed a Motion (#15) to dismiss for lack of subject matter jurisdiction on January 16, 2013. Defendant

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Vaoga filed a Motion (#21) to dismiss virtually identical to Defendant Reeves’ on February 19, 2013.

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The Motions contained information relating to agency law, the history of the formation of the Internal

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Revenue Service, reasoning why the I.R.S. is not a United States Government agency, United States

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Treasury regulations and their relationship to rules and regulations for enforcing I.R.S. code, and how

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the United States is not the same entity as the United States of America. See Doc. #15 and #21. Both

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motions were denied on March 25, 2013. See Doc. #31. The Court was unable to recognize any

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coherent argument, that had not been previously adjudicated, supporting Defendants’ proposition that

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Plaintiff lacked standing and this Court lacked subject matter jurisdiction. Id. In response to the

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Court’s decision, Defendants filed a Motion (#40) to Set Aside Order (#31) on May 28, 2013. In their

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Motion (#40), Defendants argue that they do not challenge the constitutionality of the income tax

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system, rather, their challenge is to the role in which the Internal Revenue Service plays in the system.

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See Doc. #40 at pg. 5.

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On August 27, 2013, Plaintiff filed a Motion to Compel Discovery (#48). Plaintiff specifically

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requested an order compelling Defendant Reeves to respond to the Governments’ interrogatories and

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requests for production of documents. In Defendant Reeves’ Response to Plaintiff’s Motion to Compel

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(#52), Defendant Reeves asserts Plaintiff’s failure to establish it had standing to represent the

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“unidentified entity, United States of America” as his reason for non-compliance. This argument was

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made despite the Court previously finding that both standing and subject matter jurisdiction had been

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established. See Doc. # 31. The Court granted Plaintiff’s Motion to Compel (#48) on October 3, 2013,

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and gave Defendant Reeves until October 21, 2013 to respond the Governments’ Interrogatories and

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Requests for Production of Documents. The Court also cautioned Defendant Reeves that failure to

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comply with the Court’s Order may result in the imposition of sanctions. See Court Order, Doc. #59.

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On September 20, 2013, the Court conducted a telephonic status conference at which Defendant

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Reeves and Defendant Vaoga did not appear. See Minutes of Proceedings, Doc. #56. Shortly before

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the status conference, Defendants filed a Motion (#58) for cancellation of the conference, again therein

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alleging lack of standing and subject matter jurisdiction.

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On November 27, 2013, Defendant Reeves filed his Answer (#61) and subsequently filed a

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Motion to Dismiss Plaintiff’s Complaint (#62) both of which allege lack of standing and jurisdiction.

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Plaintiff then filed its Second Motion to Compel against Defendant Reeves (#67), which was granted by

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Order (#67) on February 7, 2014. Plaintiff asserted that after a long period of conferring with

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Defendant Reeves, the discovery responses provided by Defendant Reeves were inadequate and

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asserted inappropriate blanket objections. The Court gave Defendant Reeves until February 21, 2014 to

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respond to each of the subject interrogatories and requests for production of documents without

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objection or assertion of any privilege. Defendant Reeves was further instructed that failure to comply
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with Order (#72) may result in the imposition of sanctions, up to and including a recommendation to

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the District Judge that a default judgment be entered against him. See Doc. #72.

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The Court conducted a motion hearing on Plaintiff’s Motion to Extend Time Regarding

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Discovery on February 13, 2014, at which Defendant Reeves and Defendant Vaoga were again absent.

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See Minutes of Proceedings, Dkt. #73. Defendant Reeves and Defendant Vaoga subsequently filed

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another Motion to Dismiss for Lack of Jurisdiction (#74) on February 24, 2014. Plaintiff then filed a

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Motion for Sanction (#78) on March 13, 2014. The Court set Plaintiff’s Motion (#78) for hearing on

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Monday, April 21, 2014 at 9:30 A.M. See Minute Order, Dkt. # 79. In response, Defendants Reeves

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and Vaoga filed this current Motion to Vacate Minute Order (Dkt. #79) and Reset Hearing (#80).

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Therein, Defendants argue that this Court does not have the authority to act until the issue of subject

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matter jurisdiction is settled. Id.

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Courts have held that subject matter jurisdiction should be decided before parties engage in

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discovery. See Siegert v. Gilley, 500 U.S. 226, 232 (1991). The District Court, however, has wide

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discretion in controlling discovery, and its rulings will not be overturned in the absence of a clear abuse

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of discretion. See Little v. City of Seattle, 863 F.2d 681, 685 (9th Cir. 1988). In evaluating the

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propriety of an order staying or limiting discovery while a dispositive motion is pending, this court

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considers the goal of Rule 1 of the Federal Rules of Civil Procedure which directs that the Rules shall

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“be construed and administered to secure the just, speedy, and inexpensive determination of every

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action.” See Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 603-04 (D.Nev. 2011). Therefore, when

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evaluating the propriety of an order staying or limiting discovery, the court must decide whether it is

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more just to speed the parties along in discovery and other proceedings while a dispositive motion is

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pending, or whether it is more just to delay or limit discovery and other proceedings to accomplish the

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inexpensive determination of the case. Id.

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Here, Defendant Reeves and Defendant Vaoga have consistently refused to participate in

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discovery alleging that Plaintiff lacks standing to bring this action and arguing this Court lacks subject

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matter jurisdiction to hear this action. Defendants continue to argue these points despite the Court’s

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finding that standing and subject matter jurisdiction are established. See Doc. # 31. To date,

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Defendants Reeves and Vaoga have filed two motions to dismiss, one motion to set aside an
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unfavorable order to their motion to dismiss, and one motion to dismiss Plaintiff’s Complaint, all

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alleging lack of standing and lack of subject matter jurisdiction. Defendants acknowledge in their

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Motion (#80) that they have repeatedly filed motions challenging the Court’s subject matter jurisdiction

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because they do not believe the Court has adequately addressed their points of authority, which is why

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the Defendants continue to assert that the Court does not have subject matter jurisdiction. See Doc. #80

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at pg. 2. The Court does not refute the importance of staying discovery until the imperative issue of

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subject matter jurisdiction has been resolved, however, in this instance, the Court considers the matter

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resolved pursuant to Court Order (#31). Therefore, Defendants’ failure to participate in discovery due

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to lack of standing and subject matter jurisdiction serve no other purpose than to delay these

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proceedings. In the interest of justice, the Court will not allow Defendant Reeves and Defendant Vaoga

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to delay discovery by continuously re-arguing matters already settled before this Court. Accordingly,

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IT IS HEREBY ORDERED that Defendants Reeves’ and Vaoga’s Motion to Vacate Minute

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Order (#79) and Reset Hearing (#80) are DENIED.
DATED this 31st day of March, 2014.

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GEORGE FOLEY, JR.
UNITED STATES MAGISTRATE JUDGE

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