United States of America v. Dykeman Family Corporation et al

Filing 15

ORDER signed by Judge J P Stadtmueller on 11/6/09 granting 2 plaintiff's Motion for Preliminary Injunction; see Order for the specific requirements of the Preliminary Injunction. (cc: all counsel) (nm)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN
____________________________________________ U N IT E D STATES of AMERICA, P l a i n t if f , v. D Y K E M A N FAMILY CORPORATION, and M IC H A E L K. DYKEMAN D e fe n d a n ts . ____________________________________________ Case No. 09-CV-867

ORDER
O n September 10, 2009, plaintiff filed a Complaint against defendants seeking a permanent injunction and other relief. On September 11, 2009, plaintiff filed a M o tio n for Preliminary Injunction. On October 29, 2009 (after entry of a stipulated o rd e r for extension of time to answer), defendants filed an Answer to plaintiff's C o m p la in t. However, at no point did defendants file a response to plaintiff's Motion fo r Preliminary Injunction. On November 3, 2009, due to the lack of consent of the p a rtie s , this case was transferred from the magistrate judge to this court. Thus, the c o u rt will herein address plaintiff's unopposed Motion for Preliminary Injunction. P la in tiff, in its brief in support of its motion, as well as in the affidavit of Internal R e v e n u e Service ("IRS") officer Mary Ann Otto, presents argument and evidence a lle g in g that defendant Dykeman Family Corporation ("the Corporation") ­ of which M ic h a e l Dykeman ("Dykeman") is the president, resident agent, and sole owner ­ h a s repeatedly failed to pay to the IRS: 1) its employees' withheld income taxes; 2 ) its employer's share of Form 941 employment taxes ("FICA"); and 3) its

e m p lo ye r's share of Form 940 unemployment taxes ("FUTA"). (Pl. Br. Supp. Mot. P re lim . Injunct'n, Attach. 1, Otto Aff. ¶¶ 7-9). Plaintiff now seeks a preliminary in ju n c tio n , pursuant to 26 U.S.C. § 7402, which authorizes district courts to issue in ju n c tio n s "as may be necessary or appropriate for the enforcement of the internal re ve n u e laws[,]" and which states that such remedy is "in addition to and not e xc lu s ive of any and all other remedies of the United States in such courts or o the rw is e to enforce such laws." 26 U.S.C § 7402(a). Plaintiff moves the court p u rs u a n t to § 7402 to enter a preliminary injunction requiring defendants to: (1 ) D e p o s it withheld FICA and income taxes, as well as the e m p lo ye r's share of FICA taxes of the Corporation, in an a p p ro p ria te federal depository bank in accordance with federal d e p o s it regulations; Deposit the Corporation's FUTA taxes in an appropriate federal d e p o s ito r y bank in accordance with federal deposit regulations; Sign and deliver to a designated IRS officer on the first day of e a c h month an affidavit stating that the requisite withheld in c o m e , FICA and FUTA tax deposits were timely made; T im e ly file all of the Corporation's federal employment and u n e m p lo ym e n t returns (including Forms 940 and 941) with the IR S ; Timely pay all required outstanding liabilities due with each tax re tu rn at the time the return is filed; Be prohibited from making any disbursement or assigning any p ro p e rty from the date of payment of any wages until the a m o u n ts which are required to be withheld from the payment of th o s e wages and the employer's share of FICA taxes related to th o s e are wages are paid to the IRS; and

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Notify the IRS of any new company, entity or business that either d e fe n d a n t may come to own, manage or be employed by during th e course of this litigation.

(P l. Mot. Prelim. Injunct'n at 1-2). Thus, plaintiff's motion essentially seeks to require d e fe n d a n ts to comply with pre-existing obligations imposed by the Internal Revenue C o d e ("IRC"). T y p ica lly, in order to secure a preliminary injunction, a movant must satisfy fo u r traditional equitable standards: 1) that the movant is reasonably likely to s u c c e e d on the merits; 2) that the movant is experiencing irreparable harm that e xc e e d s any harm the injunctee would suffer if the injunction issued; 3) that the m o va n t lacks an adequate remedy at law; and 4) that the injunction would not harm th e public interest. Coronado v. Valleyview Public School Dist. 365 -U, 537 F.3d 9 7 1 , 794-95 (7th Cir. 2008). The court notes that in the instant case, plaintiff has s a tis fie d each of these elements, but that doing so is not necessary because an in ju n c tio n issued pursuant to § 7402 derives from the court's statutory authority, not its equitable powers. See Burlington N.R. Co. v. Dep't of Revenue, 934 F.2d 1064, 1 0 7 4 -5 (9th Cir.1991); In re Dow Corning Corp., 280 F.3d 648, 657-58 (6th Cir. 2 0 0 2 ); CSC Holdings, Inc. v. J.R.C. Products Inc., 158 F. Supp. 2d 798, 815 (N.D. Ill. 2001) ("W h e n express authority for issuance of `statutory' injunctions is provided b y legislative enactment, an injunction may issue without resort to the traditional `e q u ita b le ' prerequisites of such relief.") (rev'd on other grounds CSC Holdings, Inc. v . Redisi, 309 F.3d 988 (7th Cir. 2002)); Duke v. Uniroyal, Inc., 777 F. Supp. 428,

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4 3 2 - 3 (E.D. N.C. 1991). Pursuant to § 7402, it is sufficient that plaintiff demonstrate th a t an injunction is "necessary or appropriate for the enforcement of the internal re ve n u e laws." 26 U.S.C. § 7402(a). U p o n consideration of the evidence presented in the affidavit of IRS officer O t t o , as well as the defendants' lack of response, the court finds that plaintiff has s u ffic ie n tly shown, for purposes of the instant motion, that defendant has violated va rio u s sections of the IRC, and that a preliminary injunction is necessary to prevent fu r th e r similar violations. A c c o r d in g ly , IT IS ORDERED that plaintiff's Motion for Preliminary Injunction (Docket #2) b e and the same is hereby GRANTED; and IT IS FURTHER ORDERED that the defendants, Dykeman Family C o rp o ra tio n and Michael Dykeman, be and the same are hereby ordered to: (1 ) D e p o s it withheld FICA and income taxes, as well as the e m p lo ye r's share of FICA taxes of the Corporation, in an a p p r o p r ia te federal depository bank in accordance with federal d e p o s it regulations; Deposit the Corporation's FUTA taxes in an appropriate federal d e p o s ito r y bank in accordance with federal deposit regulations; Sign and deliver to a designated IRS officer on the first day of e a c h month an affidavit stating that the requisite withheld in c o m e , FICA and FUTA tax deposits were timely made; T im e ly file all of the Corporation's federal employment and u n e m p lo ym e n t returns (including Forms 940 and 941) with the IR S ;

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Timely pay all required outstanding liabilities due with each tax re tu rn at the time the return is filed; Be prohibited from making any disbursement or assigning any p ro p e rty from the date of payment of any wages until the a m o u n ts which are required to be withheld from the payment of th o s e wages and the employer's share of FICA taxes related to th o s e are wages are paid to the IRS; and Notify the IRS of any new company, entity or business that either d e fe n d a n t may come to own, manage or be employed by during th e course of this litigation.

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D a te d at Milwaukee, W is c o n s in , this 6th day of November, 2009. BY THE COURT:

J .P . Stadtmueller U .S . District Judge

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