Joseph A. GAINES, Elizabeth J. Gaines, Plaintiffs, v. UNITED STATES, Defendant., United States District Court, District of Columbia., 424 F.Supp.2d 219, No. CIV.A. 05-2326(ESH)., March 31, 2006
Joseph A. GAINES, Elizabeth J. Gaines, Plaintiffs, v. UNITED STATES, Defendant.
United States District Court, District of Columbia.
424 F.Supp.2d 219
No. CIV.A. 05-2326(ESH).
March 31, 2006.
Joseph A. Gaines, Las Vegas, NV, Pro se.
Elizabeth J. Gaines, Las Vegas, NV, Pro se.
MEMORANDUM OPINION AND ORDER
HUVELLE, District Judge.
Plaintiffs Joseph and Elizabeth Gaines filed a pro se complaint on December 5, 2005, alleging errors by the Internal Reve╜nue Service ("IRS") "in connection with the collection of [a] federal tax" (Compl. ╤ 1), and seeking damages under 26 U.S.C. ╖ 7433. An amended complaint was filed on January 30, 2006 ("Am. Compl."). For the reasons explained be╜low, the Court finds that it lacks subject matter jurisdiction over plaintiffs' com╜plaint and dismisses the case without prej╜udice.
Plaintiffs' amended complaint alleges that "[b]eginning with ▒tax year' 1998 . . . officers, agents, and/or employees of the Internal Revenue Service, in connection with the collection of federal tax[,] reck╜lessly, intentionally or by reason of negli╜gence" violated myriad provisions of the Internal Revenue Code and its accompany╜ing regulations. (Am.Compl.╤ 7.) Plaintiffs sought damages for the alleged violations under 26 U.S.C. ╖ 7433. (Am.Compl. ╤ 32.) Plaintiffs' case is one of dozens of virtually identical pro se complaints recently filed in the U.S. District Court for the District of Columbia. At least two of these cases have previously been dismissed by this Court for lack of subject matter jurisdic╜tion owing to plaintiffs' failure to exhaust administrative remedies. See, e.g., Henry v. United States, 416 F.Supp.2d 130 (D.D.C.2006); Scott v. United States, 416 F.Supp.2d 116 (D.D.C.2006). Therefore, on February 27, 2006, the Court ordered plaintiffs to show cause why jurisdiction over their claim was proper. Gaines v. United States, Order, 05-2326 (D.D.C. Feb. 27, 2006) ("Show Cause Order" or "Order"). As required for pro se litigants under Fox v. Strickland, 837 F.2d 507 (D.C.Cir.1988), the Court informed plain╜tiffs that failure to respond could result in the Court dismissing the case. (Order at 2.) The Order instructed plaintiffs to ex╜plain how they had " ▒exhausted all admin╜istrative remedies' " (Plaintiffs' Affidavit ╤ 16), as required by 26 U.S.C. ╖ 7433(d)(1) and 26 C.F.R. ╖ 301.7433-1(a), (d), (e), and attach all documentation reflecting the filing of a claim as described in 26 C.F.R. ╖ 301.7433-1(e)(2). Plaintiffs filed a response to the Show Cause Order on March 14, 2006 (Response to Order to Show Cause ("Pls.' Resp.")), to which the IRS filed an opposition on March 29, 2006. (United States' Opposition to Plaintiffs' Response to the Court's Show-Cause Order ("Def.'s Opp.").) After reviewing the filings of both parties, the Court finds that it lacks jurisdiction because plaintiffs have failed to demonstrate compliance with the exhaustion requirements of the Internal Revenue Code and regulations promulgat╜ed pursuant thereto.
Plaintiffs argue that jurisdiction proper╜ly lies in this Court under 26 U.S.C. ╖ 7433, which provides:
If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intention╜ally, or by reason of negligence disre╜gards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.
26 U.S.C. ╖ 7433(a). With respect to ex╜haustion, the statute states that a "judg╜ment for damages shall not be awarded under [╖ 7433] unless the court determines that the plaintiff has exhausted the admin╜istrative remedies available to such plain╜tiff within the Internal Revenue Service." Id. ╖ 7433(d)(1).
The IRS has established by regula╜tion the procedure by which a taxpayer may pursue a claim under section 7433. See 26 C.F.R. ╖ 301.7433-1. These regula╜tions make clear that an "action for dam╜ages filed in federal district court may not be maintained unless the taxpayer has filed an administrative claim pursuant to . . . this section." Id . ╖ 301.7433-1(a). In order to properly file an administrative claim, a taxpayer must write to the "Area Director, Attn: Compliance Technical Sup╜port Manager of the area in which the taxpayer currently resides." Id. ╖ 301.7433-1(e)(1). The regulations spell out with specificity the information that must be provided to the Area Director, including, inter alia, the "grounds, in rea╜sonable detail, for the claim;" a "descrip╜tion of the injuries incurred;" and the "dol╜lar amount of the claim, including any damages that have not yet been incurred but which are reasonably foreseeable." Id . ╖ 301.7433-1(e)(2)(ii)-(iv). The tax╜payer is further required to provide any "substantiating documentation" supporting his claim. Id . A civil action in federal district court cannot be maintained until either the IRS rules on the claim, or six months pass without a decision by the IRS on a properly filed claim. Id. ╖ 3 01.7433-1(d)(i)-(ii). Failure to comply with the regulation deprives the federal district court of jurisdiction. See Venen v. United States, 38 F.3d 100, 103 (3d Cir.1994); McGuirl v. United States, 360 F.Supp.2d 125, 128 (D.D.C.2004).
In their complaint, plaintiffs do no more than assert that they "may forego exhaust╜ing administrative remedies that are either futile or inadequate . . . or when agency action exceeds statutory authorization." (Compl. ╤ 6.) Plaintiffs fail, however, to al╜lege any facts that demonstrate futility or that the agency has exceeded its statutory authorization. Cf. Cooper v. United States, 2005 WL 3707403, at *1 n. 2 (D.D.C.2005) (recognizing, in a virtually identical case ultimately dismissed for lack of venue, that plaintiff's failure to allege sufficient facts in support or to establish exhaustion doomed his ╖ 7433 claim). Plaintiff's allege that they have "exhausted administrative remedies in that [they have] written numerous requests for documents and authorities which require responses from the IRS," and that the "IRS has failed and/or refused to respond or has responded with frivolous responses." (Compl.╤ 9.) As the IRS notes in its oppo╜sition, however, plaintiffs "have not shown any attempt to comply with 26 U.S.C. ╖ 7433's [exhaustion] requirement." (Def.'s Opp. at 4 n. 1.)
Despite the Court's explicit di╜rective to plaintiffs to explain how they have exhausted their administrative reme╜dies and to provide "all documentation re╜flecting the filing of a claim as described" by the regulations (Show Cause Order at 2), plaintiffs' response to defendant's mo╜tion provides no additional detail beyond that which had already been included in their complaint. Rather, plaintiffs argue that the Court should exercise "equity" jurisdiction over their claim because "the administrative ▒remedies' purportedly pro╜vided for-as implemented by regulation-are at best unavailable, and at worst, whol╜ly inadequate." (Pls' Resp. at 6.) Plain╜tiffs' argument is without merit. Plaintiffs are not seeking an equitable remedy; they are seeking damages, which "remain today a remedy at law." Sparrow v. Comm'r, 949 F.2d 434, 437 (D.C.Cir.1991) (citing Curtis v. Loether, 415 U.S. 189, 94 S.Ct. 1005, 39 L.Ed.2d 260 (1974)). As such, an exercise of discretionary equity jurisdiction would be inappropriate. 1
1. ═ Indeed, were plaintiffs to seek an equitable remedy, they might then have to overcome the restrictions of the Anti-Injunction Act, which provides that "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court." 26 U.S.C. ╖ 7421(a).
Nor would it be appropriate for the court to waive the exhaustion require╜ment. The term "exhaustion" applies to "two distinct legal concepts." Avocados Plus Inc. v. Veneman, 370 F.3d 1243, 1247 (D.C.Cir.2004). The first, known as "non╜jurisdictional exhaustion," is a "judicially created doctrine" that the court may, un╜der certain circumstances and "in its dis╜cretion, excuse." Id . The second, called "jurisdictional exhaustion," is a statutory "predicate to judicial review . . . rooted, not in prudential principles, but in Con╜gress' power to control the jurisdiction of the federal courts." Id. (citing E.E.O.C. v. Lutheran Soc. Servs., 186 F.3d 959, 963-64 (D.C.Cir.1999)). "If the statute does man╜date exhaustion, a court cannot excuse it." Id . at 1247-48 (citing Shalala v. Ill. Coun╜cil on Long Term Care, Inc., 529 U.S. 1, 13, 120 S.Ct. 1084, 146 L.Ed.2d 1 (2000)). Because courts "presume exhaustion is non-jurisdictional," id. at 1248, there must be "[s]weeping and direct statutory lan╜guage indicating that there is no federal jurisdiction prior to exhaustion, or the ex╜haustion requirement is treated as an ele╜ment of the underlying claim." Wein╜berger v. Salfi, 422 U.S. 749, 757, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). Here, the exhaustion requirement is jurisdictional. The relevant statute is unequivocal: a "judgment for damages shall not be awarded under [section 7433] unless the court determines that the plaintiff has ex╜hausted the administrative remedies avail╜able to such plaintiff within the Internal Revenue Service." 26 U.S.C. ╖ 7433(d)(1). Several courts have "interpreted the ex╜haustion requirement as jurisdictional" in nature. Bennett v. United States, 361 F.Supp.2d 510, 514 (W.D.Va.2005); see, e.g., Conforte v. United States, 979 F.2d 1375, 1377 (9th Cir.1992); Info. Res., Inc. v. United States, 950 F.2d 1122, 1125-27 (5th Cir.1992); Simmons v. United States, 875 F.Supp. 318, 319 (W.D.N.C.1994); Mu╜sic Deli & Groceries, Inc. v. I.R.S., 781 F.Supp. 992, 997 (S.D.N.Y.1991). There╜fore, plaintiffs' failure to introduce any evi╜dence that they attempted to or did com╜ply with the procedures for bringing an administrative claim, as provided for in 26 C.F.R. ╖ 301.7433-1, deprives the Court of jurisdiction.
Even if the exhaustion require╜ment in this case were "non-jurisdictional" in nature, plaintiffs would fare no better. A non-jurisdictional exhaustion require╜ment serves a variety of purposes. Among other things, "it preserves the au╜tonomy of the administrative agency by allowing the agency to apply its expertise and to exercise its discretion," Athlone In╜dus., Inc. v. Consumer Prod. Safety Comm'n, 707 F.2d 1485, 1488 (citing McKart v. United States, 395 U.S. 185, 194, 89 S.Ct. 1657, 23 L.Ed.2d 194 (1969)); it "promotes effective and efficient judicial review by ensuring that such review is of a fully developed factual record," Randolph-Sheppard Vendors of Am. v. Weinberger, 795 F.2d 90, 105 (D.C.Cir.1986); see also Athlone Indus., 707 F.2d at 1488; and it gives "agencies the opportunity to correct their own errors." Marine Mammal Con╜servancy, Inc. v. U.S. Dept of Agric., 134 F.3d 409, 414 (D.C.Cir.1998). Therefore, it is a "long settled rule of judicial adminis╜tration that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted." Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 82 L.Ed. 638 (1938). While courts have excused exhaustion when such a requirement "would be futile because of the certainty of an adverse decision," 3 K. Davis, Administrative Law Treatise ╖ 20.07 (1958), this exception is limited to instances in which "the litigant's interests in immediate judicial review outweigh the government's interests in the efficiency or administrative autonomy that the exhaus╜tion doctrine is designed to further." Avo╜cados Plus, 370 F.3d at 1247 (quoting McCarthy v. Madigan, 503 U.S. 140, 146, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992)). Plaintiffs have not demonstrated that they meet this high standard.
In the past, the exception has applied where "an administrative agency lacks, or believes itself to lack, jurisdiction to act [making] an adverse decision cer╜tain." Randolph-Sheppard, 795 F.2d at 105 (citing Weinberger v. Wiesenfeld, 420 U.S. 636, 641 n. 8, 95 S.Ct. 1225, 43 L.Ed.2d 514 (1975)). "An adverse decision can also be certain if an agency has articulated a very clear position on the issue which it has demonstrated it would be unwilling to reconsider." Id . (citing Etelson v. Office of Pers. Mgmt., 684 F.2d 918, 925 (D.C.Cir.1982)). The mere "probabili╜ty of administrative denial" is insufficient to waive exhaustion. Id. at 106. Plaintiffs have introduced no evidence that the agen╜cy has a "preconceived position on, or lacks jurisdiction over," their claim. Id . at 107.
Nor have plaintiffs provided any evi╜dence to support their claim that the ad╜ministrative remedy is "inadequate." (Pls.' Resp. at 6.) "The administrative pro╜cess is inadequate where the agency has expressed a willingness to act, but the relief it will provide through its action will not be sufficient to right the wrong." Randolph-Sheppard, 795 F.2d at 107 (original emphasis omitted). Regulations promulgated by the IRS pursuant to 26 U.S.C. ╖ 7433 permit a taxpayer to recov╜er up to "$1,000,000 ($100,000 in the case of negligence)" in damages, fees and costs through the administrative process. 26 C.F.R. ╖ 301.7433-1(a). Such relief is pre╜cisely the remedy sought in federal court in the instant case. Therefore the Court finds plaintiffs' arguments that their ad╜ministrative remedies are inadequate to be without merit.
For the foregoing reasons, the Court finds that it lacks subject matter jurisdic╜tion over plaintiffs' claims because plaintiffs have failed to exhaust their adminis╜trative remedies as required by 26 U.S.C. ╖ 7433. It is hereby ORDERED that the case be dismissed without prejudice.