The UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE,
Defendant.
Civ. No. 13-cv-1225-J CC/IDD
REPLY MEMORANDUM IN SUPPORT OF MOTION FOR ATTORNEYS FEES
Plaintiff the National Organization for Marriage, Inc. (NOM), through counsel, hereby submits this reply memorandum in support of its Motion for Attorneys Fees (Dkt. 91, the Motion). ARGUMENT I. NOM Is a Prevailing Party Because It Has Substantially Prevailed with Respect to the Amount in Controversy and the Most Significant Issue.
A. The Governments Suggested Methodology for Calculating the Amount in Controversy Is Inconsistent with the Intent of Section 7431, Would Unnecessarily Protract Litigation, and Is Otherwise Logically Flawed.
The Government asserts that the amount in controversy must include NOMs claim for $50,000 in lost donations, a claim NOM voluntarily dropped early in the litigation to protect the First Amendment rights of its donors. (Motion at 7 n.2; United States of Americas Response in Opposition to Plaintiffs Motion for Attorneys Fees (Dkt. 92) at 5 (Opp.).) The Governments positionfor which it provides no legal supportis flawed for several reasons. Case 1:13-cv-01225-JCC-IDD Document 93 Filed 08/15/14 Page 1 of 21
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First, the Governments position is defeated by the text of the statute, which uses the phrase amount in controversy. 26 U.S.C. 7430(c)(4)(i)(I) (emphasis added). The Government was not obligated to defend against the lost donation claim and it was not presented to this Court for resolution on summary judgment. Rather, NOMs claim for lost donations was voluntarily withdrawn early in this litigation and therefore was not in controversy. Second, adoption of the Governments methodology would undermine the intent of the statute by placing successful plaintiffs at a severe disadvantage in seeking attorneys fees. While an insubstantial award is not dispositive, Don Johnson Motors, Inc. v. United States, No. B-06- 047, 2008 U.S. Dist. LEXIS 36594, 10 (S.D. Tex. Mar. 14, 2008), courts have often assessed whether [the] Plaintiff substantially prevailed on the amount in controversy by calculating the percentage of the amount in controversy the Plaintiff successfully received, id at 13 n.6. Under the Governments methodology, the value of the denominator in such a calculation would be a value that the plaintiff could not have received and would include claims for damages against which the Government was not obligated to defend. Conceivably, a recovery of even 100 percent of the damages pursued at trial could be rendered insubstantial if the complaint alleged additional damages that were voluntarily withdrawn for reasons unrelated to the merits of the case. Third, the Governments preferred methodology would unnecessarily protract discovery and trials because it would penalize plaintiffs who, before or during discovery, attempt to narrow the scope of the dispute by withdrawing damages claims they no longer wish to pursue. The
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Governments position would leave plaintiffs with little choice but to pursue all damages claims to final resolution lest they render themselves ineligible for attorneys fees. 1
B. NOMs Recovery in this Case Is Substantial. NOM ultimately recovered $50,000 in actual damages, a recovery of approximately 85 percent of the final value sought ($58,586.37), and 50 times the offer made by the Government ($1,000). NOMs recovery is not disproportionally low, Mallas v. United States, 876 F. Supp. 86, 89 (M.D.N.C. 1994), but is substantial, Reynoso v. United States, No. 10-00098, 2011 U.S. Dist. LEXIS 87929, 8 (N.D. Cal. Aug. 9, 2011) (Plaintiff thus recovered eighty-one percent of the amount in controversy in this action and has substantially prevailed under section 7430). The Government has cited no cases where an unspecified request for punitive damages was included in the calculation of the amount in controversy. Aside from avoiding speculation, there are good reasons not to include them. Punitive damages further a States legitimate interests in punishing unlawful conduct and deterring its repetition. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). Yet, the Government advances a scheme that could stifle these interests by deterring plaintiffs from seeking even unspecified punitive damages in the first instance. Indeed, the Government believes this Court should use at least a 2:1 multiplier to calculate punitive damages in this case. (Opp. at 10.) According to the Government, then, a plaintiffs failure to defeat a summary judgment motion on a punitive damages claim would erect a categorical bar to a plaintiffs eligibility for attorneys fees, even if actual damages are
1 If the Governments position is adopted, punitive damages, if they are included at all, should be included at no more than a nominal value, as they were never reduced to an amount in NOMs pleadings. (See Opp. at 9 (citing Don Johnson, 2008 U.S. Dist. LEXIS 36594 at 7).)
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recovered in full. (Opp. at 11-12 (suggesting that any recovery less than fifty percent is not substantial).) 2
C. The Most Significant Issue in this Litigation Was the Unauthorized Disclosure of NOMs 2008 Schedule B.
Focusing on one introductory paragraph in NOMs Complaint, the Government attempts to paint NOMs lawsuit as being primarily about theories of willfulness and gross negligence. (Opp. at 12 (citing Compl. 2).) To be sure, based on the information available to it, NOM reasonably believed that the disclosure of its donor list was intentional or the result of gross negligence. Supra n.2. But the inclusion of those theories in the Complaint does not change the fact that this lawsuit was pursued primarily to establish definitively that the IRS was responsible for the disclosure and subsequent publication of NOMs confidential donor list and to recover damages. The Government conveniently ignores the 27 paragraphs of the Complaint that discuss NOMs exhaustive efforts to simply determine whether the IRS made the disclosure, and who at the IRS was responsible for it (Compl. 45-71), as well as the 8 paragraphs discussing the actual damages sustained as a result of the disclosure, (id. 29-36), which damages remain the same regardless of whether the disclosure was the result of negligence or willfulness.
2 Even those with seemingly meritorious punitive damages claims may be deterred from seeking them under the Governments scheme. As was the case with NOM, the victim of an unlawful disclosure or inspection may be unable to ascertain the full facts and circumstances of that disclosure or inspection prior to filing suit, due to no fault of his own. At the time NOM filed this case, it knew that its chief political enemy, the Human Rights Campaign (HRC), had obtained, from a whistleblower, NOMs 2008 Schedule B, which contained internal IRS markings. Though the Government knew for nearly two years prior that the disclosure of NOMs 2008 Schedule B was actually made to Matthew Meisel, apparently as a result of mere negligence, the Government withheld that information from NOM until after NOM filed this suit, despite NOMs repeated requests for such information via the Freedom of Information Act (FOIA). The facts available to NOM at the time it filed this case strongly supported NOMs belief that the disclosure was intentional and thus justified NOMs request for punitive damages. And then, during discovery, Mr. Meisel and individuals associated with HRC asserted their Fifth Amendment rights and refused to answer discovery questions.
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Not until the Government forced NOM to file this action did the Government admit that it disclosed one copy of Plaintiffs 2008 Form 990 unredacted Schedule B to a single third party in violation of law. (Dkt. 33 78.) And even then, the Government denied responsibility for all of NOMs damages and did not reveal any details concerning the U.S. Treasury Inspector General for Tax Administrations (TIGTA) investigation until served with discovery requests. The Governments belated concessions do not change the fact that this lawsuit was filed primarily to prove that the IRS was guilty of an unauthorized disclosure of confidential tax return information. On that issue, NOM substantially prevailed. See Wilkerson v. United States, 67 F.3d 112, 120 (5th Cir. 1995) (A victory on the primary issue will suffice[.]). The Government attempts to distinguish Huckaby v. United States Dept of Treasury, 804 F.2d 297 (5th Cir. 1986) on the grounds that Huckaby did not concern whether the disclosure . . . resulted from . . . intentional [or] willful conduct. (Opp. at 13 n.8.) But that is simply not true. Like NOM, Huckaby ask[ed] for punitive damages under section 7431(c)(1)(B) on grounds that the disclosures were willful and grossly negligent. Huckaby, 794 F.2d at 1050. Even while rejecting the punitive damages claim, the court determined that Huckaby was a prevailing party because he nevertheless prevailed on the primary issue: whether the government was liable for tax return disclosures. Huckaby, 804 F.2d at 300. Goettee v. Commissioner, 192 Fed. Appx. 212 (4th Cir. 2006), an unpublished decision of the Fourth Circuit cited in the Governments Opposition, actually undermines the Governments position. In Goetee, the taxpayers sought abatement of interest that had accrued on past-due taxes of four different tax periods (1978, 1979, 1981, and 1982). Id. at 214. In total, the taxpayers claimed that nineteen specific, non-consecutive months of interest, as well as the interest of unspecified additional periods, should be abated. See id. at 216. After the Tax Court
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abated three months of interest, the taxpayers moved for attorneys fees. The taxpayers argued that they had substantially prevailed with respect to the most significant issue because they had succeeded in showing that the IRS abused its discretion in refusing to abate any interest. Id. 223. The Fourth Circuit disagreed because no central issue dominated the proceedings. Id. Rather, the taxpayers raised a series of individualand unrelatedclaims of delay against the IRS, requesting abatement for each individual claim. Id. (emphasis added). The diversity of the taxpayers claims meant there was simply no central issue . . . upon which either of the parties could substantially prevail. Id. In reaching that conclusion, the Fourth Circuit noted that Huckaby, in contrast, is a case in which a central issue dominated the proceedings, notwithstanding the Huckaby plaintiffs failed claims for punitive damages and statutory damages for seven alleged disclosures. Id. As this case closely mirrors the claims in Huckaby, Goetee demonstrates that the primary issue in this litigation was whether the IRS was liable for the disclosure of NOMs 2008 Schedule B. II. The Government Has Not Established that Its Position Was Substantially Justified.
In claiming that its position in this litigation was substantially justified, the Government takes an indefensible position: that NOM did not claim that the IRS was simply negligent in disclosing NOMs tax return. (Opp. at 16-17.) But NOMs Complaint could not be clearer: The IRSs disclosure was intentional, grossly negligent, or negligent. (Compl. 102.) And although the IRS claims that it admitted negligence in its Answer, it actually denied the allegations in the preceding sentence. (Dkt. 33 102-03.) In fact, the IRS has refused to admit that its actions were negligent. Instead, the Government repeatedly referred to its actions as inadvertent, up to and throughout its summary judgment motion. (See Dkt. 68 (referring to the unauthorized disclosure as inadvertent seventeen times).) Even where the IRS suggested that
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NOM was entitled to $1,000 in statutory damages, the IRS conditioned its position: [T]o the extent this action has been brought within the two-year statute of limitations and Plaintiff otherwise establishes that it did not request the information through a third party, the government is liable to Plaintiff for $1,000 for one inadvertent disclosure of Plaintiffs 2008 Form 990 unredacted Schedule B. (Dkt. 33 121.) Even with respect to issues it claims to have conceded, the Governments position continues to be of questionable justification. The Governments claim that its defensewas reasonable at every phase of the litigation (Opp. at 17), is also easily refuted by this Courts summary judgment opinion, which found it likely that the disclosure of NOMs 2008 Schedule B was the actual and proximate cause of NOMs claimed damages. Natl Org. for Marriage, Inc. v. United States, IRS, No. 1:13cv1225 (J CC/IDD), 2014 U.S. Dist. LEXIS 77263, 26-34 (E.D. Va. J une 3, 2014) (NOM). Only after losing those issues on summary judgment did the Government agree to settle the case pursuant to NOMs offer. See Hanson v. Commr, 975 F.2d 1150, 1155-1156 (5th Cir. 1992) ([T]he governments concession of a case is one factor to be considered when the trial court decides whether the governments overall position was substantially justified.). The Government does not refute that nearly two years prior to the filing this action, its own investigation revealed that it was the source of the 2008 Schedule B posted on the Internet by the Human Rights Campaign and The Huffington Post. Nor does it refute that by J une 2012, NOM informed TIGTA that Fred Karger had published that document as part of his complaint to the California Fair Political Practices Commission (FPPC). Nevertheless, the Government claims that its position with respect to NOMs actual damages was substantially justified because NOM adjusted (downward) the amount of actual damages it claimed during the course of discovery. (Opp. at 17-18.) Yet there is nothing to suggest the Government would have taken a
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reasonable position had NOM included its final damages value in the Complaint. In fact, the Governments behavior strongly suggests the opposite is true. With respect to damages associated with the Karger complaintwhich NOM included in the complaint (Compl. 36) the Government took the position that it was not liable for any of them throughout the entire course of the litigation. (See Dkt. 33 123 (The United States denies that it owes Plaintiff actual damages for an IRS employees single inadvertent disclosure of Plaintiffs 2008 Form 990 unredacted Schedule B.).) The Government then took and maintained that same hard-line position with respect to all of NOMs claimed actual damages as they were specified in discovery. At no point during this case did the Government take a justified position with respect to its liability for NOMs actual damages. The Governments suggestion that it would have changed its position had it known the final value of NOMs damages prior to filing its Answer is thus undeniably false. Nor does the Governments mere belief that six weeks prior to the close of discovery it was unclear that the damages NOM incurred were necessary (Opp. at 18) make its position any more justified. This Court has not only determined that the Governments belief was erroneous, but that it was certainly foreseeable that releasing NOMs Schedule B to a member of the media could result in its publication, and that NOM would take legal action to prevent further harm. NOM, 2014 U.S. Dist. LEXIS 77263 at 33 (emphasis added). Even when given a second chance to concede actual damages following the close of discovery, the Government refused. On April 2, 2014almost four weeks before the Government filed its summary judgment motionNOM approached the Government and offered to abandon its claim for punitive damages and settle the issue of actual damages as well as attorneys fees. (Opp. at 8.) Despite NOMs offer, the Government in its Opposition
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repeatedly chides NOM for continuing to pursue its gross negligence and willfulness claims; yet the Government made no counter-offer on the issue of actual damages and proceeded to move for summary judgment. The Governments arguments concerning mitigation of damages cannot save it. The Government believes it was justified in raising this argument until at least April 2, 2014, when according to the GovernmentNOM fully disclose[d] the extent to which it had received donations in response to solicitations referring to the disclosure or its lawsuit. (Opp. at 18.) However, the Government should have known that the extent of those solicitations was irrelevant unless the Government could show the necessary elements of causation. As this Court put it, the Governments burden was to confirm that the contributions were caused by the disclosure as opposed to some other impetus. NOM, 2014 U.S. Dist. LEXIS 77263 at 37. The Government should have known well before April 2, 2014, that it could not make that showing. As far back as J anuary 21, 2014, in response to the Governments first set of requests for admission concerning donations received as a result of the disclosure, NOM informed the Government that it is not within Plaintiffs control to know the motive behind a specific donation to it. Further, Plaintiff does not accept earmarked donations. (See, e.g., Dkt. 92-3 at 29.) Moreover, even after NOM provided the Government with the data it requested, the Governments legal bases for the application of the mitigation defense was far from reasonable, as the Government claims. (Opp. at 19.) In the words of this Court, The only evidence on this issue is NOMs admission that 2012 was a record year for donations and it received $46,086.37 from solicitations that referenced the disclosure. These facts alone are insufficient. NOM, 2014 U.S. Dist. LEXIS 77263 at 37 (internal citations omitted) (emphasis added); see also Steven N.S. Cheung, Inc. v. United States, 2007 U.S. Dist. LEXIS 85488, 13-14 (W.D. Wash. J an. 17, 2007) (Had
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defendant carefully considered its position in light of the evidence it possessed and the prior rulings of this Court, it should have realized that its position was not substantially justified.). 3
For the foregoing reasons, NOM is a prevailing party, and is entitled to reasonable attorneys fees. III. The Requested Attorneys Fees Are Reasonable.
The Governments Opposition does not mention the fact that NOM excluded nearly 1,290 hours expended on its behalf (amounting to nearly $471,000) from its Motion in an exercise of billing judgment. (See Exhibit D, Dkt. 91-3.) In fact, the Government scolds NOM for its poor exercise in billing judgment (Opp. at 23), and repeatedly refers to NOMs pre- billing judgment total as though NOM were requesting fees for every hour expended on the case, (id. at 8 n.5, 23). But, in fact, NOM reduced the number of timekeepers from thirty one to seven, eliminating all non-attorney time and the time of nine attorneys in their entirety. (See Exhibit D, Dkt. 91-3.) Further, NOM made numerous reductions from even the remaining seven timekeepers invoices accounting for even potentially excessive, redundant, or otherwise unnecessary hours. (See Motion at 15-17.) Yet the Government attempts to downplay the tremendous success NOM enjoyed by resolving its heavily-contested claim for actual damages and, in so doing, claims that the requested amount is unreasonable. As is explained above, NOMs recovery was substantial (both
3 In the event this Court finds the Governments position was substantially unjustified only with respect to a given issue or phase of this litigation, the court[] may consider each phase or issue of the litigation discretely to determine whether the Plaintiff is entitled to recover expenses incurred in pursuing that issue or litigating that phase, Christian Coal. Intl v. United States, 133 F. Supp. 2d 437, 438-439 (E.D. Va. 2001) (citing Ragan v. Commn, 135 F.3d 329 (5th Cir. 1998)).
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monetarily and in principle) and its request for fees is reasonable, especially in light of the extensive reductions already made by NOMs counsel. A. NOMs Proposed Lodestar Calculation Is Reasonable and Appropriate.
Throughout its response, the Government attempts to graft the entirety of 26 U.S.C. 7430 into section 7431 or, in the alternative, claim that any ambiguities should be resolved in its favor. But the plain language of section 7431 is contrary to such a reading and is unambiguous: in the case of a plaintiff which is described in section 7430(c)(4)(A)(ii), reasonable attorneys fees, except that if the defendant is the United States, reasonable attorneys fees may be awarded only if the plaintiff is the prevailing party (as determined under section 7430(c)(4)).
26 U.S. C. 7431(c)(3). As NOM previously explained (Motion at 18 n.9), Congress chose to specifically incorporate section 7430s prevailing party standard but chose not to include any other provisions of section 7430. (See also Dkt. 91-2 61-65.) What Congress did say, however, was that reasonable attorneys fees may be awarded. 26 U.S. C. 7431(c)(3). NOMs Motion, therefore, requested a fee award pursuant to a lodestar calculation, the appropriate measure of the reasonable fee to which a prevailing party is entitled. See City of Burlington v. Dague, 505 U.S. 557, 560 (1992); see also, Motion at 14-15. 4
1. The Requested Hourly Rates Are Reasonable.
The Government does not dispute that NOMs requested hourly rates are the prevailing market rate appropriate for each attorney. Instead, it simply argues that the statutory cap of
4 The Government mischaracterizes Mr. Zalls affidavit as inappropriate expert testimony serving to circumvent[] the imposed page limit. (Opp. at 19.) But Mr. Zall is an independent counsel, well-versed in IRS litigation and related fields. His affidavit serves to provide an outside opinion on the reasonableness of NOMs counsels fee petition, similar to the routine affidavits from local counsel on the prevailing market rate. See, e.g. In re Outsidewall Tire Litig., 748 F. Supp. 2d 557, 567 (E.D. Va. 2010). NOM did not direct Mr. Zall regarding the content of his affidavit. Moreover, NOM provided sufficient and extensive legal and factual arguments to support its case in its Petition.
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section 7430 applies to this case. 5 But such a position is not supported by the plain language of section 7431 or by the legislative history of the same. (See Motion at 18 n.9.) The Government contends that allowing for the prevailing market rate here would render the relief provided in 7431 significantly more expansive than 7430. (Opp. at 22.) Yet the Government provides no evidence that such a result was not Congresss intention. And given that Congress incorporated some portions of section 7430 into section 7431 but not others signifies that Congress did intend to broaden the hourly rate allowed for these specific cases. [W]here Congress knows how to say something but chooses not to, its silence is controlling. United States v. Webb, 655 F.3d 1238, 1257 (11th Cir. 2011); see also Ctr. For Special Needs Trust Admin., Inc. v. Olson, 676 F.3d 688, 701-02 (8th Cir. 2012) (Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.). Such a result is logical given the specific (and, ideally, rare) set of circumstances required to bring and prevail on a claim for the unauthorized disclosure or inspection of confidential information, rather than the myriad cases for which section 7430 or the Equal Access to J ustice Act allows the recovery of fees. See 26 U.S.C. 7430 (allowing an award of fees for any administrative or court proceeding which is brought by or against the United States in connection with the
5 The Government points to a court in the Western District of Missouri that restated section 7430s statutory cap when evaluating a claim for attorneys fees pursuant to section 7431. See Snider v. United States, 2005 WL 3150761 at *1. Even though this non-binding authority appears to incorporate a portion of section 7430 where Congress has not spoken, in the end, the court did not apply that hourly rate and, instead, simply stated that the rates requested by counselbased on the prevailing market rateare reasonable and awarded the requested fees. Id. at *2. If this Court finds that the statutory cap in section 7430 has been grafted into section 7431, then NOM submits that the difficulty of the issues presented in the case (see, e.g., Dkt. 91- 7 23, 36 and Dkts. 91-36 (declarations explaining counsels experience)) justify applying the requested prevailing market rate.
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determination, collection, or refund of any tax, interest, or penalty under this title) (emphasis added) and 28 U.S.C. 2412 (providing attorneys fees to a prevailing party in any civil action brought by or against the United States) (emphasis added). Because 26 U.S.C. 7431 is silent on the applicable hourly rate, Hensleys prevailing market rate standard applies. See Hensley v. Eckerhart, 461 U.S. 424, 433 n.7 (1983). 2. The Requested Hours Are Reasonable and Already Account for Appropriate Billing Judgment.
Despite the Governments bare statements about the unreasonableness of NOMs Motion, NOM has shown that it exercised careful billing judgment in reducing a substantial number of hours from even the seven remaining time keepers. Such billing judgment included numerous reductions or elimination or time spent conferencing with other counsel, traveling to and attending depositions, and reviewing key drafts, as well as exclusions of time exclusively related to NOMs theories on willfulness or gross negligence. (See Motion at 17 n. 7.) Despite these reductions, the Government contends that counsel engaged in significant block billing and provided time entries that are too vague for the Court to make a reasoned determination of whether the time spent on the tasks was appropriate. (Opp. at 27.) But that is not the case. NOM provided nearly 100 pages of carefully billed time entries, the bulk of which set forth a specific task or tasks (and with counsel exercising billing judgment to account for improper block billing or vague entries). 6 Notably, an applicant is not required to record in great detail how each minute of his time was expended. Hensley at 437 n.12. Rather, he need
6 The Government criticizes NOM for the amount of time spent on its Complaint, (Opp. at 28- 29), but, due to its exercise of billing judgment, NOM is only seeking $40,666.80 for all time spent on the case prior to October 1, 2013. (See Dkt. 91-3, Ex. A; Dkt. 91-4, Ex. A; Dkt. 91-5, Ex. B; Dkt. 91-6, Ex. B.)
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only identify the general subject matter of his time expenditure. Id. That is precisely what NOMs counsel has done. Further, in an exercise of billing judgment, NOM is not requesting additional fees for the time its counsel spent on this reply nor the expenses incurred in retaining outside counsel to provide affidavits as to the reasonableness of its hours and the prevailing market rate. (Exhibit 8, Second Declaration of Kaylan L. Phillips at 2, see also Motion at 26-27 (providing authority for the compensation of such fees and expenses).) 7
B. NOMs Claims Shared a Common Core of Facts.
As NOM explained, this case involves a common core of facts, i.e. the circumstances surrounding the IRSs processing of a request for NOMs 2008 Schedule B and the subsequent disclosure and dissemination of the document. (Motion at 21-24; see also, Dkt. 73 at Section III (describing the need to look at the record facts regarding the disclosure, including what was requested and by whomfacts NOM uncovered during discoveryin order to resolve actual and proximate causation).) Yet, the Government maintains that NOMs willfulness and gross negligence claims are solely responsible for nearly all of the work that its attorneys completed. (Opp. at 24.) That is not the case. NOM would have been required to conduct the same
7 The Governments half-hearted suggestion that NOM must submit its fee agreement with counsel in order to demonstrate its eligibility to collect attorneys fees is entirely unfounded. (Opp. at 30 n.26.) In fact, the Governments own authority confirms that no written agreement need even exist. (See id. (agreement with counsel may be implied).) Besides, on its own, [t]he presence of an attorney-client relationship suffices to entitle prevailing litigants to receive fee awards. Ed A. Wilson, Inc. v. GSA, 126 F.3d 1406, 1409 (Fed. Cir. 1997). There can be no serious dispute that NOM enjoyed that relationship with its counsel. Under that arrangement, NOM is obligated to pay any and all fees collected to its counsel. See Exhibit 8 at 5.
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depositions and request the same information regardless of whether it was seeking actual damages alone as it did when seeking to establish gross negligence or willfulness. 8
From its first filing, the Government denied that there was a causal link between the disclosure and the damages NOM incurred. (Dkt. 33 123) (The United States denies that it owes Plaintiff actual damages for an IRS employees single inadvertent disclosure of Plaintiffs 2008 Form 990 unredacted Schedule B.) The Government never backed down from this position throughout the entire litigation. This causal link was essential regardless of whether NOMs theory was negligence, gross negligence, or willfulness. Like the extensive efforts undertaken by NOMs counsel before litigation (see Dkt. 1 45-70 (describing the numerous pre-litigation efforts undertaken by NOM and its counsel to ascertain information regarding the disclosure)), the Governments refusal to admit a causal link between the disclosure and NOMs damages required NOMs counsel to undertake significant efforts during litigation (a large percentage of which NOM excluded from its Motion in an exercise of billing judgment). For example, it was only through NOMs discovery requests served upon the Government that NOM learned that Mr. Meisel told the IRS that he was a member of the media, (Dkt. 68-5 at 4), a fact that NOM used in its defense against the Governments motion for summary judgment on actual damages. (See Dkt. 73 1 and p. 25.) This information was not provided in the Governments Answer. In fact, the Governments Answer did not provide any details as to the circumstances surrounding the release of NOMs confidential information so
8 Contrary to the Governments characterization, (Opp. at 24 n.20), the amendments to NOMs witness list after summary judgment is not an indication that the discovery it took was limited to its gross negligence or willfulness claims. Rather, on the amended list, NOM lists six witnesses (including Ms. Peters, Mr. Hamilton, Mr. Meisel, Mr. Nix, and the Governments 30(b)(6) designees) whose deposition testimony it believed it would use in its presentation on actual damages, due to the witness being outside of the Courts subpoena power. (Dkt. 84 at 2-3.)
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NOMs discovery and pre-trial efforts were necessary to learn the true circumstances of the disclosure and prepare its presentation for actual damages. 9
Further, each deposition NOM took (three of which involved individuals listed on the Governments initial disclosures as witnesses with relevant information (Exhibit 9, Governments Initial Disclosures)) was necessary to prove the causal link the Government consistently denied and to establish the Governments liability for NOMs actual damages: 1. Wendy Peters, according to the Governments initial disclosures, has information concerning the request for Plaintiffs 2008 Form 990, the processing of that request and the general allegations contained in Plaintiffs complaint. (Exhibit 9 at 3.) NOM could not have presented its case for actual damages without information regarding the request and disclosure of its 2008 Schedule B. Ms. Peterss deposition was necessary to establish the causal link between the negligent act and the unauthorized disclosure to a third party, to wit, Mr. Meisel. (See, e.g., Dkt. 73 1.) It was through documents authenticated in her deposition that NOM was able to establish actual caution and the evidence showing that it was reasonably foreseeable that the document would be further disseminated. (See, e.g., id. 8, 18; Dkt. 68 2, 3, 7-10, 14.) 2. David Hamilton, according to the Governments initial disclosures, has information concerningthe system that contained the image of Plaintiffs 2008 Form 990, and IRS records pertaining to the allegations contained in Plaintiffs complaint. (Exhibit 9 at 2.) NOM could not
9 As NOM made plain in its Complaint, it devoted significant time to seeking the truth of the disclosure prior to filing suit, including quickly filing a request for investigation which, in the course of discovery, NOM discovered was the impetus for TIGTAs investigation into the disclosure. (Dkt. 73 at 2.) NOM also filed numerous FOIA requests and appeals. (Dkt. 1 45- 71.) In response to one of NOMs FOIA requests for records regarding requests to the IRS for NOMs tax return information, the IRS even responded that no such records exist. (Id. 57.) Because the IRS was not forthcoming about the disclosure, NOM was forced to file this lawsuit. The Government now criticizes NOM for spending time on a lawsuit that the Government could have prevented in the first place.
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have presented its case for actual damages without testimony regarding what information the Government had regarding the disclosure of NOMs 2008 Schedule B. Mr. Hamiltons deposition was key to proving the causal link, including providing information on the origin and development of the watermark on the disclosed document and verifying that the same watermark was consistently found on the disclosed document after it was disseminated. (See, e.g., Dkt. 68 9-13, 22; Dkt. 73 15, 51.) Such facts were important to show the connection between the IRSs disclosure and the dissemination by Mr. Meisel and by Mr. Karger. 3. Matthew Meisel, according to the Governments initial disclosures, has information pertaining to the request for the disclosure of Plaintiffs 2008 Form 990, the IRSs production of Plaintiffs 2008 Form 990, the receipt by the Human Rights Campaign of Plaintiffs 2008 Form 990, and certain other remaining allegations contained in Plaintiffs Verified Complaint. (Exhibit 9 at 1.) NOM could not have presented its case for actual damages without information regarding the request, disclosure, and dissemination of its 2008 Schedule B. Although Mr. Meisel ended up asserting his Fifth Amendment privilege during the deposition, documents produced by him pursuant to subpoena provided information about the causal link between the IRS and the dissemination, including a February 24, 2011 conversation in which Mr. Meisel referred to a promising conduit from whom he might receive NOMs tax return donor list. (See Dkt. 45 at 15-17.) These documents contradicted the Governments claim in its J anuary 27, 2014 discovery responses that the disclosure to Mr. Meisel occurred on or around March 24, 2011, (Exhibit 10 at 3), which, itself conflicted with the IRSs response to NOMs FOIA Request that no records existed (indicating that no requests had been made for NOMs tax returns, supra, n.9). Shortly after Mr. Meisel produced these documents, the Government changed its story, asserting without any direct evidentiary support that the disclosure to Mr. Meisel occurred on or around
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February 10, 2011. (Dkt. 68-5 at 5. Compare Exhibit 10 at 7-8, n-y with Dkt. 68-5 at 4-6, n-y.) Thus, NOMs discovery of third parties was necessary to learning the circumstances surrounding the disclosure. 4. The Government 30(b)(6) deposition was clearly necessary for NOM to obtain information binding on the Defendant itself regarding the request, disclosure, and dissemination of its 2008 Schedule B, key elements of its actual damages claim. This deposition established the process and failure of the IRSs system, which established negligence, and the causal connection between the negligence and the disclosure to Meisel. (See, e.g., Dkt. 68 10, 26; Dkt. 73 1, 49, 51.) This deposition would have been necessary whether NOM was suing for only negligence or for negligence, gross negligence, or willfulness because of the need for testimony that is binding on the Government. 5. The deposition of Kevin Nix, a former HRC employee with information regarding the disclosure and dissemination of NOMs tax information, was necessitated by Mr. Meisels assertion of his Fifth Amendment privilege regarding relevant facts to NOMs case. 10 Although Mr. Nix, like Mr. Meisel, ended up asserting his Fifth Amendment privilege during the deposition, it was necessary for NOM to engage in discovery with him given that documents produced by HRC established his receipt of the disclosed document from Mr. Meisel and his passing along the document for further dissemination by HRC and the Huffington Post. (See, e.g., Dkt. 68 19.)
10 Importantly, the Department of J ustice refused to grant Mr. Meisel immunity from prosecution (despite there being no known pending proceedings against him). Such immunity would have required him to respond to NOMs questions and, without it, NOM was required to serve discovery on numerous third parties, including Mr. Nix.
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6. Fred Karger, according to the Governments initial disclosures, has information concerning the complaint he filed against Plaintiff in California and other allegations contained in Plaintiff's Verified Complaint with respect to him and that action. (Exhibit 9 at 2.) Importantly, the Government noticed his deposition. NOMs attendance was critical as his testimony provided the final link between the unauthorized disclosure and the harm incurred by NOM regarding his complaint. (See, e.g., Dkt. 68 29; Dkt. 73 28, 31, 35.) Mr. Kargers testimony, along with the documents he produced pursuant to subpoena, showed that the proximate cause of the harm inflicted by his complaint was the disclosure by the IRS. The hours requested in NOMs Motion related to a common set of facts and were necessary to prove NOMs claims for actual damages. Conclusion
Because NOM is a prevailing party in this litigation, NOM respectfully requests reasonable attorneys fees in the amount of $691,025.05 for the work of its counsel on the underlying litigation and on its Motion for fees.
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Respectfully submitted this 15th day of August, 2014.
/s/ J ason Torchinsky (Va. 47481) Shawn Toomey Sheehy (Va. 82630) Holtzman Vogel J osefiak, PLLC 45 North Hill Drive, Suite 100 Warrenton, VA 20186 (540) 341-8808 (telephone) (540) 341-8809 (fax) jtorchinsky@hvjlaw.com ssheehy@hvjlaw.com Counsel for Plaintiff
J ohn C. Eastman (Cal. 193726)* Anthony T. Caso (Cal. 88561)* Center for Constitutional J urisprudence c/o Chapman University School of Law One University Drive Orange, CA 92866 (877) 855-3330 x2 (telephone) (714) 844-4817 (fax) jeastman@chapman.edu caso@chapman.edu Counsel for Plaintiff Cleta Mitchell, of counsel (D.C. 433386)* William E. Davis, of counsel (D.C. 280057)* Mathew D. Gutierrez, of counsel (Fla. 0094014)* Kaylan L. Phillips (Ind. 30405-84)* Noel H. J ohnson (Wisc. 1068004)* ACTRIGHT LEGAL FOUNDATION 209 West Main Street Plainfield, IN 46168 (317) 203-5599 (telephone) (888) 815-5641 (fax) cmitchell@foley.com wdavis@foley.com mgutierrez@foley.com kphillips@actrightlegal.org njohnson@actrightlegal.org Counsel for Plaintiff
* Admitted Pro Hac Vice
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Certificate of Service
I hereby certify that on August 15, 2014, I filed the foregoing via ECF which notified the following counsel of record: UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE Philip M. Schreiber (D.C. 502714)* Christopher D. Belen (Va. 78281) Trial Attorneys, Tax Division U.S. Department of J ustice Post Office Box 14198 Ben Franklin Station Washington, DC 20044 (202) 514-6069 (Mr. Schreiber) (202) 307-2089 (Mr. Belen) Fax: 202-514-9868 philip.m.schreiber@usdoj.gov christopher.d.belen@usdoj.gov
Benjamin L. Tompkins (D.C. 474906)* Assistant United States Attorney United States Attorneys Office for the Central District of California Federal Building, Suite 7516 300 North Los Angeles Street Los Angeles, CA 90012 (213) 894-6165 Fax: (213) 894-0115 *Admitted Pro Hac Vice
David Moskowitz Assistant U.S. Attorney 2100 J amieson Avenue Alexandria, Virginia 22314 Telephone: (703) 299-3845 Fax: (703) 299-3983 david.moskowitz@usdoj.gov
/s/ Shawn Toomey Sheehy (Va. 82630) Holtzman Vogel J osefiak, PLLC 45 North Hill Drive, Suite 100 Warrenton, VA 20186 (540) 341-8808 (telephone) ssheehy@hvjlaw.com Counsel for Plaintiff Exhibit 8 Second Declaration of Kaylan L. Phillips Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 1 of 6 PageID# 2194 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA The NATIONAL ORGANIZATION FOR MARRIAGE, INC., Plaintiff, v. The UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE, Defendant. Civ. No. 13-cv-1225-J CC/IDD SECOND DECLARATION OF KAYLAN L. PHILLIPS IN SUPPORT OF PLAINTIFFS MOTION FOR ATTORNEYS FEES Kaylan L. Phillipsdeclares, pursuant to 28 U.S.C. 1746: 1. I reiterate the facts of my prior declaration made in support of Plaintiffs Motion for Attorneys Fees (Dkt. 91-3, Motion), with respect to my experience, billing practices, and hourly rates and incorporate them herein by reference to the following statements. 2. Since the filing of my first declaration, ActRight Legal Foundation has reasonably expended an additional 30.6hours in preparation of its Reply to NOMs Motion for Attorneys Fees, totaling $10,710in attorneys fees. See Exhibit A. In an effort to be even more reasonable, NOM is not requesting any of this additional time nor is it requesting any expenses that it incurred or will incur relating to the Motion and Reply. 3. As stated in its Motion, NOMs counsel, after exercising billing judgment, previously incurred $691,025.05 litigating NOMs claims in this case and preparing the Motion. (See Dkt. 90.) 1 Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 2 of 6 PageID# 2195 4. The total amount of attorneys fees for which NOM seeks in its Motion remains $691,025.05. 5. NOM is contractually obligated to pay any and all fees awarded to its counsel. Executed in Plainfield, Indiana, on August 15, 2014, _______________ Kaylan L. Phillips ActRight Legal Foundation 209 West Main Street Plainfield, IN 46168 (317) 203-5599 (telephone) (888) 815-5641 (fax) kphillips@actrightlegal.org Counsel for Plaintiff 2 Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 3 of 6 PageID# 2196 Exhibit 8 - Exhibit A Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 4 of 6 PageID# 2197 10:39 AM 08/15/14 ActRight Legal Foundation Time by Job Detail August 8 - 15, 2014 Page 1 of 2 Date Name Duration Notes
NOM- 990 Litigation:990 08/08/2014 Noel J ohnson 0:12 NHJ - R local rules re reply memos; create shell for reply memo for attys fee motion. 08/08/2014 Noel J ohnson 0:18 NHJ - Draft second declaration of KLP re attys fees motion. 08/11/2014 Noel J ohnson 3:24 NHJ - R Govs Opposition brief; make outline and begin drafting reply for Atty fee motion. 08/11/2014 Noel J ohnson 1:54 NHJ - Continue reviewing Government's opposition to atty fees petition; continue outlining reply and 08/11/2014 Noel J ohnson 0:30 NHJ - C KLP to discuss Government's opp. to atty fee petition. 08/11/2014 Noel J ohnson 2:30 NHJ - Continue reviewing defendants' authority and drafting atty fee petition reply. 08/11/2014 Kaylan Phillips 3:42 KLP- R response to fee petition in detail. Take notes. C with NHJ re same. 08/12/2014 Noel J ohnson 2:06 NHJ - Continue RS and drafting atty fee reply brief. 08/12/2014 Noel J ohnson 0:36 NHJ - Continue RS and drafting atty fee reply brief. 08/12/2014 Noel J ohnson 1:12 NHJ - Continue RS and drafting atty fee reply brief. 08/12/2014 Noel J ohnson 0:24 NHJ - Proofread and make edits to atty fee reply brief. 08/12/2014 Noel J ohnson 0:06 NHJ - RS re compensability of local attorney time; email to KLP re same. 08/12/2014 Kaylan Phillips 2:30 KLP- D section on reasonableness of fees: lodestar calculation, prevailing maket rate. 08/13/2014 Noel J ohnson 0:12 NHJ - R and incorporate KLP's comments; r KLP's section on reasonableness. 08/13/2014 Noel J ohnson 1:06 NHJ - LR re "incurred" requirement; P paragraph on same for atty fee reply. 08/13/2014 Noel J ohnson 0:24 NHJ - LR re opinion testimony. 08/13/2014 Noel J ohnson 0:18 NHJ - LR re special factors and statutory rate cap. 08/13/2014 Noel J ohnson 0:42 NHJ - Continue LR re special factors and statutory rate cap. 08/13/2014 Kaylan Phillips 1:42 KLP- Continue working on reasonableness of fee award section; prevailing market rate. 08/13/2014 Kaylan Phillips 0:42 KLP- Continue working on reasonableness of fee award section: reasonableness of fees. 08/13/2014 Kaylan Phillips 2:06 KLP- Continue working on reasonableness of fee award section: common set of facts. 08/14/2014 Kaylan Phillips 1:48 KLP- Continue working on fee petition reply. C with NHJ re: arguments. Review emails from teammate 08/14/2014 Kaylan Phillips 0:18 KLP- Call with WD re fee petition. 08/14/2014 Kaylan Phillips 0:30 KLP- Email with MG re Snider case. R case and edit FN in brief. 08/14/2014 Kaylan Phillips 0:30 KLP- Continue working on fee petition reply: review legislative history for 7431. 08/14/2014 Kaylan Phillips 0:54 KLP- Continue working on fee petition reply: respond to section on block billing, etc. Total Litigation:990 30:36 Total NOM- 990 30:36 Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 5 of 6 PageID# 2198 10:39 AM 08/15/14 ActRight Legal Foundation Time by Job Detail August 8 - 15, 2014 Page 2 of 2 Date Name Duration Notes TOTAL 30:36 Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 6 of 6 PageID# 2199 Exhibit 9 Government Initial Disclosures Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 1 of 7 PageID# 2200 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division THE NATIONAL ORGANIZATION FOR MARRIAGE, INC. ) ) ) ) ) ) ) ) ) ) Plaintiff, v. Civil Action No. 13-1225-JCC-IDD THE UNITED STATES OF AMERICA, Defendant. INITIAL DISCLOSURES OF DEFENDANT UNITED STATES OF AMERICA The United States of America, by its undersigned attorneys, makes its initial disclosures in accordance with Fed. R. Civ. P. 26(a)(l) and the parties' proposed scheduling order, as follows: I . The name, and, if known, the address and telephone number of each individual likely to have discoverable information-along with the subjects of that information-that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment: (a) Representative(s) for Plaintiff c/o Plaintiffs counsel Subject: Plaintiffs designee has information pertaining to the alleged disclosure of and alleged damages resulting from the inadvertent disclosure of Plaintiff's 2008 Form 990, as well as the other allegations in its Verified Complaint. (b) Matthew Meisel Waltham, Massachusetts c/o Matt Kaiser, The Kaiser Law Firm PLLC, 1400 I St, NW, #525, Washington, D.C. 20005, (202) 640-2850. Subject: Mr. Meisel has information pertaining to the request for the disclosure of Plaintiffs 2008 Form 990, the IRS's production of Plaintiffs 2008 Form 990, the receipt by the Human Rights Campaign of Plaintiffs 1 Exhibit 9 - Page 1 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 2 of 7 PageID# 2201 2008 Form 990, and certain other remaining allegations contained in Plaintiff's Verified Complaint. (c) Representative for Human Rights Campaign Washington, D.C. c/o James W. Cooper, Arnold and Porter LLP, 555 12' 11 St., NW, Washington, D.C. 20004, (202) 942-6603 Subject: Representative has information pertaining to Plaintiff's allegations against HRC, and generally Plaintiff's allegations in its Verified Complaint. (d) Fred Karger 3369 Wilshire Blvd. Suite 1290 Los Angeles, CA 9001 0 Subject: Mr. Karger has information concerning the complaint he filed against Plaintiff in California and other allegations contained in Plaintiff's Verified Complaint with respect to him and that action. (e) Unidentified donors for the Plaintiff Subject: Donor(s) bave information pertaining to the Plaintiff's alleged damages resulting fiom the disclosure of Plaintiff's 2008 Form 990 umedacted Schedule B. (f) Jeremy S. Hooper 350 W. 57th St. Apt. 6G New York, New York 10019 Subject: Mr. Hooper has information concerning Plaintiffs allegations against HRC and Plaintiff's damages claims in this case. (g) David Hamilton, systems administrator I programmer in the Statistics of Income Data Management Division Internal Revenue Service Ogden, Utah c/o: Philip Schreiber, Benjamin L. Tompkins, Christopher Belen, Trial Attorneys, U.S. Department ofJustice, Tax Division, P.O. Box 14198, Washington, D.C. 20044. Subject: Mr. Hamilton has information concerning the Statistics of Income Exempt Organizations Return Image Network, the system that contained the image of Plaintiff's 2008 Form 990, and IRS records pertaining to the allegations contained in Plaintiff's complaint. 2 Exhibit 9 - Page 2 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 3 of 7 PageID# 2202 (h) Wendy Peters, Processing Clerk Internal Revenue Service Ogden, Utah c/o: Philip Schreiber, Benjamin L. Tompkins, Christopher Belen, Trial Attorneys, U.S. Department ofJustice, Tax Division, P.O. Box 14198, Washington, D.C. 20044. Subject: Ms. Peters has information concerning the request for Plaintiffs 2008 Form 990, the processing ofthat request and the general allegations contained in Plaintiffs complaint. In addition to the foregoing, the United States may support its claims or defenses through the testimony of other individuals whose identities are not yet known to the United States, including, for example, individuals identified by Plaintiti in its initial disclosures or in response to the United States' Interrogatories. The United States also may rely on expert testimony to support its claims or defenses and, if so, shall identify any such experts as provided in the Federal Rules of Civil Procedure, and in accordance with any applicable Orders of this Court. Finally, the United States may rely upon any non-governmental employees identified in Plaintiffs initial disclosures. The United States reserves the right to supplement these disclosures under Fed. R. Civ. P. 26(e) as the need arises. 2. A copy of-or a description by category and location--of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment: (a) Records pertaining to Plaintiffs damages, including records related to Plaintiff's donors, Fred Karger's complaints and the remaining allegations pertaining to Plaintiffs Verified Complaint; (b) Plaintiffs 2007,2008, 2011 and 2012 Fonns 990; (c) IRS records pertaining to the history regarding the Plaintiffs 2008 Form 990, and the disclosure thereof; (d) Documents pertaining to HRC's receipt of Plaintiffs 2008 Form 990; (e) Blank Form 4506-A; () Blank Form 3983C; (g) Exhibits to Plaintiffs Verified Complaint; and (h) Internal Revenue Manual sections pertaining to the processing of Form 4506- A requests. 3 Exhibit 9 - Page 3 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 4 of 7 PageID# 2203 In addition to the foregoing, the United States may support its claims or defenses through documents the existence of which are not yet known to the United States, including, for example, documents identified by Plaintiff in its initial disclosures or in response to the United States' Interrogatories or produced to the United States by Plaintiff in response to the United States' Requests for Production of Documents. The United States reserves the right to supplement these disclosures under Fed. R. Civ. P. 26(e) as the need arises. The referenced documents are either in the possession of the undersigned counsel for the United States or with the Internal Revenue Service. 3. A computation of each category of damages claimed by the disclosing party-who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extend of injuries suffered: The United States does not claim any damages. 4. For inspection and copying as under Rule 34, any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment: Not applicable to this proceeding. Dated: December 20, 2013 4 KATHRYN KENEALL Y Assistant Attorney General
PHILIP M. SCHREIBER* BENJAMIN L. TOMPKINS* CHRISTOPHER D. BELEN Trial Attorneys, Tax Division U.S. Department of Justice Post Office Box 14198 Ben Franklin Station Washington, DC 20044 (202) 514-6069 (Mr. Schreiber) (202) 514-5885 (Mr. Tompkins) (202) 307-2089 (Mr. Belen) Fax: 202 514-9868 E-Mail: philip.m.schreiber@usdoj.gov benjamin.!. tompkins@usdoj .gov christopher. d. belen@usdoj .gov -and- Exhibit 9 - Page 4 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 5 of 7 PageID# 2204 5 DANA J. BOENTE ACTING UNITED STATES ATTORNEY David Moskowitz Assistant U.S. Attorney 2100 Jamieson Avenue Alexandria, Virginia 22314 Telephone: (703) 299-3845 Fax: (703) 299-3983 E-Mail: david.moskowitz@usdoj.gov Attorneys for the United States of America * Admitted pro hac vice Exhibit 9 - Page 5 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 6 of 7 PageID# 2205 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on December 20, 2013, I served the foregoing Initial Disclosures on counsel of record below by electronic mail and U.S. Mail addressed as follows: Jason Brett Torchinsky Holtzman Vogel Josefiak PLLC 45 North Hill Drive Suite 100 Warrenton, VA 20186 540-341-8808 Fax: 540-341-8809 Email: jtorchinsky@hvjlaw.com Shawn Toomey Sheehy Holtzman Vogel Josefiak PLLC 45 North Hill Drive Suite I 00 Warrenton, VA 20186 540-341-8808 Fax: 540-341-8809 Email: ssheehy@hvjlaw.com 6 CHRISTOPHER D. BELEN, VSB #78281 Trial Attorney, Tax Division U.S. Department of Justice Exhibit 9 - Page 6 of 6 Case 1:13-cv-01225-JCC-IDD Document 93-2 Filed 08/15/14 Page 7 of 7 PageID# 2206 Exhibit 10 Government First Discovery Responses Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 1 of 30 PageID# 2207
11016338.2 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Alexandria Division
THE NATIONAL ORGANIZATION FOR ) MARRIAGE, INC. ) ) Plaintiff, ) ) v. ) Civil Action No. 13-1225-J CC-IDD ) THE UNITED STATES OF AMERICA, et al., ) ) Defendants. ) _________________________________________ )
DEFENDANTS OBJECTIONS AND RESPONSES TO PLAINTIFFS FIRST DISCOVERY REQUESTS
Pursuant to Local Rule 26(C) and Federal Rules of Civil Procedure 33, 34, and 36, Defendant, the United States of America, through its undersigned counsel, provides the following responses and objections to Plaintiffs first set of interrogatories, requests for admission, and requests for production of documents in the above-captioned action. The responses below incorporate, as if fully set forth in general and for each specific discovery request, the United States Objections to Plaintiffs First Discovery Requests, dated J anuary 7, 2014. As discovery is ongoing and the Internal Revenue Service (IRS) is searching for additional documents, the United States will supplement these discovery responses in accordance with Fed. R. Civ. P. 26(e).
INTERROGATORY OBJECTIONS AND RESPONSES 1. Identify the individual(s) who was/were in any way involved in the inspection, dissemination and/or disclosure of Plaintiffs return and/or return information as well as the supervisor(s) of the individual(s). Exhibit 10 - Page 1 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 2 of 30 PageID# 2208
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Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states as follows: Wendy J . Peters is identified as being involved in the disclosure of Plaintiffs amended 2008 Form 990, Return of Organization Exempt From Income Tax (Form 990), including an unredacted Schedule B. Her former immediate supervisor was Ben Aaron J ohanson. The United States also contends that Matthew Meisel was involved, and that individuals associated with the Human Rights Campaign (HRC), the Huffington Post, and other news outlets and third parties may have been involved in the unforeseeable dissemination of Plaintiffs amended 2008 Form 990, unredacted Schedule B. The United States does not know these individuals supervisors, if any.
2. For each individual(s) identified in Interrogatory Number 1, state all facts and describe in detail any inspections and/or disclosures of NOMs return and return information, including the following for each disclosure: (a) What specific return and/or return information was inspected and/or disclosed; (b) Where and when such inspection(s) and/or disclosure(s) occurred; (c) Regarding disclosure(s), to whom was the return and/or return information disclosed; (d) Regarding disclosure(s), whether and how the disclosure(s) was/were requested; (e) Which individuals associated with the United States, if any, were consulted or informed of the inspection(s) and/or disclosure(s); (f) When any individuals listed in (e), if any, were informed of such inspection(s) and/or disclosure(s); (g) Identify all documents and persons with knowledge that tend to support or undermine your contentions in (a) through (f) above. Exhibit 10 - Page 2 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 3 of 30 PageID# 2209
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Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states as follows: (a) The United States has admitted, subject to its legal defenses as stated in its Answer, that one inadvertent disclosure of Plaintiffs amended 2008 Form 990, unredacted Schedule B occurred. The United States has denied (and continues to deny) that there were any unauthorized inspections of Plaintiffs return or return information. (b) The United States contends that the disclosure occurred on or around March 14, 2011 when the return was sent out from the IRS Ogden Service Center in Ogden, Utah. (c) The United States contends that Plaintiffs amended 2008 Form 990, unredacted Schedule B was disclosed to Matthew Meisel. (d) The United States contends that Matthew Meisel requested Plaintiffs 2008 Form 990 via an IRS Form 4506-A, Request for Public Inspection or Copy of Exempt or Political Organization IRS Form, around J anuary, 2011. (e) The United States objects that this information is not reasonably calculated to lead to the discovery of admissible evidence. Furthermore, the United States avers that it does not know the exact number of individuals associated with the United States that were informed of the disclosure because answering this interrogatory would require the United States to expend a disproportionate and exorbitant number of hours to locate and provide irrelevant information located in executive agencies offices nationwide in order to determine who was consulted or informed of the inspection(s) and/or disclosure(s). Moreover, Plaintiffs interrogatory is vague because it does not delineate whether the individuals were informed of the disclosure from within the IRS or outside sources, such as media, when such individuals were informed of the disclosure, or whether Plaintiffs interrogatory includes individuals informed or consulted after Exhibit 10 - Page 3 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 4 of 30 PageID# 2210
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the filing of this action. Subject to these objections and the general objections incorporated above, the United States avers that, after the publication of Plaintiffs amended 2008 Form 990, unredacted Schedule B in late March and early April 2012 by persons not employed by or affiliated with the IRS, the following individuals were informed of the disclosure or were asked to help determine whether a disclosure had been made: agents and employees for the Treasury Inspector General for Tax Administration (TIGTA); IRS employees listed or otherwise named in the TIGTA Report of Investigation (ROI), dated October 10, 2012; Sherry Whitaker, Robert Blackwell, David Hamilton, Karl Hinds, Michael Leszcz, Ben Aaron J ohanson, Kelli Graser, Connie Peek, Debra Scott, J aLynne Archibald, Debbie Bybee, Rhonda Gill, Linda Oram, Stacy Fisher, Christina DAmico, Roberta Zarin, Lois Lerner, Michelle Eldridge, David Fish, J oseph Urban, Dawn Marx, Andy Megosh, Laurice Ghougasian, Holly Paz, J oseph Grant, Doble Gregorio, Maria Hooke, Moises Medina, Richard Daly, Marian Bodart, J ustin Lowe, Thomas Miller, J udith Kindell, Sharon Light, Christina Navarrete-Wasson, J effrey Cooper, Kevin Cunningham, Marci Ansley Plyer, Christina Hartman, Shelley Moore, Steven Miller and J . Russell George. To the extent any other individuals are not listed, and in accordance with Fed. R. Civ. P. 33(d), the United States incorporates any other individuals listed in the documents produced in response to Plaintiffs document requests that involve communications pertaining to the disclosure of Plaintiffs amended Form 2008, unredacted Schedule B. (f) The United States objects that this information is not reasonably calculated to lead to the discovery of admissible evidence. Subject to these objections and the general objections incorporated above, individuals associated with the United States were informed on various dates of the disclosure of Plaintiffs amended 2008 Form 990, unredacted Schedule B, beginning on or around April 5, 2012. Exhibit 10 - Page 4 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 5 of 30 PageID# 2211
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(g) The United States identifies the TIGTA ROI, dated October 10, 2012, in support of its contentions, the relevant sections of the Internal Revenue Manual (IRM) that identify the applicable policies, and the IRS database history indicating approximately when the Letter 3983C, EO Photocopy Request Response, at issue was processed in March 2011. The United States will identify additional responsive documents if and when they are produced. Individuals with knowledge in support of the United States contentions include individuals listed or identified in (i) the TIGTA ROI, (ii) documents produced by HRC and Matthew Meisel, (iii) the United States initial disclosures, and (iv) in response to subpart (e) of this interrogatory.
3. Please state with specificity all facts and identify all documents that tend to support or undermine your contention that the disclosure of Plaintiffs return and/or return information was inadvertent and limited to one occurrence. See Answer, 105-08. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states as follows with regard to documents: The United States identifies the TIGTA ROI in support of its contentions, the relevant sections of the IRM that identify the applicable procedures and policies governing the disclosure, and the documents pertaining to the processing of and response to the Form 4506-A at issue (including when the responding RAIVS (Return and Income Verification Services) clerk entered a command into the IRS database system used by RAIVS clerks to instruct the system to prepare a 3983C letter). The United States will identify additional responsive documents if and when they are produced. With regard to the facts and in addition to the United States J anuary 7, 2014 objections, the United States objects to this interrogatory as unduly burdensome because it demands that Defendant prove a negative that more than one Exhibit 10 - Page 5 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 6 of 30 PageID# 2212
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disclosure occurred. Plaintiff bears the burden of demonstrating that more than one disclosure occurred. Facts that support or undermine the United States contentions are included in the TIGTA ROI and the applicable documents pertaining to the processing of requests for Plaintiffs Form 990. Furthermore, as the United States is still developing its defense of this case, the list of facts in support of its contentions is necessarily incomplete. Subject to those statements, the United States contends that the following facts support that the sole disclosure in this case was inadvertent for the following reasons, among others: (a) the diagonal watermark on the excerpted version of Plaintiffs amended 2008 Form 990, unredacted Schedule B that was included in Plaintiffs Verified Complaint in this case, and which was disclosed by the IRS and later allegedly disseminated by the Human Rights Campaign and the Huffington Post (100560209), is a unique identifying number created as a watermark by the IRS database system that indicates the specific IRS employee who accessed Plaintiffs amended 2008 Form 990 on a specific date and time in response to a Form 4506-A;
(b) that identifying number is never repeated and is embedded into the tax return when it is accessed and caused to be printed out by the IRS employee;
(c) querying the IRS database regarding that unique identifier revealed that a low- level IRS RAIVS clerk properly accessed Plaintiffs amended 2008 Form 990, including the unredacted Schedule B, in J anuary 2011 and printed it in order to respond to a completed IRS Form 4506-A;
(d) the IRS had properly scanned two versions of Plaintiffs amended 2008 Form 990 one with a redacted Schedule B and one with an unredacted Schedule B into the IRS database;
(e) at the time of the disclosure, the IRS clerk who inadvertently disclosed the unredacted Schedule B from Plaintiffs amended 2008 Form 990 was not aware of Plaintiffs mission, its viewpoint, its agenda, or its officers;
(f) there are no facts that support that the IRS clerk was directed, instructed, bribed, coerced, blackmailed, or otherwise influenced by anyone to release Plaintiffs amended 2008 Form 990, Schedule B without the proper redactions;
(g) the IRS clerk does not recall the request for Plaintiffs 2008 Form 990, nor does she recall processing the request;
Exhibit 10 - Page 6 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 7 of 30 PageID# 2213
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(h) the IRS clerk has denied intentionally disclosing Plaintiffs amended 2008 Form 990, Schedule B without the proper redactions;
(i) at the time of the disclosure, the IRS clerk did not know Matthew Meisel, Kevin Nix, Sam Stein, anyone at the Human Rights Campaign (HRC) or the Huffington Post, or Fred Karger;
(j) at the time of the disclosure, the clerk did not know any of the other individuals Plaintiff identified to TIGTA as persons who disagree with Plaintiffs mission;
(k) at the time of the disclosure, the IRS clerk was processing a substantial majority of the approximately 100 to 300 requests for copies of Form 990s the IRS received per week;
(l) the IRS Wage and Information Division (W & I) unit tasked with responding to requests for Form 990s the W & I RAIVS unit located in the Ogden, Utah IRS Service Center processed over approximately 11,000 Form 4506-A requests in 2010 and over approximately 13,000 Form 4506-A requests in 2011;
(m) at the time of the disclosure and through the time of the TIGTA investigation leading to its ROI dated October 10, 2012, the IRS W & I Ogden Accounting Operations Quality Review unit, which reviewed RAIVS unit completed work related to the IRS production of copies of Form 990s, had never detected errors with regard to the IRS clerk who disclosed Plaintiffs amended 2008 Form 990, unredacted Schedule B;
(n) before responding to Mr. Meisels request for the Form 990, the IRS clerk contacted an IRS media relations specialist to determine whether Mr. Meisel was a member of the media, which he claimed to be when he completed and filed the IRS Form 4506-A;
(o) before responding to Mr. Meisels request for a copy of Plaintiffs Form 990 and after she printed both copies of the original and the amended versions of Plaintiffs 2008 Form 990s, the IRS clerk waited over a month for the IRS media relations specialist to determine that Mr. Meisel was not a member of the media;
(p) the IRS clerk e-mailed the IRS media relations employee a total of five times between J anuary and March, 2011, waiting for a determination of Mr. Meisels status as a member of the media;
(q) Mr. Meisel also requested Plaintiffs 2007 Form 990, which the IRS produced at the same time as its amended 2008 Form 990, in March 2011;
(r) in J anuary, 2011, the IRS clerk printed both versions of Plaintiffs 2008 Form 990, including an unredacted Schedule B, at a printer located within the RAIVS unit; Exhibit 10 - Page 7 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 8 of 30 PageID# 2214
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(s) after printing Plaintiffs amended 2008 Form 990 in J anuary 2011, the IRS clerk failed to redact the names and addresses of Plaintiffs contributors, even though redacting that information was her responsibility and normal practice and procedure, and was required to satisfy the Internal Revenue Code and the IRS policies and procedures;
(t) the IRS clerk did not produce to Mr. Meisel a copy of Plaintiffs original 2008 Form 990, a tax return that included a Schedule B that listed more donors than the Schedule B attached to Plaintiffs amended Schedule B;
(u) the IRS clerk caused the IRS systems to create a Form 3983C letter, which is a typical letter used in responding to Form 4506-A requests;
(v) the IRS clerk did not mail the copy of Plaintiffs Forms 990 that were produced to Mr. Meisel. The IRS clerk sent photocopied Forms 990 to the CRX unit, which was responsible for assembling photocopied tax forms together with 3983C letters responding to the persons requesting the copies. A 3983C letter was printed at the Ogden Service Center print center in response to an instruction entered into the IRS database system and sent to CRX, where it was assembled with the relevant photocopied Forms, and put out for picking up by IRS mail clerks and mailed;
(w) the IRS produced a 3983C letter and the 2007 Form 990 and amended 2008 Form 990 in response to a Form 4506-A request;
(x) the actual disclosure of Plaintiffs amended 2008 Form 990, unredacted Schedule B to Mr. Meisel occurred in or around March, 2011, a year before the disclosure became widely known and a year before the Schedule B information was unforeseeably publicized and disseminated by HRC, the Huffington Post, and Fred Karger;
(y) the Internal Revenue Service responded to three subsequent Form 4506-A requests for Plaintiffs Form 990s in August, September and December 2011, including two by the clerk who inadvertently disclosed the Form 990 at issue, and properly redacted the names and addresses of Plaintiffs contributors; and,
(z) the Internal Revenue Service played no part in any effort by any third parties, including Mr. Meisel, HRC, or the Huffington Post, to obscure the unique identifiers located on the Schedule B that Plaintiff allegedly uncovered through its investigation.
Exhibit 10 - Page 8 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 9 of 30 PageID# 2215
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4. Please state with specificity all facts and identify all documents that tend to support or undermine your contention that the United States did not engage in any unauthorized inspections. See Answer, 112. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Specifically, Defendant states that Interrogatory 4 is unduly burdensome because it demands that Defendant prove a negative. Plaintiff bears the burden of proving that Defendant engaged in any alleged unauthorized inspection but has asserted no facts supporting such a contention. Subject to and without waiving its objections, the United States states that the IRS clerk properly inspected Plaintiffs 2007 and 2008 Form 990 in order to respond to Matthew Meisels Form 4506-A request.
5. Please identify each and every individual or entity who was an employee, contractor or vendor of or to the United States that conducted any kind of analysis (including computer and/or forensic), investigation (whether internal or conducted by a third party), created any report, conducted any interviews or provided any presentations to the United States relating to the disclosure and/or inspection of NOMs return and return information or this lawsuit, and identify all documents relating to the same. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states as follows: The United States identifies the TIGTA ROI in support of its contentions, and will identify additional responsive documents if and when they are produced. Subject to those statements, the United States identifies the following individuals and entity in response to this interrogatory: TIGTA and agents of TIGTA, as identified in the TIGTA ROI; IRS employees identified in the TIGTA ROI, Exhibit 10 - Page 9 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 10 of 30 PageID# 2216
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and individuals identified in the documents produced in response to Plaintiffs document requests.
6. Identify and describe Internal Revenue Service policies concerning the handling of requests for confidential tax information, including procedures regarding redactions. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states that IRS policies concerning the handling of requests for Exempt Organizations Form 990s, including the procedures regarding redactions, will be produced in response to Plaintiffs request for production of documents. These documents include 26 U.S.C. 6103 & 6104 (including their applicable regulations); IRM sections 3.20.12 (Imaging and Perfecting Exempt Organization Returns for Public and Internal Viewing), 3.20.13 (Exempt Organization Photocopy Procedures), 11.3.9 et seq. (Disclosure of Official Information Exempt Organizations), Form 4506-A, 3983C letters, and other general documents that outline the scanning and processing of Exempt Organizations Form 990s. Examples of these documents exist in the United States production. These IRM sections describe the applicable policies and procedures concerning how the IRS processes, responds to and retains Form 4506-A requests. Furthermore these IRM sections describe the redacting of a Form 990 Schedule B when an exempt organization tax return is filed with the IRS. Finally, the sample Forms 4506-As and 3983C letters provide examples pertaining to the forms requesting and documents accompanying an IRS production of copies of Forms 990.
7. Identify all persons who provided training relating to the disclosure of return information to any individual(s) identified in response to Interrogatory Number 1. Exhibit 10 - Page 10 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 11 of 30 PageID# 2217
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Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states as follows: The United States identifies the following IRS individuals in response to this interrogatory: Marylou Andrews (ret.) provided on-the-job training, including on the relevant governing IRM provisions, to Wendy Peters relating to the photocopying and disclosure of return information. Computer training on disclosure and privacy issues was provided by the centralized IRS Training department. Various individuals, including RAIVS employees, provided on-the-job training to Ben Aaron J ohanson.
8. Identify the date, type and nature of training provided to any individual(s) identified in Interrogatory Number 1. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Subject to these objections, Defendant states that Wendy Peters was provided on-the-job training, a W & I February, 2009 training regarding the procedures for processing tax form transcript requests received through the Income Verification Express Service (IVES) program, in addition to learning about the protocols detailed in the Internal Revenue Manual, through on-the-job training and experience gained from preparing numerous responses to Form 4506-A requests. IRS computerized trainings on disclosure and privacy issues were provided on September 22, 2008, and on information security on April 21, 2009, and April 13, 2010. Documents regarding training are being produced by the government.
Exhibit 10 - Page 11 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 12 of 30 PageID# 2218
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9. Identify all persons within the Department of the Treasury and/or the Internal Revenue Service, who communicated, either internally or externally, regarding Plaintiff and the inspection and/or disclosure of Plaintiffs confidential return and/or return information. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this interrogatory. Defendant specifically objects to the overly broad and unduly burdensome request for information regarding Plaintiff, as applied to any communication, internally or externally, by all persons within two large government agencies with tens of thousands of employees, in the context of this case, which pertains to a lone, inadvertent disclosure of tax return information. As such, the Defendant would be required to expend an exorbitant number of hours to locate and identify all individuals in offices nationwide in order to determine who may have communicated with anyone regarding Plaintiff and the inspection and/or disclosure of Plaintiffs confidential return and/or return information. Moreover, Defendant objects because this interrogatory is irrelevant and not reasonably calculated to lead to the discovery of admissible evidence. Subject to these objections, Defendant states that IRS and TIGTA employees listed in the TIGTA ROI, as well as individuals listed in response to subpart (e) of Interrogatory 2 and other individuals identified in the documents produced in response to Plaintiffs document requests, communicated about Plaintiff after the publishing of Plaintiffs amended 2008 Form 990, Schedule B and as it related to the disclosure of its amended 2008 Form 990, Schedule B.
10. Identify all Internal Revenue Manual [sic] Treasury Regulations, Delegation Orders, Treasury Orders, Treasury General Counsel Orders, General Counsel Memoranda, Chief Exhibit 10 - Page 12 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 13 of 30 PageID# 2219
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Counsel Advice, Internal Revenue Bulletins, Revenue Procedures, and Technical Advice Memoranda, relating to the inspection and the disclosure of returns or return information. Response: Defendant objects to Interrogatory 10 as unduly burdensome because Plaintiff has equal access to public documents that may be responsive to Plaintiffs request. Plaintiff seeks those materials that Defendant believes relat[e] to the inspection and the disclosure of returns or return information, and, therefore, Defendant objects because Interrogatory 10 seeks attorney work product and it requires Defendants counsel to conduct legal research for Plaintiff, which is not proper under Fed. R. Civ. P. 33. Subject to and without waiving these objections, the Defendant identifies the following materials that concern the disclosure of return information under 26 U.S.C. 6103, 6104: portions of the Code of Federal Regulations, including, 26 C.F.R. 301.6103(a)-1, 301.6103(a)-2, 301.6103(c)-1, 301.6103(h)(2)-1, 301.6103(1)-1, 301.6103(j)(1)-1, 301.6103(j)(1)-1T, 301.6103(j)(5)-1, 301.6103(k)(6)-1, 301.6103(k)(9)-1, 301.6103(l)-1, 301.6103(l)(2)-1, 301.6103(l)(2)-2, 301.6103(l)(2)-3, 301.6103(l)(14)-1, 301.6103(m)-1, 301.6103(n)-1, 301.6103(n)-2, 301.6103(p)(2)(B)-1,301.6103(p)(4)-1, 301.6103(p)(7)-1; 26 C.F.R. 301.6104(a)-1, 301.6104(a)-2, 301.6104(a)-3, 301.6104(a)-4, 301.6104(a)-5, 301.6104(a)-6, 301.6104(b)-1, 301.6014(c)-1, 301.6104(d)-0, 301.6104(d)-1, 301.6104(d)-2, 301.6104(d)-3; 26 C.F.R. 601.702; IRM sections 3.5.20, 3.11.12, 3.20.12, 3.20.13, and 11.3.1 et seq. (specifically 11.3.9), and others cited in response to Interrogatory 6, above. In addition, the Disclosure and Privacy Law Reference Guide, Publication No. 4639, Catalogue No. 50891P, a publication of the IRS, Office of Chief Counsel, Procedure & Administration, is made available to the public at www.irs.gov. In particular, Chapter 13, Part III, of that publication addresses Publicity of Information Required From Certain Exempt Organizations I.R.C. 6104. Exhibit 10 - Page 13 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 14 of 30 PageID# 2220
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11. If the documents in response to any of these interrogatories or requests for production are in the possession of a third party, and you are not providing them in response to any of the document production requests, please identify the third party and which document(s) it possesses. Response: The United States identifies Matthew Meisel as a third party that may possess documents that are responsive to this request. These documents could include the Form 4506-A Mr. Meisel submitted to the IRS, the 2007 and 2008 Form 990s he received from the IRS and the 3983C letter that accompanied the IRS response.
12. Please identify all individuals who assisted in and/or conferred with you in the preparation of the responses to these interrogatories, the requests for production of documents and the requests for admission. Response: Defendant objects to Interrogatory 12 to the extent it seeks information that is subject to the attorney-client privilege, protections of the attorney work-product doctrine, or the law enforcement investigative privilege. Subject to these objections, Defendant states that counsel for the United States, counsel for the Internal Revenue Service and counsel for TIGTA assisted in or were conferred with regarding the preparation of Defendants responses to Plaintiffs first set of discovery. Beyond those individuals and the individuals who provided counsel with copies of the documents in their possession and/or control, the following individuals assisted in or were conferred with in the preparation of the responses to Plaintiffs first set of discovery: Karl Hinds, J aLynne K. Archibald, Christina L. Navarrete-Wasson, Connie Peek, and Sherry Whitaker.
Exhibit 10 - Page 14 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 15 of 30 PageID# 2221
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13. If you do not provide an unqualified admission in response to all of the requests for admission below, separately for each request for admission, state all facts and identify all persons with knowledge and documents that support your response. Response: To the extent the United States does not provide an unqualified admission, the facts, individuals, and documents in support of its response are listed for each request, respectively.
DEFENDANTS OBJECTIONS AND RESPONSES TO SPECIFIC REQUESTS FOR ADMISSION 1. Please admit that NOMs 2008 Schedule B that was published on the Human Rights Commission and the Huffington Posts websites on March 30, 2012 is identical to the version that was disclosed by the United States. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for admission. Subject to those objections, the United States responds as follows: the United States is unable to admit or deny based upon a diligent inquiry. The United States does not have the exact document that was produced to Matthew Meisel and does not know what was published on the Human Rights Campaign and the Huffington Posts websites on March 30, 2012. The United States admits that the unique identifying diagonal watermark on the excerpted page from Plaintiffs amended 2008 Form 990 attached to Plaintiffs Verified Complaint and that Plaintiff alleges was redacted from the amended 2008 Form 990, Schedule B, which currently exists on the Huffington Posts website matches a copy of a page from Plaintiffs amended 2008 Form 990, Schedule B that the IRS inadvertently disclosed. The United States will supplement this response in accordance with Fed. R. Civ. P. 26(e) to the extent necessary.
Exhibit 10 - Page 15 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 16 of 30 PageID# 2222
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2. Please admit that every retrieval of a Form 990 from the IRS internal computer systems is logged, tracked, and traceable to a specific employee, vendor or contractor. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for admission. Subject to those objections, the United States responds as follows: Denied. The United States admits that, except for qualified systems administrators, every access of Plaintiffs amended 2008 Form 990 from the IRS database named Online SEIN or OL-SEIN (Statistics of Income Exempt Organizations Return Image Network) is logged and traceable to a specific date, time, and IRS employee.
3. Please admit that accessing the IRS internal computer systems containing complete unredacted Form 990s requires one or more log-in steps that any person seeking access to such files must follow. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for admission. Subject to those objections, the United States responds as follows: Denied as written. The United States admits that IRS employees must have specific permissions to log into particular systems. Access to a complete, unredacted Form 990 requires authorized IRS employees, except qualified and authorized systems administrators, to properly login using several steps before being able to view an unredacted Form 990.
4. Please admit that the donor information contained on Schedule B of Form 990 is confidential taxpayer information. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for admission. Subject to those objections, the United States responds as follows: Exhibit 10 - Page 16 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 17 of 30 PageID# 2223
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Denied. The United States admits that the names and addresses of contributors reported on Plaintiffs amended 2008 Form 990, Schedule B is protected by 26 U.S.C. 6103.
5. Please admit that the release of the unredacted Schedule B to third parties did not follow normal IRS internal procedures for responding to requests for Form 990s. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for admission. Subject to those objections, the United States responds as follows: Denied as written. The United States admits that the IRS clerk who processed the request for Plaintiffs amended 2008 Form 990 normally would have redacted the names and addresses contained on the Schedule B before she sent the Form 990 out to any third party in accordance with the Internal Revenue Code and the relevant sections of the Internal Revenue Manual as outlined in response to Interrogatory Numbers 6 and 10, and inadvertently failed to do so.
DEFENDANTS OBJECTIONS AND RESPONSES TO SPECIFIC REQUESTS FOR PRODUCTION 1. All documents regarding the IRSs disclosure and/or inspection of NOMs return and return information (including its 2008 Form 990, Schedule B), including documents relating to the Treasury Inspector General for Tax Administration's (TIGTA) Complaint Number 63- 1204-0051-C, as well as internal and external communications. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional Exhibit 10 - Page 17 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 18 of 30 PageID# 2224
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responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
2. All documents constituting communications to or from any individual working at the Department of the Treasury and/or the Internal Revenue Service-including but not limited to political appointees, employees, anyone within the Treasury Inspector Generals Office and independent contractors-relating to the inspection and/or disclosure of Plaintiff's return and return information. The communications sought are both internal communications within either the Internal Revenue Service or the Department of the Treasury and external communications between a person within either the Department of the Treasury or Internal Revenue Service and someone outside either agency, including but not limited to: reporters, persons working for other government agencies, other branches of the federal government including Congressional Committees, representatives of the national political parties, political candidates, elected federal officials, persons at non-profit entities, etc. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
3. All documents including and relating to training materials, written procedures, or other instructions concerning the review of requests for information about tax exempt Exhibit 10 - Page 18 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 19 of 30 PageID# 2225
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organizations that were provided to any individual(s) identified in response to Interrogatory Number 1, above. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
4. All documents containing any written instruction, formal or informal, by any individual working at the Department of the Treasury and/or the Internal Revenue Service- including but not limited to political appointees, employees, anyone within the Treasury Inspector Generals Office and independent contractors -- relating to the processing, screening, review and/or scrutiny of Form 990s based on the taxpayers political viewpoint, associate [sic] or affiliation or other categorization based on perceived public policy viewpoint by the taxpayer. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production.
5. Produce the Treasury Inspector Generals Report concerning the investigation into the disclosure of Plaintiffs return and/or return information, along with any supporting materials. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is Exhibit 10 - Page 19 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 20 of 30 PageID# 2226
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producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
6. Produce copies of all requests, if any, the IRS or Department of Treasury received for Plaintiffs Form 990 tax return and any response provided to any such requestor. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that, at the time of the events at issue, pursuant to then-operative IRS procedures, Forms 4506-A and letter requests for copies of Forms 990 were retained by the IRS for 45 days after work on the request was finished. Therefore, despite a diligent search, it has not located any documents that are responsive and relevant to this request.
7. Produce internal tracking documents reflecting the aggregate number of FOIA or other public information requests for Form 990s received and processed by the individuals identified in Interrogatory 1 that includes the number of requests received, the number of documents produced, the number of documents from which they properly removed confidential information before releasing any such properly requested document, the number of no information or denials provided, and statistics showing the average length of time for processing these various requests. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that pursuant Exhibit 10 - Page 20 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 21 of 30 PageID# 2227
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to IRS procedures operative into 2013, Forms 4506-A and letter requests for copies of Forms 990 were retained by the IRS for only 45 days after work on the request was finished and then destroyed. Therefore, despite a diligent search, Forms 4506-A or other requests for production of Forms 990 for earlier time periods could be not located. The United States further responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
8. Produce any correspondence within or between the IRS and the Department of Treasury or other government agencies or between the Executive and Legislative branches regarding the inspection and/or disclosure of Plaintiffs return and/or return information, including any correspondence related to the post-release internal investigation. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
9. Produce copies of any standard cover letters prepared for use by the Exempt Organizations Division that accompany the provision of any records or denial of production of Exhibit 10 - Page 21 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 22 of 30 PageID# 2228
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any records or the redaction of any confidential portions of such records, and any documents reflecting instructions for use of such cover letters. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents including sample 3983C letters along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
10. Produce copies of all signoff sheets, tracking devices, or documents related to any computer system access control and monitoring systems identifying those who accessed the database containing Plaintiffs confidential return and return information. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production.
11. Produce copies of all signoff sheets or tracking devices involved in tracking the response to the information request, if any, including the request referenced in Defendants initial disclosure, that allegedly led to the release of Plaintiffs confidential return and return information. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and Exhibit 10 - Page 22 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 23 of 30 PageID# 2229
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objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
12. All documents regarding any referral to the Department of J ustice and/or any of its components by the IRS or TIGTA (or any other federal agency or employee) for investigation of the inspection and/or disclosure of NOMs return and return information (including its 2008 Form 990, Schedule B). Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that the United States is producing the letter from the Department of J ustice to Wendy Peters included with the ROI.
13. All documents regarding the decision of the Department of J ustice and/or any of its components to charge or not charge any individual(s) in connection with the inspection and/or disclosure of NOM's return and return information (including its 2008 Form 990, Schedule B). Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that the United States is producing the letter from the Department of J ustice to Wendy Peters included with the ROI.
14. All documents that relate to your admission, whether supporting or undermining, that the IRS engaged in one inadvertent disclosure. See Answer, 105-08. Exhibit 10 - Page 23 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 24 of 30 PageID# 2230
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Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
15. All documents that relate to your contention, whether supporting or undermining, that the IRS engaged in no unauthorized inspections. See Answer, 112. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
16. All documents constituting communication between or among any employee, contractor or vendor of the United States and any third party (including, but not limited to Matthew S. Meisel or his counsel, the any officer, employee or vendor of or to Human Rights Campaign or its counsel, J eremy Hooper, Mr. Fred Karger) that relate to this lawsuit, the IRSs inspections and/or disclosures of NOMs return and return information (including its 2008 Form 990, Schedule B). Exhibit 10 - Page 24 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 25 of 30 PageID# 2231
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Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
17. All documents identified or referenced in response to NOMs interrogatory requests, and all documents to which you referred or otherwise used as a basis for responding to any of the interrogatory requests, whether or not specifically identified or referenced. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
18. All documents that relate to any factual claim or allegation made in your Answer, whether the document(s) support or undermine the factual claim or allegation. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Subject to those objections, the United States responds that it is producing responsive, relevant and non-privileged documents along with these responses and objections, and that it will supplement its production of such documents to the extent additional Exhibit 10 - Page 25 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 26 of 30 PageID# 2232
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responsive, relevant and non-privileged documents are located, and in accordance with the Federal Rules of Civil Procedure or this districts Local Rules.
19. All documents you intend to rely on at trial. Response: Defendant incorporates its objections dated J anuary 7, 2014 in its response to this request for production. Exhibit 10 - Page 26 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 27 of 30 PageID# 2233 Exhibit 10 - Page 27 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 28 of 30 PageID# 2234 Exhibit 10 - Page 28 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 29 of 30 PageID# 2235
11016338.2 CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on J anuary 27, 2014, I served the foregoing Objections and Responses to Plaintiffs First Discovery Requests on counsel of record below by electronic mail and by U.S. Mail addressed as follows:
J ason Brett Torchinsky Holtzman Vogel J osefiak PLLC 45 North Hill Drive Suite 100 Warrenton, VA 20186 540-341-8808 Fax: 540-341-8809 Email: jtorchinsky@hvjlaw.com
/s/ Philip Schreiber PHILIP M. SCHREIBER Trial Attorney, Tax Division U.S. Department of J ustice
Exhibit 10 - Page 29 of 29 Case 1:13-cv-01225-JCC-IDD Document 93-3 Filed 08/15/14 Page 30 of 30 PageID# 2236
In Re Samuel Derek Graham and Suzanne Genett Graham, Debtors. Samuel Derek Graham and Suzanne Genett Graham v. United States, 981 F.2d 1135, 10th Cir. (1992)
United States v. Robert A. Leventhal, Personally and in His Representative Capacity As Partner/officer of Leventhal & Slaughter, P.A., 961 F.2d 936, 11th Cir. (1992)