mr canada versus you know the morning air honors we are the disk a supply of oil in the district for judge show or who is fairly new at the time so when this case was assigned to her she thought this is going to be a doozy canada versus the united states climbs and other climbs against the internal revenue service and three individual internal revenue service officers and agents under why or any remedy to contest those taxes in a court of law as a result most canada suffered substantial damages he was forced into a chapter eleven bankruptcy case  the district court for those constitutional violations and his claims were to nothing in this argument i will address three issues st whether following the supreme court's address the district court's decision on qualified immunity whether in the context of this case there was a clearly established constitutional right that was violated and whether the individual officers involved knew that that right was violating was violated and they were in fact violating it when they set the penalty at such a level that they knew he could not pay it could not get to a court of law and finally would try to address if time allows the issue of whether mr canada's timely sought the recovery of tourney's phase under the internal revenue code because the government's position was not substantially was granted and is pending before the u s supreme court do you think that we should await the outcome of that decision before deciding your case guy case was argued i think within the last pressing other than his desire to proceed in this case one you know one way or another that would caution against waiting for that from the gods well i'm not i'm i'm not going to suggest trying to tell this court what to do me you've asked me the question should we wait on our usual rule is we follow our existing precedent unless and until the supreme court reverses it my question was more do you think there's something cor in her manner other than it just generally is dealing with bivins is there something in there that you really think will or would impact the determination of whether mr canada has a bit of ins action in this case i'm sorry i may have misunderstood your question actually no i  aspects of that case the border protection the national security the officers involved the facts of the federal government you know conducted investigation of the officers actions and so forth i think i think that case is something different that i don't really think you need to but i do think we would get guidance and some of the they perhaps some of the issues that are here such as because it seems to kind of go to the core it seems like the main problem that mr canada face is the reality that he had very limited means to attack this penalty and that is not caused by these individual agents that was caused by congress so how is it that there should be a bit in saxon against iris agents for something congress elected to do the language of federal statutes they intentionally ignore how you calculate tax penalties in order to get to a penalty that was so high that needed mr canada nor most united states citizens could ever go to court to challenge the penalty and they knew that if you set the penalty high enough and he's not able to contest a judicially he would have no choice but to resolve the penalty of paying them some money even though it may be totally invalid which in this case to federal court said it was or he would have to suffer the risk of year after year of losing his problems it's the intention and the knowing actions by the i r s agents of ignoring the statutes ignoring how you only way we were able to get there your honor was by filing a chapter eleven bankruptcy case and getting a bankruptcy court which was the only court that could even review what the i r s and done to examine the facts examine the statute issue a thirty seven page opinion which was later firm by judge while in the district court i would say suggest that requiring someone to see chapter eleven bankruptcy in order to get your day in court is not the type of of post or pre could have taken his property under a jeff jeopardy assessment so long as he had a right there after to get to a court room and prove to a judicial officer that the i r s actions were improper he could be claims property you don't have to have a hearing before they assess it but he ought to have a hearing after they assess it before they start taking his property i think that is not up to the agent  again you're somewhat just challenging the statute which i understand i think it's a fairly you know and wasn't statute to the average taxpayer but that said that isn't the agent's call they're not they can't change the statute that's something you have to go to congress and try to get change or challenge the statute directly successfully or unsuccessfully saying it you know fails to give due process or whatever the challenges i guess i don't understand why an agent enforcing  absence of statute is something that can justify a business clyne even if you don't like the way they did it the statute the internal revenue statutes have there is a fa this court and rather for many many years ago and dick to recognize that if we have i r s agents and in total disregard of their obligations total disregard of their tax laws go out and harass and and secretly you know are oppressive collection that they may be subject to bevan's congress fix than a few years later with a statutory amendment unfortunately that amendment did not pick up anneliese as opposed to taxes so there's a glitch in the tax laws we're not hearing necessarily complaining about that glitch we're here complaining and believe that there's a remedy under bevan you calculate these pumping ignore whether this was in fact a tax shelter that mr canada was involved with and basically go out and targeted mr canada as some was who was whatever it's a very complex area of the law and that's why people go and get l o m since specializing in it and given that i could see an iris agent getting it wrong and being told they got it wrong and if we create a bit of ins claim for that proceed you understand it because i can wear appellate judges we don't have a whole lot of discretion we still don't really want to be sued because we were reversed by the supreme court ok or something of that nature and the problem is it it quells your ability to do your job so that's the dance the rub in part in analyzing this bit is it's one it's not the only one but it is one and i'm just trying to understand that here that's sick that's why i don't believe there's any special factors here that would  constitution of the united states and if i don't abide by the constitution of the united states this statute says mr canada whoever the taxpayer is can bring kline's and there's no evidence in this improperly assessing the penalties were those rights extended by reason of his bankruptcy case we suggest they are because one away specifically provides for an extension of the bankruptcy code and to the extent that you're suits would unduly disrupt the government's ability to enforce the tax nd in the alternative individual dependents or until the qualified immunity where no court had at the time recognized the due process lie lation under the circumstances presented here in the individual defendant's i q we found qualified immunity in hernandez and that was not satisfactory to the supreme court they sent it back to us to address the move and so i guess i'm wondering you know ordinarily it is acceptable to say well even if there was a cause of action they have qualified immunity here but i just i don't know what to make of the hernandez situation you want to address that i'm not sure i understand the question your honor in terms of whether this court can actually proceed e one of the other st but it is possible to read the screen court's decision in hand as requiring the court to st address the separation of powers issue in terms of whether to extend divisions and then proceed to a qualified immunity issue although we would submit that it doesn't really make a difference because they are in decline or you think you win either way but we have to write an opinion and understood your honor carries on that well so then on the bevins question this is a very punitive statute with very limited remedies if you don't have billions of dollars in your pocket and so how are you supposed to deal with that as an individual if you have an iris agent let's say it was true that iris age was just out to get you and just trying to squeeze every last dollar out of you on a completely false penalty let's just assume all of that is true i know you would dispute that but let's assume that what is your remedy is the taxpayer sure so and let me address in a couple parts so you're right that as part of the way that this penalty isn't acted by congress there are limited remedies available and that's partially because of the way that because the type that congress has carved out a tax code using is not available for this particular penalty a prepayment form it's also linked the amount of the penalty not to the amount that the promoter earned from from owning a shelter or to the promoters net worth of linking it rather to the aggregate amount invested in the tax shelter which can be very substantial number as it was in this  case but there are still remedies that are available even putting aside the possibility of a refund suit with the in digital can't pay that the that the individual still has at a minimum they can get iris appeals which is an independent form that has been held to an independent think you were involved in promoting us on a boss tax shelter twenty years ago that's how it would happen with mr canada but in that situation there are other safeguards as well for taxpayers one of which is suggested by the supreme court's decision and if there is no basis whatsoever for the iris assessment then presumably a taxpayer could win under that standard and then we would initially note that these aren't the only safeguards that are available to curtail any agency in claim its conduct as a nd circuit valley black press there's also the bail ability of having the independent inspector general conduct an investigation of virus and play misconduct if an iris employee is counted have committed misconduct for the purpose of retaliation  scenarios and want more on the subject of attorney's fees i guess i'm wondering this notion that his ride to the fees didn't come in until close petition even if his claim arose pre partition makes me wonder you know innocence in a case a standard case a reacher contract case you breached the contract i therefore wasn't able to keep my business going so i went into bankruptcy now i'm i'm suing you for that that's clearly a pre petition event the breach of contract and it comes with that a writer attorney's fees and i'm thinking in texas and maybe that's not obvious i'm thinking under texas law you are right to attorney's fees that would be part of your  lawsuit you would raise it as part of that lawsuit you're incurring those attorneys fees from beginning to end and then you recover all of them obviously you have to be a prevailing party but that's sort of true on the breach of contract to get damages for breach of contract you also have attorney's fees for the bankruptcy courts decision typically taxpayers wait until the appeals have run because that's when the thirty dollars day clock runs and it makes sense to do it all in one swoop rather than piecemeal and having to wait and see for you to be reversed we believe to be a particularly good fit on the circumstances ok but what do you do about the fact that the cause of action was originally part of the bankruptcy estate but then was transferred to him under the reorganization yes your honor so it's stating that claimed as as estate property he chose not to do that for whatever strategic or beneficial reasons he thought it was better to how this request and him as a really nice debtor that was a choice you could have had the estate retained that claim but as a waiver of sovereign immunity this with the claim as we go through the world so that you don't it doesn't kind of keep coming and going you was waived now time away and so on how do you respond to that we would submit that is a prerequisite to subject matter jurisdiction subject matter jurisdiction is only  and that it doesn't just suddenly disappear when the cause of action gets sent back to him i appreciate the argument your honor i don't think that it's appropriate to discuss whether there is or is not a waiver of sovereign immunity when there immunity as to the lawsuit he's saying it says to the claim and the claim that was so he could bring the lawsuit in district court and assert something else and there wouldn't be a waiver summer immunity on that but that this particular claim was wai what's wrong with that argument we think that ultimately it has to be decided the time that the students file but that's that when you're looking at saddam immunity you're looking at the time that the claim is brought at the time that the suit is filed because it's subject matter jurisdiction which must exist at the time that the s under one of six be that being said that's that's the way we think is the best reading of the statute and the best way to strictly construe the waiver in favor of the government as support present allegation there was that a woman who was in the country illegally had been removed from the country after being coerced into waiting her due process rights and after telling the border and customs officials that she feared for her life because her boyfriend who was in a drug cartel had threatened her when she was removed to mexico she was in fact killed by that boyfriend and her children brought a business suit saying that they were entitled to damages for the loss of their mother this court found the special factor counseling hesitation against extended ns was the remedial scheme offered the copper his free meal scheme governing removal and deportation proceedings notwithstanding that that particular remedial scheme did nothing to remediate the particular injury that was alleged by the place today in that case to suggest in that regard rather for it is certainly no longer good law secondly rather for it also appeared to be concerned that deliberate employing misconduct could be a basis for looking harder at whether in other cases involving allegations of intentional misconduct in the tax context include shriver from the rd circuit which involved allegations of religious and amiss in the assessment process and then judicial watch from the th circuit involving allegations of viewpoint collection now the writs as discussed in the hudson valley black press at the time there was no there was no statute that provided for determination of employees who engaged him in misconduct for the purpose of retaliation or harassment now there is at the time there was not yet a in and iris appeals office that was by law independent of the examination and collection functions now there is there also not available that point in time collection due process procedures which again have been added articulated by this court in cronin is whether a federal employee is performing on ministerial acts within the bounds of his official capacity here and in that case what the employees were doing where they were adjudicating food stamp out with patients determining whether and  what extent people were entitled to food stamp benefits and in doing so at the port noted that they had to take statutes and regulations and apply them to concrete factual circumstance that was considered to be a discretionary function even though it was bounded by whether and what amount mr cantor was liable for a penalty and then obviously we would submit that there was no clearly established law suggesting that this is the due process violation of the circumstances and in fact larsen case from the nd circuit held on to what ken admits are similar facts a similar case that there was need to know due process violation when a promoter penalty was assessed in amounting in excess of what the promoter was able to pay and seek review  that's not only true in this case but we intend to prove it at trial if we can get to trial this case was brought home way after discovery in the bankruptcy court proceeding where we learned as to why mr canada was targeted we learned what the i r s agents that we don't learn what their pattern was and we learned that they intentionally did this so that he couldn't go to court and challenge their action and they could benefit from it with respect to any really need to be settling with us instead of wasting your time that's in litigation always go to court but we're going to we're not standard operating procedure that is that that may be true your honor but certainly in this case mr cantor's lawyers understood that that meant that you really didn't have an independent agency appellate division that was going to look at  this and provide the relief or provide a substitute an adequate substitute for an independent judicial review with respect to the comment that until the i r s assessed these penalties and filed a claim in the bankruptcy case mr canada had no ability in his bankruptcy case to contest or get a rip that's simply not true sections five hundred and five of the bankruptcy code is a section that says the bankruptcy court jurisdiction over tax matters and a bankruptcy case of this nature and mr canada could have filed a motion under that section that would give the court jurisdiction to make a determination reviewable by the courts and fortunately if we cut your honor trust me we would have done that and tried to get an injunction against collection in the meantime so we could not with respect to the i mean all our attorneys face trustee or by a representative of the estate appointed for such purpose of any claim or interest blowing to the debtor or to the estate in other words what that statute says is that when you come out of bankruptcy under a plan cited to where it's a public record in the bankruptcy court this plan says and i have eleven seconds real quick plan says you're keeping it you get to sue the i r s going to get your character attorney's fees back in the news all that money to pay your creditors that's binding on arguments on today's cases we will resume tomorrow morning at eight forty five a