Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-04089/USCOURTS-cand-3_13-cv-04089-8/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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 The IRS filed identical petitions against the Soongs in two separate cases that were later

related by this Court. The Court’s prior orders have been entered on both dockets, and the motions

pending before the Court are identical and were filed in each case. For ease of citation, the Court’s

references to docket entries in this order are to entries on the docket in case number 13-cv-4088. 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Petitioner,

v.

WEN-BING SOONG,

Respondent.

___________________________________/

UNITED STATES OF AMERICA,

Petitioner,

v.

HSIN-JUNG SHIRLEY SOONG,

Respondent.

___________________________________/

No. C-13-4088 EMC

RELATED TO

No. C-13-4089 EMC

ORDER GRANTING PETITIONER

UNITED STATES OF AMERICA’S

MOTION FOR AN ORDER FINDING

RESPONDENTS IN CONTEMPT

(13-cv-4088, Docket No. 49;

13-cv-4089, Docket No. 46)

Currently pending before the Court are the Government’s identical motions for an order

finding Respondents Wen-Bing Soong and Hsin-Jung Shirley Soong in contempt of court for failing

to produce documents pursuant to an earlier order of this Court. There is no dispute that the

Soongs, who are husband and wife, have not produced any documents since this Court issued its

order on March 28, 2014. See Docket No. 43 (Enforcement Order).1

 Thus, the Court GRANTS the

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United States District Court

For the Northern District of California

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Government’s motions, finds the Soongs in civil contempt, and hereby FINES the Soongs $500 per

day ($1,000 per day collectively as a couple) that they remain out of compliance with this Court’s

order. As stated at the hearing on this matter, fines will begin to accrue on Friday, September 11,

2015, and shall continue to accrue on a daily basis thereafter until the Soongs comply with this

Court’s order. 

I. FACTUAL & PROCEDURAL BACKGROUND

The Government initiated this action on September 4, 2013, when the Internal Revenue

Service (IRS) filed a verified petition to enforce IRS summonses that had been issued to the Soongs. 

Docket No. 1. The identical summonses seek numerous categories of documents from the Soongs,

including foreign bank records and foreign brokerage or securities accounts records. Id. at 11. The

Government seeks these documents because the IRS believes that the Soongs failed to report

substantial earnings to the IRS during at least the 2004-2007 tax years, and have deposited

significant sums of undeclared income into foreign bank accounts and trusts. See id. at 2 (alleging

that the Soongs failed to report over $200 million in annual revenues earned from a privately held

corporation, and further alleging that the Soongs deposited at least $10 million in foreign bank

accounts without disclosure of such to the IRS in their tax returns). 

The Soongs moved the Court to dismiss the petitions on the basis that they had not been

properly served. Docket No. 19. The Court denied the motion (as reflected in a minute order) on

February 7, 2014, concluding that the government had established a prima facie case that the Soongs

were properly served at a home located in Union City, California, which home the Court found was

the Soongs’ dwelling or usual place of abode. See Docket No. 29 (minute order). The Court

ordered the Soongs to file – no later than February 20, 2014 – a substantive response to the petitions

to enforce summonses. See Docket No. 29. The hearing on the substantive response was set for

March 27, 2014.

One week before their substantive response was due, the Soongs filed a motion for an

interlocutory appeal. See Docket No. 32. More specifically, the Soongs asked the Court to certify

for an interlocutory appeal its order finding that the government had established a prima facie case

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 Powell requires the IRS to “‘show that [1] the investigation will be conducted pursuant to a

legitimate purpose, [2] that the inquiry may be relevant to the purpose, [3] that the information

sought is not already within the Commissioner’s possession, and [4] that the administrative steps

required by the Code have been followed.’” Action Recycling, 721 F.3d at 1144-45 (quoting Powell, 379 U.S. at 57-58).

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of proper service. A week later, on February 20, 2014, the Soongs filed their substantive response to

the petitions. See Docket No. 33. The substantive response simply reiterated the Soongs’

contention that the Union City address (where the IRS served the summonses and the petition for

enforcement in this action) is not their dwelling or usual place of abode, and thus they had not been

properly served.

Subsequently, briefing on the Soongs’ motion for an interlocutory appeal was completed and,

on March 10, 2014, the Court denied the Soongs’ motion. The Court determined that the Soongs did

not meet the standard to take an interlocutory appeal and further stated that, even if it were to

consider the motion as one for reconsideration, the motion would still be denied. See Docket No. 39

(order).

The Court held a hearing on March 27, 2014, regarding the merits of the IRS’s petitions to

enforce its summonses. Docket No. 42. The Court found that the IRS had met its burden to show

that the Court should enforce the summonses, and that the Soongs had failed to raise any substantive

basis for opposing the IRS’s petition to enforce. Enforcement Order at 1-6. Indeed, the Soongs

conceded that the IRS had satisfied the first three of four Powell factors that governed the IRS’s

motion to enforce its summonses. See id. at 3; see also United States v. Powell, 379 U.S. 48 (1964).2

Once again, the Soongs’ only defense was that the IRS failed to adequately serve them. 

Enforcement Order at 4. And once again, the Court rejected the Soongs’ argument regarding

service, finding that: (1) the Soongs received actual notice of the summonses and responded, which

would appear to satisfy the fourth Powell factor; and (2) estoppel bars the Soongs from asserting that

the Union City address (where they were allegedly served) is not their last and usual place of abode. 

Id. Thus, the Court granted the IRS’s petitions to enforce the summonses. Id. at 6. 

The Soongs filed a notice of appeal of this Court’s Enforcement Order on May 19, 2014. 

Docket No. 46. The Soongs’ appeal is currently pending before the Ninth Circuit. See Ninth Circuit

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United States District Court

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 The Court notes that the Soongs requested and received three extensions to the deadline to

file their opening brief from the Ninth Circuit motions panel, despite the fact that the sole argument

raised on appeal – personal jurisdiction – is fairly straightforward and had been pressed repeatedly

before this Court. 

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Case No. 14-15987. According to the Ninth Circuit docket briefing was completed on February 26,

2015, but as of the date of this order, the appeal has not yet been calendared for oral argument.3

 The

Soongs never filed a motion for a stay of this Court’s Enforcement Order either in this Court or in

the Ninth Circuit. There is no dispute that the Soongs have not produced any of the documents or

records listed in the IRS summonses that this Court enforced via its Enforcement Order.

II. DISCUSSION

“A court has the inherent power to punish for civil or criminal contempt any obstruction of

justice relating to any judicial proceeding.” Lambert v. Montana, 545 F.2d 87, 88 (9th Cir. 1976)

(citing United States v. Wilson, 421 U.S. 309 (1975)). As the Supreme Court has explained, civil

contempt sanctions are “designed to compel future compliance with a court order, are considered to

be coercive and avoidable through obedience, and thus may be imposed in an ordinary civil

proceeding upon notice and an opportunity to be heard. Neither a jury trial nor proof beyond a

reasonable doubt is required.” Int’l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821,

827 (1994). 

As the Supreme Court has explained, where the IRS seeks civil contempt sanctions against a

party who has failed to produce records in accordance with a Court order enforcing IRS summonses,

the “government, in a contempt proceeding, meets its initial burden by showing only a failure to

comply” with the Court’s order. United States v. Rylander, 460 U.S. 752, 755 (1983). If the

Government shows that the alleged contemnor has not complied with the Court’s order, the “burden

is then on the defendant to come forward with evidence showing categorically and in detail why he

is unable to comply.” Id. (internal quotation marks and citation omitted); see also id. at 760-61

(explaining that a taxpayer was properly found “in contempt for failure to comply with a previous

order of the District Court enforcing an IRS summons against him” where the taxpayer was unable

to show that he was unable to comply with the order). 

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Here, the Soongs do not dispute that they have not complied with this Court’s Enforcement

Order. See Docket No. 53 (Opposition Brief) at 2 (acknowledging “the Soongs’ failure to comply

with the Enforcement Order”). Rather, the Soongs maintain that this Court cannot find the Soongs

in contempt because this Court has no jurisdiction over the Soongs. The Soongs make two

arguments. 

First, they seem to suggest that this Court does not have jurisdiction to find them in contempt

of this Court’s Enforcement Order because the Soongs’ appeal of that Order is currently pending

before the Ninth Circuit. However, it is well established that a district court “retain[s] a limited

equitable jurisdiction to enforce its orders” even after a notice of appeal has been filed. Kelley v.

C.I.R., 45 F.3d 348, 351 n.5 (9th Cir. 1995); see also Hoffman v. Beer Drivers & Salesmen’s Local

Union No. 888, 536 F.2d 1268, 1276 (9th Cir. 1976) (holding that an appeal from a district court

order does not divest the district court of jurisdiction to enforce its order). Or, as the Sixth Circuit

has held, “[w]here, as here, the district court is attempting to supervise its judgment and enforce its

order through civil contempt proceedings, pendency of appeal does not deprive it of jurisdiction for

these purposes.” Island Creek Coal Sales Co. v. City of Gainesville, 764 F.2d 437, 440 (6th Cir.

1985). Thus, the Court finds that it retains the authority to enforce compliance with its order

irrespective of the fact that the Soongs’ appeal of the Enforcement Order is currently pending. 

Alternatively, the Soongs again argue that this Court lacks personal jurisdiction over them

because they are currently living abroad, and any attempted service on them at their Union City

home was improper and legally ineffectual. See Opp. Br. at 4. Thus, the Soongs contend that “there

is no personal jurisdiction for the district court until the Ninth Circuit says there is. Absent a final

determination that this Court has jurisdiction over the Soongs, there is no jurisdiction to support the

issuance of a Contempt Order.” Id. (emphasis in original). The Soongs have the law backwards. As

the Supreme Court has squarely held, “[i]t would be a disservice to the law if we were to depart from

the long-standing rule that a contempt proceeding does not open to reconsideration the legal or

factual basis of the order alleged to have been disobeyed and thus become a retrial of the original

controversy.” Rylander, 460 U.S. at 756 (quoting Maggio v. Zeitz, 333 U.S. 56, 69 (1948)). Or, as

the Ninth Circuit has stated this basic principle of law: “Disagreement with the court is not an

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excuse for failing to comply with court orders.” Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406,

1412 (9th Cir. 1990); see also Hyde & Drath v. Baker, 24 F.3d 1162, 1168 (9th Cir. 1994) (same). 

This Court has already determined that it does have jurisdiction over the Soongs, and until the

Soongs prove otherwise, they are obligated to comply with this Court’s orders. See Adriana, 913

F.2d at 1412. If the Soongs did not want to comply with this Court’s Enforcement Order pending

their appeal, they should have sought a stay of this Court’s order either in this Court or before the

Ninth Circuit. Having failed to do so, however, the Soongs have no valid excuse for failing to

comply with the unambiguous command of this Court. The Soongs must produce the documents the

IRS has requested in its summonses. 

Because it is undisputed that the Soongs have not complied with this Court’s Enforcement

Order, and because it is beyond doubt that the Soongs have no valid excuse for this failure, the Court

finds clear and convincing evidence that the Soongs are in contempt. Balla v. Idaho State Bd. of

Corrections, 869 F.2d 461, 466 (9th Cir. 1989) (“As we have previously stated, civil contempt is

appropriate when a party fails to comply with a specific and definite court order.”) (citations

omitted). In its motion, the Government asks this Court to impose a coercive fine on the Soongs in

an effort to gain their compliance with this Court’s Enforcement Order (i.e., to get the Soongs to

produce the documents requested by the IRS in its summonses). Where the Court issues a fine in an

effort to gain the contemnor’s compliance with one of the Court’s orders, the Supreme Court has

held that the fine amount must take into account “the character and magnitude of the harm

threatened by continued contumacy, and the probable effectiveness of any suggested sanction in

bringing about the result desired.” Unites States v. United Mine Workers of Am., 330 U.S. 258, 304

(1947); see also Whittaker Corp. v. Execuair Corp., 953 F.2d 510, 516 (9th Cir. 1992). “[I]n fixing

the amount of a fine to be imposed as a . . . means of securing future compliance, [the Court should]

consider the amount of defendant’s financial resources and the consequent seriousness of the burden

to that particular defendant.” United Mine Workers, 330 U.S. at 304. 

Here, the Court believes that a coercive daily fine should be imposed on the Soongs for each

day they remain out of compliance with this Court’s Enforcement Order. See Bagwell, 512 U.S. at

829 (explaining that civil contempt fines may be imposed to ensure compliance with a Court order

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so long as the contemnor has a “subsequent opportunity to reduce or avoid the fine through

compliance”). The Court finds that a fine of $500 a day per spouse (or $1,000 a day collectively as a

couple) payable to the Court is the appropriate fine amount. The Soongs’ appear to have

tremendous financial resources – the IRS has stated that the Soongs’ privately held corporation

earned revenues in excess of $200 million annually, and the Soongs apparently deposited at least

$10 million in a foreign bank account – and thus a lesser fine amount is unlikely to secure their

compliance with this Court’s order. Moreover, the Court believes this fine amount is appropriate in

light of the lengthy period of non-compliance with the IRS’s summonses, and the risk that further

delay will prejudice the IRS’s investigation if the evidence sought in its summonses is lost or

destroyed. The Soongs have made no effort to comply with this Court’s order for nearly a year-anda-half, and have refused to comply with the IRS investigation for years before that. The Soongs’

should not be permitted to put off compliance any longer. 

III. CONCLUSION

The Soongs admit that they have not complied with this Court’s Order Enforcing the IRS’s

document summonses. Thus, the Soongs are in contempt. Beginning Friday, September 11, 2015,

the Soongs shall pay a daily fine to the Clerk of Court in the amount of $500 per person ($1,000

total) until they come into substantial compliance with this Court’s order. 

This order disposes of Docket Nos. 46 and 49. 

IT IS SO ORDERED.

Dated: September 3, 2015 _________________________

EDWARD M. CHEN

United States District Judge

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