Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_07-cv-00620/USCOURTS-caed-1_07-cv-00620-9/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 42:1981 Civil Rights

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The factual history is provided for background only and does not form the basis of the 1

court’s decision; the assertions contained therein are not necessarily taken as adjudged to be true. 

The legally relevant facts relied upon by the court are discussed within the analysis. 

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

GLEN HALLIDAY, MICHAEL S. )

IOANE, SR., SHELLY IOANE, )

ASHLEY M. IOANE, MICHAEL S. )

IOANE, JR., ) 

)

Plaintiffs, )

)

v. )

)

KENT R. SPJUTE, JEAN NOLE, JEFF )

HODGES, BRIAN APPLEGATE, )

MICHELLE M. CASAREZ, UNKNOWN)

DOES 1-20, AND THE UNITED STATES)

OF AMERICA, )

)

Defendants. )

____________________________________)

CIV F-07-0620 AWI GSA

ORDER RE: MOTION TO DISMISS

OR IN THE ALTERNATIVE FOR

SUMMARY JUDGMENT

I. History1

Plaintiffs Michael Ioane Sr., Shelly Ioane, Ashley Ioane, and Michael Ioane Jr. live at

1521 Fruitland Ave., Atwater, CA. Plaintiffs are involved in tax disputes with Defendant United

States. Additional Defendants Kent Spjute, Jean Nole, Jeff Hodges, Brian Applegate, and

Michelle Casarez are Internal Revenue Service agents (“Federal Agents”). Based on the affidavit

of Kent Spjute, the United States was able to obtain a search warrant for Plaintiffs’ residence. 

The search was carried out by the Federal Agents on June 8, 2006. The precise relationship of

Plaintiff Glen Halliday to this case is unclear. 

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Plaintiffs filed suit on April 20, 2007. Doc. 1. They filed an amended complaint as a

matter of right on January 14, 2008. Doc. 39. In the operative complaint, Plaintiffs allege

violations of their First, Fourth, and Fifth Amendment against all Defendants. Plaintiffs allege

the Federal Agents were under the supervision of Defendant Does who failed to adequately

instruct, control, and/or discipline Federal Agents for their conduct. They also allege the United

States disclosed tax information about the Plaintiffs to third parties in violation of 26 U.S.C.

§6103. Appended to the complaint is a copy of the warrant in question.

The matter is now before the court on Defendants motion to dismiss the complaint for

lack of jurisdiction, failure to state a claim, and qualified immunity. Doc. 44. Defendants have

submitted a statement of undisputed material facts and declarations, asking in the alternative for

the motion to be converted to summary judgment. Plaintiffs oppose the motion and any attempt

to convert it into a summary judgment. Doc. 45. The matter was taken under submission without

oral argument. Doc. 47. 

II. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6), a claim may be dismissed because of the

plaintiff’s “failure to state a claim upon which relief can be granted.” A dismissal under Rule

12(b)(6) may be based on the lack of a cognizable legal theory or on the absence of sufficient

facts alleged under a cognizable legal theory. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.

2001). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed

factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’

requires more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do. Factual allegations must be enough to raise a right to relief above the

speculative level, on the assumption that all the allegations in the complaint are true (even if

doubtful in fact).” Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007), citations

omitted. The court is not required “to accept as true allegations that are merely conclusory,

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unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors,

266 F.3d 979, 988 (9th Cir. 2001). The court must also assume that “general allegations embrace

those specific facts that are necessary to support the claim.” Lujan v. Nat’l Wildlife Fed’n, 497

U.S. 871, 889 (1990), citing Conley v. Gibson, 355 U.S. 41, 47 (1957), overruled on other

grounds at 127 S. Ct. 1955, 1969. Thus, the determinative question is whether there is any set of

“facts that could be proved consistent with the allegations of the complaint” that would entitle

plaintiff to some relief. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002). At the other

bound, courts will not assume that plaintiffs “can prove facts which [they have] not alleged, or

that the defendants have violated...laws in ways that have not been alleged.” Associated General

Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526

(1983). 

In deciding whether to dismiss a claim under Rule 12(b)(6), the Court is generally limited

to reviewing only the complaint. “There are, however, two exceptions....First, a court may

consider material which is properly submitted as part of the complaint on a motion to dismiss...If

the documents are not physically attached to the complaint, they may be considered if the

documents’ authenticity is not contested and the plaintiff’s complaint necessarily relies on them.

Second, under Fed. R. Evid. 201, a court may take judicial notice of matters of public record.”

Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), citations omitted. The Ninth

Circuit later gave a separate definition of “the ‘incorporation by reference’ doctrine, which

permits us to take into account documents whose contents are alleged in a complaint and whose

authenticity no party questions, but which are not physically attached to the plaintiff’s pleading.”

Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005), citations omitted. “[A] court may not

look beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition

to a defendant’s motion to dismiss. Facts raised for the first time in opposition papers should be

considered by the court in determining whether to grant leave to amend or to dismiss the

complaint with or without prejudice.” Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003),

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citations omitted.

If a Rule 12(b)(6) motion to dismiss is granted, claims may be dismissed with or without

prejudice, and with or without leave to amend. “[A] district court should grant leave to amend

even if no request to amend the pleading was made, unless it determines that the pleading could

not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th

Cir. 2000) (en banc), quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). In other

words, leave to amend need not be granted when amendment would be futile. Gompper v. VISX,

Inc., 298 F.3d 893, 898 (9th Cir. 2002).

III. Discussion

A motion to dismiss may be converted to one for summary judgment when “a party has

notice that the district court may look beyond the pleadings.” Hamilton Materials Inc. v. Dow

Chem. Corp., 494 F.3d 1203, 1207 (9th Cir. 2007), citations omitted. The court declines to

convert the motion into one for summary judgment and so does not consider the declarations and

statement of material facts submitted as part of this motion. 

A. Subject Matter Jurisdiction

Plaintiffs seek “An injunction against the defendant’s continued possession of the

equipment, property, and records seized, especially First Amendment protected materials, and an

order directing them to be returned to plaintiffs.” Doc. 39, Amended Complaint, at 6:16-18. 

Defendants argue that Plaintiffs have articulated a Bivens claim against Defendant United States. 

The United States has not waived sovereign immunity for Bivens causes of actions; no such

claim may be pursued. Cato v. United States, 70 F.3d 1103, 1110 (9th Cir. 1995). Suits against

individuals in their official capacity must be construed as suits against the government entity

itself. Kentucky v. Graham, 473 U.S. 159, 165-66 (1985). Plaintiffs argue that “there is nothing

in the complaint which indicates the individual defendants do not still have the seized property in

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their possession, [therefore] they would be proper parties to the instant action for the injunction.”

Doc. 45, Plaintiffs’ Opposition, at 22:7-9. To the extent that Plaintiffs seek to recover possession

of the contested items under Bivens, the claim is limited and must be construed as requesting that

form of relief against the Federal Agents in their individual capacity. 

B. First Cause of Action- Fourth Amendment Specificity Requirement

The Fourth Amendment of the U.S. Constitution states that warrants must “particularly

describ[e] the place to be searched, and the persons or things to be seized.” “In order for a search

to be reasonable, the warrant must be specific. Specificity has two aspects: particularity and

breadth. Particularity is the requirement that the warrant must clearly state what is sought.

Breadth deals with the requirement that the scope of the warrant be limited by the probable cause

on which the warrant is based.” In re Grand Jury Subpoenas, 926 F.2d 847, 856-57 (9th Cir.

1991), citations omitted. The two concepts, while closely related, are distinct. Unfortunately,

courts are not always careful with these terms and have often conflated the two concepts. “[T]he

specificity required in a warrant varies depending on the circumstances of the case and the types

of items involved. Warrants which described generic categories of items are not necessarily

invalid if a more precise description of the items subject to seizure is not possible. In determining

whether a description is sufficiently precise, we have concentrated on one or more of the

following: (1) whether probable cause exists to seize all items of a particular type described in

the warrant; (2) whether the warrant sets out objective standards by which executing officer can

differentiate items subject to seizure from those which are not; and (3) whether the government

was able to describe the items more particularly in light of the information available to it at the

time the warrant was issued.” United States v. Spilotro, 800 F.2d 959, 963 (9th Cir. 1986),

citations omitted. “The uniformly applied rule is that a search conducted pursuant to a warrant

that fails to conform to the particularity requirement of the Fourth Amendment is

unconstitutional.” Massachusetts v. Sheppard, 468 U.S. 981, 988 n.5 (1984), citations omitted. 

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Plaintiffs allege that the search warrants are insufficiently particular due to a combination

of the following factors: (1) the failure of the warrants to cite any violation of federal law, (2) the

lack of affidavits accompanying the execution of the warrants, and (3) the wide scope of items to

be seized. See Doc. 39, Amended Complaint, at 2:19-3:1. Plaintiffs also claim “the warrant was

overbroad.” Doc. 39, Amended Complaint, at 3:2. Defendants argue that the warrants are

sufficiently specific on their face, or in the alternative, that qualified immunity applies. Doc. 44,

Part 2, Defendants’ Brief, at 7:17-9:10 and 18:4-26. 

At this motion to dismiss stage, the court evaluates the claim solely based on the

complaint, appended material, and judicially noticeable facts. Notably lacking from the record

thus far are the probable cause affidavits supporting the warrants. When evaluating whether the

specificity requirement is met, context is important. Past precedent “requir[es] courts to consider

the totality of circumstances in determining the validity of a warrant. One of the crucial factors to

be considered is the information available to the government. ‘(Generic) classifications in a

warrant are acceptable only when a more precise description is not possible.’” United States v.

Cardwell, 680 F.2d 75, 78 (9th Cir. 1982), quoting United States v. Bright, 630 F.2d 804, 812

(5th Cir. 1980). The warrant authorizes seizures of large categories of records relating to a

number of individuals/entities “plus persons or entities unknown.” Doc. 39, Amended

Complaint, at 13. Plaintiffs have clearly stated both particularity and breadth claims. As key

facts are currently unknown, the court cannot make a qualified immunity determination at this

time.

C. Second Cause of Action- Fifth Amendment

Plaintiffs allege that they were deprived of “property in violation of their right to due

process.” Doc. 39, Amended Complaint, at 3:22-23. They specified that they “are complaining

about the deprivation of their property without due process of law (i.e. a pre-deprivation or postdeprivation hearing).” Doc. 45, Plaintiffs’ Opposition, at 16:3-6. Defendants argue the Fifth

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Amendment claim is purely duplicative of the Fourth Amendment claim. Plaintiffs correctly

point out that “Certain wrongs affect more than a single right and, accordingly, can implicate

more than one of the Constitution’s commands. Where such multiple violations are alleged, we

are not in the habit of identifying as a preliminary matter the claim’s ‘dominant’ character.

Rather, we examine each constitutional provision in turn.” United States v. James Daniel Good

Real Prop., 510 U.S. 43, 50 (1993), quoting Soldal v. Cook County, 506 U.S. 56, 70 (1992).

However, the Fourth Amendment has been read as generally specifying the due process

afforded in criminal investigations. See Gerstein v. Pugh, 420 U.S. 103, 125 n.27 (1975) (“The

Fourth Amendment was tailored explicitly for the criminal justice system, and its balance

between individual and public interests always has been thought to define the ‘process that is

due’ for seizures of person or property in criminal cases”). This overall dovetailing of Fourth

and Fifth Amendment concerns applies where materials are seized and held as evidence rather

than forfeited. Cf. United States v. James Daniel Good Real Prop., 510 U.S. 43, 51-52 (1993) (“It

is true, of course, that the Fourth Amendment applies to searches and seizures in the civil context

and may serve to resolve the legality of these governmental actions without reference to other

constitutional provisions. But the purpose and effect of the Government’s action in the present

case go beyond the traditional meaning of search or seizure. Here the Government seized

property not to preserve evidence of wrongdoing, but to assert ownership and control over the

property itself. Our cases establish that government action of this consequence must comply with

the Due Process Clauses of the Fifth and Fourteenth Amendments”), citations omitted. The U.S.

Supreme Court has said, “when law enforcement agents seize property pursuant to warrant, due

process requires them to take reasonable steps to give notice that the property has been taken so

the owner can pursue available remedies for its return.” City of W. Covina v. Perkins, 525 U.S.

234, 240 (1999). Aside from the requirement of notice, no due process rights independent of

Fourth Amendment protections have been specifically articulated by the courts. Plaintiffs do not

allege any lack of notice or that the property seized was subject to forfeiture. As the search and

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Plaintiffs object that “Since there are no allegations in the complaint (or even in the 2

search warrants themselves), about any ‘criminal investigation,’ any argument about such

investigation is beyond the permissible bounds of a facial attack on the complaint under Rule

12(b)(6).” Doc. 45, Plaintiffs’ Opposition, at 18:15-18. While Plaintiffs do not state they are the

target of a criminal tax investigation, review of the complaint and appended material leaves no

other reasonable inference possible. The Federal Agents are all IRS officers. Doc. 39, Amended

Complaint, at 6:2-3. The search warrant was issued to “Kent R. Spjute, Special Agent, Internal

Revenue Service, Criminal Investigation Division.” Doc. 39, Complaint, at 8. 

8

seizure was undertaken pursuant to a criminal investigation, Fifth Amendment due process 2

evaluation in this case folds into the Fourth Amendment evaluation. See Sanders v. City of San

Diego, 93 F.3d 1423, 1429 (9th Cir. 1996) (“when seizing property for criminal investigatory

purposes, compliance with the Fourth Amendment satisfies pre-deprivation procedural due

process as well”); Wilkinson v. Hallsten, 2006 U.S. Dist. LEXIS 53822, 22-23 (W.D.N.C. 2006)

(“The Fourth Amendment is the Plaintiffs’ shield from violations of due process in the setting of

a criminal seizure. As discussed above, no Fourth Amendment violations occurred in the

issuance or execution of this warrant for search and seizure, and as such no Fifth Amendment

due process violations may be asserted”).

D. Third Cause of Action- Excessive Force and Bodily Privacy

Defendants argue the amended complaint fails to state a Fourth Amendment Bivens

action as “Plaintiffs do not allege any personal involvement of any of the [Federal Agents] for

most of the alleged wrongs. The [Federal Agents] are merely listed by their names in the opening

of the Amended Complaint.” Doc. 44, Part 2, Defendants’ Brief, at 6:4-6. 

With regards to excessive force, Plaintiffs did state,

10. On June 8, 2006 the named individual defendants (SPJUTE, NOLL, HODGE,

APPLEGATE, CASAREZ) and at least five other unknown DOE agents appeared at

plaintiffs’ leased residential building...to execute an alleged search warrant.

....

24. The defendants had no valid reason to believe the plaintiffs or any other residents of

the property were armed or dangerous. 

25. On rushing through the door, the agents had guns drawn and pointed them in a

threatening manner at the heads of both Michael and Shelly Ioane without reason or

provocation, and intended to cause and did cause these plaintiffs to fear for their lives. 

26. Although plaintiff Shelly Ioane was unarmed, and frantically screaming and crying for

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help, defendant Applegate continued approaching her and pointing his gun at her beyond

any amount of time it might take for a reasonable person to determine she was unarmed

and no threat to anyone. 

27. Defendant Applegate’s behavior was so unnecessary that one of the female agent

defendants screamed at him at least three times to put away his gun, and had to continue

screaming at him at the top of her voice until he finally did so.

....

30. The actions of the defendants were a use of unnecessary and excessive force in

violation of plaintiff’s Fourth Amendment rights.

Doc. 39, Amended Complaint, at 2 and 4. At minimum, the amended complaint must be read to

allege that Federal Agents pointed guns at the heads of Michael and Shelly Ioane, who were

unarmed. “We have held since 1984 that pointing a gun at a suspect’s head can constitute

excessive force in this circuit.” Tekle v. United States, 511 F.3d 839 (9th Cir. 2006), citing

Robinson v. Solano County, 278 F.3d 1007, 1014 (9th Cir. 2002) and McKenzie v. Lamb, 738

F.2d 1005, 1010 (9th Cir. 1984). Plaintiffs have stated a Fourth Amendment excessive force

claim. No decision concerning qualified immunity can be made at this time based on the

information provided. 

Shelly Ioane also claims to have been “watched by a federal agent while she attempted to

relieve herself in the bathroom.” Doc. 39, Amended Complaint, at 4:20-21. Under the due

process clause of the Fourth Amendment, there is a right to bodily privacy. See Sepulveda v.

Ramirez, 967 F.2d 1413, 1415 (9th Cir. 1992), citing York v. Story, 324 F.2d 450 (9th Cir.

1963). Defendants argue “the allegation does not establish that a constitutional violation

occurred.” Doc. 44, Part 2, at 21:14-15. While executing a search warrant, officers may detain an

occupant of a residence in a manner reasonable under the circumstances. Dawson v. City of

Seattle, 435 F.3d 1054, 1066 (9th Cir. 2006). The reasonableness of a detention made pursuant

to a search warrant is examined under the totality of the circumstances and includes

consideration of any danger posed to the police by the detainee, the nature of the crime being

investigated/the object of the search, any resistance by the detainee, the age of the detainee, and

the health or medical condition of the detainee. “A detention conducted in connection with a

search may be unreasonable if it is unnecessarily painful, degrading, or prolonged, or if it

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involves an undue invasion of privacy.” Franklin v. Foxworth, 31 F.3d 873, 876 (9th Cir. 1994). 

The Ninth Circuit affirmed denial of qualified immunity, finding the right to bodily privacy

clearly established in a case where

Officer Ludwig [male] ordered Sepulveda [female] to produce a urine sample for drug

testing. Sepulveda entered the restroom and began to provide the sample. Officer Ludwig

then entered the restroom. Without Sepulveda’s consent, he walked into the stall where

Sepulveda was partially unclothed and seated on the toilet. Sepulveda objected strongly to

his presence in the stall and asked him to leave. According to Sepulveda, Officer Ludwig

laughed and told her that she ‘did not have anything he had not seen before.’ Ludwig

remained in the stall while Sepulveda finished urinating, cleaned herself, and dressed.

Sepulveda v. Ramirez, 967 F.2d 1413, 1415 (9th Cir. 1992). In other cases, issues of bathroom

monitoring arise when the search warrant specifies that contraband narcotics are to be seized. 

Free access to a bathroom is a potential means of flushing drugs down a toilet. See Hunter v.

Namanny, 219 F.3d 825, 831 (8th Cir. 2000). There is no indication that illicit drugs are an issue

in this case. Instead, Defendants argue that weapons may have been cached in the bathroom.

Doc. 44, Part 2, at 22:5-6. 

In the context of serving a search warrant, the U.S. Supreme Court has found that

ordering naked individuals out of bed does not violate the Fourth Amendment as “The orders by

the police to the occupants, in the context of this lawful search, were permissible, and perhaps

necessary, to protect the safety of the deputies. Blankets and bedding can conceal a weapon, and

one of the suspects was known to own a firearm, factors which underscore this point. The

Constitution does not require an officer to ignore the possibility that an armed suspect may sleep

with a weapon within reach.” L.A. County v. Rettele, 127 S. Ct. 1989, 1993 (2007). In that case,

the police officers knew that one of the inhabitants owned a registered handgun and “there is no

allegation that the deputies prevented Sadler and Rettele [naked individuals] from dressing

longer than necessary to protect their safety.” L.A. County v. Rettele, 127 S. Ct. 1989, 1990 and

1993 (2007). Rettele discusses police officer conduct when they first came into contact with

individuals in a home they were searching. By the time any issue of bathroom monitoring comes

up, police officers have had the chance to conduct a basic search for weapons. After such a

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search happens, the situation is quite distinct from that of initial contact: “There is also no

justification for the officers failure to return Curry to his bed after the search of his room had

been completed. Again, the officers admitted at trial that they were aware of Curry’s disability

early in the course of their activities. The officers testified that they knew that Curry presented

absolutely no risk of flight. Based on this knowledge, it must have been apparent to a reasonable

officer that Curry presented no serious threat to the officers or to the conduct of the search.

Certainly it must have been apparent that returning him to his sickbed would involve no risk at

all once the officers had searched his room and made certain that there were no weapons or

contraband present.” Franklin v. Foxworth, 31 F.3d 873, 877 (9th Cir. 1994), emphasis added. 

Also relevant to this case, the fact that “the nature of the crime being investigated was

non-violent and did not pose any inherent threat of harm to adult police officers and government

agents” must be considered in determining what tactics were reasonable. See United States v.

Greathouse, 297 F. Supp. 2d 1264, 1276 (D. Or. 2003). While there has been no formal

statement as to the crime(s) being investigated, the amended complaint and attached search

warrant reasonably suggest some from of tax evasion. 

Defendants rely on a recent Eastern District case for the proposition that “an officer did

not violate the constitution when the officer escorted an individual to the bathroom during the

execution of a search warrant.” Doc. 44, Part 2, Defendants’ Brief, at 21:26-22:1. Indeed, the

case simply says that the individual “had to remain in the living room and...was escorted when

she had to use the bathroom.” Hansen v. Schubert, 459 F. Supp. 2d 973, 991 (E.D. Cal. 2006). 

The case does not say that any officer monitored the individual when she was actually in the

bathroom. Plaintiffs have stated a claim for violation of bodily privacy. No decision concerning

qualified immunity can be made at this time based on the information provided. 

E. Fourth Cause of Action- First Amendment

Plaintiffs’ First Amendment claim against the Federal Agents is based on the allegation

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that “Many of the documents seized were related to plaintiffs’ exercise of their right of

association with others, free speech, and free press rights.” Doc. 39, Amended Complaint, at

4:28-5:2. To the extent this cause of action is not duplicative of the Fourth Amendment claim,

Plaintiffs appear to be alleging that the Federal Agents targeted them with a tax investigation as a

form of retaliation and to chill their exercise of First Amendment rights. As a general matter, to

demonstrate a First Amendment violation, Plaintiffs must show that Defendants attempted to

deter or chill Plaintiffs’ speech and such deterrence was a substantial or motivating factor in

Defendants’ conduct. Mendocino Envtl. Ctr. v. Mendocino County, 192 F.3d 1283, 1300 (9th

Cir. 1999), citations omitted.

“In Bivens, the United States Supreme Court held that, in appropriate cases, government

officials may be held personally liable for violations, committed under the color of government

authority, of citizens’ constitutional rights. Bivens gives an individual a federal common law

basis to sue federal government actors if they violate the individual’s constitutional rights.

However, our precedent makes clear that the right to sue as established by Bivens is qualified and

is not absolute....Because the Internal Revenue Code gives taxpayers meaningful protections

against government transgressions in tax assessment and collection, we hold that Bivens relief is

unavailable for plaintiffs’ suit against IRS auditors and officials.” Adams v. Johnson, 355 F.3d

1179, 1183-86 (9th Cir. 2004). The immunity from suit under Bivens as outlined in Adams does

not cover all situations. See Tekle v. United States, 457 F.3d 1088, 1094-1100 (9th Cir. 2006)

(discussing excessive force and unreasonable detention claims under Bivens against IRS special

agents). The Ninth Circuit has not made a categorical statement as to whether a Bivens action

for First Amendment violations may lie against IRS officers. Cf. W. Ctr. for Journalism v.

Cederquist, 235 F.3d 1153, 1156 (9th Cir. 2000) (reserving question of Bivens claim for

retaliatory audit). Other circuits that have concluded that, “Bivens relief is not available to

taxpayers who allege First Amendment violations based on retaliatory tax audits.” Hudson Valley

Black Press v. IRS, 409 F.3d 106, 113 (2nd Cir. 2005); see also Judicial Watch v. Rossotti, 317

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F.3d 401, 402 (4th Cir. 2003). The situation at hand goes beyond tax auditing to the execution of

a search warrant. 

Defendants claim “Criminal investigations are, of course, typically the precursor to and

culminate in the assessment and collection of federal taxes.” Doc. 44, Part 2, Defendants’ Brief,

at 10 n.10. However, the Tenth Circuit case Defendants cite for that proposition discusses

criminal investigations in a different context: “The [Anti-Injunction Act] applies not only to the

actual assessment or collection of a tax, but is equally applicable to activities leading up to, and

culminating in, such assessment and collection.” Lowrie v. United States, 824 F.2d 827, 830

(10th Cir. 1987). Defendants further cite to the Seventh Circuit for the prospect that there is “no

Bivens action against IRS agents who allegedly ‘harassed’ plaintiff. Doc. 46, Defendants’ Reply,

at 5:3-4. The opinion actually reads:

If in the course of enforcing the tax laws internal revenue agents ransack people’s homes

without a warrant, or otherwise violate the Fourth Amendment, the argument for a

damage remedy against the agents is a powerful one, since a suit for a tax refund would

not be an adequate substitute. The argument is weaker if the claim is that the agents

refused to grant a charitable exemption to a religious organization in violation of the First

Amendment or deprived the taxpayer of some administrative procedure due him under

the due process clause of the Fifth Amendment, for in both of these cases the wrong to

the taxpayer can easily be set right through the legal procedures created by the tax code

itself. But the argument becomes completely untenable when as in this case the only

claim is that the agents made mistakes, subjected the taxpayer to unnecessary

inconvenience, failed to explore possibilities for settlement, or otherwise failed to come

up to the highest standards of conduct for government officers dealing with

citizens....Maybe if the complaint ‘sketches a portrait of a lawless and arbitrary vendetta

fueled by the power of the state, designed to harass by unwarranted intrusion into the

minutia[e] of their financial affairs, and intended to abuse by the creation of palpably

unfounded claims against their property which they can set to right only by unnecessary

litigation,’ Rutherford v. United States, [702 f.2d 580, 584 (5th Cir. 1983)], the taxpayer

can resist a motion to dismiss; but that is not the portrait sketched by the present

complaint. Even when liberally construed, this complaint, if true, shows only that internal

revenue agents acted in a heavy-handed, insensitive, and careless fashion in processing

the taxpayer’s tax returns. For such conduct there is no damage remedy. 

Even assuming with the Fifth Circuit in Rutherford that a deliberate campaign to

harass a taxpayer could deprive him of his liberty without due process of law, more must

be shown than a lack of courtesy, accuracy, and restraint by internal revenue agents in the

processing of tax returns. Not every interference with peace of mind is a deprivation of

liberty within the meaning of the Constitution. Even a battery by a police officer is not a

deprivation of liberty unless circumstances of aggravation are present.

Cameron v. IRS, 773 F.2d 126, 128-29 (7th Cir. 1985). The process of investigation is not

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necessarily equivalent to the process of tax assessment and collection. The Seventh Circuit

opinion lays out a continuum of activity without specifying what cutoff point forms the boundary

between non-actionable behavior and activity which could rise to a First Amendment claim. 

The court finds that the activities Federal Agents are accused to have undertaken are

comparable to the ones described in Fry v. Melaragno, 939 F.2d 832 (9th Cir. 1991). In that

case, the Ninth Circuit, in analyzing qualified immunity, found no First Amendment violation for

a number of actions taken by an IRS agent in the course of investigation. 

The complaint describes Melaragno as ‘a revenue agent for the I.R.S. who spent many

years investigating the tax planning and First Amendment-protected activities of Fry.’

Specifically, Fry complains that Melaragno conspired with others to charge him with false

criminal charges; that with two other defendants he inserted into the prosecutor’s version

of the presentence report details about his first amendment activities which encouraged

parole commission employees to retaliate against Fry and keep him in prison twice as

long as the prosecutor had promised; intentionally lied and made misrepresentations to

the probation officer preparing his presentence report; and helped the attorneys and

investigators gather evidence for the tax litigation which included the book on sex. 

....

[aside from the bringing of criminal charges] Fry’s other allegations against Melaragno

do not survive the requirement that the pleadings reveal a violation of clearly established

law. We cannot imagine how the alleged wrongful acts, such as gathering evidence for

the tax court trial and communicating details of his investigation to persons involved in

Fry’s sentencing, infringed clearly established rights under the first amendment. Nor do

they suggest that Melaragno acted in a way which he should have known was clearly

unlawful. Melaragno is entitled to qualified immunity from suit.

Fry v. Melaragno, 939 F.2d 832, 838-39 (9th Cir. 1991). The Federal Agents did not violate

Plaintiffs’ First Amendment rights by executing of a search warrant as part of a tax investigation. 

Alternatively, Federal Agents should be entitled to qualified immunity based on the Fry opinion

as the law is unclear. 

F. Sixth Cause of Action- Section 6103

“If any officer or employee of the United States knowingly, or by reason of negligence,

inspects or discloses any return or return information with respect to a taxpayer in violation of

any provision of section 6103, such taxpayer may bring a civil action for damages against the

United States in a district court of the United States.” 26 U.S.C. §7431(a)(1). The term “return

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information” is defined as “a taxpayer’s identity, the nature, source, or amount of his income,

payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax

withheld, deficiencies, overassessments, or tax payments, whether the taxpayer’s return was, is

being, or will be examined or subject to other investigation or processing...” 26 U.S.C.

§6103(b)(2)(A). Against the United States only, Plaintiffs allege “Within the last 2 years, agents

of defendant United States disclosed tax information about plaintiff Michael Ioane, Sr. multiple

times to third-parties without plaintiffs’ consent and when no statutory exception allowed for any

such disclosures. The above disclosures included accusations of tax evasions against plaintiffs to

third-parties by some of the individual defendants herein, as well as other IRS agents. These

disclosures were made in violation of 26 U.S.C. §6103, and Michael Ioane, Sr. are entitled to

damages under 26 U.S.C. §7431.” Doc. 39, Amended Complaint, at 5:27-6:5. 

Defendants argue Plaintiffs fail to allege sufficient facts to state a claim: “The Amended

Complaint does not state what tax information was allegedly disclosed, when it was disclosed,

and to whom it was impermissibly disclosed.” Doc. 44, Part 2, Defendants’ Brief, at 13:20-21. 

The only solid factual allegation is that the Federal Agents told unidentified third parties that

Plaintiffs were being accused of tax evasion. “[T]o state a claim for unauthorized disclosure

under 26 U.S.C. § 7431, Plaintiffs must allege ‘(1) that the disclosure [by IRS] was unauthorized;

(2) that the disclosure was made knowingly or by reason of negligence; and (3) that the

disclosure was in violation of section 6103.’” Aloe Vera of Am., Inc. v. United States, 128 F.

Supp. 2d 1235, 1246 (D. Ariz. 2000), quoting Weiner v. IRS, 789 F. Supp. 655, 656 (S.D.N.Y.

1992). Plaintiffs simply assert this legal standard without providing any of the necessary factual

detail. Such a statement is inadequate. See Chapin v. Hutton, 1999 U.S. Dist. LEXIS 10560,

*24-25 (D. Idaho 1999) (“Plaintiffs have alleged that the Defendants have discussed Plaintiffs’

tax liabilities and other confidential matters with unauthorized persons and that the disclosures

are not within a statutory exception....Plaintiffs have not alleged sufficient facts to state a claim

under Section 7431”). 

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IV. Order

Defendants’ motion to dismiss for failure to state a claim is GRANTED in part and

DENIED in part. The second, fourth, and sixth causes of action are dismissed without prejudice. 

Any amended complaint (a second amended complaint) must be filed within twenty (20) days of

the date this order is filed. If no amended complaint if filed by that date, Defendants are directed

to file an answer to this first amended complaint as narrowed by this order within thirty (30) days

of that date.

IT IS SO ORDERED.

Dated: September 23, 2008 /s/ Anthony W. Ishii 

0m8i78 CHIEF UNITED STATES DISTRICT JUDGE

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