Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-mc-80270/USCOURTS-cand-3_15-mc-80270-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MAXCREST LIMITED,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

Case No. 15-mc-80270-EDL 

REPORT AND RECOMMENDATION

RE: RESPONDENT’S MOTION TO 

DISMISS PETITION TO QUASH; 

ORDER REASSIGNING CASE

Re: Dkt. No. 22

On November 13, 2015, Petitioner filed this petition requesting that the Court quash an 

IRS summons to Google, Inc. arguing, in part, that Respondent failed to give Petitioner proper 

notice of the summons. On January 11, 2016, Respondent moved to dismiss. On February 16, 

2016, after Petitioner opposed the first motion to dismiss, Respondent withdrew its motion and 

filed a new motion to dismiss. In its new motion, Respondent argues that the petition to quash is 

moot and should be dismissed because Respondent has withdrawn the IRS summons in question. 

Respondent states that it has now issued a new summons to Google, Inc. related to this inquiry 

“with uncontestable notice served upon counsel for [Petitioner].” On March 22, 2016, the Court 

held a hearing. For the reasons set forth below, the Court recommends granting Respondent’s 

motion and dismissing the petition with leave to amend to challenge the reissued summons. This 

matter is hereby reassigned to the district judge who was the general duty judge on the date the 

petition was filed.

I. MAGISTRATE JUDGE'S JURISDICTION TO DETERMINE ADMINISTRATIVE 

ENFORCEMENT PROCEEDINGS

A petition to quash an IRS summons is “analogous to a dispositive motion. Once the 

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petitions are decided, the matter is over. Unlike a discovery motion, petitions to quash 

summonses are not ancillary to a larger proceeding. They are the entire proceeding.” Strong v. 

United States, 57 F. Supp. 2d 908, 913-14 (N.D. Cal. 1999) (Laporte, J.). In the absence of 

consent, this Court issues this report and recommendation. Id.; see also Maehr v. Comm’r of 

Internal Revenue, 2016 WL 475402, at *2 at n.1 (10th Cir. Feb. 8, 2016) (“magistrate judge had 

no authority to issue a final order dismissing” a petition to quash an IRS summons without the 

consent of the parties).

II. DISCUSSION

A. The petition is moot and Petitioner is therefore not entitled to discovery

As a general matter, “federal courts may not ‘give opinions upon moot questions or 

abstract propositions’ . . . . [A case] should therefore be dismissed as moot when, by virtue of an 

intervening event, a court []cannot grant ‘any effectual relief whatever’ in favor of the appellant.” 

Calderon v. Moore, 518 U.S. 149, 150 (1996) (citations omitted). However, the relief “does not 

need to be ‘fully satisfactory’ to avoid mootness. . . . To the contrary, even the availability of a 

‘partial remedy’ is ‘sufficient to prevent [a] case from being moot.’” Id. (citations omitted). 

In Pacific Fisheries Inc. v. United States, 484 F.3d 1103, 1105-06 (9th Cir. 2007), the 

petitioners moved to quash two IRS summonses that they argued had been properly served. Id. at 

1105. After the petitioners moved to quash and sent a letter to the IRS “reiterating their position 

that the summonses were unenforceable,” the IRS withdrew the summonses. Id. The IRS then 

asked the petitioners to voluntarily dismiss because “the controversy at issue . . . is [] moot.” Id. 

The petitioners “refused to file voluntary dismissals” unless the “IRS provided certain information 

and assurances,” including “assurances that the IRS would not reissue the summons[es].” Id. at 

1105-06. The petitioners also “requested administrative costs and attorneys' fees, and requested 

that the court order the government to respond to the[ir] discovery requests.” Id. at 1106. The 

district court granted the government’s motion to dismiss based on mootness once the IRS 

withdrew the summonses. Id. at 1106. The district court also “declined to impose conditions on 

the dismissal or to award attorneys' fees.” Id. On appeal, the Ninth Circuit affirmed the district 

court’s determination. Id. at 1111. The Court considered the possibility that the IRS might reissue 

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the summonses at issue in that case but held that the petition to quash became “moot after the 

summonses were withdrawn.” Id.; see also Maehr v. United States, Case No. 08-80218, Dkt. 9 at 2 

(N.D. Cal. April 2, 2009) (Ware, J.) (granting a motion to dismiss a petition to quash an IRS 

summons, in part, because the petition “[wa]s moot because [the] summons ha[d] been 

withdrawn.”); Malone v. Humphrey, 237 F.2d 55, 55 (6th Cir. 1956).

Although here the government has already reissued the summons, under the reasoning of

Pacific Fisheries, the petition to quash the original summons that has been withdrawn is moot. 

Petitioners’ recourse is to move to quash the reissued summons. 

The cases cited by Petitioner are not to the contrary. The nonbinding case of Brinkman v. 

United States, Inc. ex rel. IRS, 2015 U.S. Dist. LEXIS 175483, *4-5 (D. Minn. 2015), reasoned 

that:

[T]his case does not present exceptional circumstances such that 

rendering an opinion where there is no case or controversy would be 

appropriate. While Respondent does not admit to any deficiencies in 

the summonses, it does not indicate that it will re-issue the 

summonses . . . . [I]f the IRS does re-issue any summonses, 

Petitioners may file a new motion to quash if they believe they have 

a legally supportable reason for doing so. If the summonses are then 

withdrawn once again, the Court can revisit the issue of whether the 

litigation should nevertheless proceed in the absence of a case or 

controversy.

Id. (emphasis added). None of the other cases cited by Plaintiff, City of Los Angeles v. Lyons, 

461 U.S. 95, 101 (1983), Demery v. Arpaio, 378 F.3d 1020, 1025 (9th Cir. 2004), and Certain 

Underwriters at Lloyd's London v. Argonaut Ins. Co., 500 F.3d 571, 572 (7th Cir. 2007), involved

IRS summonses. Moreover, in Demery all of the parties agreed that the case was not moot, 

Demery, 378 F.3d at 1025, and Certain Underwriters is from another circuit.

Petitioner also requests discovery pertaining to whether the original summons was issued 

in bad faith. Generally,

[a] person receiving an IRS summons is . . . entitled to contest it in 

an enforcement proceeding. . . . [E]nforcement proceedings are to be 

‘summary in nature.’. . . Accordingly, . . . courts may ask only 

whether the IRS issued a summons in good faith, and must eschew 

any broader role of “oversee[ing] the [IRS's] determinations to 

investigate.” . . . As part of the adversarial process concerning a 

summons's validity, the taxpayer is entitled to examine an IRS agent 

when he can point to specific facts or circumstances plausibly 

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raising an inference of bad faith. Naked allegations of improper 

purpose are not enough: The taxpayer must offer some credible 

evidence supporting his charge. 

United States v. Clarke, __ U.S. __, 134 S. Ct. 2361, 2367-68 (2014) (citations omitted). Here, 

Petitioner has not pointed to sufficient facts or circumstances to raise an inference of bad faith. 

Further, as the original summons has been withdrawn, the discovery is not relevant and 

proportional. See Pacific Fisheries, 484 F.3d at 1111 (“The district court did not abuse its 

discretion in denying the taxpayers' requests [for discovery], since the purpose of discovery is to 

aid a party in the preparation of its case, not to punish its opponents for past sins.”). Accordingly, 

the Court recommends granting Defendant’s motion, dismissing the petition with leave to amend 

to challenge the reissued summons and denying Petitioner’s request to take discovery.

B. An award of attorney’s fees and costs is not warranted

“To prevail on a claim for attorneys' fees, [taxpayers must] demonstrate that [they have]

substantially prevailed with respect to the amount in controversy or the most significant issue or 

set of issues presented . . . . [Taxpayers are] then entitled to attorneys’ fees unless the United 

States can demonstrate that its position was substantially justified.” Pacific Fisheries, 484 F.3d at 

1106-07 (citing 26 U.S.C. § 7430(c)(4)). To qualify as a “prevailing party,” an individual 

taxpayers’ net worth must “not exceed $2,000,000 at the time the civil action was filed.” 28 

U.S.C § 2412(d)(2)(B); see also 26 U.S.C § 7430(b)(4)(A)(ii).

Here, Respondent’s withdrawal of the original subpoena may constitute “prevailing.” See

Pacific Fisheries, 484 F.3d at 1107 (“[T]he government does not dispute that the taxpayers 

prevailed with respect to the most significant issue in the proceedings below. . . . [T]he taxpayers 

prevailed on the most significant issue because they received the relief they sought all along–the 

IRS withdrew the summonses.”). However, Petitioner has not met the other requirements for a fee 

award. It has not provided any evidence of its net worth and, on the record before this Court, 

Respondent’s position was substantially justified. See Spires v. United States, 920 F. Supp. 140, 

141 (D. Or. 1996) (denying a fee motion because the government’s position was substantially 

justified and the “plaintiffs [] failed to come forward with evidence that they meet applicable net 

worth requirements”). The Court thus recommends denying Respondent’s fee request.

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III. CONCLUSION

The Court recommends granting Respondent’s motion and dismissing the petition to quash 

with leave to amend to challenge the reissued summons. The Court also recommends denying 

Petitioner’s pending discovery and fee requests. Any party may serve and file specific written 

objections to this recommendation within fourteen (14) days after being served with a copy. See 

28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b); Civil Local Rule 72-3. Failure to file objections 

within the specified time may waive the right to appeal the District Court's order. 

IT IS SO RECOMMENDED.

Dated: March 25, 2016

ELIZABETH D. LAPORTE

United States Magistrate Judge

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