Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-05065/USCOURTS-caDC-99-05065-0/pdf.json

Parties Involved:
Bruce E. Gardner
Appellant
United States of America
Appellee

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 13, 2000 Decided May 19, 2000

No. 99-5065

Bruce E. Gardner,

Appellant

v.

United States of America,

Appellee

Appeal from the United States District Court

for the District of Columbia

(No. 97cv03075)

Bruce E. Gardner, appearing pro se, argued the cause and

filed the briefs for appellant.

Annette M. Wietecha, Attorney, United States Department

of Justice, argued the cause for appellee. With her on the

brief were Gilbert S. Rothenberg, Attorney, and Mary Lou

Leary, United States Attorney at the time the brief was filed.

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Loretta C. Argrett, Assistant Attorney General, and Edward

T. Perelmuter, Attorney, entered appearances.

Before: Edwards, Chief Judge, Henderson and Rogers,

Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: Bruce Gardner, appearing pro se,

appeals the District Court's dismissal of his complaint for

failure to prosecute and for lack of subject matter jurisdiction. Mr. Gardner alleges that the Internal Revenue Service

("the Service") unlawfully levied his property without first

sending a notice of federal tax deficiency to his last known

address. The District Court dismissed this complaint sua

sponte for failure to prosecute under Fed. R. Civ. P. 41(b)

("Rule 41(b)") and, upon defendant's motion, for lack of

subject matter jurisdiction. On appeal, the Service defends

only the Rule 41(b) dismissal, abandoning any claim that

federal courts lack subject matter jurisdiction over Mr. Gardner's cause of action.

The District Court understandably sought to sanction Mr.

Gardner for failing to appear at a motions hearing. Given

applicable Supreme Court and D.C. Circuit precedent, however, the District Court's dismissal in the context of the instant

case constitutes an abuse of discretion. Mr. Gardner's nonappearance, while arguably irresponsible, did not justify a Rule

41(b) dismissal. In addition, the District Court erroneously

found that it lacked subject matter jurisdiction over the

complaint. Accordingly, we reverse and remand for further

proceedings on the merits.

I. BACKGROUND

Mr. Gardner formerly worked as an attorney in the Office

of Chief Counsel to the Service at the Treasury Department.

He was terminated for his alleged failure to comply with

federal and state tax laws. Mr. Gardner filed three complaints before the District Court, all related to his compliance

with federal and state tax laws; all were dismissed by the

District Court. One of the complaints was a tax refund

action, the dismissal of which this court summarily affirmed

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on October 8, 1999. The second complaint, appealed along

with the instant case, seeks damages from a variety of

defendants for allegedly unlawful disclosures of Mr. Gardner's private tax information. The instant case involves Mr.

Gardner's pro se complaint, filed December 23, 1997, claiming

that the Service unlawfully levied Mr. Gardner's bank account

for an alleged 1990 tax deficiency of almost $4,000 without

sending him a notice of deficiency and an opportunity to

challenge the assessment in the United States Tax Court.

Mr. Gardner, seeking to enjoin the Service from levying his

property, bases his complaint on 26 U.S.C. s 6213(a) (Supp.

IV 1998). Actions based on s 6213(a) to enjoin the Service's

assessment of a tax deficiency before the Service mails a

notice of deficiency to the taxpayer are exempt from the

Anti-Injunction Act of Internal Revenue Code, 26 U.S.C.

s 7421(a) (Supp. IV 1998).

On February 18, 1998, the Service filed a motion to dismiss

for lack of subject matter jurisdiction pursuant to Fed. R. Civ.

P. 12(b)(1) ("Rule 12(b)(1)"), arguing that Mr. Gardner must

meet traditional equitable requirements (i.e., demonstrate

irreparable injury and the lack of an adequate remedy at law)

as a prerequisite to obtaining injunctive relief under

s 6213(a). On the day the Service filed its motion, Mr.

Gardner filed an amended complaint affirmatively pleading

grounds for equitable relief. The District Court struck the

amended complaint from the record, because Mr. Gardner

had not sought leave to file.

After delays that no one attributes to Mr. Gardner, the

District Court scheduled a hearing on January 27, 1999, to

consider the motion to dismiss, along with motions to dismiss

filed in Mr. Gardner's other two cases. On January 21, Mr.

Gardner moved to continue the motions hearing, contending

that a continuance was necessary because he had the flu and

he had suffered burns during a fire in his home. The District

Court, after a teleconference held on January 22, denied Mr.

Gardner's motion. The District Court indicated that it would

accommodate Mr. Gardner's physical condition during the

hearing. Mr. Gardner failed to appear in court on January 27

and he telephoned the court later that evening to state that

he had slept through the hearing.

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On January 28, Mr. Gardner filed a motion to reschedule

the hearing; the motion also offered an explanation for his

absence from the January 27 hearing. He included a doctor's

note stating that, on January 21, his physician treated him for

syncope and bronchitis, prescribed antibiotics, and instructed

Mr. Gardner to get bed rest. He also made several claims to

the effect that his illness, the fire in his home, and his intense

preparation for the motions hearing had combined to deprive

him of necessary sleep and stamina. According to plaintiff,

he was so disoriented that, until he heard the evening news

on January 27, he was under the impression that it was

January 26.

On January 29, the District Court denied Mr. Gardner's

motion to reschedule the hearing. The court also granted

defendant's motion to dismiss on two grounds. First, the

District Court dismissed the complaint under Rule 41(b) for

failure to prosecute the complaint. See Gardner v. United

States, Civ. Act. No. 97-3075, Mem. Op. & Order at 2 (D.D.C.

Jan. 29, 1999). The court noted that it previously had denied

Mr. Gardner's motion for continuance and that Mr. Gardner

had stated that he would appear on January 27. See id. at 1-

2. The court also declared that it had not intended to hear

argument on January 27, because it already had decided to

issue orally its ruling dismissing Mr. Gardner's complaint for

lack of subject matter jurisdiction. See id. at 2. The District

Court found that it lacked jurisdiction because Mr. Gardner

had failed to demonstrate irreparable injury and a lack of an

adequate remedy at law. See id. at 4. The court dismissed

as moot Mr. Gardner's motion for reconsideration of the

order striking his first amended complaint from the record.

Mr. Gardner moved for reconsideration, further detailing

the events leading up to his absence from the hearing. He

stated that on January 12, 1999, he began taking Nyquil and

Chlortrimeton, an antihistamine, and that he was without

heat for one day in January because his house lost electricity

during an ice storm, exacerbating his illness. Mr. Gardner

also revealed that, on January 18, a fire had broken out in his

children's room and he had sustained third-degree burns to

his hands while dragging a burning mattress from the house.

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The court denied Mr. Gardner's motion for reconsideration.

This appeal followed.

II. DISCUSSION

A. Rule 41(b) Dismissal

Under Rule 41(b), a court may dismiss an action "[f]or

failure of the plaintiff to prosecute or to comply with ... any

order of court." In the instant case, the District Court

dismissed the complaint because Mr. Gardner failed to attend

the January 27, 1999, motions hearing. We review for abuse

of discretion. See Bristol Petroleum Corp. v. Harris, 901

F.2d 165, 167 (D.C. Cir. 1990). While this is a deferential

standard, we have made it clear that, "under certain circumstances, dismissal may be an unduly severe sanction for a

single episode of misconduct." Id. A District Court may

dismiss under Rule 41(b) "only after less dire alternatives

have been explored without success." Trakas v. Quality

Brands, Inc., 759 F.2d 185, 187 (D.C. Cir. 1985).

The Supreme Court established the framework for reviewing a sua sponte dismissal for failure to prosecute in Links v.

Wabash Railroad Co., 370 U.S. 626 (1962). In Links, plaintiff's counsel missed a pretrial conference but did not inform

the court of his impending nonattendance until the day of the

conference. See id. at 627-28. The District Court, after

reviewing the history of the case (including plaintiff's repeated untimely responses to defendant's interrogatories),

found that plaintiff's counsel did not provide a reasonable

explanation for his nonappearance and dismissed the complaint for failure to prosecute. See id. at 628-29.

The Court affirmed the dismissal, failing to find an abuse of

discretion because: (1) the District Court relied only in part

on counsel's nonappearance; (2) the excuse offered by counsel

was inadequate; and (3) "it could reasonably be inferred from

his absence, as well as from the drawn-out history of the

litigation, that petitioner had been deliberately proceeding in

dilatory fashion." Id. at 633 (footnote and citation omitted).

The Court did not reach "whether unexplained absence from

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a pretrial conference would alone justify a dismissal with

prejudice if the record showed no other evidence of dilatoriness on the part of the plaintiff." Id. at 634 (first emphasis

added).

As we previously have noted, it is important to recall that

the "lawyer's default [in Links] ... was merely the culmination of a protracted course of dilatory tactics and other

improper behavior in litigation that had dragged on for six

years." Camps v. C & P Tel. Co., 692 F.2d 120, 122 (D.C. Cir.

1982) (footnote omitted). In contrast, this court has held

"that dismissal is rarely if ever appropriate when there is but

a single instance of attorney-misconduct," as in the instant

case. Id. This is because the sua sponte dismissal of a

lawsuit on the merits is " 'a drastic step, normally to be taken

only after unfruitful resort to lesser sanctions.' " Id. at 123

(quoting Jackson v. Washington Monthly Co., 569 F.2d 119,

123 (D.C. Cir. 1978)); see also Bristol Petroleum Corp., 901

F.2d at 167 ("[D]ismissal is in order only when lesser sanctions would not serve the interests of justice.").

There are three basic justifications for dismissal because of

attorney misconduct: (1) prejudice to the other party; (2)

failure of alternative sanctions to mitigate the severe burden

that the misconduct has placed on the judicial system; and (3)

deterrence of future misconduct. See Shea v. Donohoe

Constr. Co., 795 F.2d 1071, 1074 (D.C. Cir. 1986). These

justifications are not easily met. Prejudice, for instance,

must be "so severe[ ] as to make it unfair to require the other

party to proceed with the case." Id. Similarly, a malfeasant

party places a severe burden on the judicial system if "the

court [is required] to expend considerable judicial resources

in the future in addition to those it has already wasted,

thereby inconveniencing many other innocent litigants in the

presentation of their cases." Id. at 1075-76. The final

rationale, deterrence, justifies dismissals when there is some

indication that the client or attorney consciously fails to

comply with a court order cognizant of the drastic ramifications. See id. at 1078.

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Defendants have alleged no prejudice from Mr. Gardner's

failure to appear at the January 27 conference. And given

the District Court's observation that it would not hear argument at the hearing and its intention to resolve the case on

jurisdictional grounds despite Mr. Gardner's failure to appear, his nonappearance cannot be said to have interfered

with the orderly administration of the trial court's business.

Cf. id. at 1076-77 (concluding that "repeated failure to attend

status conferences" in that case did not constitute prejudice

to the judicial system). Of the enumerated justifications for

sua sponte dismissal, then, only the last, deterrence, has any

application to the instant case.

Mr. Gardner's situation, however, is not one to which the

deterrence rationale speaks with great eloquence. There are

three reasons for this: first, this was Mr. Gardner's only

failure to comply with an order of the District Court; second,

there is no evidence that Mr. Gardner acted in bad faith by

failing to appear at the hearing; and third, the trial court

provided no warning to Mr. Gardner of the consequences of

nonappearance. We also note that there is nothing in the

record to indicate that the District Court considered alternative sanctions for Mr. Gardner's misbehavior.

The District Court did not identify any prior instance of

misconduct on Mr. Gardner's part. Indeed, the court observed that Mr. Gardner's absence was "atypical." That Mr.

Gardner had never before failed to comply with the District

Court's orders argues in favor of reversal. See Trakas, 759

F.2d at 188. In addition, as in Trakas, there is no evidence in

the record of "bad faith, deliberate misconduct, or tactical

delay." Id. In fact, Mr. Gardner provided a supportable

explanation for why he failed to attend the hearing. Finally,

the trial court did not warn Mr. Gardner that the case would

be dismissed if he failed to appear. "Absent such advance

warning [of the consequences], dismissal to drive a lesson

home, we think, is more akin to overkill than judicial discretion." Camps, 692 F.2d at 125. In short, dismissal in this

case was unwarranted.

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We appreciate the difficulty faced by the District Court in

this case. Mr. Gardner had filed three complaints before the

court. One of the complaints consisted of 44 counts and

named as defendants the United States, the Service, the State

of California, and several individual Service employees,

among others. Prior to dismissing the complaint in the

instant case, the District Court had denied Mr. Gardner's

motion for a continuance, and had been assured that Mr.

Gardner would attend the January 27 hearing. In this circumstance, we cannot doubt that Mr. Gardner's failure to

appear was an annoying occurrence. Nonetheless, given that

this was Mr. Gardner's only "failure ... to prosecute or to

comply with ... any order of court," Fed. R. Civ. P. 41(b), we

find that the District Court abused its discretion in dismissing

his case. Here we do not have a case of an unexplained

absence from the motions hearing, or any evidence that Mr.

Gardner deliberately sought to delay adjudication of the

merits of his complaints. Moreover, the record does not

show that the District Court considered the availability of a

lesser sanction. While the District Court's decision in the

instant case may not " 'comprehend[ ] a pointless exaction of

retribution,' " Camps, 692 F.2d at 123 (quoting Jackson, 569

F.2d at 123), it does cross the line to abuse of discretion. See,

e.g., Berry v. District of Columbia, 833 F.2d 1031, 1037 (D.C.

Cir. 1987) (reversing dismissal where attorney failed to file a

pretrial brief by specified date, failed to attend a status

conference, and failed to file a pleading specifically requested

by the court); Tolbert v. Leighton, 623 F.2d 585, 587 (9th Cir.

1980) (finding abuse of discretion where the only evidence of

dilatoriness was attorney's failure to attend a pretrial conference, the court had not warned that nonappearance would

result in a dismissal, and the case was still "young").

We emphasize that we do not call into question the District

Court's denial of both Mr. Gardner's motion for a continuance

and his motion to reschedule the hearing, because those

decisions are not before us. Nor does our disposition of this

case revive Mr. Gardner's tax refund complaint, the dismissal

of which this court summarily affirmed on October 8, 1999.

We hold only that, given the particular facts of this case, the

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District Court abused its discretion in dismissing Mr. Gardner's complaint for failure to prosecute.

B. Subject Matter Jurisdiction

The District Court also dismissed Mr. Gardner's complaint

under Rule 12(b)(1), holding that Mr. Gardner was required

to plead equitable grounds for relief in order to obtain an

injunction under 26 U.S.C. s 6213(a). Before this court, the

Government does not defend the District Court's Rule

12(b)(1) dismissal. Accordingly, there is no longer any dispute between the parties as to whether a federal court may

entertain jurisdiction over Mr. Gardner's complaint. This

does not moot the issue, however. We are a court of limited

jurisdiction and must be satisfied through our own inquiry of

our power to hear this dispute. See Mansfield, Coldwater &

Lake Michigan Ry. v. Swan, 111 U.S. 379, 382 (1884). In

contrast to the issue of personal jurisdiction, parties may not

waive or concede a federal court's subject matter jurisdiction.

See Jackson v. Ashton, 33 U.S. (8 Peters) 148, 148-49 (1834)

(reversing for lack of subject matter jurisdiction even though

appellee had "no objection to the court's proceeding in the

case.").

Mr. Gardner seeks an injunction preventing the Service

from levying his bank account to assess an alleged deficiency

in his 1990 federal tax return. The Anti-Injunction Act, a

provision of the Internal Revenue Code, states that, "[e]xcept

as provided in section[ ] ... 6213(a), ... no suit for the

purpose of restraining the assessment or collection of any tax

shall be maintained in any court by any person, whether or

not such person is the person against whom such tax was

assessed." 26 U.S.C. s 7421(a). The District Court must

dismiss for lack of subject matter jurisdiction any suit that

does not fall within one of the exceptions to the AntiInjunction Act. Mr. Gardner seeks to bring his suit within

one of s 7421(a)'s exceptions, arguing that the Service violated s 6213(a) by levying his bank account without first mailing

him a notice of deficiency. For the purposes of deciding

whether we have jurisdiction over Mr. Gardner's complaint,

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we will accept as true his allegation that the notice of

deficiency was never mailed to him.

Section 6213(a) establishes the Service's authority and responsibility to send a notice of deficiency to a taxpayer prior

to initiating proceedings to assess the deficiency. With a

notice of deficiency in hand, a taxpayer may file suit in Tax

Court challenging the assessment, and the Service is prohibited from enforcing the assessment until the Tax Court's

decision regarding the petition for review becomes final. See

id. s 6213(a). If the taxpayer does not file suit in Tax Court

in the time allotted after receipt of the notice of deficiency,

the Service may, among other things, impose a levy upon the

taxpayer's property, after notice, to recover unpaid taxes.

See id. s 6331(a) (1994).

There is some dispute among the circuits whether a taxpayer must allege traditional grounds for equitable relief to

establish a prima facie claim under s 6213(a) (i.e., irreparable harm and lack of an adequate remedy at law). The

District Court, following the Ninth Circuit, dismissed the

complaint, because Mr. Gardner failed to allege any equitable

grounds for relief. See Mem. Op. & Order at 4 (citing Elias

v. Connett, 908 F.2d 521, 523 (9th Cir. 1990)). The Ninth

Circuit is in the lead among those circuits that imply this

requirement in s 6213(a) claims, with the circuit's reasoning

set out in Cool Fuel, Inc. v. Connett, 685 F.2d 309, 313 (9th

Cir. 1982).

In Cool Fuel, the District Court had granted summary

judgment for the Service where a taxpayer alleging a violation of s 6213(a) had not met the requirements for equitable

relief. The Ninth Circuit affirmed, finding both a presumption that equitable grounds be met for a court to issue an

injunction and "that section 6213 does not abolish equitable

tenets to support injunctive relief." Id. (relying on Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982)). The court

emphasized s 6213(a)'s permissive language. See Cool Fuel,

685 F.2d at 313 (noting that s 6213(a) provides that an

assessment based on a notice of deficiency "may be enjoined"

by a court). Because a taxpayer retains the right to institute

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a refund suit after payment of taxes, and the taxpayer in Cool

Fuel could afford to pay the disputed tax prior to an adjudication of the alleged deficiencies, the court found that an

equitable remedy was not available. The Third and Eleventh

Circuits have followed the Ninth Circuit's rule. See Flynn v.

Eggers, 786 F.2d 586, 591 (3rd Cir. 1986); Lovell v. United

States, 795 F.2d 976, 977 (11th Cir. 1986).

The Tenth Circuit, in Guthrie v. Sawyer, 970 F.2d 733, 736-

37 (10th Cir. 1992), reached a different result. Having reviewed the circuits' competing opinions, we think that the

Tenth Circuit clearly has the best of the argument. Accordingly, we hold, in accord with Guthrie, that

[t]he purpose of the statutory exception [in s 6213(a)] is

to preserve the taxpayer's right to litigate his tax liability

in Tax Court before paying the tax. If the availability of

a refund suit after payment prohibits the taxpayer from

obtaining an injunction to protect his right to litigate

first, that right is virtually meaningless. Under this

approach, this right would be available only upon a

showing that the taxpayer could not pay the tax. We

have difficulty believing that Congress intended to give

with one hand and take back with the other.

970 F.2d at 736.

The result that we reach is not contrary to the principles

announced in Romero-Barcelo. In that case, the Supreme

Court merely observed that courts should "not lightly assume

that Congress has intended to depart from established [equitable] principles." 456 U.S. at 313. In Romero-Barcelo,

however, the Court expressly distinguished Tennessee Valley

Authority v. Hill, 437 U.S. 153 (1978), in which the Court

held that "Congress had foreclosed the exercise of the usual

discretion possessed by a court of equity" when it passed the

Endangered Species Act, 16 U.S.C. ss 1531-1544. RomeroBarcelo, 456 U.S. at 313 (citing Tennessee Valley Authority,

437 U.S. at 173). According to the Romero-Barcelo Court,

the difference was that in Hill, the statute providing the basis

for the challenge "contain[ed] a flat ban" on the challenged

activity. 456 U.S. at 314. Similarly, here s 6213(a) flatly

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prohibits the activity challenged by Mr. Gardner. See 26

U.S.C. s 6213(a) (providing that the Service shall begin "no

levy or proceeding" to collect on a notice of deficiency until a

period after the notice has been mailed to the taxpayer).

This statutory scheme, in combination with the Guthrie

Court's reasoning, convinces us that Congress did not intend

that litigants need establish equitable grounds for injunctive

relief under s 6213(a).

We decline to follow Cool Fuel for a third reason. The

Cool Fuel court cited Bob Jones University v. Simon, 416

U.S. 725, 742 n.16 (1974), to support its finding that "congressional history [of s 6213(a)] is barren of indicated intent to

abandon historical principles of equity jurisprudence." 685

F.2d at 313. Bob Jones University involved an interpretation

of the Anti-Injunction Act, however, not s 6213(a). In fact,

the Court explicitly noted that "[n]one of the exceptions in

s 7421(a) is relevant to this case." Bob Jones University,

416 U.S. at 732 n.6. Therefore, it is of no moment that the

Court in Bob Jones University held that traditional equitable

principles were applicable to an action under the AntiInjunction Act that did not fall into any of the enumerated

exceptions. Of greater note, we think, is the Supreme

Court's failure to discuss traditional grounds for equity jurisdiction when holding that taxpayers to whom the Service had

not mailed notices of deficiency are entitled to bring suit

under s 6213(a). See Laing v. United States, 423 U.S. 161,

183-85 & 184 n.27 (1976).

III. CONCLUSION

For the reasons articulated herein, we reverse the District

Court's decision and remand for proceedings on the merits.

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