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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

JIM LABER, et al.,

Plaintiffs, No. CIV S-04-1427 FCD KJM PS

vs.

ROBERT COTTELL, et al., ORDER

Defendant.

 /

A further status conference was held in this matter on September 14, 2005 before

the undersigned. Plaintiffs appeared in propria persona. No appearance was made for

defendants. Upon consideration of the court file in this action, and good cause appearing

therefor, THE COURT FINDS AS FOLLOWS:

In this action, plaintiffs allege claims arising out of their partnership’s failure to

fund payroll taxes. Plaintiffs name as defendants their former partners, who, they contend, failed

to pay the requisite taxes. The basis of federal subject matter jurisdiction was not evident in the

complaint and plaintiffs accordingly were directed to file a statement setting forth the basis of

jurisdiction. In their written filings, plaintiffs contend federal subject matter jurisdiction is

conferred by 26 U.S.C. § 3102 and 18 U.S.C. § 1701. See Plaintiffs’ Statement (filed June 27,

2005). 

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Presumably, by relying on the cited statutes, plaintiffs intend to invoke federal

question jurisdiction under 28 U.S.C. § 1331 because they contend they have a private right of

action under these statutes. When, as here, a civil suit is brought based on a federal statute that

does not expressly create a private right of action, the court must determine whether the federal

statute creates an implied private right of action. The Supreme Court has articulated a four-part

test to determine whether a statute creates an implied cause of action. Cort v. Ash, 422 U.S. 66

(1975). A court asks: (1) is the plaintiff one of the class for whose "especial benefit" the statute

was enacted, (2) does the legislative history create or deny such a remedy, (3) is an implied cause

of action consistent with the purposes of the legislative scheme, and (4) is the cause of action one

so traditionally relegated to state law that “it would be inappropriate to infer a cause of action

based solely on federal law?” Cort, 422 U.S. at 78.

Applying the Cort factors, there are no private rights of action conferred on

plaintiffs under the statutes they cite in their jurisdictional statement. 26 U.S.C. § 3102 pertains

to the payment of taxes for social security (FICA). No private right of action can be implied

under this statute. See McDonald v. Southern Farm Bureau Life Ins.Co., 291 F.3d 718 (11th Cir.

2002). The other statute cited by plaintiffs, 18 U.S.C. § 1701 (obstruction of mail), provides only

for criminal penalties. Thus, federal question jurisdiction cannot be invoked under these statutes. 

However, at the status conference, plaintiffs clarified their position that 

26 U.S.C. § 6672 also provides a basis for federal subject matter jurisdiction. This statute was

amended in 1996 and expressly creates a private right of action for contribution for each person

who has paid penalties under 26 U.S.C. § 6672(a), if other persons are liable for such penalties as

well. 26 U.S.C. § 6672(d). It thus appears federal subject matter jurisdiction may exist if

plaintiffs are able to amend their complaint to state a cause of action under subsection (d). 

Accordingly, plaintiffs will be granted leave to file an amended complaint alleging such a claim. 

/////

///// 

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Accordingly, IT IS HEREBY ORDERED that:

1. Within thirty days from the date of this order, plaintiffs may file an amended

complaint alleging a claim under 26 U.S.C. § 6672(d). If plaintiffs choose not to file an amended

complaint, they may seek dismissal as provided by Federal Rule of Civil Procedure 41(a)(2). 

Failure to file an amended complaint or a request for voluntary dismissal in compliance with this

order will result in a recommendation that the action be dismissed for lack of subject matter

jurisdiction.

2. This matter is set for further status conference on November 16, 2005. Dates

will be set at that time pertaining to discovery, law and motion, pretrial conference and trial. The

parties are directed to file status reports one week prior to the status conference setting forth

suggested dates for scheduling in this matter.

3. Defendants are cautioned that failure to appear at the status conference will

result in a recommendation that the answer be stricken and default entered. 

DATED: September 16, 2005.

______________________________________

UNITED STATES MAGISTRATE JUDGE

006

laber.juris

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