Pursuant to 5 T H C IR . R. 47.5, the court has determined that thi s opinion should not * be publishe d and is not precedent except under the limited circu mstance s set forth in 5 T H C IR . R. 47.5 .4. 

### INTHE UNI TED S TATESCOU RT OFAPPEALS

FORTHE FIFTH CIRCU IT

N o. 08- 30894 Z UGERES E T RADI NG LL C; HARBOR BAY F UN D LL C , P la in tiffs - A p p e lla n ts , v. IN T E R N A L R E V E N U E SE R V IC E , U n i t ed S t ates of A m eri ca, D epa rt m en tof th e T r e a s u r y , D efen da n t- A pp el l ee

A pp ealf

rom t h e U n i t ed S t ates D i st ri ctC ou rt f or t h e E aster n D i st ri ctof L ou i si an a, N ew O rl ean s 2: 08- C V
- 936 B ef ore K IN G , G A R W O O D , an d D AV IS, C i rcui tJu dg es . P E R C U R IA M: * Pl a i nt i f fs – a p p e l l a nt s Z ug e r e s e Tr a d i ngLLC a ndH a rb o rBa yFu ndLLC (col l ectively, “P eti ti on ers”) ap p ea lthe distri ct cou rt’ s d en i a lof th eir pe ti ti on to qua s h a n I RS su m m o ns — i s s ue d p ur s uantt o 2 6 U . S. C. § 7 60 2— andg r anto f t he I RS’ s m o t i o n t o e nf

o r c e t he s um m o ns . Addi t i o nall y, Pet i t i o ne r s as s e r tt hatt he d is tr ic t c o u r t e r r e db yr e fu s in gto co n d u c t a n e v id e n tia r yh e a r in ga n dto p e r m it di sc ove r y be f

or e de nyi ng t he p eti ti on t o q uash. W e c onc l ude t hatt he I R S has United States Court of App eals

Fifth Circuit 

### F I L E D June 18, 2 009 Cha rl es R. F ulb ru g e II I ClerkN o. 08- 30894

Un ited Statesv . P

ow el l , 3 7 9U .S . 4 8( 1 9 6 4). 1 2 m ad e a pri m a faci e s h o w in g t h at itha s s ati sf i ed the Po w ell fac t or s and t hat 1 Pet i t i oner s have fai l ed t o m ee tt hei rheavybur den of r ebutti n g thats how i ng. S ee Mazu rek v. Un i t ed S t ate s , 2 7 1 F .3d 2 2 6 , 2 2 9

– 3 0 (5t h C ir. 2 0 0 1 ). A ddi t i onal l y, t he di st r i c tc our tdi d notabus e it s di sc r et i on in for ego i ng an e v id e n tia r yh e a r in g a n d p r e lim in a r yd is c o v e r yin th is ca s e . Se ei d. at234–35 . T h u s, w e af

f i rm t h e rul i n gs of

t h e di st ri ctcourtf

or t h e f ol l ow i n g reasons: 1. The I R S suc c ee ded i n m ee t i ng i t s m i ni m albur den of m aki ng a pri m a faci e show i n g of th e Po w ell fac t o r s . Des pi t e Pe t i t i o ne r s ’c o nt e nt i o ns t o t he c o nt r ar y, Age ntLar r y W e i nge r ’ s s t at e m e nt s w e r e s uf f i c i e ntt o m ak e th is s h o w in g . Se eHi n tz ev . I RS , 87 9 F . 2 d12 1 , 12 6 ( 4 th C i r. 1 9 8 9 ) (“ In or dert o e st abl i sh a pri m a fac i e c as e . . . , t he I R S need o nl y pre sen t an af f i da vi t of an agen t i n volved i n t h e i n vest i gati on averri n g t h e Po w ellgood fa ith ele m e n ts.” (i n te rn a l qu o ta tion m a rk s o m itted )). 2. Peti t i on ers fai lt o persua de u s t h at t h e I R S sum m on s i s not r el evantt o al egit i m at e pur pos e. The c onc eptof r el evanc e under§ 7602 i s b roa d er t h a n th a t u n d er t h e F ed era l R u l es of E vid e n c e . S ee Un i t ed S t ate s v. A rt h u r You ng & Co. , 4 6 5 U .S . 8 0 5 , 8 1 3

– 1 4 & n .1 1 (1 9 8 4 ); Un i t ed St at e s v . Li ns t e adt , 7 24 F. 2d 4 80, 4 82 ( 5t h Ci r . 1 98 4) . Thus , w e f i nd unavai l i ng Pet i ti on ers’ ar gum entt hatt he I R S cannotr ely o n t he 2007 C oordi n ated I ssue P ap er becau se the t ran sact i on describedt h ere does not exactly m atc h t h e t ran sact i on in q u e stion here. Si m i l arl y, w e are u n con vin ced tha t t h e a l l eg ed statem en ts of IR S au d i tors— th a t t h e eff orts of t h e p resid en t of

P eti ti on ers’taxm a tters pa rtn er in a n ea rl i er, sep a ra te a u d i t w ere “si n cere ”— i n d i ca te tha t t h e IR S h a s n o legit i m a te ba sis for its c ur r e nti nve s t i ga t i o n . F ur t he r , t he a r gum e nt s m ad e i n Kla m a th S tra teg ic Invest m ent Fu n dex rel . S t . C roix V enturesv. Un i t ed S t ate s , — F . 3d

— , N o.N o. 08- 30894

3 0 7 -4 0 8 6 1 , 2 0 0 9 W L 1 3 5 3 1 1 8 (5 th C ir . M a y1 5 , 2 0 0 9 ), d o n o t p r e c lu d e a ll of t h e possibl e t h eori es u n der w h i ch t h e I R S seeks t o di sal l ow t h e l osses i n t h i s c ase. Final l y, t h e sum m on s i s not overl y broadbecau se itdescribes t he r e que s t e d m at e r i alw i t h su f f i c i e ntpa r t i c ul ar i t y t o pe r m i tt he s u m m o n e dp a r tyt o re s p o n da d e q u a te ly . Se eLi ns t e adt , 724 F. 2d at483; seea lso A d am ow i cz v. Un i t ed S t ate s , 5 3 1 F .3d 1 5 1 , 1 5 7

– 5 8 (2 d C ir. 2 0 0 8 ). 3 . P eti ti on ers a sse rt t h a t t h e IR S a l rea d y p oss ess es th e d ocu m en ts i tseeks i n t h e sum m on s. T h at i s n ott h e case, how ever; w h i l e P et i t i on ers po i ntt o r e l at e d d o c um e nt s t hatt he y c l ai m t he I RS ha s al r e ad y r e c e ive d, t hey do n otargue t hatthe I R S pos se ss es the s pec i f i c doc um ent s so ught by th e s u m m o n s . S eeUn itedS ta tes v. D a v is , 636 F . 2d 102 8, 103 7 ( 5th C i r. U n it A1 9 8 1 ); P

AA M gm t . , L t d . v. Un i t ed S t ate s , N o. 91- C

- 168, 1992 W L 3 4 6 3 1 4 , a t *5 (N .D . Ill. N o v . 1 9 , 1 9 9 2 ). 4. W e a l sof

i nd no er r ori n t he di st r i c tc our t ’ s c onc l usi on t hat e n fo r c e m e n to f t h e s u m m o n s d o e s n o tc o n s t it u t e a n a b u s e o f t h e c o u r t ’s pr o c e s s . Fi r s t , Pe t i t i o ne r s ha ve no ts ho w n t hatt he I R S a ba ndo ne d t he goalof as c er t ai ni ng t he c or r ec tt ax li abi l i t y o f Zuger ese T ra d i ng LL C by is s u in ga f

in a l p a r tn e r s h ip a d m in is tr a tiv e a dju s tm e n t. S e eP AA M g m t., L t d . v. Un i t ed S t ate s , 9 6 2 F .2 d2 1 2 , 2 1 7

– 1 9 (2 dC ir . 1 9 9 2 ); P AA M g m t., L t d . v. Un i t ed S t ate s , 817 F . Supp. 425 , 4 26–2 7 ( S. D . N . Y. 1 99 3) . Se c o nd, Pet i t i oner s’ar gum ent

— t hatt he i ss uance of t he sum m ons by t he I R S w as som eh ow i m p rop er b ec a u s e it w ou l dl ik ely eli ci t a m oti on to qu a sh tha t, i n t urn, w oul d tollt he l i m i t at i ons per i od appli c abl e t o a ss es si ng t ax l i ab i l i t y— i s uns upp o r t e d b y anya ut ho r i t y an d fail s t o t ak e i nt o a c c o unt th eis s u a n c eo f th efin a lp a r t n e r s h i p a d m i n i s t r a t iv e a dj u s t m e n t(w h ic hd id t ol lt h e l i m i t ati on s peri od). A n d thi rd, t h e rec ord does n otsup port P etition ers’contenti on t h at t h e I R S i ssuedt h e sum m on s as a f orm of haras sm entby put t i ng pr es sur e on t he t axpaye rt o s et t l e ac ol l at er alN o. 08- 30894

4 d is p u te , se e Un itedS ta tes v. B isc eg lia , 420 U . S. 141, 146 ( 1975) , orby s e e k in gto e x to r t r e c o r d s fr o m P e tit io n e r s ’co u n s e l, s e e Uni t e d St a t e s v. E qu i t ab le Tru stCo. , 6 1 1 F .2d 4 9 2 , 5 0 0 (4t h C ir. 1 9 7 9 ). 5. W e c annots ay t hatt he di st r i c tc our tabus ed it s di sc r et i on by f o r e go i ng an e vi de nti ary he ari ng andpr e l i m i n ary di scovery bef ore de nying t h e petit i on t o qu ash an d gran t i n g t h e m ot i on to enf orce t h e sum m on s. S u m m on s p roce ed i n gs m u st be su m m a ryi n n a tu re , see Uni t e d S t at e s v. S t u art , 489 U . S . 353 , 369 ( 19 89) , an d an evi den t i ary h eari n g an d d i scovery a r e n o t r e q u ir e din e a c h a n de v e r yca s e , seeMazu rek , 271 F. 3d at234; Ha rr is , 628 F . 2d at 879 . Peti t i on ers cl ai m t h at a heari n g an d d isco v e ry ar e ne c e s s ar y t o s upp o r tt he i ra s s e r t i o n t hat t he I RS i s s ue d t he s um m o ns for a n i m p rop er pu rp os e . S eeUni t e d St at e s v . Se . Fi rs tNat ’lBank , 655 F. 2d 661, 667–68 ( 5t h C i r . U ni t B 1981) . H ow ever, t h e i n f orm ati on t h ey pr o po s e to fi n d f

r o m s uc h pr o c e e di ngs — t o t he e xt e ntt he y m ad e s uc h a pr o f fe rt o t he di s t r i c tc o ur t

— i s c l e ar l y ai m e d ata r gum e nt s und e r l yi ng t he m e r i t s o f

t he t ax i ssue t o b e l i t i ga t e d i n TaxCour ta nd n o ta tt he i s s ue pe r t i ne nti n t he s e pr o c e e di ngs— t he g o o d fait h o f the I RS i n i s s ui ng t he s u m m o n s , cf

. Mazu rek , 271 F . 3d at 2 3 5 . I n ot h er w ords, P et i t i on ers’ cha l l en ges fai lt o rai se in a substanti alw ay the exi st en ce of def i ci en ci es in th e s u m m o n s p r o c e e d in g s . S eeUn itedS ta tes v. Ha rr is , 628 F. 2d 875, 8 7 9 (5 th C ir . 1 9 8 0 ); Uni t e d St at e sv . Ne w m an , 441 F . 2d 165 , 169 ( 5th C i r. 1 9 7 1 ). 6. Fi nall y, w e a r e unp e r s u ade d b y Pet i t i o ne r s ’a s s e r t i o n t hatt he di st ri ctcourterr ed byfai l i n g t o deem cer t ai n of t h ei r un cha l l en ged a lle g a tio n s a d m itt e d b yth e IR S . W h ile th e F e d e r a l R u le s o f C iv il Proc edur e a ppl y i n sum m ons pr oc ee di ngs, t hey ar e no tas i nf l exib l e a s P eti ti on ers w ou l d h a ve th e m . S ee D on aldson v. Un i t ed S t ate s , 4 00 U . S. 5 1 7 , 5 2 8 (1 9 7 1 ); seealso F ED . R. C IV . P . 8 1 (a )(5 ). T h e IR S s u ffic ie n tlyN o. 08- 30894

5 respond ed to the p et i t i on to q u ash t h e sum m on s w i t h a m ot i on t o enfor ce th e s u m m o n s . S ee2 6 U .S .C . § 7 6 0 9 (b )(2 )(A); Goo d Kar m aTra di ng, LLC v. Un i t ed S t ate s , N o. 07- C V
- 01688, 2008 W L 4879164 (D . C ol o. Sept . 29, 2 0 0 8 ). AF F I RMED.