Opinion ID: 413189
Heading Depth: 1
Heading Rank: 5

Heading: R.C. Sec. 6103(k)(6) (West 1980) [emphasis supplied].

Text: 31 It is important to observe here that the disclosure of return information is permissible only to the extent ... necessary in obtaining information. 32 The record before us demonstrates that Hyatt did in fact mention, without pursuing any inquiries of the Amax officers to whom the remarks were directed, that there were allegations and rumors that Jim's Water Service, Inc. was involved in stealing oil. Both Mr. Lautenschlager and Mr. Brackett of Amax so testified. Agent Betty Lou Moses, who accompanied Hyatt, testified that the IRS was conducting an investigation of Jim's Water Service, Inc. She did not have a specific recollection of Mr. Hyatt's statement concerning the subject of Taxpayer stealing oil; however, she did not deny that Hyatt made the remarks. Mr. Hyatt, however, did not have any difficulty recalling what he stated. He testified on cross-examination that: he asked Mr. Lautenschlager of Amax whether Amax had reason to utilize water service in their operations; when informed that Amax does utilize water service, he (Hyatt) stated that We have an investigation of Jim's Water Service. Have you incurred any financial problems with Jim's Water Service?; when informed by Mr. Lautenschlager that Amax, on two occasions, had financial problems with Jim's Water Service, and that Mr. Rodgers gets accused of a lot of things his employees do because he employs a lot of ex-cons, remarked only that we are aware of certain rumors and allegations; Hyatt had no recollection of mentioning stolen oil. [R., Vol. X, pp. 190-209]. Mr. Lautenschlager and Mr. Brackett testified that Hyatt stated that there were rumors that Jim's Water Service was stealing oil. Both testified that no inquiries were made of them concerning their knowledge of such rumors. Mr. Lautenschlager testified that the meeting of April 5, 1979, was called to discuss matters dealing with Amax and its employees and that at the end of the 30 minute meeting Mr. Hyatt inquired about Jim's Water Service. It was then that Lautenschlager related the two business transactions Amax had with Jim's Water Service. Lautenschlager then testified: 33 Q Now, following that explanation by you, did Mr. Hyatt respond in any manner? 34 A He indicated that was not what he had in mind. 35 Q And what was your response to that? 36 A It was similar to what I had said to him at the start of the conversation. I told him I didn't understand what he was asking. 37 Q And then Mr. Brackett--Mr. Lautenschlager, what did Mr. Hyatt respond? 38 A He asked if I had any knowledge of rumors that Jim's Water Service, Inc. was stealing oil from the major oil companies, and I told him that I didn't know anything about that. 39 [R., Vol. XI, pp. 334-35]. 40 Mr. Hyatt, upon direct examination, testified: He arranged the meeting of April 5, 1979, with Amax Coal Company officials to discuss matters relating to employees of Amax; at the conclusion of the discussion about Amax's employees, he (Hyatt) inquired whether Amax had utilized Jim's Water Service in their operations; when informed by Mr. Lautenschlager that they had, Hyatt asked if they had incurred financial problems with Jim's Water Service; ultimately, after Mr. Lautenschlager had related two problems Amax had with Jim's Water Service and had volunteered that Jim gets accused of a lot of things his employees do because he employs a lot of ex-cons, Hyatt remarked Yes, we are aware of certain rumors and allegations, without identifying them; Lautenschlager then stated that if Hyatt and associates wanted to find out anything about Taxpayer they should go to a certain bar in Gillette where Jim's Water Service drivers hang out; Hyatt does not recollect mentioning the matter of Taxpayer's alleged theft of oil, but Hyatt did have information that Amax had purchased oil from Taxpayer and he (Hyatt) believed that when he referred to rumors and allegations that this might elicit or identify the possible--additional sources of income to Jim's Water Service; that after Mr. Lautenschlager explained that Taxpayer's employees had problems with their wives, he (Hyatt) concluded that Lautenschlager did not have any knowledge of the matter of theft of oil and for that reason he (Hyatt) did not ask specific questions about Amax's knowledge of such oil thefts. [R., Vol. XI, pp. 406-11]. 41 The jury obviously credited the testimony of Lautenschlager and Brackett relative to the fact that Hyatt did relate to them that the IRS had heard rumors and allegations that Taxpayer was involved in theft of oil from major oil companies. The rule is well established that the jury alone is vested with the power and obligation to weigh conflicting evidence and to assess the credibility of the witnesses. United States v. Sierra, 452 F.2d 291 (10th Cir.1971); Chavez v. United States, 258 F.2d 816 (10th Cir.1958), cert. denied, 359 U.S. 916, 79 S.Ct. 593, 3 L.Ed.2d 578 (1959). Such is not the function of the appellate court. The court of appeals will not retry facts and findings based on sharply conflicting evidence are conclusively binding on appeal. United States v. 79.95 Acres of Land, 459 F.2d 185 (10th Cir.1972). 42 In the course of closing argument to the jury, counsel for Taxpayer pertinently observed that if in fact Hyatt raised the matter of the rumors and allegations in order to elicit information concerning the alleged theft of oil, it was incumbent on Hyatt to have inquired of Lautenschlager and Brackett Do you know where they get their oil? [R., Vol. XII, p. 483]. 43 The trial court properly instructed the jury. As concisely as possible, those instructions outlined the factual context, fully explained the applicable statutes and pinpointed Hyatt's defense, i.e., if, in fact, it be found that Hyatt made the disclosure attributed to him, to-wit, that Taxpayer was rumored or alleged to be involved in oil theft, that (a) such disclosure is permitted under a recognized exception in the law, or (b) if such disclosure was unlawful, it was neither wilful nor the result of gross negligence. After defining specific terms, the court then instructed: 44 If you find that the disclosure of tax return information was made by the defendant in connection with his official duties, and that such disclosure was necessary to obtain information not otherwise reasonably available, then the disclosure would be authorized under the law, and you must find for the defendant. 45 Good faith on the part of the defendant is a defense to an action for an unauthorized disclosure of tax return information. If you find that the defendant disclosed tax return information about the plaintiffs in an unauthorized manner, but that such disclosure was the result of a reasonable, good faith belief by the defendant that the law authorized him to make such statements, then you must find for the defendant. 46 As has been noted, 26 United States Code, Section 7217 permits the award of punitive damages if the defendant, acting willfully or with gross negligence, made an unauthorized disclosure of return information. The term gross negligence means either a willful act or an act performed in wanton or reckless disregard of the rights of another. If you find that there was a willful or grossly negligent unauthorized disclosure of return information by the defendant, you may award the plaintiffs, or either of them, punitive damages in addition to the $1,000.00 minimum statutory amount. 47 [R., Vol. VIII, pp. 9-10]. 48 The jury returned a verdict against Hyatt holding him liable in damages to Taxpayer in amount of $1,000 for his violation of 26 U.S.C. Sec. 7217. Judgment in that amount was entered on January 30, 1981. The court thereafter denied Hyatt's motion for judgment notwithstanding the verdict. 49 We must reject, just as did the trial court, Hyatt's contention that because the tax information disclosed at the April 5, 1979, meeting had been fully developed and disclosed in the course of the Wyoming district court proceeding on February 5, 1979, by virtue of cross-examination of Hyatt, that under Cooper v. IRS, supra, and other authorities relied upon by Hyatt, the content of the statement had become a matter of public record and, accordingly, could no longer be considered confidential return information within the meaning of Sec. 6103. This case appears to be one of first impression within the context presented. The dearth of case law on the issue has, we believe, led the Government to focus its arguments on the lack of confidentiality in the return information once disclosed on the public court record, buttressed by congressional intent to disclose evidenced by enactment of the Freedom of Information act, 5 U.S.C. Sec. 552. We find no legislative history evidencing congressional intent to negate or frustrate the purpose of Sec. 6103, supra, in enactment of the Freedom of Information Act. 50 The issue in the case, however, (and as submitted to the jury) is not the loss of confidentiality or privacy but, rather, whether under the circumstances, Hyatt made an unauthorized disclosure of tax return information in violation of Sec. 6103, supra. Even assuming the loss of confidentiality in the content of the statements, we hold that the April 5, 1979, disclosure was clearly unauthorized. First, the April 5, 1979, meeting arranged by Hyatt with the Amax officials was directed to an investigation of Amax, not Taxpayer. When Hyatt did make reference to the rumors and allegations that Taxpayer was involved in oil thefts, he did not make specific inquiries of Mr. Lautenschlager relative to his knowledge or information about such oil thefts. This is the more abusive in light of the fact that prior to the April 5 meeting, Mr. Hyatt had no reason to believe that Mr. Lautenschlager or Mr. Brackett had any knowledge or information about oil thefts allegedly committed by Taxpayer. Even after Mr. Lautenschlager related the two problems Amax had encountered with Taxpayer, one of which involved pouring water on a roadway instead of oil, Hyatt did not pursue inquiry of Lautenschlager or Brackett at that point relative to the rumors that Taxpayer had been involved in oil thefts. Under these circumstances, we must hold that Hyatt's disclosure of the return information was indeed unauthorized. The fact that Mr. Hyatt had given prior in court testimony relative to the alleged rumors and allegations which likely removed them from their otherwise confidential cloak, did not justify Hyatt's violation of the requirement that he, as an officer of the United States, is prohibited from disclosing return information absent express statutory authorization. Hyatt has not established such authorization. 51 WE AFFIRM.