Opinion ID: 201691
Heading Depth: 2
Heading Rank: 4

Heading: Motion to Conduct Discovery and Scope of District Court Review

Text: 36 Olsen argues that the district court erred in denying his motion to conduct discovery and in limiting its review to the administrative record. He now also contends, for the first time on appeal, that, under Robinette v. Commissioner, 123 T.C. 85, 2004 WL 1616381 (2004) (en banc), appeal docketed, No. 04-3600 (8th Cir. Oct. 27, 2004), the district court should have conducted its review pursuant to a de novo trial. In Robinette, the Tax Court held that, when reviewing for abuse of discretion under 26 U.S.C. § 6330(d), the Tax Court is not limited by the Administrative Procedure Act (APA) nor is its review limited to the administrative record. Id. at 95, 2004 WL 1616381. 9 37 Taking the last issue first, we find no merit to Olsen's claim of entitlement to a de novo trial below. No claim to a de novo trial was made to the district court. It is a bedrock rule that when a party has not presented an argument to the district court, [he] may not unveil it in the court of appeals. United States v. Slade, 980 F.2d 27, 30 (1st Cir.1992). Although an appellate court has discretion to excuse waiver in the interests of justice, see Thomas v. Arn, 474 U.S. 140, 155 & n. 15, 106 S.Ct. 466, 88 L.Ed.2d 435 (1986), we see no reason to overlook waiver here. That the Tax Court's decision in Robinette, which is itself up on appeal, was not decided until after the district court decided the present action, does not excuse Olsen's failure to have raised the argument. See, e.g., Derman v. United States, 298 F.3d 34, 44 (1st Cir.2002); see also Nat'l Ass'n of Social Workers v. Harwood, 69 F.3d 622, 627 (1st Cir.1995) ([T]he raise-or-waive principle [may not] be dismissed as a pettifogging technicality or a trap for the indolent; the rule is founded upon important considerations of fairness, judicial economy, and practical wisdom.). 38 We turn next to Olsen's argument that the district court erred in denying his motion to conduct discovery and in limiting its review to the administrative record. The Supreme Court has consistently stated that review of administrative decisions is ordinarily limited to consideration of the decision of the agency ... and of the evidence on which it was based, and that no de novo proceeding may be held. United States v. Carlo Bianchi & Co., 373 U.S. 709, 714-15, 83 S.Ct. 1409, 10 L.Ed.2d 652 (1963). [T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court. Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973). See also Florida Power & Light Co. v. Lorion, 470 U.S. 729, 743-44, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985) (The task of the reviewing court is to apply the appropriate APA standard of review, 5 U.S.C. § 706, to the agency decision based on the record the agency presents to the reviewing court.). 39 It is true the instant record is not of a formal adjudication. But an administrative record was compiled and made available, reflecting the actions, contentions, and reasoning of those involved. And the Supreme Court has made clear that the record rule extends to informal agency adjudications. See, e.g., Lorion, 470 U.S. at 744, 105 S.Ct. 1598 (The APA specifically contemplates judicial review on the basis of the agency record compiled in the course of informal agency action in which a hearing has not occurred.) (emphasis added). In the event the administrative record is found inadequate for judicial review, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation. Id.; see also Carlo Bianchi, 373 U.S. at 718, 83 S.Ct. 1409 (remand would certainly be justified where the department had failed to make adequate provision for a record that could be subjected to judicial scrutiny); Fed. Communications Comm'n v. ITT World Communications, Inc., 466 U.S. 463, 469, 104 S.Ct. 1936, 80 L.Ed.2d 480 (1984) (If ... the Court of Appeals finds that the administrative record is inadequate, it may remand to the agency or in some circumstances refer the case to a special master.) (citations omitted). Here, the court needed to ascertain whether the appeals officer had abused her discretion when she did not accept a compromise based on Olsen's insistence that he could only pay 1/20 or less of his uncontested tax liability, and in concluding that, under all the circumstances, the use of the levy process was no more intrusive than necessary. 26 U.S.C. § 6330(c) (2000). The present record showing inter alia Olsen's offer, his responses and lack thereof to the officer's requests, and the officer's conclusions, was adequate for such review. 40 To be sure, limited exception to the rule against record supplementation exists, but in circumstances clearly not applicable here. The Supreme Court said in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977), that the district court may (although it is not required to) supplement the record where there is a a strong showing of bad faith or improper behavior by agency decision makers. Id. at 420, 91 S.Ct. 814; see Town of Norfolk v. U.S. Army Corps of Eng'rs, 968 F.2d 1438, 1458-59 (1st Cir.1992). Alternatively, supplementation of the record may be permissible where there is a failure to explain administrative action as to frustrate effective judicial review. Camp, 411 U.S. at 142-43, 93 S.Ct. 1241. 41 Olsen argues that the administrative record should have been supplemented by discovery here, because there was public information suggesting the IRS's bias against offers in compromise. He asserts that the record did not include a transcript or recording of the hearing, and that the notice of determination did not state what IRS policy or procedures had been considered or applied. Olsen made scant showing, however, as to how the information he would have sought related to the question of whether the appeals officer abused her discretion in sustaining the proposed collection action. There was certainly no strong showing of bad faith or improper behavior, Overton Park, 401 U.S. at 420, 91 S.Ct. 814, nor did the IRS Office of Appeals so fail to explain its action as to frustrate judicial review. To the contrary, the administrative record adequately explains and supports the appeals officer's determination. See supra. 42 Nor, it might be added, has Olsen shown any resulting prejudice from the denial of discovery. We disturb a district court's management of discovery only upon a clear showing of manifest injustice, that is, where the lower court's discovery order was plainly wrong and resulted in substantial prejudice to the aggrieved party. Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 186 (1st Cir.1989).