Document: 544 U.S. 40 BALLARD ET UX.v.COMMISSIONER OF INTERNAL REVENUE No. 03-184. Supreme Court of United States. Argued December 7, 2004. Decided March 2005.* The Tax Court's Chief Judge appoints auxiliary officers, called special trial judges, to hear certain cases, 26 U. S. C. § 7443A(a), (b), but ultimate decision, when tax deficiencies exceed $50,000, is reserved for the court itself, 7443A(b)(5), (c). Rule 183(b) governs two-tiered proceedings in which a judge hears case, renders final decision. directs that, after and submission briefs, "shall submit report, including findings fact opinion, Judge, [who] will assign case ... Court." In acting on assigned must give "[d]ue regard circumstance that [s]pecial [t]rial [j]udge had opportunity evaluate credibility witnesses," "presum[e] be correct" factfindings contained "may adopt [j]udge's report or may modify it reject whole part." 183(c). Until 1983, such reports were made public included record appeal. Coincident with rule revision year, stopped disclosing those has excluded them from appellate record. Further, judges do not disclose whether decision "modi[fies]" "reject[s]" judge's initial report. Instead, invariably begins stock statement "agrees adopts opinion [j]udge." Whether how deviates original never revealed. Petitioners Claude Ballard, Burton Kanter, another taxpayer received notices deficiency respondent Commissioner Internal Revenue (Commissioner) charging failure payments their individual returns fraud. They filed petitions redetermination Court, where consolidated Special Trial Couvillion. After trial, Couvillion submitted who issued an order assigning Dawson "for review [of report] and, if approved, adoption." Ultimately, finding taxpayers acted intent deceive Commissioner, holding liable underpaid taxes substantial fraud penalties. That consisting wholly document labeled "Opinion Judge," declared: "The agrees set forth below." Based conversations between Kanter's attorney two came believe was reproduction Couvillion's According declaration by attorney, concluded did owe respect some at issue penalty applicable. therefore motions seeking access as or, alternative, permission place under seal Denying requested relief, stated: "Judge agre[e] adopted Couvillion, presumed [those] correct, gave due regard" findings. added "any preliminary drafts" "not subject production because they relate [the court's] internal deliberative processes." On appeal, both Eleventh Circuit Ballard's Seventh rejected taxpayers' objection absence Proceeding merits, Courts Appeals affirmed principal part. Held: exclude appeal judges. No statute authorizes, 183's current text does warrant, concealment issue. Pp. 53-65. (a) 183(c)'s promulgation history confirms clear understanding, start, deference "presumed formulations. Under precursor, transparent process. served parties, authorized file objections it, regular reviewed independently, basis parties' objections. Parties equipped argue failed required measure respect. adoption 1983 amendments, however, acknowledging instances modified appears inaugurated novel practice whereby treated essentially in-house draft worked over collaboratively judge. then issues purporting "agre[e] adop[t] Judge." Nowhere Rules this joint enterprise described authorized. Notably, provide only one "opinion": instructs before shall consist opinion. It subsequently composed collaborative 183(c), tellingly captioned "Action Report," adopt, modify, reject. difficult comprehend would to, correct," he himself collaborated producing. like all other decisionmaking tribunals, obliged follow its own Rules. See, e.g., Service v. Dulles, 354 363, 388. Although without leeway interpreting Rules, unreasonable read into 183 unprovided-for process, interpret formulations "due convey something than what same words meant prior changes. 53-59. (b) obscuring mode reviewing impedes fully informed directing determinations factfindings, 183(c) recognizes well-founded, commonly accepted understanding: officer witnesses sifts through evidence first instance have comprehensive view cannot conveyed full strength paper Fraud particular, involve critical assessments, rendering appraisals presided vital determination. present example, repeatedly draws outcome-influencing conclusions regarding witnesses. Absent similar loss determine (1) accorded judge, (2) displaced adherence standards. extraordinary, routine federal judicial administrative hearing officer's see, 28 636(b)(1)(C), make part available forum, e. g., 5 557(c). asserts statutory analogy, 7460(b), reviews single one-judge record." This rejects Commissioner's endeavor equate differ markedly. Full designed resolution legal issues. Review de novo. contrast, are key reports. Those findings, novo review. measured against Furthermore, members equal rank, each voice business, free dissenting recapitulating serves pleasure lacks judges' independence prerogative publish views. Given court's need reach, expresses no on, further arguments based process provisions. Should day amend idiosyncratic procedure here rejected, changed character consistency relevant statutes 59-65. 03-184, 321 F. 3d 1037; 03-1034, 337 833, reversed remanded. GINSBURG, J., delivered STEVENS, O'CONNOR, SCALIA, KENNEDY, SOUTER, BREYER, JJ., joined. concurring joined, post, p. 65. REHNQUIST, THOMAS, 68. CERTIORARI TO THE UNITED STATES COURT APPEALS FOR ELEVENTH CIRCUIT. Stephen M. Shapiro argued cause petitioners cases. briefs 03-184 Vester T. Hughes, Jr., Robert E. Davis, David J. Schenck, Christopher D. Kratovil, Steven Brown, Royal B. Martin, William G. Sullivan. With Mr. 03-1034 Richard H. Pildes, Peter Rubin, N. Jerold Cohen, Teresa Wynn Roseborough, Philip Allen Lacovara, Randall Dick. Deputy Solicitor General Hungar him brief Acting Clement, Assistant Attorney O'Connor, Morrison, Traci L. Lovitt, Kenneth Greene, W. Parks.† JUSTICE GINSBURG Court. 1 These cases concern employment officers appointed assist work court. See 7443A(a). Unlike President 15-year terms, see 7443(b), (e), fixed term office, Any hearing. Ultimate involving 7443A(c). 2 itself Ct. 183(b), App., 1619. whom witnesses." ibid. correct." Ibid. 3 reports, A year deleted requirement upon "a copy forthwith party." note, 81 1069-1070 (1984). Correspondingly, provision giving parties "exceptions" Ibid.1 changes, significantly altered referred Since January 16, 1984 effective date revision, post-trial transmitted been withheld since time, refrained disclosing, any "reject[s] Cf. Investment Research Assoc., Ltd. 78 TCM 951, 963 (1999), ¶ 99,407 RIA Memo TC, pp. 2562-2563. thus public. 4 unsuccessful object exclusion urge practice, lack essential information: One tell whether, requires, reflects "opportunity [the] presumes correctness factfindings. We agree so hold, mindful officer, forum. departure bold practiced — creation attribution solely superseding unrevealed collaboration demands, very least, fair Rules.2 * repeated audits spanning several years, Lisle multiple (Commissioner).3 charged during 1970's 1980's, Ballard Lisle, real estate executives Prudential Life Insurance Company America (Prudential), arrangement lawyer business entrepreneur, people corporations controlled Kanter. payments, alleged, distributed entities controlled. returns. TCM, 1058, 2672-2673; 1037, 1038-1039 (CA11 2003); Brief Petitioner 3-4; Kanter 11. notices, 1994, additionally actions fraudulent. 966, 2693. As asserted deficiency, 3d, 1040. 6 19 appointed, time Judge. 7443(a)-(b), 7443A(a).4 governing appointment competence 7443A,5 prescribes office them, sets salaries 90% salary paid 7443A(d). authorize render decisions declaratory judgment proceedings, "small cases," levy lien proceedings. 7443A(b)(1)-(4), (c); 182, 1619; Respondent 3. If amount exceeds preside containing recommended liability, decisional authority Freytag 501 868, 881-882 (1991) (noting "take testimony, conduct trials, [and] admissibility evidence," "lack enter decision" cases). supra, 44-45. 7 sought Irvin trial. five-week summer briefing completed May 1995. App. 7; also memorialized either docket records published orders, salient events can traced. September 2, 1998, his "as [Tax Court] 183(b)." Order Dec. 15, 1999, 43966-85 etc. (TC), Pet. Cert. 113a-114a. Howard A. Dawson, Id., 114a.6 Fifteen months later, "reassigned" "from [Judge] Dawson." 113a. day, 8 found held 1071, 1075, 1085, 2689, 2692-2693, 2705-2706. ruling, purported Couvillion: 963, Dawson's consists entirety document, 600 pages length, 9 titled Judge" declaration, dated August 21, 2000, Dick, accounts belief. Dick attested told individuals Prudential, 308a-309a, 4. Dick's 10 "In my I following: sections written related contrary changes relating 309a, 5. 11 Concerned tending favor, three successive Court; motion Aug. 30, 99a-101a; Motion 25, id., 105a. denied motions. 100a-101a, 103a. response third motion, elaborated: states agrees, meticulous time-consuming complex these 102a. To extent added, documents processes 101a (quoting Apr. 26, 109a). 12 taken appeals circuit resides. 7482(b)(1)(A). appealed Circuit, Fifth Circuit. All argument signature rendered Estate 840-841 (CA7 1042; accord 341 364, 384 (CA5 2003) (adopting reasoning Circuits elaboration). courts agreed pursuant qualified confidential shielded 841-844; 1042-1043; 384. 13 Having proceeded merits 873-874; 1044.7 Circuit's judgment, penalties assessed evidentiary insufficiency upheld determination years. 384-385.8 Cudahy dissented maintaining intelligent inclusion 874, 884-888. 14 granted certiorari, 541 1009 (2004), resolve question now reverse upholding exclusion. II 15 Central 183, delineates procedural framework substantive standards "Special Judge's provides "the 1619.9 directed reads: 16 Report: part, direct filing additional receive oral argument, recommit instructions. Due given witnesses, 17 take action invoked none means supplement He "direct briefs[,] argument." Nor show, contend, 14-15, "recommit[ed] [special judge's] instructions." 183(c).10 From record, then, rested transcript, file. guides appraisal materials. 18 origin Commenting 1973 newly 182(d), precursor observed modeled 147(b) former Claims. 182 60 1150 (Tax procedures "comparable" used Claims). 182(d)'s directly earlier Rule,11 Claims interpreted require respectful attention fact. Hebah States, 456 2d 696, 698 (Ct. Cl. 1972) (per curiam) (challenger strong affirmative showing" overcome presumption attaches findings). acknowledgment model Rule, indeed nearly identical language, lead conclusion expressed: formerly designated 182(b), carry "special weight insofar determined observe (1973); Stone 865 342, 345 (CADC 1989). formulated 1973, 182(b) provided service copies 182(c) allowed exceptions C., 1149. resembled district magistrate recommendation: 182(c), (d), 1149-1150. years 1984, acknowledged "disagree[d] Rosenbaum 45 825, 827 (1983), 83,113 P-H 373, Taylor 41 539 (1980), 80,552 2344 "some modifications"). 20 amended simultaneously renumbered 183. change eliminated provision, parties; procedure, permitting 1069-1070. left intact, Rule's call instruction 1069. amendments purport could report; before, "adopt" "modify it," "reject Cudahy, dissent commented "extraordinary unanimity" prevailed amendments: "Never, find," reported, "has opinion." 876; cf. Tr. Oral Arg. 44 (Counsel question, "We're aware . ."). 21 representations following submits longer alone adopting modifying rejecting treats 38 engage collegial process," "involving more person decision-making," "unusual"); 29-30 (referring process" occurring Judge); 876-877 (Cudahy, dissenting). described.12 22 When complete, "agree[ing] adopt[ing] 46. "opinion" modifies significant prompted undisclosed. 108a (denying prepared ultimately became Memorandum Findings Fact Opinion 1999.").13 23 accurately operative Court: 24 "[T]here `[special reports' many `report' product judge] (and represented views end trial) later `opinion' judge], effort, `agrees adopts' 876. 25 refer once "[T]he 1619 (emphasis added). sole properly ascribed (the report").14 contemplated hard put explain, decisionmaker, However efficient be, we find warrant publishes. 388 (1957) (Secretary State "could not, long Regulations remained unchanged, proceed them"); Vitarelli Seaton, 359 535, 540 (1959) bound regulations promulgated "even though regulations" challenged action); 546-547 (Frankfurter, part) (observing agency, Members agreed, "rightly so," "must rigorously professes judged"). 54-56. 27 determinations. illustrative. 1060, 2675 ("We testimony implausible."); 1083, 2703 ("[W]e vague, evasive, unreliable."); 1079, 2698 ("The Thomas Melinda Hart, Albrecht credible."); 1140, 2776 ("[T]he presented behalf [Investment Associates] obviously biased, credible."). 886 ("I think item significance evaluating unfiltered stood watch trial."). 29 urges, draft, mere "step" "confidential 16-17 (citing States Morgan, 313 409, 422 (1941) (courts should "probe mental processes" authorities (internal quotation marks omitted))); 101a. Our treat 59-60, disposes argument. rely arbitrary construction rules insulate disclosure. 888 (access blocked "concealment [its] behind th[e] verbal formula" purports adop[t]" omitted)). 30 resistant generally prevailing tribunal's use officers. recommendations masters, bankruptcy 636(b)(1)(C) (magistrate proposed mailed parties); Fed. Civ. Proc. 53(f) (special masters); Bkrtcy. 9033(a), (d) (bankruptcy judges); 10(a) (record includes papers court). And Administrative Procedure Act provides: "All decisions, initial, recommended, tentative record" 557(c); 706 "whole record"). comparison universal transparency forums official conducts sees witnesses), anomalous. observer asked: "[I]f there policy reasons dictate everyone else, why apply Court?" 874 part); Mazza Cavicchia, 498, 519, 105 545, 557 (1954) able state justifying attempting justify secret hearer head agency.").15 31 asserts, replacing "collaborative" refusing neither "unique" nor "aberrational." 31. analog," ibid., points Section 7460(b) For reasons, 32 First, observes, omission occurs "[f]rom earliest days predecessor." 1928, ch. 852, 601, Stat. 871). Congress ordered corresponding Understandably so. issues, Lederman & Mazza, Controversies: Practice 247 (2000). reviews, making presented. Ibid.; 33 composing presidential appointees rank. Each disagrees colleagues, repeating borrowing serving enjoyed 879-880 part).16 34 finally, tendered taxpayers. Process Clause requires disclosure 43-48; 19-27. just form court, base statute, 7482(a)(1), "in manner civil tried jury." 23-27 omitted); 27, 34-35. addition, maintain §§ 7459(b) 7461(a) generated absent specific exemption. 42-44. Because hold follows, reach express them. 35 describes defends, although system adjudication currently creates, might some-day adopt. Were would, course, 36 37 stated, judgments reversed, remanded consistent ordered. Notes: Together 03-1034,Estate Deceased, et al. Revenue, certiorari &#x2020; Briefs amici curiae urging reversal National Federation Independent Business Legal Foundation Bartolomucci; Senator Pryor Roderick Hills, Jr. Scott Nelson, Alan R. Public Citizen, Inc., 03-1034. Leandra Lederman, pro se, amicus curiae. bodies, formal publicly SeeEstate 877-878, n. (describing "formal documented procedure" amending "oddly out sync practices areas law"). solicits comments American Bar Association's Taxation, ABA Suggest Modifications Proposed Amendments 97 Notes Today, 167-25 (Aug. 28, 1997), apparently proposals accept from, general observes discretely ground our rests. Seepost, 1, (opinion J.); (i) (asking uphold unless "clearly erroneous" meaning anterior questions raised, requirements aired briefs. 34-39; Reply 2-3, 8-10; 3-8. circumstances, evident disposition entire "our Rule." Compare J.), 14.1(a) deemed comprise every subsidiary fairly therein."); V. St. Paul, 505 377, 381, (1992). Stern, Gressman, Shapiro, K. Geller, 414 (8th ed. 2002) "[q]uestions explicitly mentioned analysis below correct comprised presented" Ballard; wife, she her husband; estate; executor; wife. (ii); (ii). Lisle's petitioner Seeinfra, 52, 8. convenience, simply "Ballard" "Kanter." "commissioners" created 1943. title judge" 1979. 71 1215 (1979); 7443A 1994 Pub. 105-206, 3401(c), 112 749. alterations statute's refers version retired 1962 until 1985, member recalled duties 1990. 7447(c). Recalled serve period specified chief judge."Ibid. Their salary, unlike 48, Finding deductions legitimate, ruling SeeKanter, 854-857. seek adverse portions provisions 1483 (1994 ed.), (interim amendment), 1670 (2000 ed.). Citations reprinted 2000 edition Code contain stating entirety: "For cause, ORDERED: reassigned disposition. "After Procedure, adoption. "Dated: Washington, 1999." speculate, reference "reassign[ment]," point 1998 "recommitted" revised who, turn, Dawson. interpretation 1999 order, is, event, implausible. reveals assignment enigmatic reassignment. Had turned back receiving recommitting "with instructions," action. Moreover, him. faced recast doubtful absorbed swiftly. provided: [trial law, evidence, witnesses; 7903 (1970 publication, interpretive guide statement, suggest post-1983 comprehended, even cognoscenti, airing Cahill, Judges Decide Cases Do Not Hear, E-Report (Sept. Gerald Kafka's "[w]hen surfaced, lot scratched heads" omitted)) confident, woodenly prevent correcting clerical error. But seepost, 71, (REHNQUIST, rereading postsubmission, detects error substance, ask "recommit[ted]" modification. curious always party argues strenuously support noted, allows "very easily [to] (credibility-related otherwise) judges] detrimental well to" taxpayersKanter, (concurring part). Inclusion seem result benefit parties." (Court inquired counsel Commissioner: "[A]ren't situations Government's favor Government loses know, goes appeals, solid were?"). notes "numerous boards contract established various agencies presiding judges." 31-32. too, unimpressive. dispute panels "presiding judge," panel. Only appealIbid. situation holds position stature panel members, dissent. 15. discussing (c), text, surely intend "impugn integrity" 72 880, am suggesting exert undue influence judges]. finders fact, structural principle."). 39 SCALIA joins, concurring. concur note considered view, holding, first, mandates "that [special] ante, 54, second, "it reject," 58. 42 latter supported most natural reading Accepting Revenue's word "report" subdivisions (c) mean different things. indication moreover, position. authorizes "recommit instructions" Recommittal mechanism initiating reconsideration decisionmaker. 72(b) accept, reject, matter instructions"); 53(e)(2) (amended master's] Kansas Colorado, 543 86, 106 (2004) Master's Master preparation decree opinion"). channel send reconsideration, permit informal defend here. 43 deems necessary allow consultation design If, hand, insist formality obligation describe departures requiring problematic approach. often factfinder exists, affected ensuring enforcement. brings us resolved remand former, know happened important underscore affidavit, majority extrapolates practice" "an judge." Ante, 57. indicating is. dissent, assume suggestions Post, 70-71 J.). sparse us, quick assumption, particularly defending privy inner workings are. lingering uncertainty about superseded, factual still resolved. substantially altered, violation Rule. revisions effort remedy breach ways. instance, start there. More likely circumstances 1998. 46 leads future implies litigation knowing mounting challenge not. Thus, reasonable litigants Including possible. 47 matters addressed 48 observations, join 49 CHIEF THOMAS dissenting. 50 reverses "authorize follows." 65.1 disagree. compliance defer 51 interprets paragraph eliminate disclosed amendment "submit" instead "file" (1973), thereby removing 10(a)(1) (requiring exhibits court" added)).2 52 Consistent signed Wells, "[t]he Memo. 1999-407, approved Cohen." 102a (hereinafter Cert.).3 makes exist "would presumptively legitimate reevaluation case." 11; accord, Appellee 01-17249 (CA11), 92-93; 01-4316 (CA7), 122-123. form, drafts opinions." 109a. 53 reasonable, accepted. An agency's regulation entitled "controlling plainly erroneous inconsistent regulation." Bowles Seminole Rock Sand Co., 325 410, (1945); Cleveland Indians Baseball 532 200, 219-220 (2001); Martin Occupational Safety Health Comm'n, 499 144, 150-157 (1991).4 54 Notwithstanding owed reads [initial] report." 58-59 omitted). contrary, silent technical errors takes action, initiative suggestion. Paragraph (c)'s possessive report" naturally authored judge.5 new becomes attributable At construe reports.6 841 ("[I]t ..."). 55 claim impeded withstand scrutiny. read, does, expressly 840-841; 2003). There doubt entirety, complied whatever degree 56 Contrary claimed distinctions, quite analogous 7460(b); Varian 396 753 (CA9 1968). whose being Similarly, choose distinguish exercised, least improper control Couvillion.7 62. abdication impropriety, 872, (1991); (1941); Fayerweather Ritch, 195 276, 306 (1904), impugn integrity unsubstantiated, nonspecific affidavit.8 57 sum, allowing 58 consider concluded, taxpayer's constitutional colorable. 840-843; 1042-1043. conclusions.9 59 affirm Appeals. bespeaks weakness hinges consideration. (Deputy noting within presented). claims petitioner's 14.1(a);Yee Escondido, 503 535-538 Two four mention claiming violations Const., Art. III, statutes, 7459, 7461, 7482. mentions limited asking "`clearly erroneous.'" (i). Lopez 531 230, 244, (2001). failing abide By "magistrate shallfile ("Judge evaluated witnesses"); (TC),id., assessments "reflected (T. 1999-407)"). Though Article executive agency,Freytag 887-888 (1991), reason extend rules. Rules"). wrote content See,e. STJ's case"); way possible determine, exercise responsibility mistake"); (indicating "by Couvillion" "adopted Dawson"). Indeed, act presume disclaimed. submitting typographical recognize such, required, initially drafted corrected implication higher "rank" inapt cases: duty absolutely 7443A, 7447(c) disagreed broad charges. agreement evidentprior exceptions. 1976 less percent (6 680) involved mostly minor modifications. 17-18, arguments, 7459 7461 adopted. ("shall include inits proceeding memorandum opinion" added)), ("[R]eports Court" added)). 7482, "decisions passed Dobson 320 489 (1943), portend govern 13, addresses III Disclosure abandoned ensures sufficient given. comport Morgan 298 468, 478, 481-482 (1936).

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