Court Opinion

ID: 9386108
Source: CourtListenerOpinion
Date Created: 2023-04-11 15:01:08.973002+00
Date Added: 2024-06-11T17:17:47.421063
License: Public Domain

Case: 23-1139   Document: 19     Page: 1   Filed: 04/11/2023

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                 JAMES W. TINDALL,
                   Plaintiff-Appellant

                            v.

                   UNITED STATES,
                   Defendant-Appellee
                 ______________________

                       2023-1139
                 ______________________

    Appeal from the United States Court of Federal Claims
 in No. 1:21-cv-02200-MBH, Senior Judge Marian Blank
 Horn.
                  ______________________

                 Decided: April 11, 2023
                 ______________________

    JAMES TINDALL, Marietta, GA, pro se.

     PATRICK ANGULO, Commercial Litigation Branch, Civil
 Division, United States Department of Justice, Washing-
 ton, DC, for defendant-appellee. Also represented by
 BRIAN M. BOYNTON, PATRICIA M. MCCARTHY, DOUGLAS K.
 MICKLE.
                  ______________________

      Before DYK, MAYER, and REYNA, Circuit Judges.
Case: 23-1139     Document: 19      Page: 2    Filed: 04/11/2023

 2                                                TINDALL   v. US

 DYK, Circuit Judge.
     James W. Tindall appeals a decision of the United
 States Court of Federal Claims (“Claims Court”) dismiss-
 ing his case for lack of jurisdiction. Because the Claims
 Court wrongly decided that lack of ripeness deprived it of
 jurisdiction, and failed to assess whether it lacked jurisdic-
 tion by virtue of 28 U.S.C. § 1500, we vacate in part and
 remand. We affirm the Claims Court’s denial of Mr. Tin-
 dall’s motion for sanctions.
                         BACKGROUND
                               I
     Congress has long given the Department of the Treas-
 ury authority to pay whistleblowers for their help in detect-
 ing violations of federal tax law. See An Act to Amend
 Existing Laws Relating to Internal Revenue, and For
 Other Purposes, ch. 169, § 7, 14 Stat. 471, 473 (1867). This
 case concerns a claim for such an award.
     The appellant has asserted two separate actions for re-
 covery in two separate courts. The claim appealed here
 was filed in the Claims Court and is based on what is now
 26 U.S.C. § 7623(a). Under that subsection, the Treasury
 has the power, which it has delegated to the Internal Rev-
 enue Service (“IRS”), “to pay such sums as [it] deems nec-
 essary for—(1) detecting underpayments of tax, or (2)
 detecting and bringing to trial . . . persons guilty of violat-
 ing the internal revenue laws or conniving at the same.”
 § 7623(a); see also Merrick v. United States, 846 F.2d 725,
 726 (Fed. Cir. 1988). These bounties are to “be paid from
 the proceeds of amounts collected by reason of the infor-
 mation provided.”      § 7623(a).      While awards under
 § 7623(a) are discretionary in the first instance, the Claims
 Court has jurisdiction under the Tucker Act for award con-
 tracts created under this provision. See Merrick, 846 F.2d
 at 726 (“An enforceable contract will arise . . . after the in-
 formant and the government negotiate and fix a specific
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 TINDALL   v. US                                            3

 amount as the reward.”); 28 U.S.C. § 1491(a)(1). Mr. Tin-
 dall’s Claims Court case arises, at least in part, under this
 provision.
     Mr. Tindall has also asserted a claim under 26 U.S.C.
 § 7623(b). In 2006, Congress created a new mandatory
 whistleblower award program, codified at § 7623(b). See
 Tax Relief and Health Care Act of 2006, Pub. L. No. 109-
 432, § 406, 120 Stat. 2922, 2958–60. Subsection (b) “re-
 quires the IRS to give awards to whistleblowers” if certain
 conditions are met. Li v. Comm’r of Internal Revenue, 22
 F.4th 1014, 1016 (D.C. Cir. 2022); see 26 U.S.C. § 7623(b).
 Congress specified that the mandatory program “shall ap-
 ply to information provided on or after the date of the en-
 actment of this Act.” § 406(d), 120 Stat. at 2960.
     The Tax Court has exclusive jurisdiction over appeals
 regarding “any determination regarding an award under
 [§ 7623(b)(1)–(3)].” § 7623(b)(4); see Meidinger v. United
 States, 989 F.3d 1353, 1358 (Fed. Cir. 2021); Li, 22 F.4th at
 1016. Mr. Tindall’s Tax Court claim assertedly arose under
 § 7623(b).
                              II
     In 2004 and 2005, before the enactment of § 7623(b),
 Mr. Tindall informed the IRS, using Form 211, Application
 for Award of Original Information, about several persons
 he alleged were evading federal tax law. In 2015, Mr. Tin-
 dall submitted two more whistleblower reports to the
 agency, which he alleges concerned an unrelated taxpayer.
     In January 2019, the IRS, having recovered taxes as a
 result of Mr. Tindall’s information, sent Mr. Tindall a pre-
 liminary award letter under § 7623(a), that is, the IRS’s
 discretionary authority to issue bounties. The agency said
 that it had collected $6.9 million in proceeds based on in-
 formation Mr. Tindall had provided in 2004. It offered Mr.
 Tindall an award of $650,910.34: a 10% share of the col-
 lected returns, $693,934.26, reduced by 6.2% because of
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 4                                               TINDALL   v. US

 budgetary sequestration the agency said was required by
 the Budget Control Act of 2011 and later legislation. The
 agency included a form for Mr. Tindall to indicate whether
 he agreed with or contested the recommendation.
     Mr. Tindall did not accept the recommended award.
 He argued, inter alia, that sequestration did not apply to
 § 7623(a) awards and that the IRS guidelines suggested he
 should receive a higher share of the proceeds collected. In
 March 2019, after noting that it had considered Mr. Tin-
 dall’s comments, the IRS finalized its award recommenda-
 tion at $650,910.34.
      In April 2019, Mr. Tindall sought review of the IRS’s
 determination in Tax Court. He argued that his disclo-
 sures in 2015 should have been analyzed under § 7623(b)
 and earned mandatory payments in excess of the amount
 offered by the IRS. During the pendency of this suit the
 IRS withheld the award pursuant to its regulations, which
 provide that the IRS will not pay awards until “all appeals
 of the” award determination “are final or the whistleblower
 has executed an award consent form.”            26 C.F.R.
 § 301.7623-4(d).
     Two years later, in November 2021, Mr. Tindall sued
 the United States in the Claims Court under the Tucker
 Act, seeking the full $693,934.26. He argued that the IRS
 was unlawfully withholding his award under § 7623(a),
 which he calculated without the sequestration deduction,
 and asserted that the United States had violated his due
 process rights and engaged in unlawful taking. He later
 elaborated that he was also asserting a contract claim. Af-
 ter the government filed a motion to dismiss the suit, Mr.
 Tindall filed a motion for sanctions.
      In October 2022, the Claims Court dismissed the suit
 for lack of subject matter jurisdiction. It concluded that (1)
 the suit was unripe because the concurrent Tax Court case
 had not been terminated, and Mr. Tindall had not accepted
 the recommended award, (2) Mr. Tindall had not conceded
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 TINDALL   v. US                                            5

 the validity of the government’s actions, a necessary ele-
 ment in a takings claim, and (3) the Claims Court lacked
 jurisdiction to consider due process claims. The court de-
 nied Mr. Tindall’s motion for sanctions.
     In December 2022, the Tax Court dismissed Mr. Tin-
 dall’s action under § 7623(b). It held that it lacked juris-
 diction to consider the case because (1) Mr. Tindall’s
 disclosures submitted to the IRS in 2015 consisted of the
 same information he had provided before the existence of
 § 7623(b), and (2) the IRS had not “commence[d] judicial or
 administrative proceedings in response to the [2015]
 claim,” a necessary prerequisite for Tax Court jurisdiction.
 Gov’t’s Supplemental Appendix (“S.A.”) 71–72; see also Li,
 22 F.4th at 1017. It reached this latter holding because,
 while the government had commenced proceedings which
 resulted in the taxpayer collections at issue, those proceed-
 ings were only based on the pre-2006 information—to
 which § 7623(b) does not apply—not the information Mr.
 Tindall provided in 2015.
     Mr. Tindall appeals the decision of the Claims Court.
 We have jurisdiction under 28 U.S.C. § 1295(a)(3). We re-
 view decisions of the Claims Court dismissing a case for
 lack of jurisdiction de novo. Waltner v. United States, 679
 F.3d 1329, 1332 (Fed. Cir. 2012).
                         DISCUSSION
     Mr. Tindall argues that the Claims Court erred in dis-
 missing his case for want of jurisdiction. On the merits, he
 also contends that the Claims Court should have granted
 him relief because the United States violated the contract
 in which it agreed to award him $693,934.26. In Mr. Tin-
 dall’s view, under Federal Circuit precedent an IRS final
 whistleblower award letter constitutes a binding
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 6                                               TINDALL   v. US

 agreement. See Inf. Opening Br. 23–26. 1 Mr. Tindall also
 argues that the alleged contract amount ($693,934.26)
 should not have been reduced pursuant to budget seques-
 tration provisions. Finally, he asserts takings and exaction
 claims, and seeks vacatur of the Claims Court’s denial of
 his motions for sanctions.
      We agree that in the circumstances of this case the
 court erred in holding that the purported lack of ripeness
 was a jurisdictional bar. The ripeness issue as to the Tax
 Court case here is not concerned with whether there is an
 Article III case or controversy, but whether it would con-
 serve judicial resources to postpone adjudication. See S.A.
 16 (Claims Court explaining that the ripeness doctrine
 “prevent[s] the courts, through avoidance of premature ad-
 judication, from entangling themselves in abstract disa-
 greements over administrative policies . . .” (quoting Abbott
 Laboratories v. Gardner, 387 U.S. 136, 148 (1967)); Nat’l
 Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803, 808
 (2003) (distinguishing purely “prudential” ripeness analy-
 sis from “Article III limitations on judicial power” (citation
 omitted)). 2 But we do not reach Mr. Tindall’s contract
 claim, or the Claims Court’s other merits holdings, because

     1    See also Cambridge v. United States, 558 F.3d
 1331, 1336 (Fed. Cir. 2009) (explaining that, with IRS Pub-
 lication 733, which gave guidance on the pre-2006 whistle-
 blower bounty system, “the Government invites offers for a
 reward; the informant makes an offer by his conduct; and
 the Government accepts the offer by agreeing to pay a spe-
 cific sum.” (citation and emphasis omitted)); Krug v. United
 States, 168 F.3d 1307, 1309–10 (Fed. Cir. 1999); Merrick,
 846 F.2d 726.
      2   The suggestion that Mr. Tindall’s claim is not ripe
 because he has not accepted the IRS’s award offer is with-
 out merit. Mr. Tindall need not surrender his claim in or-
 der to pursue it.
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 TINDALL   v. US                                              7

 the court failed to address a different, colorable argument
 that it lacked jurisdiction over the suit. As the government
 suggests in its response brief, that provision must be ad-
 dressed before the Claims Court or we can address the mer-
 its. See Gov’t Inf. Br. 9–11.
     Section 1500 of Title 28 provides that the Claims Court
 “shall not have jurisdiction of any claim for or in respect to
 which the plaintiff or his assignee has pending in any other
 court any suit or process against the United States.” The
 court lacks jurisdiction “where an earlier-filed suit is ‘based
 on substantially the same operative facts’ as the Claims
 Court suit, ‘regardless of the relief sought in each suit.’”
 Acetris Health, LLC v. United States, 949 F.3d 719, 728–29
 (Fed. Cir. 2020) (quoting United States v. Tohono O’Odham
 Nation, 563 U.S. 307, 317 (2011)). We determine whether
 the earlier-filed suit is “based on substantially the same
 operative facts” as the Claims Court case by assessing if
 the latter suit “would have been barred by res judicata if it
 had been brought in district court” under the res judicata
 principles in force when the predecessor to § 1500 was en-
 acted. Id. at 729 (citation omitted).
     Under that standard, if the two suits arise “out of one
 and the same act or contract,” or “the same evidence sup-
 port[s] and establish[es] both the present and the former
 cause of action,” the Claims Court suit cannot proceed.
 Tohono, 563 U.S. at 316 (citations omitted). In addition,
 we have held that the res judicata standard would not be
 satisfied where the earlier suit was filed in a tribunal that
 “had no colorable authority” to address it. Acetris, 949 F.3d
 at 729 & n.4.
     Applying § 1500 here is complex, and we decline to ad-
 dress it in the first instance. It is true that Mr. Tindall’s
 suit in Tax Court, based on § 7623(b), was pending when
 he filed in Claims Court as to his § 7623(a) award. But
 even assuming the suits were based on the same “act or
 contract”—the IRS’s final award letter—it is not clear that
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 8                                               TINDALL   v. US

 the Tax Court had colorable jurisdiction to review Mr. Tin-
 dall’s filing. That court found that it lacked jurisdiction on
 two independent grounds. See S.A. 70–74. And if the Tax
 Court lacked colorable authority to consider Mr. Tindall’s
 appeal, his earlier filing there would “not have preclusive
 effect under [§] 1500,” and so § 1500 would not be a bar.
 Acetris, 949 F.3d at 729. We leave this question for the
 Claims Court to decide on remand.
      We note that there is a substantial difference between
 ripeness and § 1500. If § 1500 applies, final resolution of
 the Tax Court case would not vest the Claims Court with
 jurisdiction if the former suit were still pending when the
 Claims Court case was filed. See Harbuck v. United States,
 378 F.3d 1324, 1328 (Fed. Cir. 2004). If the Tax Court case
 is final and § 1500 applies, Mr. Tindall may file a new suit
 in the Claims Court within the six-year statute of limita-
 tions if he wishes to pursue his claims. See 28 U.S.C.
 § 2501.
    We see no merit to Mr. Tindall’s motion for sanctions,
 and affirm the Claims Court’s denial of sanctions.
    For the foregoing reasons, the judgment of the Claims
 Court is
     AFFIRMED IN PART, VACATED IN PART, AND
                   REMANDED
                            COSTS
 No costs.