Court Opinion

ID: 4442931
Source: CourtListenerOpinion
Date Created: 2019-09-30 21:00:45.957853+00
Date Added: 2024-06-11T14:50:55.715161
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

 WILLIAM E. POWELL,

         Plaintiff,
                v.                                          Civil Action No. 18-2675 (JEB)
 INTERNAL REVENUE SERVICE,

       Defendant.

                                  MEMORANDUM OPINION

       Over the years, pro se Plaintiff William E. Powell has employed a variety of means to

require Defendant Internal Revenue Service to turn over tax records related to his grandfather,

his father, himself, and his family’s printing business. His lack of success in the latest chapter of

this venture spurred this lawsuit in October 2018. Now, in his Motion to Supplement his

Amended Complaint, Powell requests leave of the Court to add new claims arising out of three

Freedom of Information Act requests he lodged in January 2019 and one Privacy Act request

from June 2019. At this stage, Powell’s proposed supplemental claims do not unduly prejudice

Defendant; as a result, the Court will largely grant his Motion, except as to certain record

requests that have been previously adjudicated.

I.     Background

       Powell initially filed this action on October 29, 2018, see ECF No. 1 (Complaint), and

followed up with an Amended Complaint on February 6, 2019. See ECF No. 9. The latter

pleading encompasses four record requests Powell submitted to the IRS dated August 9, 2018,

August 31, 2018, September 27, 2018, and November 25, 2018. Id. at 2–3. These sought tax

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forms concerning his family and his family’s business – the Powell Printing Company. Id. at 2–

4. The requests were filed under FOIA and the Privacy Act via the IRS’s Return and Income

Verification System (RAIVS), id., and Plaintiff alleged that Defendant unlawfully withheld

records. Id. at 2–4. This is not Powell’s first foray into the realm of FOIA and Privacy Act

litigation. Indeed, he has filed a number of lawsuits in this Court and the Eastern District of

Michigan seeking to unearth records relating to his family members and himself. See, e.g.,

Powell v. IRS, 255 F. Supp. 3d 33, 37 (D.D.C. 2017).

       Turning now to the current suit, the Court notes that on February 27, 2019, it stayed the

proceedings to give the parties an opportunity to attempt to resolve their dispute outside the

courtroom. See Minute Order of Feb. 27, 2019. No progress resulted, and the Court thus lifted

the stay on May 2, 2019. See Minute Order of May 2, 2019. Powell promptly filed a Motion for

Leave to File a Supplemental Complaint on May 7. See ECF No. 17. The Motion proposed new

FOIA and Privacy Act claims regarding additional RAIVS requests dated January 9, 2019, and

January 27, 2019 — seeking tax forms for his father and grandfather. Id. at 2–3. The Court,

however, denied this Motion on that same day because it did not comply with Local Civil Rules

7(m) and 15.1. See Minute Order of May 7, 2019.

       The IRS then answered the Amended Complaint on July 17, 2019. See ECF No. 20. The

parties were thereafter ordered to submit a joint briefing schedule by August 1, 2019. See

Minute Order of July 18, 2019. Without submitting the schedule, Powell filed a second Motion

for Leave to File a Supplemental Complaint on August 1, 2019. See ECF No. 21. This Motion

reasserted his January 9 and January 27 RAIVS requests and added a Privacy Act request dated

June 3, 2019, which demanded his own tax forms. Id. at 3. This Motion, which Defendant

opposes, is the one currently before the Court.

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II.    Legal Standard

       Federal Rule of Civil Procedure 15(d) allows the Court, “[o]n motion and reasonable

notice . . . [and] on just terms” to permit a party to serve a supplemental pleading setting forth

events that have happened since the filing of its complaint. “Rule 15(d) is used to set forth new

facts that update the original pleading or provide the basis for additional relief; to put forward

new claims or defenses based on events that took place after the original complaint or answer

was filed.” United States v. Hicks, 283 F.3d 380, 386 (D.C. Cir. 2002). “The addition of [a]

new FOIA request is plainly a supplemental pleading as defined by Federal Rule of Civil

Procedure 15(d), as it ‘sets forth transactions or occurrences or events which have happened

since the date of the pleading sought to be supplemented.’” Hall v. CIA, 437 F.3d 94, 100 (D.C.

Cir. 2006) (quoting Fed. R. Civ. P. 15(d)).

       Rule 15(d)’s intent is “to make pleadings a means to achieve an orderly and fair

administration of justice.” Gomez v. Wilson, 477 F.2d 411, 417 n.34 (D.C. Cir. 1973) (quoting

Griffin v. County School Bd., 377 U.S. 218, 227 (1964)). The Rule “promote[s] as complete an

adjudication of the dispute between the parties as is possible.” Wright & Miller, 6A Fed. Prac. &

Proc. Civ. § 1504 (3d ed. 2017). It seeks “to avoid ‘needlessly remitt[ing] [plaintiffs] to the

difficulties of commencing a new action even though events occurring after the commencement

of the original action have made clear the right to relief.’” Scahill v. District of Columbia, 909

F.3d 1177, 1183 (D.C. Cir. 2018) (quoting Fed. R. Civ. P. 15(d), advisory committee notes to the

1963 amendment). “It follows that supplementation of pleadings is encouraged ‘when doing so

will promote the economic and speedy disposition of the entire controversy between the parties,

will not cause undue delay or trial inconvenience, and will not prejudice the rights of any of the

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other parties to the action.’” U.S. ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 4 (1st Cir.

2015) (quoting Wright & Miller, supra).

         Courts typically resolve motions to supplement under Rule 15(d) and motions to amend

under Rule 15(a) via the same standard. See, e.g., Banner Health v. Burwell, 55 F. Supp. 3d 1,

8 n.9 (D.D.C. 2014); Wildearth Guardians v. Kempthorne, 592 F. Supp. 2d 18, 23 (D.D.C.

2008). The key difference between the two Rules is that amendments “relate to matters that

occurred prior to the filing” of the pleading to be amended, whereas supplements “set[] forth

transactions or occurrences or events which have happened since” that pleading. Hall, 437 F.3d

at 100 (emphasis added) (quoting Hicks, 283 F.3d at 385; then quoting Wright & Miller, supra).

Further, “[s]upplements under Rule 15(d) always require leave of the court, and the court has

broad discretion in determining whether to allow supplemental pleadings in the interests of

judicial economy and convenience.” The Fund For Animals v. Hall, 246 F.R.D. 53, 54 (D.D.C.

2007).

         Typically, Courts grant leave to amend or supplement “unless there is a good reason,

such as futility, to the contrary.” Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003

(D.C. Cir. 1996); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (noting that reasons not to

permit Rule 15(a) amendment may include “undue delay, bad faith or dilatory motive on the part

of the movant, repeated failure to cure deficiencies by amendments previously allowed, [and]

undue prejudice to the opposing party”). In other words, if the new causes of action would be

deficient as stated in the proposed supplement, courts need not grant leave. See In re Interbank

Funding Corp. Secs. Lit., 629 F.3d 213, 218 (D.C. Cir. 2010) (“[A] district court may properly

deny a motion to amend if the amended pleading would not survive a motion to dismiss.”) (citing

Foman, 371 U.S. at 182, for proposition that “‘futility of amendment’ is permissible justification

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for denying Rule 15(a) motion”); James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir.

1996) (“Courts may deny a motion to amend a complaint as futile . . . if the proposed claim

would not survive a motion to dismiss.”).

III.    Analysis

       In opposing Plaintiff’s proposed supplement, the IRS contends that the counts relating to

the newly alleged requests are either infirm, untimely, or both. The Court will first consider the

January RAIVS requests and then the June Privacy Act request.

       A. January RAIVS Requests

       The Service argues that Powell cannot supplement his Amended Complaint with his

January RAIVS requests — seeking tax forms for his father and grandfather — because 1) he

unduly delayed in adding these requests, and 2) he did not exhaust his administrative remedies.

See ECF No. 24 (Defendant Opposition to Motion to Supplement) at 3–4. The Court is not

persuaded.

             1. Undue Delay

       Undue delay “is a valid reason to reject a party’s attempt to add a new theory of liability

to a complaint.” Elkins v. District of Columbia, 690 F.3d 554, 565 (D.C. Cir. 2012). Because

“[c]onsideration of whether delay is undue . . . should generally take into account the actions of

other parties and the possibility of any resulting prejudice,” Atchinson v. District of Columbia,

73 F.3d 418, 426 (D.C. Cir. 1996), the significance of a delay depends on the prejudice it causes.

While Plaintiff’s justification for his tardiness may be a bit flimsy here, the slow progress of this

litigation negates any potential prejudice to the IRS.

       Defendant believes Powell did “not act[] in good faith” by waiting until August 1, 2019,

to file his Motion to Supplement. See Def. Opp. at 3–4. The IRS aptly notes that Powell could

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have brought his January requests to this Court as early as six months before his August 1

Motion. Id. at 3–4. Yet, following the filing of Plaintiff’s Amended Complaint on February 6,

2019, this Court issued a stay giving the parties time to resolve their dispute before continuing

litigation. See Minute Order of Feb. 27, 2019. After lifting the stay on May 2, 2019, see Minute

Order, Plaintiff promptly filed a motion to supplement the Amended Complaint with factual

allegations dating back to January 2019. See First Mot. Suppl. Compl. While the Court denied

this motion for procedural defects, his second bite at the apple cured those infirmities on August

1. Although the second Motion admittedly lagged three months behind the first — but followed

only four weeks after Plaintiff’s June 3 request arguably became actionable — that delay does

not demonstrate prejudice or a lack of good faith. Indeed, the IRS has not yet filed its

forthcoming motion for summary judgment on the Amended Complaint claims, so the

supplemental material will not derail the litigation. Cf. Thorp v. District of Columbia, 325

F.R.D. 510, 514 (D.D.C. 2018) (denying leave to supplement complaint in part because parties’

motions for summary judgment were already ripe).

           2. Futility

       The IRS next asserts that Powell’s proposed claims are futile because he failed to exhaust

his administrative remedies. See Def. Opp. at 4–5. Plaintiff retorts that FOIA’s administrative

remedies do not apply to RAIVS requests. See Pl. Reply at 3–5. While both parties have

misconstrued the law, the chips ultimately fall for Plaintiff.

       Courts often talk about the need to abide by agency procedures as the “exhaustion”

requirement. Such “[e]xhaustion of administrative remedies is generally required before filing

suit in federal court.” Oglesby v. Dep’t of Army, 920 F.2d 57, 61 (D.C. Cir. 1990). A plaintiff’s

“failure to comply with an agency’s FOIA regulations is the equivalent of a failure to exhaust”

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and generally subjects the case to dismissal. West v. Jackson, 448 F. Supp. 2d 207, 211 (D.D.C.

2006); see Hidalgo v. FBI, 344 F.3d 1256, 1258 (D.C. Cir. 2003) (affirming Rule 12(b)(6)

dismissal for failure to exhaust). To “maintain a civil action,” a litigant must thus first “properly

initiate[]” FOIA’s administrative process by following each agency’s “published rules” on

request procedures. Brown v. FBI, 675 F. Supp. 2d 122, 126 (D.D.C. 2009).

       In this case, Defendant claims that “upon receiving the unsatisfactory response from

RAIVS” after his January requests, Plaintiff failed to “proceed[] to the FOIA Disclosure

Office . . . as he has been instructed to do.” Def. Opp. at 5. Plaintiff, however, was not so

required. Defendant neglected the obligation of agencies to reply to every record request and

— if that request is denied — to give the requester an explanation for its decision. See 5 U.S.C.

§ 552(a)(6)(A)(i)–(ii); 26 C.F.R. § 601.702(c)(9)(i); 31 C.F.R. § 1.26(g)(1). If an agency does

not notify the requester of its decision in the statutorily mandated timeframe, the requester has

fulfilled the exhaustion requirement and has the right to file suit in federal court. See 5 U.S.C.

§ 552a(g)(1)(D) (providing right of action under Privacy Act when agency does not respond in

thirty days); 5 U.S.C. § 552(a)(6)(C)(i) (establishing that FOIA requester exhausts administrative

remedies when agency fails to “immediately notify” requester of decision after twenty days); 26

C.F.R. § 601.702(c)(9)(ii) (ordering agency to answer RAIVS requests after twenty days).

       Plaintiff asserts that Defendant never responded to any of his three RAIVS requests or his

single Privacy Act request. See Second Mot. Suppl. Compl. at 3. He points out that the Service

merely “refunded [his RAIVS] request fees” from January 2019 — without further

explanation — and did not respond to his June 3 Privacy Act request at all. Id. Given that the

IRS did not satisfy its requirements under FOIA, RAIVS, and the Privacy Act, no further

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exhaustion was required. Powell, accordingly, may supplement his Amended Complaint with

counts relating to these three requests.

        B. June Privacy Act Request

        Defendant finds more success — though not complete victory — in opposing Plaintiff’s

June 3 Privacy Act request. The IRS submits that the doctrine of issue preclusion bars Powell

from litigating portions of this request. See Def. Opp. at 6. “Under collateral estoppel, once a

court has decided an issue of fact or law necessary to its judgment, that decision may preclude

relitigation of the issue in a suit on a different cause of action involving a party to the first case.”

Allen v. McCurry, 449 U.S. 90, 94 (1980). In other words, “an issue of fact or law that was

actually litigated and necessarily decided is conclusive in a subsequent action between the same

parties or their privies.” Johnson v. Duncan, 746 F. Supp. 2d 163, 168 (D.D.C. 2010). “If a new

legal theory or factual assertion put forward in the second action is related to the subject-matter

and relevant to the issues that were litigated and adjudicated previously, so that it could have

been raised, the judgment is conclusive on it despite the fact that it was not in fact expressly

pleaded or otherwise urged.” Yamaha Corp. of Am. v. United States, 961 F.2d 245, 257–58

(D.C. Cir. 1992) (quoting James Wm. Moore et al., 1B Moore’s Federal Practice ¶ 0.443(2) at

760–61 (1988)).

        Issue preclusion requires three elements: (1) “the same issue now being raised must have

been contested by the parties and submitted for judicial determination in the prior case”; (2) “the

issue must have been actually and necessarily determined by a court of competent jurisdiction in

that prior case”; and (3) “preclusion in the second case must not work a basic unfairness to the

party bound by the first determination.” Martin v. Dep’t of Justice, 488 F.3d 446, 454 (D.C. Cir.

2007) (quoting Yamaha Corp., 961 F.2d at 254).

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       Powell’s June 3 request sought his individual Master File (MF) transcripts — both

“Specific and Complete” — and his automated Non-Master File (NMF) transcripts “of any

records contained therein pertaining to me.” See Second Mot. Suppl. Compl., Exh. C (June 3

Request). He requested transcripts from 1987 to 2019. Id.

       Litigating FOIA and Privacy Act requests is well-trodden ground for Powell, and this

Court has adjudicated many of his claims. In order to assess the IRS’s defense here, the Court

must set out the relevant requests Powell has previously litigated for his personal tax forms.

These include:

                 Request Date           Transcript
                                        MF-Complete (1988–1992)
                 July 19, 2016          MF-Specific for Form 1040 (1988–1992)
                                        NMF (years unspecified)
                 June 19, 2017          All NMF (1987–2017)
                 March 5, 2018          MF-Specific for Form 1040 (1987–2017)

       While knee deep in Powell’s other lawsuits, this Court came to three relevant conclusions

regarding his past requests for personal tax forms. These conclusions are at the core of

Defendant’s futility argument.

       First, Powell’s MF-Complete requests were rendered moot once the IRS “turn[ed] these

records over to [Powell]” on May 15, 2017. See Powell, 255 F. Supp. 3d at 46. In the FOIA

context, where the Government has released certain requested documents, the case is moot as to

those requests. Williams & Connolly v. SEC, 662 F.3d 1240, 1244 (D.C. Cir. 2011); cf. Perry v.

Block, 684 F.2d 121, 125 (D.C. Cir. 1982) (“[H]owever fitful or delayed the release of

information under the FOIA may be, once all requested records are surrendered, federal courts

have no further statutory function to perform.”). “By definition, . . . [the MF-]complete

transcript contains data from any past years relevant to that taxpayer.” Powell, 255 F. Supp. 3d

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at 36 (emphasis added). The MF-Complete transcript handed over in 2017 would, therefore,

include relevant transcripts from all prior years. To the extent his June 3 request sought the same

information, that request is moot. Powell’s requests for his 2018 and 2019 MF-Complete

transcripts, however, have not yet been addressed.

       Second, Powell’s past requests for MF-Specific transcripts have been focused on certain

Form 1040 transcripts. See Powell v. IRS, 280 F. Supp. 3d 155, 159 (D.D.C. 2017); Powell, 255

F. Supp. 3d at 47–48; Powell v. IRS, No. 18-453, 2019 WL 1980973, at *4–5 (D.D.C. May 3,

2019). This Court previously found these requests moot because the IRS had turned over Form

1040 transcripts from 1989 to 1992, see Powell, 280 F. Supp. 3d at 159, and it had “adequate[ly]

search[ed]” for the 1987 to 2017 forms. See Powell, 2019 WL 1980973, at *4–5; see also

Valencia-Lucena v. U.S. Coast Guard, 180 F.3d 321, 325 (D.C. Cir. 1999) (“An agency fulfills

its obligations under FOIA if it can demonstrate beyond material doubt that its search was

‘reasonably calculated to uncover all relevant documents.’” (quoting Truitt v. Dep’t of State, 897

F.2d 540, 542 (D.C. Cir. 1990)). While Powell’s earlier MF-Specific requests were under FOIA,

the same search would have satisfied the Privacy Act. See Thompson v. Dep't of Justice, 146

F. Supp. 3d 72, 82 (D.D.C. 2015) (adequacy of search for FOIA and Privacy Act analyzed under

same standard when searches would be coextensive). Although Powell’s June 3 request does not

identify the specific transcript sought, the Court has no way of knowing what (if anything) he

seeks beyond the Form 1040 transcripts. If he wishes to acquire some other form, he will have to

make that clear in a subsequent suit. As he defined it here, however, this claim is also moot

except for MF-Specific requests from 2018 and 2019.

       Finally, this Court previously rejected Powell’s suit over his requests for all automated

NMF transcripts between 1987 and 2017 because IRS’s “NMF search was adequate.” Powell v.

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IRS, 317 F. Supp. 3d 266, 279 (D.D.C. 2018). In the same vein as his other requests, Powell’s

request for 2018 and 2019 NMF transcripts, however, is a new issue before this Court.

       For these reasons, the doctrine of collateral estoppel precludes Powell from relitigating

requests for the following personal tax forms: MF-Complete transcripts between 1988 and 2017,

MF-Specific transcripts for Form 1040 between 1987 and 2017, and automated NMF transcripts

between 1987 and 2017. Only the requests for 2018 and 2019 in each category may proceed.

       C. Bad Faith

       Finally, the IRS flags Powell’s demonstrated proclivity for filing multiple related

lawsuits. Its Opposition laments his multi-suit quest to discover myriad forms of records,

claiming that Plaintiff “now appears more interested in harassing the agency than he does in

acquiring records.” Def. Opp. at 6. Such frustration is not entirely unfounded. Powell himself

has indicated that he would file “another lawsuit” based on his proposed supplemental claims.

See Second Mot. Suppl. Compl. at 4.

       While the IRS points to cases where courts have grappled with the harassing nature of

seemingly duplicative litigation, those cases do not require the Court to expand its undue-

prejudice inquiry outside the realm of this specific lawsuit, nor do they support Defendant’s

argument for denying the Rule 15(d) motion here. See In re Powell, 851 F.2d 427, 431 (D.C.

Cir. 1988) (denying injunction against plaintiff filing multiple FOIA suits because “the district

court should be careful not to conclude that . . . FOIA actions[] in and of themselves warrant a

finding of harassment”).

       Even if Powell’s litigiousness weighed heavily on the Rule 15(d) analysis, Defendant’s

grievances would still be misplaced. Here, the IRS has the opportunity to avoid piecemeal

litigation, but it would seem to prefer it over supplementation. Especially given that no

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summary-judgment motion has yet been filed, the Court believes that the better way to proceed is

all in one suit.

IV.     Conclusion

        For the foregoing reasons, the Court will grant in part and deny in part Plaintiff’s Second

Motion to Supplement the Amended Complaint. A Minute Order so stating will issue this day.

                                                             /s/ James E. Boasberg
                                                             JAMES E. BOASBERG
                                                             United States District Judge
Date: September 30, 2019

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