Court Opinion

ID: 4584191
Source: CourtListenerOpinion
Date Created: 2020-11-05 22:00:28.844849+00
Date Added: 2024-06-11T13:47:03.225228
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        NOV 5 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

SMART-TEK SERVICES, INC.,                       No.    18-56560

                Plaintiff-Appellant,            D.C. No.
                                                3:15-cv-00449-BTM-JMA
 v.

UNITED STATES INTERNAL REVENUE                  MEMORANDUM *
SERVICE,

                Defendant-Appellee.

TRUCEPT, INC., FKA Smart Tek                    No.    18-56562
Solutions, Inc.,
                                                D.C. No.
                Plaintiff-Appellant,            3:15-cv-00447-BTM-JMA

 v.

UNITED STATES INTERNAL REVENUE
SERVICE,

                Defendant-Appellee.

AMERICAN MARINE, LLC,                           No.    19-55057

                Plaintiff-Appellant,            D.C. No.
                                                3:15-cv-00455-BTM-LL
 v.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
UNITED STATES INTERNAL REVENUE
SERVICE,

          Defendant-Appellee.

SMART-TEK AUTOMATED SERVICES,           No.   19-55058
INC.,
                                        D.C. No.
          Plaintiff-Appellant,          3:15-cv-00453-BTM-LL

 v.

UNITED STATES INTERNAL REVENUE
SERVICE,

          Defendant-Appellee.

SMART-TEK SERVICE SOLUTIONS             No.   19-55059
CORP.,
                                        D.C. No.
          Plaintiff-Appellant,          3:15-cv-00452-BTM-LL

 v.

UNITED STATES INTERNAL REVENUE
SERVICE,

          Defendant-Appellee.

             Appeal from the United States District Court
                 for the Southern District of California
            Barry Ted Moskowitz, District Judge, Presiding

                 Argued and Submitted July 20, 2020
                        Pasadena, California

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Before: BEA and BADE, Circuit Judges, and DRAIN,** District Judge.

      After Appellee Internal Revenue Service (“IRS”) recorded tax liens against

Appellants Smart-Tek Services, Inc., Trucept, Inc., American Marine, LLC, Smart-

Tek Automated Services Inc., and Smart-Tek Service Solutions Corp. (collectively,

the “Companies”) based on its determination that the Companies were alter egos of

other entities with delinquent payroll tax liabilities, the Companies sent requests to

the IRS seeking each entity’s employment, corporate, and partnership tax returns

under the Freedom of Information Act, 5 U.S.C. § 552 (“FOIA”).                In this

consolidated appeal, the Companies challenge the district court’s orders granting

summary judgment in favor of the IRS and finding that the IRS conducted an

adequate search responsive to the Companies’ FOIA requests and that the IRS

properly withheld the alleged alter egos’ taxpayer return information under FOIA

Exemption 3 and 26 U.S.C. § 6103(a). We have jurisdiction pursuant to 28 U.S.C.

§ 1291.

      We review de novo the district court’s summary judgment ruling. Id. To

merit summary judgment in a FOIA case, the agency must:

      demonstrate that it has conducted a search reasonably calculated to
      uncover all relevant documents. Further, the issue to be resolved is
      not whether there might exist any other documents possibly
      responsive to the request, but rather whether the search for those

      **
         The Honorable Gershwin A. Drain, United States District Judge for the
Eastern District of Michigan, sitting by designation.

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      documents was adequate. The adequacy of the search, in turn, is
      judged by a standard of reasonableness and depends, not surprisingly,
      upon the facts of each case. In demonstrating the adequacy of the
      search, the agency may rely upon reasonably detailed, nonconclusory
      affidavits submitted in good faith.

Zemansky v. U.S. EPA, 767 F.2d 569, 571 (9th Cir. 1985) (internal quotation marks

omitted) (quoting Weisberg v. U.S. Dep’t of Justice, 745 F.2d 1476, 1485 (D.C.

Cir. 1984)). “Agency affidavits are accorded a presumption of good faith, which

cannot be rebutted by purely speculative claims about the existence and

discoverability of other documents.” SafeCard Servs., Inc. v. SEC, 926 F.2d 1197,

1200 (D.C. Cir. 1991) (internal quotation marks and citation omitted).

      Here, the IRS demonstrated that it “conducted a search reasonably calculated

to uncover all relevant documents” in response to the Companies’ FOIA requests.

Hamdan v. U.S. Dep’t of Justice, 797 F.3d 759, 770–72 (9th Cir. 2015) (quoting

Zemansky, 767 F.2d at 571). IRS disclosure specialists scanned all documents—

from both the Companies and their alleged alter egos—into electronic format and

reviewed each page of each document, looking for any documents with the

Companies’ identifying information. In all, the IRS reviewed more than 140,000

pages. If a document contained the return information of one of the Companies, it

was marked responsive. The IRS created an index and catalogued which pages

were responsive and which pages were non-responsive to ensure that each page in

all sixty-five boxes was reviewed. IRS attorneys then reviewed the documents and

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determined whether a FOIA exemption applied. The Companies “were entitled to

a reasonable search” for responsive records “[a]nd a reasonable search is what they

got.” Id. at 772. The district court correctly determined that the IRS complied

with its obligations to search for relevant records.

      Notwithstanding the reasonable search, the Companies argue that the IRS

improperly withheld documents containing information about their alleged alter

egos. They argue that once the IRS collected the records of the Companies and

their alleged alter egos and commingled them into one file, everything in that file

became part of the Companies’ administrative file to which they were entitled.

Thus, the Companies argue, it was improper for the IRS to withhold records

containing their alleged alter egos’ return information merely because those

records did not contain the Companies’ return information.

      But the Companies’ argument misses the simple point: they did not request

this information in their FOIA requests.         The Companies had the duty to

“reasonably describe[]” the records they sought. 5 U.S.C. § 552(a)(3)(A). This

requirement is generally satisfied if the request provides “the name, taxpayer

identification number (e.g., social security number or employer identification

number), subject matter, location, and years at issue, of the requested records.”

Treas. Reg. § 601.702(c)(5)(i). However, each of the Companies submitted a

request for its own employment, corporate, and partnership tax returns and listed

                                           5
only its own specific entity’s name and taxpayer identification number; none of the

Companies listed the names or taxpayer identification numbers of their alleged

alter egos. Because the Companies seek documents that are outside the scope of

their FOIA requests, the Companies are not entitled to those documents through

this particular process. Consequently, we need not reach the issue of whether the

IRS properly withheld these documents pursuant to FOIA Exemption 3 and 26

U.S.C. § 6103(a).     We affirm the district court’s orders granting summary

judgment.

      AFFIRMED.

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