Opinion
No. 04 Civ. 3321 (GEL).
August 30, 2004
Anthony M. Bentley, New York, NY, for plaintiff.
Peter M. Skinner, Assistant United States Attorney (David N. Kelly, United States Attorney for the Southern District of New York, of counsel), for defendant.
OPINION AND ORDER
Alec J. Megibow brings this action against the Clerk of the United States Tax Court ("Clerk" or "Government") under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, seeking to overturn what he characterizes as a decision by the Clerk to deny his FOIA request for certain documents. The Clerk moves to dismiss for lack of subject matter jurisdiction, failure to state a claim upon which relief can be granted, and defective service pursuant to Rules 12(b)(1), 12(b)(6), and 12(b)(5), respectively, of the Federal Rules of Civil Procedure. Megibow cross-moves for the Court to "deem" service sufficient. The motion to dismiss for failure to state a claim will be granted; all other motions will be denied.
BACKGROUND
On March 17, 2004, Megibow brought a motion before the Tax Court to vacate or revise an adverse decision it had rendered about one month earlier in a dispute between himself and the Commissioner of Internal Revenue. (Bentley Decl., Ex. A.) The Tax Court summarily denied the motion two days later. (Id.) On April 10, 2004, Megibow wrote to the Tax Court, invoking FOIA and requesting "all records reflecting a decision of the Court evidenced exclusively by the affixation of a rubber stamp." (Skinner Decl., Ex. B.) By letter dated April 28, 2004, the Clerk responded that the Tax Court is not an "agency" to which FOIA applies, but nevertheless offered to provide Megibow documents relating to his own case if Megibow paid the reproduction costs. (Id. Ex. C.) Megibow responded by filing this action on May 2, 2004.DISCUSSION
I. Service of Process
The initial positions of both parties regarding service betray more petulance than substance. The Government correctly points out that Fed.R.Civ.P. 4(i)(2)(B) requires plaintiffs suing officers or employees of the United States for acts committed in connection with the performance of their duties to serve not only the relevant agency but also "the United States attorney for the district in which the action is brought," Fed.R.Civ.P. 4(i)(1)(A); see, e.g., Leon v. Ashcroft, No. 03 Civ. 3680, 2003 WL 22937684 (S.D.N.Y. Dec. 11, 2003), a requirement with which Megibow did not comply. Megibow argues, however, that the Government's Rule — 12(b)(5) motion to dismiss on this ground is hypertechnical: The United States Attorney for the Southern District of New York; who appears here on behalf of the Clerk, clearly received actual notice of Megibow's suit.
On the one hand, the Government's effort to dismiss the action for insufficient service of process, which would merely result in Megibow's refiling it, having been taught a lesson in civil procedure, is wasteful and inefficient. On the other hand, the Federal Rules of Civil Procedure do prescribe special rules for service of process upon the United States; those rules are not complex or burdensome; they serve legitimate purposes; and Megibow not only had every opportunity to comply with them, but also, as he acknowledges, still has that opportunity, for the deadline for proper service has not yet expired. See Fed.R.Civ.P. 4(m). (P. Br. 10.) Under these circumstances, his refusal to comply reflects pique rather than prudence. That Megibow regards the Government's insistence on strict compliance as hypertechnical neither exempts him from compliance nor permits the Court to disregard the rules.
The Government represents that it does not ordinarily waive service arguments because it "cannot depend on the agencies or other parties to forward [the] complaints, [and] the interests of the United States of America may be prejudiced if [it] does not receive complaints in a timely manner." (G. Ltr. dated Aug. 24, 2004, at 1.) Moreover, when the U.S. Attorney's Office only receives a copy of the complaint informally, it "cannot be sure that the complaint . . . received is identical to the one filed with the Court." (Id.) None of these arguments apply here, however, where there it is undisputed that the Government timely received an accurate copy of the complaint.
Fortunately, the Government, recognizing that its punctilio served no purpose, subsequently withdrew its motion to dismiss on this ground. (G. Ltr. dated Aug. 24, 2004, at 2.) Accordingly, the Government's motion to dismiss for inadequate service is withdrawn, and Megibow's cross-motion to have service "deemed" complete is denied as moot.
II. Lack of Jurisdiction
The Government next moves the Court to dismiss for lack of subject matter jurisdiction, arguing that the Clerk has not denied plaintiff's request for documents. Understandably misled by loose language in Kissinger v. Reporters Committee for Freedom of the Press, 445 U.S. 136, 150 (1980), the Government misconceives the concept of jurisdiction. It cites Kissinger for the proposition that under FOIA, "federal jurisdiction is dependent upon a showing that an agency has (1) improperly; (2) withheld; (3) agency records." Id. (internal quotation marks omitted); see 5 U.S.C. § 552(a)(4)(B) (federal jurisdiction to enjoin agencies from improperly withholding records). But as subsequent passages in Kissinger make clear, the tripartite showing enumerated is not a prerequisite to federal subject-matter jurisdiction, properly speaking, but to the authority of the federal courts "to devise remedies and enjoin agencies," that is, to fashion appropriate relief to redress a FOIA violation. Id.
But this is not a question of the Court's subject matter jurisdiction; it is a question of the merits of Megibow's claim. Subject matter jurisdiction refers to authority to hear and determine a case. Brougham v. Oceanic Steam Navigation Co., 205 F. 857, 859-60 (2d Cir. 1913). Here, Megibow asserts a claim arising under FOIA, a federal statute. The Court clearly has jurisdiction to hear that claim. See 28 U.S.C. § 1331; 5 U.S.C. § 552(a)(4)(B). If Megibow cannot establish an element of his claim, that would not defeat the Court's power to determine the claim; it would mean that the Court would be required to exercise its jurisdiction, hear the claim, and deny it on the merits.See Bell v. Hood, 327 U.S. 678, 682 (1946) ("Jurisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action."). Properly understood, the Government therefore does not really contend that the Court lacks subject matter jurisdiction because the Clerk did not, contrary to Megibow's allegations, withhold agency records. Rather, it argues that Megibow cannot state a viable claim.
Kissinger itself illustrates this point. Having held that the plaintiffs failed to establish a right to the relief granted by the courts below, the Supreme Court did not remand the action with instructions to dismiss for lack of jurisdiction; it decided the case on the merits, "revers[ing] the order of the Court of Appeals compelling production of the telephone manuscripts made by Kissinger while Secretary of State and affirm[ing] the order denying the requests for transcripts produced while Kissinger served as National Security Adviser." 445 U.S. at 158.
Even thus construed, however, the motion must be denied. The Clerk argues that he did not deny Megibow's request. Rather, he argues, he reasonably construed the request, which Megibow captioned with the docket number of his Tax Court action against the Commissioner, as limited to the documents filed in that action, and he offered to provide Megibow copies of all such documents. But a motion to dismiss for failure to state a claim may only be granted when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Megibow avers that he requested certain records from the Clerk, which the Clerk refused to provide. (Compl. ¶¶ 3, 10.) The complaint therefore clearly alleges that the Clerk wrongly refused a FOIA request. The Clerk's "reasonable construction" argument raises an issue of fact about what occurred; it does not call into question the adequacy of Megibow's pleading. Moreover, while the Clerk's purported reading of Megibow's request is not entirely implausible, it is both disputable and disingenuous: disputable because Megibow's construction of his own letter is at least equally plausible, and disingenuous because, in light of the Government's position that the Tax Court is not an "agency" within the meaning of FOIA, it is clear that the Clerk would not comply with Megibow's request even were it resubmitted in a clearer form.
Megibow's letter requests " all records reflecting a decision of the Court evidenced exclusively by the affixation of a rubber stamp, as is exemplified by the annexed [decision in Megibow's own case]" (Skinner Decl., Ex. B), without limitation to any particular case.
In its reply brief, the Government seeks to salvage its "jurisdictional" argument by arguing that the Court lacks jurisdiction because Megibow failed to exhaust his administrative remedies. (G. Reply Br. 5.) This argument is also unavailing. First, by failing to raise the argument until its reply brief, the Government has arguably waived it. Booking v. Gen. Star Mgmt. Co., 254 F.3d 414, 417-18 (2d Cir. 2001). Indeed, the potential for waiver illustrates that this argument, too, is not properly jurisdictional. While FOIA requires the exhaustion of administrative remedies as a precondition to suit, Hidalgo v. F.B.I., 344 F.3d 1256, 1259 (D.C. Cir. 2003), that requirement is not jurisdictional. Taylor v. Appleton, 30 F.3d 1365, 1367-68 n. 3 (11th Cir. 1994). Were it, courts would be required to raise the exhaustion issue sua sponte, and waiver of this requirement would be impossible. See, e.g., Curley v. Brignoli, Curley Roberts Assocs., 915 F.2d 81, 83 (2d Cir. 1990) ("[S]ubject matter jurisdiction is an unwaivable sine qua non for the exercise of federal judicial power."); Capron v. Van Noorden, 6 U.S. (2 Cranch) 126 (1804). The Government cites no authority, and the Court knows of none, holding that a failure to exhaust is jurisdictional in this sense.
Second, while the Government's reliance on Oglesby v. U.S. Dep't of the Army, 920 F.2d 57, 63 (D.C. Cir. 1990), is correct as far as it goes — Megibow cannot benefit from the exception to exhaustion that applies when an agency fails to respond to a FOIA request within ten days, see 5 U.S.C. § 552(a)(6)(C), because the Clerk timely "cured" its failure to respond by denying the request before Megibow filed this lawsuit — Oglesby does not address two more basic problems with the Government's exhaustion defense.
(1) The Government neither explains what administrative appeals Megibow should have pursued, nor refers to any law, rule or regulation establishing such appeals. Agencies subject to FOIA often promulgate regulations providing for internal appeals from denials of FOIA requests. See, e.g., 28 C.F.R. § 0.23a (establishing the Office of Information and Privacy within the Department of Justice to handle appeals from denials of FOIA requests by the Department). As the Tax Court contends that it is not such an agency, it presumably has not issued such regulations. At any rate, Megibow addressed his request to the Clerk of the Court, presumably its highest administrative officer. The Government does not suggest any higher official to whom Megibow could have appealed. Finally, FOIA specifically requires an agency denying a request to advise the disappointed requester "of [his] right to appeal to the head of the agency any adverse determination." 5 U.S.C. § 552(a)(6)(A)(i). The Clerk's letter contains no such advice, strongly suggesting that no administrative appeal exists for Megibow to pursue.
(2) Because the Clerk maintains that the Tax Court is not an agency subject to FOIA, resort to any administrative appeal that did exist would naturally be futile. See Armstrong v. Bush, 807 F. Supp. 816, 819 (D.D.C. 1992) ("[I]t is well established that administrative exhaustion is not required where it would be 'futile because of certainty of an adverse decision.'"), quotingJames v. U.S. Dep't of Health and Human Servs., 824 F.2d 1132, 1138 (D.C. Cir. 1987). The Government's litigation position makes clear that there is no possibility the Tax Court or any of its officers would reverse the Clerk's decision, for that decision is based on a legal position that the Government argues is correct.Cf. Armstrong, 807 F. Supp. at 819 (exhaustion not required where Government continued to maintain that electronic materials — sought were not "records" subject to FOIA).
Because the Government's "jurisdictional" arguments are not properly jurisdictional, and in any event lack merit, its motion to dismiss for lack of subject matter jurisdiction is denied.
III. Failure to State a Claim
The Government's final argument, however, that Megibow fails to state a claim under FOIA because the Tax Court is not an agency subject to FOIA, but rather a court, is meritorious. FOIA applies to "[e]ach agency," 5 U.S.C. § 552(a), of the federal government. An "agency," for purposes of FOIA,
as defined in section 551(1) of this title includes any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency.5 U.S.C. § 552(f)(1). Section 551(1), in turn, specifically provides that an "agency . . . does not include . . . the courts of the United States." Id. § 551(1)(B). The Government argues that the Tax Court is a "court of the United States" and therefore not an "agency" for purposes of FOIA.
Nor does it include "the Congress," "the governments of the territories or possessions of the United States" or "courts martial." Id. § 551(1)(A), (C), (F).
The parties cite, and research discloses, only one case that specifically addressed the Tax Court's status under FOIA. InOstheimer v. Chumbley, 498 F. Supp. 890, 892 (D. Mont. 1980),aff'd, 746 F.2d 1487 (9th Cir. 1984), the United States District Court for the District of Montana held that the Tax Court does not fall within FOIA's definition of an agency. Megibow rightly, if somewhat condescendingly, points out thatOstheimer does not bind this Court. But binding or not, Ostheimer was correctly decided.
While decisions of other district courts, or even courts of appeals other than the Second Circuit, do not establish precedents binding on this Court, such decisions surely merit respectful consideration — despite Megibow's apparent belief that decisions from Montana, or decisions rendered twenty-five years ago, should not be given serious consideration. (P. Br. 5.) Moreover, the Ninth Circuit affirmed Ostheimer, albeit summarily, without any written opinion. As this Court has frequently emphasized, notwithstanding the local rules of the various courts of appeals proclaiming their intentions not to consider summary orders binding, district judges surely would do well to accord the views of a panel of appellate judges at least as much respect as academic articles, which may be freely cited.CFTC v. Int'l Fin. Servs. (N.Y.), Inc., 323 F. Supp.2d 482, 510 n. 19 (S.D.N.Y. 2004).
Congress established the United States Tax Court "under article I of the Constitution of the United States," as "a court of record," 26 U.S.C. § 7441; defined its members as "judges,"id.; and assigned it "jurisdiction" over certain matters, id. § 7442. The rules promulgated by the Tax Court pursuant to its statutory authority, id. § 7453, in all respects resemble the rules of other courts. They provide for the institution of cases (Rule 20); the filing of pleadings (Rule 30) and motions (Rule 50); the conduct of trials (Rule 140 et seq.); and the rendering of "findings of fact or opinion[s]" (Rule 152), which can be appealed (Rule 190). Whatever the legal status of its predecessor institutions, Congress has left no doubt about the Tax Court's institutional nature.
Megibow points out that the Tax Court exercises some functions once carried out by the Board of Tax Appeals, a body that had been "an independent agency in the Executive Branch of the Government." Lincoln Elec. Co. v. Comm'r of Internal Revenue, 162 F.2d 379, 382 (6th Cir. 1947) (internal quotation marks omitted), citing Old Colony Trust Co. v. Comm'r of Internal Revenue, 279 U.S. 716 (1929).
Courts established pursuant to Congress's powers under Article I of the Constitution may not exercise all of the powers vested in courts established under or authorized by Article III. See, e.g., N. Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982). But whatever the consequences of designating an institution an "Article I" or "legislative" court, or the limitations on its "judicial" powers, it can hardly be disputed that such an entity qualifies as a "court," not an executive agency. The Supreme Court has repeatedly emphasized that "the judicial power of the United States is not limited to the judicial power defined under Article III and may be exercised by legislative courts." Freytag v. Comm'r of Internal Revenue, 501 U.S. 868, 889 (1991), citing cases as early as Am. Ins. Co. v. Canter, 26 U.S. (1 Pet.) 511, 546 (1828). Legislative courts include, inter alia, territorial courts, the courts of the District of Columbia, and the bankruptcy courts. Richard H. Fallon, Jr., et al., Hart and Wechsler's The Federal Courts and the Federal System 377-80 (5th ed. 2003). These courts clearly qualify as "courts" in the ordinary sense of that word, and any contention that they really constitute executive agencies of the sort to which FOIA applies would be baseless. Megibow cites no precedent or authority finding a legislative court subject to FOIA, and research discloses none.
To be sure, as Megibow argues, FOIA's application to a particular governmental entity depends not on the label attached to that entity but on an examination of its functions. But applying this test makes absolutely clear that the Tax Court is not an agency. Functionally, the Tax Court acts as a judicial body — a court. It hears and decides concrete controversies by finding facts and applying established law to those facts. Unlike administrative agencies, which have some similar adjudicative functions and to which FOIA expressly applies, the Tax Court lacks any quasi-legislative rule-making functions. Nor does it enjoy any quasi-executive powers of enforcement. It does not promulgate regulations or bring lawsuits. It functions solely as an adjudicative body. The Supreme Court has left absolutely no doubt about the Tax Court's nature and legal status:
Clearly, Congress's decision to denominate the Tax Court a court is not controlling. If, in fact, Congress gave the Tax Court power to promulgate rules or bring enforcement actions, as do other agencies subject to FOIA, then assigning it the label "Tax Court" would not prevent the Court from deciding, as a matter of law, that it is in reality an agency to which FOIA applies. It is in this regard that a review of the Tax Court's prescribed functions is relevant. How well (or poorly) the Tax Court performs those functions is entirely irrelevant to its legal status.
The Tax Court exercises judicial power to the exclusion of any other function. It is neither advocate nor rulemaker. As an adjudicative body, it construes statutes passed by Congress and regulations promulgated by the Internal Revenue Service. It does not make political decisions.
The Tax Court's function and role in the federal judicial scheme closely resemble those of the federal district courts, which indisputably are "Courts of Law." Furthermore, the Tax Court exercises its judicial power in much the same way as the federal district courts exercise theirs. . . .Freytag, 501 U.S. at 891.
Megibow relies on the history of the Tax Court's predecessor entities to argue that it is, or should be deemed, part of the executive branch and therefore subject to FOIA. (P. Br. 7.) But the Supreme Court specifically rejected this argument, finding it inconsistent with "the intent of Congress, which enacted legislation in 1969 with the express purpose of 'making the Tax Court an Article I court rather than an executive agency,'" because "Congress deemed it 'anomalous to continue to classify' the Tax Court with executive agencies, . . . and questioned whether it was 'appropriate for one executive agency [the pre-1969 tribunal] to be sitting in judgment on the determinations of another executive agency [the IRS].'" Id. at 887-88 (bracketed phrases in original), quoting S. Rep. No. 91-552, at 302-03 (1969), 1969 U.S.C.C.A.N. 1645, 2027. The Court emphasized, contrary to Megibow's argument, that the "Tax Court remains independent of the Executive and Legislative Branches" of government. Id. at 891. Accordingly, it held that for purposes of the Appointments Clause of the Constitution, U.S. Const. art. II, § 2, cl. 2, the Tax Court is a "Court of Law." Id. at 892.
Megibow cites several non-authoritative sources in an effort to bolster his contention. He refers, for example, to a publication of the Administrative Office of the United States Courts outlining the court system for the education of the lay public, which refers to the Tax Court as a "specialized subject-matter court" located "[w]ithin the executive branch." (P. Br. 6; Bentley Decl., Exs. G-H.) Needless to say, the opinions of Congress and the Supreme Court carry more weight. Similarly, Megibow notes that the Second Circuit, for internal administrative purposes, refers to appeals from the Tax Court as "agency appeals," as distinct from appeals from the district courts. (P. Br. 4; Bentley Decl., Exs. B-E.) The administrative classification of an appeal for the Second Circuit's internal bureaucratic purposes is irrelevant to the issue before the Court. More important, however, the Supreme Court found the similarities between district court and Tax Court appeals to be further indication that the Tax Court is a "Court of Law."See Freytag, 501 U.S. at 891 (observing that "like the judgments of the district courts, the decisions of the Tax Court are appealable only to the regional United States courts of appeals," which "review those decisions 'in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury'"), quoting 26 U.S.C. § 7482(a).
Finally, contrary to an argument at least implied in Megibow's brief, whether the Tax Court is a court or an agency for purposes of FOIA is not a question of fact that must await the receipt of evidence establishing "how the Tax Court behaves." (P. Br. 4, 7.) Nor is the Court's conclusion dependent on whether it agrees with Megibow's contention that the Tax Court defers unreasonably to positions taken by the Internal Revenue Service ("IRS"). The status of the Tax Court is a question of law that depends on statutory interpretation. Even were Megibow correct that the Tax Court is so biased that it operates in practice as a de facto extension of the IRS, that would suggest only that the Tax Court is a bad court. But bias, or even corruption, does not transform an adjudicative body into an executive or administrative agency for FOIA purposes. The status of a governmental body under FOIA turns on its nature, structure and functions, not on whether Megibow — or, for that matter, this Court — thinks it is doing a good job.
See note 7 above.
Needless to say, the Court does not express or intend to imply any view on Megibow's criticisms of the Tax Court. It simply notes that those criticisms, meritorious or not, do not bear on the issue before the Court.
Because the Tax Court is not an agency subject to FOIA, Megibow's complaint regarding the denial of his FOIA request fails to state a claim on which relief can be granted.
CONCLUSION
Accordingly, the Government's motion to dismiss for failure to state a claim is granted, and judgment will be entered dismissing the complaint with prejudice.SO ORDERED.