RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 11a0089p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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KENNETH HOOGERHEIDE,
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Plaintiff-Appellant,
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No. 10-1126
v.
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INTERNAL REVENUE SERVICE; UNITED
Defendants-Appellees. -
STATES OF AMERICA,
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Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 08-00765—Janet T. Neff, District Judge.
Argued: March 8, 2011
Decided and Filed: April 12, 2011
Before: BATCHELDER, Chief Judge; CLAY and SUTTON, Circuit Judges.
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COUNSEL
ARGUED: Matthew S. DePerno, DePERNO LAW OFFICE, PLLC, Mattawan,
Michigan, for Appellant. Jennifer M. Rubin, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Matthew S. DePerno,
DePERNO LAW OFFICE, PLLC, Mattawan, Michigan, for Appellant. Jennifer M.
Rubin, Deborah K. Snyder, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellees.
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OPINION
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SUTTON, Circuit Judge. After the Internal Revenue Service sold Kenneth
Hoogerheide’s property to offset unpaid taxes, Hoogerheide sued the IRS and several
of its employees. Many of the claims fell by the wayside for one reason or another,
leaving a money-damages claim against the United States, which the district court
1
No. 10-1126 Hoogerheide v. IRS et al. Page 2
dismissed for lack of jurisdiction. We affirm the dismissal, though not the explanation,
as Hoogerheide’s failure to exhaust the IRS’s administrative remedies did not deprive
the court of jurisdiction over the damages claim.
I.
Hoogerheide, like most everyone, owed the IRS taxes. Yet, unlike most
everyone, he neglected to pay them.
In May 2006, the IRS tried to collect some of his unpaid taxes by auctioning a
piece of real estate he owned. Hoogerheide responded by offering a compromise and,
later that month, by requesting a hearing. Over the next few months, Hoogerheide’s
counsel sent fifteen more letters to various IRS officials and the Taxpayer Advocate
Office about his situation. Some letters requested information under the Freedom of
Information Act, 5 U.S.C. § 552, while others focused on resolving or delaying the tax
collection action. The IRS sold Hoogerheide’s property on August 15, 2006.
Two years later, Hoogerheide filed this action against the IRS (later replaced by
the United States as the defendant) and several of its employees. The district court
dismissed all of the claims against the individual defendants for failure to prosecute
them. Hoogerheide withdrew most of the remaining claims, leaving a claim for damages
and a request for a temporary restraining order designed to stop the collection action and
return the auctioned property. See 26 U.S.C. § 7433. Because Hoogerheide failed to
exhaust his administrative remedies, the court dismissed the damages claim for lack of
subject matter jurisdiction and dismissed the request for a temporary restraining order
as moot. Hoogerheide appealed.
II.
The district court had good reason to assume that a plaintiff’s failure to exhaust
the IRS’s administrative remedies deprives the federal courts of subject matter
jurisdiction over a § 7433 damages action. We have said as much before. See, e.g.,
Fishburn v. Brown, 125 F.3d 979, 982 (6th Cir. 1997); Romp v. United States, 96 F.
App’x 978, 980 (6th Cir. 2004).
No. 10-1126 Hoogerheide v. IRS et al. Page 3
Since these decisions, however, the Supreme Court has changed course.
Concerned about the vanishing distinction between the mandatory requirements of a
cause of action and jurisdiction over that cause of action, the Court in 2006 drew an
“administrable bright line” between the two. Arbaugh v. Y & H Corp., 546 U.S. 500,
516 (2006). Here is the line:
If the Legislature clearly states that a threshold limitation on a statute’s
scope shall count as jurisdictional, then courts and litigants will be duly
instructed and will not be left to wrestle with the issue. . . . But when
Congress does not rank a statutory limitation on coverage as
jurisdictional, courts should treat the restriction as nonjurisdictional in
character.
Id. at 515–16. Since Arbaugh, we have re-assessed the line between jurisdictional and
claims-processing requirements in several settings. See, e.g., Winnett v. Caterpillar,
Inc., 553 F.3d 1000, 1005–06 (6th Cir. 2009) (existence of union contract goes to the
merits, not to jurisdiction over a claim under the Labor Management Relations Act);
Allen v. Highlands Hosp. Corp., 545 F.3d 387, 401–02 (6th Cir. 2008) (administrative
exhaustion goes to a plaintiff’s right to relief, not to jurisdiction over a claim under the
Age Discrimination in Employment Act); Thomas v. Miller, 489 F.3d 293, 296 n.3 (6th
Cir. 2007) (numerosity requirement goes to the scope of liability, not to jurisdiction over
a claim under the Family Medical Leave Act).
In the aftermath of Arbaugh, it no longer is appropriate to treat the exhaustion
requirements for bringing a § 7433 claim as jurisdictional. Mandatory though the
exhaustion requirement in § 7433(d) may be, it is not jurisdictional.
Three interlocking statutes and regulations define the terms and conditions for
bringing this type of lawsuit. One, § 7433(a) permits a taxpayer to bring “a civil action
for damages against the United States” if “any officer or employee of the Internal
Revenue Service recklessly or intentionally, or by reason of negligence” violates a
provision of the Internal Revenue Code. 26 U.S.C. § 7433(a). Two, § 7433(d) provides
that “[a] judgment for damages shall not be awarded . . . unless the court determines that
the plaintiff has exhausted the administrative remedies available to such plaintiff.” Id.
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§ 7433(d). Three, a Treasury Regulation provides one of the administrative remedies
that must be exhausted: “An administrative claim . . . shall be sent in writing to the Area
Director, Attn: Compliance Technical Support Manager of the area in which the taxpayer
currently resides.” 26 C.F.R. § 301.7433-1(e)(1). The regulation adds that this
administrative claim must include “[t]he dollar amount of the claim,” id. § 301.7433-
1(e)(2)(iv), “[a] description of the injuries incurred by the taxpayer filing the claim,” id.
§ 301.7433-1(e)(2)(iii), and “[t]he name, current address, current home and work
telephone numbers and any convenient times to be contacted . . . of the taxpayer making
the claim,” id. § 301.7433-1(e)(2)(i).
Arbaugh’s “readily administrable bright[-]line” rule places this exhaustion
requirement on the nonjurisdictional side of the line. The requirement “does not speak
in jurisdictional terms or refer in any way to the jurisdiction of the district courts.” Zipes
v. Trans World Airlines, Inc., 455 U.S. 385, 394 (1982). It provides a limitation on an
“award” of a “judgment for damages,” 26 U.S.C. § 7433(d), not on the federal courts’
jurisdiction. “Under Arbaugh, we look to see if there is any ‘clear’ indication that
Congress wanted the rule to be ‘jurisdictional,’” and “[t]he terms of [§ 7433(d)] do not
suggest, much less provide clear evidence, that the provision was meant to carry
jurisdictional consequences.” Henderson v. Shinseki, __ U.S. __, 131 S. Ct. 1197, 1204
(2011).
Section 7433(d) “establishes a condition”—exhaustion—“that plaintiffs
ordinarily must satisfy before filing a[] . . . claim and invoking the [statute’s] remedial
provisions.” Reed Elsevier, Inc. v. Muchnick, __ U.S. __, 130 S. Ct. 1237, 1242 (2010).
Construing a similar provision, Reed Elsevier held that the Copyright Act’s registration
requirement was nonjurisdictional. Under the Copyright Act, “[t]he legal . . . owner of
an exclusive right under a copyright is entitled, subject to the requirements of section
411, to institute an action for . . . infringement.” 17 U.S.C. § 501(b). Section 411 of that
Act says that “no civil action for infringement . . . shall be instituted until preregistration
or registration . . . has been made.” The Court reasoned that it had “treated as
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nonjurisdictional other types of threshold requirements that claimants must complete,
or exhaust, before filing a lawsuit.” 130 S. Ct. at 1246–47.
The Court has not wavered from this rule. Each time it has construed a statutory
requirement that a plaintiff proceed in another forum or seek redress in other ways
before coming to federal court, it has construed the requirement as nonjurisdictional.
See Union Pac. R.R. Co. v. Bhd. of Locomotive Eng’rs, __ U.S. __, 130 S. Ct. 584 (2009)
(requirement to conference before seeking arbitration); Reed Elsevier, Inc., 130 S. Ct.
at 1248 (requirement to register copyright); Zipes, 455 U.S. at 393 (requirement to file
charge with EEOC before filing in court).
It makes no difference that § 7433(d) requires a court to “determine[] that the
plaintiff has exhausted” available administrative remedies. What is mandatory is not
necessarily jurisdictional. The requirement simply imposes a precondition on an award
of damages, akin to other nonjurisdictional preconditions on a plaintiff’s right to relief.
Consider Jones v. Bock, 549 U.S. 199 (2007), which dealt with a similar
exhaustion requirement under the PLRA. “No action,” the law said, “shall be brought
with respect to prison conditions . . . until such administrative remedies as are available
are exhausted.” 42 U.S.C. § 1997e(a). “There is no question,” the Court acknowledged,
“that exhaustion is mandatory under the PLRA and that unexhausted claims cannot be
brought in court.” Jones, 549 U.S. at 211. Yet the parties in Jones agreed that
exhaustion is “typically regard[ed] . . . as an affirmative defense,” and the Court
acknowledged that “[w]e have referred to exhaustion in these terms.” Id. at 212. The
PLRA’s “silen[ce] on the issue whether exhaustion” was an affirmative defense or an
element of a plaintiff’s claim, the Court reasoned, was “strong evidence that the usual
practice should be followed,” id., that the exhaustion requirement should be—and indeed
was—treated as an affirmative defense. The same is true here in two respects. An
exhaustion requirement generally will be treated as an affirmative defense, see Kim v.
United States, 632 F.3d 713 (D.C. Cir. 2011) (treating § 7433(d) as an affirmative
defense), and accordingly as a nonjurisdictional one, see Reed Elsevier, Inc., 130 S. Ct.
at 1246–47 & n.6; Allen v. Siebert, 552 U.S. 3, 6–7 (2007) (per curiam). And just as
No. 10-1126 Hoogerheide v. IRS et al. Page 6
silence in the PLRA about whether exhaustion is an element of a plaintiff’s claim
required courts to construe it as an affirmative defense, silence on whether § 7433(d) is
a jurisdictional requirement requires us to treat it as nonjurisdictional.
Context also shows that this “limitation” goes to a plaintiff’s right to relief, not
to his right to enter the federal courts. Another provision of the Internal Revenue Code,
indeed one in the same subsection of the statute, shows how an exhaustion requirement
might establish a jurisdictional requirement. Section 7422(a) provides that “No suit or
proceeding shall be maintained in any court for the recovery of any internal revenue tax
. . . until a claim . . . has been duly filed with the Secretary.” Id. (emphasis added).
Congress enacted § 7433(d), Pub. L. No. 100-647, Title VI, § 6240(a), 102 Stat. 3342,
3747 (1988), and recodified § 7433(d)’s exhaustion requirement, Pub. L. No. 105-206,
Title III, § 3102(a)(2), 112 Stat. 685, 730 (1998), against this backdrop, and nonetheless
it opted not to cast this requirement in jurisdictional terms. Different words have
different meanings. Prohibiting a “judgment for damages” is not the same as forbidding
any “suit or proceeding” from being “maintained in any court.” The latter is
jurisdictional; the former is not. See United States v. Dalm, 494 U.S. 596, 606 (1990);
cf. 8 U.S.C. § 1252(d)(1) (“A court may review a final order of removal only if the alien
has exhausted all administrative remedies.”). Congress even used the word
“jurisdiction” elsewhere in the same subtitle and conditioned district courts’ authority
on certain events. 26 U.S.C. §§ 7422(e) (“If the taxpayer files a petition with the Tax
Court, the district court or the United States Court of Federal Claims, as the case may
be, shall lose jurisdiction.”), 7426(b) (“The district court shall have jurisdiction to grant
only such of the following forms of relief as may be appropriate in the circumstances.”).
It conspicuously omitted from § 7433(d), however, similarly clear language that would
have tied a district court’s authority over a claim to a plaintiff’s exhaustion of
administrative remedies. See Henderson, 131 S. Ct. at 1205.
The United States responds that § 7433(d) is a term and condition of the United
States’ consent to suit and that the government’s consent “define[s] th[e] court’s
jurisdiction to entertain the suit.” FDIC v. Meyer, 510 U.S. 471, 475 (1994). The
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United States consented to be sued, however, in § 7433(a), and § 7433(d)’s exhaustion
requirement is not an express term or condition of that consent. Not every statutory
limitation on a plaintiff’s right to relief becomes jurisdictional in a suit against the
United States. See Henderson, 131 S. Ct. at 1206.
That the district court should not have dismissed this case for lack of jurisdiction
does not end the matter. It is quite possible that “nothing in the analysis . . . below
turned on the mistake [and] a remand would only require a new . . . label for the same
. . . conclusion.” Morrison v. Nat’l Austl. Bank Ltd., __ U.S. __, 130 S. Ct. 2869, 2877
(2010). This is just such a case.
Hoogerheide did not exhaust his administrative remedies, and the United States
timely raised failure to exhaust as a defense in a motion to dismiss. For that reason his
claim must be dismissed. The relevant letters, all attached to his complaint and
incorporated by it, show that he failed to comply with the relevant exhaustion
requirements. None of the letters from Hoogerheide or Hoogerheide’s counsel are
addressed to “the Area Director, Attn: Compliance Technical Support Manager of the
area in which” Hoogerheide “resides.” 26 C.F.R. § 301.7433-1(e)(1). None of the
letters “include[s] . . . [t]he dollar amount of the claim.” Id. § 301.7433-1(e)(2)(iv). And
none of the letters mentions a claim for damages against the IRS.
Hoogerheide claims that he substantially complied with the exhaustion
requirement. But the existence of such an exception seems doubtful in view of the
specificity of the Treasury regulations and the failure of Hoogerheide to identify any
authority for one in this setting. Even if such an exception exists, however, it is hard to
see how it would benefit Hoogerheide, given his failure to reference a claim for damages
or otherwise come close to complying with the applicable regulations in his letters.
Nor may we excuse this exhaustion requirement on futility grounds.
Section 7433(d) is mandatory. It is a congressionally established exhaustion imperative,
not a judicially created one, and accordingly the courts lack discretion to waive it. See
Booth v. Churner, 532 U.S. 731, 741 (2001).
No. 10-1126 Hoogerheide v. IRS et al. Page 8
Hoogerheide faults the district court for considering the United States’ motion,
which did not perfectly comply with the court’s scheduling order or local guidelines.
The court, however, had discretion to overlook errors in “its own local rules.” Valassis
Commc’ns, Inc. v. Aetna Cas. & Sur. Co., 97 F.3d 870, 873 (6th Cir. 1996). There is
also no evidence that any of these errors prejudiced Hoogerheide—he filed responses to
the purportedly defective motions—leaving us no reason to reverse the court’s order on
the ground that it declined to enforce a local rule or courtroom guideline. United States
v. Kingston, 922 F.2d 1234, 1240 (6th Cir. 1990).
In his reply brief, Hoogerheide for the first time raises a concern about an ex
parte communication in the district court, namely that the government’s attorney spoke
to the court’s law clerk about a motion to dismiss. The argument comes too late, and
accordingly it is forfeited. As Hoogerheide conceded, at any rate, the United States
previously indicated that this conversation was a short, nonsubstantive exchange with
the clerk confirming that the court struck the United States’ first motion to dismiss
because it filed the motion before all of the filings were served. Nothing suggests the
conversation went beyond this, and nothing thus suggests the court should be reversed
on this ground.
III.
For these reasons, we affirm the dismissal of this complaint on failure-to-exhaust
grounds.