UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 96-20667
____________________
ELVIS E. JOHNSON,
Plaintiff-Appellee,
versus
ROBERT C. SAWYER, et al.,
Defendants,
ROBERT C. SAWYER, et al.,
Defendants-Appellants.
_________________________________________________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________________________________________________
August 21, 1997
Before SMITH, BARKSDALE, and BENAVIDES, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
Of the numerous issues raised in this appeal, two are critical
to our disposition: whether tax return information, once disclosed
in open court, loses its confidentiality such that its subsequent
publication by a federal employee does not violate 26 U.S.C. §
6103, which prohibits disclosure of such information except under
limited, non-applicable, circumstances; and whether, on remand,
this case must be reassigned.
For the second time, our court reviews a judgment in favor of
Elvis E. Johnson for the claimed wrongful disclosure of tax return
information in two 1981 press releases issued by the Internal
Revenue Service following his guilty plea to, and conviction for,
income tax evasion. In 1995, our en banc court reversed Johnson’s
$10 million Federal Tort Claims Act judgment against the United
States and remanded for dismissal of that claim. Johnson v.
Sawyer, 47 F.3d 716, 737-38 (5th Cir. 1995) (en banc). Johnson
then proceeded against IRS officers (Appellants) responsible for
the releases. Based partly on an instruction that the releases
wrongfully disclosed tax return information, the jury awarded
Johnson $9 million. Because that instruction was erroneous in part
and affected the outcome of this case, we VACATE and REMAND for a
new trial. And, to ensure, inter alia, the appearance of
impartiality, the case is to be REASSIGNED.
I.
In 1981, Johnson was an executive with American National
Insurance Company (ANICO) and was employed at its headquarters in
Galveston, Texas. Johnson began in 1951 with ANICO as an agent in
Springfield, Missouri. Because of his success, he was transferred
to Galveston in 1971. By 1976, he had become executive vice-
president and a member of the board of directors. He and Orson
Clay, ANICO’s president, reported directly to the board. In an
intra-company circular, Clay described Johnson as “the most
successful field man and home office executive in [ANICO’s]
history”.
In 1976, the IRS began auditing ANICO and its key executives,
including Johnson and his wife. Upon discovering discrepancies,
the examining agent referred the matter to the IRS Criminal
Investigation Division (CID), which assigned the case to appellant
Robert G. Stone, a Special Agent with the CID.
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Following an investigation, the CID referred the case to the
Department of Justice to prosecute Johnson and his wife for tax
evasion for the years 1974 and 1975. The case was assigned to
Assistant United States Attorney James L. Powers. In February
1981, Powers advised Johnson’s attorney, Robert I. White, that he
planned to seek an indictment of both Johnson and his wife; but, if
Johnson pled guilty to a one-count criminal information that he
underpaid his 1975 taxes (by approximately $3,500), the Government
would not prosecute his wife for either 1974 or 1975, would not
prosecute Johnson for 1974, and would recommend a probated
sentence.
According to Johnson, he kept ANICO’s executive committee,
president (Clay), and counsel fully apprised of the situation.
Evidently, White and Johnson were reassured that, even if Johnson
pled guilty to a crime, as long as there was no publicity that
would embarrass ANICO, Johnson could continue with ANICO as
executive vice-president. White therefore determined to ensure
that Johnson’s identity would never be disclosed — that if someone
looked at the district court file, he could not associate Johnson
with ANICO.
White notified Powers that publicity of a conviction would be
extremely damaging, and Powers evidently agreed, as he had with
White on other occasions for other defendants, to preserve
Johnson’s relative anonymity. Powers agreed to let White seek the
district court’s authorization to have the presentence
investigation performed before charges were filed. The completed
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presentence investigation report was delivered to the court on 2
April 1981. Johnson’s case was to be heard on Friday, 10 April, at
4:00 p.m. in the Galveston courthouse. White requested that the
criminal information be filed at the time of the hearing, along
with Johnson’s waiver of indictment and the plea bargain agreement;
and that the “Defendant’s Information” sheet give White’s office
address for Johnson’s address. Powers agreed to these precautions
and agreed that no press release would be issued concerning
Johnson. But, Powers did not advise the IRS of this “no publicity”
agreement.
At approximately 4:00 p.m. on 10 April, proceedings on the
record commenced. White had ensured that the district judge (Judge
Gibson) had no other business that Friday afternoon, and Powers had
agreed to that time to minimize the risk of publicity. White and
Johnson searched the Galveston courthouse for members of the press
and found none, so the only people present for the hearing were
Johnson, White, Powers, the district judge, and court personnel.
Johnson signed and filed a waiver of indictment.
The “Defendant Information” sheet, identifying Johnson as
“Elvis Johnson” of “1100 Milam St., 28th Floor, Houston, Texas
77002", was also filed. In fact, although Johnson’s full name is
Elvis E. Johnson, he was known as “Johnny” Johnson by friends,
ANICO executives and employees, and business acquaintances; he
signed all correspondence as “Johnny”. In addition, Johnson’s home
address was 25 Adler Circle, in Galveston.
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A criminal information, charging Johnson with tax evasion for
1975 in the amount of $3,474.97, was filed; and he signed and swore
to a written “Plea of Guilty”. After a FED. R. CRIM. P. 11 hearing,
the court sentenced Johnson to six months confinement, suspended,
and one-year of supervised probation. None of the documents filed
on 10 April mentioned Johnson’s employment. (As discussed infra,
properly excluded from evidence was the transcript of the plea
hearing; it reflects that the district judge did make reference to
Johnson being “an executive with American National Insurance
Company”.) The following Monday, 13 April, a judgment of
conviction and sentence was filed.
According to Johnson, when returning from court on 10 April,
he notified ANICO’s president (Clay) about what transpired, and
Clay responded favorably that the IRS matter was over and that he
(Johnson) should move forward because he was important to ANICO.
By the end of business on Tuesday, 14 April, Johnson informed other
members of ANICO’s executive committee that he had pled guilty to
a tax crime and put the matter behind him. Johnson testified that
he was not asked to resign; instead, he was told the “best interest
of the company is served by keeping you exactly where you are”.
The day before, however, Monday, 13 April, appellant Sally
Sassen, an IRS Public Affairs Officer, had prepared the following
press release about Johnson’s conviction, entitled “Insurance
Executive Pleads Guilty in Tax Case”:
GALVESTON, TEXAS--In U.S. District Court
here, Apr. 10, Elvis E. Johnson, 59, plead
[sic] guilty to a charge of federal tax
evasion. Judge Hugh Gibson sentenced Johnson,
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of 25 Adler Circle, to a six-month suspended
prison term and one year supervised probation.
Johnson, an executive vice-president for
the American National Insurance Corporation,
was charged in a criminal information with
claiming false business deductions and
altering documents involving his 1974 and 1975
income tax returns.
In addition to the sentence, Johnson will
be required to pay back taxes, plus penalties
and interest.
Sassen had prepared the release with the help of Special Agent
Stone, relying, with one exception (the paragraph regarding back
taxes, penalties and interest), solely on information she received
from him. She testified that she did not ask Stone about the source
of that information, although she knew Stone had not been in the
courtroom for Johnson’s hearing on 10 April. As noted, the last
paragraph of the release (penalty portion) was not based on
information received from Stone. It was boilerplate language in
the form Sassen used.
According to Stone, he learned of the conviction from Powers
on either Friday, 10 April, or Monday, 13 April. Stone testified
that, based on that conversation, he prepared on Monday, 13 April,
the following internal “Report of Legal Action”:
On [10 April 1981] AUSA JIM POWERS filed
a criminal information charging JOHNSON with
tax evasion under 26 USC 7201 for the years
1974 and 1975. JOHNSON plead [sic] guilty on
the same day to one count of 7201 for 1975 and
the 1974 count was dismissed. Judge GIBSON
sentenced JOHNSON to 6 months to serve with
this 6 months being suspended and placed him
on 1 years supervised preparation [sic]. No
fine was assessed and no appeal is expected.
This legal action occurred in Galveston.
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In addition to not attending Johnson’s hearing, neither Sassen
nor Stone had any of the court documents. Stone, who was in
Houston, was not advised by Powers about either the plea agreement
or hearing in Galveston until approximately two hours before the
hearing, when Powers was leaving his Houston office to travel to
Galveston for the hearing. Because of such short notice, another
matter prevented Stone from attending the hearing. Stone, however,
did not check the public record before giving the information to
Sassen.
Sassen prepared the release in conformance with a District
Director’s Memorandum (DDM), directing her, following guilty pleas,
to prepare press releases based on information furnished by the
investigating special agent (Stone). Pursuant to the DDM, Stone
was to provide the taxpayer’s age, occupation, home address, and
other facts to the Public Affairs Officer (Sassen) and was to
obtain the information from the IRS investigatory file for that
taxpayer. The DDM did not require inquiry as to whether
information taken from the file had been disclosed in the criminal
proceeding. The DDM did, however, state that “[t]he DPAO [Sassen]
will coordinate all CID releases with the Branch Chief, Criminal
Investigation Division, and the prosecuting U.S. Attorney”.
After preparing a draft of the release, Sassen telephoned
Stone and read it to him (this was pre-FAX). Stone testified that
he copied it verbatim. According to Stone, he telephoned Powers
and read the release to him; but, Powers testified that he
remembered neither this telephone call nor basically anything else
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about the case. Stone then contacted Sassen and told her that
Powers had approved the release.
Sassen also called appellant Michael Orth, a CID supervisory
employee, and read the release to him. IRS procedures then in
effect (1981) required that such releases be cleared at the
supervisory level. After Orth approved the release, Sassen mailed
it on 13 April to 21 media outlets in the Galveston area.
On 15 April, a Galveston journalist telephoned ANICO to
inquire about Johnson’s conviction. Johnson learned of the press
release and contacted White, who immediately contacted Powers. In
a telephone conversation surreptitiously recorded by White, Powers
denied any knowledge of the release and assumed the IRS was
responsible. Powers told White, “If they damaged your client in
some way, sue the hell out of them as far as I’m concerned”.
White also telephoned and wrote to the IRS about the release.
Among others, he spoke with appellant Dale V. Braun, who was Acting
District Director of the IRS Austin, Texas, District on that day
(15 April). It was then that the IRS realized that the release
contained erroneous information: that Johnson had been charged only
for 1975; and that the criminal information did not charge him with
claiming false business deductions or altering documents.
Braun contacted appellant Robert C. Sawyer, the Chief of the
CID in the Austin District, and Harold Friedman, the IRS Austin
District Counsel, and all agreed to withdraw the release. Sassen
informed the media outlets that the release might contain errors
and asked that it not be publicized.
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The IRS then obtained a copy of the criminal information to
which Johnson had pled guilty and, following discussion on 16 April
among Sawyer, Sassen, Orth, Braun, and other IRS personnel, decided
to issue a revised release. IRS Counsel Friedman strongly advised
against issuing a second release because it would only compound
their potential liability. The revised release was identical to
the 13 April release, except for the following italicized portion
of the second (middle) paragraph:
Johnson, an executive vice-president for
the American National Insurance Corporation,
was charged in a criminal information with
willful evasion of federal tax by filing a
false and fraudulent tax return for 1975.
(Emphasis added.)
Powers evidently participated in the process resulting in this
second release. An IRS special agent testified that, on 16 April,
as instructed by Orth, he took a copy of the proposed revised
release to Powers, who was participating in a trial; that, during
a recess, he gave it to Powers for his review and approval; and
that Powers approved it. Consistent with his other testimony,
Powers did not recall the incident; he only recalled
discussing this issue with some lawyer some
years ago about a correction of the press
release. I don’t remember a second press
release. Maybe there was one.
The IRS special agent then gave the proposed release to a
secretary with the comment that “Powers said this was okay”; the
secretary relayed that information to the Austin office. This
second release was issued on 17 April to the 21 media outlets that
received the first.
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According to Johnson, he informed ANICO president Clay and two
executive committee board members of the first release on 15 April
and provided Clay with a copy of the release that same day. On
learning from White that the IRS would not withdraw the 13 April
release and planned to issue a second, Johnson told Clay that all
ANICO board members should be informed. Clay advised Johnson that
he (Clay) would contact the entire board. On Saturday, 18 April,
and Monday, 20 April, Clay asked Johnson to resign from his
positions as executive vice-president and board member.
On the one hand, Clay testified that he was unaware of the
press release when he asked Johnson for his resignation. According
to Clay, the ANICO board decided that someone with a felony
conviction could not hold a high position within the corporation.
But, Johnson presented evidence that the “real problem” was the
publicity surrounding his conviction, not the fact of the
conviction. (Obviously, the jury accepted Johnson’s version.)
Johnson resigned on 20 April 1981.
Johnson was reassigned to ANICO’s office in Springfield,
Missouri (where he began in 1951), as an associate regional
director. He served there at considerably diminished compensation
until 1986, when he reached the mandatory retirement age (65). He
then worked for ANICO as an agent, his starting position with it.
In 1983, Johnson filed this action against Sawyer, Braun,
Sassen, and other IRS employees for wrongful disclosure of tax
return information, in violation of 26 U.S.C. § 6103. That section
provides:
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(a) General Rule.—Returns and return
information shall be confidential, and except
as authorized by this title—
(1) no officer or employee of the United
States,
...
shall disclose any return or return
information obtained by him in any manner in
connection with his service as such an officer
or an employee or otherwise or under the
provisions of this section....
(b) Definitions.—For purposes of this section—
...
(2) Return information.—The term “return
information” means—
(A) a taxpayer’s identity, the
nature, source, or amount of his income,
payments, receipts, deductions, exemptions,
credits, assets, liabilities, net worth, tax
liability, tax withheld, deficiencies,
overassessments, or tax payments, whether the
taxpayer’s return was, is being, or will be
examined or subject to other investigation or
processing, or any other data, received by,
recorded by, prepared by, furnished to, or
collected by the Secretary with respect to a
return or with respect to the determination of
the existence, or possible existence, of
liability (or the amount thereof) of any
person under this title for any tax, penalty,
interest, fine, forfeiture, or other
imposition, or offense....
Id. § 6103(a)(1),(b)(2)(A) (emphasis added).
Johnson sought recovery under 26 U.S.C. § 7217(a), which
permits an action for damages against “any person” who knowingly or
negligently discloses a return or return information (collectively,
“tax return information”) in violation of § 6103. No liability
attaches if the disclosure “result[ed] from a good faith, but
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erroneous, interpretation of section 6103”. Id. § 7217(b).
Section 7217 was repealed in 1982 and replaced by § 7431, which
permits an action against the United States for damages for
disclosure by a federal employee in violation of § 6103. Tax
Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248,
§ 357, 1982 U.S.C.C.A.N. (96 Stat.) 324, 645-46. The legislation
provided that “amendments made by this section shall apply with
respect to disclosures made after the date of enactment of this Act
[September 3, 1982].” Id. § 357(c), 1982 U.S.C.C.A.N. at 646.
Because the disclosures at issue took place in 1981, this action is
governed by § 7217, not § 7431.
Pursuant to § 7217, a plaintiff is entitled to his actual
damages sustained as a result of an unauthorized disclosure
(including punitive damages for willful or grossly negligent
disclosures) or to liquidated damages of $1,000 per such
disclosure, whichever is greater, as well as the costs of the
action. 26 U.S.C. § 7217(c). It bears repeating that an
individual who discloses as the result of a “good faith, but
erroneous, interpretation” of § 6103 cannot incur liability. Id.
§ 7217(b).
Initially, Johnson claimed wrongful disclosure for four items
of tax return information: age; home address; that he was charged
with false business deductions and altering documents on his 1974
and 1975 returns; and that he would be required to pay back taxes,
plus penalties and interest.
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Johnson amended his complaint later in 1983, adding a claim
against the United States under the Federal Tort Claims Act, 28
U.S.C. § 1346, 2671-2680, for negligent supervision. The United
States and the individual defendants moved to dismiss or for
summary judgment. The motions were denied without a written
opinion.
Johnson filed a second amended complaint in 1984, adding Stone
and Orth as defendants. He also claimed that a fifth item of tax
return information had been disclosed in the releases: that he was
executive vice-president of ANICO. The defendants again moved to
dismiss or for summary judgment on a variety of grounds, including
that, as a matter of law, none of the information contained in the
releases had been disclosed in violation of § 6103. Similarly,
Johnson moved for partial summary judgment, claiming, inter alia,
that the releases, as a matter of law, wrongfully disclosed tax
return information.
In 1986, the district court ( Chief Judge Singleton) ruled on
the cross-motions, concluding that, as a matter of law, “issuing
the [releases] violated § 6103". Johnson v. Sawyer, 640 F. Supp.
1126, 1133 (S.D. Tex. 1986). The court determined that the
releases “disclosed” tax return information within the meaning of
§ 6103 and that none of the statutory exceptions to the rule
against disclosure applied. Id. at 1131-32 & n.16.
Along a similar line, the Appellants had urged the court to
create a judicial exception for disclosure of material in which
Johnson “had no reasonable expectation of privacy ... because those
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items were incidental to information already in the public record”.
Id. at 1132. The court rejected that suggestion, explaining that
“Congress made the language of § 6103 quite clear: any disclosure
of return information is illegal ‘except as authorized by this
title’”. Id. (quoting § 6103(a))(emphasis added by district
court).
Consequently, Johnson’s motion for partial summary judgment
was granted on that issue. Id. at 1139. The court also denied
Appellants’ motion for summary judgment on the following issues:
that no individual Appellant other than Sassen could be held liable
under § 7217; that Appellants evidenced sufficient good faith to
preclude liability under § 7217; and that suit against Orth and
Stone was time-barred.
The claims against the individual defendants were severed, and
a bench trial was held on the FTCA claim in 1990. Johnson was
awarded approximately $10 million. Johnson, 760 F. Supp. 1216,
1233 (S.D. Tex. 1991). Initially, our court affirmed the judgment,
Johnson v. Sawyer, 980 F.2d 1490 (5th Cir. 1992) and 4 F.3d 369
(5th Cir. 1993), but our en banc court reversed and remanded with
directions to dismiss the FTCA claim. Johnson, 47 F.3d at 738.
While the case was on appeal, Chief Judge Singleton retired.
The case was reassigned to Judge Hoyt. On remand, Johnson filed a
third amended complaint, discarding the FTCA claim and adding a
claim that “identifying” him constituted a sixth item of wrongful
disclosure.
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A hotly, if not bitterly, contested jury trial was held in
1996. The jury found for Johnson, awarding $6 million in actual,
and $3 million in punitive, damages. The court awarded pre-
judgment interest at 6% per annum on $6 million commencing 4 August
1986, post-judgment interest on all sums awarded at 5.6% per annum,
attorneys’ fees of $1.2 million (20% of $6 million), and costs of
approximately $54,000.
II.
Appellants present a number of issues: that several jury
instructions are erroneous, including not instructing (1) that the
portions of the releases concerning the charges and penalties were
not tax return information and (2) that only Sassen can be liable
under § 7217 for a § 6103 violation; that Johnson’s claims against
Stone and Orth are time-barred; and that many evidentiary rulings
(including the exclusion of Johnson’s guilty plea hearing
transcript) and the awards for punitive damages, pre-judgment
interest, and attorneys’ fees are erroneous. Moreover, should a
remand be necessary, they request that we exercise our supervisory
powers and reassign the case because “there are serious reasons to
question the trial judge’s appearance of impartiality”.
As is often the case, what is not in issue is as important, if
not more so, than what is. For example, Appellants do not
challenge the sufficiency of the evidence either (1) as to
causation for liability under § 7217, or (2) as to the “negligently
or knowingly ... disclosing or permitting the disclosure of tax
return information” standard in an instruction challenged by all
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Appellants but Sassen. And, because we reverse and remand for a
new trial, we necessarily do not reach the issues as to punitive
damages, pre-judgment interest, and attorneys’ fees. Moreover, we
only describe, rather than decide, most of the challenges to
instructions and evidentiary rulings. We describe them simply to
assist the district court in deciding what is not law of the case.
On remand, both § 7217 liability and damages are in issue, as are,
of course, the issues we do not decide in this opinion.
A.
We rule on only two of the six challenged instructions. The
issues concerning the balance are reserved for the district court
on remand. Our standard of review for such claims is well-settled:
First, the challenger must demonstrate
that the charge as a whole creates
“substantial and ineradicable doubt whether
the jury has been properly guided in its
deliberations.” [Bender v. Brumley, 1 F.3d
271, 276 (5th Cir. 1993)]. Second, even if
the jury instructions were erroneous, we will
not reverse if we determine, based upon the
entire record, that the challenged instruction
could not have affected the outcome of the
case. [Id. at 1276-77.]
FDIC v. Mijalis, 15 F.3d 1314, 1318 (5th Cir. 1994); see also Davis
v. Ector County, Tex., 40 F.3d 777, 786 (5th Cir. 1994). In
addition, to the extent there is claimed error in refusing to give
an instruction, the challenger must show “[a]s a threshold matter
... that [his] proposed instruction correctly states the law”.
FDIC v. Henderson, 61 F.3d 421, 425 (5th Cir. 1995).
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1.
Pursuant to the 1986 summary judgment ruling, the district
court instructed the jury that, “as a matter of law the April, 1981
news releases ... did disclose tax return information in violation
of the law”. Appellants claim reversible error: that the 13 April
release contained, at most, only three items of confidential return
information (Johnson’s age, his address, and the word “vice-
president”); and that, therefore, the jury should have been asked
to decide “whether disclosure of these altogether routine items
caused Johnson to lose his job”. Appellants maintain that, as a
matter of law, those items could not. They ask us to reverse and
render or, in the alternative, remand and reassign the case for a
new trial.
a.
Although we ultimately conclude that the district court did
reversibly err in giving this part of the instruction, we must
first explain why the procedural posture of this case makes it
impossible to render judgment for Appellants.
Appellants assert that “their summary judgment motion should
have been granted in 1986". Their request that we review and
reverse the 1986 order is buried in their brief in the last
paragraph of the section discussing the liability instruction,
without supporting argument, authority, or citations to the record.
We have held repeatedly that we will not consider issues not
briefed by the parties. See Webb v. Investacorp, Inc., 89 F.3d
252, 257 n.2 (5th Cir. 1996) (“An appellant abandons all issues not
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raised and argued in its initial brief on appeal.”) (quoting Cinel
v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994)); McKethan v. Texas
Farm Bureau, 996 F.2d 734, 739 n.9 (5th Cir. 1994) (failure to
sufficiently brief issue constitutes waiver of issue).
In any event, even if this issue had been properly presented,
Appellants would face other problems. They contend that the
district court erred in denying their summary judgment motion in
1986. Appellants advance this contention despite the fact that the
instruction in issue was based on the 1986 grant of Johnson’s
motion for partial summary judgment. We have held repeatedly that
orders denying summary judgment are not reviewable on appeal where
final judgment adverse to the movant is rendered on the basis of a
subsequent full trial on the merits. See Black v. J.I. Case Co.,
22 F.3d 568, 570-72 (5th Cir. 1994); Wells v. Hico ISD, 736 F.2d
243, 251 n.9 (5th Cir. 1984). Because Appellants lost at trial, we
cannot review the denial of their summary judgment motion.
On the other hand, when, by summary judgment or some other
ruling, an issue is removed from those to be tried, that ruling can
be contested on appeal, assuming it was otherwise properly
preserved in the district court, including possibly being presented
again during trial. E.g., United States v. Graves, 5 F.3d 1546,
1551 (5th Cir. 1993) (requiring party who unsuccessfully opposed
motion in limine to lodge contemporaneous objection at trial to
preserve issue for appeal); United States v. Estes, 994 F.2d 147,
149 (5th Cir. 1993) (per curiam) (same). But, again, Appellants
challenge the denial of their motion, not the grant of Johnson’s.
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This is not a distinction without a difference. Obvious
evidentiary considerations come into play, that we need not
elaborate on for purposes of this opinion.
More importantly, even if Appellants could raise this issue,
their position on appeal is different from the one they took in
1986. They contend now that the three items of return information
they now concede were disclosed in violation of § 6103 could not,
as a matter of law, have caused Johnson’s resignation. But, in
1986, they did not raise lack of causation as a basis for summary
judgment. Instead, they asserted that “none of the information in
the press release was tax ... return information that could not
lawfully be disclosed under the circumstances of this case” — i.e.,
that nothing in the release violated § 6103. Obviously, these
contentions are not even similar: one, made in district court,
denies that a violation of § 6103 has occurred; the other, made
here, presumes that one has.
Although we can affirm a summary judgment on grounds not
relied on by the district court, those grounds must at least have
been proposed or asserted in that court by the movant. See
Missouri Pac. R.R. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 538
(5th Cir. 1994) (“[W]e can affirm the district court on the
alternate grounds asserted below.”) (emphasis added); FDIC v.
Laguarta, 939 F.2d 1231, 1240 (5th Cir. 1991) (refusing to affirm
summary judgment on grounds “neither raised below ... nor even
raised sua sponte by the district court”); Frank C. Bailey Enter.,
Inc. v. Cargill, Inc., 582 F.2d 333, 334 (5th Cir. 1978). More
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importantly, we have held that, on appeal, we will not consider a
new ground in opposition to, or in defense of, summary judgment.
See Laguarta, 939 F.2d at 1240. Thus, even were we to actually
review the denial of Appellants’ motion, lack of causation would be
a new ground on appeal, one not raised in district court (in 1986).
Of course, we could address the causation issue in the context
of a sufficiency challenge; but, as noted, it has not been
presented to us. Appellants did make Rule 50 motions at the
appropriate times during the trial on several grounds, including
lack of causation. However, they do not ask us to review the
denial of those motions or conduct a sufficiency review of the
evidence. Once again, Appellants’ failure to raise this issue
constitutes waiver and abandonment on appeal. See Webb, 89 F.3d at
257 n.2; McKethan, 996 F.2d at 739 n.9.
b.
Because Appellants contend that the challenged instruction
failed to distinguish between information in the releases that was
wrongfully disclosed and information that was not wrongfully
disclosed, we must first determine the § 6103 violation in the
releases. This requires us to answer a question explicitly left
open in our en banc opinion — namely, “whether to follow the rule
of Lampert v. United States, 854 F.2d 335, 338 (9th Cir. 1988),
that section 6103(a) does not bar disclosure of matters of public
record”. Johnson, 47 F.3d at 737 n.46.
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i.
Section 6103 establishes a general, salutary rule that
“returns” and “return information” shall be confidential. Church
of Scientology v. I.R.S., 484 U.S. 9, 10 (1987). Disclosure by a
government employee is prohibited unless a specific statutory
exception provides for it. 26 U.S.C. § 6103 (forbidding disclosure
“except as authorized by this title”) (emphasis added). Although
there are a number of exceptions, none includes the issuance of
press releases by the IRS. See id.; Thomas v. United States, 890
F.2d 18, 20 (7th Cir. 1989).
One exception, however, authorizes disclosure of tax return
information in a judicial proceeding to determine a taxpayer’s
civil or criminal tax liability. 26 U.S.C. § 6103(h)(4)(A).
Citing Lampert, Appellants contend that once tax return information
is lawfully disclosed in such proceedings, it loses its
confidentiality, rendering § 6103's prohibition moot. Johnson,
citing Rodgers v. Hyatt, 697 F.2d 899 (10th Cir. 1983), and Mallas
v. United States, 993 F.2d 1111 (4th Cir. 1993), counters that §
6103 prohibits disclosure despite prior publication of the
information in court. In the alternative, Johnson maintains that,
under the reasoning of Thomas v. United States, liability under §
6103 is premised on the source of the information, not its “public”
status (if any).
Lampert involved press releases issued by the United States
Attorney’s office and the IRS that summarized tax evasion charges
against three individuals. Lampert, 854 F.2d at 336. The Ninth
- 21 -
Circuit began its analysis by explaining that the releases
disclosed “return information” as defined by § 6103. Id. at 336-37
(citing Barrett v. United States, 795 F.2d 446, 449 (5th Cir.
1986)). Contra Johnson, 47 F.3d at 732 n.34 (“[L]anguage, which on
its face purports only to describe the content of [a] criminal
information, is not return information under section 6103(a).”).
It then determined that, although § 6103 contained no exception
authorizing this disclosure, giving effect to that language would
frustrate the statute’s purpose — to prohibit the disclosure of
confidential return information. Id. at 338. (In so holding, it
declined to follow the ruling in 1986 by the district court in this
case. Id. at 337.) The court determined that, once tax return
information is made a part of the public domain, a taxpayer “may no
longer claim a right of privacy in that information”. Id.
Therefore, when such information is lawfully disclosed in a court
proceeding, subsequent disclosure does not violate § 6103. Id.
The Ninth Circuit reaffirmed Lampert in Schrambling
Accountancy Corp. v. United States, 937 F.2d 1485, 1489-90 (9th
Cir. 1991), when it held that tax return information included in
notices of federal tax liens and a bankruptcy petition lost their
confidentiality and “[could] be disclosed again without regard to
section 6103". As the court explained, “The relevant inquiry
should focus on whether the prior authorized disclosure ...
destroys the confidential nature of the information.” Id. at 1488-
89. Because tax liens are filed in the county recorder’s office
and are open for public inspection, the information in them is
- 22 -
exposed to even greater publicity than in a judicial proceeding.
Id. at 1489.
In Rowley v. United States, 76 F.3d 796 (6th Cir. 1996), the
Sixth Circuit recently adopted the Ninth Circuit’s approach.
Rowley involved IRS disclosure of information (via newspaper ad)
that, like the information in Schrambling, had previously been
disclosed in a publicly recorded tax lien. Id. at 798. The Sixth
Circuit concluded that the prior, authorized, disclosure placed the
information in the public domain, stripping it of its
confidentiality. Id. at 801. The court did make an effort to
distinguish cases where the prior disclosure occurred in a judicial
proceeding, explaining that “the recording of a federal tax lien
... is designed to provide public notice and is thus qualitatively
different from disclosures made in judicial proceedings, which are
only incidentally made public”. Id.
The Fourth and Tenth Circuits, however, have rejected the
Ninth Circuit’s analysis. Rodgers v. Hyatt, from the Tenth
Circuit, involved disclosure of tax return information by an IRS
agent who had previously and lawfully disclosed that information in
testimony in open court, see 26 U.S.C. § 6103(h)(4)(A). Rodgers,
697 F.2d at 899-900. However, the second, challenged, disclosure
was not governed by any of § 6103's exceptions. Id. at 904-06.
The Tenth Circuit explained that the issue in a § 6103 case is not
confidentiality but rather, whether an unauthorized disclosure of
return information occurred. Id. at 906. The court noted that
“[e]ven assuming the loss of confidentiality in the content of the
- 23 -
statements”, the disclosure was “clearly unauthorized” because it
lacked express statutory authorization. Id.
In Mallas v. United States, the Fourth Circuit followed the
Tenth Circuit. There, the IRS issued a series of revenue agent
reports to investors in a tax shelter, describing the convictions
(later reversed) and “financing scheme” of the two individuals who
set up the shelter. Mallas, 993 F. 2d at 1114-15. Noting that §
6103 contained no exception permitting disclosure of information
“within the public domain”, the Fourth Circuit declined the
Government’s “invitation to usurp the legislative function by
adding a judicially created exception to those set forth by
Congress”. Id. at 1120. The court rejected the Government’s
contention that the Ninth Circuit’s approach struck a better
balance between taxpayer interests in privacy and the Government’s
interest in disclosing tax return information to administer the tax
laws: “It is for Congress ... not this court, to ‘strike a balance’
between these interests. Congress has done so in section 6103,
without articulating the exception advanced by the Government ...
and adopted by the Ninth Circuit....” Id. at 1121.
The Seventh Circuit took a slightly different approach to §
6103 in Thomas v. United States, in which a taxpayer contested an
assessment of taxes and lost in the United States Tax Court.
Thomas, 890 F.2d at 19. The IRS then prepared a press release and
mailed it to the taxpayer’s hometown newspaper. Id. The Seventh
Circuit explained that it refused to “retreat” from its earlier
statement that § 6103 is a “general prohibition against the
- 24 -
disclosure of tax return information unless expressly authorized by
an exception”. Id. at 21 (quoting Wiemerslage v. United States, 838
F.2d 899, 902 (7th Cir. 1988)). However, it also refused to “take
sides” in the conflict over whether disclosure of tax return
information in a public record “bars the taxpayer from complaining
about any subsequent disclosure”. Id. at 20.
Instead, in ruling for the Government, the Seventh Circuit
reasoned: “The information disclosed in the press release did not
come from [the taxpayer’s] tax return — not directly, at any rate.
It came from the Tax Court’s opinion.” Id. at 20. For that
reason, the Government was not disclosing tax return information
within the meaning of § 6103, because “a return, or some internal
document based on a return” was not the immediate source of the
information. Id. at 20-21. When the source of the information is
a public document, the definition of return information simply does
not come into play, and there is no § 6103 violation. Id. A
contrary holding, the court noted, would have serious First
Amendment implications. Id. (citing Cox Broadcasting Corp. v.
Cohn, 420 U.S. 469 (1975)).
Consistent with the district court’s summary judgment in 1986,
we decline to follow the Ninth and Sixth Circuits and judicially
create an exception to § 6103 for tax return information disclosed
in “public records”. Our analysis of the text of § 6103, the
legislative history, and the pertinent case law compels us to
conclude that there is simply no basis for creating such an
exception. Instead, we follow the approach of the Fourth and Tenth
- 25 -
Circuits, modified by the Seventh Circuit’s “source” analysis in
Thomas. If the immediate source of the information claimed to be
wrongfully disclosed is tax return information (“return” or “return
information” pursuant to § 6103), the disclosure violates § 6103,
regardless of whether that information has been previously
disclosed (lawfully) in a judicial proceeding and has therefore
arguably lost its taxpayer “confidentiality”.
Section 6103, enacted as part of the Tax Reform Act of 1976,
Pub. L. No. 94-455, § 1202, 1976 U.S.C.C.A.N. (90 Stat.) 1520,
1667-88, enumerates 13 separate (and quite detailed) exceptions to
§ 6103, providing for disclosure to various federal and state
agencies and employees for a variety of purposes. Id. Despite
this elaborate structure, it is undisputed that the plain text of
§ 6103 contains no express exceptions permitting disclosure of tax
return information that has arguably lost its confidentiality
because it has been made available to the public via disclosure in
open court. The circuits concur on this point, including the Ninth
Circuit. See Lampert, 854 F.2d at 338. (“[A] strict, technical
reading of the statute supports the taxpayers’ position [that for
a government employee to disclose any return information,
confidential or not, there must exist an applicable exception to
section 6103(a)].”); Mallas, 993 F.2d at 1120; Rodgers, 697 F.2d at
906; cf. Thomas, 890 F.2d at 20 (“[Section 6103] makes federal tax
returns confidential with exceptions that do not include the
issuance of press releases by the [IRS].”).
- 26 -
As the Supreme Court stated, “When we find the terms of a
statute unambiguous, judicial inquiry is complete except in rare
and exceptional circumstances ... [such as] where the application
of the statute as written will produce a result ‘demonstrably at
odds with the intentions of its drafters.’” Demarest v.
Manspeaker, 498 U.S. 184, 190 (1991) (quoting Griffin v. Oceanic
Contractors, Inc., 458 U.S. 564, 571 (1982)) (citations omitted);
Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102,
108 (1980) (“[T]he starting point for interpreting a statute is the
language of the statute itself. Absent a clearly expressed
legislative intention to the contrary, that language must
ordinarily be regarded as conclusive.”); United States v.
Rodriguez-Rios, 14 F.3d 1040, 1044 (5th Cir. 1994) (en banc).
Restated, we follow the plain meaning of a statute unless it
would lead to a result “so bizarre that Congress ‘could not have
intended’ it”. Demarest, 498 U.S. at 191 (quoting Griffin, 458
U.S. at 575); see United States v. Turkette, 452 U.S. 576, 580
(1981) (“absurd results are to be avoided”); see also Rodriguez-
Rios, 14 F.3d at 1044 (“We are authorized to deviate from the
literal language of a statute only if the plain language would lead
to absurd results, or if such an interpretation would defeat the
intent of Congress.”); Almendarez v. Barrett-Fisher Co., 762 F.2d
1275, 1278 (5th Cir. 1985) (“Literal application of statutory
language is ... inappropriate if it would lead to ... unreasonable
results.”).
- 27 -
At first — even second, third, or fourth — glance, it appears
that, to find a violation of § 6103 for disclosure of tax return
information that was in most, if not all, respects previously
disclosed in a court proceeding, is to reach an absurd result.
But, in applying this rule of statutory construction, we must apply
a reasoned, objective method for determining whether a result is
actually “absurd” or whether, instead, it is simply personally
disagreeable. In general, courts look to two sources to make this
call — other provisions of the statute and legislative history. In
this regard, two most instructive cases are Demarest v. Manspeaker
and Consumer Product Safety Commission v. GTE Sylvania, Inc.
At issue in Demarest was whether 28 U.S.C. § 1821 required
payment of witness fees to a convicted state prisoner who testified
at a federal trial pursuant to a writ of habeas corpus ad
testificandum. Demarest, 498 U.S. at 185. The plain language of
the statute provided that “a witness in attendance at any court of
the United States ... shall be paid ... $30 per day” and made no
exceptions for incarcerated witnesses. Id. (quoting 28 U.S.C. §
1821(a),(b)). A unanimous Supreme Court held that the statute
required payment of the witness fee. Id. at 188-91.
The Court looked to two other provisions in the statute,
including a section providing for payment of a subsistence
allowance (in addition to the daily fee) to witnesses “other than
a witness who is incarcerated” and a section making detained aliens
ineligible for either the daily fee or the subsistence allowance.
Id. at 187-88. The Court noted, “[This] shows that Congress was
- 28 -
thinking about incarcerated individuals when it drafted the
statute.” Id. In other words, because other sections of the
statute revealed that Congress had considered the possibility that
prisoners might be witnesses in federal court, reading the section
at issue to allow payment of the fee would not yield an “absurd”
result or one that was at odds with congressional intent. Id. at
190-91.
GTE Sylvania involved § 6(b)(1) of the Consumer Product Safety
Act (CPSA), which regulates the “public disclosure” of information
collected by the Consumer Product Safety Commission (CPSC)
regarding consumer products. GTE Sylvania, 447 U.S. at 104-05.
Under § 6(b)(1), a product manufacturer must be notified 30 days
before public disclosure of information and given the opportunity
to submit comments about the information to be disclosed. Id. at
105. In this case, the CPSC had received accident reports from
manufacturers. Id. at 106. After receiving Freedom of Information
Act (FOIA) requests from two consumer groups, the CPSC decided to
release these reports without complying with § 6(b)(1)’s
notice/comment requirements. Id.
Section 6(b)(2) of the CPSA contains specific exceptions to
the notification requirements of § 6(b)(1), none of which include
disclosure in response to a FOIA request. Id. at 109.
Nevertheless, the CPSC took the position that § 6(b)(1) applied
only when it made affirmative disclosures and not when it simply
responded to FOIA requests. Id. at 107-08. The Court rejected
that position: “The fact that Congress was aware of the
- 29 -
relationship between § 6 and the FOIA when it enacted the CPSA is
exhibited by the fact that the Congress in [a different part of §
6] specifically incorporated by reference the nine exemptions of
the FOIA”. Id. at 109. In addition, another section of the CPSA
made disclosure of certain information subject to § 6(b)(1),
whether the disclosure was an affirmative act by the CPSC or a
response to a FOIA request. Id. at 110. Thus, the Court could not
conclude that the failure to include FOIA requests within the
exceptions to § 6(b)(1) was unintentional. Id.
In addition to looking to other parts of the statute, the
Court looked to the legislative history of the CPSA. Upon
examining that history, the Court concluded that “for purposes of
§ 6(b)(1)”, no distinction was made between information
“affirmatively disclosed” and information released pursuant to
FOIA. Id. at 111-16. The restrictions of § 6(b)(1) were meant to
govern the CPSC’s disclosure of information in all circumstances,
not only when the disclosure was pursuant to the CPSC’s initiative.
Id. at 112-13.
Turning to § 6103, we note that immediately following the
express disclosure exceptions (§ 6103(c)-(o)) is a provision that
explains the procedures by which disclosure requests are made to
the IRS. 26 U.S.C. § 6103(p). Part of that provision is a list of
“Safeguards”, requiring that certain federal agencies to which the
IRS may lawfully disclose return information must, inter alia: (1)
establish a system of records to keep track of all disclosure
requests, the date of request, and the reason for the request; (2)
- 30 -
establish a secure area in which to store the information; and (3)
restrict the access of persons to that information. Id. §
6103(p)(4)(A)-(F). However, these record-keeping/security
requirements “shall cease to apply with respect to any return or
return information if, and to the extent that, such return or
return information is disclosed in the course of any judicial or
administrative proceeding and made a part of the public record
thereof”. Id. § 6103(p)(4).
For example, if the IRS discloses tax return information to
the Department of Commerce (DOC) for statistical use, id. §
6103(j)(1), the DOC does not have to comply with § 6103(p)(4)
safeguards if the information has already been disclosed publicly
in a judicial proceeding. However, the fact that the DOC does not
have to be as vigilant about the information does not mean that it
(or the IRS, for that matter) can disclose that information in, for
example, a press release. That information is still subject to §
6103(a)’s general rule of non-disclosure; § 6103(p)(4) does not
create an exception to that rule.
Section 6103(p)(4) does, however, indicate that, when Congress
drafted § 6103, it considered the possibility that some tax return
information might be otherwise available to the public — e.g., in
court records, because it had been disclosed in a judicial
proceeding. For that reason, Congress deemed it unnecessary for
those federal agencies to follow the safeguards in § 6103(p)(4) for
keeping the documents in a safe place and ensuring that access to
them was restricted. That, however, is the only provision Congress
- 31 -
chose to make in § 6103 regarding this “publicized” tax return
information. Under the reasoning of Demarest and GTE Sylvania,
then, it is difficult to conclude that Congress’ failure to include
an exception for “public record” tax return information in the
exceptions to § 6103 was unintentional.1 See Lindh v. Murphy, No.
96-6298, 1997 WL 338568, at *4 (June 23, 1997) (reading provision
expressly applying Antiterrorism and Effective Death Penalty Act’s
amendments to Chapter 154 to pending cases as “implicit” indication
that amendments to Chapter 153 were meant to apply only to cases
filed after effective date of act).
More generally, § 6103(m) indicates that Congress also
considered the possibility that the IRS would need to disclose tax
return information to the news media in certain circumstances. One
of § 6103's exceptions, subsection (m), permits disclosure of
taxpayer identity information to, inter alia, “the press and other
1
Of course, in describing this proposed exception to §
6103 as an exception for “publicized” or “public record” tax return
information, we are not holding that the IRS, or any other federal
agency, is prohibited from publishing the contents of a public
record, such as a judicial opinion, see Thomas, 890 F.2d at 20-21,
provided it is the public record that is the immediate source.
Rather, as we explain infra, we simply hold that the fact that tax
return information is otherwise available in the public record —
and therefore arguably has lost its confidentiality — does not
remove § 6103's proscription against improper disclosure of tax
return information.
In addition, although Appellants’ contention is that tax
return information disclosed in a judicial proceeding has lost its
confidentiality and, therefore, the protection of § 6103, we refer
more broadly to this proposed exception as one for “public record”
tax return information. It seems that the logical implication of
Appellants’ position is that any tax return information otherwise
available to the public — whether it be in court records or real
estate filings — would likewise have lost its confidentiality and
the protection of § 6103.
- 32 -
media for purposes of notifying persons entitled to tax refunds
when the Secretary, after reasonable effort and lapse of time, has
been unable to locate such persons”. 26 U.S.C. § 6103(m)(1). We
note that this exception does not allow the IRS to disclose tax
return information to identify individuals convicted of tax
offenses (e.g., Johnson) or, more broadly, individuals who appear
in court concerning civil or criminal tax liability. Again, we
cannot conclude that Congress’ failure to include in § 6103 the
exception Appellants press upon us was unintentional. Hence,
applying the plain meaning of the statute leads to neither an
absurd result nor one that is demonstrably at odds with
congressional intent.
Furthermore, as in GTE Sylvania, the legislative history
supports the conclusion that Congress considered the relationship
between § 6103 and “public record” tax return information. In
discussing the § 6103(p)(4) safeguard procedure, the Senate Finance
Committee noted: “The record-keeping requirements would not apply
in certain situations, including disclosure of returns and return
information open to the public generally”. S. REP. NO. 94-938, at
343 (1976), reprinted in 1976 U.S.C.C.A.N. 3439, 3773 (emphasis
added). Importantly, the committee did not say that the rule of
nondisclosure does not apply where the information is open to the
public generally.
In addition, Congress considered a taxpayer’s privacy interest
in tax return information when enumerating the exceptions to §
6103. In evaluating the areas in which tax return information was
- 33 -
formerly subject to disclosure and deciding whether to maintain
such disclosure provision, the committee “balance[d] the particular
office or agency’s need for the information involved with the
citizen’s right to privacy and the related impact of the disclosure
upon the continuation of compliance with our country’s voluntary
assessment system”. Id. at 318, 1976 U.S.C.C.A.N. at 3747. In
spite of this consideration, however, Congress chose not to create
an exception for “public record” tax return information.
In judicially creating that exception, the Sixth Circuit
explained: “[T]he approach we adopt today strikes the proper
balance between a taxpayer’s reasonable expectation of privacy and
the government’s legitimate interest in disclosing tax return
information to the extent necessary for tax administration
functions.” Rowley, 76 F.3d at 802. We, however, agree with the
Fourth Circuit: “It is for Congress ... to ‘strike a balance’
between these interests [and it] has done so in section 6103,
without articulating [this] exception.” Mallas, 993 F.2d at 1121.
We are a federal appellate court, not a super-legislature; we are
not vested with plenary authority to re-evaluate the policy choices
made by our elected representatives. See THE FEDERALIST NO. 78
(Alexander Hamilton) (“The courts must declare the sense of the
law; and if they should be disposed to exercise WILL instead of
JUDGMENT, the consequence would equally be the substitution of
their pleasure for that of the legislative body.”)
Section 6103 provides blanket protection to tax return
information. If we recognized an exception for “public record” tax
- 34 -
return information, as the Ninth and Sixth Circuits have, we would
be concluding that § 6103 distinguishes between confidential
(private) and non-confidential (public) tax return information.
See Lampert, 854 F.2d at 338 (“Once tax return information is made
a part of the public domain, the taxpayer may no longer claim a
right of privacy in that information.”); see also Rowley, 76 F.3d
at 801-02 (information in public domain loses confidentiality and
protection of § 6103). Appellants ask us to hold that § 6103 makes
that distinction.
But, again, this flies in the face of § 6103. It states that
“[r]eturns and return information shall be confidential, and except
as authorized by this title ... shall [not be] disclose[d]”; not
that “[confidential] [r]eturns and return information ... shall
[not be] disclose[d]”. (Emphasis added.) This is a critical,
indeed dispositive, difference.2
We recognized in our en banc opinion that § 6103 protects more
than simply “confidential” or “private” return information:
[S]ection 6103 is a regulation of the conduct
of those who in the course of their duties as
government employees or contractors glean
2
Before the Tax Reform Act of 1976, all returns were
described as “public records”, although they were open to
inspection only under regulations approved by the President, or
under Presidential order. See S. REP. NO. 94-938, at 315, 318, 1976
U.S.C.C.A.N. at 3744, 3747. Despite that limitation, Congress
decided that, under the new law, “returns and return information
should generally be treated as confidential”. Id. at 318, 1976
U.S.C.C.A.N. at 3747 (emphasis added). In other words, § 6103(a)’s
description of tax return information as “confidential” does not
represent a congressional conclusion that all such information is,
in fact, confidential or private. Rather, it is simply a directive
to treat that information as if it is confidential — i.e., not to
disclose it unless authorized by exception.
- 35 -
information from tax returns. The regulation
is prophylactic, proscribing disclosure by
such an individual of any such information so
obtained by him. Plainly, Congress was not
determining that all the information on a tax
return would always be truly private and
intimate or embarrassing. Rather, it was
simply determining that since much of the
information on tax returns does fall within
that category, it was better to proscribe
disclosure of all return information, rather
than rely on ad hoc determinations by those
with official access to returns as to whether
particular items were or were not private,
intimate or embarrassing. Because such
determinations would inevitably sometimes err,
ultimately a broad prophylactic proscription
would result in less disclosure by return
handlers of such sensitive matters than would
a more precisely tailored enactment.
Johnson, 47 F.3d at 735 (footnote omitted). As an explicit
construction of § 6103, this statement is law of the case,
regardless of whether it was ultimately necessary to decide the
issues necessary for that opinion. See Conway v. Chemical Leaman
Tank Lines, Inc., 644 F.2d 1059, 1062 (5th Cir. 1981) (“As a
general rule if the issues were decided, either expressly or by
necessary implication, those determinations of law will be binding
on remand and on a subsequent appeal.”) (quoting Lehrman v. Gulf
Oil Corp., 500 F.2d 659, 663 (5th Cir. 1974)).
Thus, § 6103's protection does not disappear simply because
tax return information has been disclosed in the public record and
has therefore arguably lost its confidentiality.3 In enacting §
3
We say “arguably” because, as the Seventh Circuit has
noted, it is a legal fiction that “every item of information
contained in a public document is known to the whole world, so that
further dissemination can do no additional harm to privacy”.
Thomas, 890 F.2d at 21. Like the Seventh Circuit, we eschew the
idea that “only secrets [can] be confidences”. Id.
- 36 -
6103 as a prophylactic ban, Congress was determining that a
taxpayer has a statutorily created “privacy” interest in all his
tax return information, despite the fact that some of it is not
entirely “secret”.4 In another context, the Supreme Court has
recognized that an individual can have a privacy interest in such
information. See United States Dep’t of Justice v. Reporters Comm.
for Freedom of the Press., 489 U.S. 749, 770 (1989) (“[T]he fact
that ‘an event is not wholly “private” does not mean that an
individual has no interest in limiting disclosure or dissemination
of the information.’”) (citation omitted).
That interest is furthered by a construction of § 6103 that
premises a violation on the source of the information claimed to be
wrongfully disclosed, not its public or non-confidential status.
See Thomas, 890 F.2d at 21 (return information not disclosed if
immediate source is not return or internal document based on
4
The brand new Taxpayer Browsing Protection Act, H.R. 1226
(5 Aug. 1997) (to be codified at 26 U.S.C. §§ 7213A and 7431) is
further proof of this. This law makes it unlawful for any federal
employee “willfully to inspect, except as authorized in this title,
any return or return information”. Id. § 2(a). In addition, a
taxpayer may sue the United States under § 7431 for civil damages
for an unauthorized inspection. Id. § 3(a).
That Congress deemed simply browsing through a tax return,
even if no tax return information is ultimately disclosed, to be
serious enough to merit criminal and civil penalties strengthens
our interpretation of § 6103, which recognizes that all tax return
information is protected, not simply the “private” or
“confidential” portions. In addition, although we hesitate to
infer too much from this new law, we note that, on its face, it too
does not distinguish between “public” and “private” tax return
information. Hence, a federal employee may be subject to criminal
and civil liability even if he only browses through portions of a
return or return information, and even though that data is
otherwise available in public records.
- 37 -
return). Again, our en banc court has already interpreted § 6103
as having precisely that focus. In comparing § 6103 and the Texas
tort of public disclosure of embarrassing private facts, our court
noted:
Unlike section 6103(a), the Texas tort
... is not concerned with the identity of the
party making the disclosure, or his sources,
but merely with whether the information
disclosed is both private and intimate or
embarrassing, and also not of public concern,
none of which factors are relevant under the
terms of section 6103(a). The Texas tort and
section 6103(a) address totally distinct
subject matters and impose distinctly
different duties: the latter, applicable only
to certain individuals who in connection with
their government-related duties obtain tax
return information, enjoins them not to
disclose any of it so obtained, even though it
is not private and not intimate or
embarrassing and is of public concern....
Johnson, 47 F.3d at 735-36. Therefore, if tax return information
is the immediate source for the information claimed to be
wrongfully disclosed, it makes no difference that the information
is neither “private” nor “confidential”.
For this reason, we find unpersuasive Appellants’ contention
that this construction of § 6103 raises First Amendment concerns.
For support, they cite the statement in our en banc opinion that,
if § 6103 barred disclosure of matters of public record, “such a
bar, at least as to recent federal felony convictions, would appear
in some tension with [Cox Broadcasting Corp. v. Cohn, 420 U.S. 469
(1975)]”. Johnson, 47 F.3d at 737 n.46. That statement, however,
is dicta, because we expressly left open the question of whether to
adopt the rule in Lampert. Id.
- 38 -
More importantly, a closer inspection of Cox Broadcasting
reveals that there are no First Amendment implications to our
decision here. Cox Broadcasting involved a civil action brought
under a Georgia statute that made it a misdemeanor to publicize or
broadcast a rape victim’s name. Cox Broadcasting, 420 U.S. at 471-
72. A reporter, present in court when several rape defendants pled
guilty, learned the victim’s name from examining the indictments,
which were available for his inspection in the courtroom. Id. at
472-73. He later broadcast a news report about the court
proceedings, and the report named the victim. Id. at 473-74. The
Court concluded that Georgia could not “impose sanctions on the
publication of truthful information contained in official court
records”. Id. at 495.
The Court stressed the importance of having a free press to
report on the operation and administration of our government,
especially judicial proceedings like criminal prosecutions, which
are events of legitimate concern to the public. Id. at 491-92, 495
(“[A] public benefit is performed by the reporting of the true
contents of [public] records by the media. The freedom of the
press to publish that information appears to us to be of critical
importance to our type of government....”) (emphasis added). But
Government employees — e.g., IRS agents — are not members of the
media and therefore have no First Amendment responsibility to
report on criminal proceedings or other government operations.
Moreover, the media’s source in Cox Broadcasting was court
- 39 -
documents, not information protected by a non-disclosure statute,
such as § 6103.
In addition, the Court noted that accurate reports of judicial
proceedings have special protection under the First Amendment. Id.
at 492. But, as noted above, that protection arises only when the
source of those reports is public records or personal observation
of the events in court: “What transpires in the court room is
public property.... Those who see and hear what transpired can
report it with impunity.” Id. at 492 (quoting Craig v. Harney, 331
U.S. 367, 374 (1947)) (emphasis added); id. at 491 (framing issue
in case as “whether the State may impose sanctions on the accurate
publication of the name of a rape victim obtained from public
records — more specifically, from judicial records which are
maintained in connection with a public prosecution and which
themselves are open to public inspection”) (emphasis added); id. at
495 (“Public records by their very nature are of interest to those
concerned with the administration of government, and a public
benefit is performed by the reporting of the true contents of the
records by the media.”) (emphasis added).
That the Court did not address the issue present in our case
is evident from the following disclaimer in the opinion:
Appellants have contended that whether
they derived the information in question from
public records or instead through their own
investigation, the First and Fourteenth
Amendments bar any sanctions from being
imposed by the State because of the
publication. Because appellants have
prevailed on more limited grounds, we need not
address this broader challenge....
- 40 -
Id. at 497 n.27. In other words, Cox Broadcasting’s holding is
limited to its factual context. Because under our analysis, § 6103
is violated only when tax return information — which is not a
public record open to public inspection — is the immediate source
of the information claimed to be wrongfully disclosed, the First
Amendment concerns in Cox Broadcasting are not implicated here.
ii.
Given this interpretation of § 6103, we must decide what tax
return information was wrongfully disclosed in the releases. At
the beginning of the 1996 trial, Johnson claimed six items: his
age; his home address; the fact that he was executive vice-
president of ANICO; the statement that he was charged with false
business deductions and altering documents on his 1974 and 1975
returns; the statement that he would be required to pay back taxes
plus penalties and interest; and his middle initial.5
But, our en banc opinion had already concluded that the
statements about altering documents (charge portion) and about the
penalties for Johnson’s conviction (penalty portion) were not
“return information” within the meaning of § 6103. Johnson, 47
F.3d at 732 n.34 (for charge portion: “language, which on its face
purports only to describe the content of the criminal information,
is not return information under section 6103(a)”; for penalty
portion: “[it] in substance merely describes the known, universally
5
It is clear from the record that “identity” refers to
Johnson’s middle initial (“E”). Under § 6103(b)(6), “taxpayer
identity” includes “the name of a person with respect to whom a
return is filed”.
- 41 -
applicable legal consequences of willfully and knowingly filing a
false and fraudulent income tax return understating the tax due by
several thousand dollars”). Because neither of these two portions
were tax return information, their inclusion in the press releases
did not violate § 6103.
In addition, Appellants have conceded in this appeal — for the
first time during this case — that Johnson’s age, home address, and
the word “vice-president” were wrongfully disclosed.6 Appellants
maintain that the district judge who sentenced Johnson in 1981
(Judge Gibson) referred to him as an “executive with American
National Insurance Company”; therefore, they could disclose
Johnson’s affiliation with ANICO to that extent. Under their view,
because Johnson’s specific job title, vice-president, was not
mentioned in open court, it could not be disclosed.
Neither Stone nor Sassen, however, attended the court
proceedings at which Johnson pled guilty. Nor, prior to the
release, did they examine the official transcript. Moreover, they
could not have seen the transcript; it did not exist when the
releases were issued. (The court reporter did not transcribe his
6
For this reason, Appellants conceded at oral argument
that the public record exception they urge (and which we reject)
would not apply to these three items and that, therefore, Johnson
is entitled, at a minimum, to statutory liquidated damages of
$1,000 per disclosure for the wrongful disclosure of these three
items. See 26 U.S.C. § 7217(c)(1) (repealed). In its 1986 summary
judgment, the district court held that, under § 7217(c)(1), Johnson
would be entitled to $21,000 because Sassen sent the release to 21
news outlets. Johnson, 640 F. Supp. at 1135-36, 1139. Neither
party has contested that aspect of the summary judgment ruling.
Accordingly, it is law of the case.
- 42 -
notes and file the transcript until July 1981, over three months
after the releases were issued.)
In fact, Stone admitted that all of the identifying
information given to Sassen that is at issue in this case — age,
middle initial, home address, and occupation (executive vice
president of ANICO) — came either from Johnson’s return file or
from information “in his [Stone’s] head” (that is, information that
Stone had gathered during the course of investigating Johnson).
Stone testified that all information gathered about a taxpayer,
including data learned in the course of an investigation that is
not actually present in a return or the return file, is protected
by § 6103. Because neither public (court) records nor knowledge of
the open court reference was the source for Johnson’s occupation,
any disclosure of his affiliation with ANICO, and not simply the
word “vice-president”, was a violation of § 6103.
As for Johnson’s middle initial (E), there is a dispute,
outside this record, over whether it was previously disclosed in
public on the docket sheet for the 1981 criminal proceeding.7
7
Appellants contend, for the first time on appeal, that a
criminal docket sheet obtained from the district court by the
Department of Justice’s Office of Professional Responsibility
includes Johnson’s middle initial. That initial does not appear on
the sheet entered in evidence by Johnson.
Obviously, underlying this contention is a most serious and
potentially wide-ranging charge. Appellants ask us to take
judicial notice of the sheet that they claim includes that initial.
This we cannot do. For starters, even though they claim that the
sheet “is on file in the district court”, Appellants have not had
that sheet included in the record on appeal. Nor is there a record
before us that sheds light on which sheet is correct. In short,
this contention is for another day and another forum, to possibly
include the district court on remand.
- 43 -
However, because a § 6103 violation is premised on the source of
the information claimed to be wrongfully disclosed, we need not
determine whether the middle initial is in the public record,
because it is not relevant to the question of whether § 6103 was
violated. As noted above, in providing Sassen with the identifying
information in the releases, Stone relied on Johnson’s return file
or information he had otherwise gathered about Johnson, not on any
public (court) document. Therefore, the middle initial disclosure
was a violation of § 6103.
In sum, four items in the releases were wrongfully disclosed:
Johnson’s middle initial (E), his age (59), his home address (25
Adler Circle), and his occupation (executive vice-president for the
American National Insurance Corporation). The rest of the
information in the releases was not wrongfully disclosed; this
includes the two statements (charge and penalty portions) that our
en banc court previously held were not § 6103 return information.
Johnson, 47 F.3d at 732 n.34.
With the offending, identifying, information removed, the
first release would have read as follows:
GALVESTON, TEXAS--In U.S. District Court
here, Apr. 10, Elvis Johnson pled guilty to a
charge of federal tax evasion. Judge Hugh
Gibson sentenced Johnson to a six-month
suspended prison term and one year supervised
probation.
Johnson was charged in a criminal
information with claiming false business
deductions and altering documents involving
his 1974 and 1975 income tax returns.
- 44 -
In addition to the sentence, Johnson will
be required to pay back taxes, plus penalties
and interest.
c.
Johnson concedes on appeal that the charge and penalty
portions did not constitute disclosure of tax return information.
Again, the charge portion (most of the second paragraph) concerns
crimes with which Johnson had been charged, including the erroneous
information in the first release; the penalty portion (third
paragraph), his being “required to pay back taxes, plus penalties
and interest”. Unfortunately, the jury was instructed otherwise.
It was instructed that,
as a matter of law, the April 1991 news
releases at issue in this case did disclose
tax return information in violation of the
law. You have to decide whether one or more
of the Defendants negligently or knowingly
disclosed or permitted disclosure of this tax
return information.
(Emphasis added.)
Appellants maintain that this instruction caused the jury to
understand that all of the information in the releases was
wrongfully disclosed; and that this affected the outcome of the
case, mandating reversal and remand for a new trial. Johnson
counters that there was no error because he
did not contend at trial that those [charge
and penalty] portions of the press release
were tax return information or that they
caused Johnson damages. Johnson argued only
that inclusion of these statements in the
press release was relevant to Appellants’
negligent and knowing conduct.
- 45 -
Our standard of review bears repeating. Appellants “must
demonstrate that the charge as a whole creates substantial and
ineradicable doubt whether the jury has been properly guided in its
deliberations”; and, even then, “we will not reverse if we
determine, based upon the entire record, that the challenged
instruction could not have affected the outcome of the case.”
Mijalis, 15 F.3d at 1318 (internal quotations omitted).
There is no dispute that the Appellants timely and properly
objected to the given instruction. Concomitantly, their written
proposed instructions stated that the charge and penalty portions
were not return information. Accordingly, their proposed
instruction correctly stated the law.
At the conclusion of the narrowing of issues colloquy at the
start of trial, the court ruled that it (through Chief Judge
Singleton) had already ruled that there had been a disclosure of
tax return information; and that the ruling stood. It later asked
counsel: “How do you then submit to the jury the issue of the
disclosure of confidential information? The jury can’t go back in
the jury room and say, now what was disclosed? The jury can’t be
confused about what constituted [tax return] information or what
remains.” We conclude that, because of the instruction and the
evidence as to what was, or was not, tax return information, the
jury was confused in that fashion.
Along this same line, at the charge conference, the court
worked from the proposed instructions submitted by Johnson. As
noted, it rejected Appellants’ instructions, including those
- 46 -
concerning the charge and penalty portions not constituting return
information. It did so without explaining why. (Pursuant to
comments the court made to Appellants’ counsel during a bench
conference, it appears that the court may have felt that the
penalty portion was an improper disclosure, notwithstanding our en
banc ruling to the contrary.)
As required, we have considered the charge as a whole. We
conclude that the “substantial and ineradicable doubt whether the
jury has been properly guided” prong is met.
Moving to the “affected the outcome” prong, we review the
entire record in making that call. We complied with that duty, and
then some. This record has been examined, and re-examined; it has
been dissected in minute detail.
Obviously, in determining whether the erroneous instruction
“affected the outcome”, an important aspect is the positions, or
bases for liability, advanced by counsel at trial, as well as the
evidence adduced. Such bases and evidence are the soil in which
the instructions are planted; they bear on the jury’s application
of the law (instructions) to the evidence.
Despite his claim here that he “did not contend at trial that
[the charge and penalty] portions of the press release were tax
return information or that they caused [him] damages”, Johnson
repeatedly did just the opposite at trial, either expressly or by
implication. This had an effect on the district judge’s
evidentiary rulings, which of course, bore on the evidence to which
the instruction was applied. Likewise, this affected the jury’s
- 47 -
application of the instructions to the evidence. As hereinafter
described, different counsel for Johnson took different lines of
attack. They were out of step not only as to whether the charge
and penalty portions were improper disclosures of tax return
information but also as to how Johnson’s conviction should be
utilized or presented. Both aspects were elements in the
instructions affecting the outcome.
Concerning the charge and penalty portions, Johnson’s amended
complaint claimed that they were tax return information. He made
this a contested issue of law in the pretrial order.
Along that line, in addressing at the start of trial what
issues remained for the jury, in the light of Chief Judge
Singleton’s 1986 and 1991 rulings and our en banc opinion,
Appellants noted that the latter held that the charge and penalty
portions did not constitute tax return information. In response,
Johnson urged that the summary judgment granted him in 1986 had not
been overturned, and stated: “There are comments made by the Fifth
Circuit in their [en banc] opinion that certain things did not
constitute tax return information, but ... [the court] did not
overrule the finding by Chief Judge Singleton that tax information”
had been disclosed. A lengthy colloquy ensued between the court
and counsel as to the effect of our en banc opinion.
Unfortunately, how to deal with what was not tax return information
— the charge and penalty portions — got lost in the shuffle. Even
more unfortunate, it remained lost throughout the balance of the
trial.
- 48 -
There is no dispute that Johnson’s conviction could be
revealed in a press release. And, again, it is undisputed that the
charge and penalty portions were not tax return information;
therefore, the information contained in these portions was not
improperly disclosed. The causation issue for the jury was
whether, as a result of only the improperly disclosed information,
not simply because there were press releases, Johnson lost his job.
In other words, a key issue was whether identifying information in
the releases that was disclosed in violation of § 6103 caused that
job loss. Admittedly, a very strong argument can be made that, but
for the improperly disclosed information, which identified him,
Johnson would not have been linked with the person made the subject
of the press releases. (See the redacted release, supra.)
Johnson’s counsel, however, did not take that position consistently
at trial. And, the jury instruction prevented that issue from
being clearly presented to the jury.
The error in the instruction was assisted in its “effect on
the outcome” metamorphosis by the actions of Johnson’s counsel
throughout the trial. For example, in his voir dire, Johnson’s
counsel stated: “The IRS publicized [Johnson’s conviction], and as
a result of publicizing that, he lost his career, plain and simple.
That’s what this case is about.” But, again, that is not what the
case is about. Later in voir dire, Johnson’s counsel stated that
it “was a violation of law to issue that press release”. Now,
reading between the lines, perhaps Johnson’s counsel meant that it
was a violation of law to disclose part of the information in the
- 49 -
release. That, however, is not what was said to the jury. The
foregoing statements are fairly typical of overstatements made by
Johnson’s counsel throughout trial, including in questioning
witnesses.
The tactic employed in voir dire was utilized in Johnson’s
opening statement. The press releases, rather than the portions
that constituted an improper disclosure of tax return information,
were attacked, as was Johnson’s conviction.
Johnson’s counsel often questioned witnesses about the
specific improperly disclosed tax return information; but, they
kept undoing that by attacking the press releases in toto,
confusing the issue. It may well be that, as claimed by Johnson,
such attacks were relevant; that the mistakes or errors relating to
the charge and penalty portions supported finding negligent or
knowing disclosure of the four items of tax return information. In
any event, care should have been taken in adducing such proof. It
was not.
For example, in questioning Johnson’s own expert, Johnson’s
counsel asked him to agree that, in issuing a press release, the
“need for speed, to get it out now, ... should not be allowed to
overcome a need to make sure it’s right”. But, again, the issue at
trial was not whether the press release was “right”; it was whether
the release contained improperly disclosed tax return information.
Perhaps, that is what counsel meant through the use of the word
“right”. And, several questions leading up to that question had
- 50 -
been along that line. But, again, Johnson’s counsel kept undoing
his case through use of such overbroad questions.
These questions focus the jury, somewhat ambiguously, on the
errors in the first release (which are not return information) and
suggest that those errors are what caused Johnson’s dismissal.
Again, negligence in drafting the charge and penalty portions of
the release may support an inference of knowing or negligent
disclosure of the four items of tax return information (because the
release was written all at once, not piecemeal), but this
distinction must be made clear to the jury. It was not.
As another example, Johnson’s counsel asked one of the
Appellants to agree that he “didn’t take out any of the identifying
information, and you didn’t tell Ms. Sassen to take out anything
about Mr. Johnson owing back taxes, penalties, or interest, did
you?” Again, by linking the penalty portion with the identifying
information, this question suggests that the penalty portion was §
6103 “return information”, when our en banc court had already held
to the contrary.
Johnson’s counsel compounded the error by next asking: “The
fact that Mr. Johnson will be required to pay back taxes, penalties
and interest, where does that appear in a Court record or other
public record?” This question again implies that the penalty
portion was improperly taken from Johnson’s return file (which
implies that it was § 6103 “return information” in the first
place). And the next question only reinforces this implication:
“How do you determine, Mr. Sawyer, if somebody owes back taxes?
- 51 -
You have to look at their tax files, don’t you? You can’t get that
from the public record or the Court record in this case?” Given
that both Stone and Sassen admitted that Johnson’s return file was
the source of the identifying information, questioning about the
charge and penalty portions was unnecessary to prove that § 6103
was violated.
As reflected in the foregoing examples, we conclude that the
erroneous instruction affected the outcome. Based on our reading
of the whole record, it is possible that the jury determined that
the charge and penalty portions were “return information” and that
they damaged Johnson in some way. If that is so, the jury may have
found Appellants liable under § 7217 for conduct that did not
violate § 6103 in the first place. In short, when the jury applied
the erroneous instruction to such evidence, we have no doubt that
the error in the instruction — indicating that the charge and
penalty portions were improperly disclosed — affected the outcome
of the case, both as to liability and as to damages.
As stated, in determining whether the instruction affected the
outcome, we obviously did so against the backdrop of the record.
Our conclusion that the erroneous instruction did affect the
outcome is buttressed by the jury’s susceptibility to applying the
instruction improperly due to appeals to prejudice by Johnson’s
counsel against the IRS and its personnel. Johnson’s closing
argument included an attack on his conviction, as had been done in
his opening statement. But, the conviction was not at issue; it
was not open to attack. Of course, the conviction tied directly
- 52 -
into the charge and penalty portions, which the instruction implied
were improperly disclosed.
Johnson’s conviction was a trigger point for the jury, a point
pulled improperly and repeatedly by one of Johnson’s lawyers. He
stated: “So they find what they consider to be a $3,000 discrepancy
in his return, $3,500. So they undertake to make a criminal case
of it. They spend four years on it.” He later asked the jury:
“Who is the next trophy kill? Me? You?”, and then stated:
My CPAs pour over and prepare my tax returns.
I guess I’m going to have to sit down and read
them real close myself and go over everything.
I got [sic] a big enough name. Boy, they
would love to put it up on the wall.
(Amazingly, Appellants’ counsel did not object to these remarks.
We are confident that such appeals to prejudice will not reoccur on
remand.)
Each of the jurors had a set of the instructions. Because of
the complexity and intricacy of the issues in this case, a correct
jury instruction was needed more than ever. The jury did not
receive one. Because the instruction both improperly guided the
jury and affected the outcome, we must vacate and remand for a new
trial.
2.
The court instructed that the Appellants could be liable under
§ 7217 for “negligently or knowingly ... disclosing or permitting
the disclosure of tax return information”. (Emphasis added.)
Asserting that only Sassen made a “disclosure” within the meaning
of § 6103, the other Appellants maintain that persons who permit
- 53 -
disclosures or who negligently supervise others who make
disclosures cannot be held liable under § 7217.
Appellants moved at trial for judgment as a matter of law on
this issue and raised timely objections in each instance at the
charge conference. On the other hand, they do not challenge the
sufficiency of the evidence. Therefore, at issue is only whether,
as a matter of law, they could disclose by their own actions,
including by permitting another to do so.
We find no error. “Disclosure” is defined by § 6103 as “the
making known to any person in any manner whatever a return or
return information”. 26 U.S.C. § 6103(b)(8) (emphasis added). We
agree with Johnson that, under the plain meaning of the statute,
IRS agents like Stone and IRS supervisors like Orth, Braun, and
Sawyer can “make known” return information in “some manner” without
actually putting their names on a press release and mailing it to
a news outlet. In this regard, we are informed by Chandler v.
United States, 687 F. Supp. 1515 (C.D. Utah 1988), aff’d, 887 F.2d
1397 (10th Cir. 1989). (There is a dearth of law on this point.)
In Chandler, an IRS teller received a penalty check that
failed to contain a taxpayer identification number (TIN). Id. at
1516. The teller accessed the taxpayer account via computer but
mistakenly transcribed the number onto the check. Id.
Consequently, the taxpayer’s account was not credited with those
funds, and an IRS revenue officer mailed a notice of levy to the
taxpayer’s place of employment to collect the penalty. Id. The
taxpayer brought suit against the United States under 26 U.S.C. §
- 54 -
7431. See supra (§ 7217 and § 7431 contain same definition of
disclosure and same predicate for liability).
Because the Government conceded that the notice of levy
disclosed tax return information, 687 F. Supp. at 1516 n.1, the
issue was whether the disclosure was the result of negligence (or
willfulness). The court concluded that several IRS officers were
negligent, including the teller. Id. at 1521. The court reached
this conclusion despite the fact that it was the revenue officer
who actually mailed the notice of levy and despite the fact that
the teller’s only contribution to that action was in transcribing
the TIN incorrectly. Id. Nevertheless, the negligent conduct of
the teller was actionable under § 7431.
We agree with Chandler that § 7217 expands the universe of
liability beyond the federal employee who actually “publishes” tax
return information. Other individuals in the chain of causation
who contribute to a wrongful disclosure (either by acting or by
failing to act) are proper party-defendants in a § 7217 action.
Stone, who supplied the tax return information to Sassen for the
first release, and supervisors Orth, Braun, and Sawyer, who
approved and/or were personally involved in the first or second
release are equally as subject to liability under § 7217 as Sassen,
who distributed both releases. Therefore, it was not error to
instruct the jury in that regard.
3.
Because resolution of Appellants’ challenge to four more
instructions must be left to the district court on remand, based on
- 55 -
the record developed on retrial, we do not reach these issues. On
the other hand, we discuss them simply to assist the district court
on remand in deciding what is, and is not, law of the case.
a.
The district court denied Appellants’ proposed instruction
that Securities and Exchange Commission regulations would have
required ANICO to file a public report that Johnson had been
convicted of tax evasion. In our en banc opinion, we judicially
noticed the SEC regulations that would require ANICO to file a
report with the SEC that disclosed the fact that a director or
executive officer had been involved in a legal proceeding that was
“material to an evaluation of the ability or integrity” of that
person. Johnson, 47 F.3d at 733-34 & n.36 (quoting 17 C.F.R. §
229.401(f)) (emphasis added). We suggested that Johnson’s
conviction would be material under these regulations. Id. at 736-
37 (“The law has long considered conviction of any felony as
material to an evaluation of the integrity of the person so
convicted.”).
But, no evidence on materiality was presented. Because we
remand for a new trial, and because of the possible factual
underpinnings for this claim, including the questions of whether
the SEC report would be relevant to the causation issue or to
mitigation of damages, we decline to address this claim, assuming
arguendo it was even properly presented here. Whether this
instruction should be given is best left to the district court,
when this matter is tried anew.
- 56 -
b.
The jury was instructed with respect to Sassen:
In judging whether defendant Sassen was
negligent and/or knowingly violated the law,
you should ask yourself, did defendant Sassen
coordinate as she was required to do with
Branch Chief defendant Orth, and with the
prosecuting attorney, U.S. Attorney Powers?
The basis of this instruction was the earlier described DDM which
stated: “The DPAO [Sassen] will coordinate all CID releases with
the Branch Chief, Criminal Investigation Division [Orth], and the
prosecuting U.S. Attorney [Powers].” Appellants maintain that
noncompliance with an internal agency guideline does not give rise
to an actionable claim.
One of Appellants’ own witnesses, the IRS official who signed
this DDM, testified that Sassen was required to follow the
guidelines in the DDMs in issuing press releases. In other words,
there was no dispute that Sassen should have followed the
“coordination” directive in issuing the two releases. She
testified about her understanding of the term “coordinate” and
about her actions in that regard, such as communicating with Stone.
But, as discussed, Sassen also admits that she did not communicate
with Powers.
Again, because this matter will be tried anew, and because of
the factual nature of this issue, we will not address it. It
remains for the district court on retrial.
c.
According to Appellants, the court did not explain to the jury
which side had the burden of proof on each element of Johnson’s
- 57 -
case. Although Appellants maintain that the court properly
instructed the jury that Johnson carried that burden on the element
of proximate cause (Question No. 3), they contend that the jury may
have been misled into thinking that Appellants bore the burden of
disproving that they were negligent (Question No. 1). Once again,
this question is best left to the court on remand in framing its
instructions.
d.
The district court refused to read to the jury the facts
stipulated in the pre-trial order. This is yet another question
best left to the court on remand. For example, even if stipulated
facts are to be presented to the jury by instruction or otherwise,
not all of them necessarily would be. One of the stipulated facts
was that the judge who sentenced Johnson referred to him as an
“executive for the American National Insurance Company”. This is
the stipulation Appellants especially wanted presented. But, as
the district court ruled, and as discussed supra and infra, that
fact is not legally relevant; therefore, on remand, it should not
be presented to the jury, despite being stipulated to factually.
B.
Stone and Orth maintain that they should have been dismissed
because Johnson’s second amended complaint, which added them as
defendants, was filed approximately 16 months after the limitations
period had run. (Section 7217 has a two year period that runs from
the date of the wrongful disclosure. 26 U.S.C. § 7217(d)
(repealed).) Johnson responds that under FED. R. CIV. P. 15(c), the
- 58 -
second amended complaint relates back to the timely filed original
complaint. In its 1986 ruling, the district court denied summary
judgment for Stone and Orth on this issue on the grounds that the
elements of Rule 15(c) were satisfied. Johnson, 640 F. Supp. at
1134-35. This was the only occasion on which they presented this
issue.
We have no occasion to re-examine that ruling because Stone
and Orth have failed to preserve this issue for review. First, as
discussed, we cannot review the 1986 denial of their summary
judgment motion; such interlocutory orders are not to be reviewed
where final judgment adverse to the movant is rendered on the basis
of a subsequent full trial on the merits. See Black, 22 F.3d at
570.
And second, Stone and Orth did not re-urge the limitations
issue in their Rule 50 motions at trial. Such motions should
include all possible grounds, legal and factual, for judgment as a
matter of law. Id. at 571 n.5 (rejecting dual system for
evaluating denials of summary judgment). We decline to exercise
our discretion to address this issue on appeal. See, e.g,
Highlands Ins. Co. v. National Union Fire Ins. Co., 27 F.3d 1027,
1031-32 (5th Cir. 1994).
C.
Appellants contest several evidentiary rulings. But,
[w]e will not reverse a district court’s
evidentiary rulings unless they are erroneous
and substantial prejudice results. The burden
of proving substantial prejudice lies with the
party asserting error.
- 59 -
Mijalis, 15 F.3d at 1318-19; see FED. R. EVID. 103. We decide only
one of the claims.
1.
Concerning the transcript of Johnson’s guilty plea hearing
being excluded, Appellants intended to rely on it to show that
Johnson’s affiliation with ANICO was disclosed in court at the plea
hearing on 10 April, before the first release. But under our
construction of § 6103, it is irrelevant whether that tax return
information was disclosed in open court. Neither Stone nor Sassen
was present in court when Johnson pled guilty. Both admitted that
the source of the information in the release was Johnson’s return
file, not the transcript or other court documents. (Moreover, the
transcript could not have been the source; it was not filed until
24 July 1981, over three months after the releases were issued.)
Consequently, the transcript was properly excluded.
2.
As was done for most of the challenged instructions, the
remaining claims are presented simply to clarify what is, and is
not, law of the case.
a.
Appellants contest two of Johnson’s expert witnesses, James
Caldwell and Tim Millis, being allowed to testify. They maintain
that both Caldwell and Millis offered opinions on legal questions
such as whether Appellants had violated the law and whether their
conduct was intentional and reckless. Our standard of review in
such instances, however, is very limited: “The decision to admit
- 60 -
expert testimony lies within the district court’s sound discretion
and will not be overturned unless manifestly erroneous.” United
States v. Willey, 57 F.3d 1374, 1389 (5th Cir. 1995). In any
event, this issue remains for the court on remand. Obviously, it
will be framed by the issues and evidence presented.
b.
Clay, President and CEO of ANICO in 1981, was a key witness
because he supported Appellants’ contention that it was the fact of
Johnson’s conviction, not the publicity surrounding it, that cost
Johnson his job. Clay testified that he asked Johnson to resign on
Thursday, 16 April, before learning of the release and after a
conference with two members of the board of directors (Duncan and
Randall) and a telephone poll of most of the rest of the board.
The district court did not allow Clay to testify as to what
the other directors, particularly Duncan and Randall, had said to
him (Clay). In the proffer of that testimony, Clay stated that
Duncan and Randall had told him to dismiss Johnson immediately
because “they could not have a senior officer of the company,
particularly a fiduciary-type company, with a felony conviction
being a senior officer”.
Of course, this testimony is hearsay, FED. R. EVID. 801(c); it
was offered for the truth of the matter stated — i.e., that ANICO
“dismissed” Johnson because of the conviction, not because of the
press release. This is yet another issue that is best left to the
district court on remand. It must be decided based on the evidence
presented at the new trial and, in fact, may not even arise.
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c.
Appellants appear to contend that the trial court erred in
permitting Irwin Herz, one of ANICO’s outside counsel in 1981, to
give hearsay testimony. He testified, with a limiting instruction
from the court, about his discussions with one of ANICO’s most
influential board members regarding Johnson. According to Herz,
that board member told him that Johnson had been terminated because
of publicity stemming from his guilty plea, not because of the
conviction itself. This is another issue, assuming it is
presented, for the court at the trial on remand.
d.
As noted, an individual is not liable for an unauthorized
disclosure based on “a good faith, but erroneous, interpretation of
section 6103". 26 U.S.C. § 7217(b). Appellants maintain that they
were erroneously prohibited from presenting evidence concerning
their good faith defense — that reliance on internal manuals and
regulations is relevant to that defense.
At trial, the DDM requirement that Sassen “coordinate” all
press releases with Powers was highly disputed. Johnson maintained
that the DDM required Sassen to actually contact Powers; Appellants
countered that Sassen could coordinate with Powers indirectly, via
Stone. Appellants attempted to present testimony from Robert
McKeever, the district director of the Austin District in 1981, and
H.C. Longley, the acting district director who signed the DDM, as
to the meaning of “coordinate” in the DDM. The court refused to
allow that testimony.
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Once again, this is an issue that must be decided at the trial
on remand.
D.
The final issue is Appellants’ request that, on remand, this
case be reassigned because Judge Hoyt did not have the requisite
“appearance of impartiality”. A federal appellate court has
supervisory powers to do so as part of a remand order. See 28
U.S.C. § 2106 (“[A] court of appellate jurisdiction may ... require
such further proceedings to be had as may be just under the
circumstances.”); Liteky v. United States, 114 S. Ct. 1147, 1156-57
(1994) (source of this supervisory power is § 2106 and recusal
statute, 28 U.S.C. § 455(a)); In Re John H. McBryde, No. 95-11082,
1997 WL 367349, at *24 (5th Cir. July 2, 1997); United States v.
Microsoft Corp., 56 F.3d 1448, 1463 (D.C. Cir. 1995); Haines v.
Liggett Group, Inc., 975 F.2d 81, 98 (3d Cir. 1992); United States
v. Torkington, 874 F.2d 1441, 1446 (11th Cir. 1989); Davis & Cox v.
Summa Corp., 751 F.2d 1507, 1523 (9th Cir. 1985); United States v.
Robin, 553 F.2d 8, 10 (2d Cir. 1977) (en banc). For most obvious
reasons, “[t]he power to reassign pending cases is an extraordinary
one”; it is “rarely invoked”. In Re John H. McBryde, 1997 WL
367349, at *24.
Several circuits invoke such powers not just when actual bias
or prejudice exists but when the facts “might reasonably cause an
objective observer to question [the judge’s] impartiality”.
Microsoft, 56 F.3d at 1463 (quoting Liljeberg v. Health Servs.
Acquisition Corp., 486 U.S. 847, 865 (1988)); see Haines, 975 F.2d
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at 98 (purpose of reassignment is “to avoid both bias and the
appearance of bias”); Torkington, 874 F.2d at 1446 (“Reassignment
is appropriate where the trial judge has engaged in conduct that
gives rise to the appearance of impropriety or a lack of
impartiality in the mind of a reasonable member of the public.”).
Other circuits have adopted a more formal test, in which the
following three factors are considered:
(1) whether the original judge would
reasonably be expected upon remand to have
substantial difficulty in putting out of his
or her mind previously-expressed views or
findings determined to be erroneous or based
on evidence that must be rejected, (2) whether
reassignment is advisable to preserve the
appearance of justice, and (3) whether
reassignment would entail waste and
duplication out of proportion to any gain in
preserving the appearance of fairness.
Davis & Cox v. Summa Corp., 751 F.2d 1507, 1523 (9th Cir. 1985)
(quoting Robin, 553 F.2d at 10); see Robin, 553 F.2d at 10. We
need not decide which test to utilize. We conclude that, under
either test, reassignment is required.
In explaining why this case must be reassigned, we view it in
the light of its tortured, expansive (and expensive) history. The
district judge was given a hotly contested, extremely emotional
case that had been pending for more than ten years, one that was
the subject of extensive opinions by a different district judge in
1986 and 1991 and by our en banc court in 1995, by which law of the
case on some points had been established. And, there was some
tension between our en banc and the district court opinions.
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Moreover, there was immediate, continuing, and ever-increasing
tension between the district judge and one of Appellants’ counsel,
who had tried the earlier FTCA claim. Added to this volatile mix
was the tension between the Appellants and Powers, the Assistant
United States Attorney who had handled the tax conviction in 1981;
as described, he basically remembered nothing. The closest he came
to remembering anything was reviewing a press release — apparently
the second (revised) release.
Accordingly, the district judge was justifiably concerned
about truthfulness by the witnesses. Although we question the
extent, and manner by which, he pressed that concern, as well as
the extent and manner of his being at odds with the above-
referenced Appellants’ counsel, that, of course, is not why we
conclude that this case must be reassigned. The district judge was
on the scene; we will not, and cannot, question his decisions in
these regards. See Liteky, 114 S. Ct. at 1157.
And, we have no doubt that the district judge could put out of
his mind, or disregard, his prior conclusions on those matters we
have found on this appeal to be erroneous, especially the erroneous
jury instruction that compels a new trial. On the other hand,
reassignment of this case is required because of the necessity to
preserve the appearance of impartiality, fairness, and justice.
(The loss of efficiency and economy pales in comparison to this.)
Suffice it to say, few indeed are those who would list the IRS
and its personnel as an entity or individuals with which or whom
they want to deal. Tax return preparation and tax payment are
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enjoyed by few, if any. Many transfer this dislike to those who
collect those taxes and administer our tax system. This has been
true since taxes were first levied and collected. But, no one can
dispute that persons in the tax collection business, just like
anyone else, are entitled to a fair trial. We know that the
district judge agrees.
Likewise, no one can dispute that, generally, the American
public is entitled to know about the business of its courts and the
proceedings in them. We so noted in our en banc opinion. Johnson,
47 F.3d at 736 n.41, 737 & n.45.
Toward that end, press releases are one means to so advise the
American public. The need or reason for releases about tax
convictions was one of the numerous matters hotly contested at
trial. Appellants posit they are needed to help promote or ensure
voluntary tax compliance and to let the public know that everyone,
no matter his status or station, is treated the same; Johnson
counters that the release was to trumpet “bagging a trophy”. But,
as stated, the press release qua press release was not at issue; at
issue was improper disclosure of tax return information.
Nor was Johnson’s conviction at issue. In our en banc
opinion, we noted that, regarding the FTCA ruling, Chief Judge
Singleton “apparently credited all [the Johnsons’] testimony”
concerning the fact that “he was not guilty of tax evasion and that
he was wholly unaware that any items claimed as business expenses
on his return were factually false or overstated”. Johnson, 47
F.3d at 722. We commented that, “[i]n so doing, the court in
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effect rejected the government’s contention that ‘this is a matter
of res judicata, it’s not open to attack.’ In this respect, the
district court clearly erred”. Id. at 722 n.13. This
notwithstanding, Judge Hoyt appeared to, if not expressly, disagree
with the very fact of the conviction and of the events leading up
to it. For example, in a heated colloquy with Appellants’ counsel
outside the presence of the jury, Judge Hoyt stated:
This is no game down here. This is serious,
and it’s so serious it scares me to death;
that I could be prosecuted by somebody who
decides that they [sic] are not going to let
me pay $3500 in taxes.
Along this line, as discussed infra, the district court’s post-
trial opinion replows the ground of Johnson’s conviction and again
implies that it was improper.
The court’s tension with, and appearance of bias against,
Appellants was immediate. For example, the court asked the
following question during voir dire:
Now, how many of you have a bone to pick,
other than me, with the Internal Revenue
Service?” Let’s see a show of frank hands....
You don’t have to worry about it. See, you
are on hallowed ground now. I don’t care what
an IRS agent might want to do to you, you can
raise your hand.
(Emphasis added.) Such comments might simply have been intended to
put the potential jurors at ease. But, it was not an isolated
incident; this bias or antagonism, see Liteky, 114 S. Ct. at 1157,
toward Appellants in particular, and the Internal Revenue Service
in general, continued, if not increased, throughout the trial.
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In the above-referenced colloquy, in which the court commented
about the IRS not allowing payment of “$3,500 in taxes”, the court
had earlier commented:
This is not something that’s insignificant.
All of you probably would be in the
penitentiary if they had prosecuted you [under
the criminal statute for improper tax
information disclosure]. So don’t make the
mistake of lying here, because you open
yourself up to prosecution.
During yet another of the many contentious colloquies with
Appellants’ counsel, in which the court was expressing dismay
because Appellants were testifying that they believed the
disclosures had not been improper (which arguably bore on their
“good faith, but erroneous, interpretation” of § 6103 defense), the
court stated:
And yet they would get on the witness stand
and testify that they believe that they can
release this information this very day.
Is that because they disagree with [the
court’s 1986] ruling or because you
[Appellants’ counsel] told them that my ruling
isn’t right?
You see, if they had read these opinions,
any person with any common sense would not get
on the witness stand and say, in the face of
the Judge who just told them, there is
something wrong with your thinking here; and
they get up there and they say, well, you
know, I could still do this.
I [as the court] have already ruled as a
matter of law they can’t. I [as the court]
did that in 1986. I [as the court] did it
again in 1991.
If they have not read these opinions,
then they should, because there is no basis in
common sense, not in law or fact, but no basis
in common sense for anybody to get on the
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witness stand and tell a person to their face,
who has the job and responsibility of
determining what the rule of law is and how to
interpret it: Judge, you did it, but piss on
you. I have a different opinion.
(Emphasis added.) In another ruling, the court stated: “It seems
to me the problem is one of disingenuousness on the part of
witnesses getting up here and saying they don’t know anything.
They’re lying through their teeth. That’s all that means.”
Yet another example of this tension, evidencing a “high degree
of antagonism”, see Liteky, 114 S. Ct at 1157, and the appearance
of a lack of impartiality, that we must remove through
reassignment, is reflected in a dispute between the court and
Appellants’ counsel over the definition of hearsay, during which
the court stated: “Oh, excuse the hell out of me. That’s what I
learned in law school....” And, at the conclusion of the trial,
after the verdict was rendered and the jury released, the court
stated to counsel:
Let me just make a couple of observations
before you leave this afternoon. I have been
concerned, as far as the lawyers are
concerned, about the conduct of the lawyers in
this case. I am also concerned about how we
spend our money in this United States of
America; and I say that because I don’t know
how in the world you can present a defense,
[Appellants’ counsel], by having people say,
first of all, they didn’t do it, then say, I
did what I did in good faith, and then say,
but I would do it again.
There is no good faith defense to
anything of this sort as a matter of law when
those kind of options are put to the jury
because the answers are internally in conflict
with each other.
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And now we all know why those folk [sic]
are hanging out in Minnesota, because some of
us are so arrogant, in the work we do for the
people of the United States, that there are
other people who are waiting for the next
revolution.
And they’re going to bring it about if
you and I and others like us don’t do
something now to stop this kind of insanity.
This is insane. And the tax payers should not
be paying 10 - $15 million out because it
doesn’t cost you anything to come down here to
try this case.
It is a sad day for the government and
for the United States of America.
Good Luck.
The final, and perhaps most illustrative, instances of the
appearance of partiality are found in the district court’s post-
trial opinion, referenced earlier. One example suffices. A
factual background section entitled “PUBLICIZING THE ‘TROPHY’” had
an explanatory footnote:
In the opening statement, the United States
Attorney from the Department of Justice
described the Johnson case as a “trophy case.”
Apparently, the IRS takes special pride in
publicizing prosecuting a person who hold[s]
an executive position in a large corporation.
But, the “opening statement” comment attributed to Appellants’
counsel was made instead by Johnson’s:
I was, frankly, stunned by something I heard
yesterday said [during voir dire] by the
United States Attorney sent all the way down
from Washington, D.C.[,] to defend the IRS
agents. He stood before you and he told you
what, essentially, their position was. He
said, you know, the IRS can choose to
prosecute a lot of people, but we engage in
selective prosecution. If we can find
somebody with a big name, somebody who’s an
executive in an important company, that’s who
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we love to prosecute, because they are a
trophy.
Even though it was only $3500, Johnny Johnson
got selected because Johnny Johnson was a
trophy. Do you remember him telling you that?
Now, he didn’t use all the words I have used,
but that’s what he said.
And they want a trophy because they want
publicity, and he told you that; and then he
said that we particularly love to get this
publicity around April the 15th when people
have to file their taxes. Remember those
words? His words not mine.
The press release that was issued by the IRS
concerning Johnny Johnson was issued on April
the 13th, April the 13th. You will get to see
the press release with your own eyes, and you
will get to see the date.
(Emphasis added.)
What Appellants’ counsel had actually said during voir dire
was quite different:
Now, despite the great size of the Internal
Revenue Service and what we constantly hear of
as the resources of the United States, the
Criminal Investigation Division can only
investigate and prosecute a small percentage
of the cases that come to their attention, so
that within the Internal Revenue Service there
is a very involved procedure whereby men and
women known as revenue agents make referrals
from the examination division to the criminal
division.
Most of those cases never are taken to a
criminal prosecution because along the way the
people in the Criminal Investigation Division
decide its doesn’t have prosecution merit,
there isn’t enough money involved, or the
person is too old to serve a jail term; and
then it has to go through the Department of
Justice, because the Internal Revenue Service
cannot prosecute a case itself.
Once it goes to the Internal Revenue Service -
- the Department of Justice, the Department of
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Justice makes a further cut in those cases and
kicks a whole bunch out, so that by the end of
the year, of all the thousands and thousands
of matters that comes to the attention of the
Criminal Investigation Division of the
Internal Revenue Service, only a very small
number, just over a thousand for this entire
country, are prosecuted.
Now, having those limited resources, partly
because that’s all they can get, and partly
because we don’t want to turn this nation into
a police state, one of the ways that the
Internal Revenue Service had determined to
best enforce the laws is a make sure that when
someone is prosecuted and punished for a
federal tax crime, in this case a felony, that
everybody knows about it, and so they have a
public affairs office, and the public affairs
office makes press releases, and the press
releases are intended to tell the people of
the United States two things:
No. 1, pay your taxes and be fair with your
government, and be fair with your fellow
taxpayers, because if you don’t, we have this
elite group of highly skilled agents out there
who are going to catch you and they are going
to prosecute you.
And No. 2, the message to the vast majority of
honest, hard-working tax-paying American
citizens is this: We are making sure that
other people are like you. We are making sure
... everyone out there is toeing the line like
you and paying your taxes and being fair with
Uncle Sam and your neighbor; and so, they
write press releases, and they send them out
to radio station and to newspapers, and they
especially do that in the period right before
tax day, April 15th of each year.
Now, the Internal Revenue Service has a
problem. The local television news likes to
do exciting things. They like sound bites.
They like to look at things with agents
breaking into houses and pulling out drugs and
saving children from wells and so on and so
on. The fact that somebody has attempted to
evade their federal income taxes does not get
their attention; and therefore these press
releases have to be made and sent to these
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organizations, and a lot of times they don’t
publish them, but that’s what they’re doing.
Now, there is a difference, of course, between
street crime that goes on television every
night and what we euphemistically call “white
collar crime,” which is what tax evasion is.
Is there anybody here who believes that it is
unfair to make a press release about somebody
who has evaded or attempted to evade their
federal incomes taxes?
(No response)
[Appellants’ counsel] Is there anybody who
thinks that it should be excused because
somebody is high up in the executive suite and
they commit a felony, that the public should
not know about them; that all the public
should know about is the people who are out
there dealing drugs or robbing banks; that
somehow that is different; that somebody who
is high up in an executive suite is entitled
to have all of these things squashed quietly,
late in the afternoon, far away, using an
incorrect address, and in an attempt to use a
different name so that nobody can tell that it
was really him who was prosecuted.
Anybody believes that? Anybody thinks that
would be fair?
This “trophy” saga is a vivid illustration of why this case
must be reassigned (and, as discussed supra, bears on why it must
be retried).
We know that the district judge agrees that an appearance of
partiality or bias must be remedied. And, it goes without saying
that this reassignment is most extraordinary and ordered most
reluctantly. That notwithstanding, our duty is clear.8
8
The absolute necessity for impartiality and the
appearance of same, and our concomitant duty to always attempt to
ensure them, regardless of how unpleasant it may be to have a case
reassigned, evokes the following passage which incoming new cadets
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III.
It is past time for this opinion to end. It is far past time
for this case to end; indeed, to be put to rest. It has been
pending for almost 15 years. We are confident that through
insightful case management and procedures, such as a comprehensive
pretrial order and in limine and other rulings which otherwise
narrow the issues, limiting instructions, and carefully drawn jury
instructions, this case can be tried in a manner that is fair to
both sides and will result in a correct judgment.
The judgment of the district court is VACATED and this matter
is REMANDED for further proceedings consistent with this opinion.
On remand, both § 7217 liability and damages are in issue. The
(plebes) at the United States Military Academy (West Point) were,
and it is hoped still are, required to memorize. A few words may
be incorrect or out of order, due to memory dimmed somewhat by the
passage of 35 years; nevertheless, the message is crystal clear:
But an officer on duty knows no one. To be
partial is to dishonor both himself and the
object of his ill-advised favor. What will be
thought of him who winks at and overlooks
offenses in one, which he causes to be
punished in another; and contrast him with the
soldier who does his duty faithfully,
notwithstanding that it occasionally wars with
his private conduct and feelings. The conduct
of one will be emulated and venerated; the
other, detested as a satire upon soldiership
and honor.
General Douglas MacArthur, one of West Point’s, as well as this
Nation’s, greatest sons, proclaimed, and at the same time
cautioned: “There is no substitute for victory”. The same is true
of judicial impartiality. Some things never change; nor should
they. Again, we know the district judge is of this view.
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Chief Judge of the United States District Court for the Southern
District of Texas is to REASSIGN this case.
VACATED and REMANDED; INSTRUCTIONS ISSUED
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