Byers v. Intuit, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

___________

No. 09-1997
___________

STACIE BYERS and DEBORAH A. SELTZER,
individually and on behalf of all others similarly situated

Appellants

v.

INTUIT, INC.; H&R BLOCK DIGITAL TAX SOLUTIONS,
LLC; and FREE FILE ALLIANCE, LLC, each individually
and on behalf of all others similarly situated;
THE INTERNAL REVENUE SERVICE

_______

Appeal from the United States District Court
for the Eastern District of Pennsylvania
(No. 07-4753)
District Court Judge: Honorable Thomas N. O’Neill, Jr.

________
 Argued November 9, 2009
Before: AMBRO, GARTH and ROTH, Circuit Judges

(Opinion Filed: March 3, 2010)

Thomas Martin, Esquire (Argued)
Alan M. Feldman, Esquire
Thomas More Marrone, Esquire
Feldman, Shepherd, Wohlgelernter, Tanner, Weinstock &
Dodig
1845 Walnut Street, 25th Floor
Philadelphia, Pennsylvania 19103

Counsel for Appellants

Judith A. Hagley, Esquire (Argued)
Jonathan S. Cohen, Esquire
Gilbert S. Rothenberg, Esquire
Tax Division
Department of Justice
950 Pennsylvania Avenue, N.W.
P.O. Box 502
Washington, D.C. 20044

Counsel for Appellee Internal Revenue Service

Stephen M. Ryan, Esquire (Argued)
Jason A. Levine, Esquire
Rahul Rao, Esquire
Paul M. Thompson, Esquire

2
McDermott Will & Emery LLP
600 13th Street, N.W.
Washington, D.C.

Counsel for Appellee Free File Alliance, LLC, et al.

Aaron B. Hewitt, Esq.
Scott A. Stempel, Esq.
Morgan Lewis & Bockius
1111 Pennsylvania Avenue, N.W.
Suite 800 North
Washington DC 20004

Jami W. McKeon, Esq.
Morgan Lewis & Bockius
One Market Street
Spear Street Tower
San Francisco, CA 94105

Patrick A Particelli, III, Esq.
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia PA 19103

Counsel for Appellee Intuit Inc.

Laurence Z. Shiekman, Esq.
Larry R. Wood, Jr., Esq.
Pepper Hamilton
18 th & Arch Streets

3
3000 Two Logan Square
Philadelphia PA 19103

Counsel for Appellee H& R Block Digital Tax
Solutions,LLC.

___________

OPINION
___________

GARTH, Circuit Judge:
This appeal arises out of the District Court’s dismissal of
a putative class action brought by Plaintiff-Appellants Stacie
Byers and Deborah A. Seltzer against Intuit, Inc., H&R Block
Digital Tax Solutions LLC, Free File Alliance, LLC, and the
Internal Revenue Service. We will affirm.
I.
A.
In 1998, Congress passed the Internal Revenue Service
Restructuring and Reform Act, Pub. L. No. 105-206, Title II,
112 Stat. 723 (1998) (“RRA”). The RRA states, in pertinent
part, that “[i]t is the policy of Congress that paperless filing
should be the preferred and most convenient means of filing
Federal tax and information returns,” and consequently that “it
should be the goal of the Internal Revenue Service to have at
least 80 percent of all such returns filed electronically by the

4
year 2007.” Id. at § 2001(a).
Rather than ordering the IRS to develop its own internal
electronic filing system in order to achieve this goal, Congress
mandated that the IRS “should cooperate with and encourage the
private sector by encouraging competition to increase electronic
filing of such returns,” id., and to “establish a plan to eliminate
barriers, provide incentives, and use competitive market forces
to increase electronic filing gradually over the next 10 years....”
Id. at § 2001(b).
In response, the IRS initiated the Free File Program,
pursuant to which it entered into an agreement in October 2002
(“2002 Agreement”) with Free File Alliance, LLC (“FFA”), a
consortium of companies in the electronic tax preparation and
filing industry. The 2002 Agreement provided that the
individual companies comprising FFA would offer free
electronic filing (“e-filing”) services to at least 60% of
taxpayers, but it did not set an upper limit as to the percentage
of taxpayers who could be offered free e-filing services.
The 2002 Agreement expired after three years, and in
2005 the IRS and FFA entered into a new agreement (“2005
Agreement”) wherein they agreed to extend the provisions of the
initial agreement, subject to certain amendments. For example,
in contrast to the 2002 Agreement, the 2005 Agreement limited
the percentage of taxpayers eligible to receive free e-filing
services from FFA to the 70% of taxpaying population with the
lowest adjusted gross income. In addition, the 2005 Agreement
imposed a cap on the amount of free e-filing services available
from any individual FFA member at 50% of all taxpayers.
These provisions (referred to hereinafter as the “Ceiling

5
Provisions”) were inserted by the IRS in order to ensure the
continuing vitality of the Free File Program, which the IRS
feared might otherwise cause many e-filing vendors to go out of
business, thereby frustrating the program’s ultimate goals. See
Transcript of Oral Argument at 21-22, Byers v. Intuit, Inc., No.
09-1997 (3d Cir. Nov. 17, 2009).
B.
In November 2007, Stacie Byers initiated a putative class
action on behalf of U.S. taxpayers against FFA and its members
(collectively referred to hereinafter as the “FFA Members”),
alleging that in charging fees in exchange for providing e-filing
services, the FFA Members violated the Independent Offices
Appropriations Act, 31 U.S.C. § 9701 (“IOAA”).1 Byers

1
The IOAA provides:

(a) It is the sense of Congress that each service or
thing of value provided by an agency (except a
mixed ownership Government corporation) to a
person (except a person on official business of the
United States Government) is to be self-sustaining
to the extent possible.

(b) The head of each agency (except a mixed
ownership Government corporation) may
prescribe regulations establishing the charge for
a service or thing of value provided by the
agency. Regulations prescribed by the heads of
executive agencies are subject to policies

6
subsequently filed a first amended complaint that (1) added
named plaintiff Deborah Seltzer, (2) added the IRS as a
defendant with respect to the IOAA claim, and (3) added a claim
under Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1,
against the FFA Members, alleging that the 2005 Agreement
constituted an illegal horizontal agreement amongst the FFA

prescribed by the President and shall be as
uniform as practicable. Each charge shall be –

(1) fair; and
(2) based on –
(A) the costs to the
Government
(B) the value of the service
or thing to the recipient;
(C) public policy or interest
served; and
(D) other relevant facts.

(c) This section does not affect a law of the
United States –

(1) prohibiting the determination and
collection of charges and the disposition of
those charges; and
(2) prescribing bases for determining
charges, but a charge may be redetermined
under this section consistent with the
prescribed bases.

7
Members to restrict output, which had the effect of causing
plaintiffs and the members of the proposed class to pay
“supracompetitive prices” for e-filing and related services.
On May 28, 2008, the District Court issued a
memorandum and order dismissing the IOAA claim with
prejudice pursuant to Fed. R. Civ. P. 12(b)(6),2 and dismissing
the Sherman Act claim with leave to amend. With respect to the
IOAA claim, the District Court held that: (1) the IOAA does not
apply to the FFA Members, since it only applies to a
government agency or a private entity tasked with performing an
agency’s statutory duty; and (2) the IOAA does not provide a
private right of action.3

2
In its May 28, 2008 memorandum and order, the
District Court dismissed the IOAA claim only with respect to
FFA, but not with respect to the IRS, which had not yet
completed its briefing. The IOAA claim against the IRS was
subsequently dismissed in an order dated March 19, 2009.
3
Byers argued before the District Court that her IOAA
claim should in fact be construed as a claim seeking equitable
remedies under the Administrative Procedure Act, 5 U.S.C. §
702 (“APA”). The District Court rejected that argument, stating
“I believe that Count I of the First Amended Complaint is more
naturally read as asserting a claim under the IOAA, not the
APA.” App. at 77 n.66. Nonetheless, the District Court held
that, to the extent that Byers did assert claim under the APA, “I
conclude that [Byers] cannot sue the [FFA Members] under the
APA, because they are not ‘agencies’ within the meaning of the
APA.” App. at 77.

8
 With respect to the Sherman Act claim, the District Court
held that although the Ceiling Provisions of the 2005 Agreement
do have the effect of restricting competition between the FFA
Members in violation of the Sherman Act, the FFA Members are
entitled to conduct-based implied antitrust immunity and are
therefore shielded from antitrust liability, since their anti-
competitive behavior was required by the IRS pursuant to the
2005 Agreement.
In so holding, however, the District Court noted that it
may be possible for Byers 4 to allege facts triggering the
exception to conduct-based implied antitrust immunity
articulated by the Supreme Court in Otter Tail Power Co. v.
United States, 410 U.S. 366, 378-79 (1973), and thereby
reinstate the viability of Byers’ Sherman Act claim against the
FFA Members. As such, the District Court dismissed Byers’
Sherman Act claim with leave to amend.
Byers filed a second amended complaint, which
contained all of the allegations present in her first amended
complaint as well as several paragraphs intended to invoke the
Otter Tail exception mentioned by the District Court.
Nevertheless, on March 18, 2009, the District Court issued an
order dismissing Byers’ Sherman Act claim with prejudice
pursuant to Rule 12(b)(6), holding that Byers had failed to assert
sufficient allegations to invoke the Otter Tail exception, and

4
For the sake of convenience, “Byers” will hereinafter
be used to refer collectively to named plaintiff-appellants Stacie
Byers and Deborah Seltzer, as well the putative class they
purport to represent.

9
therefore that her Sherman Act claim fails due to the conduct-
based implied antitrust immunity shielding the FFA Members.
On the following day, March 19, 2009, the District Court issued
an order dismissing Byers’ IOAA claim against the IRS for the
same reasons that it dismissed her IOAA claim against the FFA
Members.
Byers timely appealed the District Court’s dismissal of
her IOAA claims against the FFA Members and the IRS, as well
as the District Court’s dismissal of her Sherman Act claim
against the FFA Members.5
II.
“Our standard of review of the District Court’s dismissal
under Rule 12(b)(6) is plenary.” Lora-Pena v. F.B.I., 529 F.3d
503, 505 (3d Cir. 2008). We “accept all factual allegations as
true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading
of the complaint, the plaintiff may be entitled to relief.”
Grammar v. John J. Kane Reg’l Ctrs.– Glen Hazel, 570 F.3d
520, 523 (3d Cir. 2009). In addition,
While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide the
grounds of his entitlement to relief requires more

5
The District Court had jurisdiction pursuant to: 28
U.S.C. §§ 1331, 1332, 1337(a), 1346(a)(2), and 1361, and 15
U.S.C. §§ 1, 15, and 26. We have appellate jurisdiction
pursuant to 28 U.S.C. § 1291.

10
 than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will
not do. Factual allegations must be enough to
raise a right to relief above the speculative level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations,
quotation marks and alterations omitted).

A. IOAA Claim
(1) IOAA Claim against FFA Members
The District Court dismissed Byers’ IOAA claim against
the FFA Members on two independent grounds, holding that: (1)
the IOAA does not apply to the FFA Members; and (2) there is
no express or implied private right of action under the IOAA.6
Because the District Court was correct in holding that the IOAA
does not apply to the FFA Members, we will affirm its dismissal
of the IOAA claim on that ground, and need not reach the issue
of whether a private right of action exists under the IOAA.
The IOAA provides, in pertinent part, that “[t]he head of
each agency . . . may prescribe regulations establishing the
charge for a service or thing of value provided by the agency.”
31 U.S.C. §9701(b) (emphasis added). From the plain language

6
As noted above, see supra n.3, to the extent that Byers’
IOAA claim against the FFA Members was asserted under the
APA, the District Court held that such a claim fails because the
APA does not apply to the FFA Members, who are not
“agencies” within the meaning of the APA.

11
of the statute, it is evident that the IOAA applies only to entities
that are considered to be an “agency” under the statute. In Title
31 of the United States Code, the term “agency” is defined as “a
department, agency, or instrumentality of the United States
Government.” 31 U.S.C. § 101. The FFA Members, who are
wholly private entities, clearly do not fit within this definition,
and thus the IOAA is facially inapposite.
However, Byers argues that the IOAA’s reach extends
not only to services provided directly by a government
“agency,” but also to private entities who provide services on
behalf of a government agency pursuant to an agreement with
that agency. Accordingly, Byers asserts that since the FFA
Members provided e-filing services pursuant to agreements with
the IRS—which is clearly an “agency” for IOAA purposes—the
IOAA therefore applies to the fees that the FFA Members
charged for e-filing services provided to taxpayers.
In support of her position, Byers relies primarily on
Thomas v. Network Solutions, Inc., 176 F.3d 500 (D.C. Cir.
1999). In Thomas, the D.C. Circuit held that while the IOAA
traditionally applies only to services provided directly by
government agencies, “[g]overnment agencies cannot escape
responsibility for failing to perform their statutory duties by
hiring private parties to perform those duties,” and thus, under
certain circumstances, the IOAA’s reach may be extended to
encompass private entities as well. Id. at 510. Under Thomas,
the IOAA applies to a private entity providing services pursuant
to an agreement with a government agency, but only if: (1) the
services provided by the private entity are services that the
agency is statutorily required to provide; (2) the agency
effectively controlled the private entity’s provision of the

12
services at issue; or (3) the services provided by the private
entity are “quintessential government service[s].” Id. at 510-11.
Exception (1) – Services Provided by the Private Entity are
Services that the Agency is Statutorily Required to Provide
Byers argues that since the FFA Members were tasked
with performing the IRS’s statutory duty, this case falls under
Thomas exception (1), and the IOAA therefore applies. We
cannot accept Byers’ argument since she erroneously conflates
the statutory duty delegated to the IRS—i.e., collecting and
processing tax returns—with the services provided by the FFA
Members—i.e., preparing and filing the returns.
26 U.S.C. §§ 6011 and 6091 make clear that the filing of
tax returns is the sole responsibility of the private individual or
entity who is making the filing. Moreover, while §6011(f)
provides that “[t]he Secretary is authorized to promote the
benefits of and encourage the use of electronic tax
administration programs,” nowhere does it state that the IRS is
obligated to assist taxpayers with the filing—electronic or
otherwise—of their tax returns. Rather, the text merely provides
that “a return...shall be made to the Secretary . . . .” Id. at
§6091(b)(1)(A) (emphasis added). The Secretary—and by
extension, the IRS—has no statutory duty with respect to the
preparation or filing of tax returns. Rather, the IRS’s
obligations begin only after the tax return is actually “return[ed]
. . . to the Secretary,” id., which triggers the IRS’s statutory
mandate to review the return and assess the proper taxes as
dictated by the Internal Revenue Code. Id. at §6201.
The FFA Members, in offering e-filing services to the

13
public, do not perform any of the tasks statutorily assigned to the
IRS, but rather serve the very same private-sector functions as
accountants (who aid with preparation of returns) and delivery
services such as Federal Express (which aid with the filing of
returns). As such, Byers has failed to state a viable IOAA claim
under Thomas exception (1).

Exception (2) – The Agency Effectively Controlled the Private
Entity’s Provision of the Services At Issue
With respect to Thomas exception (2), Byers cannot
sustain an argument that the IRS effectively controlled the
conduct of the FFA Members, since Byers herself acknowledges
that despite the FFA Members’ agreement with the IRS, they
were free to charge whatever they saw fit for their e-filing
services. See Brief for Appellants at 32. Moreover, the plain
language of the record indicates that the relationship between
the IRS and the FFA Members was cooperative and bilateral in
nature, with neither party exercising “effective control” over the
other.7

7
For example, while Article V.A. of the 2002 Agreement
states that “[t]he IRS will host and maintain the Web Page,”
Article V.C. of the same Agreement provides that “[t]axpayers
will be able to use [FFA Members]’ software to prepare and
electronically file their own personal income returns using
proprietary processes and systems which such Participants host
and maintain.” App. at 226. These two provisions illustrate the
co-dependent nature of the Agreements, and belie any argument

14
Exception (3) – The Services Provided by the Private Entity are
Quintessential Government Services
Nor does Thomas exception (3) support Byers’ argument.
The services offered by the FFA Members—i.e., the preparation
and filing of tax returns—are activities that have always been
the province of the private sector. Indeed, rather than providing
a “quintessential government service,” the FFA Members in fact
provide a quintessentially private-sector service. Accord H.R.
Rep. No. 107-575, p. 38 (2002) (“[T]he IRS stated that it did not
intend to enter into the tax preparation software business;
instead it intended to work in partnership with [private] industry
to expand the electronic filing of tax returns . . . . The
Committee strongly believes in the [private] industry-IRS
partnership concept . . .”).
* * *
Since the IOAA is facially inapplicable to the FFA
Members, and none of the Thomas exceptions apply, the District
Court was correct in dismissing Byers’ IOAA claim against the
FFA Members pursuant to Rule 12(b)(6) on the ground that the
IOAA does not apply to those entities.8

by Byers that, under the Agreements, the IRS effectively
controlled the FFA Members.
8
Since we will affirm the District Court’s dismissal on
this ground, we need not reach the questions of whether the
service provided by the FFA Members constitutes a “service or
thing of value” under the IOAA, or whether a private right of
action exists under the IOAA or the APA.

15
 (2) IOAA claim against IRS
Byers’ IOAA claim against the IRS is identical to Byers’
claim asserted against the FFA Members. Since, as we note
above, the e-filing services at issue in this case are
quintessentially private-sector services, and the IRS is a
quintessential government agency, the IOAA does not apply to
this claim. See supra § II(A)(1). Moreover, neither are the
Thomas exceptions, discussed in that section, applicable. The
IRS did not exercise control—effective or otherwise—over the
provision of those services, and accordingly, the IOAA claim
against the IRS fails as a matter of law. The District Court did
not err in dismissing the IOAA claim against the IRS pursuant
to Fed. R. Civ. P. 12(b)(6).
B. Sherman Act claim
The District Court dismissed Byers’ Sherman Act claim
against the FFA Members pursuant to Rule 12(b)(6) on the
ground that Byers failed to assert sufficient allegations to
establish that the FFA Members are not shielded from her
Sherman Act claims under the doctrine of conduct-based
implied antitrust immunity. Byers argues that the District Court
erred in (1) holding that the FFA Members are entitled to
conduct-based implied antitrust immunity, and (2) holding that
Byers had failed to assert sufficient allegations in her second
amended complaint to invoke the Otter Tail exception.
(1) Conduct-Based Implied Antitrust Immunity
Byers submits that conduct-based implied antitrust
immunity is accorded to private parties only when the private
parties are: (1) acting at the direction of a government agency;

16
and (2) providing a “government service.” Br. for Appellants at
44-46. Thus, argues Byers, if the District Court were indeed
correct in holding that the IOAA does not apply to the FFA
Members pursuant to Thomas because they were not providing
a “quintessential government service,” it must necessarily follow
that the FFA Members are not entitled to implied antitrust
immunity. In essence, Byers complains that the FFA Members
cannot “have their cake and eat it too”—if they lose on the
IOAA issue, they must win on the antitrust immunity issue—and
therefore cannot emerge victorious on both counts.
Byers’ logic, however, is fatally flawed in that she fails
to cite any authority for the proposition that implied antitrust
immunity is available to private entities only when the service
being provided is “governmental” in nature. Indeed, as the FFA
Members note, “[t]he cases in this area demonstrate that [in
order to trigger implied antitrust immunity,] the specific nature
of a private entity’s conduct need not be the provision of a
‘governmental’ function, provided the conduct is directed by
a federal agency, pursuant to a defined government program or
policy.” Joint Opening Brief of Appellees Intuit, Inc., H&R
Block Tax Digital Solutions, Inc., and Free File Alliance LLC
at 46, (“Br. of FFA Members”) (second and third emphases
added).9 Such immunity is provided to a private party acting

9
See, e.g., Jes Properties, Inc. v. USA Equestrian, Inc.,
458 F.3d 1224 (11th Cir. 2006) (antitrust immunity accorded to
private entities who, pursuant to statutory authority, engaged in
the non-governmental activity of regulating equestrian
competitions); Name.Space, Inc. v. Network Solutions, Inc., 202

17
anti-competitively pursuant to an agreement with a government
agency when: (1) the government agency is acting pursuant to
a clearly defined policy or program; and (2) the private party is
acting at the direction or consent of the government agency.
Whether the particular activity in question is of a private or
governmental nature is immaterial to the analysis.
It is clear that the IRS was statutorily authorized to enter
into the 2002 and 2005 Agreements pursuant to the RRA. See
RRA §2001(a) (mandating that the IRS “should cooperate with
and encourage the private sector” to increase e-filing). In
addition, the Ceiling Provisions in the 2005 Agreement
expressly directed the FFA Members to restrict the availability
of free e-filing services under the Free File Program.10

F.3d 573 (2d Cir. 2000) (antitrust immunity accorded to private
entity that was compelled by government agency to engage in
the non-governmental service of overseeing distribution and
management of internet “domain names”); Sakamoto v. Duty
Free Shoppers, Ltd., 764 F.2d 1285 (9th Cir. 1985) (implied
antitrust immunity accorded to private entity that engaged in
non-governmental service of selling specified merchandise to
travelers at an airport); Champaign-Urbana News Agency, Inc.
v. J.L. Cummins News Co., Inc., 632 F.2d 680 (7th Cir. 1980)
(antitrust immunity accorded to distributor engaged in private
activity of selling books and magazines to the Army and Air
Force Exchange Service).
10
As explained above, see supra § I(A), the Ceiling
Provisions included in the 2005 Agreement provided that: (1)
only the 70% of the taxpaying population with the lowest

18
 Since both prongs (1) and (2) of the standard set forth
above are satisfied, we conclude that the FFA Members are
entitled to conduct-based implied antitrust immunity with
respect to the anti-competitive action taken pursuant to the
Ceiling Provisions of the 2005 Agreement.
(2) Otter Tail Exception
The Supreme Court in Otter Tail Power Co. v. United
States, 410 U.S. 366 (1973), established an exception to the
doctrine of implied antitrust immunity. Otter Tail held that even
when the circumstances otherwise dictated that a private entity
was entitled to implied antitrust immunity, such protection
would not be accorded if: (1) the private entity had “insisted” on
anti-competitive restrictions in its contract with a government
agency; and (2) those restrictions “hindered” the government.
See 410 U.S. at 379.
Since, as we hold, see supra §II(B)(1), the FFA Members
are otherwise entitled to antitrust immunity, for Byers’ Sherman
Act claim against the FFA Members to survive, she must show
that: (1) the FFA Members “insisted” upon the anti-competitive
Ceiling Provisions present in the 2005 Agreement; and (2) that
these restrictions “hindered” the goals of the IRS’s Free File
Program.
Byers failed to include such allegations in her first

adjusted gross income was eligible to receive free e-filing
services from the FFA members; and (2) no individual FFA
member was permitted to offer free e-filing services to more
than 50% of all taxpayers.

19
amended complaint, leading the District Court to dismiss her
Sherman Act claim with leave to amend, “since [Byers] may be
able to amend [her Sherman Act claim] to allege facts that cast
doubt on the [FFA Members]’ conduct-based [antitrust]
immunity.” App. at 110.
In her second amended complaint, Byers attempted to
invoke the Otter Tail exception by including the following
paragraphs:
The IRS agreed to the restrictions on free services
only at the corporate defendants’ insistence, and
those restrictions were a hindrance to the IRS,
especially the IRS’s ability to fulfill the
President’s Management Agenda and the E Z Tax
Filing Initiative to provide free services to all
citizens and to promote electronic filing in an
effort to meet its electronic filing goals set by the
IRS Restructuring and Reform Act of 1998.
[...]
Thus the IRS agreed to the restrictions on free
services only at the corporate defendants’
insistence, and that those restrictions were a
hindrance to the IRS. For example, in the year
following implementation of the 2005 Agreement,
participation in the free file program decreased by
23%.
App. at 492-93 (emphases added).
In support of these allegations, Byers appended a 2006

20
report issued by the Treasury Inspector General for Tax
Administration (“TIGTA”)11 analyzing the 2005 Agreement
between the IRS and the FFA Members, and also included
pertinent portions of the TIGTA report in the body of her second
amended complaint. See App. at 492-93. The contents of the
appended TIGTA report support Byers’ allegations that (1) the
Ceiling Provisions were included the 2005 Agreement at the
insistence of the FFA Members, and (2) the Ceiling Provisions
had the effect of hindering the IRS’s ability to fulfill the goal of
the Free File Program to increase electronic filing.
However, while the TIGTA report itself buttresses Byers’
Otter Tail allegations, the IRS’s “Management Response” to the
report,12 which was included in the 2006 TIGTA report’s
appendix, see App. at 605-08, directly refutes the substance of
those allegations. Although Byers did not append the IRS’s
Management Response to her second amended complaint, the
District Court was nonetheless permitted to consider its contents
in ruling on FFA Members’ motion to dismiss, notwithstanding
the general rule that a motion to dismiss for failure to state a
claim is to be evaluated only on the contents of the pleadings,
see, e.g., Mele v. Fed. Reserve Bank of New York, 359 F.3d
251, 257 (3d Cir. 2004), since: (1) Byers appended the TIGTA

11
“The TIGTA is an independent, third-party auditor that
reviews IRS programs and makes recommendations.” App. at
17.
12
By law, each TIGTA report includes a section
containing the IRS’s response to the contents of the report. See
Inspector General Act of 1978 § 5(b), 5 U.S.C. app. 3 (2008).

21
report to her complaint and quoted at length from its contents,
and the Management Response is a statutorily required part of
the TIGTA report, see supra n.12; and (2) the FFA Members
attached the Management Response to their motion to dismiss.
See Seinfeld v. Becherer, 461 F.3d 365, 367 n.1 (3d Cir. 2006)
(citing In re Donald J. Trump Casino Sec. Litig. – Taj Mahal
Litig., 7 F.3d 357, 368 n.9 (3d Cir. 1993)).
As noted by the District Court:
According to the management’s response to the
TIGTA report, the IRS’ intent for the initiative
was to “provid[e] a basic electronic filing option
for a limited taxpayer segment filing simple
returns,” which suggests that the IRS had a goal
of restricting the size of the population which the
FFA would service and that restrictions were not
added at [FFA Members]’ “insistence.”
Additionally, the IRS stated that it believed that
the program had “successfully fulfilled the intent
of the initiative.” This language strongly suggests
that the restriction did not “hinder” IRS policy.
[...]
In short, according to the IRS statement in the
management report, the Free File Program
successfully met the IRS’ intended objectives....

22
App. at 17-18.13
Byers argues that since the TIGTA report and the IRS’s
Management Response “present differences of opinion
regarding whether or not changes to the 2005 Agreement
actually hindered the initial and stated goals of the IRS,” Br. for
Appellants at 50, this “creates a factual dispute regarding
whether the 2005 Agreement hindered IRS’s stated goals,”
rendering the Sherman Act claim unripe for dismissal. Id.
We do not agree. By law, the views expressed in the
TIGTA report do not reflect official IRS policy, see Inspector
General Act of 1978 § 3(c), 5 U.S.C. app. 3 (2008), whereas the
views expressed in the Management Response do reflect the
official policy and perspective of the IRS. Id. at §5(b). As such,
the contradiction between the TIGTA report and the
Management Response does not create a factual dispute; rather,
the IRS’s official stance as articulated in the Management
Response is, under the law, the final word as to whether the
Ceiling Provisions were foisted upon the IRS at the insistence
of the FFA Members, and whether they have proved a hindrance

13
Indeed, the accuracy of the District Court’s reading of
the Management Response was verified at oral argument by the
attorney representing the IRS, who stated to the Court that the
“IRS did what it thought was best and made the policy choice to
have [an] income restriction” in the 2005 Agreement in order to
“maintain[] the viability of the [Free File] Alliance” and thereby
fulfill Congress’ directive regarding the encouragement of e-
filing. Transcript of Oral Argument at 21-22, Byers v. Intuit,
Inc., No. 09-1997 (3d Cir. Nov. 17, 2009).

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to the IRS’s institutional goals.
Accordingly, we conclude as a matter of law
that—notwithstanding the opinions expressed in the 2006
TIGTA report—the Ceiling Provisions in the 2005 Agreement
were not included at the insistence of the FFA Members, nor did
they have the effect of hindering the goals of the Free File
Program.
Given that the TIGTA report does not represent the
official policy of the IRS, and therefore cannot be accepted as
to “insistence” and “hindrance,” all that remains in support of
Byers’ attempt to invoke the Otter Tail exception in her second
amended complaint are her unadorned allegations regarding
“insistence” and “hindrance.” While as a general rule we must
accept as true the allegations contained in a complaint attacked
by a 12(b)(6) motion to dismiss, Grammar, 570 F.3d at 523, “a
plaintiff’s obligation to state the grounds of entitlement to relief
requires more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not do.”
Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S.
265, 286 (1986)) (quotation marks and alterations omitted).
Here, Byers has incanted the “insistence” and
“hindrance” elements necessary to invoke the Otter Tail
exception, see App. at 492-93, but—aside from appending and
quoting a wholly refuted source—has otherwise failed to bolster
her allegations with sufficient supporting facts to satisfy the
Twombly pleading standard. See Phillips v. County of
Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (“After Twombly,
it is no longer sufficient to allege mere elements of a cause of
action; instead a complaint must allege facts suggestive of the

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proscribed conduct.”) (quoting Twombly, 550 U.S. at 563 n.8)
(alterations and quotation marks omitted).
Without the aid of the Otter Tail exception, Byers’
Sherman Act claim against the FFA Members is foreclosed by
the conduct-based implied antitrust immunity to which the FFA
Members are otherwise entitled. See supra § II(B)(1). The
District Court therefore did not err in dismissing the Sherman
Act claim pursuant to 12(b)(6).
(3) Noerr-Pennington
The FFA Members argue that even if they are not
shielded from Byers’ Sherman Act claim on the basis of implied
antitrust immunity, they are still protected under the Noerr-
Pennington doctrine, which immunizes private parties against
antitrust liability based on the petitioning of government entities,
even if there is an improperly anti-competitive motive or
purpose behind the petition. We have cogently summarized the
Noerr-Pennington doctrine as follows:
Under the Noerr- Pennington doctrine, a party
who petitions the government for redress
generally is immune from antitrust liability.
Petitioning is immune from liability even if there
is an improper purpose or motive. [...] The
immunity reaches not only to petitioning the
legislative and executive branches of government,
but the right to petition extends to all departments
of the Government, including the judiciary.
[...]
A petitioner may be immune from the antitrust

25
 injuries which result from the petitioning itself.
Also, [...] parties are immune from liability
arising from the antitrust injuries caused by
government action which results from the
petitioning. Therefore, if its conduct constitutes
valid petitioning, the petitioner is immune from
antitrust liability whether or not the injuries are
caused by the act of petitioning or are caused by
government action which results from the
petitioning.
A.D. Bedell Wholesale Co., Inc. v. Philip Morris Inc., 263 F.3d
239, 250-51 (3d Cir. 2001).
The District Court held that while “[t]he negotiations that
preceded the 2005 Agreement between [the FFA Members] and
the IRS may constitute valid petitioning that ultimately requires
me to dismiss [the Sherman Act claim] under the Noerr-
Pennington doctrine . . . I cannot consider evidence of those
negotiations at this time because such evidence is neither
mentioned in the pleadings nor [is] a matter of [public] record.”
App. at 98.
We have explained the contours of a Noerr-Pennington
claim so that the FFA Members can be assured that we have
given recognition to their Noerr-Pennington argument.
However, given that we will affirm the District Court’s
dismissal of Byers’ Sherman Act claim, see supra § III(B)(1)-
(2), we find no need to dwell on or further address the FFA
Members’ Noerr-Pennington argument, which, even if we were
to accept it, would in any event lead to the same result that we
have already reached on other grounds.

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 III.
The District Court did not err in dismissing Byers’ IOAA
claims against the IRS and the FFA Members pursuant to
12(b)(6), nor did it err in dismissing Byers’ Sherman Act claim
against the FFA Members pursuant to 12(b)(6). Accordingly,
we will affirm the judgments of the District Court dated May 28,
2008; March 18, 2009; and March 19, 2009.

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