Federal Court Dismisses Tea Party Groups’ Lawsuits Over IRS Targeting
A Federal Judge has dismissed lawsuits filed by Tea Party groups over the IRS targeting scandal.
The Internal Revenue Service scored a legal victory yesterday in two lawsuits related to the scandal that erupted in 2013 over the alleged targeting of conservative organizations who had applied for 501(c)(4) status when a Republican-appointed Federal Judge dismissed lawsuits filed by two of those organizations based on the fact that the approvals for their applications were delayed:
The IRS may have inadvertently figured out how to win its legal battles against aggrieved tea party groups: Give them what they wanted in the first place — tax-exempt status.
That was a major reason a Republican-appointed federal judge on Thursday threw out two lawsuits brought by more than 40 conservative groups seeking remedies for being singled out in the tea party targeting scandal, a victory for the IRS.
Judge Reggie Walton of the U.S. District Court of the District of Columbia dismissed almost all counts brought against the tax-collecting agency in two cases, ruling that both were essentially moot now that the IRS granted the groups their tax-exempt status that had been held up for years.
Walton, a President George W. Bush-appointee, also said individual IRS officials could not be fined in their individual capacity for allowing such treatment because it could hurt future tax enforcement.
The ruling, which the groups could appeal, has serious implications for tea party groups suing the IRS, suggesting they may never receive compensation for the long waits they endured for a ruling on their status.
The inspector general report that ignited the targeting controversy last year found that applications sat in limbo for as long as several years and that the groups were asked inappropriate questions about their donors, political affiliations and random things like social media posts.
Republicans said they were outraged at Walton’s decision.
“You get targeted and harassed for three years but, oh, because you finally get [tax-exempt status], the three years of harassment doesn’t mean anything?” asked Rep. Jim Jordan (R-Ohio), who heads a congressional subpanel investigating the controversy. “I find that argument lacking tremendously in light of what these people went through.”
The groups in their suits alleged that the IRS violated their First and Fifth Amendment rights with the inappropriate “be on the lookout” list that used words like tea party to hold up their applications. They sought monetary relief for their trouble as well as injunctive relief barring the IRS from discriminating against conservative groups ever again.
The agency has since changed its practices, including scrapping the lists.
When the suits at hand were filed, 22 of the groups had already received their tax-exempt status, five had dropped their applications altogether and just over a dozen were still waiting to hear from the IRS.
Since then, the IRS had approved all but two, rendering much of the arguments moot, the judge said — and preventing him from considering the case.
“After the plaintiff initiated this case, its application to the IRS for tax-exempt status was approved by the IRS. The allegedly unconstitutional governmental conduct, which delayed the processing of the plaintiff’s tax exempt application and brought about this litigation, is no longer impacting the plaintiff,” Walton said in his decision to throw out True the Vote’s lawsuit against the IRS.
His reasoning was similar in the second case, where 41 conservative groups banded together to sue the IRS for similar misconduct: “[T]he allegedly unconstitutional governmental conduct … is no longer impacting the plaintiffs. … Counts … are therefore moot.”
The conservative groups said they were flabbergasted.
“We are stunned by today’s judgment,” said Catherine Engelbrecht, who heads Trues the Vote, one of the groups that sued the government. “The Court acknowledges in its opinion that the IRS did in fact target True the Vote for our perceived political beliefs, but then it holds that neither the agency nor the individual IRS agents or officers are responsible for this unconstitutional conduct.”
After reading through the Court’s opinion, it’s clear to me that Engebrecht’s characterization is completely incorrect. First of all, Judge Walton did not acknowledge that “the IRS did in fact target True the Vote for our perceived political beliefs.” The motion before the Court was a Motion to Dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure that essentially argues that even if all of the facts that are alleged in the Complaint are taken as true, the Plaintiff has failed to state a claim upon which relief can be granted. When ruling on such a motion, the Court accepts for the sake of argument that the facts the Plaintiff alleges are completely accurate, and in this case that included the allegation that the IRS was targeting True The Vote for heightened scrutiny because of its political beliefs. What Walton goes on to note, though, is that there is no case for the Court to proceed forward on because the Plaintiffs’ entire cause of action became moot once their applications for 501(c)(4) status were approved. Judge Walton explains the rationale this way:
Unless an actual, ongoing controversy exists in this case, this Court is without power to decide it. See Clarke v. United States, 915 F.2d 699, 700-01 (D.C. Cir. 1990). Even where a case once posed “a live controversy when filed, the [mootness] doctrine requires” the Court “to refrain from deciding it if ‘events have so transpired that the decision will neither presently affect the parties’ rights nor have a more-than-speculative chance of affecting them in the future.'” Id. (quoting Transwestern Pipeline Co. v. FERC, 897 F.2d 570, 575 (D.C. Cir. 1990)). Here, after the plaintiff initiated this case, its application to the IRS for tax-exempt status was approved by the IRS. See Opp’n to Defs.’ Mot., Ex. A (Determination Letter) at 1.5 The allegedly unconstitutional governmental conduct, which delayed the processing of the plaintiff’s tax exempt application and brought about this litigation, is no longer impacting the plaintiff. See NorCal Tea Party Patriots v. IRS, No.1:13-cv-341, 2014 WL 3547369, at *9 n.11 (S.D. Ohio July 17, 2014) (“The claim for declaratory and injunctive relief cannot be brought by other Plaintiff Groups who have either had their applications for tax-exempt status ruled upon or have withdrawn their applications.”). Counts two and five, therefore, are moot.
The dismissals in these cases, then, lie in a pretty simple and easy to understand fact. Article III of the Constitution only gives Federal Courts jurisdiction over cases arising under Federal Law or the Constitution, and Federal Courts have long interpreted that to mean that there must be an actual case or controversy at issue for the Court to have jurisdiction. In this case, to the extent that there may have been a “case or controversy” arising out of the IRS’s extended delay in processing the 501(c)(4) applications that these groups had submitted, that case essentially ceased to exist once the applications were granted. Because of this, the Court no longer had jurisdiction over that portion of the claims asserted by the Plaintiff’s and dismissal was the only option that Walton, a George W. Bush appointee, had in here. Leaving aside for the sake of brevity the rest of Walton’s opinion regarding the Plaintiff’s effort to get around that seemingly simple fact, the result makes sense because it was clear that, once their 501(c)(4) applications were granted, the Plaintiff’s were no longer suffering any damages that could be remedied by a Court. Since Federal Courts do not issue “advisory opinions” that express what the law should be outside of the facts of a specific case, this means that there was essentially no longer any viable claim for the Court to consider.
Because the IRS ultimately approved these groups’ tax-exempt status,Judge Reggie Walton concluded that most charges in the complaint are moot. Of course, the plaintiffs were essentially seeking to challenge a pattern or system of abusive enforcement of the law. The cessation of such practices against particular defendants moots their cases, as the Supreme Court held in Lyons v. City of Los Angeles. To be sure, abusive patterns are made up of individual incidents, and mootness risks loosing the forest for the trees. But it also encourages a voluntary cessation of wronging. Moreover, securing judicial review of systematic or institutional law enforcement defects should not be more difficult than getting redress for one’s own injuries.T
In addition to the claims directly related to the denial in processing of their applications, these groups also sought monetary damages against specific IRS employees, but Judge Walton rules that those claims could not proceed because of the immunity that the law gives to government employees in performing their governmental duties. While the idea of giving government employees in this situation may not sit well with many people, the law on the issue is crystal clear and it seems unlikely that Walton would be overruled in his holding on this issue. Moreover, as Judge Walton notes in his opinion, there is already a remedy for the type of behavior complained of by the Plaintiffs that has been established by Congress, including the fact that the Plaintiffs could have simply filed as a 501(c)(4) organization when they filed their tax returns regardless of the status of their applications. The fact that they didn’t take advantage of those remedies, he ruled, does not give them an independent cause of action against government employees who are otherwise immune from suit under the law. That ruling is unlikely to be seriously in danger to be overturned on appeal.
If the IRS had not granted the 501(c)(4) applications for these groups, then it’s likely that this motion would have turned out differently. In that case, at least, there would have been some kind of potential damage that could make up a viable legal claim that would allow the case to go forward. Indeed, in a footnote to one of the two cases decided yesterday, Judge Walton noted that the applications for two groups and ordered the IRS to respond on that issue. Potentially, I suppose, that means that those cases could end up going forward at least on that portion of their claims. As for the rest of the Plaintiffs, though, it seems clear that Judge Walton’s decision was correct. Once the applications were granted, there was no case for him to decide, so he really had no choice but to dismiss the actions.
Here is the decision in the True The Vote case:
And here is the decision in the companion case involving some 40 other conservative organizations: