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MCSURELY v. MCADAMS

July 17, 1980

Alan McSURELY et al., Plaintiffs,
v.
Herbert H. McADAMS, II et al., Defendants



The opinion of the court was delivered by: BRYANT

MEMORANDUM AND ORDER

This matter involves the obligation of the Internal Revenue Service ("IRS") to comply with a subpoena issued by the plaintiffs pursuant to Fed.R.Civ.P. 45. A brief history of the case is helpful in understanding the nature of plaintiffs' discovery request.

A

 Plaintiffs have sued a United States Senator and various Congressional officials ("federal defendants"), and a former State's prosecutor ("Ratliff") for punitive and compensatory damages. The defendants are alleged to have violated plaintiffs' constitutional, statutory, and common law rights; such violations "are claimed to arise from individual actions and a conspiracy of defendants to harass, stigmatize, and intimidate plaintiffs through the appropriation and use (of approximately 234 documents) taken from (the plaintiffs') home in an unlawful search by Kentucky agents on August 11, 1967." McSurely v. McClellan, 180 U.S. App. D.C. 101, 553 F.2d 1277, 1280 (D.C.Cir. 1976) (Leventhal, J.) (majority en banc opinion).

 Early in the litigation, the federal defendants moved for summary judgment, claiming they were immune from suit under the Speech and Debate Clause. This court denied their motion, and the federal defendants appealed. Judge Leventhal, writing for a majority of the court en banc, outlined the allegations surviving the federal defendants' claim of legislative immunity and before this court on remand. Id. at 1299. These included claims that (a) federal defendant Brick inspected, selected, and transported to Washington, prior to the issuance of a Congressional subpoena, 234 documents seized from the plaintiffs, (b) federal defendants distributed copies of such documents to individuals or agencies outside of Congress, *fn1" and (c) other federal defendants acted in concert with Brick in activity unprotected by the Speech and Debate Clause. Id. at 1298-99. In addition, the potential liability of defendant Ratliff for promoting and participating in the seizure of plaintiffs' documents, inspecting the seized material, and disseminating the documents to the federal defendants or any other party, is still an issue before this court. Id. at 1281 n.3, 1288 n.38.

 It was only after the en banc decision of the Court of Appeals on December 21, 1976, that the parties were able to engage in serious discovery. *fn2" In May 1979, the plaintiffs issued a subpoena to the Commissioner of the IRS, pursuant to Fed.R.Civ.P. 45, calling for the production of four general categories of material:

  (1) Material directly relating to the McSurelys (PP 1, 3, 5) *fn3" -this included documents (or information based on documents) taken from the McSurelys, Special Service Staff ("SSS") files labelled under either of the plaintiffs' names, and tax return material for either plaintiff from 1966 to the present;

 (2) Material in the SSS files relating to nine listed organizations (P 4)-this included all documents on the Student Nonviolent Coordinating Committee ("SNCC"), Students for a Democratic Society ("SDS"), Southern Conference Educational Fund ("SCEF"), and six other organizations;

 (3) Material in the SSS files received from Congressional committees, (P 2) and

 (4) Material relating to the general activity of the SSS (PP 6, 7, 10)-this included status reports on the IRS "Ideological Organizations" project prepared from 1963-68, a list of all individuals and organizations on whom the SSS maintained files, and a list of certain individuals and organizations who were notified that they had been subject to SSS investigation.

 The Commissioner did not object to the material requested in the first category. He did object to production of material in the remaining three categories. The plaintiffs moved to compel the production of the requested documents. In response, the Commissioner asserted that the confidentiality provisions of the Tax Reform Act of 1976, 26 U.S.C. § 6103 (Supp. II 1978) ("s 6103") prohibited the plaintiffs from examining information accumulated during tax investigations of other private citizens or organizations. *fn4" On November 5, 1979, this court issued an order slightly modifying the terms of plaintiffs' subpoena and directing the IRS to produce any material falling within the revised request. Even as revised, the subpoena still required the production of material in SSS files on the nine designated organizations, contacts with certain Congressional committees, and lists and status reports reflecting the scope of SSS activity. The November 5, 1979 order also contained a provision permitting the IRS "to formally assert a recognizable privilege" as to any material subject to production. The IRS has now moved for a clarification of this provision; in particular, the agency has asked whether the privilege against discovery it claims is incorporated in § 6103 can be asserted against any particular document falling within the statutory privilege.

 B

 From the onset, it is important to recognize the exact nature of the information the plaintiffs seek. Their request is not directed at the raw tax returns filed by other parties. Instead, they are interested in discovering the extent to which their documents (or information in those documents) were disseminated throughout the IRS, and the manner in which their documents (or again, information in those documents) were used by IRS officials. The extent and use of disseminated material plays an extremely important role in plaintiffs' damage action. As mentioned earlier, an independent cause of action against the federal defendants and Ratliff may exist for disseminating material to the IRS. In such a case, the damages incurred by plaintiffs could very well include the "embarrassment and humiliation" they suffered as a result of the disclosure of their material to IRS officials, as well as the use of such material by the IRS to subject plaintiffs' friends, and organizations to which plaintiffs belonged, to "implicit and explicit threats of harassment." Id. at 4; Plaintiffs' Answers to Interrogatories of Federal Defendants at 2, 4, 9. In addition, dissemination of material may be an additional factor in determining overall damages flowing from other distinct violations by Ratliff or the federal defendants, such as the initial seizure of the documents.

 There appears to be no question that the plaintiffs' subpoena for information accumulated or prepared by the SSS (other than actual tax returns) would have been enforceable under the statutory predecessor of § 6103. See United States v. Liebert, 519 F.2d 542 (3rd Cir.), cert. denied, 423 U.S. 985, 96 S. Ct. 392, 46 L. Ed. 2d 301 (1975) (old sections 6103(a) and 7213(a)(1) of Internal Revenue Code do not prohibit production of tax information (other than actual returns) pursuant to "lawfully issued judicial order"); cf. Tax Analysts and Advocates v. IRS, 164 U.S. App. D.C. 243, 505 F.2d 350 (D.C.Cir. 1974) (same statutory provisions do not prohibit production of tax material (other than actual returns) pursuant to FOIA request); Memorandum in Support of Motion of Jerome Kurtz for Clarification and for a Protective Order at 7 (citing cases). The IRS contends, however, that § 6103, which took effect on January 1, 1977, *fn5" creates a statutory ...


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