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Ellis v. Jackson

United States District Court, District of Columbia

June 19, 2018

MICHAEL B. ELLIS et al., Plaintiffs,
v.
AMY BERMAN JACKSON et al., Defendants.

          MEMORANDUM OPINION

          TIMOTHY J. KELLY, United States District Judge

         Plaintiffs Michael Ellis, Robert McNeil, and Harold Stanley have embarked on a seemingly unending quest to stop the federal government from collecting unpaid income taxes. Courts in this Circuit have repeatedly dismissed Plaintiffs' cases for lack of subject-matter jurisdiction. These rulings have not dissuaded Plaintiffs from tilting at windmills, however, and judges themselves have become targets for Plaintiffs' ill-advised jousting. Plaintiffs fare no better in these consolidated cases, the latest chapter in their saga.

         Magistrate Judge G. Michael Harvey has issued a Report and Recommendation recommending, among other things, that the Court grant Defendants' First Amended Motion to Dismiss these cases for lack of subject-matter jurisdiction. Upon review of the Report and Recommendation and Plaintiffs' objections to it, the Court adopts the Report and Recommendation in its entirety and dismisses the cases on these grounds.

         I. Background

         These consolidated cases-Ellis v. Jackson, No. 16-cv-2313 (“ Ellis ”), and Stanley v. Lynch, No. 17-cv-22 (“Stanley”)-are the latest volley in Plaintiffs' war to enjoin the federal government's enforcement of the income tax against individuals who do not file their returns. At their core, the complaints allege that various U.S. government employees-including everyone from a former President to three federal judges-have concocted a “scheme” to “enforce the income tax” on those who do not pay it. See No. 16-cv-2313, ECF No. 3 (“Ellis Am. Compl.”) ¶ 12; No. 17-cv-22; ECF No. 3 (“Stanley Am. Compl.”) ¶¶ 1, 3. Specifically, Plaintiffs allege that certain Internal Revenue Service (“IRS”) employees operate a “records falsification” program that they use to collect taxes from individuals who do not file a tax return, so-called “non-filers.” See Ellis Am. Compl. ¶¶ 19-35; Stanley Am. Compl. ¶¶ 42-45. To do so, IRS employees purportedly enter “a certain sequence of numeric entries” into an IRS database which creates the “appearance” of two abbreviations in IRS's “Individual Master File.” See Ellis Am. Compl. ¶¶ 22-23; see also Stanley Am. Compl. ¶¶ 39, 42. These abbreviations purportedly denote falsified dates showing when the IRS “received” a tax return from the non-filer and when a “substitute for return” (“SFR”) was executed, even though no tax return was filed and no SFR created. Ellis Am. Compl. ¶ 22; see also Stanley Am. Compl. ¶ 42. As Plaintiffs tell it, the Department of Justice (“DOJ”) relies on the information in this “Individual Master File” to pursue collection and enforcement proceedings against non-filers. See Ellis Am. Compl. ¶¶ 11, 24, 28, 32-35; Stanley Am. Compl. ¶¶ 43-47. This scheme is allegedly blessed by high-level government officials, including a former President and Attorney General. Stanley Am. Compl. ¶ 1. And in Ellis, Plaintiffs also name three federal judges as defendants. Ellis Am. Compl. They allege that these judges, each of whom has agreed that federal courts lack subject-matter jurisdiction over similar lawsuits, have participated in the scheme against Plaintiffs by conspiring among themselves and with DOJ attorneys to dismiss those previous cases, including by misstating Plaintiffs' factual allegations. Id. ¶¶ 36-84.

         Plaintiffs assert claims under the Administrative Procedure Act, 5 U.S.C. § 551 et seq., and the First, Fourth, and Fifth Amendments to the Constitution. Ellis Am. Compl. ¶¶ 85-98; Stanley Am. Compl. ¶¶ 78-88. They seek various forms of relief, including (1) a declaratory judgment that Congress has not imposed a duty on Americans to file income tax returns, and therefore non-filers cannot be prosecuted for failing to file, Ellis Am. Compl. ¶¶ 100-102; Stanley Am. Compl. ¶ 96; and (2) an injunction prohibiting IRS and DOJ employees from taking various actions involving the falsification or manipulation of computer records related to tax returns, Ellis Am. Compl. ¶¶ 110-112; Stanley Am. Compl. ¶ 98.

         On April 26, 2017, Defendants moved to dismiss these cases. See No. 16-cv-2313, ECF No. 8. On November 1, 2017, Magistrate Judge Harvey issued his Report and Recommendation relating to the motion to dismiss, as well as several other pending motions. See No. 16-cv-2313, ECF No. 20 (“R&R”). In it, he recommends that the Court grant the motion to dismiss Plaintiffs' complaints for three reasons: (1) the Anti-Injunction Act (“AIA”), 26 U.S.C. § 7421(a), deprives this Court of jurisdiction to hear the case; (2) Plaintiffs lack standing; and (3) their claims, which have been repeatedly rejected in this Circuit, are frivolous. Id. at 7, 11-12.

         On November 15, 2017, Plaintiffs filed their objections to the Report and Recommendation. See No. 16-cv-2313, ECF No. 21 (“Pls.' Objs.”). Specifically, they assert that Judge Harvey: (1) failed to recuse himself or explain his decision not to do so; (2) failed to take judicial notice of and resolve conflicting IRS statements about the applicability of 26 U.S.C. § 6020(b) to income tax; (3) refused to evaluate whether the AIA shields IRS “non-action” from judicial review; (4) failed to determine if the equitable exception to the AIA applies; (5) was incorrect in concluding that Plaintiffs lack standing; (6) falsified the record in multiple instances; (7) improperly refused to compel the IRS to produce a document; and (8) impermissibly dismissed Plaintiffs' claims as frivolous. Id. at 4-5.

         II. Legal Standards

         A. Evaluating a Report and Recommendation

         Under Federal Rule of Civil Procedure 72(b), when a magistrate judge issues a report and recommendation on a dispositive motion, “[t]he district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3). But “when a party makes conclusory or general objections, or simply reiterates his original arguments, the Court reviews the Report and Recommendation only for clear error.” M.O. v. District of Columbia, 20 F.Supp.3d 31, 37 (D.D.C. 2013) (quoting Alaimo v. Bd. of Educ. of the Tri-Valley Cent. Sch. Dist., 650 F.Supp.2d 289, 291 (S.D.N.Y. 2009)).

         Rule 72(b) “does not permit a litigant to present new initiatives to the district judge.” Taylor v. District of Columbia, 205 F.Supp.3d 75, 89 (D.D.C. 2016) (quoting Aikens v. Shalala, 956 F.Supp. 14, 19 (D.D.C. 1997)). “[O]nly those issues that the parties have raised in their objections to the Magistrate Judge's report will be reviewed by this court.” M.O., 20 F.Supp.3d at 37 (quoting Aikens, 956 F.Supp. at 19). Indeed, “[p]arties must take before the Magistrate Judge, ‘not only their “best shot” but all of their shots.'” Aikens, 956 F.Supp. at 23 (quoting Singh v. Superintending Sch. Comm., 593 F.Supp. 1315, 1318 (D. Me. 1984)).

         “The district judge may accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions.” Fed.R.Civ.P. 72(b)(3).

         B. Subject-Matter Jurisdiction

         Federal courts are courts of limited jurisdiction. See Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction.”). The law presumes that “a cause lies outside [the Court's] limited jurisdiction” unless the party asserting jurisdiction establishes otherwise. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence.” Ellis v. Comm'r, 67 F.Supp.3d 325, 330 (D.D.C. 2014) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)), affd, 622 Fed.Appx. 2 (D.C. Cir. 2015). “A court may consider materials outside the pleadings to determine its jurisdiction.” DePolo v. Ciraolo-Klepper, 197 F.Supp.3d 186, 189-90 (D.D.C. 2016) (citing Settles v. U.S. Parole Comm'n , 429 F.3d 1098, 1107 (D.C. Cir. 2005)), affd, No. 16-5308, 2017 WL 4231143 (D.C. Cir. June 15, 2017).

         III. Analysis

         A. Subject-Matter Jurisdiction

         Magistrate Judge Harvey recommends that this Court conclude that it lacks subject-matter jurisdiction for three reasons: (1) the lawsuit is barred by the AIA, (2) Plaintiffs lack standing, and (3) their cases should be dismissed as frivolous. Plaintiffs object to all three recommendations. The Court addresses each in turn.

         1.The Anti-Injunction Act

         The AIA provides that, except under statutory exceptions not relevant here, “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” 26 U.S.C. § 7421(a). “The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for ...


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