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Montgomery v. Internal Revenue Service

United States District Court, District of Columbia

January 10, 2019




         In a September 6, 2018, Opinion, this Court granted Defendant Internal Revenue Service's Motion for Summary Judgment as to certain Freedom of Information Act requests made by Plaintiffs Thomas and Beth Montgomery. In now seeking reconsideration, Plaintiffs argue that the Court misstated certain facts, improperly relied on in camera declarations, and misconstrued the scope of a FOIA exemption. As none of their objections calls the prior Opinion into question, the Court denies the Motion.

         I. Background

         The Court has recounted the facts underlying this suit in several previous Opinions, see, e.g., Montgomery v. IRS, 292 F.Supp.3d 391, 393-94 (D.D.C. 2018), so just a brief summary will do. In the mid-2000s, the IRS disallowed certain tax losses and issued certain tax penalties against several partnerships associated with the Montgomerys. See Bemont Invests., LLC ex. rel. Tax Matters Partner v. United States, 679 F.3d 339, 341-42 (5th Cir. 2012), abrogated by United States v. Woods, 571 U.S. 31 (2013). After several years of subsequent litigation, the parties reached a global settlement agreement. See ECF No. 13 (First MSJ), Exh. B (Global Settlement) at 2, 4-5. This did not end the war, however, as the Mongtomerys then filed a number of FOIA requests aimed at gathering information about how they might have originally come to the IRS's attention. See ECF No. 1 (Compl.), Exh. A (FOIA Request) at 1-2. At issue here are five of those requests, which seek forms the IRS may have in its possession in connection with whistleblower activity related to the Montgomerys. Id. Defendant eventually issued a Glomar response as to those requests, refusing to confirm or deny the existence of responsive records. It based that response on a number of FOIA exemptions including Exemption 7(D), which protects information that “could reasonably be expected to disclose the identity of a confidential source.” 5 U.S.C. § 552(b)(7)(D). Dissatisfied with that response, the Montgomerys filed this suit.

         After an initial round of briefing on several procedural issues, the parties filed cross-motions for summary judgment. The Court rendered a mixed verdict, siding with Defendant as to the five requests at issue here and with Plaintiffs as to the others. While the Court required the IRS to conduct a further search on the latter group of requests - a process now underway - it agreed with the Service that disclosure of the existence of records responsive to the first five requests under these circumstances could, as a general matter, be reasonably expected to reveal the identity of a confidential source. The Glomar response based on Exemption 7(D) was thus appropriate. The Court rejected Plaintiffs' arguments that the Service's past litigating positions or public statements were inconsistent with its current position. See Montgomery v. IRS, 330 F.Supp.3d 161, 168-70 (D.D.C. 2018). This Motion to Reconsider followed.

         II. Legal Standard

         “The Federal Rules of Civil Procedure do not specifically address motions for reconsideration, ” United States v. All Assets Held at Bank Julius, Baer & Co., Ltd., 315 F.Supp.3d 90, 95 (D.D.C. 2018), but Rule 54(b) allows a court to revise any interlocutory “order . . . at any time before the entry of a judgment.” While the judicial interest in finality typically disfavors reconsideration, a court may do so “as justice requires.” Wannall v. Honeywell Int'l, Inc., 292 F.R.D. 26, 30 (D.D.C. 2013) (citation omitted). This standard is flexible and allows a district court to exercise broad discretion, but there must be some “good reason” to reconsider an issue already litigated by the parties and decided by the court, such as new information, a misunderstanding, or a clear error. See Bank Julius, 315 F.Supp.3d at 96; Alliance of Artists & Recording Cos., Inc. v. Gen. Motors Co., 306 F.Supp.3d 413, 415-16 (D.D.C. 2016); Estate of Klieman v. Palestenian Auth., 82 F.Supp.3d 237, 242 (D.D.C. 2015) (stating that district court has broad discretion to decide whether to grant motion for reconsideration). “Ultimately, the moving party has the burden to demonstrate ‘that reconsideration is appropriate and that harm or injustice would result if reconsideration were denied.'” Bank Julius, 315 F.Supp.3d at 96 (quoting FBME Bank Ltd. v. Mnuchin, 249 F.Supp.3d 215, 222 (D.D.C. 2017)).

         III. Analysis

         The Court understands Plaintiffs to offer three general bases to reconsider its prior Opinion: (A) the Opinion misstates facts; (B) it improperly relies on in camera declarations; and (C) it improperly upheld Defendant's Glomar response based on FOIA Exemption 7(D). Each concern is addressed in turn.

         A. Facts

         The Montgomerys first take issue with the Court's description of the factual background of the case. In particular, they say the Opinion wrongly stated that they owed penalties to the IRS as a result of their role in several businesses subject to IRS enforcement proceedings. See ECF No. 51 (Mot.) at 8 (citing Montgomery, 330 F.Supp.3d at 166). To the extent the Court may have improperly characterized the Montgomerys' personal income-tax history from the morass of factual disputes that marked the parties' prior litigation, this had no effect on its decision upholding the IRS's response to several of their FOIA requests. Reconsideration on this ground is thus unnecessary. See Stewart v. FCC, 189 F.Supp.3d 170, 173 (D.D.C. 2016) (reconsideration based on alleged factual error necessary only if court failed to consider “data that might reasonably be expected to alter the conclusion reached by the Court”) (citation omitted).

         Plaintiffs themselves point to no nexus between these statements and the Court's analysis of the FOIA issues in this case. They instead appear to rely on more general allegations that the Court is somehow prejudiced against them. See Mot. at 2. Such assertions are not well founded. Recall that in the most recent round of briefing, the Court sided with the Montgomerys as to more than half of their requests; in the previous procedural round, it sided with them in whole. See Montgomery, 292 F.Supp.3d 391. Today, furthermore, it has issued an Order granting Plaintiffs' most recent motion challenging the sufficiency of the Government's search for responsive records. See ECF No. 62. How those decisions, which are equally related - or, more accurately, equally unrelated - to the statements Plaintiffs mention, fit with their allegation of prejudice here is unclear. In any event, this complaint does not warrant reconsideration.

         B. In Camera Declarations

         Next up is Plaintiffs' argument that the Opinion improperly relied on in camera declarations. The IRS did submit declarations or portions of declarations for in camera review in support of its withholdings. See ECF No. 31 (Def. Second MSJ), Attach. 4 (Declaration of Patricia Williams). The Court then referenced those materials when explaining that the agency had met its burden of justifying its Glomar response based on Exemption 7(D). SeeMontgomery, 330 ...

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