In re Sealed Case

May 25, 2020Case Summary, Civil Procedure, DC Circuit, Tax, US Tax Court, Whistleblower off
E. Barrett Prettyman U.S. Courthouse and William B. Bryant Annex (Source).

Abstract

Case Name: In re Sealed Case, 931 F.3d 92 (D.C. Cir. 2019).
Jurisdiction: United States Court of Appeals, District of Columbia Circuit
Appellee: U.S.T.C.
Appellant: “Appellant” (Anonymously).
Concepts: Tax; Whistleblower; Civil Procedure.
Nature of Case: Whether the Tax Court abused its discretion in denying the Appellant’s request to proceed anonymously because he is a serial filer who relies upon public information.1
Lower Ct. Decision: The Tax Court denied Appellant’s request to move forward anonymously, finding Appellant was a “serial filer” of whistleblower claims who relied on publicly available information.2 The Tax Court rationed that, if they do not identify serial filers by name the public will be unable to judge accurately the extent to which the serial filer phenomenon has affected the work of the Tax Court.3

Introduction

Appellant is a retired certified public accountant who helps his wife run a financial advisory firm, working for almost 40 years.4 Appellant would notice accounting irregularities in filings made with the Securities and Exchange Commission (SEC), he would then report his findings to the IRS.5 Appellant would then file an application for whistleblower award.6 Appellant had over 51 whistleblower claims that he reported irregularities to the IRS about.7

Appellant filed a report with the IRS about one of his findings, the IRS claimed it yielded no additional proceeds, Appellant then petitioned the Tax Court for review of that decision asking to proceed anonymously.8 Petitioner claimed if his identity would be exposed he would loss clients, have a negative impact on his relationship with his spouse, and suffer financially among other things.9 The Tax Court denied applicant’s petition stating his justification for anonymity was not sufficiently “fact-specific.”10 The Tax Court went on to say they would have allowed him to proceed anonymously if not for him being a “unusual claimant” who filed multiple whistleblower claims based upon public knowledge.11 The Tax Court stated that since Appellant had no employment relationship or abusive position to warry about then, serial claimants of whistleblower awards may disproportionately burden the Court with petition only superficially meritorious.12 The Tax Court concluded that names of serial filers should be included otherwise the public will be unable to accurately judge the extent to which the serial filer phenomenon has affected the work of the Tax Court.13 The Tax Court provisionally removed Appellants name, allowing him to appeal anonymously.14 Appellant proceeded to appeal, pro se, stating the Tax Court abused its discretion in denying his motion to proceed anonymously based on him being a serial filer using public information.15 The Court of Appeals held that the Tax Court did abuse its discretion and remanded the case to the Tax Court to determine if Appellant satisfied setting forth sufficient, fact-specific basis for anonymity.16

The main issue here is whether the Tax Court abused its discretion in denying Appellant’s request to proceed anonymously based on him being a serial whistleblower that uses public information.17 This case is important because, the Court of Appeals, makes it clear that someone being a whistleblower that uses public information is not a good enough reason to deny them the right to proceed anonymously, regardless of the public’s interest in seeing the disproportionate affect it has on the Tax Court.18

Background

Tax Court Rule 345(a), lays out the privacy protections for filings in whistleblower actions. Rule 345(a) states that a petition to move forward anonymously must include a motion that sets forth a sufficient, fact-specific basis for anonymity. Under 26 U.S.C. § 7482(a)(1), Tax Court decisions are reviewed in the same manner as to the same extent as decisions of the district courts in civil actions tried without jury. The Court of Appeals cites to Kickapoo Tribe of Indians of the Kickapoo Reservation in Kansas v. Babbitt, 43, F.3d 1491 (D.C. Cir. 1995), stating that when reviewing for abuse of discretion they must consider whether the decision maker failed to consider a relevant factor [or] relied on an improper factor, and whether the reason given reasonable support the conclusion. Whistleblower 14106-10W v. Comm’r, 137 T.C. 183 (2011), states that Rule 345(a) embodies a balancing test whereby a “whistleblower’s identity” is “entitled to protection in the Tax Court upon a sufficient showing of harm that outweighs counterbalancing societal interest in knowing that outweighs counterbalancing societal interest in knowing the whistleblower’s identity” (the balancing test, which different courts have various multi-factor tests).19

Case Description

In In re Sealed Case (2019), the Court of Appeals found that the Tax Court abused its discretion in denying appellant the move forward anonymously. The court of Appeals found that the Tax Court improperly considered that he is a “serial filer using public information to make his whistleblowing claims. The Court of Appeals cited to the reason the Tax Court provided why he could not proceed anonymously was because the public might be interested to see how serial filers are burdening the Tax Court.20 However, the Court of Appeals found this was not sound reasoning, stating that knowing the serial filer’s name is not needed in order to determine either the extent to which serial filers affect the work of the Tax Court or whether any particular whistleblower is a serial filer.21 The Court of Appeals goes on to say that this purpose can be served by making the public aware to the serial filer’s history and explaining the burden it puts on the court; the use of a unique pseudonym in all the cases filed be the serial filer would work accomplish the Tax Court’s goal.22 The Court of Appeals remanded the case to the Tax Court to determine anew whether the Appellant has set forth a sufficient, fact-specific basis for anonymity.23

Conclusion

In conclusion, In re Sealed Case (2019), the United States Court of Appeals, District of Columbia Circuit, reviewed the Tax Court’s decision to deny Appellant’s (“serial whistleblower”) petition to move forward anonymously. The Appellant claimed the Tax Court abused its discretion for numerous reasons, however, the Court of Appeals only addressed the Appellant’s first claim (improperly considering he is a “serial filer” using public information to make his whistleblower claims) because, it immediately found the Tax Court abused its discretion.24

The Court of Appeals applied the balancing test and found that the reason the Tax Court provided, stating that by having serial filers named it will help alert the public to serial filer’s history and explain the burden serial filers impose on the court, was not enough and they can achieve those goals by using pseudonyms such as John Doe or Jane Roe.25 The Court of Appeals remanded to the Tax Court to determine anew whether the Appellant has satisfied his burden under Rule 345(a), setting forth a “sufficient, fact-specific basis for anonymity.”26

  1. In re Sealed Case, 931 F.3d 92, 93 (D.C. Cir. 2019).
  2. Id.
  3. Id.
  4. Id. at 94.
  5. Id.
  6. Id.
  7. Id. at 95.
  8. Id. at 94.
  9. Id.
  10. Id.
  11. Id.
  12. Id. at 95.
  13. Id.
  14. Id.
  15. Id.
  16. Id. at 99.
  17. Id. at 93.
  18. Id. at 98.
  19. Case Note: The “In-House” Whistleblower: Walking the Line Between “Good Cop, Bad Cop,” 37 Wm. Mitchell L. Rev. 1868, 1914 (2011).
  20. In re Sealed Case, 931 F.3d 92, 98 (D.C. Cir. 2019).
  21. Id.
  22. Id.
  23. Id.
  24. Id.
  25. Id.
  26. Id.

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Christian Ramos is currently enrolled in the J.D. Program at the Golden Gate University (GGU) School of Law, where he has taken classes in both the Tax and Estate Planning LLM Programs. Mr. Ramos has interned at Donahue Fitzgerald LLP, Hedemark Law, and Legal Assistance for Seniors, where he was exposed to the problems that face the senior community and their financial goals. He has worked and interned in the Estate Planning legal community since 2016, learning and growing through his exposure to high value estate plans that achieve both the client’s goals, while also being the most tax advantageous. He holds a a B.A. in Government from California State University Sacramento with Minors in both Philosophy and Sociology. Mr. Ramos is expected to Graduate from GGU Law in May 2020 and plans to sit for California Bar Exam in July 2020.