Case Detail

FOIA Project Annotation: A federal court in California has ruled that the IRS has not yet shown that it conducted an adequate search for records concerning tax liability for Smart-Tek Services and its legal alter ego companies and has declined to rule on the agency's exemption claims under Exemption 3 (other statutes), Exemption 6 (invasion of privacy), and Exemption 7(C) (invasion of privacy concerning law enforcement records) until the court resolves a dispute over whether the agency waived the exemptions during related litigation in Florida. Smart-Tek filed five FOIA suits after the IRS determined the company was responsible for unpaid payroll taxes for a number of companies that were legally related to Smart-Tek. In searching for records, the IRS found that the agent who handled the case had commingled records about all the companies in a file consisting of 141,000 pages. The agency had disclosed more than 3,000 pages in response to one of Smart-Tek's suits and 1,800 pages in response to a second request, but had withheld identifying information about all the other companies primarily under Section 6103, prohibiting disclosure of taxpayer information with consent and the two privacy exemptions. Smart-Tek argued that it could not respond to the agency's tax liability allegations without knowing the identities of the companies the agency considered legally related to Smart-Tek and that in a case challenging the conduct of the revenue agent, Goldberg v. United States (S.D. Fla, Aug. 5, 2015), the district court had disclosed the names of all the companies involved. Although the agency had spent more than a year reviewing the records, Judge Barry Moskowitz agreed with Smart-Tek that the company could not challenge the adequacy of the search without knowing more about how the agency decided to withhold records that did not identify Smart-Tek directly. He noted that "the fact that any privilege pertaining to the identities of the alter egos may have been dispelled does not necessarily mean the identity of every entity whose files were in the 65 boxes has to be disclosed to establish the reasonableness of the IRS's search. At this stage, the record regarding the search the IRS undertook is not yet complete, and the Court will reserve ruling on the merits of Plaintiff's argument until the record is more fully developed." As a result, Moskowitz observed that "the IRS has failed to carry its burden to demonstrate the adequacy of its search." Holding off on ruling on the agency's Section 6103 claims, Moskowitz pointed to an existing conundrum. He explained that "some of these taxpayers may be the alter ego entities whose documents Plaintiff seeks. The IRS disputes whether Plaintiff can obtain tax information relating to Plaintiff's alter egos without an authorization from the alter ego. Plaintiff cannot obtain such an authorization however, without knowing which entities' records have been withheld. Although the IRS claims even the names of the alter egos are protected from disclosure, if those names have already been published, such that any related privacy interest has been lost, there would appear to be no impediment to identifying, in subsequent briefing, any alter ego taxpayers whose records were withheld."
Issues: Exemption 3 - Limited agency discretion, Adequacy - Search

FOIA Project Annotation: In another in a series of cases brought by Smart-Tek Services against the IRS to discover why the agency concluded that Smart-Tek Services was responsible for payroll taxes for a number of alter ego companies, a federal court in California has ruled that the agency conducted an adequate search and that it properly declined to disclose any records for those alter ego companies for which Smart-Tek Services could not establish a legal connection for tax purposes. After finding that the agency considered Smart-Tek Services liable for the payroll taxes for various alter ego companies, Smart-Tek Services filed a series of FOIA requests for tax records pertaining to the collection of alter ego companies. The IRS found that responsive records were commingled in a voluminous single file and processed those records that Smart-Tek Services and its subsidiary companies' tax identification numbers but declined to disclose any records containing tax records for which Smart-Tek Services could not provide tax identifications. Smart-Tek Services filed five separate actions and this case is the second to be decided by the court. The court noted that the IRS located 3,056 responsive pages, releasing 2,319 pages in full, 617 in part, and withholding 120 pages. Smart-Tek Services argued that the agency's search was insufficient because it marked as non-responsive records which did not contain a Smart-Tek Services related tax identification. The court found the search adequate, noting that "because Plaintiff's FOIA request only requested its own [taxpayer information], and not any other taxpayers' administrative file." The court agreed with Smart-Tek Services that the names of the alter ego companies should be disclosed because they had been identified in a court filing in a related case. The court pointed out that "the identities of Plaintiff's alleged alter-egos have been 'made a part of the public domain' through legal process and the creation of a public record. It therefore follows that the identities of taxpayers named in the public tax lien are no longer privileged under § 6103." But the court explained that the disclosure applied only to the names, noting that "that the IRS named other taxpayers publicly in connection with Plaintiff does not entitle Plaintiff to those taxpayers' undisclosed, non-public documents through the FOIA." The court found that the agency had properly withheld Risk Scores under Exemption 7(E) (investigative methods or techniques). The court found that "the IRS's evidence sufficient to show that disclosure of the referenced information would disclose techniques and procedures for law enforcement investigations that could reasonably be expected to risk circumvention of the law."
Issues: Adequacy - Search

Date Filed	Doc #	Docket Text
2015-02-27	1	COMPLAINT Against United States Internal Revenue Service (Filing fee $ 400 receipt number 0974-7847551.), filed by Trucept, Inc.. (Attachments: # 1 Civil Cover Sheet) The new case number is 3:15-cv-00447-BTM-JMA. Judge Barry Ted Moskowitz and Magistrate Judge Jan M. Adler are assigned to the case. (Shamoun, Ronson)(nbp)(jrd) (Entered: 02/27/2015)
2015-02-27	2	Summons Issued. Counsel receiving this notice electronically should print this summons and serve it in accordance with Rule 4, Fed.R.Civ.P and LR 4.1. (nbp)(jrd) (Entered: 02/27/2015)
2015-03-03	3	SUMMONS Returned Executed by Trucept, Inc. re 1 Complaint, (Shamoun, Ronson) qc email re incorrect event and modified text on 3/4/2015 (rlu). (Entered: 03/03/2015)
2015-03-09	4	SUMMONS Returned Executed by Trucept, Inc.. United States Internal Revenue Service served. (Shamoun, Ronson) qc email re text and modified text on 3/10/2015 (rlu). Modified on 3/10/2015 (rlu). (Entered: 03/09/2015)
2015-03-09	5	SUMMONS Returned Executed by Trucept, Inc.. United States Internal Revenue Service served. (Shamoun, Ronson) (rlu). (Entered: 03/09/2015)
2015-03-20	6	NOTICE OF RELATED CASE(S) by Trucept, Inc. of case(s) 15-cv-455-H-BGS; 15-cv-453-JLS-RBB; 15-cv-0452-H-NLS; 15-cv-449-L-NLS . (Shamoun, Ronson) no low number prepared on 3/23/2015 (rlu). (Entered: 03/20/2015)
2015-03-20	7	NOTICE of Party With Financial Interest by Trucept, Inc. re 1 Complaint, (Shamoun, Ronson) (rlu). (Entered: 03/20/2015)
2015-03-31	8	MOTION for Extension of Time to File Answer or other Responsive Pleading by United States Internal Revenue Service. (Attachments: # 1 Supplement Proposed Order)(Josey, Stephen)Attorney Stephen Andrew Josey added to party United States Internal Revenue Service(pty:dft) qc email re proposed orders on 4/1/2015 (rlu). (Entered: 03/31/2015)
2015-04-01	9	MOTION re 8 MOTION for Extension of Time to File Answer or other Responsive Pleading for entry of Stipulation by United States Internal Revenue Service. (Attachments: # 1 Supplement Stipulation)(Josey, Stephen) qc email re proposed order on 4/2/2015 (rlu). (Entered: 04/01/2015)
2015-04-03	10	Stipulation Regarding Time for Answer. The parties stipulate that the United States has until 05/4/2015 to answer or otherwise respond to the Plaintiffs complaint. Signed by Judge Barry Ted Moskowitz on 04/01/2015. (ag) (Entered: 04/03/2015)
2015-04-03	11	ORDER. The United States Motion for Entry of Stipulation is hereby granted. Signed by Judge Barry Ted Moskowitz on 04/03/2015.(ag) (Entered: 04/03/2015)
2015-05-04	12	ANSWER to 1 Complaint, by United States Internal Revenue Service.(Josey, Stephen) (rlu). (Entered: 05/04/2015)
2015-05-06	13	NOTICE AND ORDER for Early Neutral Evaluation Conference: Telephonic Early Neutral Evaluation set for 6/1/2015 at 9:30 AM before Magistrate Judge Jan M. Adler. Signed by Magistrate Judge Jan M. Adler on 5/6/2015.(rlu) (Entered: 05/06/2015)
2015-06-01	14	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Early Neutral Evaluation Conference held on 6/1/2015. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Case Management Conference set for 7/31/2015 09:30 AM before Magistrate Judge Jan M. Adler. Counsel shall call in for the conference using the same dial-in information previously provided. (no document attached) (cdc) (Entered: 06/01/2015)
2015-07-31	15	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 7/31/2015. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Case Management Conference set for 9/15/2015 09:30 AM before Magistrate Judge Jan M. Adler. Counsel shall use the same call-in information previously provided. (no document attached) (cdc) (Entered: 07/31/2015)
2015-09-15	16	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 9/15/2015. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Court to issue order. (no document attached) (cdc) (Entered: 09/15/2015)
2015-09-15	17	ORDER: The Court convened a Case Management Conference on 9/15/2015. (1) Setting Deadline to Complete Document Production and (2) Scheduling a telephonic Case Management Conference for 12/15/2015 at 9:30 AM before Magistrate Judge Jan M. Adler. Signed by Magistrate Judge Jan M. Adler on 9/15/2015.(rlu) (Entered: 09/15/2015)
2015-12-15	18	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 12/15/2015. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Case Management Conference set for 1/27/2016 09:30 AM before Magistrate Judge Jan M. Adler. Counsel shall use the same call-in information previously provided. (no document attached) (cdc) (Entered: 12/15/2015)
2016-01-27	19	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 1/27/2016. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Case Management Conference set for 3/2/2016 09:30 AM before Magistrate Judge Jan M. Adler. Counsel shall use the same call-in information previously provided. (no document attached) (cdc) (Entered: 01/27/2016)
2016-03-02	20	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 3/2/2016. (Plaintiff Attorney Ronson Shamoun). (Defendant Attorney Stephen Josey). Court to issue order. (no document attached) (cdc) (Entered: 03/02/2016)
2016-03-02	21	ORDER: (1) Setting Filing Deadline for Motions for Summary Judgment and (2) Scheduling Case Management Conference. Motions for summary judgment must be filed on or before 9/12/2016. A telephonic Case Management Conference will be held on 5/19/2016 at 9:30 AM before Magistrate Judge Jan M. Adler. Signed by Magistrate Judge Jan M. Adler on 3/2/2016.(rlu) (sjt). (Entered: 03/02/2016)
2016-05-19	22	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 5/19/2016. (Plaintiff Attorneys Ronson Shamoun, Allison Soares, Brad Paladini). (Defendant Attorney Stephen Josey). (no document attached) (cdc) (Entered: 05/19/2016)
2016-08-24	23	Joint MOTION for Extension of Time to File Motion for Summary Judgment by United States Internal Revenue Service. (Josey, Stephen) (rlu). (Entered: 08/24/2016)
2016-08-26	24	ORDER granting 23 Motion for Extension of Time to File. The deadline to file motions for summary judgment is continued from 9/12/2016 to 10/7/2016. Signed by Magistrate Judge Jan M. Adler on 8/26/2016. (no document attached) (cdc) (Entered: 08/26/2016)
2016-10-07	25	MOTION for Summary Judgment by United States Internal Revenue Service. (Attachments: # 1 Notice of Motion, # 2 Memo of Points and Authorities, # 3 Declaration of Jacqueline Queener, # 4 Declaration of Rosanna Savala, # 5 Declaration of Delphine Thomas)(Josey, Stephen) (acc). (Entered: 10/07/2016)
2016-10-28	26	NOTICE of Association of Counsel by Trucept, Inc. (Semerdjian, Dick)Attorney Dick A Semerdjian added to party Trucept, Inc.(pty:pla) (rlu). (Entered: 10/28/2016)
2016-10-28	27	RESPONSE in Opposition re 25 MOTION for Summary Judgment filed by Trucept, Inc.. (Attachments: # 1 Declaration Declaration of Bonar in Support of Opposition)(Semerdjian, Dick) (rlu). (Entered: 10/28/2016)
2016-11-23	28	NOTICE of Appearance and Substitution of Counsel by Ryan O. McMonagle on behalf of United States Internal Revenue Service (McMonagle, Ryan)Attorney Ryan O. McMonagle added to party United States Internal Revenue Service(pty:dft) qc email re lacking pos on 11/28/2016 (rlu). (Entered: 11/23/2016)
2016-11-29	29	CERTIFICATE OF SERVICE by United States Internal Revenue Service re 28 Notice of Appearance, (McMonagle, Ryan) (rlu). (Entered: 11/29/2016)
2017-01-13	30	REPLY to Response to Motion re 25 MOTION for Summary Judgment filed by United States Internal Revenue Service. (McMonagle, Ryan) (Entered: 01/13/2017)
2017-01-20	31	MINUTE ORDER, Motions Submitted 25 MOTION for Summary Judgment (no document attached) (rfm) (Entered: 03/09/2017)
2017-07-05	32	ORDER Granting in part and Denying without prejudice in part Defendant's 25 Motion for Summary Judgment. Signed by Judge Barry Ted Moskowitz on 7/5/2017. (rlu) (Entered: 07/05/2017)
2017-08-14	33	ORDER Scheduling Case Management Conference. Telephonic Case Management Conference set for 9/14/2017 at 9:30 AM before Magistrate Judge Jan M. Adler. Signed by Magistrate Judge Jan M. Adler on 8/14/2017.(mxn) (Entered: 08/14/2017)
2017-09-14	34	Minute Entry for proceedings held before Magistrate Judge Jan M. Adler: Case Management Conference held on 9/14/2017. (Plaintiff Attorneys Ronson Shamoun, Dick Semerdjian, Owen Praskievicz). (Defendant Attorney Ryan McMonagle). (no document attached) (cdc) (Entered: 09/14/2017)
2017-09-15	35	ORDER Setting Filing Deadline for Motions for Summary Judgment. The Court convened a Case Management Conference on 9/14/2017 at 9:30 a.m. Based on the Court's discussions with counsel, it is hereby ordered that additional cross-motions for summary judgment must be filed on or before 11/15/2017. Signed by Magistrate Judge Jan M. Adler on 9/15/2017.(mxn) (Entered: 09/15/2017)
2017-11-09	36	Joint MOTION for Extension of Time to File Cross-Motions for Summary Judgment by United States Internal Revenue Service. (McMonagle, Ryan)(mxn). (Entered: 11/09/2017)
2017-11-09	37	ORDER granting 36 Motion for Extension of Time to File. Cross-motions for summary judgment must be filed on or before 11/29/2017. Signed by Magistrate Judge Jan M. Adler on 11/9/2017. (no document attached) (cdc) (Entered: 11/09/2017)
2017-11-29	38	MOTION for Summary Judgment by Trucept, Inc. (Attachments: # 1 Memo of Points and Authorities, # 2 Declaration, # 3 Proof of Service)(Semerdjian, Dick)(mxn). (Entered: 11/29/2017)
2017-11-29	39	MOTION for Summary Judgment on Remaining Issues by United States Internal Revenue Service. (Attachments: # 1 Memo of Points and Authorities, # 2 Declaration of Jacqueline Kay Queener)(McMonagle, Ryan)(mxn). (Entered: 11/29/2017)
2017-11-30	40	NOTICE Regarding Exhibit Attachment by United States Internal Revenue Service re 39 MOTION for Summary Judgment on Remaining Issues (Attachments: # 1 Declaration of Delphine V. Thomas)(McMonagle, Ryan)(mxn). (Entered: 11/30/2017)
2018-01-12	41	RESPONSE in Opposition re 39 MOTION for Summary Judgment on Remaining Issues filed by Trucept, Inc.. (Attachments: # 1 Proof of Service)(Praskievicz, Owen)(mxn). (Entered: 01/12/2018)
2018-01-12	42	RESPONSE in Opposition re 38 MOTION for Summary Judgment filed by United States Internal Revenue Service. (McMonagle, Ryan)(mxn). (Entered: 01/12/2018)
2018-01-19	43	***DOCUMENT WITHDRAWN PER 45 NOTICE OF WITHDRAWAL*** REPLY to Response to Motion re 39 MOTION for Summary Judgment on Remaining Issues filed by United States Internal Revenue Service. (McMonagle, Ryan) QC email sent re: incorrect event selected (mxn). Modified to withdraw on 1/24/2018 (mxn). (Entered: 01/19/2018)
2018-01-19	44	REPLY to Response to Motion re 38 MOTION for Summary Judgment filed by Trucept, Inc.. (Attachments: # 1 Proof of Service)(Praskievicz, Owen)(mxn). (Entered: 01/19/2018)
2018-01-23	45	NOTICE OF WITHDRAWAL OF DOCUMENT by United States Internal Revenue Service re 43 Reply to Response to Motion filed by United States Internal Revenue Service . (McMonagle, Ryan)(mxn). (Entered: 01/23/2018)
2018-01-23	46	RESPONSE in Support re 39 MOTION for Summary Judgment on Remaining Issues filed by United States Internal Revenue Service. (McMonagle, Ryan)(mxn). (Entered: 01/23/2018)
2018-01-26	47	MINUTE ORDER, Motions Submitted 38 MOTION for Summary Judgment , 39 MOTION for Summary Judgment on Remaining Issues (no document attached) (rfm) (Entered: 08/13/2018)
2018-09-27	48	ORDER Granting Defendant's Motion For Summary Judgment and Denying Plaintiff's Motion For Summary Judgment 38 , 39 . Signed by Judge Barry Ted Moskowitz on 9/27/2018. (sjm) (Entered: 09/27/2018)
2018-09-27	49	CLERK'S JUDGMENT. IT IS SO ORDERED AND ADJUDGED that judgment is in favor of United States Internal Revenue Service against Trucept, Inc. Signed by Judge Barry Ted Moskowitz on 9/27/2018.(sjm) (sjt). (Entered: 09/27/2018)
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