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ROBERT S. MUELLER, III (California State Bar No. 59775)
United States Attorney
JAY R. WEILL (California State Bar No. 75434)
Assistant United States Attorney
Chief, Tax Division
THOMAS F. CARLUCCI (California State Bar No. 135767)
Assistant United States Attorney
10th Floor Federal Building
450 Golden Gate Avenue, Box 36055
San Francisco, California 94102
Telephone: (415) 436-6852
Attorneys for the United States of America
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
H. KEITH HENSON, an individual, ) No.C-98-21290-JW
)
Plaintiff, )
) NOTICE OF MOTION TO DISMISS AND
) SUPPORTING MEMORANDUM
V. )
)
INTERNAL REVENUE SERVICE, ) DATE: JUNE 21, 1999
Does 1-36, ) TIME: 9:00 A.M.
)
Defendants. ) [Date has been change to July 19]
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
NOTICE
PLEASE TAKE NOTICE that on June 21, 1999 a.m., or soon thereafter as
counsel may be heard, before the Honorable James Ware, United States
District Judge, United States District Court, 280 S. First St., Courtroom
8, Fourth Floor, San Jose, California, defendant, United States of
America, (Internal Revenue Service) through its undersigned counsel, will
move to dismiss this matter.
MOTION
The United States, pursuant to Rules 12(b)(1) and (7), Fed. R. Civ.
P., hereby moves this Court to dismiss this matter. In support of this
motion, the United States refers the Court to the following Memorandum of
Points and Authorities and the pleadings on file in this
matter.
INTRODUCTION
On March 22, 1999 plaintiff filed his first amended complaint.
Therein, plaintiff alleges that the Internal Revenue Service conspired
with the Church of Scientology (Church) and various Church related
entities to defraud the United States. More specifically, plaintiff
alleges that the IRS unlawfully executed a closing agreement granting
the Church tax exempt status, via 26 U.S.C., section 501(c)(3).
Plaintiff seeks declaratory and injunctive relief against the IRS.
Plaintiff also seeks up to one billion dollars in damages, related to
alleged unpaid taxes from the Church. The United States maintains
that plaintiff lacks standing, has failed to include an indispensable
party and cannot demonstrate a waiver of sovereign immunity or that
this Court otherwise has jurisdiction to hear this matter.
STATEMENT OF FACTS
In 1978, the IRS issued a ruling disallowing the deductibility of
certain fixed charitable donations made to the Church. See Revenue
Ruling 78-189, 1978-1 C.B. 68 (1978)(a "fixed donation" paid to the
Church for general education courses, religious education courses, and
"auditing" and processing courses that did not exceed the fair market
value of these courses was not a charitable contribution within the
meaning of Internal Revenue Code section 170).
In 1989, the United States Supreme Court held that Church members
charitable contribution deductions for amounts paid pursuant to fixed
fee schedules to participate in auditing sessions and doctrinal
training courses were not allowable deductions under the Internal
Revenue Code. See, Hernandez v. Commissioner, 490 U.S. 680 (1989).
In 1993 the IRS entered into a closing agreement with the Church,
which ultimately reversed the IRS previous position vis-a-vis the
deductibility of certain fixed donations. The closing agreement is
attached to First Amended Complaint, as Exhibit 3. More specifically,
the IRS agreed not to contest the deductibility of the Churches fixed
donations in connection with qualified religious services. As a
result of the closing agreement the IRS issued Revenue Ruling 93-73,
1993-2 C.B. 73 (1993), declaring Revenue Ruling 78-189 obsolete.
QUESTIONS PRESENTED
1. Whether plaintiff can demonstrate that this Court has
jurisdiction to hear this matter, where the United States has not
waived its sovereign immunity?
2. Whether plaintiff has sufficient standing within the meaning
of Article III of the Constitution, as a federal taxpayer, to bring
this action?
3. Whether plaintiff has demonstrated sufficient injury,
causation and redressability of the injury to satisfy the standing
requirement of Article III of the Constitution?
4. Whether plaintiffs claims for injunctive and declaratory
relief are barred as a matter of law?
5. Whether the action must be dismissed because the Church of
Scientology is a necessary party within the meaning of Rule 19(a),
Fed. R. Civ. Proc.?
DISCUSSION I. THIS ACTION MUST BE DISMISSED BECAUSE THE UNITED STATES
HAS NOT WAIVED ITS SOVEREIGN IMMUNITY
It is well settled that the United States, as a sovereign, may
not be sued without its consent, and that the terms of its consent
define the court's jurisdiction. F.D.I.C. v. Meyer, 510 U.S. 471,
475, 114 S.Ct. 996 (1994); United States v. Dalm, 494 U.S. 596, 608,
110 S.Ct. 1361 (1990). A mere assertion that general jurisdiction
statutes apply cannot waive the government's sovereign immunity.
Hughes v. United States, 953 F.2d 531, 539 n.5 (9th Cir. 1992).
Absent the United States' consent to suit, an action against the
United States must be dismissed. Elias v. Connett, 908 F.2d 521, 527
(9th Cir. 1990). The burden is on the party bringing the action to
demonstrate that the United States has consented to suit. Hill v.
United States, 571 F.2d 1098, 1102-03 (9th Cir. 1978).
Here, plaintiff has filed this action against the IRS and Does
1-36, alleging jurisdiction under Title 42, sections 1985 and 1988 and
the United States Constitution. See, First Amended Complaint
(hereinafter Complaint) pp. 16-18. First, the IRS is not a suable
entity. White v. Internal Revenue Service, 790 F. Supp. 1017, 1019
(D. Nev. 1990). Second, to the extent that the Does are federal
employees, plaintiff still cannot avoid the bar of sovereign immunity.
See, Hawaii v. Gordon, 373 U.S. 57, 58, 83 S.Ct. 1052 (1963)( The fact
that a plaintiff names an individual employee of the government as
defendant does not preclude the application of the doctrine of
sovereign immunity); Hutchinson v. United States, 677 F.2d 1322, 1327
(9th Cir. 1982); Gilbert v. DaGrossa, 756 F.2d 1455, 1458-59 (9th
Cir. 1985). Third, the United States has not waived its sovereign
immunity under 42 U.S.C., section 1985 (civil rights). See Hohri v.
United States, 782 F. 2d 227, 245 n 43 (D.C. Cir. 1986), vacated on
other grounds, 482 U.S. 64 (1987). Plaintiffs 42 U.S.C., section 1988
claim (for attorneys fees) is derivative of his section 1985 claim,
and is therefore subject to the same sovereign immunity hurdle, which
plaintiff has failed to overcome. Fourth, plaintiffs claim of
jurisdiction via the Constitution provides no help, because the
Constitution does not waive the governments sovereign immunity.
Arnsberg v. United States, 757 F.2d 971, 980 (9th Cir. 1985). Finally,
to the extent plaintiff is attempting to bring a third-party suit
questioning the tax treatment accorded another taxpayer in a closing
agreement, such suit is barred. Cf., Flores v. United States, 551
F.2d 1169 (9th Cir. 1977).
Because plaintiff cannot establish a waiver of sovereign immunity
this court is without subject matter jurisdiction and the case must be
dismissed.
II. PLAINTIFF LACKS STANDING TO
CHALLENGE THE IRS CLOSING AGREEMENT WITH THE CHURCH.
A. Plaintiff lacks standing to challenge the IRS closing
agreement based upon his status as a federal taxpayer and his
claim that the closing a greement violates the Establishment
Clause of the First Amendment.
Assuming plaintiff can demonstrate a waiver of the governments
sovereign immunity, he still is without standing to bring this action.
When an objection to standing is raised, the courts inquiry focuses on
whether the plaintiff has such a personal stake in the outcome of the
controversy as to warrant his invocation of federal court jurisdiction
and to justify exercise of the courts remedial powers on his behalf.
Lugo v. Miller, 640 F. 2d 823 (6th Cir. 1981). More specifically, a
plaintiff must demonstrate 1) that he has suffered a distinct and
palpable injury, 2) that the source of the injury is causally
connected to the defendants conduct and 3) that the plaintiffs injury
will be alleviated by a favorable decision of the court. Id.
Here, plaintiff claims standing generally as a federal taxpayer,
claiming the public treasury has been harmed in the amount of one
billion dollars. See, Complaint paragraph 1 and 2. Plaintiff alleges
that by allowing favorable tax treatment to the Church in the closing
agreement and Revenue Ruling 93-73 (e.g., tax-exempt status and
deductibility of certain contributions by members), the IRS has
defrauded the government of federal tax dollars. Further, plaintiff
complains that the IRS closing agreement provides preferential tax
treatment to members of the Church in violation of the Establishment
Clause of the First Amendment. See, Complaint, pp. 1 and 5.
Where standing is based upon an individuals general status as a
federal taxpayer (as opposed to a claim of particular and direct
injury) the Supreme Court has set forth a slightly different inquiry
than discussed above. First, because a taxpayer alleges injury only
by virtue of his liability for tax the Court held that "a taxpayer
will be a proper party to allege the unconstitutionality only of
exercises of congressional power under the taxing and spending clause
of Art. I, section 8, of the Constitution." Flast v. Cohen, 392 U.S.
83, 102 (1968). Second, the Court required the taxpayer to "show that
the challenged enactment exceeds specific constitutional limitations
upon the exercise of the taxing and spending power and not simply that
the enactment is generally beyond the powers delegated to Congress by
Art. I, section 8." Id. at 102-103. By creating this two-part
federal taxpayer standing requirement, the Court was attempting to
ensure that the "case or controversy" aspect of standing was not
eviscerated "where a taxpayer seeks to employ a federal court as a
forum in which to air his generalized grievances about the conduct of
government or the allocation of power in the Federal System." Id. at
106.
The seminal case of federal taxpayer standing is Frothingham v.
Mellon, 262 U.S. 447 (1923). In Frothingham, a taxpayer brought suit
challenging the constitutionality of the Maternity Act of 1921, which
provided federal funding to the States for the purpose of improving
maternal and infant health. The claimed injury was the burden of
taxation in support of an unconstitutional regime. The Court
concluded that the only "injury" was the fact "that officials of the
executive department of the government are executing and will execute
an act of Congress asserted to be unconstitutional." Id. at 488. Any
tangible effect of the challenged statute on the plaintiff's tax
burden was "remote, fluctuating and uncertain." Id. at 487. In
rejecting this as a cognizable injury sufficient to establish
standing, the Court admonished;
The party who invokes the power [of judicial review] must be
able to show not only that the statute is invalid but that he has
sustained or is immediately in danger of sustaining some direct
injury as the result of its enforcement, and not merely that he
suffers in some indefinite way in common with people generally. .
. . Here the parties plaintiff have no such case. Id. at 488.
The Supreme Court again visited the issue of taxpayer standing in
Flast v. Cohen, 392 U.S. 83 (1968). The taxpayer plaintiffs in Flast
sought to enjoin the expenditure of federal funds under the Elementary
and Secondary Education Act of 1965, which they alleged were being
used to support religious schools in violation of the Establishment
Clause. The Court employing the two-part test discussed above,
determined that taxpayers did have standing to sue, because "[their]
constitutional challenge [was] made to an exercise by Congress of its
power under Art. I, section 8, to spend for the general welfare," and
because the Establishment Clause, on which, plaintiffs' complaint
rested "operates as a specific constitutional limitation upon the
exercise by Congress of the taxing and spending power conferred by
Art, I, section 8." Id. at 103-104. The Court distinguished
Frothingham v. Mellon, 262 U.S. 447 (1923), on the ground that
Frothingham had relied, not on a specific limitation on the power to
tax and spend, but on a more general claim based on the Due Process
Clause. Id. at 105.
Unlike the plaintiffs in Flast, plaintiff here fails the first
prong of the test for taxpayer standing. Here, plaintiffs claim is not
directed at Congress or some illegal congressional action but rather
an executive branch action, the IRS execution of a closing agreement
with the Church, settling longstanding litigation between the parties.
Flast limited taxpayer standing to challenges directed only [at]
exercises of congressional power. Id. at 102; see also, Valley Forge
Christian College v. Americans United for Separation of Church &
State, 454 U.S. 464 (1982) (denying standing because a taxpayers
organization failed the first prong of the test for taxpayer standing
in Flast since the source of their complaint was not a congressional
action but a decision by Department of Health, Education and Welfare
to transfer a parcel of federal property); Schlesinger v. Reservists
Committee to Stop the War, 418 U.S. 208, 228 (1974) (denying standing
because the taxpayer plaintiffs did not challenge an enactment under
Art. I, section 8 but rather the action of the Executive Branch);
United States. v. Richardson, 418 U.S. 166, 175 (1974) (denying
standing because the challenge was not addressed to the taxing and
spending power but to the statutes regulating the CIA).
Plaintiff also fails the second prong of the test for taxpayer
standing. Specifically, plaintiff alleges that the IRS granting of
tax-exempt status and allowing the deductibility of certain payments
to the Church violates the Establishment Clause of the First
Amendment, which is a specific constitutional limitation on the taxing
and spending power.
Plaintiff essentially argues that the IRS closing agreement threatens
governmental entanglement with religion because it requires the IRS to
entangle itself with religion in deciding whether to grant such
favorable tax benefits to churches.
This argument has already been rejected by the Supreme Court. In
Hernandez v. Commissioner, 490 U.S. 680 (1989), the Supreme Court held
that the IRS' disallowance of charitable deductions to the Church of
Scientology under section 170 did not violate the Establishment
Clause. The Court reasoned, in part, that section 170 does not
facially differentiate among religions and satisfies the three-pronged
Establishment Clause inquiry derived from Lemon v. Kurtzman, 403 U.S.
602 (1971). The Court explained that l) section 170 has a secular
purpose, 2) section 170's principal effect is neither to advance nor
inhibit religion, and 3) section 170 threatens no excessive
entanglement between church and state. Id. 695-697.
Although Hernandez is factually distinguishable because the IRS
closing agreement is based upon an administrative decision rather than
a statute (section 170), the rationale of Hernandez still applies.
That is because the inquiry remains the same, whether the law facially
differentiates among religions. Id. at 695. Here, the IRS closing
agreement does not facially differentiate among religions because,
like section 170, the closing agreement makes no explicit and
deliberate distinctions between different religious organizations.
Id., see also Exhibit 3, attached to the Complaint.
The Court in Hernandez stated that if no such facial preference
exists, the next step in the analysis is to apply the customary
three-pronged Establishment inquiry derived from Lemon v. Kurtzman,
403 U. S. 602 (1971). The IRS closing agreement also comports with
the Lemon test. First, the closing agreement has a secular purpose
because its purpose was to settle long-standing litigation with the
Church. Second, the primary effect of the IRS closing agreement was
neither to advance nor inhibit religion. It may be a consequence that
the IRS closing agreement allows certain deductions and tax-exempt
status to the Church whereas similarly situated organizations might
not be afforded the same tax-benefits because they do not meet the
statutory requirements for such benefits under sections 170 and
501(c)(3). However, an agency's decision "primarily having a secular
effect does not violate the Establishment Clause merely because it
happens to coincide or harmonize the tenants of some or all
religions." Hernandez, 490 U.S. at 696. Finally, the IRS closing
agreement threatens no excessive entanglement between church and
state. As explained by the Supreme Court in Hernandez :
But routine regulatory interaction which involves no
inquiries into religious doctrine "[citation omitted], no
delegation of state power to a religious body [citation omitted],
and no detailed monitoring and close administrative contact"
between secular and religious bodies [citation omitted] does not
of itself violate the nonentangelment command. Id. at 696-697.
In summary, plaintiff's complaint amounts to little more than an
attempt "to employ a federal court as a forum in which to air . . .
generalized grievances about the conduct of government." Flast v.
Cohen, 392 U.S. at 106. The Supreme Court has repeatedly rejected
such claims of standing predicated on "the right, possessed by every
citizen, to require that the Government be administered according to
the law . . ." Valley Forge Christian College v. Americans United for
Separation of Church & State, 454 U.S. 464, 482 (1982). Plaintiff
lacks standing as a federal taxpayer to challenge the IRS closing
agreement with the Church. /// ///
B. Although plaintiff alleges injuries stemming from the IRS
closing agreement, plaintiff lacks standing to challenge the
closing agreement because there is no causation and
redressability of plaintiffs alleged injuries.
As stated above, in order to satisfy the standing requirement of
Article III a plaintiff must demonstrate 1) that he has suffered a
distinct and palpable injury, 2) that the source of the injury is
causally connected to the defendants conduct and 3) that the
plaintiffs injury will be alleviated by a favorable decision of the
court. Lugo v. Miller, 640 F. 2d 823 (6th Cir. 1981). Plaintiff
alleges that the church has used its tax-exempt funds to harass
plaintiff with lawsuits and pay private investigators to attack his
reputation and physically attack him while picketing. Complaint, pp.
2-3. Although plaintiff's claims may constitute personal injury
sufficient to satisfy the first prong of Article IIIs standing
requirements (injury in fact), plaintiff lacks standing because, as
explained below, his alleged injuries are not fairly traceable to or
caused by the IRS closing agreement (causation) and are not likely to
be redressed by a favorable court decision (redressability).
This case is analogous to Simon v. Eastern Kentucky Welfare
Rights Organization,, 426 U.S. 26 (1976). There, the Supreme Court
held that indigents lacked standing to challenge the validity of an
IRS Revenue Ruling reducing the amount of free medical care hospitals
must provide in order to obtain tax benefits conferred upon charities.
The indigents challenged the IRS granting of tax exemption to certain
hospitals. The indigents argued that by extending tax benefits to
certain hospitals despite their refusals fully to serve the indigents,
the IRS encouraged the hospitals to deny services to indigents.
The Court reasoned that the indigents lacked standing because it
was "speculative" whether the denials of service could be traced the
to IRS' actions or instead a result of the decision made by the
hospitals without regard to the tax implications (causation). Id. at
42-43. Furthermore, the Court reasoned that it was "equally
speculative whether the desired exercise of the Court's remedial
powers in this suit would result in the availability to respondents of
such services" (redressability). Id. at 43. The Court stated that
the hospitals might "elect to forgo favorable tax treatment to avoid
the undetermined financial drain of an increase in the level of
uncompensated services." Id. Furthermore, although the complaint
alleged that the hospitals received substantial donations deductible
by the donors, the Court stated that it was speculative at best to
infer that the hospitals were so financially dependent on the
favorable tax exempt treatment that they would admit the indigents if
required to do so as a condition of receiving the tax benefit. Id.
Likewise here, it is speculative whether plaintiff's alleged
injuries can be traced to the to the IRS granting of favorable tax
benefits to the Church, or instead a result from decisions made by the
Church, without regard to the tax implications. Indeed, some or all
of plaintiffs alleged injuries may have occurred prior to the
execution of the closing agreement in 1993 and therefore would have no
causal connection. Moreover, it is equally speculative whether
plaintiff's request for relief would remedy his alleged injuries.
Even if we were to accept plaintiffs allegations as true (as we must
do for purposes of the instant motion), it is equally as plausible
that the Church would continue its actions that allegedly caused
plaintiffs injuries independent of any loss of tax benefits. There is
simply no assurance that the Church would modify its behavior if the
IRS closing agreement was revoked or modified as requested by
plaintiff. By suing the IRS, a party which is not the direct source
of his alleged injuries, an extra link in the chain of causation must
be shown. Id. at 41-42 (the case or controversy limitation of Art.
III still requires that a federal court act only to redress injury
that fairly can be traced to the challenged action of the defendant
and not injury that results from the independent action of same third
party not before the court). Plaintiff can not demonstrate that if he
were to prevail the Church would cease its alleged injurious conduct.
Also see Allen v. Wright, 468 U.S. 737 (1984); Fernandez v. Brock, 840
F.2d 622 (9th Cir. 1988).
In summary, even if plaintiff could prove his alleged injuries,
he could not show that the injuries were caused by the IRS closing
agreement or that a favorable decision by the court would redress his
injuries. Consequently, plaintiff lacks standing to challenge the IRS
closing agreement.
C. Plaintiff lacks standing to contest the IRS closing agreement
based upon his claim that the agreement encourages various
illegal activities.
Plaintiff alleges that by extending tax benefits to the Church
and its members through the closing agreement, the IRS apparently has
encouraged the Church to use its tax-exempt funds for various alleged
illegal purposes, such a attacking the Internet and planting an agent
within the Cult Awareness Network. Complaint, pp. 6-7. ///
For the reasons already discussed plaintiff lacks standing to
pursue this claim. Even if plaintiff could prove the alleged conduct,
he lacks standing to pursue his claim because there is simply no
evidence that the IRS closing agreement caused the alleged injuries,
or that favorable decision by the court would or could redress them.
Simon v. Eastern Kentucky Welfare Rights Organization,, 426 U.S. 26
(1976). In all events, this claim amounts to little more than
plaintiffs generalized grievance about the governments operation of
the tax system, and this is not a sufficient basis to claim standing.
Valley Force Christian College v. Americans United for Separation of
Church & State, 454 U.S. 464, 482 (1982).
III.
PLAINTIFF IS NOT ENTITLED TO INJUNCTIVE OR DECLARATORY RELIEF
Plaintiff seeks both injunctive and declaratory relief.
Specifically, plaintiff seeks a declaration that Revenue Ruling 93-73
is violative of the Establishment Clause and further for the Court to
set aside the Revenue Ruling. Complaint, p. 18. In order to qualify
for injunctive relief plaintiff must prove that he will suffer
irreparable injury in the absence of injunctive relief because he has
no adequate remedy at law. Enochs v. Williams Packing Co., 370 U.S. 1
(1962). Plaintiff is not entitled to injunctive relief because he has
an adequate remedy at law--he can sue the Church directly, the party
that is the immediate source of his alleged injuries. See Weinberger
v. Romero-Barcelo, 456 U.S. 305 (1982) (to obtain injunctive relief,
the party must suffer irreparable injury and show inadequate remedy at
law). Moreover, this action is also barred by the Anti-Injunction Act.
See, 26 U.S.C. section 7121; Barrette et. al. v. Phoenix Gen.
Hospital, 58 AFTR 2d 86-5685, 1986 WL 10896 (D. Ariz. 1986)
(Plaintiffs did not have standing to challenge hospitals tax exempt
status under 501(c)(3) of the IRC, and furthermore the action was
barred by the Anti- Injunction Act, 26 U.S.C., section 7121 and the
Declaratory Judgment Act, 28 U.S.C. section 2201).
Furthermore, plaintiff's request for declaratory relief its
barred by the Declaratory Judgment Act, 28 U.S.C., section 2201.
While section 2201 of Title 28 generally provides the district court
with jurisdiction over cases seeking declaratory relief, there is a
specific exception for disputes "with respect to federal taxes."
Because this case involves federal taxes, the district court lacks
jurisdiction to grant declaratory relief. See McCarthv v. Marshall,
723 F.2d l034, 1037 (1st Cir. 1983) (if a case calls into question a
specific provision of the Internal Revenue Code or a ruling or
regulation issued under the Code, the claim falls under the general
bar to jurisdiction and declaratory relief); Hughes v. United States,
953 F.2d 531 (9th Cir. 1992).
Accordingly, this Court is without jurisdiction to hear
plaintiffs claim for injunctive and declaratory relief. Accordingly,
those claims must be dismissed.
IV. THIS ACTION SHOULD BE DISMISSED FOR PLAINTIFFS FAILURE TO JOIN THE
CHURCH OF SCIENTOLOGY, WHICH IS A NECESSARY AND INDISPENSABLE PARTY TO
THE PRESENT LITIGATION
Assuming arguendo, that this Court has jurisdiction to hear
plaintiffs complaint and that plaintiff has proper standing to
litigate the case, the Court should still dismiss the action for
plaintiffs failure to join the Church as a necessary party consistent
with Rule 19(a) of the Rules of Federal Civil Procedure. Rule 19
provides:
A person who is subject to service of process and whose
joinder will not deprive the court of jurisdiction over the
subject matter of the action shall be joined as a party to the
action if (1) in the persons absence complete relief cannot be
accorded among those already parties, or (2) the person claims an
interest relating to the subject of the action and is so situated
that the disposition of the action in the persons absence may (i)
as a practical matter impair or impede the persons ability to
protect that interest or (ii) leave any of the persons already
parties subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations by reason of the
claimed interest.
First, full relief cannot be given to plaintiff without the
Church. As plaintiffs complaint makes clear, it is the Church that
allegedly has and continues to injure him. Thus, even if the Court
were to grant plaintiff relief against the government, it would not
ensure that the Church would cease its conduct towards plaintiff.
Indeed, that is the very reason why the Church is a necessary party to
this action, because without the Church at most plaintiffs relief will
be partial. Second, if the Court were to set aside the closing
agreement, such ruling would not affect the Church. This would create
the need for further litigation between the Church and the IRS to
resolve the dispute created by any ruling from this Court. Rule
19(a)(2)(ii); See, Cooper v. Digital Processing Systems, Inc., 182
F.R.D. 242 (N.D. Ohio 1998). /// ///
Rule 12(b)(7) Fed. Rul. Civ. Proc., provides for dismissal of an
action where a necessary party under Rule 19 is not joined. Here, the
Church is such a necessary party. Accordingly, the action must be
dismissed, unless the Church is joined. CONCLUSION
Because the government has not waived its sovereign immunity and
because plaintiff lacks standing to bring this action, plaintiffs
complaint must be dismissed. Further, because plaintiff failed to
join the Church of Scientology, which is a necessary party to the
action, the action should be dismissed.
Respectfully submitted,
ROBERT S. MUELLER, III United
States Attorney
By:
THOMAS F. CARLUCCI Assistant United
States Attorney Tax Division
ROBERT S. MUELLER, III (California State Bar No. 59775) United States
Attorney JAY R. WEILL (California State Bar No. 75434) Assistant
United States Attorney Chief, Tax Division THOMAS F. CARLUCCI
(California State Bar No. 135767) Assistant United States Attorney
10th Floor Federal Building 450 Golden Gate Avenue, Box 36055 San
Francisco, California 94102 Telephone: (415) 436-6852
Attorneys for the United States of America
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
H. KEITH HENSON, an individual, ) No. C-98-21290-JW )
Plaintiff, )
) V. )
)
INTERNAL REVENUE SERVICE, ) Does 1-36,
)
) Defendants. )
) NOTICE OF MOTION TO DISMISS AND SUPPORTING MEMORANDUM
DATE: JUNE 21, 1999 TIME: 9:00 A.M. TABLE OF
CONTENTS
PAGE
NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
MOTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . .2
STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . .2
QUESTIONS PRESENTED. . . . . . . . . . . . . . . . . . . . . . .3
DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . .3 I.
THIS ACTION MUST BE DISMISSED BECAUSE NOT THE
UNITED STATES HAS NOT WAIVED ITS SOVEREIGN IMMUNITY . . . .3
II. PLAINTIFF LACKS STANDING TO CHALLENGE THE IRS CLOSING AGREEMENT
WITH THE CHURCH.. . . . . . . . . . . . .4
A. Plaintiff lacks standing to challenge the IRS closing
agreement based upon his status as a federal taxpayer and
his claim that the closing agreement violates the
Establishment Clause of the First Amendment.4
B. Although plaintiff alleges injuries stemming from the IRS
closing agreement,
plaintiff lacks standing to challenge the closing agreement
because there is no causation and redressability of
plaintiffs alleged injuries.9
C. Plaintiff lacks standing to contest the IRS closing
agreement based upon his claim that the agreement encourages
various illegal activities.10
III PLAINTIFF IS NOT ENTITLED TO INJUNCTIVE OR DECLARATORY RELIEF. .
. . . . . . . . . . . . . . . . . . 11
IV. THIS ACTION SHOULD BE DISMISSED FOR PLAINTIFFS FAILURE TO JOIN
THE CHURCH OF SCIENTOLOGY, WHICH IS A NECESSARY AND INDISPENSABLE
PARTY TO THE PRESENT LITIGATION12
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 13
TABLE OF AUTHORITIES
CASES
Allen v. Wright, 468 U.S. 737 (1984) . . . . . . . . . . . . . . . .
. 10
Arnsberg v. United States, 757 F.2d 971 (9th Cir. 1985) . . . . . . .
. . . . . . .4
Barrette et. al. v. Phoenix General Hospital, 58 A.F.T.R.2d 86-5685,
1986 WL 10896 (D. Ariz. 1986) . 11
Cooper v. Digital Processing Systems, Inc., 182 F.R.D. 242 (N.D. Ohio
1998) . . . . . . . . . . . 12
Elias v. Connett, 908 F.2d 521 (9th Cir. 1990) . . . . . . . . . . . .
. .3
Enochs v. Williams Packing Co., 370 U.S. 1 (1962) . . . . . . . . . .
. . . . . . . . 11
F.D.I.C. v. Meyer, 510 U.S. 471, 114 S. Ct. 996 (1994) . . . . . . .
. . .3
Fernandez v. Brock, 840 F.2d 622 (9th Cir. 1988) . . . . . . . . . . .
. . 10
Flast v. Cohen, 392 U.S. 83 (1968) . . . . . . . . . . . . . . . .
5-6, 8
Flores v. United States, 551 F.2d 1169 (9th Cir. 1977) . . . . . . .
. . . . . .4
Frothingham v. Mellon, 262 U.S. 447 (1923) . . . . . . . . . . . . .
. . . . .6
Gilbert v. DaGrossa, 756 F.2d 1455 (9th Cir. 1985) . . . . . . . . .
. . . .4
Hawaii v. Gordon, 373 U.S. 57, 83 S. Ct. 1052 (1963) . . . . . . . . .
. .4
Hernandez v. Commissioner, 490 U.S. 680 (1989) . . . . . . . . . . .
. . . . 2, 7-8
Hill v. United States, 571 F.2d 1098 (9th Cir. 1978) . . . . . . . .
. . . . .3
Hohri v. United States, 782 F.2d 227 (D.C. Cir. 1986) . . . . . . . .
. . . . .4
Hughes v. United States, 953 F.2d 531 (9th Cir. 1992) . . . . . . . .
. . . .3, 12
TABLE OF AUTHORITIES CONT
CASES CONT
Hutchinson v. United States, 677 F.2d 1322 (9th Cir. 1982) . . . . .
. . . . . . . .4
In re Spendthrift Forms, Inc., 931 F.2d 405 (6th Cir. 1991) . . . . .
. . . . . . . . .2
Lemon v. Kurtzman, 403 U.S. 602 (1971) . . . . . . . . . . . . . . .
. .7-8
Lugo v. Miller, 640 F.2d 823 (6th Cir. 1981) . . . . . . . . . . . .
5, 9
McCarthv v. Marshall, 723 F.2d l034 (1st Cir. 1983) . . . . . . . . .
. . . 11
Russell v. Landrieu, 621 F.2d 1037 (9th Cir. 1980) . . . . . . . . .
. . . .1
Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208
(1974) . . . . . . . . . . . . . . . . . .7
Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26
(1976) . . . . . . . . . . . . . . . 4, 9, 11
United States v. Dalm, 494 U.S. 596, 110 S. Ct. 1361 (1990) . . . . .
. . . . .3
United States. v. Richardson, 418 U.S. 166 (1974) . . . . . . . . . .
. . . . . . . .7
Valley Forge Christian College v. Americans United for Separation of
Church & State,
454 U.S. 464 (1982) . . . . . . . . . . . . . . .7-8, 11
Weinberger v. Romero-Barcelo, 456 U.S. 305 (1982) . . . . . . . . . .
. . . . . . . 11
White v. Internal Revenue Service, 790 F. Supp. 1017 (D. Nev. 1990) .
. . . . . . . . . . .3
STATUTES
United States Codes (26 U.S.C.)
section 501(c)(3). . . . . . . . . . . . . . . . . . . . . . .2
section 7121 . . . . . . . . . . . . . . . . . . . . . . . . 11
United States Codes (28 U.S.C.)
section 2201 . . . . . . . . . . . . . . . . . . . . . . . . 11
TABLE OF AUTHORITIES CONT
STATUTES CONT
United States Codes (42 U.S.C.)
section 1985 . . . . . . . . . . . . . . . . . . . . . . . . .4
section 1988 . . . . . . . . . . . . . . . . . . . . . . . . .4
MISCELLANEOUS:
Revenue Ruling 78-189, 1978-1 C.B. 68 (1978) . . . . . .2
Revenue Ruling 93-73, 1993-2 C.B. 73 (1993) . . . . . .3