A Pair of Decisions Seeking Anonymity

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The cases of John Doe v. United States, No. 1:19-cv-00720 (Ct. Fed. Cl. 7-29-2019) and In re: Sealed Case, No. 17-1212 (D.C. Cir. 7-26-2019) present situations in which the plaintiffs sought awards for information provided to the IRS. They come from different backgrounds to make their requests both in how the information was gathered and how often they provided information to the IRS. In one case the “old” law applied and in the other the new law governed. One plaintiff provided information from public sources and provided information on many different taxpayers. The other plaintiff provided information regarding his employer and continued to work at the employer at the request of the IRS. In one situation the court granted the protection of anonymity while in the other the court remanded the case because it found that the Tax Court considered impermissible factors in denying protection.

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Joe Doe came to the IRS with information and the IRS requested that he keep working for the company so he could continue providing information. He came forward in 2000 prior to the current whistleblower statute. Before the passage of the specific statute providing relief, the IRS had the authority to grant awards but the process was governed by administrative rules developed by the IRS over decades. He alleged that disclosure of his identity would put his or his family’s life at risk. The IRS argued that he did not make an adequate showing of the risk.

The IRS typically opposes motions to remain anonymous because of the general rule that court proceedings should be open. It may not always be vigorous in its arguments but it represents the normative position of openness of the system. In many ways the IRS is a bystander with no particular fight on the issue of anonymity and often some sympathy for the person providing the information. In some cases the IRS perceives that anonymity will make its defense more difficult.

In this case the court applied the five factor test found in the case of Does I through XIII v. Advanced Textile Corp., 214 F.3d 1058, 1067 (9th Cir. 2000). It focused on three of the tests: 1) plaintiffs interest in proceeding anonymously; 2) prejudice to the government and 3) the public interest.

Here, the court found that he made a well-founded interest in preserving his anonymity because of a reasonable fear of physical or economic harm. The court found that allowing the plaintiff to proceed anonymously would not hamstring the government’s ability to defend itself. Finally, the release of redacted documents can balance the public’s need for access with the plaintiff’s privacy concerns.

The John Doe case presents a fairly classic case of a request for protection and the court’s determination that he is entitled to protection. In contrast, the Sealed case sets up a much more difficult case with a much less sympathetic petitioner. I found myself in agreement with the Tax Court’s denial of anonymity. The decision here seems to open the door for anonymity much wider than I would open it.

The D.C. Circuit, in reversing the Tax Court, acknowledged that the petitioner in this case had no connection to the company he suggested to the IRS. In fact, the petitioner, who seemed to be trying to make a living or at least to supplement his income, searched public records for anomalies suggesting underreporting by certain companies. The IRS argued that among other reasons it wanted his name public it felt that the public had the right to know about serial filers of whistleblower claims.

The D.C. Circuit cited the Advanced Textile case but relied primarily on United States v. Microsoft, 56 F.3d 1448 (D.C. Cir. 1995) which makes perfect sense because the decision comes from its circuit. The court stated that the appropriate way to determine whether a litigant may proceed anonymously is “to balance the litigant’s legitimate interest in anonymity against countervailing interests in full disclosure.”

The presumption favors disclosure. Applying the balancing test the D.C. Circuit determines that the Tax Court abused its discretion by focusing on the serial filer issue. It found this focus improper. It also found the Tax Court failed to consider relevant factors in favor of non-disclosure and discounted the possible harm to the informant. The court remands the case for the Tax Court to properly run through the factors in the tests created by prior case law.

I anticipate that the Tax Court will continue to deny the request to proceed anonymously here. In any event the D.C. Circuit has stopped the use of serial filing of whistleblower request as a basis for always disclosing the identity of the informant. Good news for persons engaged in regularly seeking awards as a business model. This gives a fighting chance for these persons to achieve anonymity. That seems appropriate but when a party blows the whistle on an entity with which it has little or no contact, the need for anonymity will be more difficult, though certainly not impossible to demonstrate. The court must continue to run through the tests which properly balance the needs of the parties and not short circuit the test because the person providing the information does so on a regular basis.

Comments

  1. Raymond Cohen says

    I thought that if the information is obtained from public records, the IRS will not make any whistleblower awards

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