United States v. Estate Preservation Services

We must decide the appropriateness of a preliminary injunction entered against the promoters of certain tax shelters. The United States filed suit in 1997 against Estate Preservation Services, a Trust; Estate Preservation Services, Inc.; 2 Robert L. Henkell; and William L. Sefton (“Appellants”). Injunctive relief was sought under Title 26 United States Code Section 7408 to prevent Appellants from rendering abusive tax-shelter advice under Title 26 United States Code Section 6700 . The district court granted a preliminary injunction in October 1998. 3 Independent appeals were timely filed and subsequently *1097 consolidated sua sponte by this court. Jurisdiction exists under Title 28 United States Code Section 1292 (a)(1).

A district court’s grant of a preliminary injunction is subject to “ ‘limited review.’ ” FTC v. Affordable Media, LLC, 179 F.3d 1228, 1233 (9th Cir.1999) (quoting Does 1-5 v. Chandler, 83 F.3d 1150, 1152 (9th Cir.1996)). This court will therefore reverse a district court only when the lower court has committed an abuse of discretion. Id. An abuse of discretion occurs when a court bases its decision on an erroneous legal standard or on clearly erroneous factual…