Aloe Vera of America, Inc. v. United States

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALOE VERA OF AMERICA , INC., a No. 10-17136 Texas corporation; REX G. MAUGHAN , husband; RUTH G. D.C. No. MAUGHAN , wife; MAUGHAN 2:99-cv-01794- HOLDINGS, INC., an Arizona JAT corporation; GENE YAMAGATA ;

YAMAGATA HOLDINGS, INC.,

Plaintiffs-Appellants, OPINION

and

BUREAU OF NATIONAL AFFAIRS, INC.

and TAX MANAGEMENT , INC., Intervenors,

v.

UNITED STATES OF AMERICA ,

Defendant-Appellee.

Appeal from the United States District Court for the District of Arizona James A. Teilborg, District Judge, Presiding

Argued and Submitted October 24, 2011—San Francisco, California

Filed November 15, 2012 ALOE VERA OF AMERICA , INC. V . UNITED STATES

Before: J. Clifford Wallace, Sidney R. Thomas, and Susan P. Graber, Circuit Judges.

Opinion by Judge Thomas; Partial Concurrence and Partial Dissent by Judge Wallace

SUMMARY*

The panel affirmed in part and reversed in part the district court’s summary judgment in favor of the United States in an action claiming that the United States improperly disclosed tax information to the Japanese National…

Opinion by Judge THOMAS;

OPINION

This appeal presents the question, among others, of what event triggers the running of the statute of limitations for a claim for wrongful disclosure of a tax return pursuant to 26 U.S.C. § 7431 (d). We conclude that the statute of limitations begins to run when the plaintiff knows or reasonably should know of the government’s allegedly unauthorized disclosures. We also conclude, in the circumstances presented by this case, that the statute of limitations did not begin to run when the plaintiffs became aware of a pending general investigation that would involve disclosures, but only later when they knew or should have known of the specific disclosures at issue. Applying these principles to the facts of this case, we affirm in part and reverse in part.

I

Tax returns and tax return information must be kept confidential, unless a statutory exception applies. 26 U.S.C. § 6103 . Section 6103 “was enacted in response to the use of tax return information for political purposes revealed during Watergate.” Rueckert v. IRS, 775 F.2d 208 , 210 (7th Cir.1985). To add teeth to this statutory protection for taxpayers, Congress created a civil action against…

concurring in part and dissenting in part:

I concur in the majority’s opinion with one exception. It is clear to me that the Yamagata plaintiffs have failed to carry their burden of establishing that their claims are not barred by the statute of limitations.

“When subject matter jurisdiction is challenged under Federal Rule of Procedure 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Kingman Reef Atoll Invs., L.L.C. v. United States, 541 F.3d 1189, 1197 (9th Cir.2008) (internal quotation marks omitted). When we remanded this case to the trial court to resolve the statute of limitations question, all plaintiffs alleged that they first learned about the critical statements in August 1998, when the Maughan/AVA plaintiffs’ counsel received notes from an IRS meeting. The Maughan/AVA plaintiffs’ allegation is supported by an affidavit from their general counsel indicating that they first learned of the statements in question when the notes were received. The only support for the Yamagata plaintiffs’ allegation, on the other hand, is the Maughan/AVA plaintiffs’ counsel’s statement that he gave the notes to the Yamagata plaintiffs’ counsel…