1:13-cv-01225 #73

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division

The NATIONAL ORGANIZATION FOR
MARRIAGE, INC.,

Plaintiff,

v.

The UNITED STATES OF AMERICA,
INTERNAL REVENUE SERVICE,

Defendant.

Civ. No. 13-cv-1225-J CC/IDD

PLAINTIFFS OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

INTRODUCTION

This is an action against the United States of America, Internal Revenue Service
(hereafter, the Government) seeking damages pursuant to 26 U.S.C. 7431 for the unlawful
inspections and disclosures of Plaintiff The National Organization for Marriages (NOM) tax
return and tax return information by agents of the Internal Revenue Service (IRS) in violation
of 26 U.S.C. 6103.
NOM was founded in 2007 to protect marriage and the faith communities that sustain it
across the United States. (Verified Complaint (VC) 8.) As a tax-exempt organization, NOM
must file a Form 990 annually with the IRS. See 26 U.S.C. 6033. Schedule B to Form 990
(Schedule B) lists donors who have contributed $5,000 or more during the reporting period.
Pursuant to 26 U.S.C. 6103 and 6104(b), the names and addresses of NOMs donors
on its Schedule B are confidential and their inspection and public disclosure is prohibited.
Section 7431 provides taxpayers a cause of action against the United States for knowing or
negligent unauthorized inspection or disclosure of tax return information. For each negligent
Case 1:13-cv-01225-JCC-IDD Document 73 Filed 05/13/14 Page 1 of 32 PageID# 1086

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disclosure or inspection, a plaintiff may recover statutory damages of $1,000 or, alternatively,
actual damages. If the inspection or disclosure is wilful or grossly negligent, a plaintiff may be
entitled to punitive damages. 26 U.S.C. 7431(c)(1)(B)(ii).
In March of 2012, NOMs unredacted 2008 amended Schedule B appeared on the
websites of the Human Rights Campaign (HRC) and the Huffington Post. (VC 14-16.) HRC
advocates nationwide for redefining marriage to include same-sex couples, a mission directly
opposed to NOMs. (VC 73.) On each page of the document were official, internal IRS
markings,
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indicating that the publicly disclosed document originated with the IRS. (VC 23.)
At NOMs request, the Treasury Inspector General for Tax Administration (TIGTA)
conducted an investigation into the unauthorized disclosure of NOMs 2008 Schedule B. (VC
51); Plaintiffs Exhibit (PEX) 2 at 8 (Deposition of Chris Chieppa (IRS 30(b)(6)), TIGTA
Inspector, March 11, 2014, 26:5-12) (TIGTA Investigation). The results and conclusions of the
TIGTA Investigation were not shared with NOM. (VC 52.) In order to determine the cause of
the disclosure and prevent future disclosure, NOM undertook significant and costly efforts to
obtain information about the illegal disclosure of its donor informationincluding the filing and
administrative appeals of five Freedom of Information Act (FOIA) requests and one Privacy
Act Request (DEX 15 (NOM Depo 107:6-108:6))however, TIGTA and the IRS consistently
withheld completely or redacted all information materially relevant to TIGTAs Investigation.
(VC 53-55.) According to TIGTA, section 6103 prohibited it from disclosing to NOM any

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The markings on the 2008 Schedule B published by HRC were originally obscured, but NOM
was able to uncover the internal IRS markings. (VC 20.) TIGTA was able to verify NOMs
forensic analysis. PEX 2 at 10 (Deposition of Chris Chieppa (IRS 30(b)(6)), TIGTA Inspector,
March 11, 2014, 43:16-19); PEX 3 at 3.

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information about TIGTAs Investigation, or even disclosing its existence. (VC 63); PEX 1 at
2.
Not until October 30, 2013almost a month after this suit was fileddid NOM learn the
identity of the individual to whom its tax information was disclosed. And, still, not from the
Government. As part of its investigation into the targeting of conservative applicants for tax-
exempt status (VC 88-90), the House Ways and Means Committee revealed that the IRS
disclosed the document to Matthew Meisel, a former employee of Bain & Company, the
company where former Republican Presidential Candidate Mitt Romney (associated with one of
the disclosed NOM donors) served as interim CEO in the early 1990s. See Eliana J ohnson,
Investigation IDs IRS Leaker, National Review Online, Oct. 30, 2013,
http://www.nationalreview.com/article/362667/investigation-ids-irs-leaker-eliana-johnson. The
House Committee also revealed that Mr. Meisel furnished NOMs 2008 Schedule B to HRC. Id.
The disputed issues in this case are (1) whether the admittedly unauthorized disclosure of
NOMs confidential tax return was grossly negligent or merely negligent; (2) whether the
admitted inspections of NOMs confidential tax returns were authorized, and if not, whether such
inspections were wilful, grossly negligent or merely negligent; (3) whether the significant
expenses NOM incurred investigating the disclosure and preventing further disclosures were
incurred as a result of the IRSs disclosure; and (4) whether NOM is barred from recovering its
actual damages because NOMs normal and ongoing fundraising activities generated donations
in excess of the damages it suffered and therefore mitigated those damages. As explained more
fully below, these are all issues of material facts that are genuinely in dispute.
STATEMENT OF MATERIAL FACTS THAT ARE IN DISPUTE

The following facts, which the Government asserts are undisputed, are in dispute:

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As an initial matter, NOM disputes the Governments framing of this case as only
involving a Single, Inadvertent Disclosure. First, NOM seeks damages for unauthorized
inspections and disclosures in violation of 26 U.S.C. 6103. (VC 1, 3, 5, 45, 58, 70, 87, 131-
34.) There is evidence of numerous inspections and disclosures. See PEX 2 at 16-18 (56:21-
58:5);
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PEX 3 at 9-11, 37, 40-41 (noting multiple accesses to NOMs return information without
apparent tax administration purposes); PEX 7 at 35-36. Further, there is evidence that the
disclosure of NOMs 2008 Schedule B was grossly negligent due to the IRSs systemic failure to
protect confidential taxpayer information as required by statute, including, as described below,
flawed systems designs, improper security procedures, failure to follow established procedures,
improper training, and other lack of supervision.
Response to Defendants Undisputed Material Facts
1. Disputed. The circumstantial evidence suggests that Mr. Meisel submitted a request and
claimed to be a member of the media. DEX 3. But there is no evidence of what Mr. Meisel
requested. PEX 3 at 2 (requests destroyed after 45 days, no record of request being processed);
PEX 6 at 9 (16:9-15). Specifically, there is no evidence that Mr. Meisel requested Schedule B
information. PEX 6 at 26 (57:11-14); PEX 7 at 1. The clerk that allegedly processed Mr.
Meisels request does not recall receiving or processing such a request and cannot verify whether
Schedule B information was requested. PEX 8 at 5-7, 10, 16 (Deposition of Wendy Peters, IRS
RAIVS Clerk, J an. 29, 2014, 36:12-38:3, 41:4-5, 49:6-8). The IRSs policy is not to include a

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In response to NOMs Notice of Deposition pursuant to 30(b)(6) (PEX 4), the Government
designated three individuals to speak on specifically delineated deposition topics (subject to the
Governments objections and limitations). See PEX 2 at 4-7 (12:13-15:7) (listing designated
topics); PEX 5 at 4-9 (Deposition of David Hamilton (IRS 30(b)(6)), March 11, 2014, 6:25-
11:15) (same); and PEX 6 at 4-5 (Deposition of Sherry Whitaker (IRS 30(b)(6)), Director of
Government Entity Management Program Staff, March 11, 2014, 6:20-7:14 (same)).

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Schedule B either on mass-distribution DVDs or in response to individual requests unless
specifically requested, in order to to reduce the risk of inadvertently identifying contributors.
PEX 7 at 2; see also PEX 9 at 2 (J an. 1, 2010 IRM), 1 (J an.1, 2011 IRM). Yet, until at least April
2011, the RAIVS unit had been including the Schedule B when responding to all Form 990
requests. PEX 3 at 6-7, 17-20; PEX 2 at 11-12 (49:25-50:16) (authenticating Interview Activity).
2. Disputed for the same reasons delineated in paragraph 1, above.
3-6. Not Disputed.
7. Disputed for the same reasons delineated in paragraph 1, above. Also disputed as
omitting material facts, specifically that Mr. Meisel indicated that he would use the requested
documents for an Internet blog. PEX 8 at 8-15 (39:23-46:12); PEX 3 at 21-35.
8. Not Disputed.
9. Disputed for the same reasons delineated in paragraph 1, above.
10. Not Disputed.
11. Disputed to the extent the Government asserts that Ms. Peters, or any other IRS
employee, did not apply redactions to the disclosed document. In fact, the Government lacks any
records of the document as it was disclosed and lacks any evidence that IRS agents did not
obscure the watermark. PEX 3 at 2. The record does show that the disclosed document as
provided to HRC was redacted. DEX 14 at 4-13.
12. Not disputed.
13. Disputed to the extent it omits material facts. Although the SEIN system is partitioned
into two sections, a redacted section for public dissemination of Form 990 data and an
unredacted section for private dissemination and internal IRS use, PEX 3 at 12-13, the clerks
who process public requests for Form 990 tax returns have access to both sides of the system.

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PEX 2 at 9 (31:2-13); PEX 5 at 10 (15:11-20); PEX 3 at 2; PEX 7 at 8. Many IRS management
employees were unaware of who had access to confidential materials. PEX 7 at 2-8. Those who
were aware of the problems did not take any action to fix them. PEX 10 at 37-38 (Deposition of
David Hamilton, Systems Administrator for the Statistics of Income Branch, J an. 29, 2014 at
54:3-55:6) (concerns about access dating from 2004); PEX 5 at 16-17 (50:18-51:8) (access
removed in May 2013); PEX 7 at 11-13. There was no need for such extensive access to the
unredacted side and it was later removed. PEX 7 at 13 (chart of revised access), 14-15; PEX 6 at
24-25 (55:8-56:15).
14. Disputed to the extent it omits material facts. The Government only cites to a portion of
the email exchange between Ms. Peters and Ms. Riley. PEX 3 at 23-35; PEX 11 at 1-4.
15. Disputed to the extent the Government asserts that the 3983C letter printed on J anuary
31, 2011, was in response to a request from Mr. Meisel for NOMs tax returns. In fact, the IRS
Integrated Data Retrieval System (IDRS) does not identify the recipient of a 3983C letter or
the documents attached thereto. PEX 3 at 2, 6 (He cannot verify if there was a Form 4506-A
because they destroy that information after 45 days.); PEX 2 at 14, 21 (53:16-20, 84:3-25).
Because the IRS did not retain a copy of the 3983 transmittal letter, the IRS has no idea whether
1, 2, or all 3 of the tax returns printed on J anuary 21, 2011 were transmitted to Mr. Meisel. The
IRS has maintained that it did not send the unredacted original 2008 tax return, but has provided
no document or other evidence to show that the original 2008 tax return was either not mailed or
that the version that was mailed was properly redacted. PEX 10 at 18-34 (35:17-51:2); PEX 3 at
14-16.
16. Not disputed.

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17. Disputed. The IRS does not maintain mailing logs or copies of the 3983C letters and has
no way to recreate previously issued letters. PEX 3 at 2; PEX 2 at 14, 21 (53:16-20, 84:3-25).
18. Disputed to the extent the IRS believes it is undisputed it was Ms. Peters who failed to
redact the 2008 Schedule B or that the failure to redact was merely negligent. PEX 3 at 2; PEX 8
at 5-7, 16 (36:12-38:3, 49:6-8) (clerk has no recollection of the NOM request). Also, disputed to
the extent it omits material facts, specifically those included in response to paragraph 1, above,
and the fact that Ms. Peters was aware that the return was disclosed to someone for the purpose
of an internet blog. DEX 3 at 1.
19. Disputed to the extent IRS believes it is undisputed whether Ms. Peters was responsible
for sending Mr. Meisel an unredacted copy of NOMs Schedule B, and when any transmittal
from the IRS to Mr. Meisel occurred. PEX 3 at 2; PEX 8 at 5-7, 16 (36:12-38:3, 49:6-8) (clerk
has no recollection of the NOM request).
20-21. Not disputed.
22. Disputed to the extent it uses the word demonstrates when the record evidence merely
indicates that a request may have been made and the original documents are not maintained, as
described in paragraph 1, above.
23-25. Disputed to the extent the Government contends this is a material fact.
26. Disputed to the extent it relies upon lack of evidence to support the assertion that the
present disclosure is the only unauthorized disclosure caused by an IRS RAIVS clerk, especially
since the Government did not maintain permanent records. See PEX 3 at 2.
27. Not disputed.
28. Disputed as omitting necessary material facts. More specifically, it is disputed whether
Mr. Fred Karger would have filed his complaint with the California Fair Political Practices

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Commission (FPPC) but for the disclosure of NOMs 990 by the IRS. PEX 12 at 4, 6-7
(Deposition of Fred Karger, March 12, 2014, 20:5-10; 54:17-55:3). The damages sought are
specific to the necessary steps taken to protect this confidential donor information from misuse,
including steps taken by NOMs counsel to prepare a lawsuit against the FPPC for the misuse of
its confidential tax return information. The measures taken by NOM resulted in the FPPC
shredding the document on the eve of filing that lawsuit. PEX 13 at 97. Ultimately, NOM was
absolved of any wrongdoing by FPPC and the complaint was dismissed. PEX 13 at 103.
29. Disputed to the extent IRS believes that the timing of the transmittal of NOMs 2008
Schedule B from the IRS to Mr. Meisel is undisputed. PEX 3 at 2; PEX 8 at 10 (41:4-5).
Disputed to the extent it omits material facts, including those facts included in paragraph 28.
30. Not disputed.
31. Disputed. First, Mr. Karger referenced the disclosure of NOMs 2008 Schedule B as the
impetus for his original FPPC complaint. PEX 12 at 6-7, 9 (54:17-25; 55:1-3; 57:11-15); DEX
19.
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In fact, Mr. Kargers original complaint contained a screen shot of portions of the 2008
Schedule B, as posted by HRC. DEX 19 at 3. Second, Mr. Kargers complaint was filed around
April 14, 2012, just a few days after NOMs Schedule B was publicly-disseminated. PEX 12 at 3
(19:9-18).
32. Disputed. Mr. Kargers supplemental complaint not only contained NOMs entire 2008
Schedule B as disclosed by the IRS, DEX 19 at 14, but it also contained the names of specific
donors that were gleaned from the document, id. at 10-11. There is no record evidence to suggest

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In his complaint to the FPPC, Mr. Karger referred to the disclosed document as included in
recently unsealed documents by a federal judge. DEX 19 at 2. But, as he explained in his
deposition, he did not correctly characterize the origin of the document and, in fact, the
document is the one disclosed by the IRS. PEX 12 at 8-9 (56:19-57:10).

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that any donations from individuals to NOM were already publicly reported. PEX 12 at 5, 10,
28 (50:6-10, 61:8-20) (Karger used the disclosed 2008 Schedule B as his primary source for his
complaint), 129:7-20 (obtained Schedule B from Huffington Post or other website after leak).
33-34. Disputed to the extent the Government contends this is a material fact.
35. Disputed to the extent IRS suggests Karger did not obtain the information needed to file
his complaint from the unlawfully disclosed copy of NOMs 2008 Schedule B. PEX 12 at 8-9,
11, 12-28 (56:19-57:10; 111:6-22, 113:9-129:20 (testimony foreclosing possibility that document
came from other sources)); DEX 19. Disputed to the extent the record evidence indicates that
Karger knew or should have known that an unredacted Schedule B is not a public document.
PEX 12 at 29-31 (136:22-138:16).
36. Disputed to the extent the Government contends this is a material fact.
37. Disputed for the reasons delineated in the first sentence of paragraph 35, above.
38. Disputed to the extent the Government goes beyond NOMs counsels invoices to
categorize or characterize the legal services obtained. The legal invoices contain
contemporaneous statements regarding the legal service performed. Also disputed for the reasons
delineated in paragraph 28, above.
39. Disputed to the extent the Government goes beyond record evidence to categorize or
characterize the legal services obtained. The legal invoices contain contemporaneous statements
of the legal service performed. DEX 21.
40. Disputed to the extent the Government goes beyond record evidence to categorize or
characterize the legal services obtained. Also disputed to the extent the Government asserts that
NOM was unable to explain the purpose of the invoices. PEX 14 at 3 (Deposition of Brian
Brown (NOM 30(b)(6)), March 14, 2014, 83:20-21) (Dr. Eastman was involved in the same

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effort to try and find out what had occurred with regard to the disclosure.)), 4 (87:19-88:2)
(Again, I believe this was for travel related to investigating how the 990 disclosure occurred.).)
41. Disputed to the extent the IRS asserts its unlawful disclosure resulted in a net benefit to
NOM. DEX 1; PEX 15 (additional pages of NOMs Responses to the Governments First Set of
Discovery Responses); DEX 23; PEX 14 at 9-12 (152:17-153:9, 156:15-157:2) (No donations
were received expressly because of the lawsuit).
42. Disputed to the extent the IRS asserts any donations were made as a result of the IRSs
disclosure. There is no evidence to support such an assertion and, in fact, NOM testified that it
has received no donations expressly because of the lawsuit and that there is no way to know the
intent of a donor. PEX 14 at 10 (153:15-17 (I cannot recall a single conversation with a donor in
which they said theyre giving to NOM because of the lawsuit.)), 11 (156:5-6 (we make very
clear to everyone we will not accept any designated gifts)), 6 (144:17-19 (I cant determine
why people give or what the motivation is and its not designated for anything.)), 7-8 (147:21-
148:2). DEX 23 at Resp. to RFA 19, 26, and 29 (no earmarks).
43-45. Disputed for the same reasons as set forth in paragraph 42, above.
46. Disputed for the same reasons as set forth in paragraphs 41 and 42, above.
Statement of Additional Material Facts
47. The record reflects evidence of extensive processes and quality review procedures in
place for ensuring the correct imaging of documents entered into the Statistics of Income Exempt
Organizations Return Image Network (SEIN), PEX 10 at 4-15 (8:8-19:4); PEX 16 at 1-2; PEX
3 at 42, yet the Government acknowledges there was no similar procedure or quality review
regarding the disclosure of confidential information at the time NOMs 2008 Schedule B was
disclosed. PEX 10 at 35-38 (52:11-55:6). The record evidence demonstrates that there were

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known and expressed concerns as to the breadth of access and potential for unauthorized
disclosure. PEX 10 at 36-37 (53:12-54:23); PEX 7 at 12. Importantly, quality reviews occurred
for only two percent of the responses to Form 4506 Requests. PEX 2 at 19-20 (61:23-62:21)
(quality review Supervisor sees only two out of 100 to 300 responses to 4506-A per week); PEX
3 at 8.
48. The computer system used by RAIVS at the time of the disclosure ma[de] it possible for
the employee to inadvertently authorize the Form 990 and Schedule B information to be printed
in the CPS site without it being redacted and without the employee realizing that they had
authorized it. PEX 3 at 6-7; PEX 2 at 14-15 (53:5-54:9).
49. The redaction of confidential information on the Schedule B was done by hand, PEX 3 at
6-7, was not reviewed by supervisors or employees in the mail room before disclosure, PEX 6 at
28-29, 30-31 (61:17-62:12, 83:21-84:13); PEX 3 at 36, and was internally referred to as the
paper doll method, PEX 6 at 27-28 (60:15-61:16). See also PEX 2 at 13-14 (52:21-53-4); PEX
8 at 4 (30:11-18); PEX 3 at 17-20, 38; PEX 7 at 17 (employee cuts out donor list, copies [it] and
sendsto requester).
50. Despite at least two reviews of the RAIVS unit by Exempt Organization management
prior to the disclosure of NOMs tax information, neither review identified the improper
application of IRS procedures regarding RAIVS providing a Schedule B even when not
requested. See paragraph 1, above; PEX 6 at 6-7 (13:10-14:1) (A: We provided a copy of IRM
to W&I, yes. Q: And that was the extent of the training that anybody from Exempt Organizations
provided to W&I? A. That TEGE would provide, yes.) and 11-14 (18:12-21:15). The IRS
issued a clarification on this procedure in April 2011, for reasons that the government refused
to explain. PEX 6 at 8-11 (15:22-18:11) (discussion about IRM 3.20.13whether or not the

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Schedule B is provided); PEX 9 at 1, 2 (2010 IRM excerpts), 3, 4 (2008 IRM excerpts); PEX 17
at 4, 4; PEX 7 at 18-33.577-1592.
51. The IRS had no procedure in place that could prevent unauthorized disclosure before the
fact, PEX 10 at 35-36 (52:23-53:2); only a watermark procedure to deter unauthorized
disclosure, id. at 54:3-23; PEX 5 at 14 (38:11-14); PEX 7 at 12 (demonstrating knowledge that
disclosure could occur). Yet, Senior Management was not even aware of the purpose of the
watermark. PEX 5 at 13 (26:7-16); PEX 7 at 12; PEX 3 at 4-5.
52. Once a user is given access to the SEIN database, there is nothing restricting a user from
accessing a wide-range of information the user has no need to access. PEX 10 at 16-17 (29:13-
30:1). Approximately 300-350 users had authorization to the database. PEX 5 at 11 (16:5-10).
53. Ms. Sherry Whitaker was responsible for allowing or disallowing access to SEIN. PEX 5
at 12 (17:15-25). Ms.Whitaker did not know who had access to SEIN, PEX 7 at 5-8, and was
unaware of the existence of audit trials with respect to the system, PEX 5 at 15 (41:3-6).
ARGUMENT

I. Whether the Illegal Disclosure of NOMs 2008 Amended Schedule B Was the Result
of Gross Negligence or Merely of Negligence Is an Inherently Fact-Based
Determination.

The law is clear: Whether the IRS acted with the requisite gross negligence for an award
of punitive damages under 7431 is a factual issue. Scrimgeour v. IRS, 149 F.3d 318, 324 (4th
Cir. 1998) (emphasis added). The Governments request to determine this issue as a matter of
law must therefore be rejected. See Memorandum of Law in Support of the United States of
Americas Motion for Summary J udgment at 19 (Dkt. 68) (hereafter SJ Mem.).
The cases on which the Government relies belie its summary judgment request. In each
case, the court made a factual determination regarding gross negligence only after a bench

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trial. Scrimgeour, 149 F.3d at 322; Mallas v. United States, 1995 U.S. App. LEXIS 10766, *1
(4th Cir. 1995) (per curiam, unpublished). Those decisions were upheld because the trial courts
determination that the IRS was merely negligent was not clearly erroneous. Scrimgeour, 149
F.3d at 324-25; Mallas, 1995 U.S. App. LEXIS 10766 at *1 (After a bench trial the trial court
[held] that Mallas could not recover punitive damages because he did not show that the IRS
acted willfully or with gross negligence); id. at *2.
Determining gross negligence in Section 7431 cases only after trial is the routine
procedure. See, e.g., id. at *1; Mallas v. United States, 993 F.2d 1111, 1126 (4th Cir. 1993) (On
remand, the district court should provide Mallas an opportunity to prove that the IRS acted
willfully or with gross negligence); Messinger v. United States, 769 F. Supp. 935, 940 (D. Md.
1991) (denying summary judgment because whether disclosure was done either knowingly or
negligently are issues which would be better resolved by a finder of fact after fully reviewing
the evidence); see also Snider v. United States, 468 F.3d 500, 504 (8th Cir. 2006) (Following a
bench trial, . . . [t]he court awarded actual, statutory, and punitive damages); Ward v. United
States, 973 F. Supp. 996, 997, 1001 (D. Colo. 1997) (finding gross negligence after having
heard the evidence of both parties in a non-jury trial); Payne v. United States, 91 F.Supp.2d
1014, 1016, 1029 (S.D. Tex. 1999) (finding gross negligence [b]ased on the evidence presented
at trial), revd on other grounds, 289 F.3d 377 (5th Cir. 2002). Simply put, whether the conduct
of the IRS was grossly negligent is a question of fact to be determined by this Court at trial.
Even if Scrimgeour and Mallas established some sort of threshold for gross negligence,
which they do not, the factual record in this case easily exceeds that threshold. Scrimgeour
involved a simple failure of an IRS office to notice that the taxpayers tax return had been
improperly requested by the taxpayers sister, a negligent mistake that continued even after the

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taxpayer requested an investigation because of typical bureaucratic delays at the IRS. 149 F.3d at
321-22. The record reflect[ed] that the employees who responded to the Forms 4506 were
simply careless. Id. at 324. The plaintiff in Mallas failed to prove gross negligence because he
offered no evidence at trial to show that the agents who continued to publicize his tax conviction
were aware that it had been reversed three years earlier. 1995 U.S. App. LEXIS 10766 at *1, *3.
In other words, each case was decided on evidence presented (or not presented) by each plaintiff.
Under Section 7431 grossly negligent conduct is that which is marked by wanton or
reckless disregard of the rights of another. Scrimgeour, 149 F.3d at 324 (quoting Barrett v.
United States, 100 F.3d 35, 40 (5th Cir. 1996)). In contrast, simple negligence is the lack of due
care id., or failure to do what a reasonable and ordinarily prudent person would do under the
circumstances, Zfass v. Commr, 118 F.3d 184, 188 (4th Cir. 1997).
Here, the IRS was not simply careless. Scrimgeour, 149 F.3d at 321-22. Rather, the
record evidence demonstrates a systemic failure by the Government marked by reckless
disregard of its statutorily mandated duty to protect the confidential donor information of
exempt organizations. 26 U.S.C. 6104(b). (Nothing in this subsection shall authorize the
Secretary to disclose the name or address of any contributor to any organizationwhich is
required to furnish such information.). While the actual disclosure may have been inadvertent, it
was brought about by, among other things: (1) overbroad access to non-public return information
(Statement of Material Facts that Are in Dispute (SoDF) 13, 52); (2) lack of checks and
balances in disclosure process (SoDF 47, 51); (3) lack of understanding by senior management
as to who had access (SoDF 53); (4) lack of basic training as to confidentiality procedures (SoDF
50); (5) lack of supervision as to confidentiality procedures (SoDF 47, 51); and (6) failure to
heed senior administrators concerns (SoDF 47).

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Clearly, this presents more egregious factual circumstances than Scrimgeour and Mallas.
See Ward, 973 F.Supp. at 1001 (in light of his prior training and IRS regulations, agents
disclosure of tax payer information was in reckless disregard of the law and rights of others);
Snider, 468 F.3d at 505 (finding disclosures grossly negligent where IRS agent that had received
extensive training and written instructions repeatedly and intentionally engaged in conduct
outside the standard of conduct for IRS special agents); see also Miller v. United States, 66 F.3d
220, 222, 224 (9th Cir. 1995) ([W]e believe that the disclosure of information to a person who
is likely to publish that information is relevant in determining the degree of negligence or
recklessness involved.), see SoDF 18.
The presence or absence of gross negligence is a question of fact.
II. Whether the Governments Inspections of NOMs Tax Return Information Were
Authorized, or Were Done Willfully or as a Result of Gross Negligence or Merely
Negligent Is an Inherently Fact-Based Determination.

NOM is also entitled to statutory and actual damages, or punitive damages, if its return
information was unlawfully inspected. 26 U.S.C. 7431(a)(1); see also id. (c)(1)(B)(ii). The
record evidence demonstrates that various IRS agents inspected NOMs 2008 Schedule B
(original and amended versions) prior to and immediately after the unlawful disclosure was
publicized. Whether these inspections were authorized or whether each inspection was willful,
grossly negligent or merely negligent is a question of disputed fact. Scrimgeour, 149 F.3d at 324.
A. Whether Wendy Peters Inspections of NOMs Amended and Original 2008
Schedule Bs Were Authorized is a Question of Fact.
.
IRS policy since at least 2007 was that an organizations Schedule B was not to be
included in response to a Form 4506-A request. See, e.g., PEX 9 at 4 (2008 IRM manual
explaining, To reduce the risk of inadvertently identifying contributors, Exempt Organizations
(EO) of TEGE has established the policy to not include Form 990 Schedule B, which lists

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contributors and the amounts of contributions, with copies of 990s for mass distribution, such as
DVD sets or other public media, and will not include the schedules in individual requests for
copies of Form 990s) (emphasis added)); see also PEX 9 at 2 (GOV- PROD-00001160 (J an. 1,
2010 IRM explaining same policy)); PEX 9 at 1 (J an. 1, 2011 IRM explaining same policy).)
IRS policy further provided that only when the requestor specifically requested a copy of the
organizations Schedule B was one provided to the requestor (with donor names redacted). See,
e.g., PEX 9 at 4 (2007 IRM). Yet, until at least April 2011after the illegal disclosure at issue
here occurredthe RAIVS unit continued to include an organizations Schedule B when
responding to all Form 990 requests. PEX 3 at 6-7 (RAIVS unit manager explained RAIVS
would senda redacted copy of the Schedule B to a requestor even if the Schedule B was not
requested), 17-18 (Schedule B is not provided unless a requestor specifically requests a
copy), 19-20; see also PEX 6 at 8-14 (15:14-21:15).
The Government claims that in response to the Form 4506-A request from Mr. Meisel,
Ms. Peters accessed and printed copies of NOMs amended and original 2008 Schedule B. Defs.
SoF 9 (citing DEX 8). It is undisputed that Ms. Peters accessed and printed the amended 2008
Schedule B to NOMs 2008 Form 990. (SJ Mem. at 2.) Record evidence demonstrates also that
Ms. Peters accessed and printed NOMs entire original 2008 Form 990, which contained a
schedule of contributors. PEX 3 at 13, 16 (Print log showing 37 pages printed by Ms. Peters, the
length of NOMs original 2008 Form 990 with Schedule B); see also PEX 3 at 6-7 (Schedule B
provided whether requested or not).
The Governments argument that Ms. Peters inspections of NOMs 2008 Schedule Bs
were authorized depends on its unsubstantiated assumption that Mr. Meisel specifically
requested copies of NOMs 2008 Schedule Bs. (SJ Mem. at 16.) Yet the Governments

17

assumption finds no support in the record. In fact, the Government cannot demonstrate whether
Mr. Meisel requested NOMs 2008 Schedule Bs because it has destroyed whatever request Mr.
Meisel did submit. SoDF 1. Emails from Ms. Peters to Ms. Riley suggest that a Form 4506-A
request was made my Mr. Meisel, but there is nothing in those emails to suggest that Mr. Meisel
also requested the Schedule B information. If Mr. Meisel did not specifically request NOMs
Schedule Bs, Ms. Peters inspection of those documents was knowingly willful, but in violation
of IRS policy prohibiting such inspection. It is thus a disputed question of fact whether Ms.
Peters inspection of NOMs original and amended 2008 Schedule Bs was required for tax
administration purposes. 26 U.S.C. 6103(h)(1).
B. Whether the Various Inspections of NOMs Amended 2008 Schedule B by IRS
Personnel Immediately Following HRCs Publication Were Authorized is a
Question of Fact.

The record evidence demonstrates that shortly after NOMs Amended 2008 Schedule B
was published on the Internet by HRC and Huffington Post, but before NOM filed a request for
investigation of the disclosure, various IRS officials intentionally inspected NOMs confidential
donor list. According to IRS audit trails produced in discovery, the following IRS employees
accessed NOMs Amended 2008 Schedule B on the dates noted below:
Connie Peek (SPP Analyst) 04/05/12 (twice)
Sherry Whitaker (SPP Manager) 04/13/12 (twice)
Kathi Palmer (SPP Manager) 04/05/12
W&I Imaging Manager 04/13/12 (twice)
Laurice Ghougasian (EO Division) 04/05/12

PEX 7 at 34-35; PEX 3 at 10. When questioned about these inspections at depositions, the IRS
simply claimed that each inspection was part of our research in order to ensure were providing
the service that we need to provide. PEX 6 at 22 (Whittaker Depo 50:2-4); PEX 10 at 22 (39:9-
21) (authenticating audit trail). However, IRS e-mails suggest that these inspections were simply

18

[Tax Exempt & Government Entities] higher-ups taking a look once the disclosure was reported
in the press. PEX 7 at 36. Casual browsing of taxpayer information, even information of
significant media attention, is strictly forbidden by Section 6103. See Taxpayer Browsing
Protection Act, Pub. L. 105-35, 11 Stat. 1104 (1997), H1466 (statement of Rep. Neal, This
legislation will provide a deterrent against IRS employees taking a quick look at tax returns for
purposes not related to work); id. at H1466 (statement of Rep. Neal, IRS employees should not
act on impulses based upon curiosity); see also 26 U.S.C. 6103(b)(7) (The terms inspected
and inspection mean any examination of a return or return information) (emphasis added). It is
thus a disputed question of fact whether some, all or none of these inspections were truly for a
tax administration purpose or were instead out of mere curiosity.
4

III. There is a Genuine Factual Dispute as to Whether the Disclosure of NOMs Return
Information Caused Actual Damages.
The Government makes two causation arguments in support of its motion for summary
judgment: 1) None of the damages sustained by NOM were as a result of the unauthorized
disclosure of NOMs tax return because of the intervening actions of third parties; and 2) NOMs
damages were mitigated or off-set by its solicitation of donations referencing the disclosure and
this lawsuit. These contentions are factually and legally incorrect.

4
The Governments records also reveal several other inspections of NOMs original 2008 Form
990 and NOMs 2009 and 2010 Form 990s that took place shortly after HRCs publication of
NOMs 2008 Amended Schedule B. PEX 3 at 10. For reasons delineated above, it is disputed
also whether these inspections were authorized by Section 6103. PEX 6 at 15-23 (43:20-51:23).
The Government has also produced evidence revealing hundreds of inspections by the IRS
RAIVS unit of NOMs tax return information dating back to 2008. E.g., PEX 2 at 16-18 (56:21-
58:5). The existence of these records is surprising in light of the IRSs representation to NOM in
response to a FOIA request that no records exist related to requests for NOMs tax returns.
Answer 57; PEX 18.

19

A. Causation is an Issue of Fact that Should not Be Determined on a Motion for
Summary Judgment in this Case.
NOM does not dispute that, at trial, it must demonstrate that the disclosure of its amended
2008 Schedule B resulted in actual damages and that those actual damages were caused by and
were the proximate result of the unauthorized disclosure. Thus, it must prove both actual and
proximate causation. Issues of actual and proximate causation, however, can be decided on
summary judgment only in those instances when there are no causal facts in dispute. Love-Lane
v. Martin, 355 F.3d 766, 776 (4th Cir. 2004) (citation omitted) (emphasis added), cert. denied,
543 U.S. 813 (2004); see also Goddard v. Protective Life Corp., 82 F. Supp. 2d 545, 554 (E.D.
Va. 2000) (The question of proximate cause is generally a question for determination by a jury.
Such a determination becomes a matter of law if undisputed facts are susceptible of only one
inference) (applying Virginia law) (citations and quotations omitted); Smith v. United States,
730 F. Supp. 948, 952 (C.D. Ill. 1990) (applying state law to proximate cause analysis in Section
7431 case); see also Olds v. United States, 473 Fed. Appx. 183, 185 (4th Cir. 2012)
(unpublished) (Proximate cause is an inference of fact to be drawn from other facts and
circumstances. Only when the facts are all admitted and only one inference may be drawn from
them will the court declare whether an act was the proximate cause of an injury or not)
(applying North Carolina law).
The Governments own authorityBarrett v. United States, 100 F.3d 35 (5th Cir.
1996)confirms that matters of causation and damages are issues of fact best suited for
resolution at trial. Barrett v. United States, 917 F. Supp. 493, 501-502 (S.D. Tex. 1995)
(describing testimony and evidence regarding causation presented at trial). The plaintiff in
Barrett alleged that the IRSs unlawful disclosure to his patients of the fact that he was being
investigated by the IRS caused his business to fail. Barrett, 100 F.3d at 40. The mere existence

20

of causes independent of the disclosure did not preclude actual damages as a matter of law as the
Government suggests. (SJ Mem. at 26.) Rather, it was Barretts fail[ure] to offer a scintilla of
evidence connecting his loss of business with the unlawful disclosures and his failure to
distinguish among different possible causes for his loss. Id. In other words, the courts
determination came only after weighing the evidence and testimony at trial.
The Governments facts concerning actual and proximate causation are disputed. See
SoDF 28-29, 31-46. Those facts are also not susceptible of only one inference. Goddard, 82
F.Supp.2d at 554. In fact, the most reasonable inference to be drawn from the facts, is that the
unlawful disclosure of NOMs amended 2008 Schedule B was the actual and proximate cause of
its injuries. At minimum, these are issues of fact that must await presentation at trial.
B. Whether the Unlawful Disclosure Was the Cause-in-fact of NOMs Damages
is a Question of Fact to be Resolved at Trial.

Causation in fact, or but-for causation, requires pro[of] that the wrongful act in fact
caused the harm; that is, the plaintiff must prove that but for the wrongful act, the harm would
not have occurred. Jones v. United States, 9 F.Supp.2d 1119, 1138 (D. Neb. 1998) (citing Horn
v. B.A.S.S., 92 F.3d 609, 611-12 (8th Cir. 1996)); see also Paroline v. United States, 12-8561,
2014 U.S. LEXIS 2936, *18 (April 23, 2014) (The concept of actual cause is not a
metaphysical one but an ordinary, matter-of-fact inquiry into the existence of a causal relation
as laypeople would view it.).
The record establishes clearly that but for the IRSs unlawful disclosure, NOMs harm
would not have occurred. Jones, 9 F. Supp. 2d at 1138. The Government concedes that it
unlawfully disclosed NOMs amended 2008 Schedule B to a third party. (Answer 78.) But for
that unlawful disclosure, none of the harms of which NOM complains would have occurred.
Paroline, 2014 U.S. LEXIS 2936 at *27 (The traditional way to prove that one event was a

21

factual cause of another is to show that the latter would not have occurred but for the
former.). The significant expenses incurred by NOM (SoDF 39-40) during its efforts to
determine the source of the disclosure and prevent further disclosures were not only a direct
consequence of the disclosure itself, but of the Governments deliberate refusal to provide any
useful information to NOM regarding TIGTAs investigation, or how the disclosure occurred or
to whom it was made, (Answer 53-55), even though it is undisputed that NOMs efforts were
the impetus for TIGTAs investigation in the first place. PEX 2 at 8 (26:5-12). Yet, the IRS
intentionally suppressed NOMs search for the truth by representing to NOM that no records
exist regarding requests to the IRS for copies of NOMs tax returns (Answer 57; PEX 18),
though the Government has produced hundreds of such records in discovery that it now claims
are related to such requests. See, e.g., PEX 11 at 1-4. Moreover, the Government concedes that
the document it unlawfully disclosed was posted on the Internet by HRC and Huffington Post.
(SJ Mem. at 7-8, 19-20.) Thus, but for the unlawful disclosure, NOM would not have
expended time and resources to prevent publication and further dissemination by these entities.
Lastly, the Government concedes that Fred Kargers original complaint to the FPPC contained a
portion of the unlawfully disclosed document (DEX 19), and that his supplemental complaint
included that document in its entirety. PEX 13 at 9-18. But for the unlawful disclosure, NOM
would not have expended time and resources to prevent dissemination of its donor information
by the FPPC.
The Governments claim that Fred Karger did not need any of the information from the
2008 Schedule B to make his original complaint to the FPPC, SJ Mem. at 10, 31, is not only a
factual matter disputed by Mr. Kargers testimony (SoDF 28, 31-32, 35), it is also irrelevant.
NOMs damages related to Mr. Kargers complaint do not relate to the merits of that complaint,

22

but relate exclusively to efforts to prevent the FPPC from possessing and publicizing the very
document the Government concedes it is responsible for disclosing. See, e.g., PEX 13 at 43-44
(NOM demand letter to FPPC requesting destruction of the 2008 Schedule B attached to Mr.
Kargers complaint); PEX 13 at 45 (Letter of FPPC stating refusal to comply with NOMs
demand); PEX 13 at 48-49 (NOM letter to TIGTA requesting investigation of Mr. Karger and
FPPC related to possession and publication of 2008 Schedule B); DEX 20 (describing work on
correspondence with FPPC and lawsuit against FPPC related to possession and publication of
2008 Schedule B). But for the IRSs unlawful disclosure, Mr. Karger could not have attached
NOMs 2008 Schedule B (or portions thereof) to his FPPC complaint. It is thus a question of fact
whether the IRSs unlawful disclosure was the cause-in-fact of NOMs legal expenses incurred
in response to Mr. Kargers complaint.
C. The Proximate Cause of NOMs Actual Damages is a Question of Fact.

Proximate cause is a flexible concept, that generally refers to the basic requirement
that ... there must be some direct relation between the injury asserted and the injurious conduct
alleged. Paroline, 2014 U.S. LEXIS 2936 at *19 (quoting Bridge v. Phoenix Bond & Indemnity
Co., 553 U.S. 639, 654 (2008)) and CSX Transp., Inc. v. McBride, 131 S.Ct. 2630, 2645 (2011)
(Roberts, C.J ., dissenting). Proximate cause is often explicated in terms of foreseeability or the
scope of the risk created by the predicate conduct. Paroline, 2014 U.S. LEXIS 2936 at *19
(citations omitted). A requirement of proximate cause thus serves, inter alia, to preclude
liability in situations where the causal link between conduct and result is so attenuated that the
consequence is more aptly described as mere fortuity. Paroline, 2014 U.S. LEXIS 2936 at *20
(citing Exxon Co., U.S.A. v. Sofec, Inc., 517 U.S. 830, 838839 (1996)). Proximate cause,
requires that the plaintiff prove that his harm was a reasonable and probable [foreseeable]

23

consequence of the wrongful act; that is, the plaintiff must prove that, considering other
potential causes, it is sensible to impose liability upon the defendant. Jones, 9 F.Supp.2d at
1138 (quoting B.A.S.S., 92 F.3d at 611-12). On these issues, the cases on which the Government
relies not only do not support its position, but are clear authority to deny summary judgment.
The Governments reliance on Paroline is misplaced. Paroline merely held that the
federal statute providing for restitution to victims of child pornography was limited to harms
proximately caused by the defendants criminal conduct. The Paroline Court rejected the kind
of cramped reading of causation that the Government urges this Court to adopt: [C]ourts need
not read phrases like results from to require but-for causality where there is a textual or
contextual reason to conclude otherwise. Id. at *16 (quoting Burrage v. United States, 134
S.Ct. 881, 888 (2014)). It would be unacceptable, held the Court, to adopt a causal standard
so strict that it would undermine congressional intent where neither the plain text of the statute
nor legal tradition demands such an approach. Id. The Court then remanded to the lower court
to assess damages under its relaxed view of causation. Id. at *43-49.
Moreover, in arguing an intervening and superseding cause under Paroline, the
Government ignores relevant proximate causation issues, namely, whether the intervening
actions of third parties were a reasonable and probable [foreseeable] consequence of the
unauthorized disclosure, Jones, 9 F.Supp.2d at 1138 (quoting B.A.S.S., 92 F.3d at 61112), or
whether the proximate causation link is broken because the causal link between conduct and
result is so attenuated that the consequence is more aptly described as mere fortuity. Paroline,
2014 U.S. LEXIS 2936 at *19 (citing Exxon Co., U.S.A., 517 U.S. at 838839).
The harms for which NOM seeks damages were both foreseeable and within the scope
of the risk of the disclosure of NOMs confidential list of major donors. SoDF 7. Though the

24

IRC requires entities like NOM to annually make public its Form 990, Congress deliberately
exempted from disclosure the names and addresses of an organizations donors, 26 U.S.C.
6104(b), a fact every IRS agent is expected to know. Huckaby v. U.S. Dept of Treasury, IRS,
794 F.2d 1041, 1049 (5th Cir. 1986) (A reasonable IRS agent can be expected to know the
provisions of sections 6103 and 7431, as they may be further clarified by IRS regulations and
other IRS interpretations.). Congresss conscious choice demonstrates its understandingone
that is assumed by the IRS, id.that such information, if disclosed publicly, could expose an
organization and its donors to a multitude of harms.
Jones v. United States, 9 F.Supp.2d 1119, 1138 (D. Neb. 1998) supports NOMs position.
Jones, like this case, involved an unauthorized disclosure of tax return information to a third
party, who subsequently disclosed it further in ways that caused harm to the taxpayer. An IRS
agent alerted a confidential informant about an upcoming search warrant raid on a taxpayer that
was under investigation (concededly tax return information). The informant then notified the
media, which was out in full force for the execution of the warrant, causing significant harm to
the taxpayers reputation and business. Following a bench trial, id. at 1122 (emphasis added),
the court held that both elements of causation were met. The intervention by the third-party
informant and media notification did not prevent the court from finding causationeither but
for causation or proximate causation. On the latter point, the court held:
While Stennis [the IRS agent] might not have foreseen that Lucchino [the
confidential informant] would call McKnight [the media], Stennis (and a
reasonable agent in his position) would have foreseen that Lucchino might use the
disclosure to harm J ones and that is all the element of proximate cause requires.
As our Court of Appeals has made clear, the law does not require precision in
foreseeing the exact hazard or consequence which in fact transpires; it is
sufficient if what occurred was one of the kind of consequences which might
reasonably be foreseen.

Id. at 1144 (quoting Griggs v. Firestone Tire & Rubber Co., 513 F.2d 851, 861 (8th Cir. 1975)).

25

Jones not only illustrates that proximate cause is an issue of fact best suited for trial, but
also that misuse of taxpayer information by third parties is one of the kind of consequences of
unauthorized disclosure which might reasonably be foreseen by a reasonable an IRS agent. Id.
The IRS admits it disclosed the unredacted 2008 Schedule B to Mr. Meisel. (Answer
78.) Mr. Meisel represented himself to the IRS to be a member of the media. (SJ Mem. at 4, 1-
2.) The IRS also understood Mr Meisel to be an Internet blogger. SoDF 7. It is clearly a
question of fact whether it was foreseeable to the IRS that Mr Meisel would republish the return
information in the media. Jones, 9 F.Supp.2d at 1144.
It is also a question of fact whether it was foreseeable that NOM would utilize
whatever avenues were available to it to identify the source of the leaked information and
prevent further disclosures and resulting harmsfrom requesting an investigation by TIGTA and
the DOJ , to filing FOIA and Privacy Act requests, to providing testimony to Congress whose
committees were in the midst of investigating IRS misconduct. Indeed, the Internal Revenue
Codes imposition of severe penalties for unauthorized disclosure demonstrates the IRSs
recognition of the serious harms caused by unauthorized disclosure. See, e.g., 26 U.S.C. 7431.
It is certainly foreseeable to the Government that an organization would take whatever steps it
thought necessary to prevent further harm to itself.
It is likewise a question of fact whether it was foreseeable that HRC, Huffington Post,
Fred Karger and NOMs other political enemies would further publish or use NOMs
confidential donor information in ways harmful to NOM. The Government takes the untenable
position that it is not responsible, as a matter of law, for any subsequent misuse of confidential
taxpayer information that the IRS has illegally inserted into the public sphere. (SJ Mem. at 26-
27.) Unwarranted publicity and abuse of tax information is precisely the harm 26 U.S.C. 6103

26

is designed to prevent. Congress feared the publics confidence in the privacy of returns filed
with IRS would suffer if sufficient safeguards were not in place to remedy the harms caused by
public disclosure. Stokwitz v. United States, 831 F.2d 893, 894 (9th Cir. 1987) (citing 122 Cong.
Rec. 24013 (1976) (remarks of Sen. Weicker)). The Governments position is manifestly
inconsistent. The independent actions of Mr. Meisel, HRC, and others do not immunize the IRS
from responsibility here (particularly when it was clear to the IRS that subsequent publication
was likely), and neither does NOMs entirely predictable efforts to get to the bottom of the
conduct against it, the Governments blame the victim assertion notwithstanding.
5

D. The Governments Mitigation Argument is Misplaced both Legally and
Factually.

i. The Cases Cited by the Government Are Not Authority for an Off-set
of Damages.

The cases on which the Government relies do not support its argument that NOMs
damages are subject to mitigation or an off-set against donations. Kittrell v. RRR, L.L.C., 280 F.
Supp. 2d 517, 523 (E.D. Va. 2003), involved a claim for actual damages caused by violations of
the Truth in Lending Act made in a lease executed by a car dealer. The court merely held that the
Plaintiff/lessee could not recover the full amount of her actual damages from both the original

5
The Government also makes two other arguments by way of footnotes that are unsupported by
any authority. First, Mr. Meisel potentially committing a felony (SJ Mem. at 27 n.11) does not
break the causal chain of damages if his actions were reasonably foreseeable. Jones, 9 F.Supp.2d
at 1144. Second, the Government cites no authority for its claim that the permissive FOIA
attorneys fees provision in Section 552(a)(4)(E) is exclusive, or that legal expenses incurred
with regard to NOMs FOIA and the Privacy Act requests are not recoverable as actual
damages. See Hrubec v. National R.R. Passenger Corp., 829 F. Supp. 1502, 1504 (N.D. Ill.
1993) (Section 7431(c) clearly allows recovery of all actual damages); Jones, 9 F.Supp.2d at
1149 (Linguistically, there is no limitation on the reach of actual damages, so long as that
damage is something that . . . exists in fact).

27

car dealer/lessor and the creditor to which the lease was assigned. Id. Kittrell is thus a joint
tortfeasor case not applicable to the present circumstances.
Johnson v. Sawyer, 120 F.3d 1307 (5th Cir. 1997), is also a joint tortfeasor case. Under
Section 7217 (the prior version of Section 7431), unauthorized disclosure suits for civil damages
could be brought not against the United States exclusively, but against any and all of the IRS
employees responsible, in part, for the disclosure. The Fifth Circuit upheld the reading of the
statute that each of those employees could be liable. The court did not address whether that
would lead to multiple awards of the same actual damages, or whether a full award of actual
damages against one of the IRS violators could be mitigated by awards against other IRS
violators. On remand, the court was instructed to consider whether SEC rules would have
required disclosure of the same information that the IRS had improperly disclosed, resulting in
the same loss-of-executive-position the taxpayer suffered, thus mitigating against the claim
that the damages resulted from the IRS disclosure. Because Sawyers use of the word
mitigating has nothing to do with the offset the Government claims here, that case provides no
support for the Governments argument.
ii. The Collateral Source Doctrine Precludes a Mitigation Argument.
The Government cannot sufficiently demonstrate that NOMs donors were motivated by
a desire to mitigate against the harm caused by the Governments unlawful disclosure. But even
if that showing could be made, the Collateral Source Rule would doom the Governments
argument. Under this doctrine, when the victim of a tort receives payment for his injuries from a
collateral source, that is, a source independent of the tortfeasor, the payment should not be
deducted from the damages owed by the tortfeasor. Szedlock v. Tenet, 139 F.Supp.2d 725, 736
(E.D. Va. 2001), affd, 61 F. Appx 88 (4th Cir. 2003) (internal citations omitted); Sloas, 616

28

F.3d at 389 (quoting United States v. Price, 288 F.2d 448, 44950 (4th Cir.1961)). The
doctrines underlying rationale is that a third-party who intends to benefit the injured party
should not be compelled to benefit the injurer instead. Id. (citing Hunter v. AllisChalmers
Corp., Engine Div., 797 F.2d 1417, 1429 (7th Cir. 1986); see also Diviney v. Vantrease, 2012
U.S. Dist. LEXIS 153159, 20 (N.D. W. Va. Oct. 24, 2012) (holding that charitable donations to a
fund set up to pay an assault victims medical expenses are a collateral source and that evidence
of such is inadmissible in the victims suit against the assailant for damages). In short, NOMs
donors made not be made to benefit the IRS.
[W]hether a source is collateral depends upon the purpose and nature of the fund, and
not merely their source. Chisholm v. UHP Projects, Inc., 205 F.3d 731, 744 (4th Cir. 2000).
NOM has consistently maintained that the donations it received in response to its ongoing
fundraising program were for its general mission, not because of the IRS disclosure, but even if
some of those donations were for the purpose of assisting NOM in its efforts to deal with the
IRS disclosure, using such donations to offset the damages NOM suffered because of the illegal
disclosure is barred by the Collateral Source Doctrine.
6

iii. Further, Whether NOMs Donations Were Made As a Result of the
Unlawful Disclosure Is a Question of Fact.
Even assuming that an offset argument was legally viable, there is a factual dispute
whether the contributions were even caused by the illegal disclosure, or to what extent. The

6
The Governments reliance on a treatise is misplaced. (SJ Mem. at 29 (quoting 22 Am. J ur. 2d
Damages 27, 32, 137).) The principles in that treatise apply if the benefit was conferred by
the tortfeasor; benefits received from third parties are governed by the collateral source rule. 22
Am. J ur. 2d 397, Observations (citing 22 Am. J ur. 2d 405 et seq.). Specifically, a payment
made to an injured party as compensation for injuries from a source wholly independent of the
tortfeasor should not be deducted from the damages that the plaintiff would otherwise collect
from the tortfeasor. Id. 405 (citing numerous cases).

29

Governments contention that NOM successfully raised more as a result of the disclosure than
it claims to have lost in actual damages is misplaced. (SJ Mem. at 28 (emphasis added).)

The
Government asserts that to survive summary judgment, NOM bears the burden of disproving
that [the ongoing] donations [NOM received after the disclosure] were as a result of the
disclosure or its lawsuit against the United States. (Id. at 29 n.14.) The Government is wrong.
The defendant bears the burden of demonstrating that it is entitled to an offset. Hylind v. Xerox
Corp., 481 Fed. Appx. 819, 824 (4th Cir. 2012) (citing Sloas v. CSX Transp. Inc., 616 F.3d 380,
389 (4th Cir. 2010)). The Government, as the party seeking summary judgment, also bears an
initial burden of demonstrating the absence of a genuine issue of material fact. Bouchat v. Balt.
Ravens Football Club, 346 F.3d 514, 522 (4th Cir. 2003). The Government has failed in this
regard. The Government asks this Court to simply determine, as an undisputed factual matter,
that every single donation NOM received after the disclosure occurred was as a result of the
disclosure. The record reflects that NOM acknowledged that it received at least $75,000 in
aggregate donations from donors who had never donated to NOM before March 30, 2012 and
that it had received additional contributions of at least $75,000 from donors who had previously
donated to NOM but did so after March 30, 2012 in a dollar amount greater that (sic) they had
in any prior calendar year. (DEX 23 at Resp. to RFA 30-31.) NOM also acknowledged that it
received at least $46,086.37 from solicitations that merely referenced the disclosure or the
lawsuit to varying degrees, among several other topics. (DEX 23 at Resp. to RFA 18.) These
acknowledgements are outcome neutral and do not suggest a causal link between the disclosure
and the donation.
7
Moreover, though the Government uses Section 7431s as a result language,

7
Nor does the fact that NOM raised more in 2012 than it did in 2011 suggest a causal link to the
disclosure, Def. SoF 46, Especially in light of record evidence that NOM raised less in 2013


30

the Government employs a causation standard that is radically looser than the one it believes
Section 7431 places on NOM to prove its own damages. The Government cannot have it both
ways. J ust as there are questions of fact as to the caution of NOMs damages, there are questions
of fact as to the cause of NOMs donations.
NOMs 30(b)(6) representative clearly testified that it will not accept any designated
gifts PEX 14 at 11 (156:5-6), and can[not] determine why people give or what the motivation
is behind any particular donation, PEX 14 at 6 (144:17-19). There is no support in the record
that demonstrates the only reason donors made contributions were a result of the unauthorized
disclosure. At trial, the Government must prove causation consistent with the same standard that
NOM must prove its damages.
CONCLUSION
For the foregoing reasons, including the material facts in dispute, the Governments
Motion should be denied in its entirety.

than 2012. DEX 1 at Resp. to RFA 14.

31

Respectfully submitted this 13th day of May, 2014.

_/s/_______________________
J ason Torchinsky (Va. 47481)
Shawn Toomey Sheehy (Va. 82630)
Holtzman Vogel J osefiak, PLLC
45 North Hill Drive, Suite 100
Warrenton, VA 20186
(540) 341-8808 (telephone)
(540) 341-8809 (fax)
jtorchinsky@hvjlaw.com
ssheehy@hvjlaw.com
Counsel for Plaintiff

J ohn C. Eastman (Cal. 193726)*
Anthony T. Caso (Cal. 88561)*
Center for Constitutional J urisprudence
c/o Chapman University School of Law
One University Drive
Orange, CA 92866
(877) 855-3330 x2 (telephone)
(714) 844-4817 (fax)
jeastman@chapman.edu
caso@chapman.edu
Cleta Mitchell, of counsel
(D.C. 433386)*
William E. Davis, of counsel
(D.C. 280057)*
Mathew D. Gutierrez, of counsel
(Fla. 0094014)*
Kaylan L. Phillips (Ind. 30405-84)*
Noel H. J ohnson (Wisc. 1068004)*
ACTRIGHT LEGAL FOUNDATION
209 West Main Street
Plainfield, IN 46168
(317) 203-5599 (telephone)
(888) 815-5641 (fax)
cmitchell@foley.com
wdavis@foley.com
mgutierrez@foley.com
kphillips@actrightlegal.org
njohnson@actrightlegal.org

* Admitted Pro Hac Vice


32

Certificate of Service

I hereby certify that on May 13, 2014, I filed the foregoing Plaintiff National
Organization for Marriage, Incs Response to Governments Motion for Summary J udgment via
ECF which notified the following counsel of record:

UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICE
Philip M. Schreiber (D.C. 502714)*
Benjamin L. Tompkins (D.C. 474906)*
Christopher D. Belen (Va. 78281)
Trial Attorneys, Tax Division
U.S. Department of J ustice
Post Office Box 14198
Ben Franklin Station
Washington, DC 20044
(202) 514-6069 (Mr. Schreiber)
(202) 514-5885 (Mr. Tompkins)
(202) 307-2089 (Mr. Belen)
Fax: 202-514-9868
philip.m.schreiber@usdoj.gov
benjamin.l.tompkins@usdoj.gov
christopher.d.belen@usdoj.gov

Dana J . Boente
Acting United States Attorney
David Moskowitz
Assistant U.S. Attorney
2100 J amieson Avenue
Alexandria, Virginia 22314
Telephone: (703) 299-3845
Fax: (703) 299-3983
david.moskowitz@usdoj.gov

*Admitted Pro Hac Vice

__/s/_______________________
J ason Torchinsky (Va. 47481)
Shawn Toomey Sheehy (Va. 82630)
Holtzman Vogel J osefiak, PLLC
45 North Hill Drive, Suite 100
Warrenton, VA 20186
(540) 341-8808 (telephone)
(540) 341-8809 (fax)
jtorchinsky@hvjlaw.com
ssheehy@hvjlaw.com

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UNITED STATES DISTRICT COURT

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