CHURCH OF SCIENTOLOGY OF CALIFORNIA, PETITIONER V. INTERNAL REVENUE SERVICE No. 86-472 In The Supreme Court Of The United States October Term, 1986 On Petition For A Write Of Certiorari To The United States Court Of Appeals For The District Of Columbia Circuit Brief For The Respondent TABLE OF CONTENTS Opinions below Jurisdiction Question presented Statement Discussion Conclusion OPINIONS BELOW The opinion of the court of appeals panel (Pet. App. 24a-37a) is reported at 792 F.2d 146. The opinion of the court of appeals en banc, as amended (Pet. App. 38a-93a) is reported at 792 F.2d 153. The order amending the en banc opinion (Pet. App. 90a-93a) is unreported. The opinion of the district court (Pet. App. 1a-14a) is reported at 569 F. Supp. 1165. JURISDICTION The judgment of the court of appeals was entered on May 27, 1986. On August 12, 1986, Justice White extended the time within which to file a petition for a writ of certiorari to and including September 23, 1986, and the petition was filed on that date. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Section 6103 of the Internal Revenue Code prohibits the IRS from disclosing tax "return information," but defines that term to exclude "data in a form which cannot be associated with or otherwise identify, directly or indirectly, a particular taxpayer." The question presented is whether this definition makes disclosable all material that, either in its original or redacted version, does not disclose the identity of the taxpayer to which it pertains, or whether, as the court of appeals held, the definition makes disclosable only material that has been reformulated into a form (such as a statistical tabulation) that cannot be associated with a particular taxpayer. STATEMENT 1. On May 16, 1980, petitioner filed a Freedom of Information Act (FOIA) request with the Internal Revenue Service (IRS). The request sought various types and categories of information pertaining to certain designated taxpayers, including documents related to a pending Tax Court case. /1/ In a response dated July 22, 1980, the IRS requested additional time to locate and consider releasing the records requested by petitioner (C.A. App. 20; Pet. App. 26a). On September 17, 1980, treating the failure of the IRS to respond by that time as a denial, petitioner filed an appeal to the Commissioner. The IRS acknowledged the appeal, but did not immediately respond to it. Pet. App. 1a-2a. /2/ On December 18, 1980, petitioner brought this suit in the United States District Court for the District of Columbia to compel the IRS to release the requested documents. On June 24, 1983, the district court, after an in camera review of the documents, granted summary judgment in favor of the IRS (Pet. App. 1a-14a). The court held: (1) that the IRS had correctly determined that the withheld documents constituted "return information" within the meaning of Section 6103(b)(2) of the Internal Revenue Code, /3/ the disclosure of which "would seriously impair federal tax administration" (Pet. App. 6a-8a); (2) that the IRS had correctly limited its search to records of petitioner itself, because none of the other taxpayers named in petitioner's FOIA request had submitted the requisite authorizations for disclosure of their records (id. at 10a-12a); and (3) that the IRS was not obliged to search all of its field offices for responsive documents because petitioner filed its request only with the National Office, not with each field office as the Treasury Regulations require (id. at 12a-13a). Petitioner appealed, challenging, inter alia, the district court's conclusion that the withheld documents reflected non-disclosable "return information" of third parties. Section 6103(a) of the Code generally provides that "(r)eturns and return information shall be confidential" and shall not be disclosed by the IRS in any manner. Section 6103(b)(2) exhaustively defines "return information" to include "a taxpayer's identity, the nature, source, or amount of his income, * * * whether (his) return was, is being, or will be examined * * *, or any other data * * * prepared by * * * or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability * * * of any person * * * for any tax." Section 6103(b)(2) goes on to provide, however, in what has come to be known as the "Haskell Amendment" (Pet. App. 43a), that "such term (viz., 'return information') does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." In challenging the district court's holding, petitioner relied on the interpretation given to the Haskell Amendment by the courts in Neufeld v. IRS, 646 F.2d 661 (D.C. Cir. 1981), and Long v. IRS, 596 F.2d 362 (9th Cir. 1979), cert. denied, 446 U.S. 917 (1980). Those courts interpreted the Haskell Amendment to remove from that the defined category of protected information all material that, either in its original or its redacted verson, does not disclose the identity of the taxpayer to which it pertains; those courts rejected the government's contention, subsequently accepted by the Seventh Circuit in King v. IRS, 688 F.2d 488 (1982), that the Haskell Amendment presupposes, besides the fact of nonidentification, some alteration by the IRS of the form of the information. After the case had been briefed and argued, the panel entered an order stating that the full court had decided to consider en banc the following question, as to which supplemental briefing was requested (Pet. App. 15a): Should the Court adhere to the interpretation of 26 U.S.C. Section 6103(b)(2) adopted by the panel opinion in Neufeld v. IRS, 646 F.2d 661, 665 (D.C. 1981), or should it adopt a different interpretation, in particular that announced by the Seventh Circuit in King v. IRS, 688 F.2d 488, 490-94 (7th Cir. 1982)? 2. On May 27, 1986, the en banc court issued an opinion addressing the question on which it had directed supplemental briefing, i.e., the meaning of the Haskell Amendment (Pet. App. 38a-89a). /4/ On the same day, the panel issued an opinion addressing the other issues presented in the case, applying the holding of the en banc court to the facts of the case, and vacating and remanding the case to the district court for further proceedings (id. at 24a-37a). The en banc court held that the Haskell Amendment created a limited exception to the general disclosure bar of Section 6103(a) that does not extend to "all nonidentifying data" (Pet. App. 50a (emphasis in original)), thereby explicitly rejecting its prior decision in Neufeld v. IRS and the holding of the Ninth Circuit in Long v. IRS. Rather, the court concluded, in order for data to become eligible for disclosure under the Haskell Amendment, the statute "requires -- in addition to the fact of nonidentification -- some alteration by the government of the form in which the return information was originally recorded" (Pet. App. 56a). The court stated that this "reformulation will typically consist of statistical tabulation or of some other form of combination with other data so as to produce a unitary product that disguises the origin of its components" (ibid.). The court noted its disagreement, however, with the government's submission and the Seventh Circuit's statement in King that such a reformulation would necessarily be limited to a statistical tabulation (id. at 55a-56a, citing King, 688 F.2d at 493). The court explained that both the detailed definition of "return information" set forth in Section 6103(b)(2)(A) and the numerous exclusions set forth in Section 6110(incorporated by reference in Section 6103(b)(2)(B)) are at odds with petitioner's contention that the mere excision of identifying data suffices to take material out of the category of "return information" (Pet. App. 43a-45a). The court also noted that the language of the Haskell Amendment itself cannot be squared with petitioner's interpretation because the text focuses on the form in which the material is found (id. at 45a). Finally, the court noted that the fact that the Haskell Amendment was adopted at the last minute without discussion other than the comment that it "might not be entirely necessary" (122 Cong. Rec. 24012 (1976)) strongly militated against the notion, implicit in petitioner's argument, that the Amendment wrought a "fundamental change" in the statutory scheme (Pet. App. 49a-50a). The court concluded that an interpretation of the Haskell Amendment that limits its application to material reformulated by the IRS so that it cannot be associated with a particular taxpayer "is the meaning most faithful to the text, most compatible with the remainder of the legislation, and most supportable by a plausible legislative intent" (id. at 57a). Judge Silberman filed an opinion concurring in part. He expressed the view that, because of the deference due the IRS's statutory interpretation, he would agree with the Seventh Circuit's position that the Haskell Amendment exception is limited to "statistical tabulations" (Pet. App. 58a-75a). Three judges dissented from the en banc opinion, agreeing with petitioner that the reduction of identifying information should suffice to bring material within the ambit of the Haskell Amendment (id. at 76a-89a). /5/ DISCUSSION Petitioner contends that the en Banc court of appeals erred in holding that the exception created by the Haskell Amendment is limited to return information that has been reformulated by the IRS into a form that cannot be associated with a particular taxpayer. Rather, petitioner contends that the Haskell Amendment requires the disclosure of any and all return information once it is redacted to remove identifying data. We believe that the court of appeals correctly rejected petitioner's contention. We do not oppose certiorari, however, because the petition presents a question of substantial importance on which there is a clear conflict in the courts of appeals. In Long v. IRS, the Ninth Circuit held that the Haskell Amendment makes disclosable all material that would otherwise constitute "return information," but from which identifying details have been deleted. See 596 F.2d at 376-369. The decision below is inconsistent with the holding of Long, and the opinion of the en banc majority explicity rejects that decision (see Pet. App. 43a-50a). This issue has also been litigated in other circuits with disparate results. The Seventh Circuit's decision in King v. IRS anticipated the decision below in rejecting Long, but it holds that "the Haskell Amendment provides only for the disclosure of statistical tabulations which are not associated with or do not identify particular taxpayers" (688 F.2d at 493). The majority below explicitly rejected that interpretation as unduly narrow (Pet. App. 55a-56a). See also Currie v. IRS, 704 F.2d 523, 532 (11th Cir. 1983) (following King). We agree with petitioner (Pet. 14) that this conflict concerns an important question of tax administration. The IRS in a typical year receives about 13,000 FOIA requests, and the absence of clear and uniform guidelines for processing these requests creates a substantial burden on the agency. More importantly, the question presented involves the sensitive matter of taxpayer privacy; the expansive reading of the Haskell Amendment adopted by the Ninth Circuit threatens the exposure of information that Congress sought to preserve as confidential (see Pet. App. 46a-47a). Given the divergent views already expressed on this issue in various circuits, it appears unlikely that any uniform guidelines for administering FOIA requests for "return information" can emerge without intervention by this Court. And the persistence of such divergent views among the circuits is a particularly severe problem in FOIA cases because of the various venues in which a requestor can sue to seek to challenge the denial of his request -- his place of residence, the situs of of the records, or the District of Columbia. Accordingly, we do not oppose the issuance of a writ of certiorari to resolve the conflict in the circuits. /6/ CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Solicitor General ROGER M. OLSEN Assistant Attorney General JONATHAN S. COHEN MURRAY S. HORWITZ Attorneys DECEMBER 1986 /1/ Specifically, the FOIA request sought "(c)opies of all records, correspondence or any form of information relating to and that might be characterized by the names Scientology, Church of Scientology, Hubbard, Dianetics, L. Ron Hubbard, Mary Sue Hubbard, located in the offices or personal areas of (specified) Internal Revenue officials," as well as "(c)opies of all information relating to or containing the names of Scientology, Church of Scientology, any specific Scientology Church or entity identified by (or) containing the words Scientology, Hubbard and/or Dianetics in their names, L. Ron Hubbard or Mary Sue Hubbard in the form of a written record, correspondence, document, memorandum, form, computor (sic) tapes, computor (sic) program or microfilm; which is contained in the following systems of records, including but not limited to those located at the National office, Regional offices, Service Centers, District offices or local IRS offices" (four-page list identifying IRS record systems omitted) (C.A. App. 12-13; Pet. App. 2a). /2/ The IRS filed a response to the administrative appeal in January 1981 in which it stated that it had limited its search to records of petitioner itself because the FOIA request did not contain authorization to disclose information pertaining to any of the other taxpayers named therein. The search was limited geographically to the IRS National Office in Washington and to field offices in Los Angeles and in Covington, Kentucky. The response also stated that all the requested documents relating to a pending Tax Court case that had not previously been released were exempt from disclosure under 26 U.S.C. 6103(e)(7) because disclosure would seriously impair federal tax administration. The IRS further explained that it was releasing in full some documents acquired subsequent to the preparation of an index in connection with the Tax Court case but that it was withholding in part "other National Office documents on (the) grounds that they were outside the scope of the appeal, that their disclosure would cause a clearly unwarranted invasion of privacy, see 5 U.S.C. Section 552(b)(6), or that they reflected return information of third parties, see 26 U.S.C. Section 6103(a)." Pet. App. 26a-27a. /3/ Unless otherwise noted, all statutory references are to the Internal Revenue Code (26 U.S.C.), as amended (the Code or I.R.C.). /4/ That opinion was subsequently amended by an order filed July 11, 1986 (Pet. App. 90a-93a). /5/ The panel opinion resolved a number of other issues, some favorably to petitioner and others favorably to the government. The panel held that the disclosure provisions of Section 6103 do not supersede the FOIA, but rather qualify as a statute restricting disclosure within the ambit of FOIA Exemption 3 (Pet. App. 27a-30a). The panel sustained the IRS's geographical restriction on its search (id. at 30a-31a), but held that the district court "erred in accepting the IRS's blanket assertion that all information responsive to (petitioner's) request in files not relating to (petitioner) was exempt from disclosure" (id. at 34a). The panel remanded the case for further proceedings in which the IRS would be required, by means of affidavits and (where necessary) indices, to justify its assertion that all third-party information requested by petitioner is not disclosable (id. at 31a-37a). Petitioner has not sought review of the panel's judgment insofar as that judgment was unfavorable to it, and we have not filed a cross-petition challenging that judgment insofar as it was unfavorable to the government. /6/ In our view, it is appropriate for the Court to grant certiorari now even though the case has been remanded to the district court for further consideration as to whether certain documents should be withheld and for the submission by the IRS of more detailed justification for withholding documents. The proceedings on remand, in particular the submission of affidavits and indices by the IRS to justify the failure to disclose documents, are largely directed to the determination whether certain documents constitute "return information" within the meaning of Section 6103 as interpreted by the court of appeals en banc. The remand proceedings would be conducted quite differently if the majority's interpretation of the Haskell Amendment were reversed by this Court. At the same time, there is no likelihood that the proceedings on remand will eliminate the basic dispute between the parties as to the meaning of the Haskell Amendment. Thus, considerations of judicial economy militate in favor of granting certiorari at this point in the litigation rather than waiting until after the proceedings on remand are concluded.