Baldwin v.United States

108 A.F.T.R.2d 2011-6574

823 F.Supp.2d 1087

John K. BALDWIN, Plaintiff,

v.UNITED STATES of America, Defendant.

Civil Action No. 09–0033.

District Court for the Northern Mariana Islands.

Sept. 26, 2011.

Daniel Cade Stafford, Bridge Capital, LLC, Deborah Deitsch–Perez, Lackey Hershman, Dallas, TX, Gregory G. Koebel, David G. Banes, O'Connor Berman Dotts & Banes, Saipan, MP, for Plaintiff.

Jeremy N. Hendon, Lauren M. Castaldi, United States Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING PLAINTIFF'S MOTION FOR RECONSIDERATION OF THE COURT'S JANUARY 22, 2010, ORDER STRIKING BOTH OF PLAINTIFF'S JURY DEMANDS AND MOTION UNDER RULE 6(b) TO ALLOW LATE JURY DEMAND

MARK W. BENNETT, District Judge.

Taxation without representation is tyranny.

—James Otis, Jr.

Taxation with representation ain't so hot either.

—Gerald Barzan

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¦TABLE OF CONTENTS¦
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I.  INTRODUCTION                                                        1092

    A.   Factual Background                                             1093
    B.   Procedural Background                                          1093

         1.  The Government's original Motion To Strike                 1094
         2.  Chief Judge Munson's Order                                 1095
         3.  Baldwin's Mandamus Efforts                                 1096
         4.  Baldwin's Motion To Reconsider                             1096

II. ANALYSIS                                                            1097

    A.   Standard Of Review For Motions To Reconsider                   1097

         1.  Reconsideration of an interlocutory order                  1098
         2.  Reconsideration of the interlocutory order of another      1099
             judge

    B.   Jury Demand A                                                  1105

         1.  Chief Judge Munson's Order                                 1105
         2.  Arguments by the parties                                   1105
         3.  Analysis                                                   1106

    C.   Jury Demand B                                                  1111

         1.  Chief Judge Munson's Order                                 1111
         2.  Arguments by the parties                                   1111
         3.  Analysis                                                   1111

             a.  Federal Rule of Civil Procedure 39(b)                  1111
             b.  Federal Rule of Civil Procedure 6(b)                   1113

III. CONCLUSION                                                         1119

The jury system is the handmaid of freedom. It catches and takes on the spirit of liberty, and grows and expands with the progress of constitutional government. Rome, Sparta and Carthage fell because they did not know it, let not England and America fall because they threw it away.¹

—Charles S. May

I. INTRODUCTION

Arising out of a tax dispute between a citizen and the United States of America, this case raises several probing, esoteric, and murky procedural questions concerning a highly unusual way to obtain the “handmaid of freedom”—a demand for a jury trial—by the citizen. Before addressing whether the jury demand here was proper, however, I must unravel the Gordian Knot ² of the appropriate standard of review for one district court judge reconsidering another's denial of the right to trial by jury—an issue the parties have fuddled.

John K. Baldwin (Baldwin) has filed suit against the United States of America (the Government), seeking a refund under 26 U.S.C. § 7422 of allegedly illegal and erroneous taxes, penalties, and interest. A bench trial is set to proceed in this case in May 2012. Before me at this time is Baldwin's Motion For Reconsideration Of The Court's January 22, 2010, Order Striking Both Of Plaintiff's Jury Demands And Motion Under Rule 6(b) To Allow Late Jury Demand (Baldwin's Motion To Reconsider). (docket no. 70.) Baldwin urges me to reconsider the Order Granting Defendant's Motion To Strike Jury Demand (Strike Order) (docket no. 37), issued by since retired Chief Judge Alex R. Munson. I heard oral arguments on Baldwin's Motion To Reconsider on August 18, 2011.

A. Factual Background

The following is a brief summary of the relevant facts that gave rise to this case, as outlined in the parties' pleadings. The Internal Revenue Service (IRS) audited Baldwin for tax year 2002 and ultimately assessed taxes, interest, and penalties against him in the sum of $5,080,000.49. See Complaint ¶ 19 (docket no. 1); Answer ¶ 19 (docket no. 5). Baldwin asserts that the IRS erroneously and illegally assessed these taxes, interest, and penalties. Complaint ¶ 20. In February 2009, Baldwin paid the $5,080,000.49 assessment to the U.S. Department of Justice. Complaint ¶ 21; Answer ¶ 21. Baldwin also filed a Claim for Refund with the IRS in February 2009 for tax year 2002. Complaint ¶ 23; Answer ¶ 23. The IRS did not take action in response to the Claim for Refund within six months, see Complaint ¶ 25; Answer ¶ 25, and Baldwin subsequently filed suit.³

B. Procedural Background

On August 27, 2009, Baldwin filed a complaint with this court,⁴ seeking to recover the $5,080,000.49 assessed against him. Complaint ¶¶ 25, 27. On October 23, 2009, the Government filed its answer, denying that the IRS improperly collected the assessment against Baldwin. Answer ¶ 22. Neither Baldwin's complaint nor the Government's answer contained a demand for a jury trial. Baldwin asserts that “the jury demand intended (and believed) to be in the complaint had inadvertently been dropped in the editing process without anyone noticing.” Baldwin's Motion To Reconsider at 2:10–12 (docket no. 70).

In the days that followed the Government's answer, the parties attempted to agree on a joint draft case management plan. Pursuant to Federal Rule of Civil Procedure 26(f), counsel conferred by phone on November 4, 2009, but their disagreement on the jury trial issue did not surface at that time. See Strike Order at 2:11–14 (docket no. 37). On November 5, 2009, Government counsel e-mailed a draft case management plan to Baldwin's counsel, which indicated that the case would be tried to the court. Id. at 2:12–17. On November 9, 2009, Baldwin's counsel e-mailed to Government counsel a competing draft—a redlined version of the Government's plan. See id. at 2:17–21; Baldwin's Redlined Case Management Plan (docket no. 18). Among other changes, Baldwin struck out the Government's plain text “This is a trial before the Court; no jury,” and replaced it with the emboldened text “This is a jury case.” ⁵ See Baldwin's Redlined Case Management Plan at 4:11.

Unable to agree on a joint case management plan, each party filed its own proposed case management plan on November 11, 2009. See Strike Order at 2:22–24. The Government indicated that Baldwin had not timely requested a jury trial. See Government's Case Management Conference Statement at ¶ P (docket no. 15). Baldwin asserted that he was entitled to a jury trial but recognized that the Government might disagree. See Baldwin's Case Management Conference Statement at ¶ P (docket no. 17).

That same day, Baldwin served and filed a free-standing “Demand for Jury Trial” (docket no. 16).⁶ See Baldwin's Motion to Reconsider at 7:8–10 (docket no. 70); Government's Response at 2:6–9 (docket no. 74). Several days later, on November 14, 2009, Baldwin filed a Certificate Of Service Of Draft Case Management Plan Containing Jury Demand and attached his Redlined Case Management Statement (docket no. 18). In this Certificate Of Service, Baldwin indicated that he had “served” the Redlined Case Management Plan when his counsel e-mailed it to Government counsel on November 9, 2009. Id. at 1:18.⁷

1. The Government's original Motion To Strike

On December 19, 2009, the Government moved to strike Baldwin's jury demands. (docket no. 22.) The Government, though not disputing that Baldwin would otherwise be entitled to a jury trial, argued that Baldwin had failed to make a proper written demand for a jury trial within ten days after the Government's answer, as then required by Federal Rule of Civil Procedure 38(b). The Government first contended that Demand A, Baldwin's Redlined Case Management Statement that stated, “This is a jury case,” was not a proper jury demand because it did not constitute a document that could be “served” or “filed” on an opposing party in satisfaction of Rule 38(b). Second, the Government argued that the court should reject Baldwin's Demand B, his free-standing Demand For Jury Trial, as untimely. Finally, the Government asserted that the court should not order a jury trial under Federal Rule of Civil Procedure 39(b), which grants district courts discretion to order a jury trial in spite of a party's failure to make a proper demand. The Government reasoned that because Baldwin's failure was due to his counsel's oversight or inadvertence, this court could not order a jury trial, based on the Ninth Circuit Court of Appeals's narrow interpretation of Rule 39(b) to deny relief where a party's failure is due to oversight or inadvertence.

On December 23, 2009, Baldwin filed his Opposition To United States' Motion To Strike Plaintiff's Timely Jury Demand And, In The Alternative, To Allow Plaintiff's Supplemental Jury Demand. (docket no. 24.) Baldwin argued that Demand A(1) was in proper form, and hence able to be “served” and “filed” because it was in writing and placed the Government on notice that a jury trial was sought, and (2) was timely and effectively served because it was e-mailed within ten days of the Government's answer to defense counsel, who had signed up for e-filing and thereby consented to service by electronic means. In the alternative, Baldwin contended that the court should exercise its discretion either under Rule 39(b) to order a jury trial or under Rule 6(b) to extend the deadline for...