Bucholz v. Mnuchin

JAMES S. BUCHOLZ, Plaintiff, v. STEVEN T. MNUCHIN., et al., Defendants.

Civil Action No. 19-1730 (ABJ)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

September 10, 2020

MEMORANDUM OPINION

Pro se plaintiff James S. Bucholz has brought this action against defendants Steven. T. Mnuchin, in his official capacity at Secretary of the United States Department of Treasury; Charles Rettig, in his official capacity as Commissioner of the United States Internal Revenue Service ("IRS"); Tonya R. Williams-Wallace and Darryl J. Jenkins, two employees of the IRS who are sued in their personal capacities; the Department of Treasury itself; the IRS; and the United States. See generally Compl. [Dkt. # 1]. He alleges that Affordable Care Act ("ACA") Shared Responsibility Payment penalties assessed against him by the IRS violated his Fifth Amendment rights because that portion of the ACA is unconstitutional. Compl. ¶¶ 50-51, 53. He seeks a refund of the penalties he was charged for tax years 2016-2018 as well as compensatory damages. Compl. at 11.

Pending before the Court is defendants' motion to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Defs.' Mot. to Dismiss [Dkt. # 9] ("Defs.' Mot."); Defs.' Mem. in Supp. of United States' Mot. [Dkt. # 9-1] ("Defs.' Mem."). Because the Shared Responsibility Payment has been upheld as constitutional by the Supreme Court and the complaint fails to adequately allege that defendants violated plaintiff's Fifth Amendment rights, the Court will grant the motion to dismiss for failure to state a claim. Plaintiff's claims for refunds related to payments made in tax years 2017 and 2018 fail for lack of subject matter jurisdiction.

BACKGROUND

The Affordable Care Act was signed into law on March 23, 2010, and it went into effect on January 1, 2014. Compl. ¶ 14. Among other provisions, the Act created a tax penalty - commonly called the "Shared Responsibility Payment" or "Individual Mandate" - for citizens who are not covered by healthcare insurance. See Compl. ¶ 1-2. The statute requires that "[a]n applicable individual shall for each month . . . ensure that the individual . . . is covered under minimum essential coverage for each month." 26 U.S.C. § 5000A(a). The statute goes on: "[i]f a taxpayer who is an applicable individual . . . fails to meet the requirement under subsection (a) for 1 or more months, then, . . . there is hereby imposed on the taxpayer a penalty with respect to such failures in the amount determined under subsection (c)." Id. § 500A(b)(1). The tax penalty "shall be included with a taxpayer's return . . . for the taxable year which includes such month," and the amount of the penalty "shall be equal to the lesser of - (A) the sum of the monthly penalty amounts determined under [a later paragraph of the statute], or (B) an amount equal to the national average premium for qualified health plans which have a bronze level of coverage . . . ." Id. §§ 5000A(b)(2); 5000A(c)(1).

On October 14, 2015, plaintiff filed a claim with the IRS seeking a refund of his 2014 Shared Responsibility Payment, citing what he characterized then as his Fourteenth Amendmentright to equal protection.¹ Compl. ¶ 17. On February 9, 2016, plaintiff received a $541.59 refund, plus interest. Compl. ¶ 20. On March 10, 2016, he filed a claim for a refund of the ACA penalty he paid in 2015, again citing the Equal Protection Clause of the Fourteenth Amendment. Compl. ¶¶ 21-22. On June 23, 2016, defendant Williams-Wallace denied the request. Compl. ¶ 26. Six days later, defendant sent a letter to the IRS with proof of his penalty payment and a new claim for the same refund, and on November 14, 2016, the refund was approved. Compl. ¶¶ 27, 30.

On February 22, 2017, plaintiff filed his 2016 tax return, and on May 17, 2017, he requested a refund of his Shared Responsibility Payment, this time citing a violation of his due process rights under the Fifth Amendment. Compl. ¶¶ 31-32. On September 12, 2017, defendant Jenkins denied the refund without addressing the merits of the plaintiff's claim. Compl. ¶ 35. On September 16, 2017, plaintiff sent a certified letter to the IRS, reasserting his claim for a refund. Compl. ¶ 36. On December 13, 2017, the IRS denied plaintiff's claim, and plaintiff appealed the decision on December 29, 2017. Compl. ¶¶ 39-40. On July 12, 2018, the IRS affirmed its denial. Compl. ¶¶ 40-42.

Plaintiff filed this action on June 14, 2019, and defendants moved to dismiss. The matter is fully briefed.²

STANDARD OF REVIEW

In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must "treat the complaint's factual allegations as true and must grant plaintiff 'the benefit of allinferences that can be derived from the facts alleged.'" Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (internal citation omitted), quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979); see also Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011), quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005) (applying principle to a Rule 12(b)(1) motion). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court accept plaintiff's legal conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002) (rule 12(b)(6) case); Food & Water Watch, Inc. v. Vilsack , 808 F.3d 905, 913 (D.C. Cir. 2015) (rule 12(b)(1) case).

I. Subject Matter Jurisdiction

Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992); Shekoyan v. Sibley Int'l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). "Federal courts are courts of limited jurisdiction," and the law presumes "that a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) ("As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction."). "[B]ecause subject-matter jurisdiction is 'an Art[icle] III as well as a statutory requirement . . . no action of the parties can confer subject-matter jurisdiction upon a federal court.'" Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982).

When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a motion to dismiss under Rule 12(b)(6), the court "is not limited to the allegations of the complaint."Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64 (1987). Rather, "a court may consider such materials outside the pleadings as it deems appropriate to resolve the question [of] whether it has jurisdiction to hear the case." Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).

II. Failure to State a Claim

"To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In Iqbal, the Supreme Court reiterated the two principles underlying its decision in Twombly: "First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions," and "[s]econd, only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 678-79, citing Twombly, 550 U.S. at 555-56.

A claim is facially plausible when the pleaded factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, citing Twombly, 550 U.S. at 556. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id., quoting Twombly, 550 U.S. at 556. A pleading must offer more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action," id., quoting Twombly, 550 U.S. at 555, and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id., citing Twombly, 550 U.S. at 555.

Where the action is brought by a pro se plaintiff, a district court has an obligation "to consider his filings as a whole before dismissing a complaint," Schnitzler v. United States, 761 F.3d 33, 38 (D.C. Cir. 2014), citing Richardson v. United States, 193 F.3d 545, 548 (D.C. Cir. 1999), because such complaints are held "to less stringent standards than formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520 (1972). In ruling upon a motion to dismiss for failure to state a claim, a court may ordinarily consider only "the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice." Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002), citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997).

ANALYSIS

Plaintiff maintains that the ACA Penalty is an unlawful, discriminatory tax. Compl. ¶¶ 44-51. Therefore, he claims that the assessment of the tax against him is a violation of his due process rights under the Fifth Amendment. Compl. ¶ 51. In his opposition, plaintiff emphasizes that this claim is based solely on a denial...