Caetano v. Internal Revenue Serv.

NATHANIEL DWAYNE CAETANO, Plaintiff, v. INTERNAL REVENUE SERVICE, et al., Defendants.

No. 1:22-cv-00837-JLT-SAB

United States District Court, E.D. California

February 23, 2023

DEADLINE: MARCH 31, 2023

ORDER SCREENING FIRST AMENDED COMPLAINT

(ECF NO. 7)

Plaintiff Nathaniel Dwayne Caetano (“Plaintiff”'), a state prisoner proceeding pro se and in forma pauperis, initiated this action on July 8, 2022. (ECF No. 1.) The first amended complaint asserts claims against Defendants Internal Revenue Service (“IRS”) General Service Administration (“GSA”), and the Securities and Exchange Commission (“SEC”) (collectively, “Defendants”) (ECF No. 7), and is now before this Court for screening.

I. SCREENING REQUIREMENT

The Court is required to screen complaints brought by prisoners seeking relief against a governmental entity or officer or employee of a governmental entity. 28 U.S.C. § 1915A(a). The Court must dismiss a complaint or portion thereof if the prisoner has raised claims that are legally “frivolous or malicious,” that “fail[] to state a claim on which relief may be granted,” or that “seek[] monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B).

A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief ....” Fed.R.Civ.P. 8(a)(2). Detailed factual allegations are not required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal (Iqbal), 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly (Twombly), 550 U.S. 544, 555 (2007)). “Vague and conclusory allegations of official participation in civil rights violations are not sufficient ....” Ivey v. Bd. of Regents of the Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982).

Prisoners proceeding pro se in civil rights actions are entitled to have their pleadings liberally construed and to have any doubt resolved in their favor. Wilhelm v. Rotman, 680 F.3d 1113, 1121 (9th Cir. 2012) (citations omitted). To survive screening, Plaintiff's claims must be facially plausible, which requires sufficient factual detail to allow the Court to reasonably infer that each named defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at 678-79; Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). The “sheer possibility that a defendant has acted unlawfully” is not sufficient, and “facts that are ‘merely consistent with' a defendant's liability” falls short of satisfying the plausibility standard. Iqbal, 556 U.S. at 678; Moss, 572 F.3d at 969.

As a general rule, the Court must limit its review to the operative complaint and may not consider facts presented in extrinsic evidence. See Lee v. City of L.A., 250 F.3d 668, 688 (9th Cir. 2001). Materials submitted as part of the complaint, however, are not “outside” the complaint and may be considered. Id.; Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). Moreover, the Court is not required to accept as true conclusory allegations which are contradicted by exhibits to the complaint. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001), amended on denial of reh'g, 275 F.3d 1187 (9th Cir. 2001); Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295-96 (9th Cir. 1998).

Leave to amend may be granted to the extent that the deficiencies of the complaint can be cured by amendment. Cato v. U.S., 70 F.3d 1103, 1106 (9th Cir. 1995).

II. COMPLAINT ALLEGATIONS

The Court accepts Plaintiff's allegations in the first amended complaint as true only for the purpose of the sua sponte screening requirement under 28 U.S.C. § 1915.

As best as the Court can ascertain, the nonfrivolous factual allegations appear to indicate Plaintiff seeks to assert a claim pursuant to the Freedom of Information Act (“FOIA”).^[1] (See Am. Compl., ECF No. 7 at 7.) Plaintiff alleges he filed/served Defendants twice, seeking information/documentation regarding his “Individual Master File/Business Master File” and the “Registered Securities ... the Bonds sold in contract case no. 09CM3557 and ledgered [sic] in Bond CUSIP no. 315805382 as assets.” (Id.) Plaintiff additionally includes his “Vital Record #104-80-343027-1721,” presumably as a descriptor relating to the information he seeks. (See id.) The relief Plaintiff appears to seek is “official recognition of being the U.S.A. President/Prasadat [sic], eternally and complete control [sic] of My corporation financial ‘Trust Fund,' ” and $660 trillion (the identified amount in controversy). (ECF No. 7 at 6-7.)

III. DISCUSSION

A. Legal Standard for Freedom of Information Act

The Freedom of Information Act (“FOIA”) provides for the mandatory search and disclosure of information held by federal agencies, unless the records fall within one of nine exemptions specified in the Act. NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 220-21 (1978); Rojas v. Fed. Aviation Admin., 989 F.3d 666, 669-70 (9th Cir. 2021), cert. denied, 142 S.Ct. 753 (2022); Inter-Coop. Exch. v. U.S. Dep't of Com., 36 F.4th 905, 908 (9th Cir. 2022); see also 5 U.S.C. §§ 552(b)(1)-(9) (enumerating the nine exemptions). It provides, among other things, that “each agency, upon any request for records which (i) reasonably describes such records and (ii) is made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed, shall make the records promptly available to any person.” See Wright v. U.S. Dep't of Just., 379 F.Supp.3d 1067, 1076 (S.D. Cal. 2019) (citing 5 U.S.C. § 552(a)(3)(A)).

1. Exhaustion of Administrative Remedies

Through the FOIA, Congress conferred jurisdiction upon the district court “to enjoin [an] agency from withholding agency records and to order the production of any agency records improperly held from the complainant.” 5 U.S.C. § 552(a)(4)(B). “This vests the district court with all the powers of an equity court to issue injunctive relief from withholding of agency records.” In re Steele, 799 F.2d 461, 465 (9th Cir. 1986); Taylor v. Sturgell, 553 U.S. 880, 885 (2008) (“If an agency refuses to furnish the requested records, the requester may file suit in federal court and obtain an injunction ordering the production of any agency records improperly withheld.”) (internal quotations omitted).

Exhaustion of a party's administrative remedies is required under the FOIA, however, before that party can seek redress from the district court. Steele, 799 F.2d at 465-66. This serves to “protect[ ] administrative agency authority and promot[e] judicial efficiency.” McCarthy v. Madigan, 503 U.S. 140, 145 (1992). It also allows agencies to correct their mistakes and creates a useful record “should judicial review become necessary.” Amerco v. NLRB, 458 F.3d 883, 888 (9th Cir. 2006). Pursuant to the FOIA, prior to initiating suit in the district court, the requestor must request specific information from the agency in accordance with published administrative procedures, 5 U.S.C. §§ 552(a)(1), (2) & (3); have the request improperly refused, 5 U.S.C. § 552(a)(4)(B); Steele, 799 F.2d at 466; file available administrative appeals, Taylor v. Appleton, 30 F.3d 1365, 1369 (11th Cir. 1994); McDonnell v. U.S., 4 F.3d 1227, 1240 (3d Cir. 1993); Oglesby v. U.S. Dep't of the Army, 920 F.2d 57, 63-64 (D.C. Cir. 1990); and present proof that he has exhausted all administrative remedies. Hedley v. U.S., 594 F.2d 1043, 1044 (5th Cir. 1979).

Under certain circumstances, a district court may waive the requirement to file an administrative appeal, such as “when . . . further administrative proceedings would prove futile,” on the basis that this exhaustion requirement under the FOIA “is a prudential rather than jurisdictional consideration.” Aguirre v. U.S. Nuclear Regul. Comm'n, 11 F.4th 719, 725 (9th Cir. 2021) (citing Yagman v. Pompeo, 868 F.3d 1075, 1083-84 (9th Cir. 2017)) (referring to “constructive” exhaustion as “futility exception” to exhaustion); see also Antonelli v. Fed. Bureau of Prisons, 591 F.Supp.2d 15, 25 (D.D.C. 2008) (holding a district court “need not dismiss a claim for failure to exhaust if it determines that the ‘purposes and policies underlying the exhaustion requirement' would not be undermined by reaching the merits.”). However, the Ninth Circuit recently joined other circuit courts in holding that, if an agency responds to a request before suit is filed, even if after the procedural deadline, a requestor must “actually” exhaust his administrative remedies under the FOIA. Aguirre, 11 F.4th at 726 (finding that, where requestor refused to respond to agency's request for more specific terminology in request and instead waited until the request was filled and then sued in federal court, he was required to actually exhaust his administrative remedies through the administrative appeal process) (collecting cases); see also Antonelli, 591 F.Supp.2d at 25 (“to proceed on a claim where the agency has not had the opportunity to act would not only undercut the exhaustion requirement but would also encourage circumvention of the administrative process simply by filing a lawsuit.”).

Furthermore other exhaustion requirements cannot be waived. For example, “when a requestor fails to pay required fees, he fails to exhaust.” Id. (citing Oglesby, 920 F.2d at 66 (“Exhaustion does not occur until the required fees are paid or an appeal is taken from the refusal to waive fees.”); Pollack v. Dept. of Just., 49 F.3d 115, 119-20 (4th. Cir. 1995), cert. denied, 516 U.S. 843 (1995) (characterizing the payment of fees as a “statutory obligation”)); see also 5 U.S.C. §§ 552(a)(4)(A)(i)-(ii) (authorizing each agency to promulgate regulations specifying schedule of...