Powell v. Internal Revenue Serv.

WILLIAM E. POWELL, Plaintiff, v. INTERNAL REVENUE SERVICE, Defendant.

Civil Action No. 18-2675 (JEB)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

September 30, 2019

MEMORANDUM OPINION

Over the years, pro se Plaintiff William E. Powell has employed a variety of means to require Defendant Internal Revenue Service to turn over tax records related to his grandfather, his father, himself, and his family's printing business. His lack of success in the latest chapter of this venture spurred this lawsuit in October 2018. Now, in his Motion to Supplement his Amended Complaint, Powell requests leave of the Court to add new claims arising out of three Freedom of Information Act requests he lodged in January 2019 and one Privacy Act request from June 2019. At this stage, Powell's proposed supplemental claims do not unduly prejudice Defendant; as a result, the Court will largely grant his Motion, except as to certain record requests that have been previously adjudicated.

I. Background

Powell initially filed this action on October 29, 2018, see ECF No. 1 (Complaint), and followed up with an Amended Complaint on February 6, 2019. See ECF No. 9. The latter pleading encompasses four record requests Powell submitted to the IRS dated August 9, 2018, August 31, 2018, September 27, 2018, and November 25, 2018. Id. at 2-3. These sought tax forms concerning his family and his family's business - the Powell Printing Company. Id. at 2-4. The requests were filed under FOIA and the Privacy Act via the IRS's Return and Income Verification System (RAIVS), id., and Plaintiff alleged that Defendant unlawfully withheld records. Id. at 2-4. This is not Powell's first foray into the realm of FOIA and Privacy Act litigation. Indeed, he has filed a number of lawsuits in this Court and the Eastern District of Michigan seeking to unearth records relating to his family members and himself. See, e.g., Powell v. IRS, 255 F. Supp. 3d 33, 37 (D.D.C. 2017).

Turning now to the current suit, the Court notes that on February 27, 2019, it stayed the proceedings to give the parties an opportunity to attempt to resolve their dispute outside the courtroom. See Minute Order of Feb. 27, 2019. No progress resulted, and the Court thus lifted the stay on May 2, 2019. See Minute Order of May 2, 2019. Powell promptly filed a Motion for Leave to File a Supplemental Complaint on May 7. See ECF No. 17. The Motion proposed new FOIA and Privacy Act claims regarding additional RAIVS requests dated January 9, 2019, and January 27, 2019 — seeking tax forms for his father and grandfather. Id. at 2-3. The Court, however, denied this Motion on that same day because it did not comply with Local Civil Rules 7(m) and 15.1. See Minute Order of May 7, 2019.

The IRS then answered the Amended Complaint on July 17, 2019. See ECF No. 20. The parties were thereafter ordered to submit a joint briefing schedule by August 1, 2019. See Minute Order of July 18, 2019. Without submitting the schedule, Powell filed a second Motion for Leave to File a Supplemental Complaint on August 1, 2019. See ECF No. 21. This Motion reasserted his January 9 and January 27 RAIVS requests and added a Privacy Act request dated June 3, 2019, which demanded his own tax forms. Id. at 3. This Motion, which Defendant opposes, is the one currently before the Court.

II. Legal Standard

Federal Rule of Civil Procedure 15(d) allows the Court, "[o]n motion and reasonable notice . . . [and] on just terms" to permit a party to serve a supplemental pleading setting forth events that have happened since the filing of its complaint. "Rule 15(d) is used to set forth new facts that update the original pleading or provide the basis for additional relief; to put forward new claims or defenses based on events that took place after the original complaint or answer was filed." United States v. Hicks, 283 F.3d 380, 386 (D.C. Cir. 2002). "The addition of [a] new FOIA request is plainly a supplemental pleading as defined by Federal Rule of Civil Procedure 15(d), as it 'sets forth transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented.'" Hall v. CIA, 437 F.3d 94, 100 (D.C. Cir. 2006) (quoting Fed. R. Civ. P. 15(d)).

Rule 15(d)'s intent is "to make pleadings a means to achieve an orderly and fair administration of justice." Gomez v. Wilson, 477 F.2d 411, 417 n.34 (D.C. Cir. 1973) (quoting Griffin v. County School Bd., 377 U.S. 218, 227 (1964)). The Rule "promote[s] as complete an adjudication of the dispute between the parties as is possible." Wright & Miller, 6A Fed. Prac. & Proc. Civ. § 1504 (3d ed. 2017). It seeks "to avoid 'needlessly remitt[ing] [plaintiffs] to the difficulties of commencing a new action even though events occurring after the commencement of the original action have made clear the right to relief.'" Scahill v. District of Columbia, 909 F.3d 1177, 1183 (D.C. Cir. 2018) (quoting Fed. R. Civ. P. 15(d), advisory committee notes to the 1963 amendment). "It follows that supplementation of pleadings is encouraged 'when doing so will promote the economic and speedy disposition of the entire controversy between the parties, will not cause undue delay or trial inconvenience, and will not prejudice the rights of any of theother parties to the action.'" U.S. ex rel. Gadbois v. PharMerica Corp., 809 F.3d 1, 4 (1st Cir. 2015) (quoting Wright & Miller, supra).

Courts typically resolve motions to supplement under Rule 15(d) and motions to amend under Rule 15(a) via the same standard. See, e.g., Banner Health v. Burwell, 55 F. Supp. 3d 1, 8 n.9 (D.D.C. 2014); Wildearth Guardians v. Kempthorne, 592 F. Supp. 2d 18, 23 (D.D.C. 2008). The key difference between the two Rules is that amendments "relate to matters that occurred prior to the filing" of the pleading to be amended, whereas supplements "set[] forth transactions or occurrences or events which have happened since" that pleading. Hall, 437 F.3d at 100 (emphasis added) (quoting Hicks, 283 F.3d at 385; then quoting Wright & Miller, supra). Further, "[s]upplements under Rule 15(d) always require leave of the court, and the court has broad discretion in determining whether to allow supplemental pleadings in the interests of judicial economy and convenience." The Fund For Animals v. Hall, 246 F.R.D. 53, 54 (D.D.C. 2007).

Typically, Courts grant leave to amend or supplement "unless there is a good reason, such as futility, to the contrary." Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003 (D.C. Cir. 1996); see also Foman v. Davis, 371 U.S. 178, 182 (1962) (noting that reasons not to permit Rule 15(a) amendment may include "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, [and] undue prejudice to the opposing party"). In other words, if the new causes of action would be deficient as stated in the proposed supplement, courts need not grant leave. See In re Interbank Funding Corp. Secs. Lit., 629 F.3d 213, 218 (D.C. Cir. 2010) ("[A] district court may properly deny a motion to amend if the amended pleading would not survive a motion to dismiss.") (citing Foman, 371 U.S. at 182, for proposition that "'futility of amendment' is permissible justificationfor denying Rule 15(a) motion"); James Madison Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996) ("Courts may deny a motion to amend a complaint as futile . . . if the proposed claim would not survive a motion to dismiss.").

III. Analysis

In opposing Plaintiff's proposed supplement, the IRS contends that the counts relating to the newly alleged requests are either infirm, untimely, or both. The Court will first consider the January RAIVS requests and then the June Privacy Act request.

A. January RAIVS Requests

The Service argues that Powell cannot supplement his Amended Complaint with his January RAIVS requests — seeking tax forms for his father and grandfather — because 1) he unduly delayed in adding these requests, and 2) he did not exhaust his administrative remedies. See ECF No. 24 (Defendant Opposition to Motion to Supplement) at 3-4. The Court is not persuaded.

1. Undue Delay

Undue delay "is a valid reason to reject a party's attempt to add a new theory of liability to a complaint." Elkins v. District of Columbia, 690 F.3d 554, 565 (D.C. Cir. 2012). Because "[c]onsideration of whether delay is undue . . . should generally take into account the actions of other parties and the possibility of any resulting prejudice," Atchinson v. District of Columbia, 73 F.3d 418, 426 (D.C. Cir. 1996), the significance of a delay depends on the prejudice it causes. While Plaintiff's justification for his tardiness may be a bit flimsy here, the slow progress of this litigation negates any potential prejudice to the IRS.

Defendant believes Powell did "not act[] in good faith" by waiting until August 1, 2019, to file his Motion to Supplement. See Def. Opp. at 3-4. The IRS aptly notes that Powell couldhave brought his January requests to this Court as early as six months before his August 1 Motion. Id. at 3-4. Yet, following the filing of Plaintiff's Amended Complaint on February 6, 2019, this Court issued a stay giving the parties time to resolve their dispute before continuing litigation. See Minute Order of Feb. 27, 2019. After lifting the stay on May 2, 2019, see Minute Order, Plaintiff promptly filed a motion to supplement the Amended Complaint with factual allegations dating back to January 2019. See First Mot. Suppl. Compl. While the Court denied this motion for procedural defects, his second bite at the apple cured those infirmities on August 1. Although the second Motion admittedly lagged three months behind the first — but followed only four weeks after Plaintiff's June 3 request arguably became actionable — that delay does not demonstrate prejudice or a lack of good faith. Indeed, the IRS has not yet filed its forthcoming motion for summary judgment on the Amended Complaint...