United States District Court, D. South Dakota, Southern Division
WILLIAMS DEVELOPMENT & CONSTRUCTION, INC.; CRAIG WILLIAMS; LEE WILLIAMS; WDC COMMERCIAL REAL ESTATE, INC.; WILLIAMS WORKING CAPITAL PARTNERSHIP; WILLIAMS MANAGEMENT TRUST; CRAIG & LEE WILLIAMS FAMILY PARTNERSHIP; LEE AND CRAIG PARTNERSHIP 100 LTD; LEE AND CRAIG PARTNERSHIP 200 LTD; LEE AND CRAIG PARTNERSHIP 300 LTD, Plaintiffs,
UNITED STATES OF AMERICA, Defendant.
ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS' MOTION TO QUASH THIRD-PARTY SUBPOENAS DOCKET
VERONICA L. DUFFY United States Magistrate Judge
matter is before the court on plaintiffs' amended
complaint seeking damages for defendant United States'
(hereinafter “government”) unlawful disclosure of
their taxpayer identification numbers. See Docket
No. 15. Jurisdiction is premised on the presence of a federal
question, 28 U.S.C. § 1331. Now pending is
plaintiffs' motion to quash subpoenas served on 13 third
parties by the government. See Docket No. 44. The
district court, the Honorable Lawrence L. Piersol, referred
the motion to this magistrate judge for determination
pursuant to 28 U.S.C. § 636(b)(1)(A) and the October 16,
2014, standing order of the court. See Docket No.
filed their original complaint in this matter on March 26,
2018, seeking to quash various administrative summonses
issued to 15 third parties by the Internal Revenue Service
(“IRS”) on March 8, 2018. See Docket No.
1. Plaintiffs argued that some of the plaintiffs had been
referred for criminal investigation and, after such a
referral, the IRS was prohibited from using administrative
summonses to gain evidence. Id. After the filing of
plaintiffs' complaint, the IRS withdrew its summonses to
Citibank and Wells Fargo Bank, two of the 15 third parties
which had previously received summonses. See Docket
No. 34 at p. 2.
April 27, 2018, plaintiffs filed an amended complaint
asserting the additional claims that the IRS had made
unlawful disclosures in the summonses to the third parties of
(1) the fact that some of the plaintiffs were under criminal
investigation and (2) of some of the plaintiffs' taxpayer
identification numbers. See Docket No. 15. The
government made a motion to dismiss pursuant to Fed.R.Civ.P.
12(b)(1) and (6), arguing the court lacked jurisdiction for
plaintiffs' request to quash the summonses because that
claim was mooted when the government withdrew the summonses
and that plaintiffs had failed to state a claim upon which
relief could be granted on the unlawful disclosure claims.
See Docket No. 24.
district court granted in part and denied in part the
government's motion to dismiss. See Docket No.
34. The court agreed the request to quash the now-withdrawn
summonses was moot and dismissed this claim from
plaintiffs' amended complaint. Id. at p. 5. The
court found the disclosure by the IRS that the summonses were
issued by an IRS criminal investigative agent was not
unlawful and could not be asserted by plaintiffs as a basis
for their request for damages. Id. at pp. 9-10.
court decided, however, that plaintiffs had at least
articulated a valid claim by asserting the IRS had
unlawfully disclosed some of the plaintiffs' taxpayer
identification numbers and by indicating some of the
plaintiffs were under criminal investigation. Id. at
pp. 10-18. The court accordingly allowed these claims to go
forward. Id. The court indicated, however, that if
the government were able to prove the third parties were in
possession of plaintiffs' taxpayer identification numbers
prior to the third parties' receipt of the IRS
summonses, the court would likely find this fact fatal to
plaintiffs' damages claims on that issue. Id. at
the district court's ruling on the government's
motion to dismiss, then, one of the key issues regarding
plaintiffs' request for damages for allegedly unlawful
disclosures by the IRS is whether the 15 recipients of the
IRS's administrative summonses already knew
plaintiffs' taxpayer identification numbers prior to the
time the third parties received the March 8, 2018, IRS
end, on July 19, 2019, the government served plaintiffs with
requests to admit as to all 15 third parties. See
Docket No. 48-1. The requests asked plaintiffs to admit that
each of the third parties had prior knowledge of
plaintiffs' taxpayer identification number before
receiving the IRS summons. Id. Plaintiff Craig
Williams admitted this was true as to 2 of the 15 third
parties, but denied it was true as to the remaining 13 third
parties. See Docket No. 48-2 at pp. 3-4.
Accordingly, the government served each of the remaining 13
third parties with subpoenas duces tecum pursuant to
Fed.R.Civ.P. 45 to seek confirmation from the third parties
as to whether they knew plaintiffs' taxpayer
identification numbers prior to receiving the IRS summonses.
government's subpoena to Citibank, N.A., in Sioux Falls,
South Dakota, asked Citibank to provide one of the following
two categories of documents in their possession concerning
each of the named plaintiffs in this case:
1. Account opening documents for each of the account holders
listed above, including but not limited to the documentation
provided to you by each of the account holders. The records
sought include (but are not limited to) correspondence and
notices, signature cards, loan applications, loan files, and
similar documents. This request also includes documents
relating to any credit card, deposit account, line of credit,
or other account at the bank, including its affiliates,
branches or predecessor banks.
2. To the extent the documents responsive to Request No. 1 do
not identify the Social Security Number or Employee
Identification Number of each of the account holders listed
above, this request seeks for each account held by an account
holder listed above, documents and records, prior to
March 8, 2018, including electronically-stored
information, that reflect the Social Security Number or
Employee Identification Number of the account holder.
See Docket No. 45-2 at p. 61.
administrative summons which the IRS had previously served on
Citibank, N.A. on March 8, 2018, would have (had it not been
withdrawn) required ...