Marijuana Business Seeks Rehearing in Filing Deadline Dispute

ORGANIC CANNIBAS FOUNDATION, LLC, DBA ORGANICANN HEALTH CENTER,
Petitioner-Appellant,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee

IN THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT

Appeal from Decisions of the United States Tax Court

PETITION FOR PANEL REHEARING OR REHEARING EN BANC

DOUGLAS L. YOUMANS (CA State #96255; Tax Court YD0027)
WAGNER KIRKMAN BLAINE
KLOMPARENS & YOUMANS LLP
10640 Mather Blvd., Suite 200
Mather, CA 95655
Telephone: (916) 920-5286
Attorneys for Petitioner-Appellant

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TABLE OF CONTENTS

I. INTRODUCTION AND SUMMARY

II. BACKGROUND

III. ARGUMENT

IV. CONCLUSION

TABLE OF AUTHORITIES

Cases

Bregin v. Commissioner, 74 T.C. 1097, 1103 (1980)

Duggan v. Commissioner, No. 15-73819 (Jan. 12, 2018)

Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019)

Gonzalez v. Thaler, 565 U.S. 134, 141 (2012)

Gonzalez v. Thaler, 565 U.S. 134, 146-147 (2012)

Greenlaw v. United States, 554 U. S. 237 (2008)

Guralnik v. Commissioner, 146 T.C. at 231

Hall v. City of Los Angeles, 697 F.3d 1059, 1071 (9th Cir. 2012)

Henderson v. Shinseki, 562 U.S. 428, 436-441 (2011)

in Guralnik v. Commissioner, 146 T.C. 230, 231 (2016)

Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990)

Kontrick v. Ryan, 540 U.S. 443, 455 (2004)

Kwai Fun Wong, 135 S.Ct. at 1632

Laboa v. Calderon, 224 F.3d 972, 985 (9th Cir. 2000)

Musacchio v. United States, 136 S. Ct. 709, 717 (2016)

Pickett v. Sheridan Health Care, 664 F.3d 632, 648 (7th Cir. 2011)

Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013)

Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. at 154

Tilden v. Commissioner, 846 F.3d 882, 884 (7th Cir. 2017)

U.S. v. Kwai Fun Wong, 135 S.Ct. 1625, 1632 (2015)

United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015)

United States. v. Kwai Fun Wong, 135 S.Ct. 1625, 1632 (2015)

Volpicelli v. United States, 777 F.3d 1042 (9th Cir. 2015)

Statutes

Fed. R. App. P. 35 and 40

Fed. R. Evid. 201(b)

Fed. R. Evid. 201(e)

I.R.C § 7459(d)

I.R.C. § 6214

I.R.C. § 6330(d)

I.R.C. § 6512(b)(1)

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I. INTRODUCTION AND SUMMARY

Pursuant to Fed. R. App. P. 35 and 40, Organic Cannabis Foundation, LLC (“Organicann”) respectfully petitions for panel rehearing or rehearing en banc. The panel's opinion seriously errs in: (i) failing to follow recent precedent of the Supreme Court by concluding the 90-day period for filing a Tax Court petition is jurisdictional and not subject to equitable tolling; (ii) conflicting with the decision of this Court in Volpicelli v. United States, 777 F. 3d 1042 (9th Circ. 2015), which requires en banc review to secure and maintain uniformity of this Court's decisions; and (iii) misapprehending a material fact by taking judicial notice, sua sponte, of a U.S. Postal Service website that suggests that a “ZIP+4 ZIP code, “. . . will likely include the actual P.O. Box number . . .,” to determine that the deficiency notice which omitted Organicann's P.O. Box number was not misaddressed.

The case involves I.R.C. § 6213(a)'s delineation of the 90-day period for filing a Tax Court petition; the “mailbox rule” set forth in I.R.C. § 7502(f); Internal Revenue Service (“IRS”) guidance pertinent to “designated delivery services” for filing petitions with the Tax Court; and the address on the deficiency notice, which omitted Organicann's P.O. Box number.

The panel erroneously determined § 6213(a)'s time limit to be jurisdictional and not subject to equitable tolling, both of which matters are of exceptional importance. (Op. 19.) Those rulings essentially ignore the Supreme Court's current approach to distinguishing jurisdictional limits from case-processing rules, and its holdings that statutory deadlines are presumptively nonjurisdictional and subject to equitable tolling unless Congress has made a clear statement that a deadline is jurisdictional.

The panel's determination that the 90-day Filing Deadline under I.R.C. § 6213(a) is jurisdictional and not subject to equitable tolling conflicts with the Court's prior decision in Volpicelli.

The panel also misapprehended a material fact by taking judicial notice, sua sponte, of a U.S. Postal Service website to determine that the deficiency notice which omitted Organicann's P.O. Box number was not misaddressed. (Op. 27.)

Rehearing is clearly warranted to permit the Court to fully consider the exceptionally important jurisdictional and equitable tolling questions presented and their implications for the functioning of the Tax Court, and to allow the panel to determine whether the deficiency notice which omitted Organicann's P.O. Box number was misaddressed.

II. BACKGROUND

A. Statutory Background.

The first sentence of I.R.C. § 6213(a) provides that a taxpayer may file a petition with the Tax Court seeking redetermination of a notice of deficiency within 90 days (150 days if the notice is addressed to a person outside the United States) after the mailing of said notice (as applicable, said 90 or 150-day period, the “Filing Deadline”). The second sentence prohibits certain collection actions until a deficiency notice is mailed and, if no petition is filed with the Tax Court, before the Filing Deadline has expired. The third sentence provides that any attempts to take any collection action so prohibited may be enjoined. The fourth sentence, added in 1988 (64 years after the predecessor to the first sentence of § 6213(a) which delineates the Filing Deadline was originally enacted), provides that the Tax Court shall not have jurisdiction to enjoin any of the collection actions referred to in the second sentence unless a petition has been timely filed.

With respect to the redetermination of income tax deficiencies and overpayments, jurisdiction is granted to the Tax Court in two sections of the Internal Revenue Code (“I.R.C.”). For deficiencies, I.R.C. § 6214(a) confers “jurisdiction to redetermine the correct amount of a deficiency.” Where a taxpayer has overpaid tax, I.R.C. § 6512(b)(1) confers “jurisdiction to determine the amount of such overpayment.” Neither of these sections refers to either a 90-day filing period or § 6213(a).

B. Factual Background.

The facts pertaining to this petition are relatively undisputed.

• The address used on the envelope the deficiency notice was mailed in included only Organicann's name, city, state, and ZIP code — Organicann's P.O. Box number was omitted. Nevertheless, Organicann actually received the notice.

• Organicann delivered its petition to FedEx one day before expiration of that Filing Deadline but, for various reasons, some of which are not entirely clear because IRS did not raise the issue for over fifteen months, FedEx did not deliver the petition to the Tax Court overnight.

• IRS contends the Tax Court did not acquire jurisdiction because: (i) Organicann's petition was not received by the Tax Court until the day after expiration of the § 6213(a) Filing Deadline; and (ii) Organicann is precluded from use of the “mailbox rule” because FedEx “first overnight” is a different “delivery service” than other FedEx “overnight” delivery options, and FedEx “first overnight” was not listed as a “designated delivery service” at the time Organicann delivered its petition to FedEx.

III. ARGUMENT 

A. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING IS CONTRARY TO SUPREME COURT PRECEDENT AND RAISES EXCEPTIONALLY IMPORTANT QUESTIONS

B. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING CONFLICTS WITH THIS COURT'S DECISION IN VOLPICELLI

C. THE PANEL'S DETERMINATION THAT THE NOTICE OF DEFICIENCY WHICH DID NOT INCLUDE ORGANICANN'S P.O. BOX NUMBER WAS PROPERLY ADDRESSED WAS BASED ON A MISAPPREHENSION OF MATERIAL FACTS OF WHICH THE PANEL TOOK JUDICIAL NOTICE, SUA SPONTE, INVOLVING ISSUES NEVER RAISED OR BRIEFED BY THE PARTIES, TO ORGANICANN'S DETRIMENT

A. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING IS CONTRARY TO SUPREME COURT PRECEDENT AND RAISES EXCEPTIONALLY IMPORTANT QUESTIONS

This petition seeks rehearing (by the panel but, barring that, by the Court en banc) to correct a panel decision that conflicts with recent Supreme Court cases that claims processing rules (which include filing deadlines) should usually not be considered jurisdictional.

The Supreme Court has endeavored to “bring some discipline” to the use of the term “jurisdictional.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). Under the Supreme Court's current approach, filing deadlines are almost never jurisdictional. United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015). The Government must clear a high bar to establish that a statute of limitations is jurisdictional. United States. v. Kwai Fun Wong, 135 S. Ct. at 1632. While the Court has acknowledged that filing deadlines still can be jurisdictional if Congress makes a “clear statement” to that effect, “Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.” Id.

Absent a “clear statement,” courts should treat time restrictions as nonjurisdictional. Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013). While Congress is not required to “incant magic words,” traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences. Kwai Fun Wong, 135 S. Ct. at 1632.

The panel starts its analysis of whether the recent Supreme Court jurisprudence addressing when statutory deadlines should be deemed jurisdictional by referencing the Seventh Circuit's decision in Tilden v. Commissioner, 846 F.3d 882, 884 (7th Cir. 2017), a poorly reasoned opinion which relied heavily on the Tax Court's decision in Guralnik v. Commissioner, 146 T.C. 230, 231 (2016), which involved I.R.C. § 6330(d)(1), which is entirely different than § 6213(a), the statute at issue here. Ignoring the facts that: (i) the Tax Court's authority to hear deficiency cases is granted pursuant to I.R.C. § 6214 (see Bregin v. Commissioner, 74 T.C. 1097, 1103 (1980) (describing § 6214(a) as the provision granting general jurisdiction)); (ii) the word “jurisdiction” appears more than two sentences and 168 words after the Filing Deadline is spelled out in the first sentence of § 6213(a); and (iii) the word “jurisdiction” was added to § 6213(a) in 1988, to grant the Tax Court jurisdiction to enjoin certain collection actions over sixty years after the predecessor of § 6213(a)'s first sentence initially appeared, Tilden suggests that § 6213(a) should not be distinguished from the statutes courts have found to be jurisdictional under the Supreme Court's recent jurisprudence because § 6213(a) has long been held by a number of lower (circuit) courts to be jurisdictional. Tilden, 846 F.3d at 886.

The panel then purports to apply “traditional tools of statutory construction” to support its conclusion that “. . . Congress has indeed done 'something special' to 'plainly show' that § 6213's time limit is 'imbued . . . with jurisdictional consequences.'” (Op. 21.)

First, the panel notes that § 6213(a) uses the “magic word 'jurisdiction,'” albeit, “with respect to one aspect of the Tax Court's power concerning deficiency redeterminations . . .” (Op. 22 (emphasis in original).) Addressing, in turn, each of the first four sentences of § 6213(a) (which include an aggregate of 282 words), the panel agrees with the Seventh Circuit's assertion in Tilden that it is “very hard” to read the fourth sentence of § 6213(a) in a way that merely strips the Tax Court of jurisdiction to enjoin the collection actions referred to in the second sentence. (Op. 23.) “By also specifying that the Tax Court lacks 'jurisdiction' to issue such an injunction 'unless' a [timely] petition has been filed, § 6213(a) seems clearly to reflect an understanding that the manner in which the Tax Court acquires jurisdiction over a deficiency dispute is through the filing of a 'timely petition.' I.R.C. § 6213(a).” (Op. 23 (emphasis in original, but added to “seems”).)

Such a holding is not only contrary to Gonzalez v. Thaler, 565 U.S. 134, 146-147 (2012), which instructs courts not to treat time periods adjacent to jurisdictional provisions as jurisdictional absent a “clear statement,” but, on its face, the panel's use of the word “seems” shows that Congress has not done “'something special' to 'plainly show' that I.R.C. § 6213's time limit is 'imbued . . . with jurisdictional consequences.'” (Op. 21); Kwai Fun Wong 575 U.S. at 410 (emphasis added).

Suggesting that the fourth sentence of § 6213(a) seems to reflect “an understanding” that the manner in which the Tax Court acquires jurisdiction over a deficiency dispute is through the filing of a “timely petition,” the panel states its reading of the statute in this fashion is “strongly confirmed” by how the second sentence's “no-collection prohibition” is phrased. (Op. 23.) On that point, the panel suggests that, if § 6213(a) is not jurisdictional, the non-collection prohibition provided in the second sentence would lapse, subject to revival if the Tax Court accepts a late-filed petition, a “discontinuity” the panel says the statute does not contemplate. (Op. 24.) While it is not clear whether any such “discontinuity” would necessarily occur, less clear is how that “plainly shows” that the Filing Deadline in the first sentence of § 6213(a) is intended to have jurisdictional consequences.

The panel then suggests that, if the aforementioned hypothetical discontinuity should occur if the Tax Court should accept a late-filed petition, it (the Tax Court) would “unquestionably lack jurisdiction to enjoin violations of that prohibition — thereby necessitating a separate court proceeding . . .” (Op. 24 (emphasis in original).) Again, while it is uncertain whether any such “discontinuity” allegedly depriving the Tax Court of jurisdiction to enjoin violations of that prohibition (of certain collection actions, as set forth in the second sentence) would ever occur, less certain is how that “plainly shows” that the Filing Deadline in the first sentence of § 6213(a) is intended to have jurisdictional consequences.

As noted in Organicann's reply brief, while the panel's contention that, if § 6213(a) is not jurisdictional, a dismissal for late-filing would have preclusive effect under I.R.C § 7459(d), no court so holds. (Appellant Reply Br., Dkt Entry 33 at p. 26.) As further noted in Organicann's reply brief, if the panel is correct about this, resolution of the issue involves policy arguments better addressed by Congress than the courts. (Appellant Reply Br., Dkt Entry 33 at p. 26.)

As its last argument pertinent to whether the Filing Deadline in § 6213(a) is jurisdictional, the panel notes, “. . . the circuits have uniformly adopted a jurisdictional reading of § 6213(a) or its predecessor since at least 1928.” (Op. 25 (emphasis added).) Citing Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019) (“[T]he Court has stated it would treat a requirement as jurisdictional when a long line of Supreme Court decisions left undisturbed by Congress attached a jurisdictional label to the prescription” (emphasis added)), the panel suggests that § 6213(a) imposes a jurisdictional time limit because Congress has never seen fit to disturb the aforementioned long-settled circuit court treatment of § 6213(a), the vast majority of which rulings precede the recent Supreme Court jurisprudence addressing when statutory deadlines should be deemed jurisdictional. However, the panel has ostensibly utterly disregarded the distinction between appellate and Supreme Court precedent clarified in the Fort Bend County ruling. In other words, as the Supreme Court has never ruled on whether § 6213(a)'s Filing Deadline is jurisdictional nor, since Kontrick v. Ryan, 540 U.S. 443, 455 (2004), has it held that Congress clearly stated an intent that any claims processing rule is jurisdictional, it is somewhat misleading to suggest that the aforementioned long-settled circuit court treatment of § 6213(a) as jurisdictional should be followed merely because Congress has not addressed it.

Finally, in deciding whether the § 6213(a) Filing Deadline is jurisdictional and not subject to equitable tolling, how the Tax Court operates should not be overlooked. For example, in Guralnik v. Commissioner, 146 T.C. at 231, where the Tax Court, in dicta, stated that FedEx First Overnight was not a “designated delivery service,” the Tax Court nonetheless extended the I.R.C. § 6330(d) 30-day filing period, holding that a petition which arrived one day late was timely because the clerk's office was inaccessible on the day the petition was due because of a snowstorm. Following its rules, which closely parallel the Federal Rules of Civil Procedure, the Tax Court concluded it had jurisdiction to extend the filing period. As nothing in the Tax Court rules or the Internal Revenue Code specifically states the Tax Court can extend filing deadlines, to do so the Tax Court had to rely on equitable tolling.

Rehearing is clearly warranted because the panel decision is contrary to the above-cited Supreme Court cases and will permit the Court to fully consider the exceptionally important jurisdictional questions presented by this case and their implications for the functioning of the Tax Court.

B. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING CONFLICTS WITH THIS COURT'S DECISION IN VOLPICELLI

This petition seeks rehearing (by the panel but, barring that, by the Court en banc) to correct a panel decision that conflicts with recent Supreme Court cases and this Court's holding in Volpicelli that non-jurisdictional filing deadlines are subject to equitable tolling.

In Volpicelli v. United States, 777 F.3d at 1043, this Court addressed the issue of whether I.R.C. § 6532(c)'s nine month¹ limitations period for bringing wrongful levy actions was subject to equitable tolling. The Court started its analysis by noting that Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990), superseded by statute, “rejected the then-prevailing rule, under which time limits set by Congress for suits against the government were deemed jurisdictional and therefore not subject to equitable tolling (citation omitted). [It] replaced that rule with a rebuttable presumption that filing deadlines may be equitably tolled, unless Congress provides otherwise (citation omitted).” Volpicelli, 777 F.3d at 1044. Volpicelli further noted that the Irwin presumption “. . . does not apply to deadlines that are 'jurisdictional'” (citing Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. at 154), but “[t]he Supreme Court's recent cases require a clear statement from Congress before a procedural rule will be treated as jurisdictional. (citation omitted) (emphasis added).” Volpicelli, 777 F.3d at 1044.

The Volpicelli court determined that I.R.C. § 6532(c) “. . . does not cast its filing deadline in 'jurisdictional' terms” (it fails the “clear statement” test) because jurisdiction [to hear an unlawful levy case] is granted under a separate provision, similar to the way the Tax Court's jurisdiction to hear deficiency cases is granted in I.R.C. § 6214, not § 6213.

Volpicelli is to be contrasted with Duggan v. Commissioner, 879 F. 3d 1029, 1031 (9th Cir. 2018), where this Court analyzed whether the 30-day deadline set forth in I.R.C. § 6330(d) to secure judicial review of “collection due process” hearings was jurisdictional. After noting that “Congress must do something special, beyond setting an exception-free deadline, to tag a [filing deadline] as jurisdictional and so prohibit a court from tolling it,” Duggan cites Kwai Fun Wong, 135 S. Ct. at 1630, for the proposition that, where a deadline is contained in a separate section from the grant of jurisdiction, that “structural divide” indicates that a failure to meet the deadline does not divest the court of power to hear the case. Duggan, 879 F.3d at 1032; Henderson v. Shinseki, 562 U.S. 428, 436-441 (2011). The Duggan court further explained, “[t]o determine whether Congress has made the necessary clear statement, we examine the text, context and relevant historical treatment of the provision at issue.” Duggan, 879 F.3d at 1032; citing Musacchio v. United States, 136 S. Ct. 709, 717 (2016).

Reasoning that the I.R.C. § 6330(d) “filing deadline is given in the same breath as the grant of jurisdiction,” (Duggan, 879 F.3d at 1034) the Duggan court held that the 30-day deadline set forth in § 6330(d) was jurisdictional. However, I.R.C. § 6330(d), the provision at issue in Duggan, is simply not comparable to § 6213(a), the provision at issue here.

Like Volpicelli, the Filing Deadline is granted in a totally separate provision (§ 6213(a)) from the one vesting the Tax Court with jurisdiction over petitions to redetermine a deficiency (§ 6214). Because the panel's decision that § 6213(a)'s Filing Deadline is jurisdictional (and equitable tolling does not apply) conflicts with this Court's holding in Volpicelli, that non-jurisdictional filing deadlines are subject to equitable tolling, rehearing en banc is clearly warranted to permit the Court to secure and maintain the uniformity of its decisions.

C. THE PANEL'S DETERMINATION THAT THE NOTICE OF DEFICIENCY WHICH DID NOT INCLUDE ORGANICANN'S P.O. BOX NUMBER WAS PROPERLY ADDRESSED WAS BASED ON A MISAPPREHENSION OF MATERIAL FACTS OF WHICH THE PANEL TOOK JUDICIAL NOTICE, SUA SPONTE, INVOLVING ISSUES NEVER RAISED OR BRIEFED BY THE PARTIES, TO ORGANICANN'S DETRIMENT

This petition seeks rehearing (by the panel initially but, barring that, by the Court en banc) to correct a panel determination that the deficiency notice was not misaddressed. Such rehearing is appropriate because the panel misapprehended material facts of which it took judicial notice, sua sponte, to Organicann's detriment.

Organicann has argued in the alternative that, if the petition was untimely, IRS's administrative error in not using Organicann's last known address invalidated the notice. According to IRS's mail log, the address on the envelope carrying the notice identified the name of the taxpayer, followed by a “care of” name, followed by the city, state and ZIP code, but the P.O. Box number was omitted. IRS argued that, under Tax Court precedent, the notice is nonetheless valid since Organicann received it with more than 30 days left to petition and no prejudice was caused by an incorrect address. (Appellee Br. 65 (emphasis added).) IRS conceded Organicann's argument that this Court has never defined what “prejudicial delay” means with regard to an incorrectly addressed envelope (Appellee Br. 65), but the panel did not address either position. Instead, the panel took judicial notice of the fact that the Santa Rosa post office uses the same five digit ZIP code for P.O. Boxes. The panel then took judicial notice of a U.S. Postal Service website statement that a “ZIP+4” in the address was likely to include the P.O. Box number, and ruled, sua sponte, that the envelope was not misaddressed because the notice included the ZIP+4 ZIP code. As the panel correctly noted about the five digit ZIP code, judicial notice may be taken of information “not subject to reasonable dispute.” (Op. 27 (quoting Fed. R. Evid. 201(b)).) However, the question of whether an envelope omitting the P.O. Box number but including a ZIP+4 ZIP code is the same as an envelope containing both the P.O. Box number and the ZIP+4 is subject to reasonable dispute. As it is not “generally known” that an omitted P.O. Box number can be ignored if an address includes a ZIP+4 ZIP code, resolution of that issue by judicial notice (taken sua sponte) is not appropriate.

The panel's use of judicial notice in this context also violates Fed. R. Evid. 201(e) where the last sentence reads, “[i]f the court takes judicial notice before notifying a party, the party, on request, is still entitled to be heard.” See also, Pickett v. Sheridan Health Care, 664 F.3d 632, 648 (7th Cir. 2011). This is especially true when taking judicial notice of items in websites. “[G]iven that the Internet contains an unlimited supply of information with varying degrees of reliability, permanence, and accessibility, it is especially important for parties to have the opportunity to be heard prior to the taking of judicial notice of websites.” Pickett v. Sheridan Health, 664 F.3d at 648.

The Supreme Court has also expressed its disfavor of courts considering arguments outside of those advanced by the parties. In United States v. Sineneng-Smith, 140 S. Ct. 1575, 1579 (2020, the Court said:

In our adversarial system of adjudication, we follow the principle of party presentation. As this Court stated in Greenlaw v. United States, 554 U. S. 237 (2008), “in both civil and criminal cases, in the first instance and on appeal . . ., we rely on the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present.” Id., at 243.

This Court has likewise acknowledged that ruling sua sponte is not the norm. Hall v. City of Los Angeles, 697 F.3d 1059, 1071 (9th Cir. 2012) (citing Laboa v. Calderon, 224 F.3d 972, 985 (9th Cir. 2000)). However, a court may consider an issue sua sponte if failure to do so would result in manifest injustice or if the opposing party will not suffer prejudice. Hall v. City of Los Angeles, 697 F.3d at 1071. Manifest injustice was not present in this case, and Organicann has been prejudiced by the panel's sua sponte misapprehension of a material fact.

The parties never briefed whether an address which does not include the recipient's P.O. Box number is a “proper address” or, if it is not, whether that defect can be cured if IRS uses the correct ZIP+4 ZIP code. Instead, the panel took it upon itself to search the postal service's website to determine that, “[T]he ZIP+4 Code will likely include the actual PO Box number in the +4 part of the ZIP Code” (Op. 27 n.9 (emphasis added)), to reach its conclusion that the envelope containing the deficiency notice was not misaddressed. In doing so, the panel overlooked the “fact” that a ZIP+4 is not necessarily any more “likely” than not to include the recipient's P.O. Box number. Additionally, the panel never considered whether the omission of the recipient's P.O. Box number makes a difference in the amount of time it takes for an item to be delivered. Organicann has been prejudiced because it was not given the opportunity to address these issues in its briefs. This failure is significant because, in a recent “test,” Organicann has noted that the omission of the P.O. Box number ostensibly gave rise to a delay in delivery.² Because manifest injustice was not present and Organicann has been prejudiced, the circumstances permitting the panel to make a sua sponte determination on this point are not present.

IV. CONCLUSION

For the reasons stated above, Organicann respectfully requests that the Court grant rehearing or rehearing en banc.

Dated: August 3, 2020

Douglas L. Youmans
Counsel for Organicann
Wagner Kirkman Blaine
Klomparens & Youmans LLP
10460 Mather Boulevard, Suite 200
Mather, CA 95655
Telephone: (916) 920-5286
Facsimile: (916) 920-8608
dyoumans@wkblaw.com