Institute for Global Prosperity Seeks Injunctive Relief

Daniel Andersen and Lorenzo LaMantia are the founders of the Institute of Global Prosperity (IGP), a voluntary political and educational association of individuals who engage in the "dissemination of educational, political, religious and philosophical ideas and materials, some of which are critical of the monetary and tax policies of the U.S. government". Andersen and LaMantia state that they "and others" are also the subjects of a federal criminal investigation into whether they have conspired to commit tax evasion and interfere with the administration of the tax laws. As part of this investigation, the government obtained and executed eight search warrants at locations connected with IGP and seized thousands of pages of documents.

In October, 2001, a U.S. district court denied Andersen and LaMantia's motion for a preliminary injunction on the ground that the alleged infringement of First Amendment rights was outweighed by the government's compelling interest in pursuing criminal investigations against persons who unlawfully failed to pay taxes. Andersen and LaMantia then filed a motion for injunction pending appeal in the district court, which was denied on November 6, 2001. The Ninth Circuit denied an emergency motion on November 15, 2001.

Andersen and LaMantia are now appealing the district court denial of injunctive relief and request that the United States and various named and unnamed IRS agents be enjoined from seizing and/or using information relating to the identities of the 70,000 or more members of IGP. Andersen and LaMantia assert that the relief they seek is limited to preventing the compelled disclosure of IGP membership lists and in no way seeks to interfere with any criminal investigation as to whether they or others have violated the tax laws. Andersen and LaMantia insist that they have standing to seek injunctive relief on their own behalf and on behalf of the members of IGP. They further argue that the Anti-Injunction Act does not apply to the search and seizure of membership indicia and identities of those associated with IGP and that they will suffer irreparable harm unless the court grants the injunctive relief sought.

[1] Pursuant to Circuit Rule 28-2.6, I hereby certify that I am unaware of any cases related to the instant appeal, Docket No. 01- 56900.

DATED: November 19, 2001

WILLIAM A. COHAN, P.C.

[2] Pursuant to Rule 32, F.R.A.P., I hereby certify that this Opening Brief is proportionately spaced with Times New Roman, 14 point typeface prepared on the following word processing system: Corel WordPerfect Suite 8, Legal Edition.

[3] Additionally, I certify that this Opening Brief contains no more than 14,000 words pursuant to Rule 32(a)(7)(B)(i).

[4] Pursuant to Rule 32(a)(7)(C), F.R.A.P., and Circuit Rule 32-1, I hereby certify that Appellant Daniel Andersen, et al., Docket No. 01-56900, contains 13,846 words pursuant to Corel WordPerfect system's word count.

DATED: November 19, 2001

WILLIAM A. COHAN, P.C.

I. Whether appellants have standing to seek injunctive relief on their own behalf and on behalf of tens-of-thousands of members of the Institute of Global Prosperity;

II. Whether the Anti-Injunction Act Applies to searches and seizures for membership indicia and evidence of activities protected by the First Amendment;

III. Whether appellants and tens-of-thousands of members of the Institute of Global Prosperity will suffer irreparable harm unless the Ninth Circuit enjoins further searches and seizures and/or use of membership indicia and other evidence of activities protected by the First Amendment; and

IV. Whether the ex-parte submissions violated the due process rights of appellants and tens-of-thousands of members of the Institute of Global Prosperity.

STATEMENT OF JURISDICTION

[5] Jurisdiction was conferred on the District Court for the Central District of California by 28 U.S.C. §§ 1331 and on this Court by 28 U.S.C. § 1291(a)(1). Notice of Emergency/Expedited Appeal was timely filed on October 23, 2001. CR 25; ER 8. See also, Minute Order entry of denial for preliminary injunction. CR 23; ER 7 and 9.

STATEMENT OF THE CASE

[6] This action was filed on September 28, 2001, by two of the founders of the Institute of Global Prosperity (hereinafter "IGP"), a voluntary political and educational association of individuals who engage in the dissemination of educational, political, religious and philosophical ideas and materials, some of which are critical of the monetary and tax policies of the United States government. Plaintiffs seek, on their own behalf and on behalf of the members of IGP, to enjoin defendants, the United States and various named and unnamed agents of the Internal Revenue Service, from seizing and/or using information relating to the identities of the 70.000 or more members of IGP in the absence of any showing of a compelling governmental need for such information.¹ The relief sought by plaintiffs is narrowly limited to preventing the compelled disclosure of IGP membership lists, and in no way seeks to interfere with any criminal investigation as to whether plaintiffs or others have violated the tax laws. CR 1 and 3; ER 1 and 2.

[7] On October 1, 2001, the district court denied plaintiffs' motion for a temporary restraining order on the ground "that there is not a sufficient emergency," and ordered defendants to show cause why a preliminary injunction should not issue at a hearing scheduled for October 22, 2001.² On October 19, 2001, however, the district court vacated the hearing date, notified plaintiffs telephonically to cancel any subpoenas issued for the purpose of introducing live testimony at the hearing, and without any hearing, denied plaintiffs' motion for a preliminary injunction on the ground that "the alleged infringement of First Amendment rights alleged by plaintiffs appears to be outweighed by the government's compelling interest in pursuing criminal investigations against persons who unlawfully failed to pay taxes."³ The record is barren, however, of any showing by the government as to why the IGP membership information was in any way relevant to its investigation of plaintiffs or others for failure to pay taxes.

[8] On October 23, 2001, plaintiffs filed a notice of appeal to this Court pursuant to 28 U.S.C. § 1292(a)(1). On October 25, 2001, plaintiffs filed a motion for injunction pending appeal in the district court, which the district court denied on November 7, 2001. See CR 26, and ER 9. On November 6, 2001, appellants filed an Emergency Motion under Circuit Rule 27-3, which this Court denied on November 15, 2001.

STATEMENT OF FACTS

[9] Plaintiffs "and others" are the subjects of a federal criminal investigation by defendants into whether they have "conspired to commit tax offenses and/or defraud the Internal Revenue Service, committed or attempted to commit tax evasion, failure to file tax returns and interference with the administration of the Internal Revenue Laws . . ."⁴ No criminal charges, however, have been filed against either of plaintiffs.⁵

[10] On the basis of sealed affidavits to which neither plaintiffs nor the court below have been privy, defendants have obtained and executed eight search warrants at plaintiffs' personal residences and at other locations connected with IGP over a period from February 28, 2001, to September 25, 2001.⁶ in addition to authorizing the seizure of documents (in hard copy and electronic form) relating to the personal and business activities of plaintiffs and IGP, these warrants authorized defendants to seize documents which identify more than 70,000 people who are members and other persons associated with IGP, despite the fact that there has been no showing that these persons have committed tax offenses or that information as to their identities will produce any evidence of the commission of tax offenses. Pursuant to these warrants, defendants have seized thousands of pages of documents, the only purpose of which is to identify IGP members and other persons associated with IGP, even in the most tenuous of ways.

[11] It Is clear from the search warrants that obtaining the identities of IGP members and persons associated with IGP was central to the government's purpose in conducting the searches. Not only was the government authorized to obtain names and addresses of IGP members, but the warrants allowed it to seize names and addresses of "prospective" IGP members as well as videotapes of all persons who even attended IGP seminars. Although all of the warrants seek essentially the same information relating to IGP membership, the language of the search warrants demonstrates how far reaching and intrusive the searches were,

[12] On February 28, 2001, the homes of the plaintiff-founders of IGP were raided by the IRS. The search warrant for the residence of Daniel Andersen provides for the search and seizure of:

. . . . applications for membership, membership cards,

. . . records reflecting attendance at Global 2, 3 or 4

. . . applications for membership, membership cards, membership

Documents to be seized are address books, business cards,

. . . records reflecting attendance at Global 2, 3 or 4

. . . applications for membership, membership cards, membership

. . . records reflecting attendance at Global 2, 3 or 4

Documents to be seized include applications for membership,

. . . applications for membership, membership cards, membership

Documents to be seized are address books, business cards,

Evidence to be seized includes membership information, including

Other evidence to be seized includes web sites and databases

Any and all computer databases residing on any computer,

[26] The impact of the above-described searches and seizures of indicia of membership and prospective membership in IGP has been devastating. It is axiomatic that the seizure by the IRS of lists of and identifying data on members and prospective members of an organization that advocates change in the tax laws, including the abolition of the IRS, has a profound chilling effect on members and prospective members. Furthermore, the manner in which these searches were conducted, including the use of firearms and the lengthy detention of persons, was calculated to intimidate and harass members and prospective members of IGP.

ARGUMENT

[27] STANDARD OF REVIEW: mixed questions of law and fact which require the Court "to consider abstract legal doctrines, to weigh underlying policy considerations and to balance competing legal interests," are reviewed de novo. U.S. v. McConney, 728 F.2d 1195, 1204-05 (9th Cir. 1984).

I. PLAINTIFFS HAVE STANDING TO SEEK INJUNCTIVE RELIEF ON

[29] The Supreme Court has recognized, "the right of litigants to bring actions on behalf of third parties, provided three important criteria are satisfied: the litigant must have suffered an 'injury- in-fact,' thus giving him or her a sufficiently concrete interest' in the outcome of the issue in dispute; the litigant must have a close relation to the third party; and there must exist some hindrance to the third party's ability to protect his or her own interests." Powers v. Ohio, 499 U.S. 400, 411 (1991)(Internal citations omitted); Wedges/Ledges, Calif v. City of Phoenix, 24 F.3d 56, 62 (9th Cir. 1994); Lepelletier v. Federal Deposit Ins. Corp., 164 F.3d 37, 43 (D.C. Cir. 1999). As the Supreme Court reiterated just last year:

In Lujan v Defenders of Wildlife, 504 U.S. 555, 560-561

[30] Plaintiffs clearly satisfy each of the Powers criteria. First, they have each suffered legally cognizable injuries as a result of the searches of their homes and association's office during which membership lists, evidence of attendance at association sponsored meetings and seminars, and political and educational publications were seized in violation of their First and Fourth Amendment rights. As the Supreme Court noted in Stanford v. Texas. 379 U.S. 476, 485 (1965):

The constitutional requirement that warrants must particularly

[31] Furthermore, plaintiffs are being injured by the effect that the government action is having on their business/political- educational association. See Declaration of Becky L. Coggins, ¶¶ 10-14 (filed with plaintiffs' motion for Temporary Restraining Order and Preliminary Injunction), Declaration of Manuel Medina at ¶¶ 6-10 (attached hereto as Exhibit 1) and Declaration of Lonnie Brasher at ¶¶ 5-7 (attached hereto as Exhibit 2). It is well settled in the Ninth Circuit that providers of goods or services have standing to challenge government action that directly affects their customers and restricts their market. Wedges/Ledges, 24 F.3d at 61; Virginia v. American Booksellers Assn., 484 U.S. 383 (1988)(booksellers have standing to raise the First Amendment rights of bookbuyers); Craig v. Boren, 429 U.S. 190, 195 (1976)("vendors . . . have been uniformly permitted to resist efforts at restricting their operations by acting as advocates of the rights of third parties who seek access to their market or function.").

[32] As set forth in the verified complaint and in the Coggins, Brasher and Medina Declarations, the chilling effect on plaintiffs' business of the government's well-publicized attacks against IGP and the targeting of its members satisfies the first prong of the Powers test. As in Wedges/Ledges, 24 F.3d at 61, plaintiffs here are claiming that the government's campaign against IGP is aimed at destroying the organization. See, e.g., White v. Lee, 227 F.3d 1214, 1241 (9th Cir. 2000)("In any event, the officials point to no evidence in the record that disputes the assertions in the plaintiffs' declarations that their rights were in fact chilled . . . . the fact that the plaintiffs incurred First Amendment injury is not a matter in genuine dispute."); Mendocino Environmental Center v. Mendocino County, 192 F.3d 1283, 1300 (9th Cir. 1999)("our description of the elements of a First Amendment claim . . . requires only a demonstration that defendants intended to interfere with [plaintiffs'] first Amendment rights; '. . . Because it would be unjust to allow a defendant to escape liability for a First Amendment violation merely because an unusually determined plaintiff persists in his protected activity, we conclude that the proper inquiry asks 'whether an official's acts would chill or silence a person of ordinary firmness from future First Amendment activities.'").

[33] The second prong of the Powers test -- that the litigant must have a "close relation" to the third party -- is also satisfied in the present case. This prudential requirement serves to insure that there is "an identity of interests between the parties such that the plaintiff will act as an effective advocate of the third party's interests." Lepelletier v. Federal Deposit Ins. Corp., supra 164 F.3d at 44. Where "the enjoyment of the right the plaintiff asserts is 'inextricably bound up' with the activity the plaintiff wishes to pursue, the court 'can be sure that its construction of the right is not unnecessary in the sense that the right's enjoyment will be unaffected by the outcome of the suit."' Voigt v. Savell, 70 F.3d 1552, 1564 (9th Cir. 1995), quoting, Singleton v. Wulff, 428 U.S. 106, 114-115 (1976).

[34] Here, plaintiffs' communication of their political, philosophical, economic and educational views through publications and seminars is "inextricably bound up" with the right of their association's members, customers and audience to associate with plaintiffs free from government interference, and the relationship makes plaintiffs effective proponents of that right. Singleton v. Wulff, 428 U.S. at 115; Eisenstadt v. Baird, 405 U.S. 438 (1972)(contraceptive sellers have standing to assert the rights of unmarried customers); Craig v. Boren, 429 U.S. 190 (1976)(liquor distributors have standing to challenge constitutionality of statute which treats male and female customers differently); Secretary of State v. Munson, 467 U.S. 947 (1984)(professional fundraiser has standing to assert the rights of charities who may be his clients). As in N.A.A.C.P. v. Alabama, 357 U.S. 449, 458 (1958), plaintiffs' nexus with the members of IGP is sufficient to permit them to act as their representative to assert their right to be protected from compelled disclosure by the government of the IGP membership lists. See also, Clark v. City of Lakewood, 259 F.3d 996, 1010 (9th Cir. 2001)(owner of adult business had standing to challenge constitutionality of city ordinance on behalf of employees who were concerned about the ordinance's requirement that they disclose their home address and phone number).

[35] Finally, the third prong of the Powers test is satisfied by the inability of the members, customers and associates of IGP to protect their own interests. As in Powers, the barriers to the vindication of their rights by individual IGP members are "daunting." 499 U.S. at 414. They are not parties to the proceedings as a result of which the IGP membership information has been seized by the government, and they have had no opportunity to be heard at the time of the seizure or since. Id. Nor can they easily obtain declaratory or injunctive relief "because of the small financial stake involved and the economic burdens of litigation." Id., at 115.

[36] More importantly, however, a requirement that IGP members assert their own right to be free from the compelled disclosure of their association with IGP would undermine the very right sought to be protected. Thus, what the Supreme Court said in N.A.A.C.P. v. Alabama, 357 U.S. at 459, is equally applicable here:

If petitioner's rank-and-file members are constitutionally

[37] The following assertion by Defendants, likewise lacks merit:

Unlike N.A.A.C.P., the assertion of rights by individual members

[38] As the Supreme Court held in Church of Scientology of California v. U.S., 506 U.S. 9 (1992):

. . . In this case, after the Church took its appeal from the

[39] Furthermore, plaintiffs' pursuit of the injunction is required by their duty to mitigate damages and plaintiffs' failure to take such reasonable steps to mitigate would reduce or eliminate their entitlement to the damages sought by their Complaint filed herein.

II. THE ANTI-INJUNCTION ACT DOES NOT APPLY TO THE SEARCHES AND

[41] The Anti-Injunction Act, 26 U.S.C. § 7421(a) provides, in pertinent part, that "[n]o suit for the purpose of restraining the assessment or collection of taxes shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed." The principal purpose of the Act is to protect the government's "need to assess and collect taxes as expeditiously as possible with a minimum of preenforcement 'and to require that the legal right to the disputed sums be determined in a suit for a refund.'" Bob Jones University v. Simon, 416 U.S. 725, 736 (1974) (quoting Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 7 (1962). The Act is applicable, moreover, "to activities which are intended to or may culminate in the assessment or collection of taxes." Kemlon Products & Development Co. v. United States, 638 F.2d 1315, 1320 (5th Cir.), modified on other ground, 646 F.2d 223 (5th Cir.), cert. denied, 454 U.S. 863 (1981)

[42] The Anti-Injunction Act does not apply, however, where the purpose of the action in which it is invoked is something other than to restrain the collection of taxes or the collection of information that would aid in the assessment of taxes. Linn v. Chivatero, 714 F.2d 1278, 1282 (5th Cir. 1983); Cardwell v. Kurtz, 765 F.2d 776, 779 (9th Cir. 1985); see also Founding Church of Scientology v. Director, Federal Bureau of Investigation, 1984 U.S. Dist. LEXIS 17064, 84-1 U.S. Tax Case. (CCH) 9468 (D.D.C. 1984) (Act not applicable in action instituted not to challenge any specific tax liability but to vindicate constitutional rights independent of plaintiff's rights as a taxpayer); Application of Dr. J. W. Schonfeld, 460 F.Supp. 332 (E.D. Va. 1978) (Act not applicable where plaintiff only sought determination of validity of seizure of property and not of tax liability).

[43] The present action does not run afoul of the Anti- Injunction Act because its "primary purpose" is not to restrain the assessment or collection of taxes. Rather, its sole purpose is to recover property seized by defendants in violation of plaintiffs' Fourth Amendment rights, and to enjoin defendants from continuing to violate the First Amendment rights of plaintiffs and the members of IGP by seizing and using IGP membership information that is totally unrelated to any legitimate interest the government may have in the assessment and collection of taxes.⁹ As one court noted, "the fact that IRS agents, rather than some other government officials, were allegedly responsible for the constitutional violation does not deprive us of the power to remedy that violation where the agents' status as tax officials is incidental to the underlying complaint." Linn v. Chivatero, 714 F.2d at 1282.

[44] The complaint in the present case describes a series of government raids on the homes of plaintiffs and other facilities related to their business and political activities pursuant to search warrants issued for the ostensible purpose of seizing records containing "evidence, fruits or other instrumentalities" of the commission of various tax offenses against the United States. However, no taxes have been assessed against plaintiffs or any other entity related to IGP, the raids were in no way related to any attempt to collect any existing tax liability, and there are no civil or criminal actions pending against plaintiffs or any entity related to IGP relating to unpaid taxes.

[45] Despite the narrow authorization in the search warrants to search for evidence, fruits and instrumentalities of criminal offenses, defendants conducted general searches of the various premises and seized many documents which not only far exceeded the scope of the warrants, but also violated the constitutional rights of plaintiffs and members of IGP. Thus, in addition to seeking the membership lists and other indicia of membership in and/or association with IGP, government agents seized various so-called "anti-tax" publications, such as "IRS Under Indictment,"¹⁰ "Issues of the Freeman,"¹¹ and "How to be Free at Last From the IRS."¹² The government has made no showing, much less a showing of a compelling need, as to how these documents are related to any legitimate government interest in assessing or collecting taxes.

[46] Plaintiffs are not seeking, as the government claims, "a blanket injunction restraining the IRS from continuing its tax investigation as well as furthering its investigation by the utilization of information that the IRS seized during the subject searches."¹³ Rather, they merely seek to recover the items seized in violation of the First and Fourth Amendments, to enjoin the government from using such information, and to enjoin the government from "any further searches for or other attempts to obtain indicia of association with plaintiffs and IGP."¹⁴ They are in no way seeking a "blanket injunction" against any government investigation, nor do they challenge or seek to avoid any assessment or collection of taxes by the government.

[47] Numerous courts have held that actions identical to the present case are not barred by the Anti-Injunction Act. In Linn v. Chivatero, 714 F.2d 1278 (5th Cir. 1983), the plaintiffs sued the IRS and various agents for the return of certain documents that had been mistakenly turned over to the government pursuant to a subpoena and which were being retained in violation of the Fourth Amendment. In rejecting the government's argument that the suit was barred by the Act, the court concluded:

Our review of the facts alleged in support of Linn's complaint

[48] Similarly, in Cardwell v. Kurtz, 765 F.2d 776 (9th Cir. 1985), the plaintiffs sued the IRS and several of its agents to require the return of information from an audit to which plaintiffs had consented on the basis of fraud, deceit and trickery by the government. In reversing the refusal of the district court to grant relief, this Court followed Linn and held:

To the extent that the plaintiffs seek the return of information

[49] This action falls squarely within the holdings of Linn and Cardwell. Indeed, plaintiffs make a far more compelling case for the exercise of this Court's jurisdiction in view of the fact that defendants have not only violated plaintiffs' Fourth Amendment rights, but their conduct has had the far more extensive and egregious effect of chilling the exercise of fundamental First Amendment rights of speech and association by the tens of thousands of IGP members, customers and associates. As in Linn and Cardwell, plaintiffs are not challenging any tax liability, nor are they attempting to prevent the collection of information relevant to any legitimate tax assessment. They only seek to be free from unreasonable searches and seizures and from the kind of government conduct excoriated by the Supreme Court over four decades ago in NAACP v. Alabama, 357 U.S. 449 (1958). And as in Linn and Cardwell, plaintiffs and the members of IGP will be left without any forum in which to vindicate the violation of their constitutional rights if this Court does not exercise its Jurisdiction.

[50] While defendants have conceded that the Anti-Injunction Act does not bar civil actions seeking the return of documents seized in violation of the Fourth Amendment,¹⁵ they attempt to distinguish the present case solely on the basis of their erroneous claim that plaintiffs are seeking "a blanket injunction" against the IRS from continuing its criminal tax investigation and from using any of the information seized as a result of the searches. As discussed above, plaintiffs' claims are narrowly limited to the recovery of IGP membership lists and other indicia of membership and in no way seek to enjoin the IRS from continuing its criminal tax investigation.

[51] For this reason, the cases relied upon by defendants are inapposite because they all involve attempts to broadly interfere with legitimate tax investigations by the IRS and its agents. Thus, in Keese v. United States, 632 F.Supp. 85 (S.D. Tex. 1985), the court held that the Act barred an action which sought to enjoin IRS activity relating to the plaintiff's business as a tax preparer, to enjoin the IRS from mentioning her when contacting her clients, to enjoin the IRS from using any information obtained as a result of illegal seizures, and to enjoin the IRS from harassing her clients, from scheduling audits of them, and from withholding refund checks from them. In Lowrie v. United States, 824 F.2d 827, 831 (10th Cir. 1987), the court held that the taxpayer's admission that his purpose in bringing the action for the return of documents seized by the IRS was "to head off action against him, of whatever nature, by the IRS," brought the case "squarely within the purview of the Act." In Black v. United States, 534 F.2d 524 (2nd Cir. 1976), as in Keese, the plaintiffs, who were tax preparers, sought to enjoin the IRS from issuing summonses, questioning and auditing clients, and from generally harassing them in connection with a criminal investigation. In holding that the action was barred by the Act, the court concluded that "if the IRS is enjoined from continuing its investigation, it will be hindered in its efforts to uncover, correct and remedy improper deductions which may have been claimed by Black on behalf of his clients." Id. at 526-527. Finally, in United States v. Dema, 544 F.2d 1373, 1376 (7th Cir. 1976), the court held that a taxpayer's action to enjoin the government's inspection of his books and records "for the sole purpose of ascertaining the correct tax liability for the years in question" fell squarely within the central purpose of the Act.

[52] Because of the limited nature of the relief sought by plaintiffs, which in no way seeks to interfere with the assessment or collection of taxes, this action is not barred by the Anti-Injunction Act. Indeed, this Court is the only forum available in which the continuing irreparable harm caused by the government's continuing first amendment violations can be effectively addressed in a timely manner.

B. The Department of Justice and the Internal Revenue

[54] But that position is flatly inconsistent with the contention that the Anti-Injunction Act bars plaintiffs' claims because searches and seizures to gather evidence for presentation to a grand jury cannot be used as a pretext for collecting information to assist in assessment and collection of taxes. As the Court noted in Badaracco v. Commissioner of Internal Revenue, 464 U.S. 386, 399 (1983) once the Department of Justice accepts a criminal referral from the IRS and commences a criminal investigation, the IRS is prohibited from proceeding with audits, assessment and collection. The Court's holdings in United States v. Sells Engineering, 463 U.S. 418, 431-33(1983) and United States v. Baggot, 463 U.S. 476, 477 (1983) made it absolutely clear that the IRS civil division -- which assesses and collects taxes -- was prohibited from utilizing the grand jury to gather information for tax collection purposes.

Not only is disclosure for civil use unjustified by the

[56] Remarkably, the government does not deny that it is using IGP's membership list and the identities of all persons associated with IGP as a data base to conduct audits or that such audits based on mere indicia of membership in or association with IGP would obviously constitute the very "threats, harassment and reprisals" alleged in plaintiffs' complaint. Indeed, it would be difficult to do so while relying on the Anti-Injunction Act and its protection of the government's power and duty to assess and collect taxes along with the government's power and duty to conduct criminal tax investigations. Distilled to its essence, according to the government, nothing as insignificant as the First and Fourth Amendments and cases construing those limitations on the government's powers and duties could empower a district court to interfere with its tax collection and criminal tax investigation being pursued simultaneously.

[57] In addition to numerous cases cited by plaintiffs suggesting the government has exaggerated its powers and duties and erroneously ignored the powers and duties of the federal courts when the first and fourth amendment rights of 70,000 people are at stake, this Court has recently decided Hines v. Gomez, 108 F.3d 265, 269 (9th Cir. 1997) and Gomez v. Vernon, 255 F.3d 1118, 1127- 28 (9th Cir. 2001), holding that an injunction is appropriate for an injury no more tangible than a claim for retaliation against persons exercising their rights protected by the first amendment.

[58] Last, but not least, if this Court finds that civil tax collection is entitled to any weight in opposition to the First Amendment rights of 70,000 people, it should consider 26 U.S.C. §6501. In Badaracco, supra, the Court held that §6501(c)(1) provides that when there is a false or fraudulent tax return filed, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time. Likewise, IRC §6501(c)(3) covers the case of a failure to file a return at all (whether or not due to fraud) and provides that an assessment then also may be made at any time. 464 U.S. 386 at 392. Accordingly, an injunction will not materially prejudice the government's ability to assess and collect taxes.

III. PLAINTIFFS AND THE MEMBERS OF IGP WILL SUFFER IRREPARABLE

To obtain a preliminary injunction a party must demonstrate

[60] This Court has noted, moreover, that the alternative formulations of these standards are the two extremes on a sliding scale "in which the degree of irreparable harm that must be shown increases as the probability of success on the merits decreases." California v. American Stores Co., 872 F.2d 837, 840 (9th Cir. 1989), rev'd on other grounds, 495 U.S. 271 (1990); see also Regents of University of California v. ABC, Inc., 747 F.2d 511, 515 (9th Cir. 1984). Put another way, "the required showing of harm varies inversely with the required showing of meritoriousness." San Diego Committee v. Governing Board, 790 F.2d 1471, 1473 n.3 (9th Cir. 1986).

[61] Thus, where the plaintiffs have raised a serious question as to whether their First Amendment rights are being violated, they are not held to the higher standard of showing a probability of success on the merits. Recognizing that "the loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury," Elrod v. Burns, 427 U.S. 347, 373-374 (1976), this Court has held that in such cases a "lesser showing of meritoriousness" will entitle plaintiffs to preliminary injunctive relief San Diego Committee v. Governing Board, supra. at 1473 n.3; see Viacom International Inc. v. F.C.C., 828 F.Supp. 741, 743 (N.D. Cal. 1993).

[62] As discussed below, however, plaintiffs in the present case have shown not only that they present a serious First Amendment claim but they have also established a probability of success on the merits. Since they clearly continue to suffer irreparable injury, they are entitled to the injunctive relief sought.

B. Defendants' Seizure and/or Use of IGP Membership

It is beyond debate that freedom to engage in association for

[64] Because disclosure of the identities of a group's members or contributors may have the practical effect of discouraging the exercise of these constitutionally protected rights, governmental attempts to compel such disclosure have been subjected to exacting scrutiny. Buckley v. Valeo, 424 U.S. 1, 64-74 (1976); Gibson v. Florida Legislative Investigation Committee, 372 U.S. 539 (1963); Shelton v. Tucker, 364 U.S. 479 (1960); Bates v. City of Little Rock, 361 U.S. 516 (1960); NAACP v. Alabama, 357 U.S. 449 (1958). As the Supreme Court has explained:

It is hardly a novel perception that compelled disclosure of

[65] For these reasons, compelled disclosure of group membership information is not permitted unless it is substantially related to a compelling governmental interest. In Buckley v. Valeo, supra, at 64, the Supreme Court stated:

We long have recognized that significant encroachments on First

[66] There can be no question in the present case that there is a "reasonable probability" that the repeated seizures by defendants of lists and other information relating to the identities of thousands of IGP members "will subject [them] to threats, harassment, or reprisals from . . . Government officials . . ." Id. at 74. ¹⁶ "The chilling effect of a summons served by an IRS agent to obtain membership records of a tax protester group has been said to be 'readily apparent."' In re First National Bank, Englewood, Colorado, 701 F.2d 115, 118 (10th Cir. 1983) quoting from United States v. Grayson County State Bank, 656 F.2d 1070, 1074 (5th Cir. 1981 ), cert. denied, 455 U.S. 920 (1982); see also Pollard v. Roberts, supra, at 258 ("[I]t would be naive not to recognize that the disclosure of the identities of contributors of campaign funds [to the Republican Party of Arkansas] would subject at least some of them to potential economic or political reprisals of greater or lesser severity."); Shelton v. Tucker, 364 U.S. at 486 (chilling effect inevitable if teachers who served at the absolute will of school boards had to disclose to the government all organizations to which they belonged); Local 1814 v. Waterfront Commission, 667 F.2d 267, 272 (2^nd Cir. 1981) (chilling effect inevitable if contributions of union members to union political action committee were disclosed to investigating agency); Mendocino Environmental Center v. Mendocino County, 192 F.3d 1283, 1300 (9^th Cir. 1999) (government officials violate the First Amendment when their acts "would chill or silence a person of ordinary firmness from future First Amendment activities"); In re: Grand Jury Proceeding, 842 F.2d 1229, 1236 (11^th Cir. 1988) (the fact that a government investigation has already focused on a particular political group may indicate the possibility of harassment).

[67] It is apparent here that the wholesale seizures of IGP membership lists in connection with an IRS criminal investigation of what the government considers a tax protester organization will have a substantial "chilling effect" upon the exercise by IGP members of their First Amendment right of association. The declarations submitted in support of plaintiffs' motion for a preliminary injunction document the damage already done by the seizures to IGP's speech, press and associational activities. One IGP salesman reports that many people with whom he deals are "no longer willing to be associated with IGP" because of the IRS raids, and that many are not purchasing IGP materials or attending seminars because they "are afraid of coming to the attention of the IRS and subjecting themselves to an audit or other IRS scrutiny." ¹⁷ Another reports that in his discussions with sales prospects "[t]he average person is very afraid of their name appearing on a list that is seized by the IRS and worried about being a target of the IRS . . ." ¹⁸ And the office manager for EPS, an entity which markets educational products for IGP, reports that sales of audiotapes and seminar tickets has declined precipitously as information of the IRS raids has spread. ¹⁹

C. Defendants Have Failed To Establish That The Seizures

The warrants' overbreadth is made even more egregious by the

D. The District Court Erred In Denying Plaintiffs' Motion For Preliminary Injunction.

[70] Although under certain circumstances the denial of a preliminary injunction is subject to only a limited review, this Court can reverse the denial "if we find that the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact." Metro Publishing, Ltd. v. San Jose Mercury News, 987 F.2d 637, 639- 640 (9th Cir. 1993). Moreover, issues of law underlying the district court's decision on the preliminary injunction are reviewed de novo. Id.

[71] In the present case, the district court's denial of the preliminary injunction sought by plaintiffs was based on an erroneous legal standard and thus subject to plenary review in this Court. As discussed above, where the plaintiffs make a prima facie showing that their First Amendment rights of speech and association are being infringed by a government investigation, the burden shifts to the government to establish that its interest is sufficiently compelling to outweigh the infringement. Brock v. Local 375, supra, at 349-350; Local 1814 v. Waterfront Commission, supra, at 270- 271. That burden cannot be met, moreover, by mere assertions by officials of a legitimate government interest in obtaining certain information. Rather, the government must produce evidence -- sufficient to survive "exacting scrutiny" -- that there is a "substantial relation" between a compelling government interest and the information required to be disclosed. Buckley v. Valeo, supra at 64.

[72] The district court incorrectly applied this legal analysis in two respects. First, the court erroneously believed that, "even if true," defendants' infringement of the most fundamental First Amendment rights of speech and association "fails to rise to the level of 'extraordinary circumstances' necessary for plaintiffs to be granted injunctive relief." ER 7, at 5 ²¹ Such a conclusion trivializes the Supreme Court decisions beginning with NAACP v. Alabama, supra, that have recognized that privacy in group association is among this Nation's most important values, and creates a virtually insurmountable burden to the vindication of those rights.

[73] Second, the district court failed to subject defendants' claims to "exacting scrutiny." Instead, relying upon ex parte information, the court merely accepted at face value defendants' assertion that the identification of IGP members was "directly relevant" to its investigation of the "possible violation of the tax laws by plaintiffs, as well as other individuals . . . ," Defs.' Opposition at 9, and concluded that such an interest outweighed plaintiffs' rights. ER 7, at 5. Such a conclusion makes a mockery of the constitutional imperative that the government must make a showing with objective and articulable facts that it has a compelling need for the information sought. See Buckley v. Valeo, supra.

[74] This Court has recognized that "'the loss of First Amendment freedoms, for even short periods of time, unquestionably constitutes irreparable injury. . .'" San Diego Committee v. Governing Board, supra, at 1473 n.3 (quoting from Elrod v. Burns, 427 U.S. 347, 373-374 (1976). In the present case, regardless of whether plaintiffs have shown a probability of success on the merits or have merely raised serious questions going to the merits, the balance of hardships tips sharply in their favor. Id. Despite their oft repeated claim, there is not a shred of evidence that an injunction against further seizures or use of IGP membership Information by defendants would in any way interfere with or compromise their criminal tax investigation.

IV. EX PARTE SUBMISSIONS VIOLATE PLAINTIFFS' DUE PROCESS

[76] The United States and the federal agent defendants preface their opposition with, inter alia:

. . . the United States of America will separately file the

The United States of America hereby gives notice that it has

[79] On October 2, 2001, the District Court entered an Order, providing in pertinent part:

Counsel are advised that the Court expects strict compliance

There is no direct evidence in the record to show what

It is the hallmark of our adversary system that we safeguard

Prior to the execution of each of these search warrants, the

We also reject petitioner's argument that if an officer is

The government filed a declaration by AUSA Larson in

[W]here a party withholds (or seeks to suppress) relevant

CONCLUSION

[86] For the foregoing reasons, this Court should reverse the District Court and remand with direction to grant plaintiffs' motion for preliminary injunction and issue its order enjoining defendants: 1) from seizing IGP membership information from plaintiffs, their affiliates, associates, IGP members, and any persons or entities acting in concert with them; and 2) from making any use of any and all IGP membership information already seized.

[87] RESPECTFULLY SUBMITTED this 19th day of November, 2001.

WILLIAM A. COHAN, P.C.

[88] I hereby certify that on this 19th day of November, 2001, I did deposit in the United States mail, two true and correct copies of the foregoing OPENING BRIEF FOR APPELLANTS ANDERSEN, et al., and one true and correct copy of the Excerpt of the Record (Docket No. 01-56900), with sufficient first-class postage affixed thereto, addressed to the following:

GRETCHEN M. WOLFINGER, ESQ.

² CR 7, ER at 4. Minute Order of October 1, 2001.

³ CR 23, ER at 7, Minute Order of October 22, 2001, at 5.

⁴ CR 13, Opposition of Defendants to Plaintiffs' Motion for Preliminary Injunction ("Def. Opp.") at 3.

⁵ Id. at 4.

⁶ CR 1, ER 1, Verified Complaint, ¶¶ 6-87; Exhibits 1(a), 2(a), 3(a), 4(a), 5, 6(a), 8(a) and 9(a).

⁷ In addition to injunctive relief, plaintiffs also seek damages for the violation of their Fourth and Fifth Amendment rights by defendants in the execution of the search warrants.

⁸ In Appellees 'Opposition to Appellants' Emergency Motion Under Circuit Rule 27-3 at 5 n.3 ("Gov't Opp."), the government misleadingly states that plaintiffs do not request a return of the illegally seized property in their emergency motion for injunction pending appeal. The Verified Complaint requests a mandatory injunction requiring the return of this property (Exhibit 1, p. 26, §90(2)), and the motion requests that the Court enjoin the government from using the information pendente lite. (Emergency Motion at 1)

⁹ As explained in Section II.B., infra, the Department of Justice and the Internal Revenue Service are prohibited from using the Grand Jury to assist in gathering evidence for use In civil litigation and a fortiori for use by the Internal Revenue Service for Assessment and Collection of Taxes.

¹⁰ ER 1, Exhibit 1 p. 56 (Inventory Control No. 64).

¹¹ Id., (Inventory Control No. 61).

¹² Id.,(Inventory Control No. 62).

¹³ CR 13, Exhibit 9, Opposition of Defendants to Plaintiffs' Motion for Preliminary Injunction ("Gov't Opp. to Pl Motion"), at 16.

¹⁴ ER 2, Exhibit 2, Plaintiffs' Motion for Preliminary Injunction and Temporary Restraining Order, at 8.

¹⁵ CR 13, Gov't Opp. to Preliminary Injunction Motion at 15.

¹⁶ Each of the warrants for the searches conducted on February 28, 2001, August 23, 2001, and September 25, 2001, authorized defendants to seize "lists of names or addresses or telephone numbers (or other identifying data) of [IGP] members, prospective members . . . "(pp. 3-6 , above) One of the warrants authorized the seizure of "the Global membership database" (p. 6, above), and another authorized the seizure of "all computer databases . . , including any 'database server' containing records of Global . . . id." (p. 7, above)

¹⁷ CR 19 (Declaration of Manuel Medina, ¶6); ER 5.

¹⁸ CR 19 (Declaration of Eron Lonnie Brasher, III, ¶4), ER 6.

¹⁹ CR 6, Declaration of Becky L. Coggins, ¶¶ 10-15, ER 3.

²⁰ Defendants cannot meet their burden of showing that the seizure of IGP membership information serves a compelling government interest by relying on the in camera Declaration of Patrick F. Stokes, a U.S. Department of Justice trial attorney, filed under seal, "that IGP records relating to members is [sic] directly relevant to [the IRS] investigation." Defendants' Opposition, p.9. As the Supreme Court has said, one of the "relatively immutable" principles of our jurisprudence is that "the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue." Greene v. McElroy, 360 U.S. 474, 496 (1959). "It is therefore the firmly held rule that a court may not dispose of the merits of a case on the basis of ex parte, in camera submissions." Abourezk v. Reagan, 785 F.2d 1043, 1061 (D.C. Cir. 1986); see also In re Wheeler Technology, 139 B.R. 235 (9th Cir. 1992) (debtor's action to recover property was inappropriately brought by means of ex parte motion; adversary proceeding required); Guenther v. C.I.R., 939 F.2d 758 (9th Cir. 1991)(holding taxpayers' due process rights were violated by Commissioner's ex parte, in camera submission of trial memorandum). Despite plaintiffs' motion to strike or to disclose the Stokes Declaration, the district court evidently relied upon it in denying plaintiffs' motion for a preliminary injunction. Exhibit 7, at 2. This was error, and plaintiffs are, at the very least, entitled to a remand for a hearing at which the Stokes Declaration is disclosed to them or, alternatively, for a hearing before a different judge who has not been exposed to ex parte communications. See Guenther v. C.I.R., supra (taxpayers were entitled to a new trial before a different judge who had not been exposed to ex parte communications); United States v. Mikaelian, 168 F.3d 380 (9th Cir. 1999) (defendant entitled to resentencing before a judge who had not viewed in camera documents not available to the defense).

²¹In stating that it would only entertain an action to enjoin a prosecutor's investigative activities "in extraordinary circumstances," the district court relied upon a decision by a divided panel of this Court in Olagues v. Russoniello, 770 F.2d 791, 799-800 (9th Cir. 1985). That opinion, however, was subsequently withdrawn for rehearing en banc, Nos. 82-4427 and 83-2581, in an unpublished order on January 21, 1986. On August 26, 1986, a divided en banc Court reversed the district Court and remanded for a determination of whether an injunction should issue. Specifically, the en banc Court held that where governmental actions burden a fundamental right they can be upheld "only if they are necessary to advance a compelling governmental interest . . . [and] the classification must be closely tailored to effectuate only that interest." Olagues v. Russoniello, 797 F.2d 1511, 1521 (9th Cir. 1986) (en banc). The Court further held that "the district court erred in finding as a matter of law that the Government's interest in preventing voter fraud outweighed the appellant's first amendment interests." Id. at 1523. Subsequently, pursuant to the direction of the Supreme Court in Russonlello v. Olagues,, 484 U.S. 806 (1987), the Court vacated its en banc judgment and remanded to the district court to dismiss as moot. Olagues v. Russoniello, 832 F.2d 131 (9th Cir. 1987).

²²Cf., U.S. v. Kow, 58 F.3d 423, 428-29 (9^th Cir. 1995) ("[T]he warrant in this case listed entire categories of documents to be seized, encompassing essentially all documents on the premises. We have been 'vigilant in scrutinizing officers' good faith reliance on such illegally overbroad warrants.' . . . Because the warrant in this case was facially invalid, no reasonable agent could have relied on it 'absent some exceptional circumstance.' . . . The mere fact that the warrant was reviewed by two AUSA's and signed by a magistrate does not amount to 'exceptional circumstances.'"