The Carpenter decision relates to a motion to dismiss based on inadequacies in the complaint. Motions to dismiss test the adequacy of the complaint. Basically, the Court declined to dismiss the main thrust of the claim in order to permit discovery to proceed, with the recognition that, after discovery, some or all of the issues could be resolved by summary judgment. There will be further trial level proceedings in the matter. But, some aspects of the decision caught my attention.
The factual background is interesting because, according to the allegations in the complaint not yet tested in discovery, the IRS agents executing the search warrant at Carpenter's place of business were way over the top in the manner in which they executed the search warrant.
The affidavit in support of the search warrant alleged that the agents would search for "for evidence that Carpenter was engaging in criminal tax offenses, including conspiracy to impede the lawful function of the IRS, 18 U.S.C. § 371, and aiding and assisting the preparation of false income tax returns, 26 U.S.C. § 7206(2)." The affidavit did not mention "any specific dangers anticipated in executing the proposed search nor any exigent circumstances justifying a highly armed raid on the property."
Here is a description from the case of how the IRS agents executed the search warrant:
On April 20, 2010, Schrader and 72 unknown IRS agents (the "John Doe" defendants) executed the search warrant at 100 Grist Mill Road in order to obtain evidence against Daniel Carpenter and GMC. Carpenter alleges that the IRS agents wore "black Kevlar bullet-proof vests and were brandishing automatic weapons" during the execution of the search, which was conducted in the same manner as a SWAT operation. Id. at ¶¶ 8. During the search, Carpenter and the other GMC employees were not informed of which crime they were suspected of committing, nor were they provided with the search warrant affidavit or any other document indicating which crimes were at issue. Id.
During the search, the government seized 322 banker boxes of documents over the course of eighteen hours, a period in excess of what was authorized by the warrant. Id. at ¶ 9. During the search, the agents held numerous employees against their will for long periods of time and interrogated them. Id. Carpenter was "placed in custody, threatened with handcuffs, and questioned, despite his invocation of his right to have counsel present." Id. at ¶ 10. He was also "threatened with arrest" when he attempted to speak to counsel or leave the room to make a call. Id. Carpenter also alleges that the government "ransacked" his office during the search. Id. at ¶ 28.
Carpenter alleges that Schrader had a duty to supervise the John Doe defendants in their use of force and the manner in which they carried out the search, and that he failed to do so. Id. at ¶¶ 21, 24. Specifically, he alleges that Schrader failed to supervise or instruct the agents on what was appropriate conduct during the search, and that Schrader was either "directly responsible" for the intimidating tactics or "deliberately indifferent" to the possibility that the search would be carried out in an unconstitutional manner. Id. at ¶ 21. Carpenter alleges that Schrader also "consciously disregarded the substantial risk that he had authorized the custodial interrogation" of Carpenter without reading him his Miranda rights in violation of his Fifth and Sixth Amendment rights to have counsel present. Id. at ¶ 28.
Carpenter alleges that Schrader's acts were intentional and motivated by animus against Carpenter because of his reputation as an "anti-government" actor and his litigation against the government in the Massachusetts case. Id. at ¶ 26. Accordingly, Carpenter alleges that the manner in which the search was carried out was deliberately intended to "harass, intimidate and humiliate" him. Id. Carpenter further claims that the IRS has a policy and practice of using armed agents to enforce search warrants for [*8] tax documents, despite the fact that the IRS manual "requires investigations to be carried out with the least intrusive means necessary." Id. at ¶ 22; see also id. at ¶ 25. Carpenter does not allege, however, that Schrader had any responsibility for setting IRS policies.
To date, Carpenter and his related entities have not been indicted for the tax offenses alleged in the warrant affidavit.The Court later said as to the execution of the search warrant:
Moreover, Carpenter has alleged that the search, and his concurrent detention, lasted longer than what was permitted by the warrant. The warrant permitted a search from 6:00 a.m. to 10:00 p.m., e.g., a sixteen-hour day. See Warrant (STOLI Case, doc. 81-1). The Second Amended Complaint alleges that the search lasted for eighteen hours, two hours longer than permitted. SAC at ¶ 9.Further related to the execution of the search warrant, the Court said:
With respect to the Fourth Amendment claims arising out of the unreasonable manner of the search, I asked the government whether there was anything alleged in the complaint, or likely to be put forward, indicating that the agents had specific safety concerns that might have justified using heavily-armed agents to conduct the search. 2d Mot. to Dismiss Tr. at 26, 31. The government conceded that there was nothing of that kind alleged in the complaint and suggested it was unlikely that a stronger safety justification would be forthcoming. Id. at 26.Although not indicted for the tax offenses which formed the basis for the search warrant, Carpenter was indicted and convicted in another federal district for other crimes, based on some of the evidence from executing the search warrant used in the indictment and conviction.
In the earlier criminal convictions, Carpenter had been convicted of some 57 for counts related to "a fraudulent scheme involving stranger-originated life insurance." (The Wikipedia entry for such insurance, acronymed "STOLI," is here.) The district court in the criminal case rejected Carpenter's motion to suppress the evidence from the execution of the search warrant. The current case described that dismissal as follows:
On December 24, 2015, Judge Chatigny denied Carpenter's motion to suppress. STOLI case (doc. No 155). In relevant part, he found that the 2010 search warrant was "sufficiently particularized." Id. at 9-10. In making that finding, he rejected Carpenter's arguments that the warrant was defective because the supporting affidavit was not attached to it or because it permitted a large amount of material to be seized. Id. at 11 n.4. He found that the 2010 warrant also was not overbroad, observing that "uncontested statements" in Schrader's supporting affidavit adequately established probable cause for the search. Id. at 12-13. He also denied Carpenter's motion for a Franks hearing on the veracity of statements in the 2010 warrant affidavit, both because Carpenter had failed to make a preliminary showing that a false statement was included in the warrant and because the uncontested statements in the warrant nevertheless established probable cause. Id. at 15. Finally, he held that Carpenter had failed to allege facts sufficient to support a claim that the manner in which the search was carried out violated his substantive due process rights. Id. at 18-19. Judge Chatigny did not consider whether the manner in which the search was conducted was unreasonable and thus in violation of the Fourth Amendment.The sentencing in that criminal case is now pending, as post-conviction motions have not been resolved.
The Court in the present Bivens case described Carpenter's claims as follows (footnotes omitted):
The Second Amended Complaint appears to assert four claims: (1) Schrader violated Carpenter's Fourth Amendment rights by knowingly including false statements in the warrant affidavit; (2) Schrader violated Carpenter's Fourth Amendment rights by planning and supervising an unreasonable search of 100 Grist Mill Road; (3) Schrader violated Carpenter's Fifth Amendment rights by authorizing his custodial interrogation in a manner that created a substantial risk of coerced self-incrimination without the benefit of any attorney or a Miranda instruction; and (4) Schrader violated Carpenter's Sixth Amendment rights by authorizing his custodial interrogation while Carpenter was represented by counsel in the Massachusetts case.
At the hearing, Carpenter abandoned several of those claims for the time being. He conceded that, under the doctrine of Heck v. Humphrey, 512 U.S. 477, 114 S. Ct. 2364, 129 L. Ed. 2d 383 (1994), the Fourth Amendment claims based on claims of an invalid warrant are precluded by Judge Chatigny's rulings in the STOLI case. Accordingly, Schrader's motion to dismiss those claims is granted without prejudice to renewal if the conviction is invalidated. Carpenter conceded that he was withdrawing his Fifth Amendment claim as premature. Accordingly, Schrader's motion to dismiss that claim is granted without prejudice to renewal. Carpenter also clarified at the hearing and in his opposition brief that he does not assert a stand-alone Sixth Amendment claim. See Pls.' Opp'n Br. at 23 n.9. Accordingly, Schrader's motion to dismiss that claim is denied as moot. Two additional issues have been set on a separate briefing schedule: (1) whether the identities of the John Doe defendants can be subject to discovery; and (2) the viability of any claims asserted on behalf of GMC. See (docs. 85, 88). Thus, the sole issue to resolve on this motion to dismiss is whether qualified immunity bars Carpenter's Fourth Amendment claims arising from his allegations that the search was conducted in an unreasonable manner.
Schrader argues that the remaining Fourth Amendment claims, which are based on allegations that Schrader was personally responsible for conducting the search in an unreasonable manner, are barred by the doctrine of qualified immunity. Drawing all reasonable inferences in favor of Carpenter, the Second Amended Complaint alleges that the force used to effectuate the search of his property was unreasonable and excessive because it involved 72 agents engaged in "commando" tactics, such as wearing bullet-proof vests and "brandishing" automatic weapons specifically in order to intimidate Carpenter, and that the search resulted in the needless destruction of Carpenter's property.7 SAC at ¶¶ 8, 9, 19. Carpenter further alleges that the excessive force was used deliberately, at least in part because of Carpenter's reputation as an "anti-government" actor. Id. at ¶ 26. He also alleges that Schrader unreasonably seized Carpenter during the search by subjecting him to an extended involuntary detention for the purpose of coercing incriminating statements. Id. at ¶ 28.
In the decision, the Court dismissed all of Carpenter's claim except the Fourth Amendment claims about excessive force, needless destruction of property and unreasonable detention as to which, the Court found, the discovery phase should proceed with any appropriate dispositive motions filed after discovery.
On IRS Special Agent Use of Guns in Executing Search Warrants and Use of Guns Generally:
By contrast [to cases involving execution of search warrants in drug cases], although guns may be the tools of the trade" of drug distribution, United States v. Becerra, 97 F.3d 669, 671 (2d Cir. 1996), they are not the tools of tax evasion. Tax-related felonies are generally recognized to be nonviolent offenses. See, e.g., Meredith v. Erath, 342 F.3d 1057, 1061 (9th Cir. 2003) (denying qualified immunity on summary judgment where IRS agent handcuffed a woman verbally objecting to execution of warrant). Accordingly, in the tax cases that discuss strong governmental interests in, for instance, officer safety, the courts justified their rulings at least in part on a determination that the officers in those circumstances reasonably believed there was a meaningful risk of harm. See, e.g., Unus v. Kane, 565 F.3d 103, 120 (4th Cir. 2009) (observing that the searched home was "believed to contain evidence of money laundering by entities suspected of assisting international terrorism"); Dawson v. City of Seattle, 435 F.3d 1054, 1067 (9th Cir. 2006) (discussing, inter alia, the specific context of searching a boardinghouse and that the property owner had resisted the search and had an associate with a violent criminal history, including a history of threatening government officials about inspections); cf. Garavaglia v. Budde, 43 F.3d 1472, [published in full-text format at 1994 U.S. App. LEXIS 36161], 1994 WL 706769 (6th Cir. 1994) (unpublished) (granting summary judgment because the application of a specific Supreme Court case to the situation was unsettled in the Sixth Circuit).
* * * *
In the present case, Carpenter has at least arguably alleged a show of force that was in excess of any legitimate governmental interest. He alleges that seventy-two armed agents brandishing weapons descended on a corporate building in the middle of the day to facilitate a search through his documents and to frighten him into a coercive interrogation. Cf. United States v. Faux, 828 F.3d 130, 137 (2d Cir. 2016) (in the Fifth Amendment context, observing that the need for 10-15 armed officers in a 4,900 sq. foot house was "not readily apparent" when "[n]othing in the record suggests that Faux was suspected of being particularly dangerous; she was being investigated for a paperwork fraud scheme, and the warrant was to search primarily for documents rather than (for example) weapons or drugs"). The warrant makes no mention of any possible threat to the officers' safety during the raid, nor any suggestion that Carpenter or any of the GMC employees was prone to violence or had access to weapons. Cf. Terebesi, 764 F.3d at 239 (holding that the exigent circumstances doctrine had not been shown to apply where there was no suggestion that the plaintiff "was ready to engage in violence, had any record of or propensity towards violence, that he had immediate access to weapons, or indeed that he was likely to offer any resistance at all"). And, drawing all inferences in favor of Carpenter, the complaint can be read to suggest that the agents continued to "brandish" their weapons throughout the search, despite the lack of resistance from Carpenter or any of the detained employees. Cf. Unus, 565 F.3d at 118 (basing its determination that the defendants had not violated the Fourth Amendment at least in part on indications in the record that they "drew their weapons only long enough to ensure their safety and control of the situation—once the plaintiffs complied with the agents' directives, the weapons were holstered"). In sum, Carpenter has alleged that Schrader and the agents under his supervision engaged in a show of force wholly unrelated to any "perceived risk of injury of danger to the officer or others," Holland, 268 F.3d at 1192, and continued to use such intimidation tactics long after the site was secure and it would have been clear to any reasonable officer that no plausible risk remained.
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Carpenter also argues that Schrader's show of force exceeds the statutory authority granted to the IRS. In his brief, Carpenter argues that IRS agents lack statutory authorization to carry firearms in this context altogether. See Pl.'s Opp'n Br. at 12-15. He points out that the statutory sections discussing IRS enforcement of laws pertaining to alcohol, tobacco, and firearms and IRS enforcement of other tax laws are largely parallel, except that the former includes an explicit authorization for agents to "carry firearms" and the latter does not. Compare 26 U.S.C. § 7608(a)(1) with 26 U.S.C. § 7608(b)(2). Although Carpenter's statutory construction is convincing, he has not identified any decision predating the April 2010 search adopting it—in fact, the First Circuit, considering the same theory in a suppression motion in United States v. Adams, 740 F.3d 40 (1st Cir.), cert. denied, 134 S. Ct. 2739, 189 L. Ed. 2d 775 (2014), observed that it was "a novel one." Id. at 43. Unfortunately for Carpenter, novel theories do little work in the qualified immunity context, where a violation of "clearly established" law is required.
In the same vein, I note that the Internal Revenue Manual ("IRM") undercuts Carpenter's theory, observing that although there is "no specific statutory authority for special agents to carry firearms," such authority is implied by the statutory authority to make arrests. See IRM at § 220.127.116.11.1 (effective Nov. 10, 2004) (doc. 86-1); see also id. at § 18.104.22.168.1 (effective Jan. 23, 2004) (same). Although the claimed authority is far from apparent and although an agency's official view of its own statutory authority is not dispositive of whether a Fourth Amendment violation has occurred, the existence of such a policy statement would make it extremely difficult for Carpenter to show that any reasonable officer would have known that the contested actions were unlawful. See, e.g., Mountain Pure, LLC v. Roberts, 814 F.3d 928, 933 (8th Cir. 2016) (holding that qualified immunity applied to IRS agents carrying weapons during a search because, inter alia, that conduct was permitted by IRS policy).
Finally, Carpenter argues that the show of force violated IRS policy. Although agency policy would not provide the basis for a Fourth Amendment or statutory violation, a knowing violation of official policy would certainly have bearing on the third prong of the qualified immunity test. See Soares v. Connecticut, 8 F.3d 917, 922 (2d Cir. 1993) ("To be sure the written policy might bear upon whether the officers' actions were objectively reasonable, but it has no bearing on whether the officers violated clearly established constitutional or statutory rights unless it somehow created a protected interest . . . ."). Carpenter has at least arguably alleged such violations. For instance, the IRM, at section 22.214.171.124, provides:
(2) Special agents must conceal their handguns upon their persons, keeping them away from public view when conducting official business. However, special agents may display their handguns, if they feel it will relieve a threat against special agents or others.
(3) Special agents should draw their handguns only if there is sufficient cause to expect they will be used and doing so affords the agent a tactical advantage.
Carpenter has alleged that those policies were not followed in several ways—he alleges that the agents were carrying "automatic weapons," rather than handguns; that those weapons were in plain view; and that they were "brandished" during the search, all despite the absence of any plausible threat. See SAC at ¶¶ 8, 22. A reasonable inference arises that Schrader, as the Special Agent in charge of planning the search, was aware of those policies.Improper detention During the Execution of the Search Warrant
Carpenter alleges that the agents "detained the plaintiff [presumably Carpenter] and others for unreasonably long periods of time." SAC at ¶ 19. He further suggests that the detentions were intended to coerce witnesses into making statements without the assistance of counsel or other protections. See id. at ¶¶ 25, 28. As a preliminary matter, I note that Carpenter cannot assert claims on behalf of other parties, such as the GMC employees. Accordingly, I focus only on whether Carpenter's personal detention constituted an unreasonable seizure.
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Judge Alito's analysis of the government's rationales [in Michigan v. Summers, 452 U.S. 692 (1981)] transfers easily to Carpenter's case, where he has alleged a lengthy search for a large number of documents that indeed still have not led to an arrest, during which Carpenter posed no meaningful risk of violence or harm, and in which Carpenter was not required to provide any meaningful assistance.
Carpenter's allegation that his detention was used as a means of extracting statements from him outside the presence of counsel similarly does not appear to be balanced by any pressing governmental need at this stage of the proceedings. The Ninth Circuit held in Ganwich v. Knapp, 319 F.3d 1115 (9th Cir. 2003), that the law enforcement interests identified in Summers may justify ordering someone to remain on the premises and in a specified location, but they do not justify "coercing [that person] into submitting to interrogations." Id. at 1122. Instead, the Ganwich court observed that:
The interrogations did not deter the plaintiffs' flight, did not reduce the risk of harm to officers, and did not assist the officers in the orderly completion of the search. Because the interrogations of the plaintiffs were not carefully tailored to the detention's underlying justification, the detention was more intrusive than necessary. This rendered the detentions unlawful.
Id. I would add that, in the absence of some kind of emergency, it is unclear why the government would have any kind of legitimate interest in using detention to obtain an un-Mirandized statement from their primary suspect, which statement cannot actually be used in any proceeding against him.
Despite Schrader's effort to rely on drug and gun cases, see Def.'s Br. at 20-21, the government's interests in the violent crime context do not automatically translate with the same force to the context of tax offenses. As discussed above, Schrader is at a disadvantage in assessing the Summers factors at the motion to dismiss stage. Without presenting evidence outside the pleadings, it is difficult for him to assert with particularity the specific circumstances and concerns that may have made his conduct entirely reasonable. But until such evidence is put before me through the adversarial system, I cannot simply rely on its possible existence to dismiss Carpenter's claims.JAT Comments:
1. Keep in mind that the Court's decision is discusses only whether Carpenter's allegations, if ultimately truthful (which is not yet known), have stated a claim. In the discovery phase, the parties can flesh out the facts. I have no idea whether Carpenter's allegations are true, but the Court had to assume the truth of the allegations in testing whether he had stated claims that could survive motion to dismiss.
2. United States v. Faux, 828 F.3d 130, 137 (2d Cir. 2016) is mentioned in the opinion. I have blogged on Faux. Important Second Circuit Decision on Custody Requirement for Miranda Warnings (Federal Tax Crimes Blog 7/20/16), here.
3. On the authority of IRS agents to carry guns, I have previously blogged the Adams case, United States v. Adams, 740 F.3d 40 (1st Cir. 2014), cert. denied, ___ U.S. ___. 134 S. Ct. 2739 (2014) discussed in the Carpenter Order. First Circuit Rejects Tax Defier's Complaints About IRS Packing Heat and Improper Good Faith Defense Instructions (Federal Tax Crimes Blog 1/15/14), here. At the cost of redundancy, I note that Judge Underhill in this Carpenter Order says (emphasis supplied by JAT):
Carpenter also argues that Schrader's show of force exceeds the statutory authority granted to the IRS. In his brief, Carpenter argues that IRS agents lack statutory authorization to carry firearms in this context altogether. See Pl.'s Opp'n Br. at 12-15. He points out that the statutory sections discussing IRS enforcement of laws pertaining to alcohol, tobacco, and firearms and IRS enforcement of other tax laws are largely parallel, except that the former includes an explicit authorization for agents to "carry firearms" and the latter does not. Compare 26 U.S.C. § 7608(a)(1) with 26 U.S.C. § 7608(b)(2). Although Carpenter's statutory construction is convincing, he has not identified any decision predating the April 2010 search adopting it—in fact, the First Circuit, considering the same theory in a suppression motion in United States v. Adams, 740 F.3d 40 (1st Cir.), cert. denied, 134 S. Ct. 2739, 189 L. Ed. 2d 775 (2014), observed that it was "a novel one." Id. at 43. Unfortunately for Carpenter, novel theories do little work in the qualified immunity context, where a violation of "clearly established" law is required.I read the bold face as a signal that Judge Underhill may be prepared to accept that this particular "novel" theory may do some work in other cases where it is relevant and outcome determinative.
4. The precise number of agents involved in the search is not clear. At one point, Judge Underhill says the complaint alleges that "Schrader and 72 unknown IRS agents (the "John Doe" defendants) executed the search warrant." I read this as meaning 73 agents executed the warrant. At another point, Judge Underhill says "Drawing all reasonable inferences in favor of Carpenter, the Second Amended Complaint alleges that the force used to effectuate the search of his property was unreasonable and excessive because it involved 72 agents * * * *." I read this as meaning 72 agents were involved. I am not sure the differing numbers are material to the larger point of whether, even if it were only 72 agents involved in the search, there is an issue of overkill that may raise constitutional concerns (which is the point of a Bivens action). I suspect that, without further explanation (not offered in the complaint which is the basis for considering a motion to dismiss), the number does seem a bit excessive. But, Judge Underhill cautions at several points that discovery and other submissions may ultimately counter the claims in the complaint.
Addendum 12/26/16 10:00AM
5. Carpenter's lead counsel is Norman A. Pattis who promotes himself on his personal web site, here, as:
Leading American Trial Lawyer Author, Speaker, and Voice for Freedom.
Norman Pattis, a leading New England based trial lawyer, represents people who face powerful foes. His relentless voice levels the playing field for individuals against prosecutors in serious criminal cases, for people or families who experience catastrophic injuries against uncaring insurance giants, for victims of corporate malfeasance, and other people who face the loss of liberty or property.
Norm is a veteran of more than 100 jury trials, many resulting in acquittals for people charged with serious crimes, multi million dollar civil rights and discrimination verdicts, and scores of cases favorably settled. Attorneys from California to New York refer their clients to the Pattis Law Firm and they seek out Norm as co-counsel in challenging high stakes cases across the U.S.
A regular in the national media, Norman Pattis is a frequent speaker, prolific blogger and author of the new book Taking Back the Courts (Sutton Hart Press).His law firm website is here, and his blog is here. I poked around his blog and found some interesting discussions. For flavor of his musings on the blog, here are three entertaining ones.
- Bitcoin for Legal Fees? (Norm Pattis Blog 9/26/2016), here. He discusses whether bitcoins received for legal services needed to be reported on Form 8300 and concludes that receipt of bitcoin need not be reported because the IRS/FinCEN does not treat bitcoin as cash or currency.
- Judge Wins Pissing Contest (Norm Pattis Blog 2/3/16), here. He discusses a defendant's and judge's gamesmanship on plea bargains. (My experience is that judges normally win pissing contests.)
- What You Can Do About Corporate Fraud (Norm Pattis Blog (10/28/15), here. He weighs in on the issue of whistleblowers, mentioning specifically the famous / infamous Bradley Birkenfeld who was awarded over $100 million in an IRS whistleblower case involving offshore accounts.