Johnson v. Sawyer ( 1992 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________________
No. 91-2763
_____________________________
ELVIS E. JOHNSON
Plaintiff-Appellee
versus
ROBERT SAWYER, ET AL.,
Defendants,
UNITED STATES OF AMERICA
Defendant-Appellant.
_________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________________________________
Before JOHNSON, GARWOOD, and WIENER, Circuit Judges.
WIENER, Circuit Judge:
In this suit for damages under the Federal Torts Claims Act
(FTCA or the Act),1 the United States as Defendant-Appellant
appeals the decision of the district court in favor of the
Plaintiff-Appellee Elvis E. Johnson. His FTCA action arises from
the public dissemination of private taxpayer information about
Johnson by agents of the IRS. Finding no reversible error on the
issue of liability, we affirm that part of the judgment of the
district court as well as special damages albeit with a
modification of the pension loss element. But in the absence of
any explanation by the district court of how it calculated damages
1
28 U.S.C. §§ 1291, 1346, 2671-2680 (1988)(FTCA or the Act).
for emotional distress and mental anguish, we reverse and remand
for further explanation or re-calculation of the quantum of damages
awarded for that aspect of Johnson's injuries.
I
FACTS AND PROCEEDINGS
The facts of this case are reported in considerable detail in
the published opinions of the district court.2 We therefore set
out in this opinion only those facts required to give necessary
perspective of the issues of significance presented by the instant
appeal.
Elvis Johnson began selling insurance for a branch of the
American National Life Insurance Company (American National) in the
early 1950s. Johnson was a proficient salesman who advanced up the
company ladder, eventually becoming one of its sales leaders. In
1972, Johnson moved from Missouri, where he was head of a sales
region, to American National's headquarters in Galveston, Texas.
After the move to Galveston, Johnson continued to advance.
Eventually, he became the Senior Executive Vice President, the
Chief Marketing Officer, and a member of the Board of Directors.
At the time of his forced resignation, he was in line to become the
company's next Chief Executive Officer.
In the late 1970s, the Internal Revenue Service (IRS) began
looking into Mr. and Mrs. Johnson's tax returns. Discrepancies
2
Johnson v. Sawyer, 760 F. Supp. 1216 (S.D. Tex. 1991);
Johnson v. Sawyer, 640 F. Supp. 1126 (S.D. Tex. 1986).
2
were discovered in the Johnsons' records. The discrepancies were
due, in large part, to the erroneous (or as the district court
characterized them, "eccentric") bookkeeping practices of Mrs.
Johnson, to whom Johnson had delegated his personal expense record
keeping, in large measure to familiarize his wife with family
business matters in case of his unexpected demise.3 An IRS
examining agent referred the case to the IRS Criminal Investigation
Division, which eventually assigned the case to Special Agent
Stone. After the criminal investigation was completed, the United
States Department of Justice recommended that Johnson and his wife
to be prosecuted for tax evasion.4
During the course of the investigation, Mrs. Johnson had
disclosed her part in the matter by submitting to a deposition at
the office of the assistant U.S. Attorney assigned to the case,
James Powers. Johnson did not want the IRS to upset his wife
further regarding their taxes and was adamant that she not be
indicted. Eager to work out an arrangement that would ensure his
wife's noninvolvement, Johnson agreed to Powers's plea bargain
offer: In exchange for Johnson's plea of guilty to one count of
tax evasion, the government would recommend probation for him and
would not indict or further trouble Mrs. Johnson. As a part of the
plea agreement the government also accepted inclusion of several
measures designed to keep the prosecution from becoming known to
3
The nuances of Mrs. Johnson's accounting procedures are set
out in the second opinion of the district court. See 760 F.
Supp. at 1218-21.
4
See 26 U.S.C. § 7201 (1988).
3
the general public. The agreement provided that:
(1) all papers filed in the case would give plaintiff's
name as "Elvis Johnson" rather than "E.E. 'Johnny'
Johnson," by which he is normally known;
(2) papers requiring Johnson's street address would give
it as 1100 Milam Street in Houston, which was the address
of his attorney, and no reference to his address at 25
Adler Circle, Galveston would be made;
(3) the Government would seek to have the presentence
investigation completed before the criminal information
was filed so that the probation officer's recommendation
could be made known to the judge by the time the
information was filed;
(4) the information would be filed late on a Friday
afternoon, and the case would be brought before the judge
immediately, so that arraignment and sentencing could be
completed that same afternoon; and
(5) the U.S. Attorney's office would publish no press
release.
Powers also agreed to recommend probation, and not
to oppose a plea of nolo contendere.5
Faithful to that arrangement, the government filed a Criminal
Information charging Johnson with but a single count of tax evasion
on his 1975 return.6 To minimize the chance of accidental
publicity, the filing was timed for late on the afternoon of
Friday, April 10, 1981. Although the court refused to accept a
nolo plea, it was satisfied to assess a probated sentence on
Johnson's plea of guilty. In a courtroom devoid of spectators,
Johnson entered his guilty plea and received a probated sentence;
no fine was imposed.
In the instant FTCA case, the district court found, among
5
760 F. Supp. at 1221.
6
Id. n.3.
4
other facts regarding the plea arrangement, that Johnson had kept
his closest business associates and superiors apprised of his
problems with the IRS; and that his position with the company was
secure, regardless of the guilty plea, as long as there was no
public scandal regarding Johnson's tax problems. American National
was a publicly held corporation, and Johnson's superiors did not
want it known outside the company that the second most senior
officer of the corporation had pleaded guilty to a criminal tax
charge.
Despite the extraordinary measures that both the United States
Attorney and Johnson's counsel had taken, however, public knowledge
followed quickly on the heals of Johnson's plea. Without advising
or consulting Powers or anyone else at the Department of Justice,
the IRS issued a news release on Wednesday, April 15, 1981--the
third business day after Johnson's plea--that went well beyond the
provisions of the plea agreement and, more significantly, disclosed
vital information that was not contained in the records of the
court in which Johnson had pleaded guilty.7
7
The IRS news release stated:
INSURANCE EXECUTIVE PLEADS GUILTY IN TAX CASE
GALVESTON, TEXAS--In U.S. District Court here,
Apr. 10, Elvis E. Johnson, 59, plead [sic] guilty to a
charge of federal tax evasion. Judge Hugh Gibson
sentenced Johnson, of 25 Adler Circle, to a six-month
suspended prison term and one year supervised
probation.
Johnson, an executive vice-president for the
American National Insurance Corporation, was charged in
a criminal information with claiming false business
deductions and altering documents involving his 1974
and 1975 income tax returns.
In addition to the sentence, Johnson will be
required to pay back taxes, plus penalties and
5
When Johnson learned of the release, he immediately contacted
his attorney, who just as immediately called Powers. Johnson's
lawyer was told by Powers that he was not responsible for the
release and that Johnson's lawyer should speak to someone with the
IRS. Counsel then called the IRS and informed officials there that
the release contained information that was not supposed to be
disclosed as well as erroneous information. Compounding the
damage, and over the strenuous objections of Johnson's counsel, the
IRS issued a second release on April 17, 1981,8 which corrected an
error regarding the exact charge to which Johnson had pleaded
guilty and restated the specific facts about Johnson and his tax
problems.
Once the information about Johnson's guilty plea in the tax
evasion case became so widely and publicly known, the effects on
his career were tragic and swift. He was "asked" to resign from
his positions at American National; the CEO and other senior
officials with the company had been willing to allow Johnson to
keep his position and his career track, but only as long as his tax
problem was kept within the company and not made known to the
interest.
Id. at 1222.
8
The heading and the first and third paragraphs of the
second press release were the same as the first. The second
paragraph read:
Johnson, an executive vice-president for the
American National Insurance Corporation, was charged in
a criminal information with willful evasion of federal
tax by filing a false and fraudulent tax return for
1975.
Id. at 1222.
6
public at large. Johnson and his wife left Galveston and returned
to the Missouri branch office where he had begun his career with
American National. There Johnson worked as a salesman for American
National until he was forced to retire at the age of sixty-five,
the mandatory retirement age for all company employees other than
the few topmost executives, who were permitted to serve actively
until age 70.
Johnson sued several of the IRS officials involved in the
press release, claiming that the release of disclosed tax
information violated 26 U.S.C. § 6103. Johnson subsequently
amended his complaint to include an FTCA claim against the United
States. The FTCA claim was severed from those against the
individual defendants and tried to the court without a jury. At
the conclusion of the bench trial, the court granted Johnson a
judgment against the United States in the amount of $10,902,117.
The United States timely appealed that judgment.
II
ANALYSIS
A. Johnson's Claim Under the FTCA
The FTCA constitutes a general waiver of the federal
government's sovereign immunity from tort claims.9 Under the Act,
suits against the United States are authorized
for injury or loss of property, or personal injury or
death caused by negligent or wrongful act or omission of
any employee of the Government while acting within the
scope of his office or employment, under circumstances
where the United States, if a private person, would be
9
See 28 U.S.C. § 2674 (1988).
7
liable to the claimant in accordance with the law of the
place where the act or omission occurred.10
The Act also provides that the United States will be liable in tort
"in the same manner and to the same extent as a private individual
under like circumstances."11
To recover under the FTCA, Johnson must be able to succeed
against the government in a state law tort cause of action.
Johnson's theory of state law negligence is: (1) in Texas,
violation of a statute is negligence per se when a member of the
class of persons protected by the statute is injured by the
violation; (2) the government owed him a duty, under 26 U.S.C. §
6103, not to release any of his confidential tax information; (3)
through its agents, the government breached its duty to Johnson
under § 6103 by issuing protected information in the press release;
and (4) the breach of the duty established by § 6103 caused
Johnson's injury.
The government counters that the breach of a federal statute,
here § 6103, cannot establish liability under the FTCA. As far as
it goes that statement is irrefutable, but it stops short of
addressing the full import of Johnson's position. Johnson does not
contend simplistically that the violation of § 6103 ipso facto
creates FTCA liability. Rather, he asserts that § 6103 sets a
standard of behavior and that, under Texas tort law, the violation
10
28 U.S.C. § 1346(b); see United States v. S.A. Empressa de
Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 807-08
(1984).
11
28 U.S.C. § 2674.
8
of such a statutory standard is negligence per se when one who is
afforded protection by the standard is damaged by its violation.
The first question this court must answer, then, is whether
Johnson's premise that Texas recognizes a tort in this situation is
correct. The answer is a resounding "yes." The Texas Supreme
Court has held repeatedly that "[t]he unexcused violation of a
statute setting an applicable standard of care constitutes
negligence as a matter of law if the statute is designed to prevent
an injury to the class of persons to which the injured party
belongs."12 Johnson was clearly a member of the class that the
statute was written to protect,13 and none of the recognized excuses
for violation of a protective statute apply in this case.14
12
El Chico v. Poole, 732 S.W.2d 306, 312 (Tex. 1987)(citing
Nixon v. Mr. M Property Management Co., 690 S.W.2d 546, 549 (Tex.
1985), and Murray v. O & A Express, Inc., 630 S.W.2d 633, 636 &
n.4 (Tex. 1982)); see Moughon v. Wolf, 576 S.W.2d 603, 604 (Tex.
1978); Missouri P. R.R. v. American Statesman, 552 S.W.2d 99, 103
(Tex. 1977).
13
In 1976, § 6103 was amended as part of a sweeping reform
of the tax code. The goal of this amendment to the code was two-
fold. Congress wanted to stem the tide of information, which was
voluntarily disclosed to the IRS, from being disclosed to other
persons or agencies because of privacy needs of those who
discloser information (i.e., all taxpayers). Congress also
reasoned that the possible abuses of privacy of the system could
"seriously impair the effectiveness of our country's very
successful voluntary assessment system which is the mainstay of
the Federal tax system." S. Rep. No. 938, 94th Cong., 2d Sess.,
pt. 1, at 317 (1976), reprinted in 1976 U.S.C.C.A.N. 3439, 3747.
See generally Mertens Law of Federal Income Taxation: Tax Reform
Act of 1976 Analysis 117-25 (James J. Doheny ed., 1977).
14
In Impson v. Structural Metal, Inc., 487 S.W.2d 694, 696
(Tex. 1972), the Texas Supreme Court approved the Restatement
(Second) of Torts § 288A as substantially stating Texas law
concerning civil liability for violation of a penal statute.
Section 288A provides five categories of situations where a
statutory violation is excused. They are:
9
Unquestionably, § 6103 creates a duty and in so doing sets an
applicable standard of care. It imposes on the government a
general duty of confidentiality as to information disclosed made by
taxpayers. Section 6103 broadly prohibits public disclosure of
such information. That prohibition is subject to but a handful of
narrow exceptions. Section 6103 provides:
(a) General rule.
Returns and return information shall be
confidential, and except as authorized by this title--
(1) no officer or employee of the United States . . .
shall disclose any return or return information obtained
by him in any manner in connection with his service as
such an officer or employee or otherwise or under the
provisions of this section.
"Return information" is defined as "a taxpayer's identity, the
nature, source, or amount of his income, . . . deficiencies, . . .
whether the taxpayer's return was, is being, or will be examined or
subject to other investigation or processing."15 And "taxpayer
identity" is defined as the name, mailing address, taxpayer
identifying number, or any combination thereof.16
Considering this general information, we must answer three
(a) the violation is reasonable because of the actor's
incapacity;
(b)the actor neither knows nor should know of the
occasion for compliance;
(c) the actor is unable after reasonable diligence or
care to comply;
(d) the actor is confronted by an emergency not due to
his own misconduct;
(e) compliance would involve a greater risk of harm to
the actor or to others.
Id.; see O & A Express, 630 S.W.2d at 636 n.4.
15
26 U.S.C. § 6103 (b)(2)(A).
16
Id. § 6103 (b)(6).
10
specific questions to determine whether Johnson's theory can stand
on appeal: (1) Did the agents' conduct violate § 6103?; (2) if so,
did that violation amount to negligence under Texas tort law?; and
(3) if so, did that negligence proximately cause the Johnsons'
injuries? We find positive responses for all of these questions.
1. § 6103 Violation
The threshold question here is whether a violation of § 6103
occurred at all. Johnson asserts that by releasing the protected
information about him, the IRS agents clearly violated § 6103.
Some of the information released about Johnson had been discussed
in his tax evasion proceeding, but other information about him was
neither discussed in that proceeding nor otherwise appeared in the
record of the court. Although provisions of § 6103 exempt certain
disclosures,17 no provision specifically exempts disclosures such
as those made in the instant case.
The government urges this court to adopt the rule of the Ninth
Circuit that once information is disclosed in open court or is in
some other manner stripped of the confidentiality requirement of §
6103, the IRS may release that information with impunity.18 In
Lampert v. United States, the Ninth Circuit stated that "Congress
sought to prohibit only the disclosure of confidential tax return
information" and held that "[o]nce tax return information is made
a part of the public domain, the taxpayer may no longer claim a
17
See, e.g., id. § 6103 (h)(4).
18
See William E. Schrambling Accountancy Corp. v. United
States, 937 F.2d 1485, 1488-89 (9th Cir. 1991), cert. denied, 112
S. Ct. 956 (1992).
11
right of privacy in that information."19 Thus, that circuit holds
that once information is disclosed in a criminal proceeding against
a taxpayer, the IRS may release that information to the press
without violating § 6103.
Johnson counters by urging us not to accept the Ninth
Circuit's rule but instead to adopt the view of either the Tenth or
the Seventh Circuits on this issue. The Tenth Circuit holds that
information protected by § 6103 never loses its confidentiality,
even when it is disclosed in a court record.20 The Seventh Circuit
holds that the "immediate source" of the information, at least in
a cases of information being taken from a court opinion or record,
might control confidentiality. Specifically, the Seventh Circuit
has held that when the facts disclosed are gleaned from court
records, no § 6103 violation occurs.21 The Seventh Circuit did not
speculate, however, as to what the outcome might be in a case in
which the "immediate source" of the information is the confidential
records of the taxpayer but the information can also be found in a
court record. Neither did that court speculate as to the possible
outcome of a case in which the "immediate source" of the
information is the tax records and the information is not to be
19
854 F.2d 335, 338 (9th Cir. 1988), cert. denied, 490 U.S.
1034 (1989).
20
See Rogers v. Hyatt, 697 F.2d 899, 906 (10th Cir. 1983);
see also Chandler v. United States, 887 F.2d 1397, 1397-98 (10th
Cir. 1991)(following Rogers v. Hyatt).
21
Thomas v. United States, 890 F.2d 18, 20-21 (7th Cir.
1989).
12
found in a court record.22
The circumstances of the instant case are such that we are not
required to adopt a rule from among those of the several circuits
as the one henceforth to be applied in this circuit. Such a choice
is unnecessary here because we are faced with a fact pattern unlike
any yet ruled on in one of those other circuits. Here, the
"immediate source" of the information was the taxpayer's
confidential records and the information was not contained in a
court record. Thus, it never lost its entitlement to
confidentiality. Although we make no rule selection, we
nevertheless observe that even if we were to follow the Ninth
Circuit's rule as typified in its Lampert decision (which we do
not), the disclosures made by the IRS agents in the instant case
would still constitute a violation of § 6103.
Both of the press releases about Johnson contained more
information than was contained in the official record of his plea
and sentencing hearing. True, several items contained in the press
releases (Johnson's first and last name, the guilty plea to one
count of tax evasion, the sentence imposed, and the fact that he
was an executive with American National) were part of the trial
record. But several other items contained in those releases
(Johnson's middle initial (he was known as "E.E." to many people),
his age, his home address, and his official job title with American
22
See id.
13
National23) were not discussed at his arraignment or sentencing or
placed in any public record. The government concedes that
additional information about Johnson had been taken from his
confidential taxpayer file or from the IRS investigation of
Johnson, and inserted in the press release.
The Lampert court held that the fact that the information was
contained in a public record, in effect, prevented its release from
constituting a violation of § 6103. In the instant case, by
contrast, significant portions of the released information were not
contained in any public record, so even under Lampert no convincing
argument can be made that the entire release was shielded and did
not violate § 6103.
2. Violation of § 6103 as a Texas Tort
We find inescapable the conclusion that the IRS agents'
violations of the standard of behavior and thus the duty
established in § 6103 amounted to negligence under Texas tort law--
if not either reckless disregard or deliberate violation of that
standard. Even under the relaxed Lampert rule, which again we do
not adopt, the IRS agents' activities actionably violated § 6103's
standard. After Johnson pleaded guilty, special agent Stone called
Powers to ascertain the results of the conviction and plea
arrangement. Immediately following that discussion, in which
Powers informed Stone of all terms of the plea arrangement, Stone
23
The only reference during the proceeding about Johnson's
job was the court's remark that "arrangements can be made to
relax [the terms of Johnson's parole] to the extent that they
will not interfere with the performance of [Johnson's] position
as an executive for the American National Insurance Company."
14
nevertheless took it upon himself to contact Public Affairs Officer
Sally Sassen, report Johnson's conviction on his plea and, without
mentioning the proscription of publicity, have a news release
prepared. Sassen took the information from Stone, wrote up the
release, and had it disseminated for publication without ever
checking its accuracy or the propriety of the sources of its
information. The release was then approved for publication by
Stone, who knew better, and by Michael Orth, the Branch Chief for
Criminal Investigation, who also knew better or at least should
have.
Although Stone did not testify in the FTCA case, he stated in
a deposition that Powers had approved the publication of the
release. But the district court made an explicit finding that
Stone lied about obtaining Power's approval.24 In fact, Powers had
told Johnson's attorney in a taped telephone conversation credited
by the court that if the news release damaged Johnson, he "should
sue the hell out of them."25
There is no evidence in the record that any of the IRS
personnel involved in creating or authorizing the press release
checked to see whether the information contained in it appeared in
the record of the tax evasion proceedings. Even if an agent tries
to comply only with the relaxed standard of Lampert, he or she
must, at a minimum, verify that the information in the release has
been disclosed in the court proceedings or in some other public
24
760 F. Supp. at 1229-30.
25
Id. at 1222.
15
record.
At trial, Johnson testified, and the court accepted, that
during an early meeting between Johnson and an Agent O'Connell, one
of the investigators initially assigned to the case, O'Connell
candidly told Johnson that
the only favorable publicity that the Internal Revenue
Service can get is when they bring a big one down and he
said "your name is a household word to thousands of
people" and I [Johnson] said "do you mean to tell me that
you think you can take me to a court of law and get a
conviction on me with what you have from my records?" He
[O'Connell] said, "probably not, but I can get your name
in the newspapers and that will have accomplished my
purpose."26
This "trophy hunting" mentality is apparent in the actions of
special agent Stone in his procuring of the news release through
agent Sassen. Although both of them must have been aware of §
6103's stern strictures on disclosure of taxpayer information, they
consciously effected the release of information coming directly
from Johnson's taxpayer record without attempting to determine
whether such information was or was not a part of the public
record.27 The protected information was deliberately publicized
despite the obviously extreme and comprehensive efforts of the
prosecution to keep such details out of the public record during
the judicial proceedings, and thereby out of public view.
26
Id. at 1233(emphasis added).
27
Again, we restate that we do not decide whether the
presence of information in a public record would shield the
release of the information from being a § 6103 violation. We
only decide that the wanton disregard of the standard set by §
6103 regarding Johnson's right to privacy vis-à-vis his taxpayer
information was at least negligent behavior by Stone and Sassen.
16
The acts and omissions of the IRS agents directly and
proximately caused the statutorily protected information twice to
be released to the public at large--the second time after Johnson's
lawyer vigorously alerted the IRS to the problem. Irrespective of
what inevitably might have come out in company and shareholder
literature, or even publicly, concerning Johnson's case, the pair
of widely disseminated news releases were the first public
disclosures of his conviction--publicity that immediately decimated
Johnson's exemplary business career.
3. The Texas Tort and the FTCA
We do not believe that allowing a federal law, such as § 6103,
to be used a standard of care is not contrary to the jurisprudence
of this circuit. For example, in Moorhead v. Mitsubishi Aircraft
International, Inc.,28 the federal procedures found in the FAA
Flight Service Handbook were found to set the applicable standard
of care under Texas tort law. Also, in Gibson v. Worley Mills,
Inc.,29 we provided, in an alternative holding, that under Texas
law, the sale of a certain seed mixture was negligence per se
because the sale was forbidden by 7 U.S.C. §§ 1561, 1571 (1976).30
28
828 F.2d 278, 282 (5th Cir. 1987).
29
614 F.2d 464 (5th Cir. 1980).
30
Id. at 466; see, e.g., In re Aircrash at Dallas/Fort Worth
Airport, 720 F. Supp. 1258, 1288 (N.D. Tex. 1989)(relying on
federal regulations--specifically the Federal Air Traffic Control
Manual and FAA Order 7110.65D--for the standard of care under
Texas tort law), aff'd, 919 F.2d 1079 (5th Cir. 1991), cert.
denied, 112 S. Ct. 276 (1992).
17
Neither are we convinced that this holding is affected by
United States v. Smith31 or Tindall v. United States.32 In Tindall,
we construed Mississippi tort law and found that the government had
no duty to warn anticipated users of the potential dangers of
certain devices.33 In footnote eight of that opinion, we rejected
the proposition that a federal statute alone could establish a duty
to the plaintiff. In the instant case, we remain consistent with
Tindall as we do not find that § 6103 itself creates an actionable
duty. We do find, though, that Texas tort law recognizes per se
negligence when a statute or ordinance meant to protect a class of
persons is violated--regardless of whether that statute or
ordinance originates with federal, state, county, or city action.
Similarly, we are satisfied that the result we reach today is not
inconsistent with our decision in Smith, which construed Georgia
tort law.34
As we noted above, the government can only be held liable
under the FTCA "in the same manner and to the same extent as a
private individual under like circumstances."35 We find that there
are state law torts analogous to the liability imposed on the
31
324 F.2d 622 (5th Cir. 1963).
32
901 F.2d 53 (5th Cir. 1990).
33
Id. at 56.
34
See Smith, 324 F.2d at 624-25.
35
28 U.S.C. § 1346(b).
18
government in the instant case.36 In addition to such analogies,
we find that it is possible for a private actor to be held civilly
liable under Texas tort law for a violation of § 6103.
To grasp the full import of this point, it is necessary to
focus on the operational or functional structure of § 6103, which
is entitled "Confidentiality and disclosure of returns and return
information." Subsection (a) states the general rule that returns
and return information shall be confidential, then specifies three
broad categories of persons who ar prohibited from disclosing such
confidential information. First, subsection (1) of § 6103(a)
prohibits federal officers and employees from making such
disclosures Second, subsection (2) of § 6103(a) prohibits
disclosure by state officers and employees as well as by those of
certain local agencies, who have or had access to returns or return
information under § 6103. Third, to complete the picture,
36
Texas, as does most other states, recognizes the
traditional torts of liable, slander, defamation, and
malpractice. Liability is imposed on private actors when one who
is entrusted with such information (e.g., lawyers, psychiatrists,
"insider" investment bankers, and under some circumstances, even
reporters and editors) is under a statutory or regulatory mandate
to maintain such confidences and yet he or she discloses that
confidence. As the dissent rightly points out, § 2680(h) retains
governmental immunity for liable and slander. We do not,
however, rewrite the statute by pointing to analogous situations
in state law in which private actors can be held liable for
wrongful disclosure of confidential information.
In another analogous situation, only the federal government
can be held liable regarding air traffic controllers--liability
that arises under the FTCA--and their actions are regulated
almost exclusively by federal rules and statutes. But, as the
attorneys in the Aviation department of the Department of
Justice's Torts Branch will attest, an FTCA action certainly lies
for an alleged state law tort action when a federal air traffic
controller is accused of negligence.
19
subsection (3) of § 6103(a) prohibits disclosure by any person--no
mention whatsoever of governmental employment or affiliation at any
level--who has access to returns or return information under the
aegis of various other subsections of § 6103.
Among the subsections listed in the catch-all provision of
§ 6103(a)(3) is subsection (n). That the reference to subsection
(n) in § 6103(a)(3) implicitly if not explicitly covers persons of
the private sector is confirmed in its recognition that, in the
course of the government's obtaining services from the private
sector, "returns and return information may be disclosed to any
person . . . to the extent necessary in connection with the
processing, storage, transmission, maintenance, repair, testing,
and procurement of equipment, and the providing of other services,
for the purpose of tax administration."37 Obviously, then,
§ 6103(n) contemplates the likelihood, nay, certainty, that such
confidential information will of necessity be disclosed to
employees of private sector independent contractors providing goods
and services to the Treasury Department and the IRS, and that the
express prohibitory language of § 6103(a)(3) is needed to extend
its proscription to such private sector employees.38
Thus, for example, if in Texas a non-governmental computer
programmer or computer maintenance worker were to be furnished or
should otherwise encounter the kind of confidential return
37
28 U.S.C. § 6103(n).
38
Cf. Wiemerslage v. United States, 838 F.2d 899, 902 (7th
Cir. 1988)(illustrating that non-governmental employees are
sometimes given access to confidential tax return information).
20
information the disclosure of which is prohibited by § 6103(a), his
or her wrongful disclosure in violation of the prohibition clearly
could subject such a worker to Texas tort liability analogous to
subjecting the government to liability in the instant case.39
4. Causation
Causation is the final element of Johnson's tort theory that
we must investigate. The government insists that the district
court erred in finding that publication of the news releases was
the proximate cause of Johnson's damages. We disagree.
On uncontradicted evidence, the trial court found that Mr.
Clay (the president and CEO of the company) and several other
members of the Board of Directors (but not a majority of the
Board), had been told by Johnson about his tax troubles and his
impending guilty plea. Nevertheless, on the Monday following the
Friday on which Johnson's guilty plea was entered, he was told by
Clay that in his (Clay's) opinion it would be best if Johnson would
remain with American National. But, after the press releases
appeared, all of that changed. Clay obviously felt compelled to
bring the question of Johnson's continued employment before the
full Board of Directors, which in turn requested Johnson's
39
Our research reveals only four cases in which § 6103(n)
was mentioned, none of which are relevant to the instant case.
See Wiemerslage, 838 F.2d at 902; Ungaro v. Desert Palace, Inc.,
732 F. Supp. 1522 (D. Nev. 1989); Crismar Corp. v. United States,
1989 WL 98843 (E.D. La.); Crown Cork & Seal Co. v. Pennsylvania
Human Relations Comm'n, 463 F. Supp. 120 (E.D. Penn. 1979). We
believe it is clear, however, that a "private individual under
like circumstances" could be held liable under Texas tort law for
a violation of the protections afforded to taxpayers by § 6103.
21
resignation. The district court found that this, along with other
evidence, demonstrated conclusively that the news releases were the
proximate cause of Johnson's forced resignation and all job-related
and personal losses that followed.
Findings of proximate cause by a district court, like other
findings of fact, are reviewed by this court under the clearly
erroneous standard.40 The district court examined Johnson's record
as an American National employee and executive, the nature of his
and his wife's tax troubles, the fact that several of the board
members had already known about his guilty plea but had not called
for his resignation, and the additional fact that Johnson was not
asked to resign, even after he pleaded guilty, until the board felt
forced to request his resignation following publication of the
press releases.41 Reviewing all of the circumstances leading to
Johnson's forced resignation, the district court found that the
IRS's releases were the proximate cause of that and all of the
disastrous consequences that flowed from it. After our own careful
review of the record and of the district court's findings and
40
In re Air Crash at Dallas/Fort Worth Airport, 919 F.2d
1079, 1085 (5th Cir.)(citing Pullman-Standard v. Swint, 456 U.S.
273 (1982), and 53 Tex. Jur. 3d, Negligence § 129), cert. denied,
112 S. Ct. 276 (1991).
41
We are not in a position to speculate what information
would have been omitted from the press release to cause a
different result (what information was critical to damage
Johnson). It is at least conceivable that if a press release had
been issued containing only the information agreed to with Powers
or only the information that appeared in the court record, the
same result might have occurred. Surely, however, it was not
beyond reason for the jury to find that the confidential
information that was released caused the damage to Johnson.
22
reasoning, we are not prepared to say that the court's finding of
proximate cause is clearly erroneous.
B. The Government's Affirmative Defenses
1. Action Sounds in Contract, not Tort
The government's first argument for reversal is that the trial
court improperly allowed Johnson to proceed under the FTCA because
the nature of the actions that damaged Johnson was the breach of
the agreement made between Johnson and Powell. The government
argues that "the District Court improperly based its decision on
the grounds [sic] that the IRS's issuance of the press release was
in violation of the plea agreement." The government
mischaracterizes both Johnson's cause of action and the basis for
the district court's judgment. Neither relied on breach of the
plea agreement.
As discussed above, Johnson's assertions do, as he insists,
fit a recognized theory of tort under Texas case law.
Additionally, the government's breach of contract argument rings
particularly hollow when viewed in the realization that the IRS
was not even a party to the plea agreement between the Department
of Justice and Johnson, and thus had no privity with Johnson.42
Without privity there can be no breach of contract. Moreover,
Johnson never asserted that the government was liable to him
because the IRS violated his agreement with the Department of
42
The plea agreement specified only that the Justice
Department would not issue a press release.
23
Justice. To the contrary, Johnson has consistently asserted that
the government's liability results from violation of its duty
toward him as established by § 6103.
We perceive the government's entire breach of contract
argument to be a red herring. Irrespective of its label, a plea
agreement in a criminal case is not a contract in the civil sense.
A breach of a plea agreement may affect such criminal matters as
sentencing, withdrawal of a plea, sentencing appeals, and the like;
but the breach of a plea agreement never generates civil remedies
such as monetary damages or specific performance. Thus, we reject
the government's breach of contract argument out of hand. In so
doing, however, we observe in passing that a plea agreement does
create a duty owed by the government to the defendant, and thus a
standard of care, the breach of which might constitute a tort under
the right circumstances.
2. Preemption
The government next asserts that the remedial structure of §
721743 of the Internal Revenue Code preempts the FTCA for resolution
of claims such as Johnson's. The government cites no direct
authority for this proposition but relies on our holding, in
Rollins v. Marsh,44 that the FTCA was preempted by the Civil Service
43
26 U.S.C. § 7217, which was in effect at the time this
action arose, was replaced by § 7431.
44
937 F.2d 134, 139-40 (5th Cir. 1991).
24
Reform Act of 1978 (CSRA).45 The government's reliance on Rollins
is misplaced. There, we acknowledged that, to preempt the FTCA,
new legislation must specify comprehensive remedies that
unmistakably provide the exclusive method for resolving
controversies of the type covered by the legislation.46 In so
acknowledging, we agreed with the conclusions reached earlier by
the Eighth and Ninth Circuits that the remedial provisions of the
CSRA were sufficiently comprehensive and exclusive to preempt the
FTCA.47
We are convinced, however, that even though § 7217 may be
comprehensive, it is not similarly exclusive. Unlike the CSRA,
which creates a cohesive system for the redress of civil servants'
employment problems, § 7217 merely provides remedies for violations
of § 6103; nowhere does Congress purport to make § 7217 preemptive
of the FTCA. The government fails to cite to this court any
evidence that Congress intended for § 7217 to be the exclusive
remedy for each and every § 6103 violation.48 We hold that
45
Pub. L. No. 95-454, 92 Stat. 1111 (codified as amended at
5 U.S.C. § 1101 et seq. (1988)).
46
Rollins, 937 F.2d at 139.
47
Id.; see Rivera v. United States, 924 F.2d 948, 951-52
(9th Cir. 1991); Premachadra v. United States, 739 F.2d 392, 393-
94 (8th Cir. 1984).
48
It is true that § 7217 is comprehensive in terms of
allowing actions for breaches of § 6103. This court, however,
must recognize the significant distinction between
"comprehensive" and "preemptive." Rollins and other authorities
instruct us that we must have some evidence of congressional
intent before we hold that an enactment preempts the FTCA. In
this case, no such evidence of intent has been cited to this
court, and our independent research reveals none. We are thus
25
Johnson's right to sue the government under the FTCA for a tort
arising from violation of the duty created under § 6103 is not
preempted by § 7217.
3. Discretionary Function Exception
The government next argues that Johnson's claims are barred by
the so-called discretionary function exception to the FTCA. By
statute, that exception excludes from the FTCA's broad waiver of
sovereign immunity "[a]ny claim . . . based upon the exercise or
performance or the failure to exercise or perform a discretionary
function or duty on the part of a federal agency or an employee of
the government, whether or not the discretion involved be abused."49
Clearly, however, the discretionary function exception does
not encompass every act of a government employee that involves some
element of discretion. This court has previously noted that our
"decisions . . . have been extraordinarily careful to avoid any
interpretation of the discretionary function exception that would
embrace any governmental act merely because some decision-making
power was exercised by the official whose act was questioned."50
Thus, as virtually every act of a government employee involves at
least a modicum of choice, we must exercise restraint when applying
unprepared to say that a statute that allows for recovery for all
§ 6103 violations clearly evidences congressional intent to
preempt the FTCA.
49
28 U.S.C. § 2680(a).
50
Trevino v. General Dynamics Corp., 865 F.2d 1474, 1484
(5th Cir.), cert. denied, 493 U.S. 935 (1989).
26
the discretionary function exception.51 If courts were not to
exercise restraint, the government would be insulated "from nearly
all tort liability,"52 thereby frustrating the very purposes that
motivated enactment of the FTCA--a classic example of the exception
swallowing the rule.
In an exercise of discretion, the IRS has elected to maintain
a policy of publishing the names of persons who run afoul of the
criminal tax laws. The avowed purpose of that policy is to deter
future violations by all who encounter such publicity. The
district court recognized that the IRS had made an upper-level
discretionary decision to disseminate press releases about persons
convicted of tax evasion.53 The government argues to us that the
agents in the instant case were merely carrying out this policy
when they released the information about Johnson. But even if we
were to grant that this argument is true as far as it goes, it
stops well short of fully addressing the applicability of the
discretionary function exception in this case.
The fact that there was an IRS policy to release information
about persons convicted of tax evasion does not automatically
sterilize every action taken in furtherance of the policy. This
court has stated:
Once the government makes a discretionary decision, the
discretionary function exception does not apply to
51
Collins v. United States, 783 F.2d 1225, 1233 (5th Cir.
1986).
52
Id.53
760 F. Supp. at 1226-27.
27
subsequent decisions made in carrying out that policy,
"even though discretionary decisions are constantly made
as to how those acts are carried out."54
When the government adopts a discretionary policy, it must
thereafter exercise constant vigilance to ensure that actions taken
in furtherance of that policy are not performed negligently.55
In the instant case, we start, as did the district court, with
a given: The IRS, in its discretion, decided to maintain a policy
of issuing news releases about persons convicted of tax evasion.
In general, that is the kind of policy decision which the
discretionary function exception is meant to shield. When Stone
and the other IRS agents here involved published the news release
about Johnson, they were ostensibly acting in furtherance of this
express policy of the IRS. Clearly, however, their actions
purportedly aimed at implementing the policy were at least
negligent because those agents overlooked § 6103--if in fact they
did not deliberately ignore it.
Just because the discretionary function exception would
generally shield the government from FTCA liability otherwise
arising from the policy decision of the IRS to issue such news
releases, it does not follow that the government is automatically
shielded from such liability when the acts of the particular agents
seeking to implement that policy violate another federal law,
54
Trevino, 865 F.2d at 1484 (quoting Wysinger v. United
States, 784 F.2d 1252, 1253 (5th Cir. 1986)).
55
See Payton v. United States, 679 F.2d 475, 479 (5th Cir
1982)(discussing Indian Towing Co. v. United States, 350 U.S. 61(1955)).
28
regulation, or express policy. Actions taken to carry out a
discretionary policy must be taken with sufficient caution to
ensure that, at a minimum, some other federal law is not violated
in the process. It goes without saying, then, that if caution must
be exercised to avoid simple negligence, even greater caution must
be employed to prevent reckless disregard and intentional or
deliberate violations of law.
In the instant case, the IRS agents' release of protected
information about Johnson was not only negligent in the abstract;
it was negligent as a matter of Texas law because a statute--§
6103--was violated in the course of such conduct. We hold that the
discretionary function exception to the FTCA does not shield the
government from liability for acts of its agents taken in
furtherance of a general discretionary policy--such as the IRS
policy to deter tax evasion through the publication of the names
and other personal information about tax evaders--when such acts
are taken in a manner that violates a federal statute. As the
actions in the instant case violated § 6103, which expressly
prescribes an applicable standard of diligence, those actions do
not qualify for shelter under the wings of the discretionary
function exception. The sheltering wings of the exception are
broad, but not infinite.
4. Tax Assessment and Collection Exception
The government urges yet another exception to the FTCA's
waiver of sovereign immunity, one that purports to eschew
governmental liability under the FTCA for "[a]ny claim arising in
29
respect of the assessment or collection of any tax or customs
duty."56 The district court rejected the "[g]overnment's position
that any misdeeds committed by the individual defendants in this
case . . . were sufficiently related to the assessment or
collection of taxes to fall under § 2680(c)."57
Again, we review such factual findings for clear error. But
even if this issue were one of law, and thus subject to plenary
review, we would agree with the district court. To argue that the
actions of the IRS officers involved with the Johnson news release
were causally connected to the tasks of assessing or collecting
taxes strains credulity beyond the breaking point. The government
informs us that the purpose of the instant publication effort was
to deter potential tax evaders and thus was in furtherance of the
more general efforts of the IRS to collect taxes. Therefore,
argues the government, publicity aimed at deterring future evasion
should be included within the assessment and collection exemption
of § 2680(c). We find the government's position untenable.
A determination that the ambit of the assessment and
collection exception is so all-embracing as to cover the news
releases about Johnson's conviction would extend the exception to
the point that the FTCA's waiver of sovereign immunity vis-à-vis
the IRS would be wholly subsumed in that exception. Such an
extension would effectively exempt every act of every IRS agent
whatsoever. No case law cited to this court supports such a
56
28 U.S.C. § 2680(c).
57
760 F. Supp. at 1227.
30
pervasive immunity for the IRS, and we have found none
independently.58 True, the jurisprudence in this area supports the
conclusion that the exemption is quite broad as it relates to
agents engaged in activities with a realistic nexus to the
functions of assessing or collecting taxes. But in the instant
case, accepting the government's argument would stretch the
assessment and collection exemption to cover all general deterrent
activities of the IRS even though, as here, the taxpayer may have
long since paid the tax deficiency as well as penalties and
interest.
It is axiomatic that not every employee of the IRS is engaged
in assessing or collecting taxes even though those are the primary
functions and missions of the Service. It is equally true that not
every official act of those agents who are thus engaged is
sufficiently related to assessing or collecting taxes to have the
nexus required to enjoy the protection of § 2680(c). We refuse to
expand this exemption as far beyond its already broad range as the
government suggests.
In Cappozzoli v. United States, we stated that
an IRS agent could engage in tortious conduct
sufficiently removed from the agents official duties of
assessing or collecting taxes as to be beyond the scope
of Section 2680(c), and at the same time sufficiently
within the scope of his employment to give rise to an
action against the United States.59
58
See, e.g., Wright v. United States, 719 F.2d 1032, 1035-36
(9th Cir. 1983); Cappozzoli v. Tracey, 663 F.2d 654, 657-58 (5th
Cir. 1981).
59
663 F.2d at 658.
31
Today we consider just such a situation. Even accepting for the
sake of argument that the actions of the subject IRS agents were
directed at deterring future tax evasion by others, those actions
were not "sufficiently related" to assessing or collecting taxes to
be immune from responsibility under § 2680(c). The attenuation of
those acts from the outer limits of the exemption is too great to
appertain. One of the agents was a publication relations officer;
the others were special agents whose jobs comprehend criminal tax
violations and violators. Off hand, we can think of no two IRS
jobs with less nexus to the functions of assessing or collecting
taxes. We are satisfied by the plain language of § 2680(c) that
its tax assessment and collection exception was never intended to
include deterrent publicity within its ambit of that exemption. We
therefore reject the government's exemption argument.
C. Damages
District courts are allowed wide discretion in setting damage
awards.60 Like other fact issues, a district court's assessment of
damages is reviewed under the clearly erroneous standard.61 An
appeals court's "reassessment of damages is 'inherently subjective
in large part, involving the interplay of experience and emotions
60
Wheat v. United States, 860 F.2d 1256, 1259 (5th Cir.
1988)(citing Wakefield v. United States, 765 F.2d 55, 59 (5th
Cir. 1985)); see Fed. R. Civ. P. 52(a).
61
Id. (citing Johnson v. Offshore Express, Inc., 845 F.2d
1347, 1356 (5th Cir. 1988)).
32
as well as calculation.'"62 A district court's determination of
damages cannot be reversed by this court "simply because we would
have awarded a lesser sum."63 We have recognized that, in reviewing
damage awards, appellate courts are well advised to view the award
in question within an objective framework--i.e., to compare the
award under review to awards in similar cases.64 We also have
noted, however, that "we cannot determine excessiveness by
comparing damage awards and that each case depends on its own
facts."65
In the instant case, the district court awarded Johnson
$10,902.17: $5,902,117 for economic loss, and $5,000,000 for
emotional distress and mental anguish. We now review each
component of the court's award.
1. Economic Damages
The district court awarded Johnson $5,902,117 for the economic
loss resulting from his forced resignation. That loss comprised
the following items:
Loss of earnings $ 3,675,917
Loss of pension benefits 1,524,492
Loss of deferred compensation 664,208
Loss o[n] sale of Galveston house 37,50066
62
Sosa v. M/V Lago Izabul, 736 F.2d 1028, 1035 (5th Cir.
1984)(quoting Caldarera v. Eastern Airlines, Inc., 705 F.2d 778,
784 (5th Cir. 1983)).
63
Id. (citing Batchkowsky v. Penn Central Co., 525 F.2d
1121, 1124 (2d Cir. 1975)).
64
See Wheat, 860 F.2d at 1259.
65
Id. (citing Wakefield, 765 F.2d at 59).
66
760 F. Supp. at 1233.
33
The government does not appeal the quanta of Johnson's losses from
either the sale of his Galveston house or his deferred
compensation. The government does take the position that Johnson's
calculations of his pension losses, which the district court
accepted, were erroneous in that they allowed a partial double
recovery. We find that position to be well taken.
The loss of earnings was calculated correctly. Johnson's
income was properly projected forward, and all salary he received
from American National as an employee from the time he returned to
Missouri until he attained the age of sixty-five, was properly
deducted. The calculation of Johnson's pension, however, was
flawed.
Johnson testified that he would have received lifetime pension
payments of $11,731 a month had he not been forced to leave his
executive position. Instead, he will receive $4858 per month under
his current pension--a monthly differential of $6873.67 He would
have been paid this additional money for twelve years (from the age
of seventy, his executive retirement age, until the age of eighty-
two, the end of his actuarially calculated life expectancy). This
yields a gross pension loss of $989,712.68
From that gross loss, however, the pension payments that
Johnson actually received between the ages of sixty-five and
seventy must be subtracted. (As the government properly asserts,
67
Johnson testified that the difference was $7473 per month.
This is clearly an arithmetic error, which we will correct.
68
$6873. x 12(months) x 12(years).
34
Johnson cannot be compensated both for lost wages and as a
pensioner during the same five year period.) This deduction equals
$291,480,69 leaving Johnson with lost pension benefits of $698,232
rather than $1,524,492 as accepted by the district court.
This recalculation produces a properly determined economic
loss of $5,075,857, not $5,902,117. That amount is $826,260 less
than the district court's award.
2. Damages for Emotional Distress and Mental Anguish
The district court's opinion is devoid of information or
explanation of the reasoning process or methodology, if any,
employed in arriving at its lump sum award of five million dollars
as damages for emotional distress and mental anguish. The record
contains explicit testimony of the nature of the Johnsons'
suffering, as well as discussion by the district court about the
effects that the news releases had on Johnson, and the pain and
anguish they caused to him and his wife. These negative effects on
Johnson's life are well demonstrated by the record of the trial.
Irrespective if all that information, we still have no way of
knowing how the district court equated the distress, anguish, and
humiliation suffered by the Johnsons with an award of five million
dollars. Although that figure might appear to be high, at this
juncture we are not prepared either to agree or disagree with its
accuracy; we simply have no basis on which to consider the court's
determination. Therefore, we remand only this part of the judgment
to the district court for verbalization or, if necessary,
69
$4858. x 12(months) x 5(years).
35
recalculation and explanation, of how it arrived at the amount of
damages to which Johnson is entitled for emotional distress and
mental anguish.
III
CONCLUSION
The district court committed no reversible error in finding
that the actions of the IRS agents violated § 6103, and that when
such a violation of a statute injures persons whose interests are
intended to be protected by the statute, the violation constitutes
a tort under Texas law, thereby implicating the FTCA. Neither did
the court err in rejecting the various exceptions proffered by the
government, or in finding that the actionable negligence of the IRS
agents in promulgating the two news releases was the proximate
cause of the Johnsons' damages. With the exception of Johnson's
pension losses--which we have recalculated--the district court's
determination of Johnson's special damages are not clearly
erroneous. But, as the district court revealed nothing of the
method it employed in calculating the Johnsons' damages for
emotional distress and mental anguish, we remand this case for the
limited purpose of affording that court the opportunity to explain
its methodology or, alternatively, to recalculate those damages and
explain its recalculation sufficiently to permit appellate review.
For the foregoing reasons, the judgment of the district court
is AFFIRMED in part; MODIFIED in part and, as thus modified,
RENDERED in part; and REMANDED in part.
36
Garwood, Circuit Judge, Dissenting:
I respectfully dissent.
In my view, Johnson has established neither a cause of action
under Texas law, as required by the Federal Tort Claims Act
(FTCA),70 nor that he suffered any material damage as a result of
any violation of 26 U.S.C. § 6103 as construed in Lampert v. United
States, 854 F.2d 335, 338 (9th Cir. 1988), cert. denied, 109 S.Ct.
1931 (1989) and William E. Schrambling Accountancy Co. v. United
States, 937 F.2d 1485, 1488-89 (9th Cir. 1991), cert. denied, 112
S.Ct. 956 (1992), a construction which the majority accepts,
arguendo, as correct.71
This is a federal, not a Texas, law claim.
The FTCA, subject to diverse exceptions, waives the sovereign
immunity of the United States, making it liable in tort "in the
same manner and to the same extent as a private individual under
like circumstances," 28 U.S.C. § 2674, for certain damages "caused
by the negligent or wrongful act or omission of any employee of the
Government while acting within the scope of his office or
70
28 U.S.C. §§ 1346, 2671-2680.
71
Under this construction, section 6103 prohibits "only the
disclosure of confidential tax return information" and hence does
not prohibit disclosure of return information once that
information has been "made a part of the public domain." Lampert
at 338. I am in essential agreement with Lampert. Cf. United
States v. Wallington, 889 F.2d 573, 576 (5th Cir. 1989) (18
U.S.C. § 1905 restricted to confidential information).
employment, under circumstances where the United States, if a
private person, would be liable to the claimant in accordance with
the law of the place where the act or omission occurred." 28
U.S.C. § 1346(b) (emphasis added). While as a matter of abstract
linguistics the phrase "law of the place where the act or omission
occurred" might be thought to include generally applicable federal
law, it has long been settled that it does not, and that "the
liability of the United States under the Act [FTCA] arises only
when the law of the state would impose it." Brown v. United
States, 653 F.2d 196, 201 (5th Cir. 1981). Thus, even a violation
of the United States Constitution, actionable under Bivens,72 is not
within the FTCA unless the complained of conduct is actionable
under the local law of the state where it occurred. Brown at 201.
It follows, of course, and has consistently been held, that
"the FTCA was not intended to redress breaches of federal statutory
duties." Sellfors v. United States, 697 F.2d 1362, 1365 (11th Cir.
1983). As the Second Circuit said in Chen v. United States, 854
F.2d 622, 626 (2d Cir. 1988):
"The FTCA's 'law of the place' requirement is not
satisfied by direct violations of the Federal
Constitution, See Contemporary Mission, Inc. v. U.S.P.S.,
648 F.2d 97, 104-05 n.2 (2d Cir. 1981); Birnbaum v.
United States, 588 F.2d 319, 328 (2d Cir. 1978), or of
federal statutes or regulations standing alone, Cecile
Indus., Inc. v. United States, 793 F.2d 97, 100 (3d Cir.
1986); Art Metal-U.S.A., Inc. v. United States, 753 F.2d
1151, 1157-58 (D.C. Cir. 1985); Birnbaum, 588 F.2d at
328; Nichols, 656 F.Supp. at 1444-45. The alleged
federal violations also must constitute violations of
duties 'analogous to those imposed under local law,'
72
Bivens v. Six Unknown Named Agents of Federal Bureau of
Narcotics, 91 S.Ct. 1999 (1971).
38
Cecile Indus., 793 F.2d at 100 (quoting Art Metal, 753
F.2d at 1158.)"
See also, e.g., Zabala Clemente v. United States, 567 F.2d 1140,
1149 (1st Cir. 1977) (". . . even where specific behavior of
federal employees is required by federal statute, liability to the
beneficiaries of that statute may not be founded on the Federal
Tort Claims Act if state law recognizes no comparable private
liability"); Gelley v. Astra Pharmaceutical Products, Inc., 610
F.2d 558, 562 (8th Cir. 1979) (". . . federally imposed
obligations, whether general or specific, are irrelevant to our
inquiry under the FTCA, unless state law imposes a similar
obligation upon private persons"). Our Court has long followed
this rule. United States v. Smith, 324 F.2d 622, 624-25 (5th Cir.
1963) (the FTCA "simply cannot apply where the claimed negligence
arises out of the failure of the United States to carry out a
[federal] statutory duty in the conduct of its own affairs" and is
unavailable where "[t]he existence or nonexistence of" the claim
"depends entirely upon Federal statute"); Brown; Tindall v. United
States, 901 F.2d 53, 56 at n.8 (5th Cir. 1990) ("a federal
regulation cannot establish a duty owed to the plaintiff under
state law," citing Smith). See also Bosco v. U.S. Army Corps of
Engineers, 611 F.Supp. 449, 454 (N.D. Tex. 1985).
This is not to say that the required state law must be one
directly applicable to the conduct of federal employees or to the
precise activity from which the claim arose. The Supreme Court
made this clear in Indian Towing Co. v. United States, 76 S.Ct.
122, 124 (1955), where it relied on the "under like circumstances"
39
language of section 2674 in holding that the United States could be
liable under the FTCA for the Coast Guard's negligence in the
operation of its lighthouse, asserting "it is hornbook tort law
that one who undertakes to warn the public of a danger and thereby
induces reliance must perform his 'good Samaritan' task in a
careful manner." See also Block v. Neal, 103 S.Ct. 1089, 1092
(1983). Although Indian Towing did not expressly refer to state
law, subsequent decisions have made plain that in FTCA cases "the
application of the 'Good Samaritan' doctrine is at bottom a
question of state law." United States v. S.A. Impresa de Viacao
Aerea Rio Grandense (Varig Airlines), 104 S.Ct. 2755, 2765 n. 12
(1984). See also Sheridan v. United States, 108 S.Ct. 2449, 2455
(1988). If the government undertakes to perform a duty, such as to
furnish a lighthouse service or direct air traffic, and negligently
performs that duty, then it may be liable under the FTCA if a
similarly situated private enterprise would be liable under the
local law good Samaritan rule. As the Supreme Court explained in
Sheridan:
"By voluntarily adopting regulations that prohibit the
possession of firearms on the naval base and that require
all personnel to report the presence of any such firearm,
and by further voluntarily undertaking to provide care to
a person who was visibly drunk and visibly armed, the
Government assumed responsibility to 'perform [its] "good
Samaritan" task in a careful manner.'" Indian Towing Co.
v. United States, 350 U.S. 61, 65, 76 S.Ct. 122, 124, 100
L.Ed. 48 (1955). The District Court and the Court of
Appeals both assumed that petitioners' version of the
facts would support recovery under Maryland law on a
negligence theory if the naval hospital had been owned
and operated by a private person." Id. at 2555 (footnote
omitted).
We have applied the same theory in FTCA cases involving air traffic
40
controllers. See Gill v. United States, 429 F.2d 1072, 1075 (5th
Cir. 1970).73
The teaching of these authorities is that the violation of a
federal statute or regulation does not give rise to FTCA liability
unless the relationship between the offending federal employee or
agency and the injured party is such that the former, if a private
(or at least non-federal) person or entity, would owe a duty under
state law to the latter in an analogous non-federal situation. If
the requisite relationship exists, then the statutory or regulatory
violation may constitute or be evidence of negligence in the
performance of that analogous state law duty.74 But merely because
a given state has a general doctrine of negligence per se does not
mean that every violation there of a federal statute by a federal
employee suffices for a claim by an intended statutory beneficiary
to be a claim under state law for purposes of the FTCA. Otherwise,
in such states the FTCA would have been rewritten to include
conduct actionable only by virtue of federal law where "a private
individual under like circumstances" would not be liable under
state law. Thus in Art Metal-U.S.A., Inc. v. United States, 753
73
Gill was a Texas case. Texas has recognized the good
Samaritan doctrine since well before enactment of the FTCA. See,
e.g., Colonial Savings Ass'n v. Taylor, 544 S.W.2d 116, 119 (Tex.
1976).
74
Similarly, in an action between private parties who owe a
duty one to the other under state law, such as the duties owed by
a seller to a buyer in respect to the quality of the goods sold,
violation of applicable federal law may constitute a breach of
that duty under a negligence per se concept, just as would
violation of state law. See Gibson v. Worley Mills, Inc., 614
F.2d 464, 466 (5th Cir. 1980).
41
F.2d 1151 (D.C. Cir. 1985), the D.C. Circuit rejected FTCA
liability sought to be predicated on a violation of federal
regulations, notwithstanding that local law had a broad negligence
per se doctrine and the plaintiffs were intended beneficiaries of
the regulatory provisions violated. The court observed: "duties
set forth in federal law do not, therefore, automatically create
duties cognizable under local tort law. The pertinent question is
whether the duties set forth in the federal law are analogous to
those set forth in local tort law." Id. at 1158 (citing Indian
Towing Co.).75 And, in Sellfors, an FTCA case sought to be based
on a federal statutory violation, the court stated: "We must first
reject appellant's insistence upon automatically applying the state
negligence per se law." Id., 697 F.2d at 1367. The Sellfors court
went on to say:
"Even though violation of a federal statutory duty
does not automatically invoke state law principles of
negligence per se, where the government, in the
performance of such duties does act negligently,
liability may be found under state law because of the
relationship created: the good samaritan doctrine. See
Indian Towing Co. v. United States, 350 U.S. 61, 76 S.Ct.
122, 100 L.Ed. 48 (1955)." Id.Where a claim is wholly grounded on violation of a federal
statute or regulation, to allow FTCA recovery merely on the basis
of a general, abstract state doctrine of negligence per se, without
requiring that there be some specific basis for concluding that
similar conduct by private or non-federal governmental employees in
75
This language and holding were cited with approval by the
Third Circuit in Cecile Industries, Inc. v. United States, 793
F.2d 97 at 100 (3d Cir. 1986).
42
clearly analogous circumstances would be actionable under state
law, is to in essence discriminate against the United States:
recovery against it is allowed, although in analogous circumstances
the private or municipal employer or employee would not be subject
to liability under state law. Plainly, the FTCA waiver of
sovereign immunity does not go so far.
Here the duty not to disclose return information is grounded
entirely on the federal statute, 26 U.S.C. § 6103. Neither the
majority, nor the district court, nor the plaintiff-appellee,
points to any provision of Texas statutory or common law analogous
to section 6103, much less any which in similar circumstances would
prohibit a state or municipal official, or a private person, from
disclosing information comparable to that disclosed here concerning
an individual recently convicted of a felony in the local courts.
In its footnote 36 the majority refers, without elaboration or
citation of authority, to the torts of libel, slander, and
defamation as possible Texas law analogues to the claim made here.
However, as the majority recognizes, libel and slander are
specifically excluded from the FTCA, 28 U.S.C. § 2680(h), and so
presumably is defamation, which is essentially the same thing.
Further, the information disclosed here was in every significant
respect truthful and a matter of public record. The footnote also
makes a similar conclusory reference to professional malpractice
arising from the disclosure of confidential information by lawyers
or psychiatrists or the like concerning a client or patient.
Again, no authority is cited. It seems to me that the analogy is
43
quite strained, as in the instances cited there is a broad and
general relationship of trust and confidence voluntarily undertaken
between the parties, while the relationship between the Internal
Revenue Service and taxpayers is largely involuntary, adversarial,
and at arms length. Tellingly, the majority relegates its asserted
Texas law analogues to a footnote, and makes no analysis either of
the particular elements necessary for recovery under such purported
section 6103 analogues or of the facts here to determine whether
such particular elements are established. Nor did the district
court. It is plain that the majority has relied exclusively on
section 6103 (as did the district court), with no justification for
doing so beyond the mere fact that Texas has a general doctrine of
negligence per se.76 For the reasons previously stated, that simply
76
The majority apparently takes some comfort from the fact
that the prohibitions of section 6103(a) extend to certain state
and local government employees and, in some specified
circumstances, to private persons. Section 6103(a) provides:
"(a) General rule.SQReturns and return information
shall be confidential, and except as authorized by this
titleSQ
(1) no officer or employee of the United
States,
(2) no officer or employee of any State, any
local child support enforcement agency, or any
local agency administering a program listed in
subsection (l)(7)(D) who has or had access to
returns or return information under this section,
and
(3) no other person (or officer or employee
thereof) who has or had access to returns or
return information under subsection
(e)(1)(D)(iii), (l)(12), paragraph (2) or (4)(B)
of subsection (m), or subsection (n),
shall disclose any return or return information
obtained by him in any manner in connection with his
service as such an officer or an employee or otherwise
44
will not suffice to convert this federal law claim to one under
Texas law.
Moreover, the majority does not establish that there actually
is any Texas law doctrine of negligence per se applicable in a case
such as this, where the statute violated is a federal one and there
is also a federal statute that creates a comprehensive federal
cause of action for the precise federal statutory violation
alleged. As in effect at the time of the here challenged press
releases, 26 U.S.C. § 7217 provided as follows:
"§ 7217. Civil Damages for unauthorized disclosure of
returns and return information
(a) General rule.SQWhenever any person knowingly, or
by reason of negligence, discloses a return or return
information (as defined in section 6103(b)) with respect
to a taxpayer in violation of the provisions of section
6103, such taxpayer may bring a civil action for damages
against such person, and the district courts of the
United States shall have jurisdiction of any action
commenced under the provisions of this section.
(b) No liability for good faith but erroneous
interpretation.SQNo liability shall arise under this
section with respect to any disclosure which results from
a good faith, but erroneous, interpretation of section
6103.
(c) Damages.SQIn any suit brought under the provisions
of subsection (a), upon a finding of liability on the
or under the provisions of this section. For purposes
of this subsection, the term "officer or employee"
includes a former officer or employee."
Obviously, section 6103(a)(1) is the only clause applicable to
this case. The word "other" in clause (3) plainly excludes
federal employees from that clause. But even if section
6103(a)(2) or section 6103(a)(3) applied by analogy, that would
be an analogous federal law, not an analogous state law. The
majority's discussion of clauses (2) and (3) of section 6103(a)
merely serves to confirm that it relies exclusively on federal
law.
45
part of the defendant, the defendant shall be liable to
the plaintiff in an amount equal to the sum ofSQ
(1) actual damages sustained by the
plaintiff as a result of the unauthorized
disclosure of the return or return information
and, in the case of a willful disclosure or a
disclosure which is the result of gross
negligence, punitive damages, but in no case
shall a plaintiff entitled to recovery receive
less than the sum of $1,000 with respect to
each instance of such unauthorized disclosure;
and
(2) the costs of the action.
(d) Period for bringing action.SQAn action to enforce
any liability created under this section may be brought,
without regard to the amount in controversy, within 2
years from the date on which the cause of action arises
or at any time within 2 years after discovery by the
plaintiff of the unauthorized disclosure."
Added Pub.L. 94-455, Title XII, § 1202(e)(1), Oct. 4,
1976, 90 Stat. 1687, and amended Pub.L. 95-600, Title
VII, § 701(bb)(7), Nov. 6, 1978, 92 Stat. 2923. 77
None of the Texas negligence per se cases cited by the majority
involve a situation where there is a statutorily created
comprehensive cause of action for the statutory violation claimed
to constitute negligence per se.78 It seems to me evident that the
77
In 1982 section 7217 was repealed and replaced by 26 U.S.C.
§ 7431, which generally allows for an action against the United
States for violations of section 6103. The legislation repealing
section 7217 and enacting section 7431 provided that such
legislation would "apply with respect to disclosures made after
the date of enactment of this Act [September 3, 1982]." Pub. L.
97-248, Title III, § 357(c). Hence, section 7217 remains
applicable to the here challenged disclosures, and section 7431
is inapplicable.
78
The closest case cited by the majority is El Chico Corp. v.
Poole, 732 S.W.2d 306 (Tex. 1987). Poole involved suits against
licensed on-premises beverage distributors for selling liquor to
intoxicated persons contrary to Texas Alcoholic Beverage Code
Ann. 101.63(a) (Vernon 1978). Plaintiffs were individuals
injured in collisions during 1984 with cars driven by those to
whom the defendants had recently dispensed the alcoholic
46
Texas courts would not create a common law cause of action for the
statutory violation in such a situation, particularly where the
statute violated is a federal one and the statute creating a
comprehensive cause of action for the violation is likewise a
federal one. Indeed, what could possibly motivate a Texas court to
create such a cause of action in those circumstances? If the Texas
cause of action merely mirrored section 7217, what purpose would be
served?79 Texas law obviously could not prevent recovery authorized
by section 7217. It seems just as plain that Texas could not
beverages in violation of the referenced Texas statute. The
Texas Supreme Court handed down its decision on June 3, 1987,
holding the defendants civilly liable and relying in part on the
doctrine of negligence per se. Id., 732 S.W.2d at 312-314. At
the time of the complained of acts and injuries, and indeed at
the time the Supreme Court's opinion was handed down, no Texas
statute spoke to the question whether or under what circumstances
there would be civil liability for violation of this or similar
provisions of the Texas Alcoholic Beverage Code. The Texas
Supreme Court did note, however, that on June 1, 1987, the
legislature had passed an amendment to the Texas Alcoholic
Beverage Code providing for civil liability if it was apparent to
the party furnishing the alcoholic beverage that the person being
served was obviously intoxicated to the extent of presenting a
clear danger to himself and others. The Supreme Court noted that
it was uncertain whether the act would become law, observing that
it had not yet been signed by the governor and that its
"effectiveness . . . depends upon the action, if any, taken by
the Governor." Id., 732 S.W.2d at 314. The Court also noted
that the legislation apparently placed "a much more onerous
burden of proof" on the plaintiff than did the Court's opinion.
The Court, however, declined to apply this more onerous standard
because the legislative amendment "does not by its terms govern a
cause of action arising or accruing before its effective date."
Id. The plain implication of Poole is that the statutory cause
of action would be exclusive of any court-created action under a
negligence per se theory with respect to statutory violations
occurring after the legislation went into effect.
79
Clearly, state as well as federal courts are available for
suits under section 7217 itself, as its grant of federal
jurisdiction does not purport to be exclusive. See, e.g.,
Tafflin v. Levitt, 110 S.Ct. 792 (1990).
47
enhance the recovery provided for in section 7217 or authorize such
recovery under circumstances in which section 7217 does not allow
it.80 Any such law would plainly be preempted by section 7217.
See, e.g., Offshore Logistics, Inc. v. Tallentire, 106 S.Ct. 2485,
2499 (1986); Mobil Oil Corp. v. Higginbotham, 98 S.Ct. 2010, 2015
(1978); Brown v. General Services Administration, 96 S.Ct. 1961,
1969 (1976); United States v. Demko, 87 S.Ct. 382, 383-84 (1966);
Rollins v. Marsh, 937 F.2d 134, 140 (5th Cir. 1991); Atkinson v.
Gates, McDonald & Co., 838 F.2d 808 (5th Cir. 1988); LeSassier v.
Chevron USA, Inc., 776 F.2d 506 (5th Cir. 1985). Here we deal with
a suit grounded on the liability of federal employees for actions
taken in the course of their employment with the Internal Revenue
Service in releasing federal income tax information contrary to
section 6103(a)(1) and so as to create civil liability under
section 7217. Clearly in such instances section 7217 must be
preemptive of state law. As the Court remarked in Boyle v. United
Technologies Corp., 108 S.Ct. 2510, 2514-15 (1988): "Another area
that we have found to be of peculiarly federal concern, warranting
the displacement of state law, is the civil liability of federal
officials for actions taken in the course of their duty. We have
held in many contexts that the scope of that liability is
80
For example, could Texas law allow civil recovery for a
section 6103 proscribed disclosure even though it resulted "from
a good faith, but erroneous, interpretation of section 6103" and
was hence not actionable under section 7217(b)? Could Texas law
authorize a longer limitations period than that of section
7217(d)? Could Texas law authorize recovery of more than the
$1,000 provided for in section 7217(c) absent proof of larger
actual damages?
48
controlled by federal law."
The only reasonable conclusion is that the complained of
conduct by the IRS employees here was not, and could not have been,
actionable under Texas law; it was, and was only, a violation of
section 6103 actionable under section 7217. Because it was not
actionable under Texas law, the United States had no liability
under the FTCA.
The section 6103 violation was not a cause of Johnson's
damage.
The majority accepts, arguendo, that Lampert correctly
construes section 6103 and accordingly that the violations here
are: the disclosure of Johnson's middle initial "E." (the press
releases describe him as "Elvis E. Johnson," while the information
uses "Elvis Johnson"); his age (59); the title of his executive
position with American National Insurance Company (the press
releases say "an executive vice-president for the American National
Insurance Corporation," but the trial record refers to him as "an
executive for American National Insurance Company"); and his street
address (the press releases, which have "Galveston, Texas" headers
and use "here" to refer to Galveston, describe Johnson as "of 25
Adler Circle"; the information describes him as "a resident of
Galveston, Texas").81
81
The information to which Johnson pleaded guilty charged a
violation of 26 U.S.C. § 7201, a felony that then provided for a
maximum prison term of five years and a $10,000 fine for "[a]ny
person who willfully attempts in any manner to evade or defeat
any tax imposed by this title." The law clearly is, and has been
in this Circuit since well before any of the events at issue,
that establishing a violation of section 7201 requires a finding
49
The April 17 press release would have been entirely in
conformance with section 6103 had it merely omitted the middle
initial "E.," the figure "59," and the word "vice-president," while
expressly substituting the already clearly implicit "Galveston" for
"25 Adler Circle." As so redacted, the press release would read as
follows (bracketed material omitted; underscored added):
"INSURANCE EXECUTIVE PLEADS GUILTY IN TAX CASE
GALVESTON, TEXASSQIn U.S. District Court here, Apr.
10, Elvis [E.] Johnson, [59,] plead guilty to a charge of
federal tax evasion. Judge Hugh Gibson sentenced
Johnson, of [25 Adler Circle] Galveston, to a six-month
suspended prison term and one year supervised probation.
Johnson, an executive [vice-president] for the
American National Insurance Corporation, was charged in
a criminal information with willful evasion of federal
that the defendant "acted willfully and knowingly with specific
intent to evade his income tax obligation," United States v.
Daniels, 617 F.2d 146, 148 (5th Cir. 1980), and that "a
negligent, careless, or unintentional understatement of income"
is not "sufficient." United States v. Garber, 607 F.2d 92, 97-98
(5th Cir. 1979). "The government must demonstrate that the
defendant willfully concealed and omitted from her return income
which she knew was taxable." Id. at 98.
The information here alleged in relevant part as follows:
". . . on . . . April 15, 1976 . . . the defendant
ELVIS JOHNSON, a resident of Galveston, Texas, did
willfully and knowingly attempt to evade and defeat a
large part of the income tax due and owing by him to
the United States for the calendar year 1975, by
preparing and causing to be prepared, by signing and
causing to be signed, and by mailing and causing to be
mailed, . . . a false and fraudulent income tax return,
which was filed with the Internal Revenue Service,
wherein he stated and represented that his taxable
income for said calendar year was $53,589.00 and that
the amount of tax due and owing thereon was the sum of
$18,374.50, whereas, as he then and there well knew,
his taxable income for 1975 was $59,784.18 upon which
said taxable income he owed to the United States an
income tax of $21,849.47 (Violation: Title 26, United
States Code, Section 7201)."
50
tax by filing a false and fraudulent tax return for 1975.
In addition to the sentence, Johnson will be
required to pay back taxes, plus penalties and interest."
There is absolutely no evidence whatever even tending to
suggest that such a press release would have had, or was calculated
to have had, any different effect on Johnson or his relations with
American National Insurance Company than the press releases
actually issued.82 The district court, in effect, simply ignored
this problem and treated the entirety of the press releases as
proscribed under section 6103. Hence the district court's factual
finding of causation is grounded on what the majority has assumed
is a legally incorrect foundation. The majority (footnote 41)
asserts "it was not beyond reason . . . to find that the
confidential information that was released caused the damage to
Johnson." But no explanation is given for this delphic and wholly
counterintuitive conclusion.83This was a matter as to which Johnson
82
While the majority refers, as did the district court, to the
fact that Johnson was known as "E.E." to many people, there is no
evidence that a reference to "Elvis Johnson, of Galveston, an
American National Insurance Company executive," would not have
sufficed to identify him. Furthermore, Johnson's damage claims
are almost entirely premised on his loss of high position with
American National. Yet, it is undisputed that the chief
executive officer and general counsel of that concern, as well as
a couple of others on its board, were aware, before any press
release, that Johnson had pleaded guilty to the information and
been sentenced. There is not a scintilla of evidence that anyone
thought that the addition of the section 6103 confidential (non-
public domain) information even had the potential for making any
difference at all to anyone with American National (or to anyone
else).
83
The significant facts were Johnson's identity, his being an
executive with American National, and his felony offense, all of
which were non-confidential, public domain matters.
51
had the burden of proof and that burden surely cannot have been
sustained by such unreasonable and unexplained speculation.
Nor is this the whole of it. The district court reasoned that
because a minority of the board knew about Johnson's April 10
guilty plea before any press release, but he was not forced to
resign until a few days after the second and last (April 17)
release, that therefore the press releases themselves caused him to
be terminated. But this is pure post-hoc, propter-hoc reasoning.
No one testified that the press releases had anything to do with
Johnson's loss of position. The district court seems to assume
that the board as a whole would not have been told. The majority
assumes that there was a change of heart because of the publicity.
There is no evidence to support either assumption. Johnson was a
member of the board, and the second ranking executive with the
company. Only the board could remove him from that position. The
fact that a minority of the board knew of the April 10 conviction
and failed to take action before April 17 proves nothing.
Moreover, the evidence is undisputed that the whole board and all
the stockholders of this large, publicly held company, the stock of
which was publicly traded, would have had to have been informed,
even if there had never been any press release whatever. Johnson
himself testified:
"Q. At some point you were going to tell the Board that
you were a tax felon?
A. It would be in the footnotes of the annual report,
sir.
Q. And would have gone out to the board of directors?
52
A. And to the shareholders.
Q. And to the shareholders. And you were going to do
that regardless whether there was a press release?
A. It would have to have been done, yes, sir."84
In these circumstances, and on this barren record, it is
wholly fanciful to suggest that the inclusion in the press releases
of the essentially minor matters whose disclosure was prohibited by
section 6103 was a cause of Johnson's loss of position at American
National or of any material damage to him.
Conclusion
The majority and the district court recite evidence,
principally from Johnson himself, tending to indicate that he
wasn't really guilty of felony tax evasion, but was merely
negligent at worst, carelessly relying on his wife's confused
bookkeeping, and/or that he simply sacrificed himself to protect
his wife. Any such contention is wholly inconsistent with the
wording of the information to which Johnson pleaded guilty as well
as with the necessary elements of a section 7201 violation. See
footnote 12 supra. In this case Johnson's convictionSQwhich he has
never challengedSQwholly bars him from taking any such position,
especially in this suit against the United States, which
successfully prosecuted him for his tax fraud against it. See,
e.g., Piper v. United States, 392 F.2d 462, 464-65 (5th Cir. 1968);
Tomlinson v. Lefkowitz, 334 F.2d 262, 264-65 (5th Cir. 1964), cert.
84
And we also know as a matter of common knowledge that this
information would likewise have to be disclosed to the SEC, where
it would be a matter of public record, and to the investment
community.
53
denied, 85 S.Ct. 650 (1965). See also, e.g., United States v.
Thomas, 709 F.2d 968, 972 (5th Cir. 1983). The majority
acknowledges that there was no breach of the plea of agreement, 85
but nevertheless it, and the district court, seem to view the
matter as if Johnson's legitimate expectations from the agreement
were frustrated. Again, however, the conviction stands and Johnson
is bound by its necessarily implied findings. He never sought to
challenge it. Having received a short, probated sentence for what
we must presume was the willful, knowing, and intentional cheating
of the United States out of several thousand dollars, and protected
by that sentence from more severe punishment, he now collects
several million dollars from the United States because this matter
of public recordSQwhich he admits all the shareholders of his
publicly-held company would have to have been specifically informed
of anywaySQwas mentioned in two brief Galveston press releases.
Neither the law nor the facts support this recovery. Johnson has
indeed made a silk purse from a sow's ear, and we should not
countenance it.
85
This is because, as the majority points out (fn. 42), "[t]he
plea agreement specified only that the Justice Department would
not issue a press release," and there is no finding or conclusive
evidence that the Justice Department caused either press release
or failed to inform the IRS of the agreement. The majority notes
that neither Johnson nor the district court relied on a claim of
breach of the plea agreement.
54