In re: Sealed Case

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 2, 2019 Decided July 26, 2019
No. 17-1212
IN RE: SEALED CASE
______
On Appeal from the Order of the
United States Tax Court
______
Michael F. Qian, appointed by the court, argued the cause
as amicus curiae in support of appellant. With him on the
briefs were Deanne E. Maynard and Lena H. Hughes,
appointed by the court.
Kathleen E. Lyon, Attorney, U.S. Department of Justice,
argued the cause for appellee. With her on the brief were
Richard E. Zuckerman, Principal Deputy Assistant Attorney
General, and Teresa E. McLaughlin, Attorney.
Before: GRIFFITH and SRINIVASAN, Circuit Judges, AND
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
GINSBURG.
GINSBURG, Senior Circuit Judge: The Appellant asked to
proceed anonymously before the Tax Court when challenging
the decision of the Internal Revenue Service (IRS) to deny his
application for a whistleblower award. The Tax Court denied
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his request, concluding the balance of interests weighed against
anonymity because the Appellant is a “serial filer” of
whistleblower claims, which he bases upon publicly available
information. The Tax Court’s rationale was that if it does not
“identify serial filers by name, the public will be unable to
judge accurately the extent to which the serial filer
phenomenon has affected the work of the Tax Court.”
Whistleblower 14377-16W v. Comm’r, 148 T.C. 510, 518-19
(2017).
We first hold we have jurisdiction to hear this interlocutory
appeal pursuant to the collateral order doctrine. On the merits,
we conclude the Tax Court abused its discretion because
identifying the Appellant is not necessary to enable the public
to gauge (1) the extent to which serial filers affect the work of
the Tax Court or (2) whether any particular petitioner is a serial
filer. We therefore remand the case for the Tax Court to
reconsider whether the Appellant has otherwise made out a
fact-specific basis for protecting his identity under Tax Court
Rule 345(a).
I. Background
The Appellant is a retired certified public accountant who
helps his wife run a financial advisory firm. He has worked in
the fields of “tax, accounting, and financial advice” for almost
40 years, including two decades as a partner in an accounting
firm. Since at least 2010 the Appellant, using information
gleaned from public financial records, claims to have noticed
accounting irregularities in the filings made with the Securities
and Exchange Commission (SEC) by a publicly traded
corporation (the Taxpayer), which led him to conclude the
Taxpayer had underpaid its taxes by misrepresenting its sales.
The Appellant shared this information with the IRS and then
filed an application for a whistleblower award pursuant to 26
3
U.S.C. § 7623(b), which permits any individual who has
provided the IRS with information about an underpayment of
tax to receive a monetary award if his information enabled the
agency to collect additional tax revenue or other proceeds.
The IRS investigated the Taxpayer, all the while keeping
the Appellant’s identity confidential. In 2016 the IRS denied
his claim for a whistleblower award, explaining that its audit of
the Taxpayer did not yield any additional proceeds.
The Appellant petitioned the Tax Court for review of that
decision. Whistleblower 14377-16W, 148 T.C. 510-11. In
addition, he asked to proceed anonymously under Tax Court
Rule 345(a), which permits the petitioner in a whistleblower
action to file a motion “setting forth a sufficient, fact-specific
basis for anonymity.” In pleadings and a declaration filed with
the Tax Court, the Appellant claimed that disclosure of his
identity would cause “severe damage” to his reputation, in a
field in which “known whistleblowers are routinely blacklisted
by clients.” Disclosing his name, he said, would “jeopardize
[his] representation of current clients [and] of any future client
prospects,” cause him and his family to “suffer severe financial
harm,” “have a negative impact on [his] domestic relationship
with [his] spouse,” and “elicit harsh and arbitrary retribution by
state authorities” because some of his claims before the IRS
“involve parties very close to important political figures.”
The Tax Court denied the Appellant’s motion to proceed
anonymously. Id. In reaching its decision, the Tax Court first
compared the Appellant’s situation to that of five prior
petitioners who were allowed to proceed anonymously and
explained the Appellant’s justifications for anonymity were not
sufficiently “fact-specific” to satisfy Rule 345(a):
Unlike the claimants in the five reports summarized
4
above, petitioner has not identified a taxpayer who,
upon learning petitioner’s identity, would have the
power to, and might be expected to, act against him....
[H]is fears of marital discord, the alienation of unnamed
business partners, and retribution from unnamed
political figures are speculative, and, thus, petitioner has
not provided us with a sufficient ‘fact-specific’
justification for permission to proceed anonymously.
Id. at 517. The Tax Court went on, however, to say it would
have allowed him to proceed anonymously were it not for his
being the “unusual claimant” who has filed multiple
whistleblower claims based upon publicly available
information:
Nevertheless, given the early stage of this case, we
might otherwise be inclined to weigh the people’s
interest in knowing who is using the courts as so weak
as to give petitioner the benefit of the doubt, at least
temporarily. But petitioner is an unusual claimant to
our whistleblower jurisdiction. He has so far brought
11 whistleblower cases in the Tax Court.... He also
admits that he has before [the IRS] 51 numbered claims
supplemental to claims in cases already before the
Court....
Petitioner’s recourse to publicly available materials to
identify supposed tax abuses imposes no natural limit
other than his own industriousness on the number of
cases he could bring. His lack of an employment or
other close relationship to the taxpayers he identifies
suggests that he has no familiarity with a taxpayer’s
basis or rationale for taking what petitioner considers an
abusive position. For those reasons, serial claimants of
whistleblower awards may disproportionately burden
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the Court with petitions only superficially meritorious.
Id. at 517-18 (citation omitted). The Tax Court then concluded:
Unless we identify serial filers by name, the public will
be unable to judge accurately the extent to which the
serial filer phenomenon has affected the work of the Tax
Court because the public would not know whether any
particular petitioner of an adverse whistleblower
determination had filed petitions appealing other
adverse whistleblower determinations.... The public
may wish to know the extent to which petitioners with
numerous whistleblower claims require ... special
handling [by the Tax Court].
Id. at 518-19.
Although the Tax Court denied the Appellant’s motion to
proceed anonymously, it provisionally removed his name from
the case caption to permit him to appeal anonymously. Id. at
511 n.2. Proceeding pro se, he filed a timely appeal in the
Eighth Circuit, which transferred the case to this court pursuant
to the applicable venue statute. Whistleblower 14377-16W v.
Comm’r, No. 17-2678, 2017 WL 7135455, at *1 (8th Cir. Sept.
27, 2017); see 26 U.S.C. § 7482(b)(1).
II. Analysis
We appointed an amicus curiae to assist the court in
addressing our jurisdiction and the issues the Appellant has
raised on appeal. As described below, however, the dispute has
narrowed significantly on appeal because the parties agree, as
do we, upon the appropriate legal standard for evaluating the
petition of a tax whistleblower to proceed anonymously in the
Tax Court.
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A. Collateral Order Doctrine
Before addressing the merits, we are obliged to determine
whether we have jurisdiction over this case under the collateral
order doctrine. See United States v. Microsoft, 56 F.3d 1448,
1457 (D.C. Cir. 1995) (leaving open the question whether an
order granting anonymity fits within the doctrine). We agree
with the parties that we do.
The Tax Court’s order denying anonymity satisfies the
requirements of the doctrine because it: (1) “conclusively
determines the disputed question,” that is, whether the
Appellant may proceed anonymously; (2) “resolves an
important issue completely separate from the merits of the
action”; and, (3) if the Appellant’s identity is disclosed as
required by the Tax Court, the issue would be “effectively
unreviewable on appeal from a final judgment.” In re Sealed
Case (Med. Records), 381 F.3d 1205, 1209 (D.C. Cir. 2004).
Every court of appeals to consider the question has applied the
collateral order doctrine to permit immediate appeal of an order
denying a motion to proceed anonymously, and we see no
reason to reach a contrary conclusion. See James v. Jacobson,
6 F.3d 233, 236-38 (4th Cir. 1993); Doe v. Stegall, 653 F.2d
180, 183 (5th Cir. 1981); Doe v. Village of Deerfield, 819 F.3d
372, 375-76 (7th Cir. 2016); Does I thru XXIII v. Advanced
Textile Corp., 214 F.3d 1058, 1066-67 (9th Cir. 2000); Raiser
v. Brigham Young Univ., 127 F. App’x 409, 410 (10th Cir.
2005); Doe v. Frank, 951 F.2d 320, 322 & n.1 (11th Cir. 1992).
Having assured ourselves of our jurisdiction, we turn to the
merits of the case.
B. The Appropriate Legal Test
Tax Court decisions are reviewed “in the same manner and
to the same extent as decisions of the district courts in civil
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actions tried without a jury.” 26 U.S.C. § 7482(a)(1).
Although we review de novo the criteria used by a district court
to decide whether to grant a motion to proceed anonymously,
cf. Price v. District of Columbia, 792 F.3d 112, 114 (D.C. Cir.
2015), we review a court’s application of those criteria only for
an abuse of discretion. See Microsoft, 56 F.3d at 1464; James,
6 F.3d at 239. In so doing, we must consider “whether the
decision maker failed to consider a relevant factor [or] relied
on an improper factor, and whether the reasons given
reasonably support the conclusion.” Kickapoo Tribe of Indians
of the Kickapoo Reservation in Kansas v. Babbitt, 43 F.3d
1491, 1497 (D.C. Cir. 1995).
This court has not provided clear guidance as to when a
petitioner may proceed anonymously. In Microsoft, we said
only that the district court should take into account the risk of
unfairness to the opposing party, as well as the “customary and
constitutionally-embedded presumption of openness in judicial
proceedings.” 56 F.3d at 1464 (quoting Stegall, 653 F.2d at
186). In that case, the “judge did not fulfill his duty to consider
... the public interest in knowing the identities of the
participants in this proceeding, nor did he consider possible
unfairness to [the defendant].” Id.
Consistent with Microsoft, with the views of both parties
in this case, and with many of our sister circuits, we hold that
the appropriate way to determine whether a litigant may
proceed anonymously is to balance the litigant’s legitimate
interest in anonymity against countervailing interests in full
disclosure. See, e.g., Sealed Plaintiff v. Sealed Defendant, 537
F.3d 185, 189 (2d Cir. 2008) (characterizing the relevant
inquiry in the Fifth, Ninth, Tenth, and Eleventh Circuits as “a
balancing test that weighs the plaintiff’s need for anonymity
against countervailing interests in full disclosure”); see also
Tax Court Rule 345, explanation to 2012 amendments
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(explaining Rule 345(a) embodies a balancing test whereby a
“whistleblower’s identity” is “entitled to protection in the Tax
Court upon a sufficient showing of harm that outweighs
counterbalancing societal interests in knowing the
whistleblower’s identity”) (citing Whistleblower 14106-10W v.
Comm’r, 137 T.C. 183 (2011)). There is, of course, a
presumption in favor of disclosure, which stems from the
“general public interest in the openness of governmental
processes,” Washington Legal Found. v. U.S. Sentencing
Comm’n, 89 F.3d 897, 899 (D.C. Cir. 1996) (quotation marks
omitted), and, more specifically, from the tradition of open
judicial proceedings. See Doe v. Frank, 951 F.2d at 324
(“Lawsuits are public events. A plaintiff should be permitted
to proceed anonymously only in ... exceptional cases”); FED. R.
CIV. P. 10(a) (“The title of the complaint must name all the
parties”); FED. R. CIV. P. 17(a) (“An action must be prosecuted
in the name of the real party in interest”). As the Seventh
Circuit explained, “[i]dentifying the parties to the proceeding
is an important dimension of publicness. The people have a
right to know who is using their courts.” Doe v. Blue Cross &
Blue Shield United of Wisconsin, 112 F.3d 869, 872 (1997);
accord Doe v. Public Citizen, 749 F.3d 246, 273 (4th Cir.
2014).
In order to ensure the balance is appropriately struck,
courts have endorsed various multi-factor tests involving as
many as ten non-exhaustive factors. See, e.g., Sealed Plaintiff,
537 F.3d at 189-90; James, 6 F.3d at 238-39; Stegall, 653 F.2d
at 186; Doe v. Porter, 370 F.3d 558, 560 (6th Cir. 2004); Doe
v. Kamehameha Schs./Bernice Pauahi Bishop Estate, 596 F.3d
1036, 1042 (9th Cir. 2010). Some factors are “specific aspects
of a plaintiff’s potential privacy interests” or the weight to be
given those interests, but others “go more to the weight of the
countervailing interest in open judicial proceedings.” Doe v.
Del Rio, 241 F.R.D. 154, 158 (S.D.N.Y. 2006). District courts
9
in our circuit often consider the five factors set forth by the
Fourth Circuit in James, 6 F.3d at 238-39, perhaps because we
quoted it approvingly in Microsoft, 56 F.3d at 1464. See
Sandberg v. Vincent, 319 F. Supp. 3d 422, 426 (D.D.C. 2018)
(collecting cases).
We continue to think those five factors serve well as
guideposts from which a court ought to begin its analysis:
[1] whether the justification asserted by the requesting
party is merely to avoid the annoyance and criticism that
may attend any litigation or is to preserve privacy in a
matter of sensitive and highly personal nature;
[2] whether identification poses a risk of retaliatory
physical or mental harm to the requesting party or even
more critically, to innocent non-parties;
[3] the ages of the persons whose privacy interests are
sought to be protected;
[4] whether the action is against a governmental or
private party; and, relatedly,
[5] the risk of unfairness to the opposing party from
allowing an action against it to proceed anonymously.
6 F.3d at 238. The Tax Court has previously cited a “non-
exhaustive” list of ten factors borrowed from the Second
Circuit to guide its analysis of a request made under Rule
345(a), see Whistleblower 14106-10W, 137 T.C. 193-94
(citing Sealed Plaintiff, 537 F.3d at 189-90); we have no
quarrel with its use of the Second Circuit’s list, which
encompasses the five factors from James, as long as these
factors inform the ultimate balancing of the public and private
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interests at stake.
Indeed, our singling out of the James factors should not
lead a trial court to engage in a wooden exercise of ticking the
five boxes. Cf. Sealed Plaintiff, 537 F.3d at 189-90
(“caution[ing] that [its 10-factor] list is non-exhaustive and
district courts should take into account other factors relevant to
the particular case under consideration”); Stegall, 653 F.2d at
185-86 (“we think it would be a mistake to distill a rigid, three-
step test for the propriety of party anonymity from [a] fact-
sensitive holding .... We advance no hard and fast formula for
ascertaining whether a party may sue anonymously”). A court
that fails to consider one of the five enumerated factors from
James or one of the ten enumerated factors from the Second
Circuit’s list therefore does not automatically abuse its
discretion, as long as it has considered the factors relevant to
the case before it.
C. Applying the Balancing Test
In this case, the Appellant urges us to find the Tax Court
abused its discretion in several ways: The Court (1) improperly
considered that he is a “serial filer” using public information to
make his whistleblower claims; (2) improperly considered the
merits of his claims when it assumed petitions by serial filers
using public information are “only superficially meritorious”;
(3) failed to consider certain relevant factors weighing in the
Appellant’s favor; and (4) discounted the economic and
professional harms that would befall the Appellant if he were
identified, and therefore incorrectly concluded he did not
advance a fact-specific basis for preserving his anonymity.
Because we agree with the Appellant’s first point, we do not
reach the other three.
As to that first contention, the Appellant claims there is no
11
reason to disfavor filers in his position. In his view, the number
of whistleblower claims a person has filed and the source of
information upon which he relied to make those claims do not
bear upon any legitimate public interest in disclosing his name;
nor does it affect the interests of the public in ensuring fair
proceedings and in understanding the work of the Tax Court. *
Specifically, the Appellant points out that the Tax Court failed
to identify any legal basis for disfavoring serial filers using
public information: Neither the whistleblower statute nor any
precedent suggests a public policy disfavoring repeat filers or
filers who rely upon publicly available information. In any
event, says the Appellant, disclosing his name would not serve
such a policy.
We agree, based upon the Appellant’s last point, that the
reasoning of the Tax Court is not sound. The court said:
Unless we identify serial filers by name, the public will
be unable to judge accurately the extent to which the
serial filer phenomenon has affected the work of the Tax
Court because the public would not know whether any
particular petitioner ... had filed petitions appealing
other adverse whistleblower determinations.
148 T.C. 518-19. It simply does not follow that the public
must know the serial filers’ names in order to determine either
the extent to which serial filers affect the work of the Tax Court
*
The IRS explains the Appellant’s use of public information means
he “does not face the same risk of retaliation that threatens
insiders.” Appellee’s Br. 45. True, but this misses the point: The
Tax Court reasoned his use only of public information increased the
public’s interest in disclosure, 148 T.C. 518, but that fact is
relevant only insofar as it diminishes the whistleblower’s interest in
anonymity.
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or whether any particular whistleblower is a serial filer. As the
Appellant correctly points out, the Tax Court can serve those
interests by alerting the public to the serial filer’s history and
by explaining the burdens that serial filers impose upon the
court; indeed, that is precisely what it did in this case. The use
of a unique pseudonym (John Doe, Jane Roe and the like) in all
the cases filed by a particular filer would similarly inform the
public in the two respects identified by the Tax Court. † Cf.
James, 6 F.3d at 241-42 (remanding in part because the district
court did not consider the option of imposing conditions on the
plaintiffs’ use of pseudonyms that “could effectively relieve the
court’s expressed concerns”).
III. Conclusion
We conclude the Tax Court’s denial of the Appellant’s
request to proceed anonymously because he is a serial filer who
relies upon public information was an abuse of discretion. See
Kickapoo, 43 F.3d at 1497 (“An appellate court, in reviewing
for an abuse of discretion, must consider ... whether the reasons
given reasonably support the conclusion”). Therefore, we
remand the case to the Tax Court to determine anew whether
the Appellant has satisfied his burden under Rule 345(a) to set
forth a “sufficient, fact-specific basis for anonymity.”
So ordered.
†
Indeed, a dynamic pseudonym might itself convey the number of
cases that a particular person has filed, as in “John Doe (51)” for the
Appellant.