plaintiff’s application and motion for attorneys’ fees

UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

True the Vote, Inc.;Plaintiff,

v.

Internal Revenue Service, et al.;Defendants.

Civil Case No. 1:13-cv-000734-RBW

Plaintiff’s Application and Motionfor Attorneys’ Fees, Costs, andExpenses Under the Equal Access toJustice Act

Plaintiff’s Application and Motion for Attorneys’ Fees, Costs, and ExpensesUnder the Equal Access to Justice Act

Plaintiff, True The Vote (“TTV”), respectfully moves this Court for an order awarding it

reasonable attorneys’ fees of $1,933,888.06 under the Equal Access to Justice Act (“EAJA”).

This amount can be awarded as an “bad faith” enhancement under 28 U.S.C. § 2412(b), based

upon the IRS’s actions or as a “special factor” enhancement under § 2412(d)(2)(A), based upon

the IRS’s unusually litigious position.1 In the alternative, TTV respectfully moves this Court for

an order awarding it reasonable attorneys’ fees of $750,922.79, pursuant to the EAJA statutory

rate, adjusted for inflation, in § 2412(d)(2)(A).

This motion is made on the grounds that: (1) the EAJA applies to this action; (2) plaintiff

meets the net worth eligibility requirements of the EAJA; (3) the application is timely; (4) TTV

1 TTV has included attorneys’ fees through February 13, 2018, including fees incurred inmaking this application, in these totals. TTV will also seek attorneys’ fees incurred afterFebruary 13, 2018 related to this application and will file a supplemental request for such feesonce briefing is concluded.

Pl. App. And Motion for Att. Feesand Costs Under EAJA -1-

Case 1:13-cv-00734-RBW Document 151 Filed 02/20/18 of 4

is the prevailing party in this litigation; (5) the IRS cannot carry its heavy burden of showing its

position was substantially justified in either law or fact and will not be able to show special

circumstances make an award of fees unjust; and (6) the requested fees are fair and reasonable.

This motion is based on: (1) TTV’s memorandum of points and authorities supporting this

motion; (2) the supporting Declarations of Attorneys; (3) all of the pleadings, records, and papers

filed in this action, deemed to be filed in this action, or of which this Court may take judicial

notice at or before the time of the hearing on this motion; and (4) any rulings by this Court or by

the District of Columbia Court of Appeals that relate to this action.

Rule 7(f) Request For Oral Hearing

Pursuant to LcvR 7(f), TTV requests an oral hearing on this motion.

Rule 7(m) Certification

In compliance with LcvR (7)(m), counsel for TTV discussed this motion with counsel for the

federal defendants in a good faith effort to determine whether the federal defendants (“IRS”)

oppose the relief sought. Counsel for TTV and counsel for the IRS were unable to reach an

agreement as to the relief sought and the IRS will oppose this motion.

WHEREFORE, Plaintiff True the Vote, Inc. prays this Court grant Plaintiff’s Application

and Motion for Attorney’s Fees, Costs, and Expenses Under the Equal Access to Justice Act and

direct the Defendant to pay Plaintiff such an award within 30 days of the Court’s Order.



February 20, 2018 Respectfully submitted,

/s/ James Bopp, Jr.

James Bopp, Jr. (D.C. Bar No. CO0041)Courtney Turner Milbank*THE BOPP LAW FIRM, P.C.The National Building1 South 6th StreetTerre Haute, Indiana 47807(812) 232-2434(812) 235-3685 (fax)Attorneys for Plaintiff*Admitted pro hac vice



Certificate of Service

I hereby certify that on February 20, 2018 , I caused the Plaintiff’s Application and Motion

for Attorneys’ Fees, Costs, and Expenses Under the Equal Access to Justice Act and exhibits

thereto in the above-captioned matter to be filed with the United States District Court for the

District of Columbia via the Court’s CM/ECF system.

/s/ James Bopp, Jr.James Bopp, Jr.





v.



Memorandum of Points andAuthorities in Support of Plaintiff’sMotion for Attorneys’ Fees, Costs,and Expenses Under the EqualAccess to Justice Act

Memorandum of Points and Authorities in Support of Plaintiff’sApplication and Motion for Attorneys’ Fees, Costs, and Expenses Under the

Equal Access to Justice Act

Introduction

True the Vote, Inc. (“TTV”) respectfully seeks an order awarding it reasonable attorneys’ fees

of $1,933,888.06 under the Equal Access to Justice Act (“EAJA”). This amount can be awarded

as an “bad faith” enhancement under 28 U.S.C. § 2412(b), based upon the IRS’s actions or as a

“special factor” enhancement under § 2412(d)(2)(A), based upon the IRS’s unusually litigious

position.1 In the alternative, TTV respectfully seeks an order awarding it reasonable attorneys’

fees of $750,922.79, pursuant to the EAJA statutory rate, adjusted for inflation, under

1 TTV has included attorneys’ fees through February 13, 2018, including fees incurred inmaking this application, in these totals. TTV will also seek attorneys’ fees incurred afterFebruary 13, 2018 related to this application and will file a supplemental request for such feesonce briefing is concluded.

Memo. Of Points and Auth. In Support of Pl.’sMotion for Att. Fees Under EAJA

Case 1:13-cv-00734-RBW Document 151-8 Filed 02/20/18 Page 1 of 30

§ 2412(d)(2)(A). TTV requested “costs and reasonable attorneys’ fees” under the EAJA from the

outset of this litigation. (See First Am.Verified Compl., Doc. 14, Prayer for Relief at ¶ 9). In

addition, the letter from Defendants’ (“IRS”) counsel, attached to the proposed consent order

specifically acknowledged that the proposal was a full and final resolution of all claims, “except

any request for attorney’s fees and costs that Plaintiff might make under any applicable law . . . .”

(Consent Order Cover Letter, attached as Ex. 9).

TTV satisfies all requirements for an award of attorneys’ fees under the EAJA. The EAJA

applies to this case because it is a civil action brought against officials of the United States acting

in their official capacities. TTV meets the net worth eligibility requirements of the EAJA. This

application is timely. TTV is the “prevailing party” in this litigation. The IRS’s position is not

substantially justified in either its actions underlying this litigation or its actions during the

litigation. Special circumstances do not exist that make an award of attorneys’ fees unjust. The

fees sought are fair, reasonable, and align with the fee structure used by this Court in previous

cases. Because TTV satisfies the requirements of the EAJA, it is entitled to the requested

attorneys’ fees. The IRS acted in bad faith in both its actions underlying this litigation and its

actions during the litigation itself, so TTV is entitled to an enhanced attorney fee rate over the

EAJA statutory cap under § 2412(b). The IRS’s unusually litigious position also justifies an

enhanced attorney fee rate over the EAJA statutory cap under § 2412 (d)(2)(A).

Background

On June 7, 2010, TTV organized as a not for profit corporation under laws in the State of

Memo. Of Points and Auth. In Support of Pl.’sMotion for Att. Fees Under EAJA 2


Texas. (First Am.Verified Compl., Doc. 14, at ¶ 31). Almost immediately, TTV applied for tax

exemption under Section 501(c)(3) with the IRS, and the IRS received TTV’s application no later

than September 23, 2010. (Defendant’s Answer, Doc. 117, at ¶ 4). However, TTV did not receive

its determination letter granting tax-exempt status until September 20, 2013. (Determination

Letter, attached as Ex. 10). The reasons it took the IRS nearly three years to grant TTV’s tax-

exempt status prompted the instant litigation.

In 2010, instead of simply processing TTV’s application in the same manner as all other

applications received, the IRS began to select certain organizations for heightened scrutiny. See

(Consent Order, Doc. 150, at ¶ 8(a)). Applicants whose names contained “Tea Party,” “Patriots,”

“9/12,” or other “political sounding names” were referred to a separate group (“Group 7822”) for

processing. Id. at ¶¶ 8(a),(b),(f). Likewise, heightened scrutiny was given to applicants that

expressed concern about issues like government spending, government debt, or taxes. Id. at ¶

8(h). If an applicant expressed interest in education of the public by advocacy/lobbying to “make

America a better place to live,” it was identified for heightened scrutiny. Id. The IRS issued a “be

on the lookout” (“BOLO”) spreadsheet for such “Tea Party” applications. Id. at ¶ 8(c),(e),(f).

The use of this screening criteria resulted in requests for information from TTV that were

unnecessary for a proper tax-exempt status determination. Id. at ¶ 40. Some of these requests

included: requests for the identities of donors; identification of issues important to the

organization and the organization’s positions on those issues; the types of conversations and

discussions members and participants had during organizational activities; whether officers or

directors planned to run for public office; and political affiliations of officers and directors.



(Defendant’s Answer, Doc. 117, at ¶ 129(a-j)). This unnecessary screening resulted in substantial

delays in processing TTV’s application. (Consent Order, Doc. 150, at ¶ 40).

TTV sought various legal and equitable remedies in this litigation, including: declaratory

judgments under the Internal Revenue Code, actual damages, punitive damages, declaratory

judgments under the First Amendment to the United States Constitution, permanent enjoinment

of the IRS from further implementation or application of similar policies, Bivens damages due to

a violation of TTV’s Constitutional rights under the First Amendment, and reasonable attorney

fees and costs. (First Am.Verified Compl., Prayer for Relief, at ¶ ¶ 1-10). The actual and punitive

damages were denied by this Court and affirmed by the United States Court of Appeals for the

District of Columbia. See True the Vote, Inc. v. IRS, 831 F.3d 551 (D.C. Cir. 2016). The

declaratory judgments were denied by this Court, but the court of appeals reversed that decision

and remanded the litigation back to this Court. Id. After further discovery and negotiations, the

parties agreed to a Consent Order, which was entered by this Court on January 21, 2018. Consent

Order, Doc. 150. In a letter attached to the Consent Order, the IRS specifically acknowledged

TTV preserved its right to apply for an award of attorneys’ fees. (Consent Order Cover Letter,

attached as Ex. 9).

Argument

The EAJA provides that “[u]nless expressly prohibited by statute, a court may award

reasonable fees and expenses of attorneys.” Id. at § 2412(b). Further, the EAJA states that,

“[e]xcept as otherwise specifically provided by statute, a court shall award to the prevailing party



other than the United States fees and other expenses, . . . unless the court finds that the position

of the United States was substantially justified or that special circumstances make an award

unjust.” Id. at § 2412(d)(1)(A) (emphasis added).

I. The EAJA Applies to This Action.

Under the EAJA, a court may award reasonable fees and expenses of attorneys to the

prevailing party in any civil action brought against the United States or any agency or official of

the United States acting in her official capacity. Id. at § 2412(b). The EAJA applies to this action

because the instant case is a civil action brought against the Internal Revenue Service, an agency

of the United States, and various officials of the IRS, acting in their official capacities. (See, e.g.,

First Am.Verified Compl., Doc. 14, Prayer for Relief at ¶¶ 13(a-e), 32 - 48).

II. TTV Is an Eligible Party and Meets the Net Worth Requirements of the EAJA.

Under the EAJA, a Section 501(c)(3) organization qualifies as a “party” eligible for an award

of attorneys’ fees, regardless of the organization’s net worth. Id. at § 2412(d)(2)(B). On

September 26, 2013, the IRS granted TTV’s tax-exempt status and specified the effective date of

such status was June 7, 2010. (Determination Letter, attached as Ex. 10). Therefore, TTV is an

eligible party and meets the net worth requirements under the EAJA.

III. TTV’s EAJA Application Is Timely.

A party seeking an award of fees under the EAJA must file an application within 30 days of

final judgment. Id. at § 2412(d)(1)(B). “Final judgment” is a “judgment that is final and not

appealable, and includes an order of settlement.” Id. at § 2412(d)(2)(G). Here, this Court entered

a Consent Order on January 21, 2018, in which the IRS stipulated to certain facts, and in which



this Court made certain declaratory judgments. (Consent Order, Doc. 150) The IRS’s stipulation

to facts resulted in a judicial holding of those facts. This Consent Order is final and not

appealable. See Delorme Publ'g Co. v. ITC, 805 F.3d 1328, 1336 (Fed. Cir. 2015). This

application is timely because it has been filed within 30 days of when the Consent Order was

entered on January 21, 2018.2

IV. TTV Is the Prevailing Party in This Litigation.

Under § 2412, in order to obtain “prevailing party” status, “a party must obtain a ‘substantial

part of’ the relief it sought and the lawsuit must have caused ‘a change in someone's primary

conduct in the real world.’” Role Models America, Inc. v. Brownlee, 353 F.3d 962, 966 (D.C. Cir.

2004) (quoting Waterman Steamship Corp. v. Maritime Subsidy Board, 901 F.2d 1119, 1122

(D.C. Cir. 1990)). While an injunction or a “mere legal declaration” that does no more than

preserve the status quo does not confer “prevailing party” status, a decision or outcome that alters

the legal relationship between the parties does confer such status within the meaning of the

EAJA. Lake Pilots Ass'n v. United States Coast Guard, 310 F. Supp. 2d 333, 339 (D.D.C. 2004).

The plaintiff need not prevail on every issue, or even on the central issue, to be considered

the prevailing party in the litigation. Waterman Steamship Corp., 901 F.2d at 1121. However, the

plaintiff must demonstrate a causal relationship between litigation brought and the result

obtained. Lundin v. Mecham, 980 F.2d 1450, 1458 (D.C. Cir. 1992).

Therefore, if a decision or outcome in litigation either grants a substantial part of the relief

2 February 20, 2018, is the 30th day after the entry of the Consent Order, according toFed. R. Civ. P. 6(a)(1).



sought or causes a change in the conduct or relationship between the parties, the plaintiff is the

“prevailing party” under the EAJA.

A. The Court of Appeals Ruling Changed the Legal Relationship Between TTV and theIRS.

The District of Columbia Court of Appeals ruled that the IRS had not fully, unequivocally,

and permanently ceased the “inappropriate” actions, such as subjecting “Tea Party” groups to

heightened scrutiny; this heightened scrutiny prompted TTV to initiate this litigation. See True

the Vote, Inc. v. IRS, 831 F.3d 551, 563-64 (D.C. Cir. 2016). The IRS only fully and permanently

changed its primary and potential conduct toward TTV and other similar litigants when forced to

do so by this litigation and the resulting decision of the court of appeals. Id. This ruling is

relevant, authoritative, and amounts to a binding legal holding with legal effect on the parties’

rights.

Therefore, the court of appeals ruling changed the legal relationship between TTV and the

IRS.

B. The Consent Order Changed the Legal Relationship Between TTV and the IRS.

The appellate court’s holding led directly to further discovery, motions, and negotiations

between TTV and the IRS. (See Discovery Order, Doc. 138). These negotiations ended in the

Consent Order approved and adopted by this Court. (Consent Order, Doc. 150).

In the Consent Order, the IRS stipulates to and this Court finds a chain of facts demonstrating

conclusively that the litigation resulted in a change in the conduct or legal relationship between

the parties—i.e., that TTV is the prevailing party. The IRS stipulates and this Court finds that



TTV alleged the IRS violated its constitutional rights when it screened TTV’s tax-exempt

application, significantly delayed processing its application; made harassing, probing, and

unconstitutional requests for information based on the name, associations, and/or political

viewpoints of TTV; and continued violating TTV’s rights. (Consent Order, Doc. 150, at ¶ 3).3

The substantiation and stipulations continue in the Consent Order. This Court, through the

Consent Order, adopts as fact the findings of the 2013 Treasury Inspector General for Tax

Administration (“TIGTA”) Report, to which the IRS stipulates. Id. at ¶ 8. These findings include

that in March 2010, an EO Determinations Unit Specialist was asked to search for applications

with “Tea Party,” “Patriots,” or “9/12” in the organization’s name as well as other “political

sounding” names. Id. at ¶ 8(b). A “Sensitive Case Report” was prepared with regard to the “Tea

Party” cases and was shared and reported with EO upper management. Id. at ¶ 8(c). The EO

Determinations Unit management requested that its specialists “be on the lookout” (“BOLO”) for

“Tea Party” applications. Id. at ¶ 8(d).

The BOLO directive caused screeners to direct qualifying applications to Group 7822 for

coordinated processing. Id. at ¶ 8(e)(f). The IRS identified potential political cases on the basis of

the organization’s name; the organization’s concern with issues like government spending,

government debt, or taxes; public education by advocacy/lobbying to “make America a better

3 The IRS stipulates and this Court finds that then-director of the IRS’s ExemptOrganization (“EO”), Lois Lerner, publicly admitted that the IRS used a method for triggeringcentralized and invasive scrutiny for certain organizations based on their names, such as “TeaParty” or “Patriots.” Ms. Lerner stated, “That was wrong, that was absolutely incorrect, it wasinsensitive, and it was inappropriate.” Id. at ¶ 5.



place to live”; and statements in case files which criticized how the country is being run. Id. at

¶ 8(h)(I-iv). The IRS continued utilizing these criteria for more than 18 months. Id. at ¶ 8(g).

Further, the IRS stipulates and this Court finds that the use of such inappropriate criteria resulted

in “substantial delays” in processing these applications, and that Ms. Lerner failed to adequately

manage or to inform upper-level IRS management for two years. Id. at ¶¶ 9,11 (emphasis

added).

As a result of the litigation, the IRS now states that it “remains fully committed to avoiding

any selection and/or further review of tax-exempt applicants or entities that is based solely on the

name or policy positions of such entity” (referencing many of the changes recommended by the

TIGTA report and the Senate Finance Committee’s Report). Id. at ¶ 41. In short, the IRS made a

blanket admission of the very specific, inappropriate screening methods it used against TTV, and

the IRS made a wholesale admission that its treatment of TTV was wrong.4

Not only does the IRS acknowledge its wrongful treatment of TTV, but this Court also issues

declaratory judgments in the Consent Order. “The traditional function of a declaratory judgment

4 As perhaps the most important indication that this litigation changed the IRS’s conducttoward TTV in the real world, the IRS finally admitted its actions were wrong and apologized toTTV:

. . . [I]ts treatment of TTV during the tax-exempt determination process, includingscreening its application based on its name or policy positions, subjecting theapplication to heightened scrutiny and inordinate delays, and demanding of TTVsome information that TIGTA determined was unnecessary to the agency’sdetermination of its tax-exempt status, was wrong. For such treatment, the IRSexpresses its sincere apology.Consent Order, Doc. 150, at ¶ 40.



is to affect the parties' future conduct by resolving present disputes over legal rights and

obligations.” All. for Democracy v. FEC, 335 F. Supp. 2d 39, 47 (D.D.C. 2004). When read in

context with the IRS admissions, these declaratory judgments caused a change in the legal

relationship between TTV and the IRS. This Court declares it “wrong to apply the United States

tax laws . . . to any tax-exempt applicant or entity based solely on such entity’s name, any lawful

positions it espouses on any issues, or its association or perceived associations with a particular

political movement, position, or viewpoint.” Id. at ¶ 48. This Court further declares that any

action taken by the IRS “must be applied evenhandedly and not based solely on a tax-exempt

applicant or entity’s name, political viewpoint, or associations or perceived associations with a

particular political movement, position, or viewpoint.” Id. at ¶ 49. For this Court to say an action

is “wrong” is to say it violates law, and the Consent Order directly declares so when it states that

“discrimination on the basis of political viewpoint in administering the United States tax code

violates First Amendment rights. . . . [and] is unlawful.” Id. at ¶ 50.

The IRS admits it mistreated TTV, “including screening its application based upon its name

or policy positions.” Id. at ¶ 40. This Court agrees, deeming it unlawful to apply tax law based

solely on an “entity’s name, or any lawful positions it espouses.” Id. at ¶ 48. Since the IRS did

not qualify its apology by indicating it screened TTV’s application for heightened scrutiny or

issued a BOLO on any factors other than its “name or policy positions,” the IRS admission in

paragraph 40 of the Consent Order falls squarely within the boundaries of the actions this Court

declared wrong and unlawful.

Before this litigation commenced, the IRS admittedly screened TTV’s tax-exempt application



for heightened scrutiny based upon inappropriate criteria. Prior to this litigation, TTV was not

assured that such inappropriate IRS actions had fully, unequivocally, and permanently ceased. As

a direct result of this litigation, the inappropriate IRS actions toward TTV have fully,

unequivocally, and permanently ceased. The appellate court’s ruling caused a permanent

cessation of improper and unlawful IRS heightened scrutiny and caused a change in the legal

relationship between TTV and the IRS. The IRS admissions and this Court’s declarations in the

Consent Order also caused a fundamental change in the legal relationship between TTV and the

IRS. Those types of legal changes between the parties in the real world that the Role Models, Inc.

Court envisioned. Therefore, TTV is the prevailing party in this litigation.

V. The IRS’s Position in This Litigation Is Not Substantially Justified.

In addition, for a prevailing party to obtain attorneys’ fees under the EAJA, the position of

the United States must not be substantially justified. Id. at § 2412(d)(1)(B). However, the

prevailing party does not bear the burden of proving that the position of the United States was not

substantially justified. Once a plaintiff demonstrates that it is the prevailing party, the burden

shifts to the United States to affirmatively show that its position was substantially justified.

Carey v. Federal Election Comm’n, 864 F. Supp. 2d 57, 62-63 (D.D.C. 2012) (holding FEC

could not substantially justify ignoring controlling law).

The government must show that “its position, including both the underlying agency action

and the arguments defending that action in court, was substantially justified within the meaning

of the [EAJA].” Cobell v. Norton, 407 F. Supp. 2d 140, 152 (D.D.C. 2005) (emphasis added).

Government conduct is “substantially justified” where it is “justified in substance or in the main -



that is, justified to a degree that could satisfy a reasonable person. That is no different from

[having] a reasonable basis both in law and fact.” Pierce v. Underwood, 487 U.S. 552, 565

(1988). Therefore, the government must show it could satisfy a reasonable person that its

position is substantially justified. The government must show substantial justification for the

underlying actions of the government that lead to litigation and for its position during litigation.

The IRS cannot carry this heavy burden.

The same instances of the IRS’s admitted wrongdoing described in the “prevailing party”

section of this memorandum are also pertinent to the determination that the IRS is not

substantially justified. These arguments are incorporated by reference into this section, but are

summarized for the Court’s convenience.

A. The IRS’s Actions Underlying This Litigation Are Not Substantially Justified.

Using the Pierce standard, the IRS must show its actions underlying this litigation would

“satisfy a reasonable person.” Pierce, 487 U.S. at 565. The IRS cannot satisfy this heavy burden.

An organization that submits an application for tax-exempt status to the IRS should reasonably

expect that its application will be reviewed fairly, without regard to political viewpoint, to

determine if it meets the requirements under existing tax law. Conversely, it would be

unreasonable for that organization to anticipate its name or political philosophy will be used

against it, contrary to tax law and the most fundamental understanding of our system of

governance. Instead of upholding this fundamental understanding of governance, the court of

appeals recognized that the IRS “utterly failed” in its mission to “apply tax law with integrity and

fairness to all.” True the Vote, Inc., 831 F.3d at 559 (referencing TIGTA at 6-7). The court of



appeals decision noted that “it [was] plain” to it, to the Inspector General, and to the district

court, that the IRS “[could] not defend its discriminatory conduct on the merits.” True the Vote,

Inc.,831 F.3d at 561.

Yet, in order to show it was “substantially justified” in its underlying actions, the IRS would

have to satisfy a reasonable person that its actions, described as indefensible discriminatory

conduct, were justified. The IRS would have to convince a reasonable person that its actions,

characterized by the Court of Appeals as an utter failure, were justified. To equate

“indefensible,” “discriminatory,” and “utter failure” with a substantial justification for such

actions is contrary to law and reason.

Further examination of specific IRS actions demonstrates just how untenable the IRS’s

substantial justification argument would be in this case. The IRS admits and this Court finds that

in 2010, it started separating out organizations for heightened scrutiny based upon the

organizations’ names and assumed political ideology. (Consent Order, Doc. 150, at ¶ 8(h)(I-iv)).

The IRS admits and this Court finds it created BOLO lists on the same basis. Id. at ¶ 8(f). The

IRS admits and this Court finds it subjected TTV to heightened scrutiny, which was

“unnecessary” in order to make its determination under the law. Id. at ¶ 40. The IRS admits and

this Court finds it separated out groups based upon its “policy positions,” such as the truly radical

notion that citizens have a right to be concerned about government spending, government debt,

or taxes. Id. at ¶ 8(h)(ii). The IRS admits and this Court finds that an organization with the goal

of educating the public on how to “make America a better place to live” deserved special scrutiny

under its practices at the time. Id. at ¶ 8(h)(iii).



This unlawful screening continued throughout 2010. The IRS admits and this Court finds that

this heightened scrutiny led to “substantial delays” in processing (in some cases, for a period of

time spanning two election cycles). Id. at ¶ 9. Yet the IRS continued this practice throughout

2011 and 2012. Before this litigation began, Ms. Lerner publicly admitted “[that separating

applicants based upon their names] was wrong, that was absolutely incorrect, it was insensitive,

and it was inappropriate.” Id. at ¶ 5. The IRS continued utilizing these criteria for more than 18

months after Lerner admitted it was wrong. Id. at ¶ 8(g). In fact, because of the IRS’s

unreasonable practices, TTV did not receive its tax-exempt status until September 26, 2013,

more than three years after its initial application was submitted. (Determination Letter, attached

as Ex. 10).

A reasonable person would not think any of the IRS’s admitted wrongdoing underlying this

litigation is substantially justified. After all, a reasonable person, as demonstrated by the court of

appeals decision, would think the IRS should apply tax law fairly, without regard to an

organization’s name or political ideology. However, the IRS admits to doing just the opposite

when it “screen[ed]” [TTV’s] application based on its name and policy positions. (Consent

Order, Doc. 150, at ¶ 40). A reasonable person would not expect an applicant seeking tax-

exempt status would be subjected to “heightened scrutiny” based upon this screening process.

Yet the IRS admits TTV experienced such heightened scrutiny. Id. at ¶ 40. A reasonable person

would not expect it to take nearly three years and two election cycles to screen an organization’s

application. Id. at ¶ 9. Nonetheless, that is exactly how long it took the IRS to finally grant TTV’s

tax-exempt status. In the meantime, TTV lost the opportunity in two separate elections to



effectively speak to the issues it is passionate about.

Controlling authorities in this jurisdiction recognize the IRS’s actions were discriminatory,

indefensible, and utter failures under a fair system of government. The IRS cannot now argue that

the very same actions prompting the use of such strong language and rulings by controlling

authorities in this jurisdiction satisfies its burden of substantial justification to a reasonable

person. Because the IRS cannot meet this heavy burden, its actions are not substantially justified.

B. The IRS’s Actions During the Litigation Are Not Substantially Justified.

Using the Pierce standard, the IRS must also show its actions during this litigation would

“satisfy a reasonable person.” Pierce, 487 U.S. at 565. The IRS also cannot satisfy this heavy

burden. The IRS had at least eighteen months before this litigation began to fully, unequivocally,

and permanently stop this unlawful practices. It had at least eighteen months to treat all

organizations fairly under the law, regardless of political perspective. It had at least eighteen

months to admit this wrongdoing, apologize for its actions, and expedite the applications for the

groups affected by its misjudgment and abuse. The IRS did not choose this path.

This action was originally filed on May, 21, 2013. (Verified Compl. for Declaratory

Judgment, Declaratory and Injunctive Relief and Damages, Doc. 1). It is now 2018, almost eight

years after the IRS initially began subjecting certain organizations to heightened scrutiny, based

upon criteria that was “wrong,” according to the IRS’s own admissions. (Consent Order, Doc.

150, st ¶ 40). The court of appeals found that there “was little factual dispute” between the

parties as to the IRS’s conduct. True the Vote, Inc., 831 F.3d at 555. Instead of ending this

litigation quickly based upon this lack of factual dispute, the IRS continued to argue in court that



the case should be dismissed for mootness because it had “voluntarily ceased” using the

offensive and inappropriate targeting criteria. Id. at 561.

However, it had not fully, unequivocally, and permanently ceased such actions. All “suspect”

applications still had not been properly processed, and worse, the IRS had not unequivocally and

permanently abandoned its use of BOLO lists. Id. at 561, 563. Instead, it merely “suspended [the

practice] until further notice.” Id. at 563. It took eight years of litigation and a court of appeals

ruling to convince the IRS that properly processing “most” applications is not the same as

properly processing “all” applications, and that “suspension until further notice” does not equate

to “unequivocally and permanently abandon.”

The IRS offered a “rather puzzling explanation” for why the continued failure to properly

process some of the applications should not prevent a finding of cessation by the court of

appeals. The IRS pointed to its “long-standing” procedure of suspending the applicable

processing if a party litigates against it. The court of appeals completely rejected this argument,

comparing it to Joseph Heller’s classic, Catch-22. Id. at 562. In Heller’s book, the government

told World War II airmen they were entitled to exemptions from flying if they were mentally

unfit, but “you can’t get it as long as you are asking for it.” Id. (quoting Catch-22). The court of

appeals drew a direct parallel between Heller’s airmen and the applicants impacted by the IRS’s

conduct. The court of appeals found the IRS essentially said to each applicant who litigated, “we

have been violating your rights and not properly processing your applications. You are entitled to

have your applications. But if you ask for that processing by way of a lawsuit, then you can't have

it.” Id.



TTV was not the only organization impacted by the IRS’s puzzling logic or apparent

litigation strategy. The IRS “suspended” the processing of Z STREET’s application because it

filed an action under similar circumstances. (Consent Order, Z STREET, Doc. 117-1, attached as

Ex. 11 at ¶ 43) (alleging IRS subjected Z STREET to heightened scrutiny on basis of “Israel

Special Policy”). The IRS apologized to Z STREET that its decision resulted in a delay of six

years and ten months. Id. This type of unjustified litigation strategy affected the NorCal Tea

Party Patriots as well. After allegedly being subjected to scrutiny on the basis of its name and

political ideology, the Sixth Circuit found the “lawsuit ha[d] progressed as slowly as the

underlying applications themselves: at every turn the IRS ha[d] resisted the plaintiffs' requests for

information regarding the IRS's treatment of the plaintiff class, eventually to the open frustration

of the district court.” United States v. NorCal Tea Party Patriots (In re United States), 817 F.3d

953, 955 (6th Cir. 2016).

A reasonable person who discovered the IRS actually issued BOLO alerts for organizations

based upon names and assumed political ideology would expect the IRS to quickly and

unequivocally stop such actions. A reasonable person would not expect the IRS to argue it had

stopped such actions, when it had merely “suspended” them “until further notice.” A reasonable

person would not expect that its application would be suspended because it chose to litigate

against such actions, when litigation was virtually the only option available to the litigant. A

reasonable person would not expect it to take five years of litigation to make the IRS fully,

unequivocally, and permanently stop such actions.

The IRS cannot meet its heavy burden to show its actions during the litigation itself would



satisfy a reasonable person. Because the IRS cannot meet this burden, its actions are not

substantially justified.

Therefore, the IRS’s actions underlying this litigation and its actions during this litigation are

not substantially justified.

C. Special Circumstances Do Not Exist That Make an Award of Attorneys’ Fees Unjust.

Even if the position of the United States was not substantially justified, a fee award is

inappropriate if “special circumstances make an award unjust.” 28 U.S.C. at § 2412(d)(1)(A).

This Court has held this “safety valve” was designed to “insure that the Government is not

deterred from advancing in good faith the novel but credible extensions and interpretations of the

law that often underlie vigorous enforcement efforts” and to permit courts to rely on “equitable

considerations” in denying a fee award. Wilkett v. Interstate Commerce Commerce, 844 F.2d

867, 873 (D.C. Cir. 1988) (quoting H.R. REP. No. 1418, 96th Cong., 2d Sess. 11, reprinted in

1980 U.S. CODE CONG. & ADMIN. NEWS 4984, 4990).

The IRS’s actions underlying this litigation were more than “vigorous enforcement efforts.”

Vigorous enforcement efforts by the IRS might justifiably include investigating the activities of

an applicant, to make sure it complies with tax law”. If proper, vigorous enforcement efforts were

all the efforts used by the IRS in this case, such efforts might give rise to a special circumstance

that would make an award unjust.

The IRS admits multiple instances of wrongdoing. It admits to screening the application

based upon names or policy positions. (Consent Order, Doc. 150, at ¶ 40). It admits this

improper screening subjected TTV to heightened, unnecessary scrutiny and inordinate delays. Id.



The Inspector General and court of appeals made it clear that the IRS utterly failed in its mission

to apply the tax laws of this nation fairly and equitably. True the Vote, Inc., 831 F.3d at 559. Both

this Court and the court of appeals held that the IRS’s discriminatory actions could not be

defended. Id. at 561.

The Wilkett Court made clear equity may be considered. In this case, equity demands an

award of attorney fees. TTV is not a wealthy organization. TTV has had to litigate for almost five

years against the IRS, which is backed by the almost limitless resources of the federal

government. Not only do these admissions and rulings eliminate “special circumstances” that

would make an award unjust, refusing such an award would itself be manifestly unjust.

VI. Enhanced Rates Over the EAJA Statutory Cap Are Fair and Reasonable.

A. TTV Is Entitled to an Enhanced Attorney Fee Rate Over the EAJA Statutory Cap.

An enhancement of the EAJA’s statutory fee ceiling is available in either of two

circumstances: (1) this Court determines the IRS acted in bad faith and should be “liable for such

fees and expenses to the same extent that any other party would be liable under the common law

or under the terms of any statute which specifically provides for such an award” under § 2412(b);

or (2) this Court finds the IRS was unnecessarily litigious and should be subject to a “special

factor” under § 2412(d)(2)(A). TTV is entitled to an enhanced attorney fee rate under § 2412(b)

because of the bad faith exhibited by the IRS in both the actions underlying this litigation and in

the litigation itself. The IRS’s actions, discussed in the “prevailing party” and “substantial

justification” sections of this memorandum, amount to bad faith and an abrogation of the public

trust. Furthermore, the IRS’s unnecessarily litigious position also justifies an enhanced rate under



§ 2412(d)(2)(A) .

1. TTV Is Entitled to an Enhanced Attorneys’ Fee Rate because of the IRS’s BadFaith Actions.

This court has awarded bad faith enhancements in excess of the statutory cap under

§ 2412(b). See Cobell, 407 F. Supp. 2d 140. This “narrow exception” to the American Rule is

triggered where the losing party has acted “vexatiously, wantonly, or for oppressive reasons.” Id.

at 167. The “bad faith” enhancement is appropriate where “(1) the Government’s misconduct

occurred in connection with the litigation, or (2) was an aspect of the conduct giving rise to the

litigation.” Id. at 168 (quoting American Hosp. Ass'n v. Sullivan, 290 U.S. App. D.C. 397, 938

F.2d 216, 219 (D.C. Cir. 1991)) (emphasis added). It is a “punitive” award that must be

construed “stringently,” and “imposed only in exceptional cases and for dominating reasons of

justice.” Id. at 167 (citations omitted).

In Cobell, trustee-delegates, acting as representatives of the United States, abrogated their

trust responsibilities toward Indian beneficiaries. The Cobell Court found that the defendants’

pretrial conduct consistently contravened controlling authority and required plaintiffs “to

undertake otherwise unnecessary litigation to vindicate plain legal rights.” Id. at 168. The court

noted the appellate court had characterized the Cobell defendants’ actions as “unreasonable” and

“egregious.” Id. Therefore, actions by defendants that are vexatious, oppressive, or an abrogation

of clear duty are subject to a “bad faith” enhancement under § 2412(b). Further, defendants who

force plaintiffs to initiate “unnecessary litigation” in order “vindicate plain legal rights” act in

bad faith and are subject to fee enhancement under § 2412(b).



The bad faith, dishonesty, and misjudgment exhibited by the IRS both in the events

underlying the litigation and in the litigation itself justify increased rates. The IRS admits its

“treatment of [TTV] during the tax-exempt determination process, including screening its

application based on its name or policy positions, subjecting the application to heightened

scrutiny and inordinate delays, and demanding of [TTV] some information that TIGTA

determined was unnecessary to the agency’s determination of its tax-exempt status, was wrong.”

It strains credulity to think the IRS’s admitted wrongdoing was not for an oppressive purpose.

Approximately 1/3 of the entities forwarded to Group 7822, the group in charge of “coordinated

processing,” had names that contained the terms “Tea Party,” “Patriots,” or “9/12.” (Consent

Order, Doc. 150, at ¶ 8(j)). Furthermore, all entities whose names contained these terms were

forwarded for coordinated processing, while a smaller proportion of entities whose names did not

contain those terms were forwarded. Id. (emphasis added). If not for an oppressive purpose, the

IRS would not have placed all the applicants with names meeting its screening criteria into a

suspected category.

While the Cobell Court dealt with a financial trust which endowed the trustee-delegates with

certain fiduciary and legal duties, this Court has before it a case dealing with a different kind of

trust – the public trust. The public should be able to trust its government and its agencies to apply

the law fairly and equally, without regard to political ideology. This Court has stated it “is

constantly aware that the public interest requires judicial support of executive and administrative

officials in the faithful execution of their public trust.” Black v. Sheraton Corp. of Am., 371 F.

Supp. 97, 101 (D.D.C. 1974) (holding “admitted misconduct and perversion of power by



governmental officials, rather than a legitimate determination of policy. . . strike at the

foundation of democratic government”). The IRS abrogated this public trust in its treatment of

TTV. Because the IRS abrogated the public trust in its treatment of TTV, it is entitled to a “bad

faith” enhanced attorney fee rate over the EAJA statutory cap under § 2412(b).

2. TTV Is Entitled to an Enhanced Attorneys’ Fee Rate because of the IRS’sUnnecessarily Litigious Actions .

Enhanced rates may be awarded under § 242(d)(2)(A), if the court finds a “special factor”

justifying such an enhancement. The government’s “unusually litigious position”would constitute

such a special factor if it could be shown that its aggressive strategy was adopted in order to deter

attorneys subject to a statutory cap to operate at a loss. Jean v. Nelson, 863 F.2d 759, 776 n. 13

(11th Cir. 1988). Therefore, this Court should award an enhancement under the “special factor”

analysis of § 2412(d)(2)(A) because the IRS’s litigation strategy was unnecessarily aggressive.

This litigation has taken over five years. As the court of appeals noted, there “was little

factual dispute” between the parties as to the IRS’s conduct. True the Vote, Inc., 831 F.3d at 555.

However, the IRS continued to litigate this case based upon its claim it had “voluntarily ceased”

using the offensive and inappropriate targeting criteria, even though complete cessation had not

occurred. Id. at 561. It is now five years after the litigation was initiated and almost eight years

after the IRS began using the inappropriate criteria that prompted this case. Continuing to litigate

a case when very little factual dispute exists and in the face of the TIGTA report is unnecessarily

litigious. The unnecessarily protracted litigation position, the statutory rate cap, and the disparity

in resources virtually guaranteed that TTV would be forced to rely on it attorneys to ultimately



operate at a loss. TTV is entitled to an enhanced attorneys’ fee rate because of the IRS’s

unnecessarily litigious actions.

B. TTV Is Entitled to Receive the LSI Laffey Rates for This Award.

In 2005, the Cobell Court awarded enhanced rates over the statutory cap on the basis of “bad

faith.” 407 F. Supp. 2d at 169. Once a fee enhancement is granted, a fee applicant must establish

at least three elements: (1) the attorneys’ billing practices; (2) the attorneys’ skill, experience, and

reputation; and (3) the prevailing market rates in the relevant community. Id. at 170.

1. TTV’s Attorneys’ Billing Practices Are Fair and Reasonable.

Over the course of this litigation, four traditional and public-interest law firms have worked

for TTV: (1) The Public Interest Legal Foundation (“PILF”), (2) The Claremont Institute Center

For Constitutional Jurisprudence (“CCJ”), (3) Foley & Lardner, LLP (“Foley”), and (4) The

Bopp Law Firm, PC (“BLF”). All firms submitted billing records detailing the gross amount of

hours worked on TTV’s behalf; the attorneys, clerks, or paralegals performing the work5; and

detailed descriptions of the work done. Each firm has submitted a declaration attesting to the

accuracy of the gross billing hours and descriptions submitted (Billing Records, attached as Ex.

1-5).

5 The U.S. Supreme Court held that paralegal fees are recoverable at the prevailingmarket rate as part of an award of “attorneys’ fees” under the EAJA. See Richlin Sec. Serv. Co. v.Chertoff, 553 U.S. 571, 128 S. Ct. 2007 (2008).



The facts underlying all of TTV’s claims were virtually the same, as all claims arose from the

IRS’s improper heightened scrutiny on the basis of names and ideology. However, TTV was

ultimately unsuccessful in some of its claims. This Court did not award statutory damages based

upon improper disclosure of IRS records, (First Am.Verified Compl., Doc. 14, at Count IV), did

not award Bivens damages from the individual defendants, Id. at Count III, and did not award

damages for violations of the Administrative Procedures Act. Id. at Count V. The attorneys’

hours have been adjusted to reflect a deduction for the unsuccessful claims according to the

following process:

• The percentage of documents (briefs, motions, etc.) that pertained to the unsuccessfulclaims was calculated. For example, approximately 20% of the initial complaint wasdevoted to the unsuccessful claims. (See Table of Percentage Deductions forUnsuccessful Claims, attached as Ex. 8).

• If the billing sheet was unspecified as to what issue or claim the attorney was workingon, the hours were adjusted according to the relevant percentage devoted to theunsuccessful claims.

• If the billing description pertained to only one of the unsuccessful claims, that line itemwas “no charged.”

• If the billing description pertained to only the successful claim(s), that line itemremained fully chargeable, with no reduction of hours.

• Reimbursable expenses include filing fees, process service fees, copying/printing, andcomputer-aided legal research. All other expenses are non-reimbursable. Travel time isawarded at half the hours.

• CCJ and BLF included expenses in the billing detail. (See Billing Records, attached asEx. 3,5). PILF’s and Foley’s expenses are not in the billing detail, but attachedseparately. (See PILF/Foley Expenses, attached as Ex. 4).

Because the attorneys have diligently and accurately recorded their time and have adjusted for

the unsuccessful claims, the attorneys’ billing practices are fair and reasonable.

2. TTV’s Attorneys’ Skill, Experience, and Reputation Are Well-Established.

The attorneys who worked in this litigation have hundreds of years of combined experience,



much of which has specifically been spent specializing in not-for-profit tax, constitutional and

election law. The attached biographies and declarations for the attorneys show the skill and

experience TTV received in this litigation. Declarations of [CCJ, PILF, Foley, and BLF] in

Support of Plaintiff’s Application and Motion for Attorneys’ Fees, Costs, and Expenses Under

the Equal Access to Justice Act (February 20, 2018). The prevailing market rate for legal skill

and experience of this caliber is accurately accounted for within the LSI Laffey Matrix.

3. The LSI Laffey Rates Are the Prevailing Market Rates in the RelevantCommunity.

The Cobell Court validated the use of the Laffey Matrix when enhanced fees apply to an

EAJA award. Cobell, 407 F. Supp. 2d 140, 170. The Laffey Matrix is a schedule of hourly rates

based on years of experience originally developed by the D.C. Circuit. Id. The Cobell Court

applied United States Attorney’s Office’s (“USAO”) version of the Laffey Matrix. Id.

Ten years after the Cobell Court applied the USAO Laffey Matrix, this circuit upheld the use

of a more recently updated matrix, the LSI Laffey Matrix. See Salazar v. District of Columbia,

809 F.3d 58, 65 (D.C. Cir. 2015) (holding relevant market is that of complex federal litigation).

Although Salazar was a claim for attorneys’ fees based on 42 U.S.C. § 1983, the reasoning

behind using the LSI Laffey Matrix was not based specifically on the statutory framework, but

instead on the reasonableness and accuracy of the matrix selected. The district court had

determined that the LSI Laffey Matrix had “the distinct advantage of capturing the more relevant

data because it is based on the legal services component of the Consumer Price Index (CPI)

rather than the general CPI on which the [USAO] matrix is based.” Id. at 62. In affirming the



district court’s decision, the court of appeals noted that the LSI Matrix was probably a

conservative estimate of the actual cost of legal services in the Washington, D.C. area. Id. at 65.

In adopting the LSI Laffey Matrix, the court of appeals affirmed that “fees should be neither

lower, nor calculated differently, when the losing defendant is the government.” Id.

Civil Rights litigation has been recognized as complex federal litigation, as the Salazar Court

indicated as a factor for the use of the LSI Laffey Matrix. The Civil Rights Attorney's Fees

Awards Act of 1976, 42 U.S.C. § 1988, authorizes district courts to award a reasonable attorney's

fee to prevailing civil rights litigants.7 In enacting the statute, Congress directed that attorney's

fees be calculated according to standards currently in use under other fee-shifting statutes, such

as anti-trust litigation, and “not be reduced because the rights involved may be nonpecuniary in

nature.” Blum v. Stenson, 465 U.S. 886, 893 (1984).

This litigation has always been based in the federal courts in Washington, D.C. and involved

many complex questions involving tax law, constitutional law, and administrative law. While

this litigation did not invoke civil rights legislation, many of the same complex questions of

statutory interpretation, fairness, and equality apply to IRS’s actions toward TTV. Such complex

litigation required attorneys experienced in such law. Even though TTV received nonpecuniary

awards, such as declaratory judgments, the Blum Court made clear the lack of monetary damages

did not render the litigation simple versus complex.

7Section 1988 provides in relevant part:

“In any action or proceeding to enforce a provision of sections 1981, 1982, 1983,1985, and 1986 of this title ..., the court, in its discretion, may allow the prevailingparty, other than the United States, a reasonable attorney's fee as part of the costs.”



http://www.westlaw.com/Link/Document/FullText?findType=L&pubNum=1000546&cite=42USCAS1988&originatingDoc=I178e20d49c1f11d993e6d35cc61aab4a&refType=LQ&originationContext=document&vr=3.0&rs=cblt1.0&transitionType=DocumentItem&contextData=(sc.Search)






LSI Laffey rates are applicable to a bad faith enhancement in this litigation. (LSI Laffey Rates

per attorney, attached as Ex. 6). If a bad faith enhancement or “special factor” enhancement is

awarded, TTV’s award is $1,933,888.06. The chart below summarizes the LSI Laffey rates,

adjusted as explained above.

LSI Bad Faith Enhancement Calculations

Description CCJ Foley PILF BLF Totals

Gross LSI Bad FaithEnhancement Award (PILFincludes PILF/Foley GrossExpenses; CCJ and BLFGross Expenses included)

$ 155,705.80 $ 902,762.40 $ 993,916.73 $ 312,530.16 $ 2,364,915.09

Less Billing Adjustmentsfor Unsuccessful Claims,Travel Time, Non-reimbursable Expenses(PILF includes adjustmentsfor PILF/Foley Expenses;CCJ and BLF expenseadjustments included)

$ (57,518.50) $ (168,287.20) $ (198,662.77) $ (6,558.56) $ (431,027.03)

Net LSI Bad FaithEnhancement Award

$ 98,187.30 $ 734,475.20 $ 795,253.96 $305,971.60 $ 1,933,888.06

D. TTV Accurately Applied the Statutory Rate if a Bad Faith Enhancement Is NotAwarded.

If this Court agrees that TTV is the prevailing party and the IRS’s actions are not

substantially justified, but does not agree that TTV should be awarded a “bad faith” or “special

factor” enhanced rate under § 2412(b) or § 2412 (d)(2)(A), then the statutory rate, adjusted for

inflation, should apply. The current statutory rate structure for EAJA is attached to this

memorandum. (EAJA Rates, attached as Ex. 7). The EAJA rate structure is applied for the entire

calendar year and are the same for each attorney, regardless of experience.

The same adjustments for billing related to unsuccessful claims would apply to a statutory



rate EAJA award. In that case, TTV’s statutory award would be $750,922.79. The chart below

summarizes the EAJA rates, adjusted as explained above.

EAJA Statutory Rate Calculations

Description CCJ Foley PILF BLF Totals

Gross EAJA StatutoryRate Award (PILFincludes PILF/FoleyGross Expenses; CCJ andBLF Gross Expensesincluded)

$41,854.30 $260,235.34

$518,512.22

$116,250.24 $936,852.10

Less Billing Adjustmentsfor Unsuccessful Claims,Travel Time, Non-reimbursable Expenses(PILF includesadjustments forPILF/Foley Expenses;CCJ and BLF expenseadjustments included)

$(16,594.12)

$(56,128.92)

$(111,525.20)

$ (1,681.07)

$(185,929.31)

Net EAJA StatutoryRate Award

$25,260.18

$204,106.42 $406,987.02

$114,569.17 $750,922.79

Conclusion

The IRS utterly failed in its mission to treat applicants fairly under tax law. With these

indefensible actions, the IRS broke an important public trust – the trust that the rule of law will

apply to any individual or organization regardless of political ideology.

TTV is the prevailing party in this litigation and the IRS’s actions are not substantially

justified. Therefore, TTV is entitled to an award of attorneys’ fees under the EAJA. Because of

the IRS’s bad faith in both its actions underlying this litigation and in the litigation itself, as well

as the IRS’s aggressive litigation strategy, TTV is entitled to a “bad faith” or “special factor”

enhancement of the award. The total award with a “bad faith” or “special factor” enhancement is

$1,933,888.06, and TTV respectfully requests this Court grant that award. The total award



without a bad faith or special factor enhancement is $750,922.79, and TTV alternatively requests

this Court grant that award if it does not grant the bad faith or special factor enhancement.

February 20, 2018 Respectfully submitted,/s/ James Bopp, Jr. James Bopp, Jr. (D.C. Bar No. CO0041)Courtney Turner Milbank*THE BOPP LAW FIRM, P.C.The National Building1 South 6th StreetTerre Haute, Indiana 47807(812) 232-2434(812) 235-3685 (fax)Attorneys for TTV*Admitted pro hac vice




I hereby certify that on February 20, 2018 , I caused the Plaintiff’s Memorandum of Points

and Authorities in Support of Plaintiff’s Application and Motion for Attorneys’ Fees, Costs, and

Expenses Under the Equal Access to Justice Act and exhibits thereto in the above-captioned

matter to be filed with the United States District Court for the District of Columbia via the

Court’s CM/ECF system.



IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) TRUE THE VOTE, INC., ) )

Plaintiff, ) ) v. ) Civil Action No. 1:13-cv-00734-RBW ) UNITED STATES OF AMERICA, et al., ) ) Defendants. ) )

UNITED STATES’ OPPOSITION TO PLAINTIFF’S APPLICATION AND MOTION FOR ATTORNEYS’ FEES, COSTS, AND EXPENSES

Case 1:13-cv-00734-RBW Document 152 Filed 03/06/18 Page 1 of 26

i

TABLE OF CONTENTS

DISCUSSION ..................................................................................................................................1

I. Plaintiff True the Vote does not qualify as a “prevailing party” under the EAJA ...............2

A. Plaintiff is not a prevailing party under the Consent Order ....................................4

B. Plaintiff is not a prevailing party under the D.C. Circuit’s interlocutory ruling on purely jurisdictional issues. .....................................................................................7

II. The United States’ position in defending this action was substantially justified ................9

III. Special circumstances exist here that would make an award of attorneys’ fees and costs under the EAJA unjust .......................................................................................................14 IV. Even if an award of attorneys’ fees and costs under the EAJA were allowed, Plaintiff’s requests are excessive ........................................................................................................16 CONCLUSION ..............................................................................................................................19


ii

TABLE OF AUTHORITIES

Page(s)

Cases

Air Transport Ass’n of Canada v. FAA, 156 F.3d 1329 (D.C. Cir. 1998) .........................................................................................14, 15

Am. Petroleum Inst. v. EPA, 72 F.3d 907 (D.C. Cir. 1996) ...................................................................................................16

Ass’n of Am. Physicians & Surgeons, Inc. v. Clinton, 187 F.3d 655 (D.C. Cir.1999) ............................................................................................16, 17

Baltimore Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602 (D. Md. 2000), aff’d, 237 F.3d 394 (4th Cir. 2001) ...................................5

Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971) ......................................................................................................... passim

Buckhannon Bd. & Care Home, Inc. v. W. Virginia Dep’t of Health & Human Res., 532 U.S. 598 (2001) ...................................................................................................................6

Campaign for Responsible Transplantation v. Food & Drug Admin., 511 F.3d 187 (D.C. Cir. 2007) ...................................................................................................6

Conservation Force v. Salazar, 916 F. Supp. 2d 15 (D.D.C. 2013) ...........................................................................................16

Ctr. for Food Safety v. Burwell, 126 F. Supp. 3d 114 (D.D.C. Sept. 4, 2015) ............................................................................10

D.C. v. Straus, 590 F.3d 898 (D.C. Cir. 2010) ...................................................................................................2

Dudley v. Washington Metro. Area Transit Auth., 924 F. Supp. 2d 141 (D.D.C. 2013) ...........................................................................................5

Fabi Construction v. Sec. of Labor, 541 F.3d 407 (D.C. Cir. 2008) .................................................................................................16

GasPlus, L.L.C. v. U.S. Dep’t of Interior, 593 F. Supp. 2d 80 (D.D.C. 2009) .............................................................................................7

Hensley v. Eckerhart, 461 U.S. 424 (1983) .................................................................................................................16


iii

Hill v. Gould, 555 F.3d 1003 (D.C. Cir. 2009) .......................................................................................2, 9, 10

Ivy Sports Med., LLC v. Burwell, 174 F. Supp. 3d 130 (D.D.C. 2016) .........................................................................................10

Kennecott Corp. v. E.P.A., 804 F.2d 763 (D.C. Cir. 1986) .................................................................................................17

Lake Pilots Ass’n, Inc. v. U.S. Coast Guard, 310 F. Supp. 2d 333 (D.D.C. 2004) ...................................................................................2, 7, 8

Linchpins of Liberty, Inc., et al. v. Internal Revenue Service, No. 13-777 (D.D.C.) ........................................................................................................ passim

Loving v. IRS, 2014 WL 12778284 (D.D.C. Sept. 19, 2014) ..........................................................................16

New Life Evangelistic Ctr., Inc. v. Sebelius, 847 F. Supp. 2d 50 (D.D.C. 2012) .........................................................................................7, 8

NorCal Tea Party Patriots v. IRS, No. 1:13-CV-341, 2014 WL 3547369 (S.D. Ohio July 17, 2014) ...........................................11

Pierce v. Underwood, 487 U.S. 552 (1988) ...................................................................................................................9

Porter v. Astrue, 2013 WL 5978623 (D.D.C. Nov. 2013) ..................................................................................16

Precision Concrete v. NLRB, 362 F.3d 847 (D.C. Cir. 2004) ...................................................................................................9

Qassim v. Bush, 466 F.3d 1073 (D.C. Cir. 2006) ...............................................................................................11

Role Models America, Inc. v. Brownlee, 353 F.3d 962 (D.C. Cir. 2004) .............................................................................................2, 18

Spencer v. N.L.R.B., 712 F.2d 539 (D.C. Cir. 1983) ...................................................................................................9

Taucher v. Brown-Hruska, 396 F.3d 1168 (D.C. Cir. 2005) ...........................................................................................9, 11

Thomas v. Nat’l Sci. Found., 330 F.3d 486 (D.C. Cir. 2003) ...............................................................................................2, 6


iv

Trahan v. Brady, 907 F.2d 1215 (D.C. Cir. 1990) .................................................................................................9

True the Vote, Inc. v. IRS, 71 F. Supp. 3d 219 (D.D.C. 2014) ...................................................................................3, 4, 11

True the Vote, Inc. v. IRS, 831 F.3d 551 (D.C. Cir. 2016) ......................................................................................... passim

Wilkett v. ICC, 844 F.2d 867 (D.C. Cir. 1986) .................................................................................................14

Statutes

28 U.S.C. § 2412(b) .................................................................................................................15, 16

28 U.S.C. § 2412(d) ............................................................................................................... passim

I.R.C. § 501(c)(3) .............................................................................................................................2

I.R.C. § 6103 ....................................................................................................................................3

I.R.C. § 7428 ....................................................................................................................................3

I.R.C. § 7431 ..................................................................................................................................17

Other Authorities

Fed. R. Civ. P. R. 56(d)..................................................................................................................15

U.S. Const., amend. I ...............................................................................................................3, 4, 5

H.R. Rep. No. 1418, 96th Cong., 2d Sess. 11 ................................................................................14

2013 TIGTA Report ............................................................................................................... passim

2015 TIGTA Report ...................................................................................................................6, 12

2017 TIGTA Report .........................................................................................................................6





UNITED STATES’ OPPOSITION TO PLAINTIFF’S APPLICATION AND MOTION FOR ATTORNEYS’ FEES, COSTS, AND EXPENSES

Plaintiff True the Vote is not entitled to attorneys’ fees, costs, or expenses because it is

not a “prevailing party” within the meaning of the Equal Access to Justice Act (“EAJA”). Even

if Plaintiff were a prevailing party, it still would not qualify to receive any of its requested

amounts because the United States’ position in this action – that Plaintiff’s claims are moot –

was substantially justified. Indeed, this Court granted the United States’ motion to dismiss this

case based on mootness. And even if Plaintiff were a prevailing party and if the United States’

position were not substantially justified, the circumstances of this case make the award of

attorneys’ fees “unjust” and not allowable under the EAJA. Finally, Plaintiff should not be

awarded the full amount it has requested because its request is excessive.

DISCUSSION

Traditionally, a party bears its own costs of litigation. However, a plaintiff may recover

attorney’s fees against the United States if it demonstrates: (1) the plaintiff is a “prevailing


2

party”; (2) the position of the United States was “not substantially justified”; and (3) the plaintiff

timely submits an itemized statement showing the actual time expended and rate applied.1

28 U.S.C. § 2412(d)(1), (d)(2) (commonly referred to as the Equal Access to Justice Act, or

“EAJA”). All three elements are required. Moreover, even if a plaintiff satisfies those

requirements, “special circumstances” may “make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).

The Court’s determination whether to award attorney’s fees is reviewed for abuse of discretion.

Hill v. Gould, 555 F.3d 1003, 1006 (D.C. Cir. 2009).

I. Plaintiff True the Vote does not qualify as a “prevailing party” under the EAJA.

When the party seeking fees under the EAJA is the plaintiff, the D.C. Circuit has

“articulated a three-part test for determining prevailing-party status: (1) there must be a ‘court-

ordered change in the legal relationship’ of the parties; (2) the judgment must be in favor of the

party seeking the fees; and (3) the judicial pronouncement must be accompanied by judicial

relief.” D.C. v. Straus, 590 F.3d 898, 901 (D.C. Cir. 2010) (citing Thomas v. Nat’l Sci. Found.,

330 F.3d 486, 492–93 (D.C. Cir. 2003) (internal quotation marks and alterations omitted)). Put

another way, “[t]o be a prevailing party, a party must obtain a ‘substantial part of’ the relief it

sought and the lawsuit must have caused ‘a change in someone’s primary conduct in the real

world.’” Lake Pilots Ass’n, Inc. v. U.S. Coast Guard, 310 F. Supp. 2d 333, 336 (D.D.C. 2004)

(quoting Role Models America, Inc. v. Brownlee, 353 F.3d 962, 966 (D.C. Cir. 2004)). Plaintiff

satisfies none of these elements.

1 A plaintiff generally must also meet a net-worth limitation, but True the Vote is excused from that requirement because it is a tax-exempt organization under 26 U.S.C. § 501(c)(3). See 28 U.S.C. § 2412(d)(2)(B).


3

In Plaintiff’s original complaint, filed May 21, 2013, Plaintiff raised three separate

claims: a claim for the determination of its tax-exempt status under Internal Revenue Code

(“I.R.C.”) § 7428; a claim for damages for alleged violation of its First Amendment rights under

Bivens; and a claim for damages for the alleged wrongful inspection of its return information in

violation of I.R.C. § 6103. (Doc. 1 ¶¶ 85-118.) Plaintiff’s amended complaint, filed July 22,

2013, included the three claims from the original complaint and added two more: a claim for

declaratory and injunctive relief that the IRS violated Plaintiff’s First Amendment rights and a

claim for the same declaratory and injunctive relief brought under the Administrative Procedure

Act. (Doc. 14 ¶¶ 148-61, 188-206.)

Plaintiff obtained none of the relief it requested in this suit. Plaintiff’s claim under I.R.C.

§ 7428 for a determination of its tax-exempt status (Count I)2 became moot, prior to any Court

action on the claim, when the IRS granted Plaintiff’s application soon after it filed its complaint.

Plaintiff conceded that this claim was moot and the Court dismissed it. True the Vote, Inc. v.

IRS, 71 F. Supp. 3d 219, 226 (D.D.C. 2014). Plaintiff did not appeal the dismissal of that claim.

(Ex. 1, True the Vote’s Brief on Appeal, at 13 n.5.) This Court also dismissed Plaintiff’s Bivens

(Count III) and wrongful inspection (Count IV) claims, True the Vote, 71 F. Supp. 3d at 229-35,

and the D.C. Circuit affirmed the dismissal of those claims, True the Vote, Inc. v. IRS, 831 F.3d

551, 556-58 (D.C. Cir. 2016).

But even if the dismissal of three of five counts is not sufficient of itself to deny Plaintiff

“prevailing party” status, Plaintiff has not received relief under Count II (First Amendment) and

2 References to count numbers reflect how Plaintiff numbered its claims in its amended complaint.


4

Count V (Administrative Procedure Act).3 Both Counts II and V alleged that the federal

defendants targeted Plaintiff’s application for heightened scrutiny based on Plaintiff’s

viewpoints, and that the IRS deliberately delayed the consideration of Plaintiff’s application.

(Doc. 14 ¶¶ 150-51, 155 (Count II allegations), ¶¶ 194, 204 (Count V allegations).) Count V

included the additional allegation that the IRS asked Plaintiff to provide information that was not

necessary for the determination of its tax-exempt status. (Doc. 14 ¶¶ 199, 201.)

Plaintiff sought the following equitable relief: (1) a declaration that the alleged “IRS

Targeting Scheme”4 and any other similar policies are unconstitutional under the First

Amendment; (2) injunctive relief to prevent the IRS from further implementing and applying the

alleged “IRS Targeting Scheme” and any other similar practices and policies; and (3) injunctive

relief to prevent the IRS from illegally inspecting Plaintiff’s return information. (Doc. 14

¶¶ 148-61 (Count I), ¶¶ 188-206 (Count V); Doc. 14 at 47 (both counts).) Plaintiff obtained none

of that relief from any Court involved in this action.

A. Plaintiff is not a prevailing party under the Consent Order.

Plaintiff points to various parts of the Consent Order as changing the legal relationship

between itself and the IRS, but none of them actually do. Plaintiff first points to paragraph 3 of

the Consent Order, which states that “[t]he IRS stipulates and this Court finds that TTV alleged

3 This Court dismissed Plaintiff’s claims for equitable relief under the First Amendment (Count II) and under the Administrative Procedure Act (Count V) as moot. True the Vote, 71 F. Supp. 3d at 226-29. The D.C. Circuit, however, reversed the dismissal of those claims and remanded them for further proceedings. True the Vote, 831 F.3d at 564.

4 In describing the “Targeting Scheme,” Plaintiff alleged that the IRS engaged in a practice of subjecting certain applications for tax exemption to heightened scrutiny, unnecessary requests for information, and delays in processing based the applicants’ espoused conservative points of view. (Doc. 14 ¶¶ 73-74.)


5

the IRS violated its constitutional rights when it screened TTV’s tax-exempt application,

significantly delayed processing its application; made harassing, probing, and unconstitutional

requests for information based on the name, associations, and/or political viewpoints of TTV,”

and that the violations were ongoing. (Doc. 151-8, Pl. Fee Mem., at 8 (citing Doc. 150, Consent

Order, ¶ 3) (emphasis added.) The fact that the United States acknowledges that Plaintiff made

certain allegations in this action, and the fact that the Court signed the Consent Order containing

that acknowledgment, do not constitute a finding by the Court that those allegations were true.

Plaintiff correctly notes that, in the Consent Order, the parties agreed to a number of specific

facts found in the May 14, 2013 Report from the Treasury Inspector General for Tax

Administration (“TIGTA”) and the August 5, 2015 Report of the Senate Finance Committee,

both of which addressed the events that gave rise to Plaintiff’s suit. But nowhere in the Consent

Order is there any conclusion that the stipulated facts gave rise to a violation of law. Plaintiff

sought a declaration that the IRS had violated its First Amendment rights, but the Consent Order

contains no such declaration.5 Plaintiff also sought injunctive relief, but the Consent Order

includes no injunction. Plaintiff cannot therefore be said to have “prevailed.”

Even if this Court had declared that the IRS conduct at issue violated Plaintiff’s

constitutional rights, that alone would not make Plaintiff a “prevailing party.” “[A] claimant is

not a ‘prevailing party’ merely by virtue of having ‘acquired a judicial pronouncement that the

5 Plaintiff wrongly argues (Doc. 151-8 at 9-10) that the IRS’s acknowledgment in the Consent Order that its treatment of Plaintiff’s application was “wrong” also means that the IRS’s treatment of Plaintiff’s application was “illegal” or “unconstitutional.” But actions can be wrong without being in violation of the Constitution or otherwise illegal. See Dudley v. Washington Metro. Area Transit Auth., 924 F. Supp. 2d 141, 169 (D.D.C. 2013); Baltimore Scrap Corp. v. David J. Joseph Co., 81 F. Supp. 2d 602, 603-604 (D. Md. 2000), aff’d, 237 F.3d 394 (4th Cir. 2001).


6

defendant has violated the Constitution unaccompanied by “judicial relief.”’” Thomas v. Nat’l

Sci. Found., 330 F.3d 486, 493 (D.C. Cir. 2003) (quoting Buckhannon Bd. & Care Home, Inc. v.

W. Virginia Dep’t of Health & Human Res., 532 U.S. 598, 606 (2001)). To qualify as a

prevailing party under fee-shifting statutes, “[s]omething more than a mere ‘judicial

pronouncement’ is necessary – there must also be ‘judicial relief’ on the merits of the plaintiff’s

claim.” Campaign for Responsible Transplantation v. Food & Drug Admin., 511 F.3d 187, 193

(D.C. Cir. 2007) (quoting Buckhannon, 532 U.S. at 606).

The only specific adjudication in the Consent Order of True the Vote’s claims in

Counts II and V is that they are dismissed with prejudice. (Doc. 150 at 13.) If the Consent

Order had included a substantive adjudication in Plaintiff’s favor on Counts II and V, dismissal

of those claims would have been inappropriate. But the dismissal is entirely consistent with the

parties’ adoption of TIGTA’s findings in 2015 (and reiterated in its 2017 Report) that the IRS

had implemented recommendations made in TIGTA’s 2013 Report to permanently change the

conduct that gave rise to this action. (See Doc. 150 ¶¶ 26-35, 41.) Dismissal also is consistent

with the parties’ further stipulation that “[t]he IRS accepted all the recommendations in the

Senate Finance Committee’s report concerning the [tax-exempt] determinations process that

were within its control – that is, those that did not involve tax policy matters or legislative action.

They included 15 of the report’s 18 bipartisan recommendations.” (Doc. 150 ¶ 36.) Especially

in light of those stipulations, Plaintiff cannot be considered a “prevailing party” on claims that

the Court now has dismissed. The Consent Order’s dismissal of Plaintiff’s remaining claims is

not a judgment in Plaintiff’s favor.


7

B. Plaintiff is not a prevailing party under the D.C. Circuit’s interlocutory ruling on purely jurisdictional issues.

Plaintiff contends that the D.C. Circuit’s reversal of the prior dismissal and remand of the

claims in Counts II and V operated to change the legal relationship between Plaintiff and the

United States. In 2014, this Court dismissed the claims in Counts II and V on the grounds of

mootness because the IRS had granted Plaintiff’s application for tax-exempt status soon after it

filed this action, and thus the complained-of procedures regarding the application process no

longer affected Plaintiff, as well as on the additional grounds that the IRS no longer engaged in

the practices that served as the bases for Plaintiff’s claims. But on Plaintiff’s appeal, which was

combined for argument and decision with the similar claims presented in Linchpins of Liberty,

Inc., et al. v. Internal Revenue Service, No. 13-777 (D.D.C.), the D.C. Circuit found that the

United States had not established mootness under the voluntary cessation doctrine because (i) a

small number of the Linchpins plaintiffs’ applications for tax-exempt status were still pending,

and (ii) the evidence previously available to this Court did not establish that the IRS had

permanently suspended the conduct that gave rise to Plaintiff’s claims. As a result, the D.C.

Circuit reversed the dismissal of Counts II and V and remanded those declaratory and injunctive

relief claims for further action consistent with its opinion.

Because the D.C. Circuit addressed only the preliminary issue of whether Plaintiff’s

claims could proceed and determined nothing about the underlying merits of Plaintiff’s claims in

Counts II and V, Plaintiff is not a prevailing party as to those claims. An order of remand must

provide or compel a result on the merits for it to convey “prevailing party” status on a litigant.

See Lake Pilots Ass’n, Inc. v. U.S. Coast Guard, 310 F. Supp. 2d 333, 345 (D.D.C. 2004)

(internal citation omitted) (finding that party was not entitled to attorney’s fees on remanded

claim when the remand did not reach the merits of the claim); New Life Evangelistic Ctr., Inc. v.


8

Sebelius, 847 F. Supp. 2d 50, 54 (D.D.C. 2012) (finding that remand of a summary judgment

ruling did not convey “prevailing party” status when the remand “failed to supply any material

relief” because it did not compel a substantive ruling).

Plaintiff’s assertion that the IRS only changed its conduct after the D.C. Circuit’s opinion

is not supported by the record. Contrary to Plaintiff’s assertion, the D.C. Circuit did not reject

the United States’ position on appeal that the IRS had already changed the conduct that was the

subject of Plaintiff’s complaint. The D.C. Circuit merely found that the United States “ha[d] not

carried its heavy burden of establishing mootness by voluntary cessation,” True the Vote,

831 F.3d at 563, – i.e., that it had not yet proven voluntary cessation – not that the voluntary

cessation had not actually occurred. As to the D.C. Circuit’s separate concern that the United

States had not established mootness under the voluntary cessation doctrine because a small

number of the Linchpins plaintiffs’ applications for tax-exempt status were still pending, that

concern did not impact Plaintiff because, as Plaintiff acknowledges (Doc. 150 ¶ 22), the IRS had

granted Plaintiff’s application in September 2013, nearly three years before the D.C. Circuit

issued its opinion in August 2016. The D.C. Circuit’s opinion could not have caused the IRS to

act on Plaintiff’s application because the IRS already had acted on it.

But even if Plaintiff’s assertion about the timing of the IRS’s voluntary changes were

true, the IRS’s voluntary change in conduct would not qualify as a court-ordered change in the

legal relationship between the parties. The Supreme Court has “found that the ‘catalyst theory,’

which posits that a plaintiff is a prevailing party if it achieves the desired result because the

lawsuit brought about a voluntary change in the defendant’s conduct, was an inadequate basis to

confer prevailing party status.” Lake Pilots Ass’n, 310 F. Supp. 2d at 346 n.4.


9

Plaintiff is not the “prevailing party” here under the EAJA. Accordingly, it is not entitled

to receive an award of any of its attorneys’ fees and costs.

II. The United States’ position in defending this action was substantially justified.

Even if Plaintiff qualified as a “prevailing party” under the EAJA, it still would not be

entitled to recover any of its attorneys’ fees because the United States’ position in this suit was

substantially justified. The United States’ position is substantially justified if it is “‘justified to a

degree that could satisfy a reasonable person’ or, in other words, has ‘a reasonable basis in both

law and fact.’” Taucher v. Brown-Hruska, 396 F.3d 1168, 1173 (D.C. Cir. 2005) (quoting

Pierce v. Underwood, 487 U.S. 552, 565 (1988)). Although a “substantially justified” argument

requires something more than it not being frivolous, it “does not ‘require the Government to

establish that its decision to litigate was based on a substantial probability of prevailing.’”

Taucher, 396 F.3d at 1173 (quoting Spencer v. N.L.R.B., 712 F.2d 539, 557 (D.C. Cir. 1983)). In

determining whether the United States was substantially justified, the Court should analyze “the

government’s position looking prospectively from the time the government took this position,

without the advantage of this Court’s subsequent pronouncement on the actual meaning of the

law.” Trahan v. Brady, 907 F.2d 1215, 1219 (D.C. Cir. 1990).

The Government lacks substantial justification if its position is “flatly at odds with the

controlling case law,” “obviously insufficient under well-established precedent,” or advocated

“in the face of an unbroken line of authority.” Taucher, 396 F.3d at 1174 (D.C. Cir. 2005)

(quoting Precision Concrete v. NLRB, 362 F.3d 847, 851-52 (D.C. Cir. 2004)); Hill v. Gould,


10

555 F.3d 1003, 1008 (D.C. Cir. 2009). The United States’ position that Plaintiff’s claims in

Counts II and V6 were moot is none of those things.

“‘[P]osition of the United States’ means, in addition to the position taken by the United

States in the civil action, the action or failure to act by the agency upon which the civil action is

based . . . .” 28 U.S.C. § 2412(d)(2)(D). “Despite focusing on both of the agency’s actions and

the government’s subsequent litigating position, the Court ‘is not to review the different elements

of the government’s position separately.’” Ivy Sports Med., LLC v. Burwell, 174 F. Supp. 3d

130, 140 (D.D.C. 2016) (quoting Ctr. for Food Safety v. Burwell, 126 F. Supp. 3d 114, 123–24

(D.D.C. Sept. 4, 2015)). “Instead, the Court must consider the agency’s conduct and the

government’s subsequent defense of that conduct ‘as an inclusive whole,’ and make ‘only one

threshold determination for the entire civil action.’” Ivy Sports Med., 174 F. Supp. 3d at 140

(citations omitted). Viewing the United States’ position as a whole, the appropriate focus is

whether its mootness argument was substantially justified.

The United States moved to dismiss the claims in Counts II and V on the grounds of

mootness because the IRS had granted Plaintiff’s application for tax-exempt status soon after it

filed this action, and thus the complained-of procedures regarding the application process no

longer could have been affecting Plaintiff. (Doc. 54 at 2-5.) This Court granted the motion to

dismiss, as well the United States’ motion to dismiss similar claims in the related Linchpins case.

Even though the D.C. Circuit later reversed and remanded requiring further proof of voluntary

6 As noted above, Plaintiff did not appeal the dismissal of its Count I claim, and the D.C. Circuit affirmed the dismissal of all of Plaintiff’s other claims.


11

cessation, certainly this Court’s prior dismissal shows that the United States’ position had “a

reasonable basis in both law and fact.” Taucher, 396 F.3d at 1173.

The ruling in another related case further supports the reasonableness of the United

States’ position. That case presented similar claims for declaratory and injunctive relief based on

those plaintiffs’ claims that the IRS had used unconstitutional criteria to select their applications

for tax-exempt status for review, had issued irrelevant requests for information based on their

viewpoints, and had unreasonably delayed the processing of their applications. In that case, the

United States District Court for the Southern District of Ohio found that the similar “claim[s] for

declaratory and injunctive relief cannot be brought by the other Plaintiff Groups who have either

had their applications for tax exempt status ruled upon or have withdrawn their applications.”

NorCal Tea Party Patriots v. IRS, No. 1:13-CV-341, 2014 WL 3547369, at *9 n.11 (S.D. Ohio

July 17, 2014).

The granting of True the Vote’s application in 2013 certainly ended any prior delay in

processing its application. But acting on the application meant more than just that the delay had

long since ceased. Once Plaintiff’s application was granted, it no longer was impacted by

inappropriate selection criteria or any improper requests for additional information it may have

received – even if the IRS still had been engaging in those activities, which it was not. That

argument was and is supported by D.C. Circuit authority finding that Guantanamo Bay

detainees’ claims challenging their detention under an allegedly unlawful detention policy

became moot upon their release. See Qassim v. Bush, 466 F.3d 1073, 1076 (D.C. Cir. 2006).

The position on mootness that the United States advanced in its motion to dismiss is supported

by relevant legal authority and thus is substantially justified.


12

This Court granted the United States’ motion to dismiss on the advanced grounds that

Counts II and V were moot because the IRS had acted on Plaintiff’s application, as well as on the

additional grounds that the IRS no longer was engaging in the practices that served as the bases

for Plaintiff’s claims. The United States was substantially justified in defending this Court’s

dismissal on both those grounds when Plaintiff appealed. This Court’s well-reasoned opinion,

True the Vote, 71 F. Supp. 3d at 226-29, shows that a reasonable person could conclude that the

position on mootness was substantially justified, even though the D.C. Circuit later reversed the

dismissal and remanded Counts II and V for further action.

On Plaintiff’s appeal, the United States submitted TIGTA’s 2015 Report, which found

that the IRS had implemented recommendations made in TIGTA’s 2013 Report to permanently

change the conduct that gave rise to this action. TIGTA’s 2015 Report, however, was issued

after this Court’s ruling on the motion to dismiss. Because it was not part of the record before

this Court, the D.C. Circuit did not consider it in issuing its ruling, but noted that “the

government is free to offer the document in the district court” on remand. True the Vote,

831 F.3d at 562.

After the D.C. Circuit reversed the dismissal of Counts II and V and remanded those

claims for further action consistent with its opinion, the United States was reasonable in

accepting the D.C. Circuit’s invitation to offer the 2015 TIGTA Report to this Court in support

of its mootness argument. In addition to submitting the 2015 TIGTA Report, the United States

also submitted the detailed declaration of the IRS Exempt Organizations Director who held that

position during the time that many of the IRS’s changes were implemented. That declaration

describes in detail the actions that the IRS took to permanently change the conduct that gave rise


13

to Plaintiff’s suit. Based on those submissions, a reasonable person could conclude that the

United States’ position on mootness was substantially justified in fact.

The United States also was reasonable in renewing its argument that the IRS’s action

granting Plaintiff’s application in 2013 rendered the claims at issue moot. The D.C. Circuit

found that voluntary cessation had not occurred because some of the Linchpins plaintiffs’

applications had yet to be processed. True the Vote, 831 F.3d at 561. The D.C. Circuit

“advise[d] the IRS that a heavy burden of establishing mootness is not carried by proving that the

case is nearly moot, or is moot as to a ‘vast majority’ of the parties. Their heavy burden requires

that they establish cessation, not near cessation.” Id. at 561. Regardless of the status of any of

the Linchpins plaintiffs’ applications, True the Vote’s application was granted in 2013, and its

claims were moot as of that time. To the extent that the D.C. Circuit considered the status of the

Linchpins plaintiffs’ applications somehow relevant to True the Vote’s claims, by the time the

United States renewed its mootness argument in this Court, the IRS had acted upon all

applications of the Linchpins plaintiffs that wanted their applications acted upon, thus resolving

the D.C. Circuit’s concern on that point.

At all stages of this litigation, the United States’ position that Plaintiff’s claims are moot

has been substantially justified in law and in fact. Even if the IRS’s administrative conduct is

considered, and because mootness was the United States’ position, the appropriate focus is what

the agency did to change the complained-of conduct. As Plaintiff acknowledges, on May 10,

2013, before this suit was filed, the IRS apologized for its actions that gave rise to this suit and

acknowledged that it should have done far better in handling applications for tax-exempt status.

(See Doc. 150 ¶ 5; Doc. 151-8 at 8 n.5.) Also before this litigation began, the 2013 TIGTA

Report, including the IRS Management response, which was attached as Appendix VIII to the


14

2013 Report (Doc. 1 6 at 50-55), showed that the IRS already had made meaningful strides to

correct the conduct at issue and to ensure that it never happened again. 7

At all relevant stages in this litigation, the United States’ position on mootness was

substantially justified. As a result, Plaintiff may collect none of the attorneys’ fees and costs that

it has requested.

III. Special circumstances exist here that would make an award of attorneys’ fees and costs under the EAJA unjust.

A party is not entitled to its attorneys’ fees and costs under the EAJA if “special

circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). The “special circumstances”

language in the EAJA was meant to be a “safety valve” to “insure that the Government is not

deterred from advancing in good faith the novel but credible extensions and interpretations of the

law that often underlie vigorous enforcement efforts” and to “permit courts to rely on ‘equitable

considerations’ in denying a fee award.” Wilkett v. ICC, 844 F.2d 867, 874 (D.C. Cir. 1986),

citing H.R. Rep. No. 1418, 96th Cong., 2d Sess. 11, reprinted in 1980 U.S. Code Cong. &

Admin. News 4953, 4984, 4990. The D.C. Circuit has said that a guiding principle in

determining if special circumstances exist is to apply “traditional equitable principles.” Air

7 Plaintiff incorrectly implies, citing paragraph 8 of the Consent Order, that the IRS continued to use inappropriate criteria “for more than 18 months after Lerner admitted it was wrong [in May of 2013].” (Doc. 151-8 at 14.) Plaintiff’s implication that inappropriate criteria were still in effect in 2015 is simply wrong. In fact, the IRS had ceased using the inappropriate criteria by May 2012, long before the filing of Plaintiff’s complaint. (See Consent Order ¶ 8(g), (h); Doc. 1-6, TIGTA Report of 2013, at 7 (“The May 2012 criteria more clearly focus on activities permitted under the Treasury Regulations”).) Furthermore, contrary to Plaintiff’s assertions, paragraph 8 of the Consent Order describes criteria in effect from 2010 through May of 2012 and makes no mention of Lerner’s apology in 2013. As a result, Plaintiff’s statement is unsupported and incorrect.


15

Transport Ass’n of Canada v. FAA, 156 F.3d 1329, 1333 (D.C. Cir. 1998). The equities do not

favor an award of attorneys’ fees and costs here.

In addition to the reasons discussed above regarding the government’s substantial

justification for its litigation position, it would be unfair and unreasonable to award Plaintiff the

fees and costs it seeks. Plaintiff is requesting nearly $2 million in attorneys’ fees and costs in an

action that never proceeded to merits discovery and in which the Court ordered extremely limited

discovery in response to Plaintiff’s Rule 56(d) Motion. In addition, three of the five counts in the

first amended complaint did not survive a motion to dismiss. The remaining two counts were

ultimately dismissed as well. In settlement, Plaintiff received a Consent Order that includes the

parties’ adoption of specific facts found in the 2013 TIGTA Report and TIGTA’s findings in its

2015 Report (and reiterated in its 2017 Report) that the IRS implemented recommendations

made in TIGTA’s 2013 Report. It was not Plaintiff or Plaintiff’s complaint that caused the IRS to

correct its conduct. Further, the IRS granted Plaintiff its tax-exempt status shortly after Plaintiff

filed its complaint. Thus, the award of the large amount of fees claimed by Plaintiff would be

grossly disproportional in comparison to the limited success it achieved.

A fee award is particularly inequitable given the treatment of the similarly situated

plaintiffs in Linchpins. The identical claims of the 38 remaining plaintiffs in Linchpins were

dismissed without an award of attorneys’ fees. (Case No. 1:13-cv-00777-RBW Doc. 143 ¶¶ 47-

48.) And, unlike Plaintiff, the applications of a small number of the Linchpins plaintiffs had not

been acted upon at the time the cases were before the D.C. Circuit, which was part of the basis

for the D.C. Circuit’s reversal of the mootness dismissal. Accordingly, the equities lay in favor

of declining to award any attorneys’ fees or costs in this action.


16

IV. Even if an award of attorneys’ fees and costs under the EAJA were allowed, Plaintiff’s requests are excessive.

Plaintiff makes two separate requests for attorneys’ fees and costs under the EAJA. Its

first request is for $1,933,888 based on a “bad faith” enhancement of the normal statutory rates

under 28 U.S.C. § 2412(b). As an alternative, it requests $750,922 under the normal EAJA rates.

In either case, Plaintiff claims that its four law firms billed a total of 4,007 hours—the equivalent

of one attorney working 40 hours per week, 50 weeks per year, for two years. Both of Plaintiff’s

requests are excessive, and it has not carried its burden to show that either is reasonable.

The general rule under the EAJA is that “Plaintiffs ‘bear the burden of demonstrating the

reasonableness of each element of their fee request.’” Conservation Force v. Salazar, 916 F.

Supp. 2d 15, 28 (D.D.C. 2013) (quoting Am. Petroleum Inst. v. EPA, 72 F.3d 907, 912 (D.C. Cir.

1996)). “Degree of success is ‘the most critical factor’ in evaluating the reasonableness of a fee

award.” Loving v. IRS, 2014 WL 12778284, at *7 (D.D.C. Sept. 19, 2014) (quoting Hensley v.

Eckerhart, 461 U.S. 424, 436 (1983)). Also, fees may be awarded only for “time reasonably

expended” on the litigation. Porter v. Astrue, 2013 WL 5978623, at *5 (D.D.C. Nov. 2013).

Time that was wasted or otherwise unnecessary for the matter should be excluded. Id. The Court

has wide discretion in reducing fee requests; it may reduce the requested hours by a percentage

or may reduce particular line items in the fee request. Id. Fees must be sufficiently documented

to be allowed. Fabi Construction v. Sec. of Labor, 541 F.3d 407, 411 (D.C. Cir. 2008). As

discussed below, Plaintiff has not carried its burden.

When a litigant, like Plaintiff here, seeks a “bad faith” enhancement of the normal

statutory rates under 28 U.S.C. § 2412(b), the burden is even higher. “[T]he substantive standard

for a finding of bad faith is stringent and attorneys’ fees will be awarded only when

extraordinary circumstances or dominating reasons of fairness so demand.” Ass’n of Am.


17

Physicians & Surgeons, Inc. v. Clinton, 187 F.3d 655, 660 (D.C. Cir.1999) (quotation marks and

citation omitted). “Further, the finding of bad faith must be supported by clear and convincing

evidence, which generally requires the trier of fact, in viewing each party’s pile of evidence, to

reach a firm conviction of the truth on the evidence about which he or she is

certain.” Id. (quotation marks and citations omitted); see also GasPlus, L.L.C. v. U.S. Dep’t of

Interior, 593 F. Supp. 2d 80, 88 (D.D.C. 2009).

Here there are no such extraordinary circumstances. There is no evidence that the United

States acted in bad faith during this litigation. This Court dismissed all of Plaintiff’s claims, and

although two claims were remanded for further proceedings, Plaintiff has now stipulated to the

dismissal of those remaining claims. The parties agreed to settle this litigation under the terms of

the Consent Order: Plaintiff’s attempt to inject a finding of bad faith by the Court against the

United States for the purpose of obtaining attorneys’ fees should be summarily rejected.

Putting aside Plaintiff’s argument for fee enhancement based on bad faith, Plaintiff’s

alternate request for $750,922 is objectionable and excessive for many reasons. The government

will not attempt to go line-by-line through the hundreds of pages of billing statements Plaintiff

filed for its four law firms, but we call the Court’s attention to several transparent issues.

Lack of detail in billing records. Under Kennecott Corp. v. E.P.A., 804 F.2d 763, 767

(D.C. Cir. 1986), “[f]ee applicants bear the heavy obligation to present well-documented

claims.” (citations and internal quotations omitted). Many of the billing records filed in support

of Plaintiff’s application lack sufficient detail. For example, Foley & Lardner, LLP’s records

contain entries in which an attorney billed numerous hours for “Work on IRS issue.” (Doc. 151-9

at 2). From that description, it is impossible to determine what work that attorney performed and

whether the work was reasonable.


18

The adjustments supposedly made by Plaintiff’s counsel to reflect deductions for the

unsuccessful claims in the complaint for damages under I.R.C. § 7431 and for alleged

constitutional violations by individual defendants under Bivens v. Six Unknown Named Agents of

Federal Bureau of Narcotics, 403 U.S. 388 (1971)—see page 24 of the Memorandum—are

inadequately documented. On page 37 of Doc. 151-9, a Foley & Lardner attorney bills 4.30

hours for research “to identify and outline allegations made concerning each defendant,” which

appears to relate to the Bivens defendants. There is no way to verify whether the adjustments

have accurately been made.

Charges for “fundraising” or other non-legal work. Plaintiff asks the government to

pay for work “on fundraising for IRS Litigation costs” and “grant proposal for IRS litigation”

(Doc. 151-9 at 5) and “draft/forward outline regarding IRS Litigation Fund” (Doc. 151-9 at 6).

Those tasks are not compensable because they do not represent legal work.

Possible duplication of efforts. Plaintiff has had four different law firms representing it

in this case: The Public Interest Legal Foundation (“PILF”), The Center for Constitutional

Jurisprudence (“CCJ”), Foley & Lardner (“Foley”), and The Bopp Law Firm, PC (“BLF”).

Multiple attorneys from each firm billed time to the case. PILF, CCJ, and Foley represented

Plaintiff initially, Plaintiff discharged them, and it hired BLF to take over. Plaintiff does not

explain what, if anything, was done to avoid duplication of efforts. It is Plaintiff’s burden to

show that its attorneys worked efficiently.

“Media relations” charges. In the D.C. Circuit, “the government cannot be charged for

time spent in discussions with the press.” Role Models America, Inc. v. Brownlee, 353 F.3d 962,

973 (D.C. Cir. 2004). Foley’s records contain charges for “Receive/review press calls; send

documents to media” (Doc. 151-9 at 2); “press conference call regarding IRS lawsuit”


19

(Doc. 151-9 at 3); “news coverage regarding [IRS employee] Holly Paz” (Doc. 151-9 at 4); and

“appear on Tony Perkins radio show” (Doc 151-9 at 23). Charges of this type are not allowable.

Questionable charges for service of process and electronic legal research.

Although not large, numerous charges appear in connection with service of process on the

individual Bivens defendants. (See Doc. 151-10 at 7 (“Discuss needs for home addresses of

defendants with KLP”).) All of the Bivens charges were dismissed, so these billings should be

disallowed.

Further, Foley seeks more than $17,000 for “electronic legal research” with no

description of when the research was conducted, by whom, or why. (Doc. 151-12 at 5.) That

documentation is insufficiently detailed.

CONCLUSION

Plaintiff does not qualify to receive its requested attorneys’ fees. As an initial matter,

Plaintiff was not the prevailing party in this action. There has been no court-ordered change in

the legal relationship of the parties, Plaintiff has obtained no judgment on the merits in its favor,

and Plaintiff has obtained no judicial relief on the merits. Instead, Plaintiff consented to the

dismissal of its claims in Counts II and V, the only claims that survived both this Court’s prior

order of dismissal and the D.C. Circuit’s ensuing opinion. Even if Plaintiff were a “prevailing

party” within the meaning of the EAJA, it still would not be entitled to an award of attorneys’

fees because the United States was substantially justified in its position that Plaintiff’s claims

were moot. As a result, the United States asks the Court to decline to award Plaintiff any

attorneys’ fees and costs.


20

DATED: March 6, 2018 Respectfully submitted,

RICHARD E. ZUCKERMAN Principal Deputy Assistant Attorney General Tax Division

s/ Joseph A. Sergi JOSEPH A. SERGI (DC 480837) Senior Litigation Counsel U.S. Department of Justice, Tax Division 555 4th Street, N.W., JCB 7207 Washington, D.C. 20001 (202) 305-0868; (202) 307-2504 (FAX) [email protected] LAURA M. CONNER (VA 40388) STEVEN M. DEAN (DC 1020497) JOSEPH R. GANAHL (MD) W. CARL HANKLA (DC 411665) JEREMY N. HENDON (OR 982490) Trial Attorneys U.S. Department of Justice, Tax Division 555 4th Street, N.W. Washington, D.C. 20001 (202) 514-2000

Of Counsel: JESSIE K. LIU United States Attorney ATTORNEYS FOR THE UNITED STATES





CERTIFICATE OF SERVICE

I hereby certify that on March 6, 2018, the UNITED STATES’ OPPOSITION TO

PLAINTIFF’S APPLICATION AND MOTION FOR ATTORNEYS’ FEES, COSTS, AND

EXPENSES was filed with the United States District Court for the District of Columbia via the

Court’s CM/ECF system.

s/ Joseph A. Sergi JOSEPH A. SERGI




v.



Plaintiff’s Reply to United States’Opposition to Plaintiff’s Application andMotion for Attorneys’ Fees, Costs, andExpenses

Plaintiff’s Reply to United States’ Opposition to Plaintiff’s Application andMotion for Attorneys’ Fees, Costs, and Expenses

Pl.’s Reply to Def.’s Opp.To Pl.’s App. And Mot. forAttn’y. Fees, Costs, and Exp. Under EAJA

Table of Contents

Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I. TTV Achieved the Relief Sought in its Litigation Against the IRS Through theConsent Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. TTV Is the Prevailing Party Under the Consent Order. . . . . . . . . . . . . . . . . . . . . . . . . . . 3

A. The Consent Order Carries the Judicial Imprimatur Required UnderBuckhannon to Confer Prevailing Party Status on TTV. . . . . . . . . . . . . . . . . . . . . . 4

B. The Consent Order Specifically Addresses Both Screening by Name and PolicyPositions and Viewpoint Discrimination While the IRS’s ImplementedChanges to Procedures Do Not Address the Underlying ViewpointDiscrimination Which Led to This Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

C. The Consent Order’s Declarations Have Prospective Effect. . . . . . . . . . . . . . . . . . . 7

III. The United States’ Position Is Not Substantially Justified Under the EAJA. . . . . . . . . 12

A. The IRS’s Conduct Underlying This Litigation Cannot Be SubstantiallyJustified. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

B. The DOJ’s Conduct During This Litigation Cannot Be Substantially Justified. . . 16

IV. Special Circumstances Do Not Exist That Make an Award of Attorneys’ Fees Unjust. 17

V. TTV’s Requested Fees Are Not Excessive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

A. TTV Is Entitled to a Bad Faith Enhancement Under the EAJA Because of theIRS’s Conduct That Gave Rise to This Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 20

B. TTV Is Entitled to Enhanced Fees Because of the DOJ’s UnnecessarilyLitigious Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

C. TTV’s Attorneys’ Billing Practices Are Fair and Reasonable. . . . . . . . . . . . . . . . . 22

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Pl.’s Reply to Def.’s Opp.To Pl.’s App. And Mot. forAttn’y. Fees, Costs, and Exp. Under EAJA i

Table of Authorities

Cases

Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res., 532 U.S. 598(2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 5, 6, 21, 22

Blackman v. District of Columbia, 390 F. Supp. 2d 16 (D.D.C. 2005) . . . . . . . . . . . . . . . . . . . . . 8

Cobell v. Norton, 407 F. Supp. 2d 140 (D.D.C. 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 20

Davy v. CIA, 456 F.3d 162 (D.C. Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

DL v. D.C., 187 F. Supp. 3d 1 (D.D.C. 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-10

Gatson v. Bowen, 854 F.2d 379 (10th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Ivy Sports Med., LLC v. Burwell, 174 F. Supp. 3d 130 (D.D.C. 2016) . . . . . . . . . . . . . . . . . . . . 13

Jean v. Nelson, 863 F.2d 759, 776 (11th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

NLRB v. Holsum Bakers of P.R., No. 96-1065, 1998 U.S. App. LEXIS 10650 (D.C. Cir. Apr. 29,1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Oregon Natural Resources Council v. Lyng, 882 F.2d 1417 (9th Cir. 1989). . . . . . . . . . . . . . . . 14

Perez-Arellano v. Smith, 279 F.3d 791 (9th Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Pierce v. Underwood, 487 U.S. 552 (1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 16

Porter v. Astrue, 2013 WL 5978623 (D.D.C. Nov. 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Russell v. Heckler, 866 F.2d 638 (3d Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Taucher v. Brown-Hruska, 396 F.3d 1168 (D.C. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Trahan v. Brady, 907 F.2d 1215 (D.C. Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 14

True the Vote, Inc. v. IRS, 71 F. Supp. 3d 219 (D.D.C. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Pl.’s Reply to Def.’s Opp.To Pl.’s App. And Mot. forAttn’y. Fees, Costs, and Exp. Under EAJA ii

True the Vote, Inc. v. IRS, 831 F.3d 551 (D.C. Cir. 2016) . . . . . . . . . . . . . . . . 2, 10, 14, 16-18, 21

United States v. Wells Fargo Bank, NA, 891 F. Supp. 2d 143 (D.D.C. 2012) . . . . . . . . . . . . . . . . 8

Univ. Legal Servs. Prot. & Advocacy, Inc. v. Knisley, 2006 U.S. Dist. LEXIS 89140 (D.D.C.2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Wilkett v. ICC, 844 F.2d 867 (D.C. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 18

Constitutions, Statutes & Rules

28 U.S.C. § 2412(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

28 U.S.C. § 2412(d)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

28 U.S.C. § 2412(d)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

28 U.S.C. § 2412(d)(2)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

U.S. Const., amend. I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 16

Other Authorities

Internal Revenue Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

TIGTA 2013 Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 14

TIGTA 2015 Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 7, 9, 18

Pl.’s Reply to Def.’s Opp.To Pl.’s App. And Mot. forAttn’y. Fees, Costs, and Exp. Under EAJA iii

On February 20, 2018, Plaintiff True the Vote, Inc. (“TTV”) filed its Application and Motion

for Attorneys’ Fees, Costs, and Expenses Under the Equal Access to Justice Act. On March 6,

2018, Defendant Internal Revenue Service (“IRS”), through its counsel at the U.S. Department of

Justice, Tax Division (“DOJ”), timely responded. On March 8, 2018, this Court granted TTV a

30-Day Extension for its reply. TTV now timely replies.

Argument

I. TTV Achieved the Relief Sought in its Litigation Against the IRS Through the ConsentOrder.

Under the Equal Access to Justice Act (“EAJA”), a “prevailing party shall be awarded

attorneys’ fees and other expenses, . . . unless the court finds that the position of the United

States was substantially justified or that special circumstances make an award unjust.” 28 U.S.C.

§ 2412(d)(1)(A). “Prevailing party” is a legal term of art; the United States Supreme Court has

summarized its view that a “prevailing party is one who has been awarded some relief by the

court . . . .” Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res., 532 U.S.

598, 603 (2001). TTV obtained the relief it sought in the litigation by the Consent Order herein.

On June 7, 2010, TTV organized as a non-profit corporation under laws in the State of Texas.

(First Am.Verified Compl., Doc. 14, ¶ 31). (“Compl.”). Almost immediately, TTV applied for tax

exemption under Section 501(c)(3) with the IRS, and the IRS received TTV’s application no later

than September 23, 2010. (Def.’s Answer, Doc. 117, ¶ 4). However, TTV did not receive its

determination letter granting tax-exempt status until September 20, 2013. Instead of simply

processing TTV’s application in the same manner as all other applications received, the IRS

Pl.’s Reply to Def.’s Opp.To Pl.’s App. And Mot. forAttn’y. Fees, Costs, and Exp. Under EAJA 1

implemented a methodology to target conservative groups for heightened scrutiny, by examining

their names and policy positions. (See Consent Order, Doc. 150, ¶ 8(a),(b),(f)(h)). All of the

conservative organizations that matched the IRS’s screening methodology were subjected to

heightened scrutiny. (Id. at ¶ 8(j)). The IRS’s screening methodology resulted in substantial

delays in processing TTV’s application. (Id. at ¶ 40).

TTV sought various legal and equitable remedies in this litigation, most importantly the

claim that “the existence and application of the IRS Targeting Scheme by the IRS . . . constitutes

blatant viewpoint discrimination in violation of the First Amendment,” for which TTV requested

“[a] declaration that the IRS Targeting Scheme and any other similar policies are unconstitutional

under the First Amendment to the United States Constitution.” (Compl., Doc. 14, at ¶ 156, Prayer

for Relief at ¶ 2 ).1 These requests for declaratory judgments, however, were deemed moot by

this Court, True the Vote, Inc. v. IRS, 71 F. Supp. 3d 219, 229 (D.D.C. 2014), but the D.C.

Circuit reversed, finding the changes the IRS had implemented, referenced in the Treasury

Inspector General for Tax Administration 2013 Report (“TIGTA 2013"), were insufficient to

ensure that the IRS’s discriminatory activity could not recur. See True the Vote, 831 F.3d at 564.

Upon remand, the IRS produced the Treasury Inspector General for Tax Administration 2015

Report (“TIGTA 2015"), which allegedly detailed the types of “permanent” changes the IRS

made after the TIGTA 2013. Through discovery, the IRS provided TTV with parts of its Internal

1 Other relief sought, such as actual and punitive damages were denied by this Court andaffirmed by the United States Court of Appeals for the District of Columbia. See True the Vote,Inc. v. IRS, 831 F.3d 551 (D.C. Cir. 2016).


Revenue Manual (“IRM”), a training manual adopted in October 2015.

https://www.irs.gov/irm/part7/irm_07-020-002r (last checked April 10, 2018). The IRS again

purports the IRM made the type of permanent, irrevocable changes against viewpoint

discrimination TTV sought in this litigation; under the heading “General Case Processing

Considerations,” it reads, “Caution: Review cases based on the activities of an organization, not

on words in a name or labels.” Id. (emphasis in original). While this one subsection of the

training manual cautions against using the methodology of “reviewing cases” based upon names

or labels, it does not address in any way the larger underlying problem in the IRS’s conduct:

viewpoint discrimination. Furthermore, Part 1.2 of the IRM contains broad “policy statements,”

and none of these policy statements address viewpoint discrimination in administering the IRC.

See https://www.irs.gov/irm/part1/irm_01-002-010 (last checked April 10, 2018). Employee

training manuals, and to perhaps a lesser extent, agency policy statements can be changed at any

point. Declaratory judgments by a court, however, carry the force of law.

The Consent Order negotiated between the parties does contain the type of declaratory

judgments against viewpoint discrimination sought by TTV in its Complaint. (See Consent

Order, Doc. 150, ¶¶ 48-50). Therefore, TTV achieved the relief sought in its litigation against the

IRS through the Consent Order and thus is a prevailing party.

II. TTV Is the Prevailing Party Under the Consent Order Because It Changed the LegalRelationship Between TTV and the IRS.

The Consent Order approved by this Court contains a combination of IRS stipulations, Court

findings, and this Court’s declaratory judgments. Taken together, the Consent Order also changes


the legal relationship between TTV and the IRS and confers prevailing party status upon TTV.

The DOJ’s assertions to the contrary have no merit. (U.S. Opp., Doc.152, 4). The Consent Order

makes clear declaratory judgments about the illegality of the type of screening based upon name

or policy positions engaged in by the IRS and about the viewpoint discrimination that TTV was

subjected to by the IRS. (See Consent Order, Doc. 150, ¶¶ 48-50). These carry the judicial

imprimatur required to confer prevailing party status on TTV. The Consent Order addresses the

illegality of the IRS’s viewpoint discrimination, while changes implemented at the IRS only

address “case review” based upon taxpayers’ names. See IRM 7.20.2.2. Therefore, the Consent

Order also carries prospective effect against the IRS if the agency once again subjects TTV to

illegal heightened scrutiny on the basis of its political viewpoint. The Consent Order’s judicial

imprimatur, specific declarations regarding political viewpoint discrimination, and prospective

effect combine to change the legal relationship between TTV and the IRS and confer prevailing

party status on TTV.

A. The Consent Order Carries the Judicial Imprimatur Required Under Buckhannon toConfer Prevailing Party Status on TTV.

The DOJ’s characterization of the Consent Order as a mere judicial pronouncement misreads

the purpose of the Consent Order and both its current and future effects on the parties. (U.S.

Opp., Doc.152, 6). The DOJ relies on Buckhannon’s statement that a judicial pronouncement

unaccompanied by “judicial relief” is not enough to confer prevailing party status on TTV. 532

U.S. at 606. However, the Buckhannon Court stated that “enforceable judgments on the merits

and court-ordered consent decrees create the material alteration of the legal relationship of the


parties necessary to permit an award of attorney's fees.” Id. at 604 (internal citations omitted).

Therefore, a party may be considered a "prevailing party" for the purpose of awarding attorney's

fees with either: (1) an enforceable judgment on the merits; or (2) a settlement agreement

enforceable through a court-ordered consent decree. Perez-Arellano v. Smith, 279 F.3d 791, 793

(9th Cir. 2002). See also, Univ. Legal Servs. Prot. & Advocacy, Inc. v. Knisley, 2006 U.S. Dist.

LEXIS 89140, 9-10 (D.D.C. 2006). A court-ordered consent decree2 does not have to include an

admission of liability to meet the Buckhannon standard to confer prevailing party status. 532 U.S.

at 604.

The DOJ acknowledged that the IRS stipulated that it was “wrong” to subject TTV to

heightened scrutiny, delay, and unnecessary intrusion, but asserts such stipulations do not give

rise to a violation of law. (U.S. Opp., Doc.152, n. 5). The DOJ seems to be arguing that the IRS’s

actions were morally wrong, but not a violation of law or the U.S. Constitution. The Consent

Order, however, does not stop at the IRS’s stipulations to its conduct. This Court, through

declaratory judgments, makes it clear the actions of the IRS are not just morally wrong, but that

“discrimination on the basis of political viewpoint in administering the United States tax code

violates fundamental First Amendment rights.” (Consent Order, Doc. 150, ¶ 50).

The IRS admits it screened TTV’s application based upon its name or policy positions and

then subjected it to heightened scrutiny, inordinate delays, and unnecessary demands. (Consent

2 A “consent order” carries the same judicial imprimatur as a “consent decree.” Davy v.CIA, 456 F.3d 162, 166 (D.C. Cir. 2006) (doubting Buckhannon was “intended to be interpretedso restrictively as to require that the words ‘consent decree’ be used explicitly”).


Order, Doc. 150, ¶ 40). Ten paragraphs after the IRS admits to these actions, this Court declares

such viewpoint discrimination to be unlawful and unconstitutional. (Id. at ¶ 50). The IRS cannot,

on one hand, admit to “mere wrongdoing,” while on the other hand, agree to a Consent Order

which declares such “wrongdoing” to be unlawful and unconstitutional. Therefore, the Consent

Order carries the judicial imprimatur required under Buckhannon to confer prevailing party status

to TTV.

B. The Consent Order Specifically Addresses Both Screening by Name and PolicyPositions and Viewpoint Discrimination While the IRS’s Implemented Changes toProcedures Do Not Address the Underlying Viewpoint Discrimination Which Ledto This Litigation.

The IRS stipulates that it subjected some applicants, TTV included, to heightened scrutiny on

the basis of their names or policy positions. (Consent Order, Doc. 150, ¶ 40). Using “Tea Party,”

“Patriots,” and “9/12” was simply the methodology the IRS used to ferret out conservatives for

the BOLO lists because those names revealed the groups as politically conservative

organizations. (See id. at ¶ 8b). The Court declares these types of actions as unconstitutional. (Id.

at ¶ 50). In order to reach the “absolute assurance” that discrimination will not recur, any IRS

policy implemented to rectify such discrimination should deal directly with prohibiting viewpoint

discrimination, which the IRS has not done.

After the D.C. Circuit rejected the IRS’s voluntary cessation and mootness arguments, this

case was remanded and further discovery was ordered from this Court. (Discovery Order, Doc.

138). The IRS produced documentation regarding its current training and procedures for

applicant screening, which only addressed the case review use of names or labels, not policy


positions or political viewpoints. Supra at 3.This training does not prohibit the consideration of

an organization’s policy positions in its tax-exemption determinations, which was part of the

BOLO screening process, or prohibit discrimination based on the organization’s political

viewpoints which was its goal. Moreover, IRS training procedures are different than policy; IRS

policy statements are in a different section of the manual and these policy statements also contain

no specific prohibition on viewpoint discrimination. Supra at 3.

The IRS also references the TIGTA 2015 as proof of how the IRS’s implemented changes

ensure viewpoint discrimination will not recur. TIGTA 2015 contains audit reviews and findings

of IRS procedures, but does not itself implement any changes at the IRS. See TIGTA 2015 at 2.

TIGTA 2015 reviewed IRS training changes, elimination of BOLO lists, and determination of

applications for tax-exempt status “without regard to specific labels of any kind.” TIGTA 2015 at

8. TIGTA 2015 also reviewed the IRS’s creation of committees to “screen, review, and monitor

emerging issue referrals and to make appropriate recommendations regarding them.” Id. at 8.

However, TIGTA 2015 did not identify any policy which prohibited viewpoint

discrimination. Thus, the IRS changes were not fundamental policy changes, but largely

cosmetic. The Consent Order deals directly with the root problem of the IRS’s viewpoint

discrimination.

C. The Consent Order’s Declarations Have Prospective Effect.

The Consent Order carries prospective effect in the continuing legal relationship between

TTV and the IRS. A consent order has prospective effect when it resolves a legal question or

issue between the parties, is “inextricably intertwined” with an issue of agency non-compliance,


or is one that offers a party post-consent order basis for action. United States v. Wells Fargo

Bank, NA, 891 F. Supp. 2d 143, 146 (D.D.C. 2012) (holding consent order tailored to ending

policies that led to discrimination and to assuring no discrimination recurs); Blackman v. District

of Columbia, 390 F. Supp. 2d 16, 18 (D.D.C. 2005) (finding consent order “inextricably

intertwined" with agency non-compliance, “persistent difficulties” achieving post-consent order

compliance, and plaintiff “prevailed by virtue of Consent Order”); NLRB v. Holsum Bakers of

P.R., No. 96-1065, 1998 U.S. App. LEXIS 10650, at *4 (D.C. Cir. Apr. 29, 1998) (holding

consent order basis for post-consent order action and original prevailing party status).

Here, the IRS implemented a screening methodology which enabled it to discriminate against

organizations based upon their political viewpoint. See (Consent Order, Doc. 150, ¶ 8). TTV’s

legal protection against the IRS’s viewpoint discrimination has been a primary legal concern

throughout this litigation, and the IRS’s implemented changes inadequately protect TTV against

future viewpoint discrimination. Supra at 2, 6-7. However, the Consent Order will protect TTV

in the future, if the IRS’s viewpoint discrimination recurs. Therefore, the Consent Order contains

prospective effect as it resolves a primary legal question between the parties by offering TTV

protection against recurrence of the IRS’s viewpoint discrimination.

Consent Orders offer important protection against future recurrences of the behavior

underlying the litigation when the parties will have an ongoing relationship. DL v. D.C., 187 F.

Supp. 3d 1, 9 (D.D.C. 2016) (suit against D.C. School District for violations of Rehabilitation

Act). The school district asserted the plaintiffs were not the prevailing parties based upon the


declaratory judgments regarding district’s past violations because it had implemented a “web of

policies, safeguards, and personnel” that provided assurances violations would not recur. Id. at 9.

The DL court rejected the school district’s “assurances.” In spite of defendants’ five year

period of sustained compliance, the court held it was not “absolutely clear” there could be no

reasonable expectation of recurrence. Id. at 10. (emphasis added). The court reached this

conclusion by considering that the school district had: (1) complied because of the litigation; (2)

a long history of violations; (3) consistently and completely contested liability; and (4) a large,

complex system that would require great effort to administer properly, and therefore presented a

greater opportunity for recurrence of the violations. See id. at 10, 15 (comparing relatively

simple, physical changes that decrease likelihood of recurrence).

Here, as long as TTV operates as a 501(c)(3) organization, it will have an ongoing

relationship with the IRS because the IRS investigates organizations like TTV to ensure they are

not participating in disallowed political campaign intervention activities. See TIGTA 2015 at 2.

Because of this continuing relationship, the combination of IRS stipulations and this Court’s

declaratory judgments will legally protect TTV from a recurrence of the IRS’s viewpoint

discrimination. See (Consent Order, Doc. 150, ¶ 50).

The IRS subjected TTV to heightened scrutiny, unnecessary questions, and inordinate delays

for nearly three years. (Consent Order, Doc. 150, ¶ 40). The DL court rejected an argument that

declaratory judgments on prior violations have no effect when those violations had been

discontinued for five years. As recently as 2016, the D.C. Circuit ruled the IRS had not


permanently abandoned its use of BOLO lists and other methods of politically-based scrutiny.

True the Vote 831 F.3d at 561 (holding IRS’s “heavy burden requires that they establish

cessation, not near cessation).

The IRS’s arguments in its Opposition align with the same resistance it showed at the late

stages of this litigation. On April 6, 2017, this Court held a hearing to determine issues related to

discovery. (Tr. of Mot. Hr’g, Doc. 139). This Court asked the attorney for the DOJ, “[y]ou’re not

suggesting that there was not inappropriate targeting of conservative groups are [you]?” The

IRS’s counsel equivocated in its answer, “Your Honor, no one, no one disputes that what the IRS

did was wrong. But at the same time, that still does not answer whether that arose to a level of

constitutional violation.” (Id. at 28-29). The defendant’s resistance to an admission of liability on

past violations led the DL court to find an increased likelihood of recurrence. DL, 187 F. Supp.

3d at 10. On one hand, the IRS wants this Court to discount the declaratory judgments in the

Consent Order as inapplicable to the IRS’s past actions because it promises never to reinstate the

practices which led to this litigation. (U.S. Opp., Doc.152, 6). On the other hand, it also

continues to deny the illegality and unconstitutionality of its actions which led to this litigation.

The DL court was right to look skeptically at a defendant who promises to continue to act legally,

but who also denies liability for the actions which forced the litigation. The same skepticism is

warranted here.

The IRS is a large and complex organization, with over 75,000 full-time positions.

https://www.irs.gov/statistics/irs-budget-and-workforce (last visited April 3, 2018). The D.C.


school district the DL court characterized as “complex” has just under 10,000 employees. See

https://dcps.dc.gov/sites/default/files/dc/sites/dcps/publication/attachments/FY16_DCPS_School

_Budget_Overview.pdf (last visited April 3, 2018). The DL holding shows the complexity of the

IRS lends itself to an increased risk that mismanagement or improper oversight could lead to a

recurrence of viewpoint discrimination.

The IRS granted TTV its tax-exempt status within months of this litigation’s commencement,

after three years of heightened and unnecessary scrutiny based upon its political viewpoint. The

IRS continues to characterize this heightened scrutiny as merely wrong, but denies its past

actions were found to be illegal or unconstitutional. The IRS asserts this Court’s declaratory

judgments in the Consent Order do not apply to the IRS’s past actions and do not carry

prospective effect which changes the legal relationship between the IRS and TTV. The amount of

oversight necessary for the IRS to maintain non-discriminatory policies and procedures makes it

more likely such discrimination could recur, and makes the Consent Order more effective in its

protection of TTV. All of these factors mean the Consent Order’s declarations have prospective

effect.

The Consent Order: (1) carries the judicial imprimatur required under Buckhannon; (2)

specifically addresses viewpoint discrimination which the IRS does not in its implemented

changes; and (3) has prospective effect. For all of these reasons, TTV is the prevailing party.3

3 The DOJ argues that because Counts II and V of TTV’s complaint were dismissed withprejudice, TTV cannot prevail on claims the court dismissed. (U.S. Opp., Doc.152, 6). Theparties agreed to dismiss the remaining claims with prejudice because they had reached an


III. The United States’ Position Is Not Substantially Justified Under the EAJA.

For a prevailing party to obtain an award of attorney’s fees under the EAJA, the position of

the United States must not be substantially justified. § 2412(d)(1)(B). The United States carries

the burden to justify both its conduct which led to the litigation and its litigation position to the

extent that the justification would satisfy a reasonable person. Pierce v. Underwood, 487 U.S.

552, 565 (1988) (emphasis added). However, the Court cautioned substantially justified means

“more than merely undeserving of sanctions for frivolousness” because the sanction standard is

not the standard “of which a reasonable person would approve.” Id. at 566.

The DOJ asserts its position defending this action was substantially justified. (U.S. Opp.,

Doc.152, 9). The DOJ virtually ignores the IRS’s conduct underlying the litigation, and urges

that only the changes to its “complained-of conduct” should be considered. (Id. at 13). The

DOJ’s analysis of subsequent changes misapplies the legal standard for determining whether the

government was substantially justified. The DOJ focuses primarily on its argument that its

mootness defense was justified. However, the DOJ still shows resistance to the D.C. Circuit

ruling which rejected the mootness argument. Infra. at 16. In addition, the DOJ, as late as 2017,

continued to question whether the IRS conduct was even a constitutional violation, in direct

contradiction to the D.C. Circuit’s decision. Supra at 10.

agreement regarding the stipulations and court declarations. See (Consent Order, Doc. 150, ¶ 47).Consent Orders necessarily bring an end to litigation, which requires a dismissal of claims. Thisdismissal with prejudice is not the same as a court dismissal due to lack of merit and does notdeprive TTV of prevailing party status.


The government agency will necessarily have lost at least part of its case if the substantial

justification question is reached. Taucher v. Brown-Hruska, 396 F.3d 1168, 1173, (D.C. Cir.

2005). The court does not re-litigate, but makes one threshold determination regarding the

government’s substantial justification for both the underlying agency conduct and the subsequent

defense of that conduct; however, one part of the analysis does not swallow the other. See Ivy

Sports Med., LLC v. Burwell, 174 F. Supp. 3d 130, 140 (D.D.C. 2016); see also Taucher, 396

F.3d 1168; Trahan v. Brady, 907 F.2d 1215, 1218 (D.C. Cir. 1990). To support its position that a

threshold analysis by this Court should “appropriate[ly] focus” on whether its mootness argument

was substantially justified, the DOJ relies primarily on Ivy Sports Med., Taucher, and Trahan.

(U.S. Opp., Doc.152, 9-10). Contrary to the DOJ’s assertion; however, these courts do not

“focus” only on the defense arguments made during the litigation, but also analyze the

reasonableness of the underlying government conduct. See Ivy Sports Med., 174 F. Supp. 3d at

145-46 (determining government substantially justified in rescinding approval for medical device

and defense based on statutory interpretation, administrative law, and legislative history);

Trahan, 907 F.2d at 1219-20 (holding government reasonable in interpretation regarding contents

of consent form and defense based upon available law at time); Taucher, 396 F.3d at 1175-76

(finding reasonable government registration of publishers and defense as no controlling

precedent existed).

Neither the IRS’s discriminatory conduct which led to this litigation, nor the DOJ’s actions

during the litigation can be justified, and the IRS must justify both. Therefore, the IRS’s position


is not substantially justified under the EAJA.

A. The IRS’s Conduct Underlying This Litigation Cannot Be Substantially Justified.

The IRS’s conduct underlying this litigation began in 2010, not in 2012 or 2013. (Consent

Order, Doc. 150, ¶ 8). Targeting names and policy positions (such as concern about government

debt) was the methodology used to discriminate based upon political viewpoint. Supra at 6. It is

not only a hypothetical “reasonable person” under Pierce who would deem the underlying IRS

conduct as unjustified. The D.C. Circuit recognized that the IRS “utterly failed” in its mission to

“apply tax law with integrity and fairness to all” and such discriminatory conduct could not be

defended. True the Vote, 831 F.3d at 559, 561 (referencing TIGTA 2013 at 6-7). When the

agency action underlying the litigation is “patently unreasonable,” the EAJA clearly supports a

finding that the government is not substantially justified. Trahan, 907 F.2d at 1219 (citing, inter

alia, Oregon Natural Resources Council v. Lyng, 882 F.2d 1417, 1428 (9th Cir. 1989); Russell v.

Heckler, 866 F.2d 638, 640 (3d Cir. 1989); Gatson v. Bowen, 854 F.2d 379, 380-81 (10th Cir.

1988); Wilkett v. ICC, 844 F.2d 867, 872 (D.C. Cir. 1988)).

The DOJ virtually ignores any substantial justification analysis of the IRS’s conduct

underlying this litigation and instead focuses its analysis of whether the DOJ’s mootness

argument during the litigation was justified. (U.S. Opp., Doc.152, 9-13). The analysis of the

DOJ’s mootness argument is analyzed in the next section. Infra. at 16. However, the DOJ does

state, “[e]ven if the IRS’s administrative conduct is considered, and because mootness was the

United States’ position, the appropriate focus is what the agency did to change the complained-of


conduct.” (U.S. Opp., Doc.152, 13) (analysis of changes supra at 3,6,7).

The DOJ’s focus on what the agency did to change its conduct completely misreads the

substantial justification standard under the EAJA and court precedent. The standard under the

EAJA is clear: the government must be substantially justified in both its conduct underlying the

litigation and in its defense of those actions. Cobell v. Norton, 407 F. Supp. 2d 140, 152 (D.D.C.

2012) (emphasis added). The DOJ wants to start the analysis clock for the underlying actions at

the point it allegedly began to change its “complained-of conduct.” (U.S. Opp., Doc.152, 13).

The clock for the underlying conduct did not start in 2012, when the IRS began to take some

inadequate steps toward corrective action.4 The underlying conduct began in 2010, when TTV

was subjected to heightened scrutiny because of its political viewpoint. (Consent Order, Doc.

150, ¶¶ 8, 40). This Court’s analysis of whether the IRS’s underlying actions would satisfy a

reasonable person that such actions were substantially justified must begin when the heightened

scrutiny began, not when the agency partially addressed some of the underlying issues.

The IRS’s systematic application of heightened scrutiny and inordinate delays to tax-exempt

applicant organizations based upon their political viewpoints are the underlying actions to this

litigation, and these actions are patently unreasonable. Because they are patently unreasonable,

4 The DOJ states that the IRS actions allegedly lasted for only 18 months and endedbefore, not after, Lois Lerner’s apology in May 2013 detailed in the Consent Order. (U.S. Opp.,Doc.152, n.7). While the 18 month period detailed in ¶ 8 of the Consent Order did occur prior toMs. Lerner’s apology, the fact remains that TTV was subjected to delays in its application evenafter this apology, not receiving its tax-exempt status until September 2013. As discussed supraat 10, the D.C. Circuit held in 2016, that the IRS had not permanently ceased this scrutiny, andthe Consent Order’s declaratory judgments were necessary to protect TTV. Supra at 7-11.


the DOJ cannot show that it can satisfy a reasonable person that the IRS’s actions were

“substantially justified.” As a result of the DOJ’s failure to show the substantial justification of

the IRS’s actions, TTV is entitled to an award of attorneys’ fees under the EAJA.

B. The DOJ’s Conduct During This Litigation Cannot Be Substantially Justified.

The Pierce standard also requires the DOJ to show its actions during the litigation would

“satisfy a reasonable person.” Pierce, 487 U.S. at 565. (emphasis added). This litigation

commenced in 2013, three years after TTV was subjected to heightened scrutiny (Verified

Compl., Doc. 1). The IRS could have permanently ceased systemic discrimination for all

organizations, including TTV, at any point in those three years. It did not do so.

Instead, the DOJ argued for five years that TTV’s claims should be dismissed for mootness.

(Mem. of P.&A., Doc. 151-8, 15-16). The D.C. Circuit rejected this argument, not only for

organizations whose applications still remained pending, but for TTV as well. True the Vote, 831

F.3d at 554, 561-63 (holding differences in factual detail immaterial to ultimate decision and

statements of law applicable to Linchpins and TTV). Finding that the IRS had merely “suspended

[its discriminatory practices] until further notice,” the D.C. Circuit ruled suspension did not

equate to permanently abandoning such practices. See id. Even today, the DOJ states, in direct

contradiction to the D.C. Circuit’s ruling, “[r]egardless of the status of any of the Linchpins

plaintiffs’ applications, True the Vote’s application was granted in 2013, and its claims were

moot as of that time.” (U.S. Opp., Doc.152, 13).

The DOJ argues that the defense of mootness was justified at the instant TTV received its


tax-exempt status and when the IRS began to implement some inadequate changes in procedures.

Id. This argument contradicts the D.C. Circuit’s holding. True the Vote 831 F.3d at 561-563. In

2016, the D.C. Circuit was quite aware that TTV had already been granted its tax-exempt status

yet still ruled that the “suspension until further notice” could be revoked at any time by the IRS.

Id. Then, TTV could once again be subjected to the type of viewpoint discrimination that the

court termed “a blatant violation of the First Amendment.” Id. at 561.

The IRS still resists what the D.C. Circuit unequivocally stated in its opinion. As recently as

2017, the DOJ questioned whether what the IRS did “arose to a level of constitutional

violation.”Supra at 10. However, that “question” had in fact been answered when the D.C.

Circuit deemed administering the tax code with viewpoint discrimination “a blatant violation of

the First Amendment.” True the Vote, 831 F.3d at 561. Because of its resistance to both the

mootness ruling of the D.C. Circuit and that the IRS’s actions were constitutional violations, the

DOJ cannot show that it can satisfy a reasonable person that the IRS was “substantially justified”

in its actions during the litigation. Therefore, the United States’ position is not substantially

justified under the EAJA.

IV. Special Circumstances Do Not Exist That Make an Award of Attorneys’ FeesUnjust.

If special circumstances exist to make an award of fees unjust, the court may refuse fees,

even if the “prevailing party” and the “no substantial justification” elements are satisfied.

§ 2412(d)(1)(A). This equitable provision of the EAJA is designed to ensure the government is

not “deterred from advancing in good faith the novel but credible extensions and interpretations


of the law that often underlie vigorous enforcement efforts.” Wilkett, 844 F.2d at 873 (internal

citations omitted). The DOJ asserts that awarding TTV attorneys’ fees would be unjust due to

TTV’s “limited success” and the procedural posture of this case but ignores the legal and

equitable principles described in Wilkett. (U.S. Opp., Doc. 152, 15).

For the IRS, “vigorous enforcement” efforts include determining whether an organization has

participated in political campaign activities that are disallowed. See TIGTA 2015 at 3. However,

the IRS and DOJ actions discussed go far beyond the “vigorous enforcement efforts” envisioned

by Wilkett. Supra at 1-2 . The IRS engaged in a methodology based upon names and policy

positions that was used to subject certain applicants to viewpoint discrimination. (See Consent

Order, Doc. 150, ¶¶ 8, 40). The D.C. Circuit made it clear that the IRS utterly failed in its

mission to apply the tax laws of this nation fairly and equitably and that the IRS’s discriminatory

actions could not be defended. True the Vote, 831 F.3d at 559-61.The DOJ, however, ignores

how far the IRS strayed from proper enforcement efforts in its conduct.

Instead, the DOJ argues that an award of nearly $2 million is “unjust” because of the

“limited success” of TTV and the procedural posture of the case. (U.S. Opp., Doc. 152, 15).

However, as explained, TTV obtained the relief it sought. Supra at 1-3. The DOJ claims this

litigation did nothing to cause the IRS to change its conduct. Id. This argument ignores that the

IRS’s lame attempt to change its conduct did nothing to permanently remedy the situation. Supra

at 2-3. The DOJ also continues to assert TTV’s claims were moot in 2013, (U.S. Opp., Doc. 152,

13), and questioned, as late as 2017, whether the IRS’s actions “arose to a level of constitutional


violation.” (Tr. of Mot. Hr’g, Doc. 139, 29). In the face of a Consent Order protecting TTV’s

constitutional rights, the DOJ still asserts this litigation caused no change in the IRS’s conduct or

any change to the legal relationship between the IRS and TTV. (U.S. Opp., Doc. 152, 2,15).

These allegations are meritless. The Consent Order ensures TTV that it will never again be

subjected to viewpoint discrimination in violation of its constitutional rights. See Supra at 7-11.

Assurance of its constitutional rights was one of TTV’s primary claims in this litigation. Supra at

2. TTV does not consider the sought-after, court-ordered assurance of its constitutional rights to

be “limited success.”5

Thus, the IRS actions that went far beyond vigorous enforcement, the Consent Order’s

assurances of TTV’s rights, the DOJ’s continued claims of mootness, the DOJ’s recent

questioning of whether constitutional violations occurred, and TTV’s specific reservation of the

right to ask for fees eliminate “special circumstances” that would make an award unjust.

Refusing TTV an award of fees in the face of these circumstances would itself be manifestly

unjust.

5 The DOJ also argues that an award would be unjust because several of TTV’s claims“did not survive a motion to dismiss” and because 38 Linchpins plaintiffs were dismissedwithout an award of attorneys’ fees. (U.S. Opp., Doc. 152, 2,15). TTV accounted for thedismissals by removing the time and fees for unsuccessful claims from its calculations. (Mem. ofP. & A., Doc. 151-8, at 24). Linchpins plaintiffs waived their rights to such fees in the ConsentOrder ending that litigation. (Case No. 1:13-cv-00777-RBW, Doc. 143, ¶ 48). TTV made no suchwaiver, and in fact, specifically reserved its right to seek an award of attorneys’ fees under “anyapplicable law.” (Consent Order Cover Letter, Doc. 151-17). TTV should not be denied feessimply because it reserved the right to do so when other similar plaintiffs did not, for reasonsunbeknownst to this Court.


V. TTV’s Requested Fees Are Not Excessive.

TTV is entitled to an enhanced attorney fee under the EAJA, and the requested rates are fair

and reasonable given the totality of the circumstances. The EAJA’s statutory fee ceiling may be

increased if this Court determines either: (1) the IRS acted in bad faith, and TTV is entitled to an

enhanced fee under § 2412(b); or (2) the IRS and DOJ were unnecessarily litigious, and TTV is

entitled to an enhanced fee under § 2412(d)(2)(A).

A. TTV Is Entitled to a Bad Faith Enhancement Under the EAJA Because of the IRS’sConduct That Gave Rise to This Litigation.

A bad faith enhancement to fees under § 2412(b) may be awarded when the government

acted “vexatiously, wantonly, or for oppressive reasons.” See Cobell, 407 F. Supp. 2d at 167.

Actions in an “aspect of the conduct giving rise to the litigation” can justify a bad faith fee

enhancement. Id. 168. The DOJ argues that TTV should not be awarded a bad faith enhancement

because TTV must show, by clear and convincing evidence, that “extraordinary circumstances or

dominating reasons of fairness so demand” and there is “no evidence that the United States acted

in bad faith during this litigation.” (U.S. Opp., Doc. 152, 17) (emphasis added). This conclusion

misstates both the law surrounding a bad faith enhancement and TTV’s arguments supporting the

bad faith enhancement. TTV did not claim that it was due the bad faith fee enhancement because

of the IRS’s actions during this litigation in either its initial application for fees or in this reply.

The IRS’s bad faith actions occurred in the IRS’s conduct which gave rise to the litigation, as

Cobell supports. See 407 F. Supp. 2d at 168. The record is replete with admissions and examples

of the IRS’s conduct which gave rise to this litigation. See Supra at 1-2 . The viewpoint


discrimination applied to conservative groups was egregious and obvious, causing the D.C.

Circuit to characterize the IRS’s discriminatory conduct as an “utter failure” and indefensible.

True the Vote, Inc., 831 F.3d at 559, 561.

The public officers at the IRS did not act as servants and agents of the people, nor did they

act within the limits of the U.S. Constitution. Instead, they subjected TTV to heightened scrutiny

because of its political viewpoint. TTV is entitled to a bad faith enhancement under the EAJA

because of the IRS’s discriminatory conduct that gave rise to this litigation.

B. TTV Is Entitled to Enhanced Fees Because of the DOJ’s Unnecessarily LitigiousActions.

Enhanced rates may be awarded under § 2412(d)(2)(A) if the court finds a “special factor”

justifies such an enhancement. The government’s “unusually litigious position” constitutes such

a special factor if it can be shown that its aggressive strategy was adopted in order to deter

attorneys subject to a statutory cap to operate at a loss. Jean v. Nelson, 863 F.2d 759, 776 n. 13

(11th Cir. 1988).

The DOJ completely ignores TTV’s arguments regarding this special factor enhancement.

(See U.S. Opp., Doc. 152, 16-19). For over five years, the DOJ has continued to litigate when

there was “little factual dispute” between the parties as to the IRS’s conduct. True the Vote, 831

F.3d at 555. It has now been almost eight years since the IRS began taking discriminatory actions

against TTV on the basis of its political viewpoint. (See Consent Order, Doc. 150, ¶ 8). The DOJ

continues to argue TTV’s claims were moot as of 2013. (U.S. Opp., Doc. 152, 13). The DOJ, in

2017, questioned whether this viewpoint discrimination was really a constitutional violation, in


direct opposition to the conclusion of the D.C. Circuit. (Tr. of Mot. Hr’g, Doc. 139, 29). This

stubborn refusal to acknowledge that TTV’s claims were not moot or to acknowledge the IRS

violated TTV’s constitutional rights, forced TTV, a small organization with limited resources, to

litigate against the vast power and resources of the DOJ for five years. This unnecessarily

protracted litigation position, the statutory rate cap, and the disparity in resources virtually

guaranteed TTV would be forced to rely on its attorneys to ultimately operate at a loss. TTV is

entitled to a special factor enhancement under § 2412(d)(2)(A) because of the IRS’s

unnecessarily litigious actions.

C. TTV’s Attorneys’ Billing Practices Are Fair and Reasonable.

TTV’s Application details the billing records, calculations, and rate adjustments for

unsuccessful claims and non-legal work, offers proof of the attorneys’ skill, and demonstrates

LSI Laffey Rates are the proper rates to use. (See Mem. of P.&A., Doc. 151-8, 23-28).

The DOJ makes a conclusory assertion that the number of hours TTV’s counsel worked on

the five years of litigation are excessive, but its own claims of mootness and resistance to

constitutional declarations contributed significantly to the hours claimed. (U.S. Opp., Doc. 152,

16); See Supra at 21-22. TTV maintains its detailed documentation and evidence of the

attorneys’ skills justify the hours and rates sought. This Court does have wide discretion in

reducing fee requests, if it finds that a portion of TTV’s requests should be excluded. Porter v.

Astrue, 2013 WL 5978623, at *5 (D.D.C. Nov. 2013).

Lack of detail in billing records. “Works on IRS issue” occurs in May 2013, before TTV’s


complaint was filed. (Foley Billing Records, Doc. 151-9, 2)6. This description is completely

appropriate as TTV’s counsel was analyzing which, if any claims, it would assert in the

complaint. If the court in its discretion reduces for these descriptions, the total is 18.3 hours

($13,779.90 LSI rates; $3,422.46 EAJA statutory rates).

Adjustments for Unsuccessful Claims. Foley had a total of 29.5 hours that were related to

unsuccessful claims7 and inadvertently charged ($17,480.00 LSI rates; $5,546.79 EAJA statutory

rates). (Foley Billing Records, Doc. 151-9, 2, 3, 9, 14, 19, 20, 25, 29, 37, 45, 46, 47, 61, 68, 84,

99, 113, 114, 116). PILF had a total of 64 hours that were related to unsuccessful claims and

inadvertently charged ($17,497.80 LSI rates; $11,606.87 EAJA statutory rates).(PILF Billing

Records, Doc. 151-10, 7, 9, 10, 11, 14, 23, 25, 27, 28, 29, 30, 32, 34, 35, 36, 37, 38, 39, 40, 42,

43, 44, 47, 50, 59, 70, 72, 74, 81, 82, 83, 89, 94, 95, 107, 156).

Charges for “fundraising” or other non-legal work. In both fundraising instances the DOJ

references, (U.S. Opp. to Pl.’s App., Doc. 152, 18), the time has been adjusted to zero and no

charges were claimed. TTV has found exactly one other fundraising line item, totaling 0.4 hours

that was inadvertently charged ($308.80 LSI rates; $76.02 EAJA statutory rates). (Foley Billing

Records, Doc. 151-9, 56).

6 The page number cited refers to the firm’s LSI rates record. The corresponding EAJArecord with the identical narrative has not been re-cited to reduce confusion.

7 In the interest of justice and thoroughness, TTV once again reviewed all four firms’billing records for unsuccessful claims, fundraising, media, and other non-legal work; the vastmajority had already been properly reduced. Inadvertent charges related mostly to the claimssurrounding individual defendants and have been corrected herein.


Possible duplication of efforts. This Court can determine, through the detailed narratives,

when the firms collaborated and when they worked separately on various issues and stages of the

litigation, but in any instance, the records provide documentation of efficient work. See ([Firm]

Billing Records, Docs. 151-9, -10, -11, -13).

Media relations charges. - Foley had a total of 8.2 hours related to media or press and

inadvertently charged (including two charges referenced in (U.S. Opp. to Pl.’s App., Doc. 152,

19); ($6,375.40 LSI rates; $1,549.68 EAJA statutory rates). (Foley Billing Records, Doc.

151-9,4,23,52,53,85,89). PILF had a total of 5.5 hours that were related to unsuccessful claims

and inadvertently charged ($2,231.00 LSI rates; $1,033.77 EAJA statutory rates). (PILF Billing

Records, Doc. 151-10,4,5,8,9,10,12,35,36,37,99).

Questionable charges for service of process and electronic legal research. The

questionable charges for service of process referenced in (U.S. Opp. to Pl.’s App., Doc. 152, 19)

are accounted for in the unsuccessful claims. Supra at 23. The total charged for electronic legal

research is $21,674.39. TTV suggests it should, at the most, be reduced by 50%, or $10,837.20,

to account for the research surrounding unsuccessful claims.

Only 107.68 out of the 4,007 hours billed by the four firms are related to unsuccessful claims,

fundraising, or media that the DOJ asserts as improper. That is only 2.6% of the total hours

billed, which shows TTV’s billing practices are fair and reasonable. The total LSI reduction is

8 Total does not include the 18.3 hours discussed in the lack of detail section, supra at 23,but does include the 50% suggested reduction for electronic legal research.


$54,730.20; the total EAJA statutory rate reduction is $30,650.33. Therefore, TTV now requests

a total enhanced LSI fee of $1,879,157.86, or a total EAJA statutory rate fee of $720,272.46.

Conclusion

TTV achieves the relief sought in this litigation against the IRS through the Consent Order,

which changes the legal relationship between TTV and the IRS and carries the judicial

imprimatur required under Buckhannon. The Consent Order has prospective effect because it

specifically addresses both name and viewpoint discrimination while the IRS’s implemented

changes to procedures do not address the underlying political viewpoint discrimination which led

to this litigation. Therefore, TTV is the prevailing party. The United States’ position is not

substantially justified under the EAJA because the DOJ cannot show either the IRS’s underlying

actions or its own actions during the litigation were substantially justified. Special circumstances

do not exist that make an award of attorneys’ fees unjust. TTV’s requested fees are not excessive

because either it is entitled to a bad faith enhancement due to the IRS’s underlying conduct, or it

is entitled to a special factor enhancement due to the DOJ’s unnecessarily litigious actions.

Finally, TTV’s billing records are fair and reasonable. Therefore, TTV is entitled to the

attorneys’ fees, costs, and expenses of $1,879,157.86 (LSI) or $720,272.46 (EAJA statutory

rates).


April 11, 2018 Respectfully submitted,

/s/ James Bopp, Jr.

James Bopp, Jr. (D.C. Bar No. CO0041)Courtney Turner Milbank*THE BOPP LAW FIRM, P.C.The National Building1 South 6th StreetTerre Haute, Indiana 47807(812) 232-2434(812) 235-3685 (fax)Attorneys for Plaintiff*Admitted pro hac vice



I hereby certify that on April 11, 2018, I caused the Plaintiff’s Reply to United States’

Opposition to Plaintiff’s Application and Motion for Attorneys’ Fees, Costs, and Expenses in the

above captioned matter to be filed with the United States District Court for the District of

Columbia via the Court’s CM/ECF system.


plaintiff’s application and motion for attorneys’ fees

Documents