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UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF VIRGINIA

The NATIONAL ORGANIZATION FOR

MARRIAGE, INC.,

Plaintiff ,

v.

The UNITED STATES OF AMERICA,INTERNAL REVENUE SERVICE,

Defendant .

Civ. No. 13-cv-1225-JCC/IDD

REPLY MEMORANDUM IN SUPPORT OF MOTION FOR ATTORNEYS FEES

Plaintiff the National Organization for Marriage, Inc. (NOM), through counsel, hereby

submits this reply memorandum in support of its Motion for Attorneys Fees (Dkt. 91, the

Motion).

ARGUMENT

I. NOM Is a Prevailing Party Because It Has Substantially Prevailed with Respectto the Amount in Controversy and the Most Significant Issue.

A. The Governments Suggested Methodology for Calculating the Amount inControversy Is Inconsistent with the Intent of Section 7431, WouldUnnecessarily Protract Litigation, and Is Otherwise Logically Flawed.

The Government asserts that the amount in controversy must include NOMs claim for

$50,000 in lost donations, a claim NOM voluntarily dropped early in the litigation to protect the

First Amendment rights of its donors. (Motion at 7 n.2; United States of Americas Response in

Opposition to Plaintiffs Motion for Attorneys Fees (Dkt. 92) at 5 (Opp.).) The Governments

positionfor which it provides no legal supportis flawed for several reasons.

Case 1:13-cv-01225-JCC-IDD Document 93 Filed 08/15/14 Page 1 of 21

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First, the Governments position is defeated by the text of the statute, which uses the

phrase amount in controversy . 26 U.S.C. 7430(c)(4)(i)(I) (emphasis added). The Government

was not obligated to defend against the lost donation claim and it was not presented to this Court

for resolution on summary judgment. Rather, NOMs claim for lost donations was voluntarily

withdrawn early in this litigation and therefore was not in controversy.

Second, adoption of the Governments methodology would undermine the intent of the

statute by placing successful plaintiffs at a severe disadvantage in seeking attorneys fees. While

an insubstantial award is not dispositive, Don Johnson Motors, Inc. v. United States , No. B-06-

047, 2008 U.S. Dist. LEXIS 36594, 10 (S.D. Tex. Mar. 14, 2008), courts have often assessedwhether [the] Plaintiff substantially prevailed on the amount in controversy by calculating the

percentage of the amount in controversy the Plaintiff successfully received, id at 13 n.6. Under

the Governments methodology, the value of the denominator in such a calculation would be a

value that the plaintiff could not have received and would include claims for damages against

which the Government was not obligated to defend. Conceivably, a recovery of even 100 percent

of the damages pursued at trial could be rendered insubstantial if the complaint alleged additional

damages that were voluntarily withdrawn for reasons unrelated to the merits of the case.

Third, the Governments preferred methodology would unnecessarily protract discovery

and trials because it would penalize plaintiffs who, before or during discovery, attempt to narrow

the scope of the dispute by withdrawing damages claims they no longer wish to pursue. The

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Governments position would leave plaintiffs with little choice but to pursue all damages claims

to final resolution lest they render themselves ineligible for attorneys fees. 1

B. NOMs Recovery in this Case Is Substantial.

NOM ultimately recovered $50,000 in actual damages, a recovery of approximately 85

percent of the final value sought ($58,586.37), and 50 times the offer made by the Government

($1,000). NOMs recovery is not disproportionally low, Mallas v. United States , 876 F. Supp.

86, 89 (M.D.N.C. 1994), but is substantial, Reynoso v. United States , No. 10-00098, 2011 U.S.

Dist. LEXIS 87929, 8 (N.D. Cal. Aug. 9, 2011) (Plaintiff thus recovered eighty-one percent

of the amount in controversy in this action and has substantially prevailed under section 7430).The Government has cited no cases where an unspecified request for punitive damages

was included in the calculation of the amount in controversy. Aside from avoiding speculation,

there are good reasons not to include them. Punitive damages further a States legitimate

interests in punishing unlawful conduct and deterring its repetition. State Farm Mut. Auto. Ins.

Co. v. Campbell , 538 U.S. 408, 416 (2003). Yet, the Government advances a scheme that could

stifle these interests by deterring plaintiffs from seeking even unspecified punitive damages in

the first instance. Indeed, the Government believes this Court should use at least a 2:1 multiplier

to calculate punitive damages in this case. (Opp. at 10.) According to the Government, then, a

plaintiffs failure to defeat a summary judgment motion on a punitive damages claim would erect

a categorical bar to a plaintiffs eligibility for attorneys fees, even if actual damages are

1 If the Governments position is adopted, punitive damages, if they are included at all, should beincluded at no more than a nominal value, as they were never reduced to an amount in NOMs

pleadings. ( See Opp. at 9 (citing Don Johnson , 2008 U.S. Dist. LEXIS 36594 at 7).)

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recovered in full. (Opp. at 11-12 (suggesting that any recovery less than fifty percent is not

substantial).) 2

C. The Most Significant Issue in this Litigation Was the Unauthorized

Disclosure of NOMs 2008 Schedule B. Focusing on one introductory paragraph in NOMs Complaint, the Government attempts

to paint NOMs lawsuit as being primarily about theories of willfulness and gross negligence.

(Opp. at 12 (citing Compl. 2).) To be sure, based on the information available to it, NOM

reasonably believed that the disclosure of its donor list was intentional or the result of gross

negligence. Supra n.2. But the inclusion of those theories in the Complaint does not change the

fact that this lawsuit was pursued primarily to establish definitively that the IRS was responsible

for the disclosure and subsequent publication of NOMs confidential donor list and to recover

damages. The Government conveniently ignores the 27 paragraphs of the Complaint that discuss

NOMs exhaustive efforts to simply determine whether the IRS made the disclosure, and who at

the IRS was responsible for it (Compl. 45-71), as well as the 8 paragraphs discussing the

actual damages sustained as a result of the disclosure, ( id . 29-36), which damages remain the

same regardless of whether the disclosure was the result of negligence or willfulness.

2 Even those with seemingly meritorious punitive damages claims may be deterred from seekingthem under the Governments scheme. As was the case with NOM, the victim of an unlawfuldisclosure or inspection may be unable to ascertain the full facts and circumstances of thatdisclosure or inspection prior to filing suit, due to no fault of his own. At the time NOM filed thiscase, it knew that its chief political enemy, the Human Rights Campaign (HRC), had obtained,from a whistleblower, NOMs 2008 Schedule B, which contained internal IRS markings.Though the Government knew for nearly two years prior that the disclosure of NOMs 2008

Schedule B was actually made to Matthew Meisel, apparently as a result of mere negligence, theGovernment withheld that information from NOM until after NOM filed this suit, despite

NOMs repeated requests for such information via the Freedom of Information Act (FOIA).The facts available to NOM at the time it filed this case strongly supported NOMs belief that thedisclosure was intentional and thus justified NOMs request for punitive damages. And then,during discovery, Mr. Meisel and individuals associated with HRC asserted their FifthAmendment rights and refused to answer discovery questions.

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Not until the Government forced NOM to file this action did the Government admit that

it disclosed one copy of Plaintiffs 2008 Form 990 unredacted Schedule B to a single third

party in violation of law. (Dkt. 33 78.) And even then, the Government denied responsibility

for all of NOMs damages and did not reveal any details concerning the U.S. Treasury Inspector

General for Tax Administrations (TIGTA) investigation until served with discovery requests.

The Governments belated concessions do not change the fact that this lawsuit was filed

primarily to prove that the IRS was guilty of an unauthorized disclosure of confidential tax return

information. On that issue, NOM substantially prevailed. See Wilkerson v. United States , 67 F.3d

112, 120 (5th Cir. 1995) (A victory on the primary issue will suffice[.]).The Government attempts to distinguish Huckaby v. United States Dept of Treasury , 804

F.2d 297 (5th Cir. 1986) on the grounds that Huckaby did not concern whether the disclosure

. . . resulted from . . . intentional [or] willful conduct. (Opp. at 13 n.8.) But that is simply not

true. Like NOM, Huckaby ask[ed] for punitive damages under section 7431(c)(1)(B) on

grounds that the disclosures were willful and grossly negligent. Huckaby , 794 F.2d at 1050.

Even while rejecting the punitive damages claim, the court determined that Huckaby was a

prevailing party because he nevertheless prevailed on the primary issue: whether the

government was liable for tax return disclosures. Huckaby , 804 F.2d at 300.

Goettee v. Commissioner , 192 Fed. Appx. 212 (4th Cir. 2006), an unpublished decision

of the Fourth Circuit cited in the Governments Opposition, actually undermines the

Governments position. In Goetee , the taxpayers sought abatement of interest that had accrued

on past-due taxes of four different tax periods (1978, 1979, 1981, and 1982). Id . at 214. In total,

the taxpayers claimed that nineteen specific, non-consecutive months of interest, as well as the

interest of unspecified additional periods, should be abated. See id . at 216. After the Tax Court

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abated three months of interest, the taxpayers moved for attorneys fees. The taxpayers argued

that they had substantially prevailed with respect to the most significant issue because they had

succeeded in showing that the IRS abused its discretion in refusing to abate any interest. Id . 223.

The Fourth Circuit disagreed because no central issue dominated the proceedings. Id . Rather,

the taxpayers raised a series of individual and unrelated claims of delay against the IRS,

requesting abatement for each individual claim. Id . (emphasis added). The diversity of the

taxpayers claims meant there was simply no central issue . . . upon which either of the parties

could substantially prevail. Id . In reaching that conclusion, the Fourth Circuit noted that

Huckaby , in contrast, is a case in which a central issue dominated the proceedings,notwithstanding the Huckaby plaintiffs failed claims for punitive damages and statutory

damages for seven alleged disclosures. Id . As this case closely mirrors the claims in Huckaby ,

Goetee demonstrates that the primary issue in this litigation was whether the IRS was liable for

the disclosure of NOMs 2008 Schedule B.

II. The Government Has Not Established that Its Position Was SubstantiallyJustified.

In claiming that its position in this litigation was substantially justified, the Government

takes an indefensible position: that NOM did not claim that the IRS was simply negligent in

disclosing NOMs tax return. (Opp. at 16-17.) But NOMs Complaint could not be clearer: The

IRSs disclosure was intentional, grossly negligent, or negligent. (Compl. 102.) And

although the IRS claims that it admitted negligence in its Answer, it actually denied the

allegations in the preceding sentence. (Dkt. 33 102-03.) In fact, the IRS has refused to admit

that its actions were negligent. Instead, the Government repeatedly referred to its actions as

inadvertent, up to and throughout its summary judgment motion. ( See Dkt. 68 (referring to the

unauthorized disclosure as inadvertent seventeen times).) Even where the IRS suggested that

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NOM was entitled to $1,000 in statutory damages, the IRS conditioned its position: [T]o the

extent this action has been brought within the two-year statute of limitations and Plaintiff

otherwise establishes that it did not request the information through a third party, the government

is liable to Plaintiff for $1,000 for one inadvertent disclosure of Plaintiffs 2008 Form 990

unredacted Schedule B. (Dkt. 33 121.) Even with respect to issues it claims to have conceded,

the Governments position continues to be of questionable justification.

The Governments claim that its defensewas reasonable at every phase of the

litigation (Opp. at 17), is also easily refuted by this Courts summary judgment opinion, which

found it likely that the disclosure of NOMs 2008 Schedule B was the actual and proximatecause of NOMs claimed damages. Natl Org. for Marriage, Inc. v. United States, IRS , No.

1:13cv1225 (JCC/IDD), 2014 U.S. Dist. LEXIS 77263, 26-34 (E.D. Va. June 3, 2014) ( NOM ).

Only after losing those issues on summary judgment did the Government agree to settle the case

pursuant to NOMs offer. See Hanson v. Commr , 975 F.2d 1150, 1155-1156 (5th Cir. 1992)

([T]he governments concession of a case is one factor to be considered when the trial court

decides whether the governments overall position was substantially justified.).

The Government does not refute that nearly two years prior to the filing this action, its

own investigation revealed that it was the source of the 2008 Schedule B posted on the Internet

by the Human Rights Campaign and The Huffington Post. Nor does it refute that by June 2012,

NOM informed TIGTA that Fred Karger had published that document as part of his complaint to

the California Fair Political Practices Commission (FPPC). Nevertheless, the Government

claims that its position with respect to NOMs actual damages was substantially justified because

NOM adjusted (downward) the amount of actual damages it claimed during the course of

discovery. (Opp. at 17-18.) Yet there is nothing to suggest the Government would have taken a

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reasonable position had NOM included its final damages value in the Complaint. In fact, the

Governments behavior strongly suggests the opposite is true. With respect to damages

associated with the Karger complaintwhich NOM included in the complaint (Compl. 36)

the Government took the position that it was not liable for any of them throughout the entire

course of the litigation. ( See Dkt. 33 123 (The United States denies that it owes Plaintiff actual

damages for an IRS employees single inadvertent disclosure of Plaintiffs 2008 Form 990

unredacted Schedule B.).) The Government then took and maintained that same hard-line

position with respect to all of NOMs claimed actual damages as they were specified in

discovery. At no point during this case did the Government take a justified position with respectto its liability for NOMs actual damages. The Governments suggestion that it would have

changed its position had it known the final value of NOMs damages prior to filing its Answer is

thus undeniably false.

Nor does the Governments mere belief that six weeks prior to the close of discovery it

was unclear that the damages NOM incurred were necessary (Opp. at 18) make its position any

more justified. This Court has not only determined that the Governments belief was erroneous,

but that it was certainly foreseeable that releasing NOMs Schedule B to a member of the media

could result in its publication, and that NOM would take legal action to prevent further harm.

NOM , 2014 U.S. Dist. LEXIS 77263 at 33 (emphasis added).

Even when given a second chance to concede actual damages following the close of

discovery, the Government refused. On April 2, 2014almost four weeks before the

Government filed its summary judgment motionNOM approached the Government and

offered to abandon its claim for punitive damages and settle the issue of actual damages as well

as attorneys fees. (Opp. at 8.) Despite NOMs offer, the Government in its Opposition

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repeatedly chides NOM for continuing to pursue its gross negligence and willfulness claims; yet

the Government made no counter-offer on the issue of actual damages and proceeded to move

for summary judgment.

The Governments arguments concerning mitigation of damages cannot save it. The

Government believes it was justified in raising this argument until at least April 2, 2014, when

according to the GovernmentNOM fully disclose[d] the extent to which it had received

donations in response to solicitations referring to the disclosure or its lawsuit. (Opp. at 18.)

However, the Government should have known that the extent of those solicitations was irrelevant

unless the Government could show the necessary elements of causation. As this Court put it, theGovernments burden was to confirm that the contributions were caused by the disclosure as

opposed to some other impetus. NOM , 2014 U.S. Dist. LEXIS 77263 at 37. The Government

should have known well before April 2, 2014, that it could not make that showing. As far back as

January 21, 2014, in response to the Governments first set of requests for admission concerning

donations received as a result of the disclosure, NOM informed the Government that it is not

within Plaintiffs control to know the motive behind a specific donation to it. Further, Plaintiff

does not accept earmarked donations. ( See, e.g. , Dkt. 92-3 at 29.) Moreover, even after NOM

provided the Government with the data it requested, the Governments legal bases for the

application of the mitigation defense was far from reasonable, as the Government claims.

(Opp. at 19.) In the words of this Court, The only evidence on this issue is NOMs admission

that 2012 was a record year for donations and it received $46,086.37 from solicitations that

referenced the disclosure. These facts alone are insufficient. NOM , 2014 U.S. Dist. LEXIS

77263 at 37 (internal citations omitted) (emphasis added); see also Steven N.S. Cheung, Inc. v.

United States , 2007 U.S. Dist. LEXIS 85488, 13-14 (W.D. Wash. Jan. 17, 2007) (Had

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defendant carefully considered its position in light of the evidence it possessed and the prior

rulings of this Court, it should have realized that its position was not substantially justified.). 3

For the foregoing reasons, NOM is a prevailing party, and is entitled to reasonable

attorneys fees.

III. The Requested Attorneys Fees Are Reasonable.

The Governments Opposition does not mention the fact that NOM excluded nearly

1,290 hours expended on its behalf (amounting to nearly $471,000) from its Motion in an

exercise of billing judgment. ( See Exhibit D, Dkt. 91-3.) In fact, the Government scolds NOM

for its poor exercise in billing judgment (Opp. at 23), and repeatedly refers to NOMs pre- billing judgment total as though NOM were requesting fees for every hour expended on the case,

(id . at 8 n.5, 23). But, in fact, NOM reduced the number of timekeepers from thirty one to seven,

eliminating all non-attorney time and the time of nine attorneys in their entirety. ( See Exhibit D,

Dkt. 91-3.) Further, NOM made numerous reductions from even the remaining seven

timekeepers invoices accounting for even potentially excessive, redundant, or otherwise

unnecessary hours. ( See Motion at 15-17.)

Yet the Government attempts to downplay the tremendous success NOM enjoyed by

resolving its heavily-contested claim for actual damages and, in so doing, claims that the

requested amount is unreasonable. As is explained above, NOMs recovery was substantial (both

3 In the event this Court finds the Governments position was substantially unjustified only withrespect to a given issue or phase of this litigation, the court[] may consider each phase or issueof the litigation discretely to determine whether the Plaintiff is entitled to recover expensesincurred in pursuing that issue or litigating that phase, Christian Coal. Intl v. United States ,133 F. Supp. 2d 437, 438-439 (E.D. Va. 2001) (citing Ragan v. Commn , 135 F.3d 329 (5th Cir.1998)).

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monetarily and in principle) and its request for fees is reasonable, especially in light of the

extensive reductions already made by NOMs counsel.

A. NOMs Proposed Lodestar Calculation Is Reasonable and Appropriate.

Throughout its response, the Government attempts to graft the entirety of 26 U.S.C.

7430 into section 7431 or, in the alternative, claim that any ambiguities should be resolved in its

favor. But the plain language of section 7431 is contrary to such a reading and is unambiguous:

in the case of a plaintiff which is described in section 7430(c)(4)(A)(ii),reasonable attorneys fees, except that if the defendant is the United States,reasonable attorneys fees may be awarded only if the plaintiff is the

prevailing party (as determined under section 7430(c)(4)).

26 U.S. C. 7431(c)(3). As NOM previously explained (Motion at 18 n.9), Congress chose to

specifically incorporate section 7430s prevailing party standard but chose not to include any

other provisions of section 7430. ( See also Dkt. 91-2 61-65.) What Congress did say,

however, was that reasonable attorneys fees may be awarded. 26 U.S. C. 7431(c)(3). NOMs

Motion, therefore, requested a fee award pursuant to a lodestar calculation, the appropriate

measure of the reasonable fee to which a prevailing party is entitled. See City of Burlington v.

Dague , 505 U.S. 557, 560 (1992); see also , Motion at 14-15. 4

1. The Requested Hourly Rates Are Reasonable.

The Government does not dispute that NOMs requested hourly rates are the prevailing

market rate appropriate for each attorney. Instead, it simply argues that the statutory cap of

4 The Government mischaracterizes Mr. Zalls affidavit as inappropriate expert testimony

serving to circumvent[] the imposed page limit. (Opp. at 19.) But Mr. Zall is an independentcounsel, well-versed in IRS litigation and related fields. His affidavit serves to provide an outsideopinion on the reasonableness of NOMs counsels fee petition, similar to the routine affidavitsfrom local counsel on the prevailing market rate. See , e.g. In re Outsidewall Tire Litig ., 748 F.Supp. 2d 557, 567 (E.D. Va. 2010). NOM did not direct Mr. Zall regarding the content of hisaffidavit. Moreover, NOM provided sufficient and extensive legal and factual arguments tosupport its case in its Petition.

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section 7430 applies to this case. 5 But such a position is not supported by the plain language of

section 7431 or by the legislative history of the same. ( See Motion at 18 n.9.) The Government

contends that allowing for the prevailing market rate here would render the relief provided in

7431 significantly more expansive than 7430. (Opp. at 22.) Yet the Government provides no

evidence that such a result was not Congresss intention. And given that Congress incorporated

some portions of section 7430 into section 7431 but not others signifies that Congress did intend

to broaden the hourly rate allowed for these specific cases. [W]here Congress knows how to say

something but chooses not to, its silence is controlling. United States v. Webb , 655 F.3d 1238,

1257 (11th Cir. 2011); see also Ctr. For Special Needs Trust Admin., Inc. v. Olson , 676 F.3d688, 701-02 (8th Cir. 2012) (Where Congress includes particular language in one section of a

statute but omits it in another section of the same Act, it is generally presumed that Congress acts

intentionally and purposely in the disparate inclusion or exclusion.). Such a result is logical

given the specific (and, ideally, rare) set of circumstances required to bring and prevail on a

claim for the unauthorized disclosure or inspection of confidential information, rather than the

myriad cases for which section 7430 or the Equal Access to Justice Act allows the recovery of

fees. See 26 U.S.C. 7430 (allowing an award of fees for any administrative or court

proceeding which is brought by or against the United States in connection with the

5 The Government points to a court in the Western District of Missouri that restated section7430s statutory cap when evaluating a claim for attorneys fees pursuant to section 7431. See Snider v. United States , 2005 WL 3150761 at *1. Even though this non-binding authority

appears to incorporate a portion of section 7430 where Congress has not spoken, in the end, thecourt did not apply that hourly rate and, instead, simply stated that the rates requested bycounselbased on the prevailing market rateare reasonable and awarded the requested fees.

Id . at *2. If this Court finds that the statutory cap in section 7430 has been grafted into section7431, then NOM submits that the difficulty of the issues presented in the case ( see , e.g., Dkt. 91-7 23, 36 and Dkts. 91-36 (declarations explaining counsels experience)) justify applyingthe requested prevailing market rate.

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determination, collection, or refund of any tax, interest, or penalty under this title) (emphasis

added) and 28 U.S.C. 2412 (providing attorneys fees to a prevailing party in any civil action

brought by or against the United States) (emphasis added).

Because 26 U.S.C. 7431 is silent on the applicable hourly rate, Hensley s prevailing

market rate standard applies. See Hensley v. Eckerhart , 461 U.S. 424, 433 n.7 (1983).

2. The Requested Hours Are Reasonable and Already Account forAppropriate Billing Judgment.

Despite the Governments bare statements about the unreasonableness of NOMs Motion,

NOM has shown that it exercised careful billing judgment in reducing a substantial number of

hours from even the seven remaining time keepers. Such billing judgment included numerous

reductions or elimination or time spent conferencing with other counsel, traveling to and

attending depositions, and reviewing key drafts, as well as exclusions of time exclusively related

to NOMs theories on willfulness or gross negligence. ( See Motion at 17 n. 7.)

Despite these reductions, the Government contends that counsel engaged in significant

block billing and provided time entries that are too vague for the Court to make a reasoned

determination of whether the time spent on the tasks was appropriate. (Opp. at 27.) But that is

not the case. NOM provided nearly 100 pages of carefully billed time entries, the bulk of which

set forth a specific task or tasks (and with counsel exercising billing judgment to account for

improper block billing or vague entries). 6 Notably, an applicant is not required to record in

great detail how each minute of his time was expended. Hensley at 437 n.12. Rather, he need

6 The Government criticizes NOM for the amount of time spent on its Complaint, (Opp. at 28-29), but, due to its exercise of billing judgment, NOM is only seeking $40,666.80 for all timespent on the case prior to October 1, 2013. ( See Dkt. 91-3, Ex. A; Dkt. 91-4, Ex. A; Dkt. 91-5,Ex. B; Dkt. 91-6, Ex. B.)

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only identify the general subject matter of his time expenditure. Id . That is precisely what

NOMs counsel has done.

Further, in an exercise of billing judgment, NOM is not requesting additional fees for the

time its counsel spent on this reply nor the expenses incurred in retaining outside counsel to

provide affidavits as to the reasonableness of its hours and the prevailing market rate. (Exhibit 8,

Second Declaration of Kaylan L. Phillips at 2, see also Motion at 26-27 (providing authority for

the compensation of such fees and expenses).) 7

B. NOMs Claims Shared a Common Core of Facts.

As NOM explained, this case involves a common core of facts, i.e. the circumstancessurrounding the IRSs processing of a request for NOMs 2008 Schedule B and the subsequent

disclosure and dissemination of the document. (Motion at 21-24; see also , Dkt. 73 at Section III

(describing the need to look at the record facts regarding the disclosure, including what was

requested and by whomfacts NOM uncovered during discoveryin order to resolve actual

and proximate causation).) Yet, the Government maintains that NOMs willfulness and gross

negligence claims are solely responsible for nearly all of the work that its attorneys completed.

(Opp. at 24.) That is not the case. NOM would have been required to conduct the same

7 The Governments half-hearted suggestion that NOM must submit its fee agreement withcounsel in order to demonstrate its eligibility to collect attorneys fees is entirely unfounded.

(Opp. at 30 n.26.) In fact, the Governments own authority confirms that no written agreementneed even exist. ( See id . (agreement with counsel may be implied).) Besides, on its own, [t]he

presence of an attorney-client relationship suffices to entitle prevailing litigants to receive feeawards. Ed A. Wilson, Inc. v. GSA , 126 F.3d 1406, 1409 (Fed. Cir. 1997). There can be noserious dispute that NOM enjoyed that relationship with its counsel. Under that arrangement,

NOM is obligated to pay any and all fees collected to its counsel. See Exhibit 8 at 5.

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depositions and request the same information regardless of whether it was seeking actual

damages alone as it did when seeking to establish gross negligence or willfulness. 8

From its first filing, the Government denied that there was a causal link between the

disclosure and the damages NOM incurred. (Dkt. 33 123) (The United States denies that it

owes Plaintiff actual damages for an IRS employees single inadvertent disclosure of Plaintiffs

2008 Form 990 unredacted Schedule B.) The Government never backed down from this

position throughout the entire litigation. This causal link was essential regardless of whether

NOMs theory was negligence, gross negligence, or willfulness. Like the extensive efforts

undertaken by NOMs counsel before litigation ( see Dkt. 1 45-70 (describing the numerous pre-litigation efforts undertaken by NOM and its counsel to ascertain information regarding the

disclosure)), the Governments refusal to admit a causal link between the disclosure and NOMs

damages required NOMs counsel to undertake significant efforts during litigation (a large

percentage of which NOM excluded from its Motion in an exercise of billing judgment).

For example, it was only through NOMs discovery requests served upon the

Government that NOM learned that Mr. Meisel told the IRS that he was a member of the media,

(Dkt. 68-5 at 4), a fact that NOM used in its defense against the Governments motion for

summary judgment on actual damages. ( See Dkt. 73 1 and p. 25.) This information was not

provided in the Governments Answer. In fact, the Governments Answer did not provide any

details as to the circumstances surrounding the release of NOMs confidential information so

8 Contrary to the Governments characterization, (Opp. at 24 n.20), the amendments to NOMswitness list after summary judgment is not an indication that the discovery it took was limited toits gross negligence or willfulness claims. Rather, on the amended list, NOM lists six witnesses(including Ms. Peters, Mr. Hamilton, Mr. Meisel, Mr. Nix, and the Governments 30(b)(6)designees) whose deposition testimony it believed it would use in its presentation on actualdamages, due to the witness being outside of the Courts subpoena power. (Dkt. 84 at 2-3.)

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NOMs discovery and pre-trial efforts were necessary to learn the true circumstances of the

disclosure and prepare its presentation for actual damages. 9

Further, each deposition NOM took (three of which involved individuals listed on the

Governments initial disclosures as witnesses with relevant information (Exhibit 9,

Governments Initial Disclosures)) was necessary to prove the causal link the Government

consistently denied and to establish the Governments liability for NOMs actual damages:

1. Wendy Peters , according to the Governments initial disclosures, has information

concerning the request for Plaintiffs 2008 Form 990, the processing of that request and the

general allegations contained in Plaintiffs complaint. (Exhibit 9 at 3.) NOM could not have presented its case for actual damages without information regarding the request and disclosure of

its 2008 Schedule B. Ms. Peterss deposition was necessary to establish the causal link between

the negligent act and the unauthorized disclosure to a third party, to wit, Mr. Meisel. ( See , e.g.,

Dkt. 73 1.) It was through documents authenticated in her deposition that NOM was able to

establish actual caution and the evidence showing that it was reasonably foreseeable that the

document would be further disseminated. ( See , e.g., id. 8, 18; Dkt. 68 2, 3, 7-10, 14.)

2. David Hamilton , according to the Governments initial disclosures, has information

concerningthe system that contained the image of Plaintiffs 2008 Form 990, and IRS records

pertaining to the allegations contained in Plaintiffs complaint. (Exhibit 9 at 2.) NOM could not

9 As NOM made plain in its Complaint, it devoted significant time to seeking the truth of thedisclosure prior to filing suit, including quickly filing a request for investigation which, in the

course of discovery, NOM discovered was the impetus for TIGTAs investigation into thedisclosure. (Dkt. 73 at 2.) NOM also filed numerous FOIA requests and appeals. (Dkt. 1 45-71.) In response to one of NOMs FOIA requests for records regarding requests to the IRS for

NOMs tax return information, the IRS even responded that no such records exist. ( Id . 57.)Because the IRS was not forthcoming about the disclosure, NOM was forced to file this lawsuit.The Government now criticizes NOM for spending time on a lawsuit that the Government couldhave prevented in the first place.

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17

have presented its case for actual damages without testimony regarding what information the

Government had regarding the disclosure of NOMs 2008 Schedule B. Mr. Hamiltons

deposition was key to proving the causal link, including providing information on the origin and

development of the watermark on the disclosed document and verifying that the same watermark

was consistently found on the disclosed document after it was disseminated. ( See , e.g., Dkt. 68

9-13, 22; Dkt. 73 15, 51.) Such facts were important to show the connection between the

IRSs disclosure and the dissemination by Mr. Meisel and by Mr. Karger.

3. Matthew Meisel, according to the Governments initial disclosures, has information

pertaining to the request for the disclosure of Plaintiffs 2008 Form 990, the IRSs production ofPlaintiffs 2008 Form 990, the receipt by the Human Rights Campaign of Plaintiffs 2008 Form

990, and certain other remaining allegations contained in Plaintiffs Verified Complaint.

(Exhibit 9 at 1.) NOM could not have presented its case for actual damages without information

regarding the request, disclosure, and dissemination of its 2008 Schedule B. Although Mr.

Meisel ended up asserting his Fifth Amendment privilege during the deposition, documents

produced by him pursuant to subpoena provided information about the causal link between the

IRS and the dissemination, including a February 24, 2011 conversation in which Mr. Meisel

referred to a promising conduit from whom he might receive NOMs tax return donor list. ( See

Dkt. 45 at 15-17.) These documents contradicted the Governments claim in its January 27, 2014

discovery responses that the disclosure to Mr. Meisel occurred on or around March 24, 2011,

(Exhibit 10 at 3), which, itself conflicted with the IRSs response to NOMs FOIA Request that

no records existed (indicating that no requests had been made for NOMs tax returns, supra , n.9).

Shortly after Mr. Meisel produced these documents, the Government changed its story, asserting

without any direct evidentiary support that the disclosure to Mr. Meisel occurred on or around

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20

Respectfully submitted this 15th day of August, 2014.

/s/Jason Torchinsky (Va. 47481)

Shawn Toomey Sheehy (Va. 82630)Holtzman Vogel Josefiak, PLLC45 North Hill Drive, Suite 100Warrenton, VA 20186(540) 341-8808 (telephone)(540) 341-8809 (fax)

[email protected]@hvjlaw.comCounsel for Plaintiff

John C. Eastman (Cal. 193726)*

Anthony T. Caso (Cal. 88561)*Center for Constitutional Jurisprudencec/o Chapman University School of LawOne University DriveOrange, CA 92866(877) 855-3330 x2 (telephone)(714) 844-4817 (fax)

[email protected]@chapman.eduCounsel for Plaintiff

Cleta Mitchell, of counsel (D.C. 433386)*

William E. Davis, of counsel (D.C. 280057)*Mathew D. Gutierrez, of counsel (Fla. 0094014)*Kaylan L. Phillips (Ind. 30405-84)*

Noel H. Johnson (Wisc. 1068004)*ACTR IGHT LEGAL FOUNDATION 209 West Main StreetPlainfield, IN 46168(317) 203-5599 (telephone)(888) 815-5641 (fax)[email protected]@foley.com

[email protected]@[email protected] for Plaintiff

* Admitted Pro Hac Vice

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21

Certificate of Service

I hereby certify that on August 15, 2014, I filed the foregoing via ECF which notified the

following counsel of record:

UNITED STATES OF AMERICA, INTERNAL REVENUE SERVICEPhilip M. Schreiber (D.C. 502714)*Christopher D. Belen (Va. 78281)Trial Attorneys, Tax DivisionU.S. Department of JusticePost Office Box 14198Ben Franklin StationWashington, DC 20044(202) 514-6069 (Mr. Schreiber)(202) 307-2089 (Mr. Belen)

Fax: 202-514-9868 [email protected]@usdoj.gov

Benjamin L. Tompkins (D.C. 474906)*Assistant United States AttorneyUnited States Attorneys Office for the Central District of CaliforniaFederal Building, Suite 7516300 North Los Angeles StreetLos Angeles, CA 90012(213) 894-6165Fax: (213) 894-0115 *Admitted Pro Hac Vice

David MoskowitzAssistant U.S. Attorney2100 Jamieson AvenueAlexandria, Virginia 22314Telephone: (703) 299-3845Fax: (703) [email protected]

/s/Shawn Toomey Sheehy (Va. 82630)Holtzman Vogel Josefiak, PLLC45 North Hill Drive, Suite 100Warrenton, VA 20186(540) 341-8808 (telephone)[email protected] for Plaintiff

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Exhibit 8

Second Declaration of

Kaylan L. Phillips

Case 1:13-cv-01225-JCC-IDD Document 93-1 Filed 08/15/14 Page 1 of 6 PageID# 2194

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UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF VIRGINIA

The NATIONAL ORGANIZATION FOR

MARRIAGE, INC.,

Plaintiff ,

v.

The UNITED STATES OF AMERICA,INTERNAL REVENUE SERVICE,

Defendant .

Civ. No. 13-cv-1225-JCC/IDD

SECOND DECLARATION OF KAYLAN L. PHILLIPS IN SUPPORT OFPLAINTIFFS MOTION FOR ATTORNEYS FEES

Kaylan L. Phillips declares, pursuant to 28 U.S.C. 1746:

1. I reiterate the facts of my prior declaration made in support of Plaintiffs Motion for

Attorneys Fees (Dkt. 91-3, Motion), with respect to my experience, billing practices, and

hourly rates and incorporate them herein by reference to the following statements.

2. Since the filing of my first declaration, ActRight Legal Foundation has reasonably

expended an additional 30.6 hours in preparation of its Reply to NOMs Motion for Attorneys

Fees, totaling $10,710 in attorneys fees. See Exhibit A. In an effort to be even more reasonable,

NOM is not requesting any of this additional time nor is it requesting any expenses that it

incurred or will incur relating to the Motion and Reply.

3. As stated in its Motion, NOMs counsel, after exercising billing judgment, previouslyincurred $691,025.05 litigating NOMs claims in this case and preparing the Motion. ( See Dkt.

90.)

1


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4. The total amount of attorneys fees for which NOM seeks in its Motion remains

$691,025.05.

5. NOM is contractually obligated to pay any and all fees awarded to its counsel.

Executed in Plainfield, Indiana, on August 15, 2014,

_______________ Kaylan L. PhillipsActRight Legal Foundation209 West Main Street

Plainfield, IN 46168(317) 203-5599 (telephone)(888) 815-5641 (fax)[email protected] for Plaintiff

2


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Exhibit 8 -

Exhibit A


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10:39 AM 08/15/14

ActRight Legal Foundation Time by Job Detail

Augu st 8 - 15, 2014

Page 1 of 2

Date Name Duration Notes

NOM- 990

Litigation:990

08/08 /2014 Noel Johnson 0 :12 NHJ- R loca l rules re reply memos ; c reate she ll fo r r ep ly memo for at tys f ee motion .

08 /08/20 14 No el Jo hnso n 0 :18 NHJ- Draft se con d dec larati on of KLP re attys fees m otion.

08/11 /2014 Noel Johnson 3 :24 NHJ- R Govs Opposi tion br ie f; make ou tl ine and begin d ra ft ing rep ly fo r Atty fee motion .

08/11/2014 Noel Johnson 1:54 NHJ- Continue reviewing Government's opposit ion to atty fees petit ion; continue outlining reply and

08 /11/20 14 No el Jo hnso n 0 :30 NHJ- C KLP to dis cuss Governm ent's op p. to atty fee p etiti on.

08/11 /2014 Noel Johnson 2 :30 NHJ- Continue reviewing de fendan ts ' authori ty and d ra ft ing a tty f ee pe ti tion reply.08/11 /2014 Kaylan Phi ll ips 3 :42 KLP- R response to f ee pe ti tion in detai l. Take notes . C wi th NHJ re same.

08/12/2014 Noel Johnson 2:06 NHJ- Continue RS and drafting atty fee reply brief.



08/12/2014 Noel Johnson 0:24 NHJ- Proofread and make edits to atty fee reply brief.

08 /12/20 14 No el Jo hnso n 0 :06 NHJ- RS re com pensa bil ity of loca l attorn ey ti me; em ai l to KLP re sam e.

08/12/2014 Kaylan Phill ips 2:30 KLP- D section on reasonableness of fees: lodestar calculation, prevail ing maket rate.

08/13 /2014 Noel Johnson 0 :12 NHJ- R and incorpora te KLP 's comments; r KLP 's sec tion on reasonableness.

08 /13/20 14 No el Jo hnso n 1 :06 NHJ- LR re "inc urred" requ irem en t; P parag raph on sam e for atty fee re ply.

08/13/2014 Noel Johnson 0:24 NHJ- LR re opinion testimony.

08/13/2014 Noel Johnson 0:18 NHJ- LR re special factors and statutory rate cap.

08 /13/20 14 No el Jo hnso n 0 :42 NHJ- Con tinue LR re spe cial factors and s tatutory rate c ap.

08/13 /2014 Kaylan Phi ll ips 1 :42 KLP- Cont inue working on reasonab leness o f fee award sec tion ; preva il ing market r at e.

08/13 /2014 Kaylan Phi ll ips 0 :42 KLP- Cont inue working on reasonab leness o f fee award sec tion : reasonab leness o f fees .

08/13 /2014 Kaylan Ph il lips 2 :06 KLP- Continue work ing on reasonableness o f f ee award sect ion: common se t o f f ac ts .

08/14/2014 Kaylan Phill ips 1:48 KLP- Continue working on fee petit ion reply. C with NHJ re: arguments. Review emails from teammate

08/14/2014 Kaylan Phillips 0:18 KLP- Call with W D re fee petition.

08 /14/20 14 Ka yla n Phill ips 0 :30 KLP- Em ail with MG r e Snide r case . R c ase and ed it FN in brief.

08/14 /2014 Kaylan Ph il lips 0 :30 KLP- Continue work ing on fee pe ti tion reply: review legi sl at ive hi story for 7431 .

08/14 /2014 Kaylan Ph il lips 0 :54 KLP- Continue work ing on fee pe ti tion rep ly: re spond to sect ion on block b il ling , e tc .

Total Litigation:990 30:36

Total NOM- 990 30:36


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10:39 AM 08/15/14

ActRight Legal Foundation Time by Job Detail

Augu st 8 - 15, 2014

Page 2 of 2

Date Name Duration Notes

TOTAL 30:36


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Exhibit 9

Government Initial

Disclosures


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IN THE UNITED STATES DISTRICT COURTFOR TH EASTERN DISTRICT OF VIRGINIA

Alexandria Division

THE NATIONAL ORGANIZATION FORMARRIAGE, INC.

Plaintiff,

v Civil Action No. 13-1225-JCC-IDD

THE UNITED STATES OF AMERICA,

Defendant.

INITIAL DISCLOSURES OF DEFENDANT UNITED STATES OF AMERICA

The United States of America, by its undersigned attorneys, makes its initial disclosures

in accordance with Fed. R Civ. P 26(a)(l ) and the parties' proposed scheduling order, as

follows:

I . The name, and, if known, the address and telephone number of each individual likely tohave discoverable information along with the subjects of that information that thedisclosing party may use to support its claims or defenses, unless the use would be solelyfor impeachment:

(a) Representative(s) for Plaintiffc/o Plaintiffs counsel

Subject: Plaintiffs designee has information pertaining to the allegeddisclosure of and alleged damages resulting from the inadvertent disclosure ofPlaintiff's 2008 Form 990, as well as the other allegations in its VerifiedComplaint.

(b) Matthew MeiselWaltham, Massachusetts

c/o Matt Kaiser, The Kaiser Law Firm PLLC, 1400 I St, NW, 525,Washington, D.C. 20005, (202) 640-2850.

Subject: Mr. Meisel has information pertaining to the request for thedisclosure of Plaintiffs 2008 Form 990, the IRS 's production of Plaintiffs2008 Form 990, the receipt by the Human Rights Campaign of Plaintiffs

1

Exhibit 9 - Page 1 of 6


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2008 Form 990, and certain other remaining allegations contained inPlaintiff s Verified Complaint.

(c) Representative for Human Rights CampaignWashington, D.C.c/o James W Cooper, Arnold and Porter LLP, 555 12 St., NW, Washington,D.C. 20004, (202) 942-6603

Subject: Representative has information pertaining to Plaintif f s allegationsagainst HRC, and generally Plaintiff s allegations in its Verified Complaint.

(d) Fred Karger3369 Wilshire Blvd.Suite 1290Los Angeles, CA 9001 0

Subject: Mr. Karger has information concerning the complaint he filed againstPlainti ff in California and other allegations contained in Plain tiff s VerifiedComplaint with respect to him and that action.

(e) Unidentified donors for the Plaint iffSubject: Donor(s) bave information pertaining to the Plaintiff s allegeddamages resulting fiom the disclosure of Plaintif f s 2008 Form 990umedacted Schedule B.

(f) Jeremy S Hooper350 W 57th St. Apt. 6GNew York, New York 10019

Subject: Mr. Hooper has information concerning laintiffs allegationsagainst HRC and Plaintiff s damages claims in this case.

(g) David Hamilton, systems administrator programmer in the Statistics o fIncome Data Management DivisionInternal Revenue ServiceOgden, Utahc/o: Philip Schreiber, Benjamin L Tompkins, Christopher Belen, TrialAttorneys, U.S. Department ofJusti ce, Tax Division, P.O. Box 14198,Washington, D.C. 20044.

Subject: Mr. Hamilton has information concerning the Statistics o f IncomeExempt Organizations Return Image Network, the system that contained theimage o f Plaintiff s 2008 Form 990, and IRS records pertaining to theallegations contained in Pla intiff s complaint.

2



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(h) Wendy Peters, Processing ClerkInternal Revenue ServiceOgden, Utahc/o: Philip Schreiber, Benjamin L Tompkins, Christopher Belen, TrialAttorneys, U.S. Department ofJustice, Tax Division, P.O. Box 14198,Washington, D.C. 20044.

Subject: Ms. Peters has information concerning the request for Plaintiffs2008 Form 990, the processing ofthat request and the general allegationscontained in Plaintif fs complaint.

In addition to the foregoing, the United States may support its claims or defensesthrough the testimony of other individuals whose identities are not yet known to theUnited States, including, for example, individuals identified by Plaintiti in its initialdisclosures or in response to the United States Interrogatories. The United States alsomay rely on expert testimony to support its claims or defenses and, if so, shall identifyany such experts as provided in the Federal Rules of Civil Procedure, and in accordancewith any applicable Orders of this Court. Finally, the United States may rely upon anynon-governmental employees identified in Plaintiffs initial disclosures. The UnitedStates reserves the right to supplement these disclosures under Fed. R. Civ. P. 26(e) asthe need arises.

2. A copy o f - o r a description by category and location--of all documents, electronicallystored information, and tangible things that the disclosing party has in its possession,custody, or control and may use to support its claims or defenses, unless the use would besolely for impeachment:

(a) Records pertaining to Plaintiffs damages, including records related to

Plaintiff s donors, Fred Karger s complaints and the remaining allegationspertaining to Plainti ffs Verified Complaint;

(b) Plaintiffs 2007,2008, 2011 and 2012 Fonns 990;

(c) IRS records pertaining to the history regarding the Plain tif fs 2008 Form 990,and the disclosure thereof;

(d) Documents pertaining to HRC s receipt of Plaintiffs 2008 Form 990;

(e) Blank Form 4506-A;

) Blank Form 3983C;

(g) Exhibits to Plaintiffs Verified Complaint; and

(h) Internal Revenue Manual sections pertaining to the processing of Form 4506-A requests.

3



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In addition to the foregoing, the United States may support its claims or defenses throughdocuments the existence of which are not yet known to the United States, including, forexample, documents identified by Plaintiff in its initial disclosures or in response to theUnited States' Interrogatories or produced to the United States by Plaintiff in response tothe United States' Requests for Production of Documents. The United States reserves theright to supplement these disclosures under Fed. R Civ. P 26(e) as the need arises.

The referenced documents are either in the possession of the undersigned counsel for theUnited States or with the Internal Revenue Service.

3 A computation of each category of damages claimed by the disclosing party who mustalso make available for inspection and copying as under Rule 34 the documents or otherevidentiary material, unless privileged or protected from disclosure, on which eachcomputation is based, including materials bearing on the nature and extend of injuriessuffered:

The United States does not claim any damages.

4 For inspection and copying as under Rule 34, any insurance agreement under which aninsurance business may be liable to satisfy all or part of a possible judgment in the actionor to indemnify or reimburse for payments made to satisfy the judgment:

Not applicable to this proceeding.

Dated: December 20, 2013

4

KATHRYN KENEALL YAssistant Attorney General

{ } 9 A / , e _ ~ .PHILIP M. SCHREIBER*BENJAMIN L TOMPKINS*CHRISTOPHER D BELENTrial Attorneys, Tax DivisionU.S. Department of JusticePost Office Box 14198Ben Franklin StationWashington, DC 20044(202) 514-6069 (Mr. Schreiber)(202) 514-5885 (Mr. Tompkins)

(202) 307-2089 (Mr. Belen)Fax: 202 514-9868E-Mail: [email protected]

benjamin. . tompkins@usdoj .govchristopher. d belen@usdoj .gov

a n d



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5

DANA J BOENTEACTING UNITED STATES ATTORNEY

David MoskowitzAssistant U.S. Attorney2100 Jamieson AvenueAlexandria, Virginia 22314Telephone: 703) 299-3845Fax: 703) 299-3983E-Mail: [email protected]

Attorneys for the United States o America

Admitted pro hac vice



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CERTIFIC TE OF SERVICE

I HEREBY CERTIFY that on December 20, 2013, I served the foregoing InitialDisclosures on counsel o record below by electronic mail and U.S. Mail addressed as follows:

Jason Brett TorchinskyHoltzman Vogel Josefiak PLLC45 North Hill DriveSuite 100Warrenton, VA 20186540-341-8808Fax: 540-341-8809Email: [email protected]

Shawn Toomey SheehyHoltzman Vogel Josefiak PLLC45 North Hill DriveSuite 00Warrenton, VA 20186540-341-8808Fax: 540-341-8809Email: [email protected]

6

CHRISTOPHER D BELEN, VSB 78281Trial Attorney, Tax DivisionU.S. Department o Justice



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Exhibit 10

Government First Discovery

Responses


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11016338.2

IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF VIRGINIA

Alexandria Division

THE NATIONAL ORGANIZATION FOR )

MARRIAGE, INC. ) )Plaintiff, )

)v. ) Civil Action No. 13-1225-JCC-IDD

)THE UNITED STATES OF AMERICA, et al. , )

)Defendants. )

_________________________________________ )

DEFENDANTS OBJECTIONS AND RESPONSES TO PLAINTIFFSFIRST DISCOVERY REQUESTS

Pursuant to Local Rule 26(C) and Federal Rules of Civil Procedure 33, 34, and 36,

Defendant, the United States of America, through its undersigned counsel, provides the

following responses and objections to Plaintiffs first set of interrogatories, requests for

admission, and requests for production of documents in the above-captioned action. The

responses below incorporate, as if fully set forth in general and for each specific discovery

request, the United States Objections to Plaintiffs First Discovery Requests, dated January 7,

2014. As discovery is ongoing and the Internal Revenue Service (IRS) is searching for

additional documents, the United States will supplement these discovery responses in accordance

with Fed. R. Civ. P. 26(e).

INTERROGATORY O BJECTIONS AND R ESPONSES

1. Identify the individual(s) who was/were in any way involved in the inspection,

dissemination and/or disclosure of Plaintiffs return and/or return information as well as the

supervisor(s) of the individual(s).



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2

Response: Defendant incorporates its objections dated January 7, 2014 in its response to

this interrogatory. Subject to these objections, Defendant states as follows: Wendy J. Peters is

identified as being involved in the disclosure of Plaintiffs amended 2008 Form 990, Return of

Organization Exempt From Income Tax (Form 990), including an unredacted Schedule B.

Her former immediate supervisor was Ben Aaron Johanson. The United States also contends

that Matthew Meisel was involved, and that individuals associated with the Human Rights

Campaign (HRC), the Huffington Post, and other news outlets and third parties may have been

involved in the unforeseeable dissemination of Plaintiffs amended 2008 Form 990, unredacted

Schedule B. The United States does not know these individuals supervisors, if any.

2. For each individual(s) identified in Interrogatory Number 1, state all facts and

describe in detail any inspections and/or disclosures of NOMs return and return information,

including the following for each disclosure:

(a) What specific return and/or return information was inspected and/or disclosed;

(b) Where and when such inspection(s) and/or disclosure(s) occurred;

(c) Regarding disclosure(s), to whom was the return and/or return information disclosed;

(d) Regarding disclosure(s), whether and how the disclosure(s) was/were requested;

(e) Which individuals associated with the United States, if any, were consulted or

informed of the inspection(s) and/or disclosure(s);

(f) When any individuals listed in (e), if any, were informed of such inspection(s) and/or

disclosure(s);

(g) Identify all documents and persons with knowledge that tend to support or undermine

your contentions in (a) through (f) above.



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3


this interrogatory. Subject to these objections, Defendant states as follows:

(a) The United States has admitted, subject to its legal defenses as stated in its Answer,

that one inadvertent disclosure of Plaintiffs amended 2008 Form 990, unredacted Schedule B

occurred. The United States has denied (and continues to deny) that there were any unauthorized

inspections of Plaintiffs return or return information.

(b) The United States contends that the disclosure occurred on or around March 14, 2011

when the return was sent out from the IRS Ogden Service Center in Ogden, Utah.

(c) The United States contends that Plaintiffs amended 2008 Form 990, unredactedSchedule B was disclosed to Matthew Meisel.

(d) The United States contends that Matthew Meisel requested Plaintiffs 2008 Form 990

via an IRS Form 4506-A, Request for Public Inspection or Copy of Exempt or Political

Organization IRS Form, around January, 2011.

(e) The United States objects that this information is not reasonably calculated to lead to

the discovery of admissible evidence. Furthermore, the United States avers that it does not know

the exact number of individuals associated with the United States that were informed of the

disclosure because answering this interrogatory would require the United States to expend a

disproportionate and exorbitant number of hours to locate and provide irrelevant information

located in executive agencies offices nationwide in order to determine who was consulted or

informed of the inspection(s) and/or disclosure(s). Moreover, Plaintiffs interrogatory is vague

because it does not delineate whether the individuals were informed of the disclosure from

within the IRS or outside sources, such as media, when such individuals were informed of the

disclosure, or whether Plaintiffs interrogatory includes individuals informed or consulted after



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4

the filing of this action. Subject to these objections and the general objections incorporated

above, the United States avers that, after the publication of Plaintiffs amended 2008 Form 990,

unredacted Schedule B in late March and early April 2012 by persons not employed by or

affiliated with the IRS, the following individuals were informed of the disclosure or were asked

to help determine whether a disclosure had been made: agents and employees for the Treasury

Inspector General for Tax Administration (TIGTA); IRS employees listed or otherwise named

in the TIGTA Report of Investigation (ROI), dated October 10, 2012; Sherry Whitaker, Robert

Blackwell, David Hamilton, Karl Hinds, Michael Leszcz, Ben Aaron Johanson, Kelli Graser,

Connie Peek, Debra Scott, JaLynne Archibald, Debbie Bybee, Rhonda Gill, Linda Oram, StacyFisher, Christina DAmico, Roberta Zarin, Lois Lerner, Michelle Eldridge, David Fish, Joseph

Urban, Dawn Marx, Andy Megosh, Laurice Ghougasian, Holly Paz, Joseph Grant, Doble

Gregorio, Maria Hooke, Moises Medina, Richard Daly, Marian Bodart, Justin Lowe, Thomas

Miller, Judith Kindell, Sharon Light, Christina Navarrete-Wasson, Jeffrey Cooper, Kevin

Cunningham, Marci Ansley Plyer, Christina Hartman, Shelley Moore, Steven Miller and J.

Russell George. To the extent any other individuals are not listed, and in accordance with Fed.

R. Civ. P. 33(d), the United States incorporates any other individuals listed in the documents

produced in response to Plaintiffs document requests that involve communications pertaining to

the disclosure of Plaintiffs amended Form 2008, unredacted Schedule B.

(f) The United States objects that this information is not reasonably calculated to lead to

the discovery of admissible evidence. Subject to these objections and the general objections

incorporated above, individuals associated with the United States were informed on various dates

of the disclosure of Plaintiffs amended 2008 Form 990, unredacted Schedule B, beginning on or

around April 5, 2012.



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5

(g) The United States identifies the TIGTA ROI, dated October 10, 2012, in support of its

contentions, the relevant sections of the Internal Revenue Manual (IRM) that identify the

applicable policies, and the IRS database history indicating approximately when the Letter

3983C, EO Photocopy Request Response, at issue was processed in March 2011. The United

States will identify additional responsive documents if and when they are produced. Individuals

with knowledge in support of the United States contentions include individuals listed or

identified in (i) the TIGTA ROI, (ii) documents produced by HRC and Matthew Meisel, (iii) the

United States initial disclosures, and (iv) in response to subpart (e) of this interrogatory.

3. Please state with specificity all facts and identify all documents that tend to

support or undermine your contention that the disclosure of Plaintiffs return and/or return

information was inadvertent and limited to one occurrence. See Answer, 105-08.


this interrogatory. Subject to these objections, Defendant states as follows with regard to

documents: The United States identifies the TIGTA ROI in support of its contentions, the

relevant sections of the IRM that identify the applicable procedures and policies governing the

disclosure, and the documents pertaining to the processing of and response to the Form 4506-A

at issue (including when the responding RAIVS (Return and Income Verification Services)

clerk entered a command into the IRS database system used by RAIVS clerks to instruct the

system to prepare a 3983C letter). The United States will identify additional responsive

documents if and when they are produced. With regard to the facts and in addition to the United

States January 7, 2014 objections, the United States objects to this interrogatory as unduly

burdensome because it demands that Defendant prove a negative that more than one



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6

disclosure occurred. Plaintiff bears the burden of demonstrating that more than one disclosure

occurred. Facts that support or undermine the United States contentions are included in the

TIGTA ROI and the applicable documents pertaining to the processing of requests for Plaintiffs

Form 990. Furthermore, as the United States is still developing its defense of this case, the list of

facts in support of its contentions is necessarily incomplete. Subject to those statements, the

United States contends that the following facts support that the sole disclosure in this case was

inadvertent for the following reasons, among others:

(a) the diagonal watermark on the excerpted version of Plaintiffs amended 2008Form 990, unredacted Schedule B that was included in Plaintiffs Verified

Complaint in this case, and which was disclosed by the IRS and later allegedlydisseminated by the Human Rights Campaign and the Huffington Post(100560209), is a unique identifying number created as a watermark by theIRS database system that indicates the specific IRS employee who accessedPlaintiffs amended 2008 Form 990 on a specific date and time in response to aForm 4506-A;

(b) that identifying number is never repeated and is embedded into the tax returnwhen it is accessed and caused to be printed out by the IRS employee;

(c) querying the IRS database regarding that unique identifier revealed that a low-level IRS RAIVS clerk properly accessed Plaintiffs amended 2008 Form 990,including the unredacted Schedule B, in January 2011 and printed it in order torespond to a completed IRS Form 4506-A;

(d) the IRS had properly scanned two versions of Plaintiffs amended 2008 Form 990 one with a redacted Schedule B and one with an unredacted Schedule B into the IRS database;

(e) at the time of the disclosure, the IRS clerk who inadvertently disclosed theunredacted Schedule B from Plaintiffs amended 2008 Form 990 was not aware ofPlaintiffs mission, its viewpoint, its agenda, or its officers;

(f) there are no facts that support that the IRS clerk was directed, instructed, bribed,coerced, blackmailed, or otherwise influenced by anyone to release Plaintiffsamended 2008 Form 990, Schedule B without the proper redactions;

(g) the IRS clerk does not recall the request for Plaintiffs 2008 Form 990, nor doesshe recall processing the request;



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(h) the IRS clerk has denied intentionally disclosing Plaintiffs amended 2008 Form990, Schedule B without the proper redactions;

(i) at the time of the disclosure, the IRS clerk did not know Matthew Meisel, Kevin Nix, Sam Stein, anyone at the Human Rights Campaign (HRC) or the

Huffington Post, or Fred Karger;

(j) at the time of the disclosure, the clerk did not know any of the other individualsPlaintiff identified to TIGTA as persons who disagree with Plaintiffs mission;

(k) at the time of the disclosure, the IRS clerk was processing a substantial majorityof the approximately 100 to 300 requests for copies of Form 990s the IRSreceived per week;

(l) the IRS Wage and Information Division (W & I) unit tasked with responding torequests for Form 990s the W & I RAIVS unit located in the Ogden, Utah IRS

Service Center processed over approximately 11,000 Form 4506-A requests in2010 and over approximately 13,000 Form 4506-A requests in 2011;

(m) at the time of the disclosure and through the time of the TIGTA investigationleading to its ROI dated October 10, 2012, the IRS W & I Ogden AccountingOperations Quality Review unit, which reviewed RAIVS unit completed workrelated to the IRS production of copies of Form 990s, had never detected errorswith regard to the IRS clerk who disclosed Plaintiffs amended 2008 Form 990,unredacted Schedule B;

(n) before responding to Mr. Meisels request for the Form 990, the IRS clerk

contacted an IRS media relations specialist to determine whether Mr. Meisel wasa member of the media, which he claimed to be when he completed and filed theIRS Form 4506-A;

(o) before responding to Mr. Meisels request for a copy of Plaintiffs Form 990 andafter she printed both copies of the original and the amended versions ofPlaintiffs 2008 Form 990s, the IRS clerk waited over a month for the IRS mediarelations specialist to determine that Mr. Meisel was not a member of the media;

(p) the IRS clerk e-mailed the IRS media relations employee a total of five times between January and March, 2011, waiting for a determination of Mr. Meisels

status as a member of the media;(q) Mr. Meisel also requested Plaintiffs 2007 Form 990, which the IRS produced at

the same time as its amended 2008 Form 990, in March 2011;

(r) in January, 2011, the IRS clerk printed both versions of Plaintiffs 2008 Form990, including an unredacted Schedule B, at a printer located within the RAIVSunit;



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(s) after printing Plaintiffs amended 2008 Form 990 in January 2011, the IRS clerkfailed to redact the names and addresses of Plaintiffs contributors, even thoughredacting that information was her responsibility and normal practice and

procedure, and was required to satisfy the Internal Revenue Code and the IRS

policies and procedures;

(t) the IRS clerk did not produce to Mr. Meisel a copy of Plaintiffs original 2008Form 990, a tax return that included a Schedule B that listed more donors than theSchedule B attached to Plaintiffs amended Schedule B;

(u) the IRS clerk caused the IRS systems to create a Form 3983C letter, which is atypical letter used in responding to Form 4506-A requests;

(v) the IRS clerk did not mail the copy of Plaintiffs Forms 990 that were produced toMr. Meisel. The IRS clerk sent photocopied Forms 990 to the CRX unit, which

was responsible for assembling photocopied tax forms together with 3983C lettersresponding to the persons requesting the copies. A 3983C letter was printed at theOgden Service Center print center in response to an instruction entered into theIRS database system and sent to CRX, where it was assembled with the relevant

photocopied Forms, and put out for picking up by IRS mail clerks and mailed;

(w) the IRS produced a 3983C letter and the 2007 Form 990 and amended 2008 Form990 in response to a Form 4506-A request;

(x) the actual disclosure of Plaintiffs amended 2008 Form 990, unredacted ScheduleB to Mr. Meisel occurred in or around March, 2011, a year before the disclosure

became widely known and a year before the Schedule B information wasunforeseeably publicized and disseminated by HRC, the Huffington Post, andFred Karger;

(y) the Internal Revenue Service responded to three subsequent Form 4506-Arequests for Plaintiffs Form 990s in August, September and December 2011,including two by the clerk who inadvertently disclosed the Form 990 at issue,and properly redacted the names and addresses of Plaintiffs contributors; and,

(z) the Internal Revenue Service played no part in any effort by any third parties,including Mr. Meisel, HRC, or the Huffington Post, to obscure the unique

identifiers located on the Schedule B that Plaintiff allegedly uncovered through itsinvestigation.



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4. Please state with specificity all facts and identify all documents that tend to

support or undermine your contention that the United States did not engage in any unauthorized

inspections. See Answer, 112.


this interrogatory. Specifically, Defendant states that Interrogatory 4 is unduly burdensome

because it demands that Defendant prove a negative. Plaintiff bears the burden of proving that

Defendant engaged in any alleged unauthorized inspection but has asserted no facts supporting

such a contention. Subject to and without waiving its objections, the United States states that the

IRS clerk properly inspected Plaintiffs 2007 and 2008 Form 990 in order to respond to MatthewMeisels Form 4506-A request.

5. Please identify each and every individual or entity who was an employee,

contractor or vendor of or to the United States that conducted any kind of analysis (including

computer and/or forensic), investigation (whether internal or conducted by a third party), created

any report, conducted any interviews or provided any presentations to the United States relating

to the disclosure and/or inspection of NOMs return and return information or this lawsuit, and

identify all documents relating to the same.


this interrogatory. Subject to these objections, Defendant states as follows: The United States

identifies the TIGTA ROI in support of its contentions, and will identify additional responsive

documents if and when they are produced. Subject to those statements, the United States

identifies the following individuals and entity in response to this interrogatory: TIGTA and

agents of TIGTA, as identified in the TIGTA ROI; IRS employees identified in the TIGTA ROI,



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and individuals identified in the documents produced in response to Plaintiffs document

requests.

6. Identify and describe Internal Revenue Service policies concerning the handling

of requests for confidential tax information, including procedures regarding redactions.


this interrogatory. Subject to these objections, Defendant states that IRS policies concerning the

handling of requests for Exempt Organizations Form 990s, including the procedures regarding

redactions, will be produced in response to Plaintiffs request for production of documents.These documents include 26 U.S.C. 6103 & 6104 (including their applicable regulations);

IRM sections 3.20.12 (Imaging and Perfecting Exempt Organization Returns for Public and

Internal Viewing), 3.20.13 (Exempt Organization Photocopy Procedures), 11.3.9 et seq.

(Disclosure of Official Information Exempt Organizations), Form 4506-A, 3983C letters, and

other general documents that outline the scanning and processing of Exempt Organizations

Form 990s. Examples of these documents exist in the United States production. These IRM

sections describe the applicable policies and procedures concerning how the IRS processes,

responds to and retains Form 4506-A requests. Furthermore these IRM sections describe the

redacting of a Form 990 Schedule B when an exempt organization tax return is filed with the

IRS. Finally, the sample Forms 4506-As and 3983C letters provide examples pertaining to the

forms requesting and documents accompanying an IRS production of copies of Forms 990.

7. Identify all persons who provided training relating to the disclosure of return

information to any individual(s) identified in response to Interrogatory Number 1.



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this interrogatory. Subject to these objections, Defendant states as follows: The United States

identifies the following IRS individuals in response to this interrogatory: Marylou Andrews

(ret.) provided on-the-job training, including on the relevant governing IRM provisions, to

Wendy Peters relating to the photocopying and disclosure of return information. Computer

training on disclosure and privacy issues was provided by the centralized IRS Training

department. Various individuals, including RAIVS employees, provided on-the-job training to

Ben Aaron Johanson.

8. Identify the date, type and nature of training provided to any individual(s)

identified in Interrogatory Number 1.


this interrogatory. Subject to these objections, Defendant states that Wendy Peters was provided

on-the-job training, a W & I February, 2009 training regarding the procedures for processing tax

form transcript requests received through the Income Verification Express Service (IVES)

program, in addition to learning about the protocols detailed in the Internal Revenue Manual,

through on-the-job training and experience gained from preparing numerous responses to Form

4506-A requests. IRS computerized trainings on disclosure and privacy issues were provided on

September 22, 2008, and on information security on April 21, 2009, and April 13, 2010.

Documents regarding training are being produced by the government.



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9. Identify all persons within the Department of the Treasury and/or the Internal

Revenue Service, who communicated, either internally or externally, regarding Plaintiff and the

inspection and/or disclosure of Plaintiffs confidential return and/or return information.


this interrogatory. Defendant specifically objects to the overly broad and unduly burdensome

request for information regarding Plaintiff, as applied to any communication, internally or

externally, by all persons within two large government agencies with tens of thousands of

employees, in the context of this case, which pertains to a lone, inadvertent disclosure of tax

return information. As such, the Defendant would be required to expend an exorbitant numberof hours to locate and identify all individuals in offices nationwide in order to determine who

may have communicated with anyone regarding Plaintiff and the inspection and/or disclosure of

Plaintiffs confidential return and/or return information. Moreover, Defendant objects because

this interrogatory is irrelevant and not reasonably calculated to lead to the discovery of

admissible evidence. Subject to these objections, Defendant states that IRS and TIGTA

employees listed in the TIGTA ROI, as well as individuals listed in response to subpart (e) of

Interrogatory 2 and other individuals identified in the documents produced in response to

Plaintiffs document requests, communicated about Plaintiff after the publishing of Plaintiffs

amended 2008 Form 990, Schedule B and as it related to the disclosure of its amended 2008

Form 990, Schedule B.

10. Identify all Internal Revenue Manual [sic] Treasury Regulations, Delegation

Orders, Treasury Orders, Treasury General Counsel Orders, General Counsel Memoranda, Chief



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Counsel Advice, Internal Revenue Bulletins, Revenue Procedures, and Technical Advice

Memoranda, relating to the inspection and the disclosure of returns or return information.

Response: Defendant objects to Interrogatory 10 as unduly burdensome because

Plaintiff has equal access to public documents that may be responsive to Plaintiffs request.

Plaintiff seeks those materials that Defendant believes relat[e] to the inspection and the

disclosure of returns or return information, and, therefore, Defendant objects because

Interrogatory 10 seeks attorney work product and it requires Defendants counsel to conduct

legal research for Plaintiff, which is not proper under Fed. R. Civ. P. 33. Subject to and without

waiving these objections, the Defendant identifies the following materials that concern thedisclosure of return information under 26 U.S.C. 6103, 6104: portions of the Code of Federal

Regulations, including, 26 C.F.R. 301.6103(a)-1, 301.6103(a)-2, 301.6103(c)-1,

301.6103(h)(2)-1, 301.6103(1)-1, 301.6103(j)(1)-1, 301.6103(j)(1)-1T, 301.6103(j)(5)-1,

301.6103(k)(6)-1, 301.6103(k)(9)-1, 301.6103(l)-1, 301.6103(l)(2)-1, 301.6103(l)(2)-2,

301.6103(l)(2)-3, 301.6103(l)(14)-1, 301.6103(m)-1, 301.6103(n)-1, 301.6103(n)-2,

301.6103(p)(2)(B)-1,301.6103(p)(4)-1, 301.6103(p)(7)-1; 26 C.F.R. 301.6104(a)-1,

301.6104(a)-2, 301.6104(a)-3, 301.6104(a)-4, 301.6104(a)-5, 301.6104(a)-6, 301.6104(b)-1,

301.6014(c)-1, 301.6104(d)-0, 301.6104(d)-1, 301.6104(d)-2, 301.6104(d)-3; 26 C.F.R.

601.702; IRM sections 3.5.20, 3.11.12, 3.20.12, 3.20.13, and 11.3.1 et seq. (specifically 11.3.9),

and others cited in response to Interrogatory 6, above. In addition, the Disclosure and Privacy

Law Reference Guide, Publication No. 4639, Catalogue No. 50891P, a publication of the IRS,

Office of Chief Counsel, Procedure & Administration, is made available to the public at

www.irs.gov . In particular, Chapter 13, Part III, of that publication addresses Publicity of

Information Required From Certain Exempt Organizations I.R.C. 6104.



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11. If the documents in response to any of these interrogatories or requests for

production are in the possession of a third party, and you are not providing them in response to

any of the document production requests, please identify the third party and which document(s)

it possesses.

Response: The United States identifies Matthew Meisel as a third party that may possess

documents that are responsive to this request. These documents could include the Form 4506-A

Mr. Meisel submitted to the IRS, the 2007 and 2008 Form 990s he received from the IRS and the

3983C letter that accompanied the IRS response.

12. Please identify all individuals who assisted in and/or conferred with you in the

preparation of the responses to these interrogatories, the requests for production of documents

and the requests for admission.

Response: Defendant objects to Interrogatory 12 to the extent it seeks information that is

subject to the attorney-client privilege, protections of the attorney work-product doctrine, or the

law enforcement investigative privilege. Subject to these objections, Defendant states that

counsel for the United States, counsel for the Internal Revenue Service and counsel for TIGTA

assisted in or were conferred with regarding the preparation of Defendants responses to

Plaintiffs first set of discovery. Beyond those individuals and the individuals who provided

counsel with copies of the documents in their possession and/or control, the following

individuals assisted in or were conferred with in the preparation of the responses to Plaintiffs

first set of discovery: Karl Hinds, JaLynne K. Archibald, Christina L. Navarrete-Wasson, Connie

Peek, and Sherry Whitaker.



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13. If you do not provide an unqualified admission in response to all of the requests

for admission below, separately for each request for admission, state all facts and identify all

persons with knowledge and documents that support your response.

Response: To the extent the United States does not provide an unqualified admission,

the facts, individuals, and documents in support of its response are listed for each request,

respectively.

DEFENDANT S O BJECTIONS AND R ESPONSES TO SPECIFIC R EQUESTS FOR ADMISSION

1. Please admit that NOMs 2008 Schedule B that was published on the HumanRights Commission and the Huffington Posts websites on March 30, 2012 is identical to the

version that was disclosed by the United States.


this request for admission. Subject to those objections, the United States responds as follows:

the United States is unable to admit or deny based upon a diligent inquiry. The United States

does not have the exact document that was produced to Matthew Meisel and does not know what

was published on the Human Rights Campaign and the Huffington Posts websites on March 30,

2012. The United States admits that the unique identifying diagonal watermark on the excerpted

page from Plaintiffs amende