Free Joint Status Report - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS No. 04-683 T (Judge Marian Blank Horn) (Consolidated with Nos. 05-695 T, 05-696 T, 05-1074 T, 05-1315 T, & 05-1384 T)

JOHN E. KETTLE and ANNE R. KETTLE, Plaintiffs v. THE UNITED STATES, Defendant.

JOINT STATUS REPORT

Related to the Court's Order [Doc. #33] filed January 4, 2008, the parties provide the following joint status report. The impetus for this report is the decision rendered on April 16, 2008, in the representative AMCOR case Prati v. U.S., Fed. Cl. No. 02-60 T [Doc. #87]. A copy of the decision is attached. Pending before the Court are six AMCOR cases, which divide into two groups. Group I has two cases: (1) Kettle, Fed. Cl. No. 04-683 T; and (2) Weidemann, Fed. Cl. No. 05-1384 T. Group II has four cases: (1) Plowman, Fed. Cl. No. 05-695 T; (2) Glass, Fed. Cl. No. 05-696 T; (3) Mitchell, 05-1074 T; and (4) Brandsted, Fed. Cl. No. 05-1315 T. The attached Prati decision impacts the "Group I Report" set forth below, but does not change the parties' basic proposal that the Court continue the stay in the two Group I cases (Kettle and Weidemann) and wait until final appellate action, before dismissing the period of

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limitation and tax motivated interest claims in those two cases. I. Group I Report Regarding Group I (Kettle and Weidemann), the parties report on the progress in the following five cases: (1) Keener, Fed. Cl. No. 03-2028 T; (2) Smith, Fed. Cl. No. 04-907 T; (3) Isler, Fed. Cl. No. 01-344 T; (4) Scuteri, Fed. Cl. No. 01-358 T; and (5) Prati, Fed. Cl. No. 02-60 T. A. Progress Report

(1) Keener, Fed. Cl. No. 03-2028 T and (2) Smith, Fed. Cl. No. 04-907 T: Keener and Smith present claims like the claims raised in the two Group I cases. Keener and Smith were consolidated on August 11, 2005, for briefing of dispositive motions. On April 18, 2007, Judge Allegra issued an opinion in Keener and Smith, granting defendant's partial motion to dismiss for lack of jurisdiction taxpayers' period of limitations and tax motivated interest claims.1 Judgment entered in Keener and Smith on August 17, 2007. Under the decision, the Court lacks subject matter jurisdiction over the period of limitations and tax motivated interest claims in the two Group I cases (Kettle and Weidemann). Plaintiffs' attorneys, however, filed a notice of appeal on October 15, 2007, and filed their appellate brief on February 12, 2008. The Government's appellee brief is currently due in May 2008. (3) Isler, Fed. Cl. No. 01-344 T; (4) Scuteri, Fed. Cl. No. 01-358 T; and (5) Prati, Fed.

On August 8, 2007, the parties filed a joint stipulation of dismissal of the interest abatement claims in Keener and Smith, as a result of the Supreme Court's decision in Hinck v. United States, 127 S.Ct. 2011 (2007). Pursuant to Hinck, the Court dismissed the interest abatement claims in the two Group I cases - Kettle, Fed. Cl. No. 04-683 T and Weidemann, Fed. Cl. No. 05-1384 T. See Order [Doc. #26], Fed. Cl. No. 04-683 T. -2-

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Cl. No. 02-60 T: Isler, Scuteri, and Prati present claims like the claims raised in the two Group I cases and Isler and Scuteri also present claims like the claims raised in the four Group II cases.2 Regarding the claims like those raised in the two Group I cases: On October 8, 2004, the Court heard oral argument in Isler, Scuteri, and Prati. The United States filed an additional motion for partial dismissal in Isler on December 12, 2005, in Scuteri on February 3, 2006, and in Prati on June 2, 2006. Plaintiffs filed their responses in Isler and Scuteri on July 17, 2006, and their response in Prati on July 18, 2006. The United States filed its replies on August 28, 2006. On September 29, 2006, defendant filed an additional/alternative ground in support of its motion for partial dismissal in all three cases. Plaintiffs filed their responses on November 13, 2006, and the United States filed its replies on November 30, 2006. The Court held oral argument on all pending motions on May 1, 2007. Plaintiffs filed their post oral argument supplemental brief on July 5, 2007. The United States filed its response on October 4, 2007. On April 16, 2008, Judge Block issued an opinion and order in Prati, granting defendant's motions to dismiss for lack of jurisdiction taxpayers' claims regarding period of limitations, tax motivated interest, and abatement of interest, and ordering all claims in Prati be dismissed and 76 other related AMCOR cases be dismissed. Under the Prati decision, as under the Keener decision, the Court lacks subject matter jurisdiction over the period of limitations and §6621(c) tax motivated interest claims in the two Group I cases (Kettle and Weidemann). Plaintiffs' attorneys, however, intend either to appeal the Prati decision and the 76

This statement is corrected from past reports, which included Prati as also presenting claims like the claims raised in the four Group II cases. Prati, however, only raised claims like the claims raised in the two Group I cases. -3-

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related cases dismissed with Prati, and/or to pursue a course of action that would permit Prati and/or the 76 related cases to be held in abeyance pending the outcome of the Keener appeal. B. Plaintiffs' Additional Statement:3

There is a split on the §6621(c) penalty interest jurisdictional issue in the Court of Federal Claims that will more than likely be decided by the outcome of the appeal in Keener. In a different set of partnership cases, the Elektra cases, Judge Lettow held that this court does have jurisdiction over §6621(c) penalty interest claims based on the same arguments raised by the government in Keener and Prati. McGann v. U.S., 76 Fed.Cl. 745 (2007). Judge Lettow is currently in the process of addressing the merits of the taxpayers' §6621(c) penalty interest claims. Therefore, his McGann opinion is not yet ripe for appeal. Moreover, there is a split on the §6621(c) penalty interest jurisdictional issues between this Court and the district courts of the Fifth Circuit. Two independent district courts have rejected the government's jurisdictional arguments in another AMCOR case and another Elektra case. Mellina v. United States, 518 F.Supp.2d 825, 829 (N.D.Tex.2007)(AMCOR) and Bartimmo v. U.S., 525 F.Supp.2d 879 (S.D.Tex.,2007)(Elektra). The government appealed those decisions but later voluntarily dismissed those appeals. Mellina v. United States, Docket No. 07-11302 in the Fifth Circuit and Bartimmo v. United States, Docket No. 08-20060 in the Fifth Circuit. The government later conceded the same §6621(c) penalty interest jurisdictional issues in another case pending in the Southern District of Texas. Kapusta v. United States, Docket No. 03-3929. Plaintiffs' attorneys here represent the taxpayers in the other cases referenced in this

Defendant does not agree with plaintiffs' additional statement and also considers it to be unnecessary and inappropriate argument for a joint status report. -4-

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report and have appealed the Keener decision, including the issue of this Court's subject matter jurisdiction over §6621(c) tax motivated interest claims to the Federal Circuit, where plaintiffs' attorneys believe any conflict with McGann as to jurisdiction will be resolved. C. Group I Proposal

The parties propose the Court continue the stay in the two Group I cases (Kettle and Weidemann) and wait until final appellate action in Keener and Prati, before dismissing the period of limitation and tax motivated interest claims in the two Group I cases (Kettle and Weidemann). II. Group II Report Regarding Group II (Plowman, Glass, Michell, and Brandsted), the parties report on the progress in the following five cases: (1) LeBlanc, Fed. Cl. No. 05-743 T; (2) Schell, Fed. Cl. No. 04-1743 T; (3) Isler, Fed. Cl. No. 01-344 T and (4) Scuteri, Fed. Cl. No. 01-358 T. A. Progress Report

(1) LeBlanc, Fed. Cl. No. 05-743 T: This case presents claims like the claims raised in the four Group II cases. Defendant moved to dismiss plaintiffs' complaint on December 7, 2007, plaintiffs responded on January 7, 2008, and defendant filed its reply on February 15, 2008. (2) Schell, Fed. Cl. No. 04-1743 T: This case presents claims like the claims raised in the four Group II cases. Defendant moved to dismiss plaintiffs' complaint on December 20, 2007, and plaintiffs responded on April 2, 2008. (3) Isler, Fed. Cl. No. 01-344 T and (4) Scuteri, Fed. Cl. No. 01-358 T, Fed. Cl. No. 0260 T: As noted above, Isler and Scuteri, in addition to presenting claims like the claims raised in the two Group I cases, present claims like the ones raised in the four Group II cases. However,

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there has, to date, been no litigation of the claims in Isler and Scuteri that are like the claims in the four Group II cases. The litigation has focused instead on the claims similar to those raised in the two Group I cases. B. Group II Proposal

The parties continue to propose the Court stay the four Group II cases (Plowman, Glass, Mitchell, and Bransted), until Schell or LeBlanc or both are resolved.

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Plaintiffs' attorney has authorized defendant's attorney to sign this joint status report on her behalf. Respectfully submitted, 4/23/2008 Date s/Teresa J. Womack by s/Bart D. Jeffress TERESA JEAN WOMACK Redding & Associates, P.C. P.O. Box 924328 Houston, Texas 77292-4328 (713) 965-9244 (713) 621-5227 (fax) Attorney for Plaintiffs 4/23/2008 Date s/Bart D. Jeffress BART D. JEFFRESS Attorney of Record U.S. Department of Justice Tax Division Court of Federal Claims Section Post Office Box 26 Ben Franklin Post Office Washington, D.C. 20044 (202) 307-6496 (202) 514-9440 (fax) NATHAN J. HOCHMAN Assistant Attorney General DAVID GUSTAFSON Chief, Court of Federal Claims Section STEVEN I. FRAHM Assistant Chief, Court of Federal Claims Section 4/23/2008 Date s/Steven I. Frahm Of Counsel Attorneys for Defendant