Although the court concluded in Loving, et al. v. IRS, et al. that it may be wise as a policy matter to allow the IRS to regulate tax-return preparers more stringently, the court held firm to its traditional tools of statutory interpretation and ruled that Section 330 did not allow for such regulation. Section 330 authorizes the IRS to “regulate the practice of representatives of persons before the Department of the Treasury.” The IRS interpreted the statute to mean that it authorized the regulation of tax-return preparers. However, three independent tax-return preparers argued that the interpretation of the IRS exceeded the agency’s authority under the statute. The court decided to handle the issue of whether Section 330 gives the IRS authority to regulate tax-return preparers by employing all of the tools of statutory interpretation. These tools include text, structure, purpose, and legislative history.
First, the court found that the term “representatives” in the statute should not include tax-return preparers because a representative is traditionally someone who has the authority to bind others. Tax-return preparers cannot legally bind the taxpayer by acting on the taxpayer’s behalf. Second, the phrase “practice…before the Department of the Treasury” ordinarily refers to practice during an investigation, adversarial hearing, or other adjudicative proceeding, which is different from the process of filing a tax return. Next, the court considers the history of the statute. The original language of the statute enacted in 1884 would not encompass tax-return preparers. The statute specified the agency’s regulation of “agents, attorneys, or other persons representing claimants before his Department…otherwise competent to advise and assist such claimants in the presentation of their cases.” Furthermore, when Congress re-codified the statute, it made it clear that there was no substantive change. Therefore, the court held that the traditional tools of statutory interpretation rendered the IRS’s interpretation of Section 330 unreasonable and thus affirmed the judgment of the District Court.
By Ashley Ellerbe, JD,cum laude, from Florida Coastal School of Law, May 2013, , Practicing in Atlanta GA.
By Contributor Attorney Ashley T. Ellerbe, JD, cum laude, Phi Delta Phi Legal Honor Society, Florida Coastal School of Law, former legal intern for CSX Corporation.
For some copyright holders, the ruling of the United States Ninth Circuit Court of Appeals in Inhale, Inc. v. Starbuzz Tobacco, Inc. may be a disappointing one.Although Inhale, Inc. had a registered copyright for the shape of a hookah water container, that registration would not grant them the protection that they anticipated.
Inhale sued Starbuzz claiming copyright infringement due to Starbuzz’s use of hookah water containers that were identical in shape to Inhale’s container. The district court held that although Inhale has a registered copyright, its copyright registration is invalid because the hookah water container is not copyrightable. The shape of the container is only copyrightable if the sculptural features are capable of existing independently of the utilitarian aspects of the container. Moreover, the distinctive shape of an item is not a factor in determining whether the artistic features can be separate from its usefulness. The district court concluded and the court of appeals affirmed that the shape of the container accomplishes its function which is to hold the contents within its shape, thus making the hookah water container uncopyrightable. Furthermore, to keep a tight seal on Pandora’s Box of potentially similar frivolous claims against innocent defendants, the court of appeals affirmed the lower court’s award of attorneys’ fees and the court of appeals awarded attorneys’ fees that incurred in the defense of the appeal.
Amazon.com, Inc. and other online retailers challenged the state of New York’s law requiring that they collect sales tax on online purchases by consumers. The New York Court of Appeals affirmed the state’s right to require the collection, rejecting the retailers’ claim that the law violated the Commerce Clause of the US Constitution, which limits the right of states to regulate interstate commerce.
This week, the United States Supreme Court declined to hear the case, leaving the Court of Appeals decision as the prevailing authority in that state. While 11 other states have similar state laws, there will likely be continuing litigation as state laws vary on this issue.
Legislation has been introduced in Congress, and the collection processes may become less burdensome in the future. These are two potential reasons suggested by commentators for the Supreme Court’s denial to hear the case.
It’s one thing to have a federal lawsuit by former so-called student athletes against the NCAA. It’s quite another to have current players suing the premier college sports regulator. And it is even more cataclysmic if the case is certified as a class action allowing innumerable student athletes to share the consequences. That is the revolution that some have advocated for decades. Yet an unceremonious court ruling days ago lighting a match to this war has been little more than a back page blurb or a verbal footnote in talk radio and sportscasts.
The discreet little ruling last week was from federal judge Claudia Wilken in a case where the lead plaintiff is former UCLA star basketball player Ed O’Bannon. He and several other former players claim the NCAA has been fixing the price of an athlete’s image and likeness in a way that virtually eliminates a player from sharing in the value they created. The suit alleges the NCAA colludes with its member schools, TV networks and videogame manufacturers in violation of anticompetitive provisions of federal antitrust law. The claimed relief includes a share of the billions in revenue generated from the current system.\
By William Fife, Florida Coastal School of Law graduate, Indiana University MA – International Relations.
Adopted in the first Judiciary Act of 1789, the Alien Tort Statute (ATS) is nearly as old as the American Republic itself. Although the ATS was included in this bedrock of American judicial power, the ATS has rarely been used to exercise jurisdiction in U.S. district courts as forums for lawsuits by foreign citizens against foreign defendants for torts in violation of international customary law or a treaty of the U.S. (28 USC § 1350). Congress furthered this standard by adopting the Torture Victim Protection Act (TVPA) in 1991 to enable both U.S. and foreign victims of torture and extra-judicial killing to seek redress in U.S. courts. Filartiga v. Pena-Irala in 1980 set ATS precedent by pursuing not just states but also individuals for violations of international customary law. Sosa v. Alvarez-Machain in 2004 affirmed Filartiga allowing federal courts to recognize claims for violations of international norms that are “specific, universal, and obligatory.” The ATS has also been used in several claims against multi-national corporations, such as Unocal, Royal Dutch Shell, and Caterpillar with varying results. However, the current U.S. Supreme Court, in Kiobel v. Royal Dutch Petroleum Co., limited the reach of the ATS by shielding corporate liability for international human rights violations—at least in terms of extraterritoriality.
In a unanimous decision, the Court in Kiobel held that “the presumption against extraterritoriality applies to claims under the ATS, and nothing in the statute rebuts that presumption.” Originally framed around the issue of whether or not there is corporate liability under the ATS, the Court then shifted focus to the issue of jurisdictional extraterritoriality. Why the about-face? Did the Court shift issue-focus to create a new limitation regarding extraterritoriality to avoid affirming corporate liability for human rights abuses abroad? The ATS only offers the following language: “the district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” The Court held that since the precise language of the ATS does not specifically state the ability for extraterritoriality, then it has none in order to avoid judicial interference in foreign policy.
In an apparent victory for limiting corporate liability for human rights abuses abroad, Kiobel still does not extinguish all claims against corporations under the ATS. The opening to pursue claims under the ATS against corporations has just been narrowed in terms of extraterritoriality. Justice Breyer’s concurrence provides the opening. In his view, “(T)oday’s pirates include torturers and perpetrators of genocide…and… they are “fair game” where they are found.”
William McCue, Florida Coastal School of Law student, Bachelors of Business Administration,Accounting from University of North Florida, and former tax accountant with two CPA firms in Florida.
In Bush v. United States, nineteen partners of Dillion Oil Technology Partnership were assessed penalties by the IRS for substantial underpayments of tax. The partnership experienced considerable losses that the individual partners claimed as deductions on their respective federal personal income tax returns. The IRS rejected most of the deductions. The tax was paid and sued for a refund. The dispute centered on whether the losses were associated with tax motivated transactions. The determination of whether a transaction is tax motivated is a partnership-level decision because it reflects the intent of the partnership in undertaking the transaction. The determination is not an individual partner-level decision. However, the partners are still liable for the partnership and the partners paid the tax and penalties in 2004. In 2006, the partners, as individuals, initiated a suit for refund.
The determinative issue became one of jurisdiction and the lack of a proper plaintiff. The Court of Federal Claims held that individual partners may not bring tax challenges relating to subject matter “attributable to a partnership item.” A tax transaction is “attributable to a partnership item” if it is due to, caused by, or generated by the partnership in conducting business. Claims that are attributable to the partnership must be brought in a partnership-level suit by the Partnership Representative or the Tax Matters Partner. Accordingly, the Court dismissed for lack of subject matter jurisdiction under the Tax Equity and Fiscal Responsibility Act, 1 I.R.C.7422 (h). The Federal Circuit affirmed the dismissal, calling the claim an impermissible collateral attack. For the full text of the opinion see http://docs.justia.com/cases/federal/appellate-courts/cafc/12-5051/12-5051-2013-05-30.pdf
By Contributor Joshua Goldsborough, graduate of Florida Coastal School of Law, after working with Well Fargo Financial, and was an intern for the Florida Chief Financial Officer.
The issue is whether Defendants, Omnicare, Incorporated, its officers, and directors, made material misstatements and/or omissions to Plaintiff investors. The investors bought Omnicare securities in connection with a December 2005 public stock offering.
Relief may be sought under § 11 of the Securities Act of 1933, which provides a remedy for investors who have acquired securities under a registration statement that was materially misleading or omitted material information. Furthermore, it imposes liability on issuers and signers of registration statements containing untrue statements or omissions of material fact.
Here, Plaintiffs allege that Omnicare’s Registration Statement stated that Omnicare’s therapeutic interchanges were meant to provide patients with more efficacious and/or safer drugs than those presently being prescribed and that its contracts with drug companies were “legally and economically valid arrangements that bring value to the healthcare system and patients that we serve.” Plaintiffs argue that these representations were material, untrue and misleading because they effectively concealed Omnicare’s illegal activities from its investors.
Omnicare argues that liability only exists to the extent that the statement was both objectively false and disbelieved by the defendant at the time it was expressed. Furthermore, Omnicare argues that Plaintiff’s failed to state a claim and moved to dismiss the complaint because Plaintiff’s did not adequately plead any allegations that Omnicare knew that the legal compliance statements were false when made.
The court held that the plaintiffs had not adequately pleaded knowledge of wrongdoing.
The Supreme Court of Florida examined a case certified by a lower court as an issue of great public importance held that Florida’s statute of limitations applies to an arbitration proceeding because it is within the statutory term “civil action or proceeding” under section 95.011 of Florida statutes. This case involved a mandatory provision for clients of Raymond James Financial Services, Inc. to arbitrate all disputes arising from their investments. A group of investors claimed that the statute only applies to judicial actions, not contractual arbitration clauses, and thus claims could be brought against Raymond James beyond the statutory deadlines. The Supreme Court reversed the 2nd District Court of Appeals, reasoning that the statutory terms “action” or “proceeding” was intended by the Florida legislature to include an adjudication by an arbitrator since the parties are engaged in a legal process to resolve a dispute. Additionally, the Court stated that if the legislature had intended to limit proceedings to only judicial actions, it would have so declared. The statute did not include that limitation, so the Court refused to add that limitation. See the Supreme Court opinion, Case No. SC11-2513 (May 16, 2013).
Contributor: Roger M. Groves, Professor of Law, Director of Business Law Program
On May 1, 2013, the US Federal Circuit Court of Appeals held that even when a company adapted a software pricing system that prevented users from saving data into certain fields, the jury finding of a direct infringement was upheld. In Versata Software, Inc. v SAP AM., Inc. the plaintiff had a pending patent on a pricing system, and sold it as an addition to companies like the defendant software maker SAP. While Versata’s patent application was pending, SAP released a new version of its software that infringed the plaintiff’s product. The Defendant thereafter modified its own product to make it less available to users. But the jury concluded that the products still infringed and awarded plaintiff $260 million in lost profits and royalties of $85 million.
By Contributor Roger M. Groves, Professor of Law and Director of the Business Law Program at Florida Coastal School of Law.
A small startup company, Aereo, provides a method of streaming broadcast TV through a browser. It provides a DVR in a cloud storage system by micro-version TV antennas, thereby rebroadcasting programming content found in the public airwaves. Aero has recently been sued by a contingent of broadcasters, including Fox, Univision, and PBS and a majority of the media outlets in New York City. The claim is that Aereo infringes of their copyrights. The broadcasters seek an injunction to immediately stop Aereo’s activities and attendant monetary damages.