[00:00:00] Speaker 04: Case number 21-5258, Bradley asked Waterman a balance versus Internal Revenue Service. [00:00:07] Speaker 04: Mr. Vlodet for the balance, Ms. [00:00:09] Speaker 04: Oveta for the appellee. [00:00:12] Speaker 01: Good morning, Your Honors, and may it please the Court. [00:00:15] Speaker 01: The question before the Court today is whether the deliberative process privilege shields memos laying out the factual basis for allegations of misconduct against Mr. Waterman. [00:00:26] Speaker 01: And the answer to that question is plainly no. [00:00:29] Speaker 01: This case is unusual because the IRS seems to be at odds with itself. [00:00:35] Speaker 01: The IRS argues that disclosure of the factual basis of the allegations could shield reporting of misconduct, even though none of the IRS's declarations mention any specific harm to the deliver to process privilege, let alone the chilling effect argument made in the IRS's brief. [00:00:55] Speaker 01: And this absence may reflect the fact that the Office of Professional Responsibility, OPR, as I'm going to refer to it, disagrees. [00:01:06] Speaker 01: Its practice is to provide practitioners a full and fair opportunity to respond to misconduct allegations to ensure that there's a fair basis for its decisions. [00:01:19] Speaker 02: I was going to ask you about that because you make that argument in your brief. [00:01:24] Speaker 02: What do you point to? [00:01:25] Speaker 02: What regulation or agency directive says that? [00:01:30] Speaker 02: As I understand it, your position is that had they proceeded against Mr. Ward, they would have disclosed these four documents, right? [00:01:39] Speaker 02: That is correct. [00:01:40] Speaker 02: Okay. [00:01:40] Speaker 02: What do I look at in the record to find where the agency [00:01:47] Speaker 01: Yes, I think it's 1060, 31 CFR 1060, and then there is a second regulation if in the event that there was a disciplinary provision, I believe it's 10.71 through 74. [00:02:11] Speaker 01: But the rule says the proceeding will not be instituted under this section unless the proposed respondent previously has been advised in writing of the law, facts, and conduct or in such action. [00:02:26] Speaker 02: Well, that doesn't say, previously advised of the law and facts doesn't say that you'll get these four documents, does it? [00:02:34] Speaker 01: Your honor, the other point that we're trying to make, however, is that the Office of Professional Responsibility, after the 2018 [00:02:44] Speaker 01: District Court ruling against Mr. Waterman issued an alert that says that Mr. Waterman brought this case, the Spoia case, to challenge the denial of, quote, specific information regarding the allegations. [00:02:59] Speaker 01: That's referring to the three affidavits or declarations that the IRS submitted to this case. [00:03:05] Speaker 02: But that's that's. [00:03:06] Speaker 02: Wait. [00:03:09] Speaker 02: Let's just look, you're talking about this alert, right? [00:03:12] Speaker 02: Yes. [00:03:13] Speaker 02: Okay. [00:03:13] Speaker 02: So I understood, tell me if this is wrong. [00:03:16] Speaker 02: I understood that to say that here, like in, like in Waterman's case, if this alert had existed, he would have gotten earlier the same information he got in the September 10th. [00:03:32] Speaker 02: It doesn't say anything about whether he would have gotten these for any underlying documents. [00:03:37] Speaker 02: Just whatever was in the September 10th letter that told him the proceedings were closed, he would have gotten at an earlier stage. [00:03:44] Speaker 01: Am I reading it correctly? [00:03:46] Speaker 01: No, Your Honor, you're not. [00:03:47] Speaker 01: By the time this alert was issued, the IRS had already issued [00:03:55] Speaker 01: free indictments of my client. [00:03:58] Speaker 01: But what OPR is saying is the failure to allow him to get the factual basis of these allegations was, quote, inconsistent with its OPR's commitment to provide practitioners a full and fair opportunity to respond to the allegations. [00:04:17] Speaker 01: And let's just go back to the insight of Trombley and Ickball. [00:04:21] Speaker 01: If you're trying to resolve a motion to dismiss on rule 12b6 grounds, you can't possibly evaluate the allegations without the underlying factual basis for them. [00:04:36] Speaker 01: And that is what OPR is saying. [00:04:38] Speaker 01: If not, OPR becomes a star chamber. [00:04:41] Speaker 01: It just relies solely on IRS documents. [00:04:45] Speaker 05: That is to a degree the government's argument here is that [00:04:49] Speaker 05: their ultimate decision ended on facts. [00:04:56] Speaker 05: And according to the Vaughn index, the documents you want are documents that describe the facts that were necessary for them to make their opinion. [00:05:09] Speaker 01: Yes, your honor. [00:05:10] Speaker 01: But let's go back to the IRS's declarations in this case. [00:05:15] Speaker 01: There is not a syllable in either the Rollins declaration or in the Voigt index that points to any specific harm under the deliberative process probably. [00:05:27] Speaker 01: The argument about... Do we require that? [00:05:31] Speaker 02: I believe we do. [00:05:32] Speaker 02: I thought our case law basically said that, you know, if it's facts, it has to be turned over. [00:05:37] Speaker 02: But if it's [00:05:39] Speaker 02: sort of curated facts by an employee who's putting together a case, then it's covered by the deliberative process. [00:05:49] Speaker 01: My point, Your Honor, is there's nothing in any of the affidavits or declarations that talks about harm under the deliberative process, let alone alludes to this chilling effect. [00:06:03] Speaker 01: And this court just recently, and I'm going to mispronounce the name. [00:06:07] Speaker 01: Right, I can't pronounce it. [00:06:09] Speaker 01: But in the Machado Amadas case, I believe, [00:06:15] Speaker 01: Pardon my, yes, but it was the same question in that case. [00:06:20] Speaker 01: And the court said, look, unless there's some substance to this, the agency loses. [00:06:27] Speaker 01: The agency bears the burden of providing the essential elements of the claim. [00:06:35] Speaker 01: In Machado, the court said the affidavit, the agency affidavit explained in full why there would be chilling effect. [00:06:43] Speaker 01: There's nothing in the record that goes to that. [00:06:46] Speaker 01: And going back to the OPR bulletin or alert, here's our problem. [00:06:54] Speaker 01: We have been throwing down the gauntlet ever since this case started to say that Mr. Waterman is the only practitioner who's ever been deprived access [00:07:04] Speaker 01: to the factual allegations that underlie the misconduct referral. [00:07:09] Speaker 01: Just to go back to Iqbal trauma, you cannot assess bare bones allegations without some understanding. [00:07:16] Speaker 05: Why do you think those facts were put into a document? [00:07:21] Speaker 01: There's no question that Mr. Marchetti and Ms. [00:07:25] Speaker 01: Kelly thought that Mr. Waterman had engaged in misconduct. [00:07:29] Speaker 01: And, you know, I don't, I don't doubt their good faith. [00:07:32] Speaker 05: I worked in the government, you know, why, why, why do you think, why do you think they wrote those documents? [00:07:39] Speaker 05: Why do you think they put those facts to persuade? [00:07:42] Speaker 01: I'm certain that they wrote those facts to persuade the office of professional responsibility to initiate a disciplinary action. [00:07:52] Speaker 05: I mean, so then to quote, quote ancient coin, which is self [00:07:58] Speaker 05: referring to Maypother, which you of course know Maypother very well, an exercise of judgment and extracting pertinent material from a vast number of documents for the benefit of an official called upon to take discretionary action. [00:08:10] Speaker 05: That's when they're protected. [00:08:12] Speaker 01: Yeah, but that's not the case here. [00:08:15] Speaker 01: For Ms. [00:08:16] Speaker 01: Kelly's declaration, there was no vast universe of facts. [00:08:21] Speaker 01: Her declaration dealt with a single telephone call between her and Mr. Waterman. [00:08:28] Speaker 01: And she made a contemporary support of that. [00:08:31] Speaker 01: What about the marketing marketing? [00:08:34] Speaker 01: The one index says he compiled actions in statements by Mr. Waterman. [00:08:41] Speaker 01: That is what he did. [00:08:42] Speaker 05: And is it in the public record? [00:08:43] Speaker 05: How many pages that completion was? [00:08:46] Speaker 05: There is, I believe it was nine pages. [00:08:49] Speaker 05: And how many months or years did Marchetti interact with Mr. Waterman? [00:08:54] Speaker 05: Oh, several years, Your Honor. [00:08:55] Speaker 05: That would be if you were listing all the facts of those interactions longer than nine pages. [00:09:01] Speaker 01: I'm sorry, listing all of them? [00:09:03] Speaker 01: Yes. [00:09:04] Speaker 01: Yes, sir. [00:09:04] Speaker 05: Yes, that is true. [00:09:05] Speaker 05: If Marchetti were to list all of his interactions with Waterman, that document would be a lot longer than nine pages. [00:09:12] Speaker 01: This is undoubtedly correct, Your Honor. [00:09:15] Speaker 01: That is true. [00:09:16] Speaker 01: But the question here is, what did he put down in the declaration that Ms. [00:09:22] Speaker 01: Rollins says? [00:09:24] Speaker 01: What did he put down? [00:09:25] Speaker 01: He put down the actions and statements of Mr. Rollins. [00:09:29] Speaker 02: Well, no, actually it says, I wanted to follow up on this question with you. [00:09:33] Speaker 02: It actually says, he recorded in his memorandum actions and statements [00:09:40] Speaker 02: that Marchetti believed made the referral appropriate. [00:09:44] Speaker 02: So he made the referral appropriate. [00:09:45] Speaker 02: So I've looked at the document. [00:09:48] Speaker 02: How do I? [00:09:49] Speaker 02: I know you haven't. [00:09:53] Speaker 02: But what does a court do with a situation like this? [00:09:56] Speaker 02: OK, we've got the document in front of us. [00:09:58] Speaker 02: We've got the affidavit which says that the description of actions and statements quote that Marchetti believed made it appropriate. [00:10:07] Speaker 02: So how do we? [00:10:10] Speaker 02: What do we do with that? [00:10:11] Speaker 02: I mean, I can look at it, and let's assume to me that it looks comprehensive. [00:10:17] Speaker 02: But I have a sworn statement by the agency that it's selected. [00:10:22] Speaker 02: What do we do with it? [00:10:24] Speaker 01: Again, it's the agency's burden to prove an essential element of the exemption. [00:10:30] Speaker 01: And here, there is nothing in any of the IRS files [00:10:35] Speaker 01: that the release of these documents to allow Mr. Waterman to defend himself would cause some kind of chilling effect. [00:10:45] Speaker 01: And remember, in some ways, I think this argument is somewhat demeaning to IRS staff. [00:10:49] Speaker 01: The IRS staff are under an obligation by regulation to report any suspicious misconduct. [00:10:56] Speaker 01: When I worked in the government, if someone suspicious conduct, they would have reported it and they would not have said, oh, gee, I don't want to report this because. [00:11:07] Speaker 01: It might become public what I really want to know from the IRS is. [00:11:13] Speaker 01: What is there? [00:11:13] Speaker 01: What is real practice? [00:11:15] Speaker 01: Because if you read. [00:11:17] Speaker 01: the bullet to the alert the way I do. [00:11:19] Speaker 01: What they're saying is the failure of the IRS to give access to Mr. Waterman about these factual memos was not consistent with their practice. [00:11:35] Speaker 01: There is no manual about how OPR goes about its business. [00:11:41] Speaker 01: But we are really concerned that he is the only one who has not been able to at least understand the factual basis for very, I mean, if you look at the explanation, these are very sharply worded allegations without any underlying factual predicate for them. [00:11:59] Speaker 01: I realize my time is well over, but I'm happy to answer. [00:12:04] Speaker 05: Judge Tatel, any additional questions? [00:12:05] Speaker 05: Judge Rogers, anything else? [00:12:07] Speaker 03: No, thank you. [00:12:08] Speaker 05: Give you two minutes. [00:12:09] Speaker 01: Okay, thank you very much. [00:12:10] Speaker 01: Thank you. [00:12:27] Speaker 04: Morning, your honors. [00:12:27] Speaker 04: May it please the court, Julia Vetta for the IRS. [00:12:31] Speaker 04: I want first to answer a question posed by Judge Tatel, which is whether Waterman, under the new OPR letter writing procedure, would have received the same information as he did under the previous regime. [00:12:50] Speaker 04: My opposing counsel has represented that [00:12:54] Speaker 04: the file would have been effectively magically revealed and all claims of privilege would have dropped under the new procedure in OPR and nothing in the alert reveals that to be the case. [00:13:06] Speaker 04: There is no guarantee that a request made under the new procedure would result in any different outcome from a result made under the previous procedure. [00:13:16] Speaker 04: Previous procedure. [00:13:17] Speaker 02: Wait, wait, can you just back off? [00:13:19] Speaker 02: So as I understand the alert, what you're telling me is that [00:13:23] Speaker 02: All it says is that Waterman would have gotten what he got in the letter earlier, correct? [00:13:30] Speaker 02: Possibly. [00:13:31] Speaker 02: What do you mean possibly? [00:13:31] Speaker 04: There may be other 6103 protections that aren't triggered in a FOIA request that may have been applicable at that time. [00:13:41] Speaker 04: There has since been a waiver of a number of 6103. [00:13:43] Speaker 04: You mean possibly he would have gotten more than he got? [00:13:46] Speaker 04: Or possibly he would have gotten less than he got? [00:13:48] Speaker 04: He would not have, in either event, he would not have received anything that the IRS would hold back under the deliberative process privilege. [00:13:55] Speaker 04: A separate question from any changes in what might have been disclosed under 6103. [00:13:59] Speaker 02: Okay, but setting aside the alert, Mr. Vladeck's point that had OPR, instead of closing the case, proceeded against the store, he would have had access to these documents. [00:14:16] Speaker 04: He would have had access, Your Honor, to the factual allegations made against him. [00:14:20] Speaker 04: Not necessarily in the form made in these documents. [00:14:25] Speaker 04: What we don't know is whether the ultimate allegations made against him. [00:14:31] Speaker 02: The letter, is it September 10th? [00:14:34] Speaker 02: Oh no, I'm sorry. [00:14:36] Speaker 02: When he asked the agency for these documents, before he filed his waiver, [00:14:42] Speaker 02: The agency said we can't give them to you because the proceedings are now closed. [00:14:46] Speaker 02: Correct? [00:14:47] Speaker 02: Correct. [00:14:47] Speaker 02: And they cited a statute for that. [00:14:49] Speaker 02: Well, doesn't that suggest that if the proceedings are no longer closed, that is, if they're proceeding against him, he could have the documents? [00:14:55] Speaker 04: He could have received so that that goes to the change in procedure. [00:14:59] Speaker 04: The previous procedure in OPR advised a [00:15:05] Speaker 04: practitioner who had been referred to OPR that claims had been made against you, but we have decided not to proceed against you and we have closed your file. [00:15:16] Speaker 04: The provision of 6103 cited by OPR when it declined to share his file with him was the provision that protected closed files from disclosure. [00:15:25] Speaker 04: That vision, which we cite in our brief, [00:15:29] Speaker 04: of only permits the disclosure of files in an active proceeding to assist in a practitioner's defense. [00:15:35] Speaker 04: So when they close the, when they close the file. [00:15:37] Speaker 02: That's his whole point. [00:15:39] Speaker 02: His whole point that had OPR ceded against Waterman, instead of closing, have had access to these documents. [00:15:48] Speaker 04: No, he would have had access to what he eventually received under his FOIA request. [00:15:54] Speaker 04: As it were, as it was in the previous. [00:15:56] Speaker 02: What, what, is there, [00:15:59] Speaker 02: Can you cite, is there an IRS regulation that governs what people are entitled to, who OPR proceeds against? [00:16:06] Speaker 04: Well, Circular 230 prescribes the procedure of when a complaint is filed against a practitioner before the IRS and the discovery rights that they have. [00:16:18] Speaker 04: during an OPR procedure. [00:16:19] Speaker 02: Right. [00:16:20] Speaker 02: And what does that say about these? [00:16:22] Speaker 02: What does that say that would help us? [00:16:24] Speaker 04: It allows you to, it certainly allows you to access the factual substance of the allegations made against you. [00:16:30] Speaker 04: That's actually going to be apparent in the complaint. [00:16:33] Speaker 02: How can someone defend against the factual allegation unless they see the underlying [00:16:42] Speaker 02: analysis of the agency that supports that. [00:16:45] Speaker 04: Well, Your Honor, you have no doubt witnessed many a discovery dispute where parties alleged that the pre-decisional deliberative documents that led to those allegations were protected by the same privilege, and that will arise even in a circular 230%. [00:17:00] Speaker 04: Can you cite a case for that? [00:17:04] Speaker 04: Offhand, no, I can't name a discovery dispute. [00:17:06] Speaker 04: But my point is this. [00:17:10] Speaker 04: The availability of discovery and evidentiary procedures in circular 230 has its own governing structure. [00:17:19] Speaker 04: It's not quite the federal rules of evidence, but in the past, people complained about circular 230s being more, I think my colleague called it a star chamber. [00:17:27] Speaker 04: It is not like that now. [00:17:28] Speaker 04: There are rules and you can access the facts against you. [00:17:31] Speaker 04: However, what you cannot access, which you cannot access [00:17:35] Speaker 04: under the new OPR procedure, making requests for your file before they close it, is the same information that is protected in a FOIA request, which is the pre-decisional deliberative process. [00:17:47] Speaker 04: For example, if these line level employees decided to refer Mr. Waterman for misconduct for, let's say, three different incidences of wrongdoing, and OPR chose to proceed only with one, the allegations that were not advanced [00:18:05] Speaker 04: in the complaints would be withheld on relevance grounds as well. [00:18:10] Speaker 04: That certainly is pre-decisional and deliberate. [00:18:12] Speaker 04: And that's where the concern comes in with the chilling effect. [00:18:15] Speaker 04: Of course, employees have a duty to do their jobs, but they also have the protection of not having their thought processes laid open for public scrutiny, particularly in cases where no further action is taken based on their recommendations. [00:18:28] Speaker 02: Go ahead. [00:18:30] Speaker 02: we may be talking past each other. [00:18:31] Speaker 02: You're particularly sentence the phrase that you added on. [00:18:35] Speaker 02: I get that. [00:18:36] Speaker 02: Okay, I get that. [00:18:38] Speaker 02: But the point is that these documents would have been available and hope you are proceeded against. [00:18:46] Speaker 04: Don't believe that is correct, Your Honor. [00:18:48] Speaker 04: I believe they would have been protected by a claim of privilege, which would have been, I guess, been subject to litigation. [00:18:53] Speaker 02: Okay, I would like you, after oral argument, to cite for us the best authority you have for that, okay? [00:19:04] Speaker 02: If that's okay. [00:19:04] Speaker 02: Thank you, pardon? [00:19:05] Speaker 02: You'd like the best authority on the proposition that? [00:19:08] Speaker 02: Yeah, on the proposition that the deliberative process privilege or some form of it would operate to deny Waterman access to these documents even if OPR had proceeded against it, okay? [00:19:22] Speaker 02: So, let me ask you a different question. [00:19:28] Speaker 02: Okay. [00:19:29] Speaker 02: So, the Rawlins Declaration says, I cited this to Mr. Flagg. [00:19:38] Speaker 02: It says that these are facts that he thought believed may be referral appropriate, right? [00:19:47] Speaker 02: Yes. [00:19:47] Speaker 02: Okay. [00:19:48] Speaker 02: I've looked at the Marchetti memo. [00:19:52] Speaker 02: It's, I mean, we know, it's, I think the declaration says it's nine pages, so I can say that. [00:20:02] Speaker 02: To me, it looks like a chronology. [00:20:03] Speaker 02: So what do I do as a judge reviewing this thing? [00:20:07] Speaker 02: I have an agency declaration that says it's selective. [00:20:11] Speaker 02: But I look at the document, it doesn't look selective at all. [00:20:14] Speaker 02: It looks like, to me, exactly the kind of document that the chronology that was in this case called [00:20:21] Speaker 02: Menfother, whatever the case is, you know, the Kurt Waldheim case. [00:20:27] Speaker 04: Looks just like that. [00:20:29] Speaker 04: I think that the presentation of information in chronological order does not imply that there was a lack of deliberation in the selection of that information. [00:20:37] Speaker 04: As Your Honor yourself noted earlier, this was information that Mr. Marchetti selected out of the universe of his dealings with Waterman. [00:20:46] Speaker 02: Yeah, but the universe of Waterman's dealings, [00:20:50] Speaker 02: Why would it be such a broad? [00:20:52] Speaker 02: Wouldn't it just be the universe of the case against which he's charged? [00:20:58] Speaker 04: And that therein lies the rub, because what he's doing is he's creating a persuasive selection of the facts is based on his belief. [00:21:09] Speaker 02: Look, if I hadn't looked at the document, I would say, OK, I get it. [00:21:13] Speaker 02: We have a sworn declaration. [00:21:15] Speaker 02: But like the district court, I went and looked at it. [00:21:18] Speaker 02: So, and I'm asking, what do I do when, and it's the agency's burden here. [00:21:24] Speaker 02: You, the agency has the burden of defending the application of the delivery. [00:21:30] Speaker 02: So if I have, if I have a sentence in a declaration that says, that says, these are facts that he quote, believed made it appropriate. [00:21:40] Speaker 02: But I look at the document and it doesn't look that way. [00:21:43] Speaker 02: Wouldn't I say, well, I don't think the agency's satisfied its burden of proof. [00:21:47] Speaker 02: It hasn't explained to me. [00:21:48] Speaker 02: Sure, the sentence that's in the declaration says that Marchetti believed made the referral appropriate. [00:21:57] Speaker 02: That's conclusory now that I've seen the affidavit. [00:22:00] Speaker 02: He doesn't say in what respect. [00:22:02] Speaker 02: What's he left out? [00:22:03] Speaker 02: What kinds of decisions did he make? [00:22:06] Speaker 02: And when it's the agency's burden, aren't I entitled to ask that question? [00:22:11] Speaker 04: And this is where we have the benefit of the district judges in camera review. [00:22:16] Speaker 04: Well, I reviewed it, too, and we're de novo. [00:22:18] Speaker 04: Yes, but the district judges are helpful. [00:22:24] Speaker 04: because he says he did not uphold the IRS's indication of Exemption 5 and the deliberative process privilege because of the nature of the factual material contained within the records, but instead because of how those documents were prepared and for what purpose, as Your Honors have observed. [00:22:39] Speaker 02: The district court had the same thing I did. [00:22:41] Speaker 02: The district court is basically describing the Rawlins declaration. [00:22:46] Speaker 02: And what I'm trying to get some help on is what I'm saying to you is that [00:22:51] Speaker 02: at least as one of the judges who's looking at this case. [00:22:55] Speaker 02: I'm worried about your burden of proof. [00:22:58] Speaker 02: And what's your best answer to my concern here, where I have an affidavit that inclusory form says it's selective. [00:23:07] Speaker 02: When I look at the document, it doesn't look that. [00:23:10] Speaker 02: What do I do? [00:23:11] Speaker 02: That's my question. [00:23:12] Speaker 02: I'm not arguing with you about it. [00:23:14] Speaker 02: I'm asking you for your thoughts about how a reviewing court is supposed to think about it. [00:23:21] Speaker 04: We have to look to the purpose of the document, and we have to look to what Mr. Marchetti told Ms. [00:23:27] Speaker 04: Rollins when she made her declaration, which was, yes, I put that together because I was building a case, because I was advocating. [00:23:39] Speaker 04: This is a distinct, a different type of list making from a sort of broad net patch all investigation where you are listing all of the information you find or you're possibly making relevance determinations. [00:23:57] Speaker 04: He's going a step beyond that. [00:23:58] Speaker 04: This isn't merely everything that's relevant. [00:24:00] Speaker 04: This is what he thinks are his best facts. [00:24:03] Speaker 02: All right. [00:24:04] Speaker 02: So when I said to you that I looked at the document and it just was a chronological list, your response was, well, chronology can be an important way to present the facts. [00:24:12] Speaker 02: But in the Waldheim case, I'm calling it that because I can't pronounce the name of the case, but you know which one I mean. [00:24:18] Speaker 02: We said it was a it was a quote inventory presented in chronological order. [00:24:27] Speaker 02: containing a comprehensive collection of the essential fact. [00:24:31] Speaker 04: A comprehensive collection of the essential fact. [00:24:33] Speaker 04: That's right, Your Honor. [00:24:34] Speaker 04: And this is different from a comprehensive collection of everything that Waterman did. [00:24:42] Speaker 04: The ball time chronology was a comprehensive collection of everything that ball time did during his military service and that was why the court released it after an in camera review had so determined here are in camera. [00:24:53] Speaker 04: In camera review has made a different determination, which is that this involved. [00:24:58] Speaker 04: This involved an attempt to persuade, this involved beliefs that these were the best facts to build a case that this practitioner had committed misconduct before the IRS. [00:25:09] Speaker 04: It's not comprehensive and it's not exhaustive. [00:25:11] Speaker 04: There are many, many instances of non-misconduct that are not on that list. [00:25:16] Speaker 02: But how do I know that? [00:25:18] Speaker 02: I mean, I've looked at the document. [00:25:21] Speaker 02: Shouldn't we say to the agency, well, let's go on. [00:25:24] Speaker 02: You and I have talked about this for a while. [00:25:27] Speaker 02: Let's talk about the Kelly memo. [00:25:29] Speaker 02: The Rawlins declaration says about that, that it says, sets forth part of the facts that made it appropriate, right? [00:25:36] Speaker 02: So I've read the Kelly memo. [00:25:39] Speaker 02: Looks to me like a straightforward summary of a telephone call. [00:25:44] Speaker 02: How do I know what she didn't put in there? [00:25:47] Speaker 02: How do I know, from looking at that, that she was selective? [00:25:50] Speaker 02: Since Rollins didn't tell me. [00:25:52] Speaker 02: She just stated conclusorily that she did conclusorily that that's what she did. [00:25:57] Speaker 02: But she doesn't tell me how. [00:25:58] Speaker 04: What you know she didn't put in there is information not necessary to build the case against Waterman because that's the purpose for which she wrote that memo. [00:26:08] Speaker 02: How do I know that? [00:26:11] Speaker 04: leave. [00:26:13] Speaker 04: You don't know it from the Rawlins Declaration. [00:26:15] Speaker 04: Right. [00:26:15] Speaker 04: That's my whole point about the burden of proof. [00:26:18] Speaker 04: That's exactly my point. [00:26:20] Speaker 04: But must a declaration state like define the universe of facts from which a piece of advocacy is drawn in order for that piece of advocacy to be deliberative? [00:26:30] Speaker 02: That's exactly why I'm asking you the question. [00:26:32] Speaker 02: I don't know the answer to that. [00:26:34] Speaker 02: I'm asking you for some guidance about [00:26:36] Speaker 02: So it gets tricky because in most FOIA cases, we don't go look at the record. [00:26:42] Speaker 02: But here they were so short, I went and got them and read them. [00:26:45] Speaker 02: So now I face this dilemma. [00:26:48] Speaker 04: It's not simply the record of, for example, the investigation of Mr. Waterman's potential wrongdoing, because there was no such investigation. [00:26:56] Speaker 04: The investigation was referred and OPR said, we're not proceeding with it. [00:27:00] Speaker 04: There would be a record of an investigation had there been one. [00:27:03] Speaker 04: These pre decisional deliberative documents are how you would get to that investigation. [00:27:09] Speaker 04: And that's the goal of those documents. [00:27:11] Speaker 04: And that's why they were prepared. [00:27:13] Speaker 04: There will not be in any declaration at this phase in the proceeding a contextualization of those allegations within the universe of a practitioner's good conduct. [00:27:25] Speaker 04: And it wouldn't make sense for it. [00:27:27] Speaker 04: It wouldn't make sense. [00:27:28] Speaker 04: for Rawlins or for Marchetti or Kelly in briefing out the facts that they believe support a referral for misconduct to list off all of the many, many years of Waterman's practice and all of their voluminous interactions with him during which he committed no misconduct. [00:27:47] Speaker 04: That's not part of their case for misconduct. [00:27:50] Speaker 05: Kelly and Marchetti had an opinion about what OPR should do, correct? [00:27:57] Speaker 05: They did. [00:27:58] Speaker 05: What was their opinion? [00:27:59] Speaker 04: Their opinion was that OPR should investigate Mr. Waterman for potential misconduct. [00:28:05] Speaker 05: That opinion was their point of view, correct? [00:28:09] Speaker 05: It was indeed. [00:28:10] Speaker 05: And did these two memos from Marchetti and Kelly reflect that point of view? [00:28:19] Speaker 05: That is our position. [00:28:20] Speaker 05: And that is, and if they did reflect that point of view, they're protected under the Maypother Waldheim case, because the chronology in that case did not reflect a point of view. [00:28:32] Speaker 05: The chronology reflects no point of view. [00:28:34] Speaker 05: So let me try a version of Judge Taylor's question. [00:28:39] Speaker 05: I'm not going to speak for him. [00:28:40] Speaker 05: I think you have a good chance of winning if these documents, Marquette memo and the Kelly memo reflect Marquette and Kelly's point of view about what OPR should do. [00:28:50] Speaker 05: How do we know that they reflect Marquette and Kelly's point of view? [00:28:56] Speaker 04: We know from the Rollins declaration she has confirmed with both Marquette and Kelly that they wrote these memoranda specifically with the intent of making an OPR referral and having selected the facts to support that referral. [00:29:08] Speaker 04: We know the purpose for which those documents were prepared. [00:29:10] Speaker 05: And can we also infer that purpose absent the declaration just by looking at the documents? [00:29:17] Speaker 04: We do not suggest that that is necessary on these facts. [00:29:21] Speaker 04: We're just looking at the Vaughn index and the declarations. [00:29:25] Speaker 04: We are not urging an in-camera review of the documents to make a holding. [00:29:29] Speaker 05: I understand that, but if I have reviewed them in-camera, I don't want you to say anything that's not public. [00:29:37] Speaker 05: What is your best argument for how I can infer from that nine-page, one-page, [00:29:46] Speaker 05: that those documents reflect Marquette and Kelly's point of view, OPR should engage in an enforcement. [00:29:56] Speaker 04: As noted, this came during an extensive interaction between Waterman and the IRS. [00:30:05] Speaker 04: There were not multiple [00:30:07] Speaker 04: instances of, there were not multiple potential referrals. [00:30:10] Speaker 04: There was one instance where Marquette and Kelly said, hmm, something's going on here. [00:30:15] Speaker 04: And they put their hands together. [00:30:16] Speaker 04: The rest of the time, as you noted before, years and years and years of documents going back and forth, interactions between the agency and the practitioner, those were not documented here with the purpose of creating a referral or supporting a referral to open [00:30:37] Speaker 04: And that's key. [00:30:38] Speaker 04: Because you are winnowing this universe of facts down to the facts that you believe make your case. [00:30:47] Speaker 05: Again, to quote May Pothor, you think they betray the occasion that gave rise to its compilation. [00:30:52] Speaker 05: Precisely. [00:30:52] Speaker 05: And you think it would be inaccurate to say no known datum in the selected category has been omitted? [00:30:59] Speaker 05: I beg your pardon. [00:31:00] Speaker 05: That's all right. [00:31:03] Speaker 05: I have my answer, but I will just title. [00:31:05] Speaker 05: Do you have more? [00:31:06] Speaker 02: Yeah, I do. [00:31:08] Speaker 02: If you want to continue pursuing that plan, I'm going to change the subject. [00:31:10] Speaker 02: Please do. [00:31:13] Speaker 02: So I know this is a FOIA case, and it's not about the legitimacy of the September 10 letter. [00:31:18] Speaker 02: I have to ask you about this, which seems to me to be deeply unfair. [00:31:23] Speaker 02: This letter says to Watermen, we're not going to charge you. [00:31:30] Speaker 02: But the information, we're going to retain it in our files. [00:31:35] Speaker 02: because it might be used against you later if you get in any more trouble. [00:31:40] Speaker 02: You're welcome to respond, it says, but that won't affect, we won't consider it at this point. [00:31:45] Speaker 02: And then it says you should modify your behavior accordingly. [00:31:51] Speaker 02: I mean, explain to me why the IRS thinks that's [00:31:57] Speaker 02: there to someone, you're basically saying we're not charging you, but we're keeping all of the evidence we have against you on file. [00:32:04] Speaker 02: It could be used against you later. [00:32:06] Speaker 02: And by the way, I don't have a language right in front of me. [00:32:09] Speaker 02: You should, you should, you should, you should adjust your behavior accordingly. [00:32:15] Speaker 02: You know, how can a federal agency tell someone? [00:32:20] Speaker 04: My first response, your honor, is that you've identified the reason why they needed to change the procedure. [00:32:25] Speaker 02: Well, this doesn't change the procedure. [00:32:27] Speaker 02: Under the new procedure, it will be exactly the same. [00:32:30] Speaker 02: The only difference, as I understand it, under the new procedure, is that Waterman, before they closed it, would have been told essentially what was in the September 10 letter. [00:32:40] Speaker 02: It doesn't change this at all. [00:32:43] Speaker 04: Right? [00:32:44] Speaker 04: So here's the new procedure. [00:32:46] Speaker 04: The old procedure, they would issue that letter. [00:32:49] Speaker 04: You're talking about the September 10 letter? [00:32:51] Speaker 04: the September. [00:32:55] Speaker 02: Do I have the wrong date? [00:32:56] Speaker 04: The September 10th is the marketing memo. [00:32:58] Speaker 02: He only got one letter. [00:32:59] Speaker 02: What's the date of the letter? [00:33:01] Speaker 02: I'm sorry. [00:33:02] Speaker 02: It's what's the what's the date of the letter? [00:33:04] Speaker 02: That's also September 10th. [00:33:05] Speaker 04: So the marketing memo and the OPR letter are precisely a year. [00:33:09] Speaker 04: Yes, I'm not talking about those. [00:33:11] Speaker 02: I'm only talking about the letter that that waterman got. [00:33:15] Speaker 02: Yes. [00:33:16] Speaker 02: Do I misread that letter? [00:33:19] Speaker 02: By the way, we're not charging you, but you better adjust your behavior. [00:33:24] Speaker 02: I mean, that's like saying someone's charged with, indicted for robbing a bank and they drop the charges against them, but they say, okay, we're dropping the charges. [00:33:35] Speaker 02: We're keeping all the evidence. [00:33:36] Speaker 02: If you get in trouble again, we're going to use it against you, but don't rob any more banks. [00:33:41] Speaker 02: I mean, how does that conform with even the simplest concepts of due process? [00:33:47] Speaker 04: I think evidence of past wrongdoing is frequently relevant in subsequent proceedings, and the agency is under no obligation to destroy its records just because an investigation is not pursued. [00:33:59] Speaker 03: However... What is the agenda? [00:34:03] Speaker 02: Excuse me, in the letter? [00:34:04] Speaker 02: Yes, that's what I'm doing. [00:34:06] Speaker 02: They said, we're welcome to file something and respond, but we won't consider it. [00:34:11] Speaker 04: And that's the change. [00:34:13] Speaker 02: What's now? [00:34:14] Speaker 04: That letter does not promptly close the file. [00:34:16] Speaker 04: That letter is issued when a practitioner is notified that a referral was made, but an investing. [00:34:24] Speaker 05: Can I see if I understand the change correctly? [00:34:28] Speaker 05: It sounds like a slight improvement, but not enough of improvement to alleviate one, the kinds of concerns that Judge Tatel is airing that I share. [00:34:41] Speaker 05: In the old regime, they would say someone like Mr Waterman, there's an allegation against you. [00:34:48] Speaker 05: Period. [00:34:49] Speaker 05: In the new regime, they'll say there's an allegation against you, and we will tell you what that allegation is. [00:34:58] Speaker 05: But even in the new regime, although we will tell you what the allegation is, we will not tell you the facts that support that allegation. [00:35:05] Speaker 05: Am I correct that that's the new regime? [00:35:08] Speaker 04: The new regime, so both the old and the new regime do come with a summary of the allegations. [00:35:13] Speaker 04: So it's not a total mystery. [00:35:15] Speaker 04: But the factual basis for the allegations is not revealed absent in inquiry. [00:35:21] Speaker 04: You're not going to be presented with them in your first communication with OPR. [00:35:27] Speaker 04: What OPR provides you now is the opportunity to request those and to request as much of your file as is unprivileged and can be disclosed to you. [00:35:35] Speaker 04: And once you receive that, [00:35:37] Speaker 04: And you will then have a sense of what is being referred. [00:35:44] Speaker 02: Would Waterman get anything more under the new procedure than he got in the September 10 letter? [00:35:54] Speaker 04: He would receive what he got in response to his FOIA request, at a minimum. [00:35:59] Speaker 04: Isn't that also a maximum? [00:36:02] Speaker 04: Based on this record is what other privileges might be implicated. [00:36:08] Speaker 05: In the new regime, he would not receive anything more than he currently today has. [00:36:16] Speaker 04: That's correct. [00:36:18] Speaker 04: But he would receive it on first request and he would not have his first request rebuffed because his file was closed and then need to file a second order. [00:36:28] Speaker 03: So here's what is under the, go ahead. [00:36:33] Speaker 02: No, you go ahead. [00:36:34] Speaker 02: I didn't mean to. [00:36:35] Speaker 03: Please continue. [00:36:37] Speaker 02: I was just going to ask you, I'm looking at the alert. [00:36:40] Speaker 02: Okay. [00:36:42] Speaker 02: Okay. [00:36:43] Speaker 02: OPR now sends a letter to the practitioner, advising him of the issues presented, of the issues presented. [00:36:55] Speaker 02: That's all it says. [00:36:56] Speaker 02: And then it says, when appropriate, it sends a second letter with a soft letter. [00:37:01] Speaker 02: It sounds to me, I mean, you can explain this to me, but the way I understand this, Waterman, once they decided to investigate him, he would get what he got in the September 10 letter. [00:37:14] Speaker 02: And sure, he could ask for more information. [00:37:17] Speaker 02: The agency would probably deny it. [00:37:19] Speaker 02: But all he would get is what's in the September 10. [00:37:22] Speaker 02: And then, so that's my understanding number one. [00:37:27] Speaker 02: My understanding number two is that even under the new alert, if the agency decides not to proceed against a rule, that lawyer will get exactly what the September 10 letter was. [00:37:41] Speaker 02: I don't believe that. [00:37:43] Speaker 02: In other words, we're going to keep, oh, they won't be told any longer that it'll be kept on file. [00:37:48] Speaker 02: And they won't be told any longer that they can respond, but we won't consider it. [00:37:51] Speaker 02: And they won't be told any longer that they should adjust their behavior accordingly. [00:37:56] Speaker 04: We don't know from this alert how the text of the letter has changed. [00:38:00] Speaker 04: And we do know that there is now an opportunity to request the file and receive it without making a separate FOIA request. [00:38:08] Speaker 04: That's the material distinction here. [00:38:10] Speaker 04: If you received this letter, it advises you of the issues presented in the matter under investigation, gives the practitioner an opportunity to comment. [00:38:17] Speaker 04: You can now add to your file and you can say, these allegations have been made against me. [00:38:22] Speaker 04: Here are my potential defenses to this. [00:38:25] Speaker 04: And I believe the, for example, in this case, the misconduct, potential misconduct of which Marquette suspected watermen involved unreasonable delay and unreasonable delay is [00:38:37] Speaker 04: an allegation that is not a mystery. [00:38:39] Speaker 04: For someone who has been a part of this process and knows how long it's taken, he can offer defenses and add information to his file in response. [00:38:46] Speaker 04: And this new process creates an opportunity for him to do exactly that. [00:38:50] Speaker 04: So he can respond and say, please provide me with what you've got on these allegations. [00:38:56] Speaker 04: Yes, I want to see my file. [00:38:57] Speaker 04: He gets the file, which resembles precisely the FOIA disclosure. [00:39:01] Speaker 04: And he is able to comment. [00:39:04] Speaker 04: And only thereafter do they close his case. [00:39:08] Speaker 04: And it says, this two letter process gives a practitioner who wants to know more about the allegations an opportunity to make a request before the OPR closes the matter, thus fitting within the framework of the 6103 provision. [00:39:19] Speaker 04: It waives no privilege. [00:39:21] Speaker 04: It doesn't change the contours of the file other than to remove this one blocked disclosure under section 6103 that the previous letter imposed. [00:39:33] Speaker 05: Is that I know that Judge Rogers has attempted a question. [00:39:38] Speaker 05: Judge Rogers? [00:39:40] Speaker 03: Yes, thank you, Judge Walker. [00:39:42] Speaker 03: My only concern here is initially I understood the IRS to be piggybacking on sort of criminal procedures. [00:39:52] Speaker 03: But it's become clearer and clearer that that's not what's happening here. [00:39:57] Speaker 03: That this is something quite different. [00:39:59] Speaker 03: And I understand that [00:40:02] Speaker 03: I originally thought, well, he knows the essential allegations, like it's alleged that undue delay. [00:40:12] Speaker 03: Well, in what respect? [00:40:13] Speaker 03: With regard to what? [00:40:14] Speaker 03: With regard to what element of the case? [00:40:17] Speaker 03: I mean, he's been practicing for years. [00:40:21] Speaker 03: Just think of how he could respond. [00:40:23] Speaker 03: And he may have wonderful reasons for those delays, but they may be irrelevant to what the agency was considering. [00:40:32] Speaker 03: So I guess the question still in my mind is, I understand you push back and you say, well, now you get two letters. [00:40:42] Speaker 03: And I thought, yeah, but if you don't know what it is and you've been practicing there for years and apparently no complaint has been filed before. [00:40:58] Speaker 03: So how is he supposed to change his procedures? [00:41:02] Speaker 03: All right? [00:41:03] Speaker 03: He's supposed to never violate a rule on the agency about your opposition is due within 30 days or something like that. [00:41:12] Speaker 03: It's just not clear. [00:41:13] Speaker 03: And so I guess what we're concerned about is, so far as I know, if a practitioner's sole practice is in this particular area, and he's trying to clear his record, and he gets this statement from the agency. [00:41:31] Speaker 03: Presumably in any future matter he's involved in, somebody in the agency has got to note that record, even though there are no charges. [00:41:43] Speaker 03: But I just think this is entirely different from a criminal procedure where you're not arguing that you have to be able to determine beyond a reasonable doubt that he's violated something, much less [00:41:59] Speaker 03: that the prosecutor has to make representations that it has the evidence that could be its burden of proof. [00:42:10] Speaker 03: So I just think this is so different and the agency has the right to set up its rules, but if it's going to have some sort of broad new approach that anyone who files more than 30 days late is subject to a potential complaint [00:42:30] Speaker 03: Then it's quite a different agency procedure. [00:42:35] Speaker 03: And that's what's unsettling about this matter. [00:42:40] Speaker 03: And I think our questions have just been trying to give you the best opportunity to assure us that this is not a situation where somebody has a gripe against the attorney. [00:42:53] Speaker 03: He may have had bad relations with some client. [00:42:58] Speaker 03: There may be an explanation as to why he was unable to respond, but, you know, what does he do? [00:43:04] Speaker 03: File sort of a case history of all his proceedings over decades? [00:43:09] Speaker 03: That's troubling. [00:43:11] Speaker 04: Well, the most immediate response to that, Your Honor, is that the information he's received here is that he is not being investigated. [00:43:21] Speaker 04: the claim against him is not acting. [00:43:23] Speaker 03: But this can be used against him in the future. [00:43:26] Speaker 03: And in the meantime, he ought to change his procedures. [00:43:30] Speaker 04: That's all. [00:43:31] Speaker 04: And that wording is unfortunate. [00:43:33] Speaker 04: But it does not place him at a disadvantage in a subsequent proceeding where those allegations against him will be fleshed out in detail if they are relied on by the agency. [00:43:45] Speaker 03: Well, he risks having another complaint filed against him. [00:43:51] Speaker 03: And as I understand it, part of his concern is his reputation before the agency. [00:43:58] Speaker 03: He comes to the agency with sort of an asterisk by his name. [00:44:03] Speaker 03: Any event, thank you, counsel, for your efforts to assure us that the agency understands unfairness and its new procedures will set up our concerns and Judge Taylor's. [00:44:16] Speaker 02: I just want to follow up on Judge Rogers' question. [00:44:18] Speaker 02: So is this September 10, [00:44:22] Speaker 02: Is it on the agency's website? [00:44:26] Speaker 04: I would not be surprised if it were, but I can't answer that to a certainty. [00:44:31] Speaker 02: Do you see why I ask? [00:44:34] Speaker 02: I mean, suppose I'm a client looking for counsel before the IRS and I know about this. [00:44:37] Speaker 04: Oh, you mean against him? [00:44:38] Speaker 04: No, no, no. [00:44:39] Speaker 04: I don't believe that decisions not to proceed with investigations are published based on the individual's name. [00:44:45] Speaker 02: Could I obtain it through FOIA? [00:44:50] Speaker 04: I do not know. [00:44:51] Speaker 04: I could not state right here that it might not be subject to someone withholding privilege. [00:44:57] Speaker 04: I do know that the reputational harm as he is threatened with by an investigation that was never pursued against him is effectively of his own making, since he has publicized the documents through this case. [00:45:11] Speaker 02: Well, that's why I ask whether the documents, that's why I ask whether they're available in a FOIA. [00:45:14] Speaker 02: I mean, if I were a corporation looking for counsel in a tax case, I might say the IRS, [00:45:20] Speaker 02: I want to see, uh, I want to see, uh, I don't know what you call these letters, but I want to see these letters. [00:45:25] Speaker 02: And if I saw a letter, if I was thinking of hiring Mr. Waterman and I saw a letter that said, you know, allegations we made against you, but not allegations of it. [00:45:33] Speaker 02: Yeah. [00:45:35] Speaker 02: Uh, and, and it said that he's been told to quote, modify his future conduct accordingly. [00:45:44] Speaker 02: Uh, [00:45:44] Speaker 02: based on allegations he's never seen that the agency hasn't pursued. [00:45:48] Speaker 04: I wouldn't hire the guy. [00:45:49] Speaker 04: On the record before this court, I regret that language on behalf of the agency, but the letter itself does not put him in any legal jeopardy. [00:45:56] Speaker 04: He has not been accused. [00:45:58] Speaker 04: He has not been subject to an investigation and no complaint has been filed against him. [00:46:03] Speaker 03: I know you say it's unfortunate, but it's a fact of life in his case. [00:46:10] Speaker 04: Yes, Your Honor. [00:46:11] Speaker 03: The agency sent him the letter, and now the burden is on him to do something. [00:46:17] Speaker 03: Okay, thank you, Council. [00:46:21] Speaker 05: Before you go, Ms. [00:46:23] Speaker 05: Vetta, if you could, within the next three days, and the court would be grateful if Mr. Vodick could do the same, let us know of the rules and regulations that govern what [00:46:38] Speaker 05: Mr. Waterman would have received from the IRS if the OPR had proceeded against him. [00:46:58] Speaker 02: Thank you. [00:46:59] Speaker 05: Mr. Vlade. [00:47:09] Speaker 05: No doubt my time is expired. [00:47:12] Speaker 05: You can respond to. [00:47:15] Speaker 01: Judge Walker, our opening brief does go through the various steps that would have been [00:47:20] Speaker 01: would have been taken had there been a disciplinary hearing. [00:47:24] Speaker 01: And I think the answer to your question is in our opening brief. [00:47:28] Speaker 01: But we will certainly provide that. [00:47:31] Speaker 05: Yes. [00:47:32] Speaker 05: If we want a sneak preview of what will be filed in three days, where in your opening brief would we? [00:47:37] Speaker 05: I was just searching for it. [00:47:40] Speaker 05: That's OK. [00:47:41] Speaker 05: Yeah. [00:47:41] Speaker 05: We'll find out in three days. [00:47:44] Speaker 05: I have a lot to cover and I realize- You can have more than the minute and a half that's left. [00:47:49] Speaker 05: Okay. [00:47:49] Speaker 05: I think that you're proposing counsel. [00:47:51] Speaker 05: We gave 25 minutes. [00:47:53] Speaker 01: Thanks. [00:47:53] Speaker 01: I just want to quote from the other side's brief in response to a question Judge Tatel asked, and it says this on page 40 of the brief, quote, had the Office of Professional Responsibility chosen to take action against Waterman, he would have been apprised of the facts and the allegations against him. [00:48:14] Speaker 01: So there's no question that if there had been a disciplinary proceeding, he would have gotten the facts that were laid out in the Marchetti and the Kelly memoranda. [00:48:28] Speaker 01: Let me also try to explain why I think the bulletin is more important than perhaps the IRS has suggested. [00:48:40] Speaker 01: and this is on J175, at the end of the second paragraph, Mr. Waterman went to court with a FOIA request. [00:48:52] Speaker 01: But there, the IRS continued to deny specific allegations, excuse me, specific information regarding the allegations. [00:49:05] Speaker 01: Now that is plainly a reference to the allegations that are contained in the Marchetti, Kelly, and Brown memoranda. [00:49:14] Speaker 01: And the OPR then goes on and says that the district court's ruling, quote, is inconsistent with its commitment to provide practitioners a full and fair opportunity to respond to allegations. [00:49:28] Speaker 01: Now, again, [00:49:29] Speaker 01: I don't know and I cannot represent that Mr. Waterman is the only one who has faced this kind of allegation of misconduct without having access to the factual record. [00:49:41] Speaker 01: But there is, you know, again, likely harm is an essential element of the IRS's case. [00:49:51] Speaker 01: They have to claim privilege and show privilege. [00:49:53] Speaker 01: And once again, I just want to underscore there is absolutely nothing in the declarations that goes to this chilling harm argument. [00:50:02] Speaker 01: And in fact, it doesn't really make sense because here Mr. Mr. Marquetti and Miss Kelly filed this. [00:50:10] Speaker 01: referral for one reason alone, which was to ensure that there was an investigation and a discipline hearing for Mr. Mr. Water. [00:50:19] Speaker 05: But so that Mr. Mr. Vodick seems to resolve the FOIA question against you, which, you know, we've been talking for the last minute or so about whether what the IRS did with its letter to Mr. Waterman was fair or outrageous. [00:50:38] Speaker 05: But [00:50:39] Speaker 05: The inquiry into FOIA, and I can't remember the exact phrasing that you just used, but the inquiry into FOIA for deliberative process seems to be, were the facts in the document compiled and curated for the purpose of advising the agency of what to do? [00:50:58] Speaker 05: And that seems to be what you just said the purpose was. [00:51:00] Speaker 01: Well, advising, yes. [00:51:01] Speaker 01: Any referral advises the OPR to investigate. [00:51:05] Speaker 05: If I ask my clerk, [00:51:07] Speaker 05: uh who should win this case and I said just just no just do a document I just I just want to know the and he's and he said you should win uh and I said well just do do a memo for me that says all the facts that support uh what Mr. Waterman winning [00:51:24] Speaker 05: That would be a chronology and I said put him in chronological order. [00:51:27] Speaker 05: That would be a chronology of facts, but it would be with the purpose of advising me how to make a decision that seems to be textbook deliberate process. [00:51:35] Speaker 01: And having argued Mappethor, your question to me was you were channeling Judge Buckley [00:51:42] Speaker 01: who was presiding, and asked the same question. [00:51:45] Speaker 01: But once again, let's go back to Mappither. [00:51:48] Speaker 01: First of all, the government ultimately released the entire report. [00:51:52] Speaker 01: Why did it release the entire report? [00:51:54] Speaker 01: Because the chronology section, which it said should be released, was the roadmap to all of Waltime's misgivings. [00:52:02] Speaker 05: Maybe that means that, well, maybe that means that Maypother's ultimate decision was in conflict with itself. [00:52:09] Speaker 01: No, no, Your Honor, because the chronology section [00:52:13] Speaker 01: the chronology section, this court ordered disclosed. [00:52:18] Speaker 05: I know. [00:52:18] Speaker 05: And maybe that part of the court's decision was in conflict with the other part of the court's decision. [00:52:22] Speaker 05: What they said should not be disclosed. [00:52:25] Speaker 01: I don't think so, Your Honor. [00:52:26] Speaker 01: I mean, what the court said is there's no valence to this. [00:52:30] Speaker 01: These are just facts. [00:52:31] Speaker 01: These are just facts that are assembled by people like Miss Kelly and Mr. Marquette. [00:52:36] Speaker 05: The court said that in the chronology, the court said no fact was left out. [00:52:41] Speaker 05: That is clearly not the case here, because if no fact had been left out of Mr. Marchetti's interactions with Mr. Waterman, that document would not have been nine pages. [00:52:50] Speaker 05: It would have been 109 pages. [00:52:52] Speaker 01: Well, that is true, Your Honor. [00:52:54] Speaker 01: That is a difference. [00:52:57] Speaker 01: And I have not looked at the records, but to the extent there's a chronology of what [00:53:03] Speaker 01: Miss Kelly and Miss Marchetti think was wrong. [00:53:08] Speaker 01: Why isn't that just like the chronology section in Mappethor, which was required to be right? [00:53:15] Speaker 05: Because in this case, it reflects a point of view. [00:53:18] Speaker 05: May Pother said the chronology reflected no point of view. [00:53:20] Speaker 05: In this case, a datum [00:53:23] Speaker 05: has been omitted. [00:53:24] Speaker 05: In Maypother, the chronology was a chronology where no known datum in the selected categories had been omitted. [00:53:34] Speaker 05: In this case, the chronology betrays the occasion that gave rise to the compilation. [00:53:39] Speaker 05: In Maypother, the chronology in no way betrayed the occasion that gave rise to the compilation. [00:53:46] Speaker 01: Let me just quote again the IRS's brief. [00:53:49] Speaker 01: Rather, and now I'm on page 33, rather, the facts were carefully selected with one purpose in mind, to support allegations that Waterman had violated certain provisions of Section 230. [00:54:03] Speaker 01: There is nothing in these declarations that say anything about showing a fact. [00:54:08] Speaker 01: There's just, there's nothing there at all. [00:54:11] Speaker 01: The only reference to the deliberative process privilege is in Ms. [00:54:15] Speaker 01: Herring's declaration where she thinks that maybe this is a work product. [00:54:21] Speaker 05: And maybe that's the test we should apply. [00:54:22] Speaker 05: We should just ask ourselves whether it would have chilling effect. [00:54:25] Speaker 05: Of course, I mean, that is one of the main purposes behind the privilege, but of the three differences I drew between the chronology and the Waldheim report and the [00:54:37] Speaker 05: what is publicly known about the Marchetti and Kelly memos. [00:54:41] Speaker 05: Do you disagree with any of those three differences? [00:54:45] Speaker 05: Or maybe a better way of phrasing it. [00:54:47] Speaker 05: Do you agree that these memos are different than the chronology in the Waldheim report in at least those three ways? [00:54:55] Speaker 01: I don't think so, Your Honor. [00:54:56] Speaker 01: And let me just take a step back. [00:54:58] Speaker 01: The point of the chronology was to lay out where Waldheim was during the Second World War. [00:55:07] Speaker 01: And from that chronology, any reasonable historian could have deduced everything else in the report. [00:55:15] Speaker 01: That is why the government ultimately decided to release the entire report. [00:55:21] Speaker 01: And here, what you have is a selective [00:55:24] Speaker 01: You have a selective release. [00:55:28] Speaker 01: You have the explanation that releases all the allegations, paints my client in a very poor light. [00:55:35] Speaker 01: Everyone in the IRS knows about this. [00:55:38] Speaker 01: And once the alert was published, everybody else could figure this out, right? [00:55:46] Speaker 01: There's no hiding from this for my client. [00:55:49] Speaker 05: But it is for that reason. [00:55:51] Speaker 05: I mean, you just go through each three. [00:55:53] Speaker 05: You tell me if you disagree. [00:55:54] Speaker 05: It is for that reason that the memos in this case reflect a point of view, correct? [00:56:00] Speaker 05: They reflect, yes, they're seeming to. [00:56:03] Speaker 05: And the memos in this case betray the occasion that gave rise to their compilation. [00:56:08] Speaker 05: Yes, but they're again. [00:56:09] Speaker 05: The last one, the memos in this case omit [00:56:14] Speaker 05: at least some known data. [00:56:17] Speaker 05: That there are nine pages rather than 109 pages, correct? [00:56:19] Speaker 05: That is correct. [00:56:20] Speaker 01: But there's one factor missing, which is they wanted these facts made public. [00:56:27] Speaker 01: They wanted a process to go forward. [00:56:31] Speaker 01: They assumed that Mr. Waterman would ultimately see these facts because if there was any kind of disciplinary proceeding, the IRS would be obligated to give it to him. [00:56:43] Speaker 01: So the idea that they're, you know, they're going to be chilled seems to me, you know, they wanted the disciplinary proceeding and they were well aware of the fact that if they succeeded, there was no way that they would not end up furnishing these, you know, these memos to Mr. Water. [00:57:07] Speaker 02: I have two questions. [00:57:09] Speaker 02: One is, what's your [00:57:13] Speaker 02: How would you answer the questions I was asking IRS counsel about what a court does when we have a situation like this, or at least that I think we have, where we have a declaration that says, essentially, these memos are selective. [00:57:29] Speaker 02: The authors pick the facts that they thought supported their case. [00:57:31] Speaker 02: That's what she says. [00:57:33] Speaker 02: Yet when we've looked at the document, it looks like the Kurt Waldo document. [00:57:37] Speaker 02: So what do we do? [00:57:41] Speaker 02: Is it a burden of proof issue, or is there [00:57:43] Speaker 02: How would we, what would I say in an opinion if we were gonna say, yeah, I understand the declaration say they're selected, but I've looked at the document and they don't look selected. [00:57:56] Speaker 01: They don't look deliberate. [00:57:57] Speaker 01: Well, this is, I mean, this court reviews the district court decision to know. [00:58:01] Speaker 01: Yes, correct. [00:58:02] Speaker 01: Right, so the fact that the district court may have seen this in a different light. [00:58:06] Speaker 02: No, I'm not asking about the district court. [00:58:08] Speaker 02: I'm asking about the declaration, the agency's declaration. [00:58:11] Speaker 02: Don't forget. [00:58:12] Speaker 01: I'm not talking about the... Yeah, a declaration is like any other piece of evidence. [00:58:16] Speaker 01: It has to be valued and judged, and oftentimes judges don't agree with the assertions that are made. [00:58:24] Speaker 02: So what should they have... I get that's a good point. [00:58:26] Speaker 02: What should they have put in this? [00:58:28] Speaker 02: What should Rawlins have put in this declaration to convince us that this was in fact selected? [00:58:34] Speaker 01: Well, I think what should she have said? [00:58:36] Speaker 01: One thing, there's nothing in the in the in the declarations that really speaks to harm under that. [00:58:42] Speaker 02: I understand that. [00:58:43] Speaker 02: But setting that aside, what what what should they have said? [00:58:47] Speaker 02: In addition to March, Eddie selected the facts that he thought supported the case. [00:58:53] Speaker 01: what should they have said. [00:58:55] Speaker 01: Oh, and I think she would have had to add something which she didn't. [00:58:59] Speaker 01: And there is a concern that if these documents become public, there will be a chilling effect. [00:59:05] Speaker 01: And the next time Mr. Marchetti thinks that a practitioner is engaging in [00:59:11] Speaker 01: not comply with the IRS's requirement that you report. [00:59:15] Speaker 01: I'm sorry. [00:59:16] Speaker 02: Let me try once again. [00:59:17] Speaker 02: I understand your point about that. [00:59:20] Speaker 02: They haven't shown that it would chill, but I'm asking you a different question, which is what should what should Mollins have said in it to convince us that this document, which I've looked at, is in fact selective. [00:59:33] Speaker 02: Should she have said? [00:59:33] Speaker 02: What should she have said? [00:59:36] Speaker 02: How could she have convinced me that even though I'm looking at what looks like a chronology, it's not. [00:59:41] Speaker 02: I'm sorry, Your Honor, I don't have a good answer. [00:59:44] Speaker 02: All right, here's my other question. [00:59:46] Speaker 02: I'm still completely confused about the alert. [00:59:49] Speaker 02: I'm sorry that I just don't understand it. [00:59:52] Speaker 02: It says, here's what it says. [00:59:54] Speaker 02: It says, it says, it says, OK, OPR now sends a letter to a practitioner advising him [01:00:06] Speaker 02: of the issues presented, all it says is of the issues presented and gives him an opportunity to ask for more documents. [01:00:15] Speaker 02: In other words, that looks like the September 10 letter minus you get more documents. [01:00:20] Speaker 02: So that's why I asked both of you whether under the new rule, what he would have gotten under the new rule, he would have gotten this statement of issues earlier. [01:00:33] Speaker 02: And then he could have asked for more documents. [01:00:35] Speaker 02: And that's the issue before us today. [01:00:37] Speaker 02: Now, of course, today it's before us under FOIA, but then it would have been before the IRS under its own regulations. [01:00:44] Speaker 02: That's why I said, all it seems to me it does is move up the date that he gets a statement of the issue. [01:00:49] Speaker 01: I think that is, I agree with your interpretation of the procedures. [01:00:56] Speaker 01: What I think is equally salient is that the IRS found, excuse me, the OPR found the decision below inconsistent with its commitment to provide practitioners a full and fair opportunity to respond to the allegations. [01:01:12] Speaker 01: Everybody knew the allegations had been provided to Mr. Waterman at that point in time. [01:01:19] Speaker 01: The question really is what else should have been provided in order to allow the process to continue. [01:01:26] Speaker 01: Look, part of the concern is fairness, right? [01:01:29] Speaker 01: We've been talking about fairness. [01:01:31] Speaker 01: How can a process be fair if you can't understand what the underlying factual is? [01:01:37] Speaker 05: What do we do if we think parts of the process were profoundly unfair? [01:01:43] Speaker 05: But the application of the FOIA statute [01:01:47] Speaker 05: was legally set. [01:01:52] Speaker 01: I guess you write an opinion in which I lose and you sort of upgrade the IRS, which is not what I would urge you to do, Your Honor. [01:01:59] Speaker 01: I think the better way to do it is saying there's something fundamentally wrong with this case. [01:02:05] Speaker 01: All the allegations have been released. [01:02:07] Speaker 01: They're very unkind to my client. [01:02:10] Speaker 01: He has no way to really defend himself. [01:02:12] Speaker 01: You won't, I'm sure at one point or another had to decide whether a complaint, you know, plan a cause of action. [01:02:21] Speaker 01: But the inside of promptly an Iqbal is, you know, you need to understand the factual basis for allegations in order to decide whether a case can go forward or not. [01:02:32] Speaker 01: And so I don't want to try your patience. [01:02:37] Speaker 05: Judge Rogers, do you have any additional questions? [01:02:39] Speaker 03: No, thank you. [01:02:41] Speaker 01: I would urge this court to resolve this case one way or another. [01:02:45] Speaker 01: This is the sixth anniversary of this case. [01:02:48] Speaker 01: Literally it was filed on September 12th. [01:02:51] Speaker 01: And thank you so much. [01:02:52] Speaker 01: Thank you, Mr. Vlade. [01:02:54] Speaker 01: The case is submitted.