Supreme Court case

Exciting news this week: I was on the winning side in a Supreme Court case.

The case was Ballard v. Commissioner of Internal Revenue. What happened here was that several taxpayers were sued for civil fraud and tax evasion in the Tax Court. The Tax Court -- for the past 20 or so years -- has had this weird process by which a lot of cases are tried before a so-called "Special Trial Judge." The Special Trial Judge conducts the trial, views the witnesses, and writes up a lengthy recommended decision. That decision is then approved by a regular judge of the Tax Court, who invariably issues a final decision that says, "The Tax Court hereby adopts the opinion of the Special Trial Judge," or words to that effect.

And I do mean "invariably" -- out of something like 880 cases reported in the past 20 years, every single one begins with that boilerplate language and then reproduces what purports to be the Special Trial Judge's opinion. (That's what led Judge Cudahy -- who dissented in the Seventh Circuit case -- to say, "I find this extraordinary unanimity telling. . . . I say with confidence that this degree of unanimity is not only unusual, but impossible in a system of arms-length appellate style review involving 39 independent individuals.")

In this case, a couple of Tax Court judges revealed that the Tax Court had actually reversed the Special Trial Judge's opinions -- but without releasing the Special Trial Judge's original report and recommendations. The parties were upset at this lack of transparency, and asked to see the original report of the Special Trial Judge. The Tax Court refused, and appeals ensued.

Because of a statute peculiar to this situation, appeals from a Tax Court decision go the appeals court in which the taxpayer resides. In this case, there were multiple taxpayers living in different states. As a result, there were 3 appeals from the same Tax Court case. My former law firm handled the 5th and 11th Circuit appeals, while another law firm handled the 7th Circuit taxpayer's appeal.

We won the Fifth Circuit case on factual sufficiency grounds. But the other two circuits went the other way on the facts, and rejected the taxpayers' arguments that the original report should be produced under the Tax Court's own rules, various statutes, and the Constitution. Both sets of taxpayers petitioned the Supreme Court, and I helped draft the cert petition for the 11th Circuit taxpayers (the Ballards).

The Supreme Court granted both cert petitions (as I announced here), consolidated the cases, heard oral argument from Stephen Shapiro, and just this week issued a 7-2 decision (written by Ginsburg) in favor of the taxpayers. (The dissenters were Rehnquist and Thomas).

You can find some interesting analysis of the Supreme Court's decision here, here, and here. You can also find the lower court decisions and some of the briefs here.