US govt brings settlement authority issue to 9th Circuit

The U.S. government on Tuesday brought to the U.S. Court of Appeals for the Ninth Circuit the legal issue as to who should attend the settlement conference in businessman John K. Baldwin’s federal tax refund lawsuit against the United States.

Deputy assistant attorney general Tamara W. Ashford filed an emergency petition asking the Ninth Circuit to order the U.S. District Court for the NMI (Chief Judge Ramona V. Manglona and Senior Judge Alex R. Munson) to vacate its orders issued on Sept. 9, 13, and 14, 2011.

In the Sept. 9 order, Munson denied the U.S. government’s emergency motion to excuse the government from the requirement that person with full settlement authority attend the settlement conference in Baldwin’s lawsuit.

In the Sept. 13 order, Munson stood pat on his earlier decision that a person with authority to recommend any settlement reached by the parties to the Congressional Joint Committee on Taxation must be present at the settlement conference in Baldwin’s lawsuit.

Manglona, in the Sept. 14 order, denied the U.S. government’s second emergency motion.

In the U.S. government’s petition in the Ninth Circuit, Ashford said the orders raise the issue of whether the District Court has the authority to direct the United States, its agencies, or its officers to appear in their official capacities at routine settlement conferences through a high-level official who has full settlement authority over the claim in dispute.

Ashford said the orders also raise the issue whether, if such authority exists, it has been abused under the circumstances of this case.

U.S. Department of Justice Tax Division’s trial attorney Lauren M. Castaldi stated in the emergency motion that due to the amount at issue in Baldwin’s suit, “settlement proposals may involve a concession of more than $2 million.”

Castaldi asked the District Court to allow him and trial counsel for the U.S. Jeremy Hendon to personally appear at the settlement conference and Deborah Meland, the chief of the Tax Division’s Office of Review, will be available by phone.

Castaldi stated, among other things, that only by centralizing decision-making in these cases can the Internal Revenue Service and the DOJ hope to be able to treat all taxpayers similarly, so that the burdens of government are fairly shared by all.

The settlement conference in Baldwin’s suit is scheduled for Oct. 17, 2011, in Idaho before Munson.

In his Sept. 9 order, Munson said that in 29 years of facilitating settlement negotiations, he has never brought about a settlement agreement without having present on each side a person with full authority to reflect such an agreement.

Under the requirement, the Principal Deputy Assistant Attorney General for the Tax Division in consultation with the Congressional Joint Committee on Taxation has final settlement authority for a refund of this amount.