Filed: Jan. 21, 2015
Latest Update: Jan. 21, 2015
Summary: ORDER Plaintiff's Motion to Reconsider (ECF No. 51) RICHARD F. BOULWARE, II, District Judge. This matter is before the Court on Plaintiff United States of America's Motion to Reconsider Order Denying Motion to Approve Consent Injunction against Defendant James Stoll. ECF No. 51. On March 21, 2013, Plaintiff filed a Motion to Approve Agreed Order of Permanent Injunction against James Stoll. ECF No. 28. In that motion, Plaintiff presented a stipulated order of permanent injunction against Sto
Summary: ORDER Plaintiff's Motion to Reconsider (ECF No. 51) RICHARD F. BOULWARE, II, District Judge. This matter is before the Court on Plaintiff United States of America's Motion to Reconsider Order Denying Motion to Approve Consent Injunction against Defendant James Stoll. ECF No. 51. On March 21, 2013, Plaintiff filed a Motion to Approve Agreed Order of Permanent Injunction against James Stoll. ECF No. 28. In that motion, Plaintiff presented a stipulated order of permanent injunction against Stol..
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ORDER
Plaintiff's Motion to Reconsider (ECF No. 51)
RICHARD F. BOULWARE, II, District Judge.
This matter is before the Court on Plaintiff United States of America's Motion to Reconsider Order Denying Motion to Approve Consent Injunction against Defendant James Stoll. ECF No. 51.
On March 21, 2013, Plaintiff filed a Motion to Approve Agreed Order of Permanent Injunction against James Stoll. ECF No. 28. In that motion, Plaintiff presented a stipulated order of permanent injunction against Stoll, in which Stoll agreed, inter alia, that he would be permanently enjoined from engaging in certain specified conduct relating to the preparation of tax returns, giving of tax advice, representation of individuals or entities before the Internal Revenue Service (IRS), and formation of legal documents, corporations, partnerships, or trusts. Id. On July 11, 2013, the Honorable Robert C. Jones issued a Minute Order denying Plaintiff's motion. ECF No. 45. The Minute Order contained no explanation for the decision.
On July 16, 2013, Plaintiff filed a Motion for Further Explanation in which it requested "a further explanation for the Court's denial of the motion so that the United States may know the basis for the Court's decision and proceed intelligently." ECF No. 47 at 2. Judge Jones did not respond to this motion. On August 29, 2013, this case was reassigned to the Honorable Jennifer A. Dorsey. Minute Order, ECF No. 50. Plaintiff filed its Motion to Reconsider on September 17, 2013. This case was transferred to the undersigned on August 5, 2014.
"As long as a district court has jurisdiction over the case, then it possesses the inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient." City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir. 2001) (citation omitted) (internal quotation marks omitted). This power is rooted in the common law, not the Federal Rules of Civil Procedure. Id. at 886.
In this case, the Court cannot determine the basis for Judge Jones's decision from the record before it. Nevertheless, considering the stipulated permanent injunction anew upon Plaintiff's motion to reconsider, the Court finds sufficient cause to modify its previous Order denying it. "Unless a consent decree is unfair, inadequate, or unreasonable, it ought to be approved." S.E.C. v. Randolph, 736 F.2d 525, 529 (9th Cir. 1984) (citations omitted). Here, the Court finds that the agreement is, in general, fair, adequate and reasonable. However, the Court finds that sections 4(c), 4(d), 4(e), 4(f), 4(h), and 4(m) are unreasonably restrictive insofar as they prohibit Stoll, in any way whatsoever, from engaging in activities such as forming partnerships and corporations for others, preparing wills for others, and serving as trustee of a trust established for the benefit of anyone other than himself or his relatives. While mindful that both parties agreed to this permanent injunction, the Court finds it necessary to order certain modifications to the agreement in order to render it completely fair, adequate and reasonable.
ORDER
Accordingly,
IT IS HEREBY ORDERED that Plaintiff United States of America's Motion to Reconsider Order Denying Motion to Approve Consent Injunction against Defendant James Stoll (ECF No. 51) is GRANTED.
IT IS FURTHER ORDERED that this Court's Minute Order Denying Plaintiff's Motion to Approve Agreed Order of Permanent Injunction against James Stoll (ECF No. 45) is VACATED.
IT IS FURTHER ORDERED that Plaintiff United States of America's Motion to Approve Agreed Order of Permanent Injunction against James Stoll (ECF No. 28) is GRANTED with modifications.
IT IS FURTHER ORDERED that the Plaintiff will make certain modifications to its "Agreed Order of Permanent Injunction" against James Stoll (ECF No. 28) and resubmit this modified permanent injunction order within 10 days of the filing of this order. The Plaintiff is instructed to make the following modifications to its "Agreed Order of Permanent Injunction":
• Section 4(c) is modified to read as follows: "Preparing, creating, or forming or assisting in the preparation, creation, or formation of trusts, wills, or other legal documents for others that facilitate or promote noncompliance with federal tax laws, lead to the understatement of federal tax liability, or incite or assist customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
• Section 4(d) is modified to read as follows: "Forming or assisting in the formation of partnerships (LLPs), limited liability companies (LLCs), S-corporations, or C-corporations for others that facilitate or promote noncompliance with federal tax laws, lead to the understatement of federal tax liability, or incite or assist customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
• Section 4(e) is modified to read as follows: "Acting as the trustee of any trust— whether established for the benefit of himself, his relatives, or others—that facilitates or promotes noncompliance with federal tax laws, leads to the understatement of federal tax liability, or incites or assists customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
• Section 4(f) is modified to read as follows: "Acting as the registered agent of any entity—including trusts, corporations, or partnerships—that facilitates or promotes noncompliance with federal tax laws, leads to the understatement of federal tax liability, or incites or assists customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
• Section 4(h) is modified to read as follows: "Opening or assisting in the opening of a bank account for any trust, corporation, or partnership that facilitates or promotes noncompliance with federal tax laws, leads to the understatement of federal tax liability, or incites or assists customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
• Section 4(m) is modified to read as follows: "Providing any individual or entity with advice with respect to forming trusts, corporations, or partnerships, where such advice would facilitate or promote noncompliance with federal tax laws, lead to the understatement of federal tax liability, or incite or assist customers to violate the internal revenue laws or evade the assessment or collection of their federal tax liabilities."
IT IS FURTHER ORDERED that Plaintiff United States of America's Motion for Further Explanation (ECF No. 47) is DENIED as moot.
