Carrie Willis v. United States ( 2021 )

United States Court of Appeals
For the Eighth Circuit
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No. 20-2047
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Carrie S. Willis, individually and as trustee of the Trust of James C. and Norma D.
Willis
lllllllllllllllllllllPlaintiff - Appellee
v.
Stephen Boyd; Jason Brushwood; Missouri Highway Patrol; Sergeant D Nash;
The City of Farmington, New Mexico, doing business as Farmington Police
Department; Detective Corporal Russell Bradford
lllllllllllllllllllllDefendants
United States of America
lllllllllllllllllllllDefendant - Appellant
Robert Jackson, IRS Special Agent, Individually and in his official capacity; Scott
Wells, IRS Special Agent, Individually and in his official capacity
lllllllllllllllllllllDefendants
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Appeal from United States District Court
for the Western District of Missouri - Springfield
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Submitted: February 17, 2021
Filed: April 2, 2021
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Before SMITH, Chief Judge, ARNOLD and STRAS, Circuit Judges.
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ARNOLD, Circuit Judge.
This is a case of mistaken identity, though not of the usual kind. During the
search of Carrie Willis's home, police seized a large number of coins and passed them
along to the Internal Revenue Service. An IRS agent deposited the coins at their face
value into an IRS account and later remitted the amount to Willis. She maintains the
coins were collectors' items and so the agent was mistaken when he essentially
swapped them for ordinary currency, greatly discounting their value, so she sued the
government under the Federal Tort Claims Act for conversion. After a bench trial, the
district court agreed and awarded Willis $94,880. The government appeals, arguing
that the district court erred when it concluded that the FTCA had waived the
government's sovereign immunity to suit in the current circumstances. We agree with
the government and so reverse and remand.
According to the district court's findings of fact, which the parties do not
challenge, the government seized 364 boxes of recently minted one-dollar coins
commemorating deceased U.S. Presidents. Each box contained one thousand coins.
An agent with the local IRS office took possession of them the day after they were
seized and had them removed from their original packaging and processed through
a coin counter, after which $364,000 was deposited into an IRS account. The agent
admits that he did not make an effort to determine whether the coins had any
numismatic value. A few years later, after Willis requested the coins' return, the IRS
informed her they had been "converted to cash and deposited into the government's
account." When the government then paid Willis the face value of the coins, she
asserted they were worth a great deal more than that as collectors' items. This suit
followed.
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A person who sues the federal government must show that it has unequivocally
waived its sovereign immunity from suit. See Barnes v. United States, 448 F.3d 1065,
1066 (8th Cir. 2006). The FTCA waives sovereign immunity in suits seeking money
damages against the federal government "for injury or loss of property . . . caused by
the negligent or wrongful act or omission of any employee of the Government while
acting within the scope of his office or employment, under circumstances where the
United States, if a private person, would be liable to the claimant." 28 U.S.C.
§ 1346(b)(1); see also Brownback v. King, 141 S. Ct. 740, 746 (2021).
But the FTCA contains a number of exceptions to this general waiver of
immunity. Hinsley v. Standing Rock Child Protective Servs., 516 F.3d 668, 672 (8th
Cir. 2008). The so-called "discretionary-function exception" that the government
relies on as a bar to this action applies when government agents make decisions that
are discretionary in nature, that is, ones that involve "an element of judgment or
choice." See United States v. Gaubert, 499 U.S. 315, 322 (1991). More specifically,
the exception applies to any claim that is "based upon the exercise or performance or
the failure to exercise or perform a discretionary function or duty on the part of a
federal agency or an employee of the Government, whether or not the discretion
involved be abused." 28 U.S.C. § 2680(a).
The Supreme Court has held, though, that the exception, despite its apparent
breadth, does not insulate from suit every discretionary decision that a government
agent makes; the decision must be "of the kind that the discretionary function
exception was designed to shield." See Gaubert, 499 U.S. at 322–23. The Court has
explained that, in enacting this exception, "Congress wished to prevent judicial
'second-guessing' of legislative and administrative decisions grounded in social,
economic, and political policy through the medium of an action in tort." See United
States v. Varig Airlines, 467 U.S. 797, 814 (1984). So suppose, for example, that a
government agent was driving a car on government business and negligently caused
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an accident. While "driving requires the constant exercise of discretion," that's not the
type of discretion that triggers the exception because the decisions the agent makes
when exercising the discretion associated with driving a car are not grounded in
government policy. See Gaubert, 499 U.S. at 325 n.7.
The upshot of these and other Supreme Court decisions is that we must answer
two questions to determine if the exception applies. First, we ask "whether the
challenged conduct or omission is 'truly discretionary'" in that "it involves an element
of judgment or choice instead of being controlled by mandatory statutes or
regulations." See Buckler v. United States, 919 F.3d 1038, 1045 (8th Cir. 2019). If it
is, we consider whether the employee's judgment or choice could be "based on
considerations of social, economic, and political policy." Id. If it could, the exception
applies, and sovereign immunity bars the suit.
The parties vigorously dispute whether the agent's decision to send the coins
for processing rather than to preserve them in specie was a matter that is "truly
discretionary" or if it was mandated by laws or policies that the agent failed to follow.
We agree with the government that the agent's decision was a discretionary one. The
manual governing the actions of IRS agents provided, as relevant here, "that domestic
and foreign currency seized for forfeiture, except where it is . . . held as a 'collectible
asset,' must be expeditiously counted, processed, and deposited . . . within 5 days of
seizure." See Internal Revenue Manual § 9.7.4.6.1(2); see also id. § 9.7.6.14.1(1).
Willis's own expert agrees that neither that manual nor any other mandatory rule
instructed an agent how to determine whether seized currency is a "collectible asset."
That determination is left to the agent's discretion.
Willis asserts that the agent violated this manual provision by failing to
investigate whether the coins had a special value to collectors. But that provision does
not direct an agent to undertake an investigation. The agent satisfied the provision
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when he determined that the coins were ordinary currency and had them expeditiously
processed. Willis's argument misses the mark.
Willis maintains that some other provisions of the IRS manual required the
agent to investigate whether the coins had collectors' value. For example, Willis faults
the agent for failing to fulfill certain "pre-seizure planning" obligations, including a
general obligation to consider and "realistic[ally] estimate" the value of seized
property. See id. § 9.7.4.3.2(1). But the provision Willis cites never elaborates on the
information an agent must obtain before making a realistic estimate. It never spells
out when additional investigatory duties are triggered, or what an additional
investigation might look like; rather, it apparently gives an agent discretion to
determine whether seized currencies' face value is a realistic estimate of its worth or
whether an investigation into its value as a collectible asset is needed and what it
might entail.
Willis also points to provisions in the IRS manual relating to the storage of
seized property and property appraisals. See id. §§ 9.7.6.9.2(1), 9.7.6.8(1), 9.7.6.8.1,
9.7.6.7.3. But those provisions do not guide agents in determining whether seized
currency is collectible in the first place. At most, they tell agents how to handle coins
like these should they conclude that the coins are collectibles. But as we've pointed
out before, we may not ignore the discretion associated with an underlying,
antecedent determination. Buckler, 919 F.3d at 1050.
We think this case is distinguishable from Buckler and Appley Brothers v.
United States, 164 F.3d 1164 (8th Cir. 1999), two cases Willis invokes for the
proposition that the discretionary-function exception does not apply when a
government agent fails to perform a mandatory task requiring discretion to carry out.
In Buckler, for example, a plaintiff sued a mine inspector who was obligated to
review certain training records. 919 F.3d at 1054. Our court explained that, though
the inspector had discretion in how to examine those records, he was obliged to
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conduct at least some review, and so his alleged entire failure to do so did not trigger
the discretionary-function exception. See id. Similarly, in Appley Brothers, a grain-
warehouse inspector had discretion in how he carried out a mandatory grain
inspection, and since the complaint centered on an allegation that the inspector
conducted no inspection at all, rather than an allegation that the inspector had
performed his obligations negligently, we held that the discretionary-function
exception did not apply. 164 F.3d at 1172–73.
Here, however, the agent satisfied his mandatory obligation—he did not fail
to decide whether the seized currency was ordinary currency or a collectible asset. He
quite clearly decided that the coins were ordinary currency and so had them quickly
processed. Though Willis argues that the IRS manual required him to do more, and
that his failure to follow the manual was not discretionary, we do not think, as just
explained, that the manual required the agent to do more than he did when he
categorized the coins. Even if the decision was carelessly made or was uninformed,
the agent's negligence in making it is irrelevant. See Layton v. United States, 984 F.2d
1496, 1502 (8th Cir. 1993). The decision was still discretionary.
That brings us to the second question we must answer—whether the agent's
choice to treat these coins as ordinary currency could have been "based on
considerations of social, economic, and political policy." When we've already
determined that a government's choice was discretionary, as here, we presume that it
was based on relevant policy considerations. See Buckler, 919 F.3d at 1046. We are
not convinced that Willis has rebutted that presumption.
In rejecting the government's argument that the discretionary-function
exception applied, the district court pointed out that the agent exercised no judgment
because he never considered whether the coins had numismatic value, and so,
presumably, there was never a balancing of any policy considerations. As our court
has explained, however, it does not matter whether the agent actually "engaged in
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conscious policy-balancing." What matters is whether the decision in question is by
its nature as an objective matter "susceptible to policy analysis." See Herden v. United
States, 726 F.3d 1042, 1047 (8th Cir. 2013) (en banc).
A decision is quite obviously susceptible to a policy analysis when it requires
a federal employee to balance competing policy interests. See id. at 1050. One matter
of policy at play in this case is the policy of expeditiously depositing seized currency.
Once again, the manual required agents to count, process, and deposit seized currency
within five days. See §§ 9.7.4.6.1(2), 9.7.6.14.1(1). A reason for this rule, the manual
elaborated, is that "[t]he security, budgetary, and accounting problems associated with
the seizure and retention of large amounts of cash creates great concern . . . and raises
both financial management and internal control issues." Id. § 9.7.4.6.1(1). The manual
to the Department of Justice's Asset Forfeiture Program, in which the IRS
participates, echoes this concern and says that participating agencies "have held tens
of thousands of dollars in office safes and other locations throughout the country.
This raises both financial management and internal control issues. The Department
must report annually to Congress on the amount of seized cash not on deposit." DOJ
Asset Forfeiture Policy Manual ch. 2, pt. VI (previously codified at ch. 1, pt. IV). But
agents acting in circumstances like the ones present here must also undertake
reasonable efforts to preserve the value of seized property. The IRS manual requires
that agents "strive to ensure that seized property is protected and its value preserved."
Internal Revenue Manual Ex. 9.7.1-1(IX).
What this comes down to is that agents who seize currency must balance the
competing interests of expeditious deposit on the one hand and preserving property
on the other—a calculation that plainly involves questions of social, economic, and
political policies as to which the IRS and DOJ have understandably professed "great
concern." So we conclude that the agent's choice was "susceptible to policy analysis"
in the relevant sense. Cf. Metter v. United States, 785 F.3d 1227, 1233 (8th Cir.
2015).
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We therefore hold that the FTCA's discretionary-function exception applies,
and so the government has not waived its sovereign immunity.
We reverse the judgment of the district court and remand for it to dismiss
Willis's claim.
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