Safe Harbor International LLC, Alarm Concepts, Inc., Belpointe Sleepovation Investment, LP, Shelby Lowman and Cedrick Williams v. Booz Allen Hamilton, Inc., et al.

Summary

The United States District Court for the District of Maryland denied motions to dismiss a putative class action alleging unauthorized inspection and disclosure of taxpayer return information under 26 U.S.C. §§ 6103 and 7431. The court held that the plaintiffs could rely on common-law agency principles and the control test to plausibly allege that Charles Edward Littlejohn was an employee of the United States, and that the complaint plausibly supported a vicarious-liability theory against Booz Allen Hamilton, Inc. The opinion addresses sovereign immunity, the scope of Section 7431, and the sufficiency of the plaintiffs’ allegations at the pleading stage.

Holdings

1. The complaint plausibly alleged that Littlejohn was an employee of the United States because it alleged that the IRS exercised extensive, detailed, day-to-day control over his work and provided him with IRS equipment, credentials, facilities, and access to taxpayer information.
2. Section 7431 does not preclude application of common-law agency principles, including the control test, to determine whether an individual is an employee of the United States.
3. Section 7431(a)(2) does not preclude a wrongful-disclosure claim against an employer under a vicarious-liability theory.
4. The complaint plausibly alleged that Littlejohn was a Booz Allen employee acting within the scope of his employment when he accessed and disclosed plaintiffs’ tax information, and therefore stated a claim against Booz Allen under §§ 6103(a) and 7431(a)(2).

Questions Presented

1. Whether the allegations plausibly showed that Littlejohn was an officer or employee of the United States for purposes of the sovereign-immunity waiver in 26 U.S.C. § 7431(a)(1).
2. Whether common-law agency principles, including the control test, may be used to determine whether a contractor is an employee of the United States under § 7431(a)(1).
3. Whether 26 U.S.C. § 7431(a)(2) permits a wrongful-disclosure claim against an employer under a vicarious-liability theory.
4. Whether the complaint plausibly alleged that Littlejohn was acting within the scope of his employment with Booz Allen when he accessed and disclosed the tax information.

Disposition

other