Paula I. Forney, Albuquerque, New Mexico (Cheryl O'Connor, Santa Fe, New Mexico, with her on the briefs), for Defendant-Appellant.
Herbert M. Silverberg, Albuquerque, New Mexico, for Plaintiff-Appellee.
Defendant-Appellant, Secretary of the New Mexico State Highway and Transportation Department, appeals from the district court's order denying: 1) his request for summary judgment on Plaintiff-Appellee's claim of wrongful termination in violation of his First Amendment rights; and 2) his claim of qualified immunity. Our jurisdiction arises under 28 U.S.C. § 1291, and we AFFIRM.
Plaintiff was a classified employee of the New Mexico State Highway and Transportation Department ("the Department") from 1974, when he began working for the Department. See Aplt.App. at 172. In January 1995, a new state administration replaced the Department's upper management, appointing Defendant-Appellant Rahn ("Rahn") Secretary of the Department and Benny Roybal ("Roybal") Deputy Secretary. Id. at 173.
In early 1995, Rahn announced his intent to reorganize the Department workforce. Id. By February 1995, plaintiff knew he would be demoted and transferred to another division within the Department. Id. Generally, the reorganization plan promoted three Department employees and demoted three others, including plaintiff. Id. at 50-55. Plaintiff asserts that the reorganization was illegal as the Department did not obtain the approval of the New Mexico State Personnel Office.
On April 14, 1995, Roybal met with plaintiff and told him that he (plaintiff) would be demoted and transferred as part of the reorganization. Plaintiff refused to discuss the reorganization with Roybal because Roybal was not plaintiff's immediate supervisor and had not followed the appropriate chain of command. Id. at 173-74. On April 18, 1995, plaintiff sent an Intra-Department Correspondence ("IDC") to Roybal with copies to Rahn and plaintiff's immediate supervisor, Fred Cooney. In the IDC, plaintiff accused Roybal of abusing his power and attempting to "crucify" plaintiff. Id. at 174. Neither Rahn nor Roybal took any action in response to the April 18 IDC. Id.
Shortly thereafter, plaintiff took medical leave to undergo hip replacement surgery and did not return to work until June 1995. Id. at 52. Upon his return, plaintiff learned that Secretary Rahn and the Department had demoted him from an Administrator V to an Administrator IV and transferred him to another division. Id. at 175. On July 24, 1995, plaintiff sent a memorandum to the Department's Deputy General Counsel, Richard Ferrary. Id. The memorandum was not presented to the trial court, but generally requested Ferrary's assistance in plaintiff's attempt to contest the reorganization. Id.
On August 17, 1995, plaintiff sent another IDC to Rahn and Roybal, id. at 57, and sent copies to more than thirty-five other individuals and agencies. Id. at 62. Plaintiff criticized the reorganization and Roybal's "personal agenda of hurting people you don't like (and/or are handicapped) and promoting those that play up to you." Id. at 58. Plaintiff suggested that the reorganization manifested Rahn's discrimination, favoritism and other abuses, and that the Department's use of the phrase "Equal Opportunity Employer" was a "sick joke." Id. at 59. He further alleged that Roybal was unqualified for his current position because Roybal was a non-engineer in a position of engineering oversight. Plaintiff also attempted to discredit Roybal's accounting abilities by citing certain incidents. Id. He voiced a wide range of concerns over the Department's implementation of the New Mexico State Personnel Act, including a mention of litigation involving another employee and the Department. Id. at 60. He suggested specific and detailed ways in which the reorganization could be better and more fairly instituted. Id. at 61. The remainder of plaintiff's August 17 memorandum displayed a vitriolic tone and reflected his great displeasure at the alleged inequities of the Department's reorganization, including statements that he believed Rahn and Roybal were abusing plaintiff's disabled status.
Plaintiff's August 21, 1995 IDC to the Department's Office of General Counsel ("Office") also reflected his emotional distress. Id. at 63. Once again, plaintiff sent copies to a large list of individuals and agencies. Id. at 65. The IDC's primary purpose was to request any legal assistance the Office might provide in plaintiff's continuing struggle with Rahn and Roybal. Plaintiff also stated he would be filing separate EEOC claims against both Rahn and Roybal for discrimination against a disabled person. Id. at 63-64. The IDC concluded with a bitter diatribe on what he termed "a statement or two on values (Southwestern style)." Id. at 63-65.
In an August 23, 1995 IDC, plaintiff continued his vehement attacks on the reorganization and the leadership of Roybal and Rahn. Id. at 67. Plaintiff again sent copies of this correspondence to an increasingly large group of recipients. Id. at 69-70. While plaintiff's escalating level of frustration was clearly evident from the tone and language of the IDC, he did make several factual assertions. For example, plaintiff stated that Rahn and Roybal had failed to meet the State Personnel Offices' reorganization deadline. Plaintiff claimed this failure put the Department in a state of confusion and disarray, with neither managers nor employees knowing which tasks Rahn had assigned to which persons. Id. at 67-68. Plaintiff felt that Rahn and Roybal should have taken steps, such as providing a written clarification of the new system, its codes, and the new work assignments, to alleviate the confusion. In the August 23 IDC, plaintiff again expressed concern about Roybal's qualifications for an engineering and accounting position, and frustration at various management decisions that he claimed led to a significant loss of Department funds. Specifically, plaintiff stated Roybal had ignored the requests of qualified engineers for a specific type of storage building and that Roybal's decisions led to the loss of hundreds of thousands of dollars in traffic paint. Id. at 69. Finally, plaintiff once again accused Rahn and Roybal of conspiring to promote their supporters and to demote and discriminate against the disabled.
On August 24, 1995, Rahn issued to plaintiff a notice of contemplated disciplinary action. See id. at 71. The notice cited plaintiff's August 17, August 21, and August 24 IDCs as the cause for the notice. Secretary Rahn states that "[t]he atmosphere you have created by widely disseminating such vitriolic documents detracts from my goal of maintaining a positive work environment." Id. The notice suggests that plaintiff should consider more "appropriate avenues to address grievances and complaints against the Department and its employees."
Plaintiff ignored the notice and sent Roybal another memorandum on August 28, 1995, again with wide dissemination. Id. at 74-75. In short, the memorandum accused Roybal of having an affair with a married employee and, once the employee's marriage ended, promoting the employee. In a number of conclusory statements, plaintiff suggests that Roybal is not fit to serve, has nothing to contribute, and should step down. Id.
On September 7, 1995, Ronald Grimes, acting Secretary for defendant Rahn, issued a final notice of disciplinary action indicating that the Department would proceed with plaintiff's termination. Id. at 76. The notice again cites plaintiff's August 17, August 21 and August 24 memoranda as the basis for termination. The notice states, "[a]lthough the substance of these documents deal with matters about which you have the prerogative to pursue as disputes with management (impact of a Department reorganization on your position, right to representation by Department counsel, alleged improper behavior by management officials, job assignments, etc.), the tone and manner in which you chose to air these matters is irresponsible and unprofessional." Id.
On August 28, 1998, plaintiff filed a complaint for damages and equitable relief in the First Judicial District Court of the State of New Mexico, alleging that the defendants violated his right of free speech. Defendants removed the action to the United States District Court for the District of New Mexico on September 1, 1999. On January 31, 2000, defendants filed a motion seeking summary judgment on plaintiff's First Amendment claim arguing that plaintiff's speech was not a matter of public concern and that defendants' interest in regulating such speech outweighed plaintiff's interest in engaging in the speech. Defendant Rahn also asserted his entitlement to qualified immunity. The district court denied both the motion for summary judgment filed by all defendants and defendant Rahn's claim of qualified immunity. Id. at 172-207. Defendant Rahn appealed.
The district court applied the balancing test set out in Pickering v. Board of Education, 391 U.S. 563, 568, 88 S. Ct. 1731, 20 L.Ed.2d 811 (1968), in denying defendants summary judgment on plaintiff's First Amendment retaliation claim. We review de novo. Koch v. City of Hutchinson, 847 F.2d 1436, 1441 & n.14 (10th Cir.1988)(en banc). Additionally, we review the denial of qualified immunity de novo. Furnace v. Oklahoma Corp. Com'n, 51 F.3d 932, 935 (10th Cir. 1995).
We first address the district court's determination that plaintiff engaged in speech protected by the First Amendment. A government employer cannot "condition public employment on a basis that infringes the employee's constitutionally protected interest in freedom of expression." Connick v. Myers, 461 U.S. 138, 142, 103 S. Ct. 1684 (1983). Thus, "a public employer cannot retaliate against an employee for exercising his constitutionally protected right of free speech." Dill v. City of Edmond, 155 F.3d 1193, 1201 (10th Cir. 1998).
We apply a four-part test in evaluating plaintiff's First Amendment retaliation claim. First, "we must determine whether the employee's speech involves a matter of public concern." Dill, 155 F.3d at 1201. If so, "we then balance the employee's interest in commenting upon matters of public concern 'against the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.'" Id. (quoting Pickering, 391 U.S. 563, 568, 88 S. Ct. 1731, 20 L.Ed.2d 811 (1968)). Third, if the balance "tips in favor of the employee, the employee then must show that the speech was a 'substantial factor or a motivating factor in the detrimental employment decision.'" Id. (quoting Gardetto v. Mason, 100 F.3d 803, 811 (10th Cir. 1996)). Fourth, if the plaintiff establishes that speech was such a factor, "the employer may demonstrate that it would have taken the same action against the employee even in the absence of the protected speech." Id.
Our review considers only the two initial inquiries.(1) The threshold question in assessing the free speech claim of a discharged government employee is whether the employee has spoken "as a citizen upon matters of public concern" or merely "as an employee upon matters only of personal interest." Connick, 461 U.S. at 147, 103 S.Ct. at 1690. Matters of public concern are those which can "be fairly considered as relating to any matter of political, social, or other concern to the community." Id. at 146, 103 S.Ct. at 1690. While speech pertaining to internal personnel disputes and working conditions ordinarily will not involve public concern, id. at 148, 103 S.Ct. at 1690-91, "[s]peech that seeks to expose improper operations of the government or questions the integrity of governmental officials clearly concerns vital public interests." Conaway v. Smith, 853 F.2d 789, 797 (10th Cir. 1988). In making this determination, we consider the "content, form, and context of a given statement, as revealed by the whole record." Connick, 461 U.S. at 147-48, 103 S.Ct. at 1690.
As to the first inquiry, Rahn concedes that limited portions of plaintiff's speech touch on matters of public concern. In Rahn's own termination notice to plaintiff, he indicates that plaintiff's IDCs "deal with matters about which you have the prerogative to pursue as disputes with management (impact of Department reorganization on your position, right to representation by Department counsel, alleged improper behavior of management officials, job assignments, etc.)." Aplt.App. at 76. Plaintiff's speech sought to expose the allegedly illegal nature of the Department's reorganization, the lack of integrity and qualifications of the Department's management, ineptitude of the Department's management, loss of Department funds due to management's poor decision-making, and the impact of Roybal's alleged affair with a subordinate on his decision to promote that subordinate. Portions of plaintiff's speech do touch on matters of public concern under the Connick standards.
Yet many portions of plaintiff's speech dealt with matters of purely personal interest to plaintiff. His concerns for maintaining his existing position, salary, and responsibility motivated his statements concerning the negative effects of the reorganization. Plaintiff's repeated requests that Rahn and Roybal reconsider his demotion were similarly motivated. In alleging that Rahn and Roybal discriminated against him because of his disability, plaintiff was simply furthering his attempts to contest the demotion and transfer. Additionally, many other portions of plaintiff's memoranda contained vitriol, which we construe as matters of personal interest. In short, we agree with the district court's conclusion that some portions of plaintiff's speech are of public concern and many portions are not.
Defendant argues, however, that the district court erred in "picking and choosing" portions of speech in performing the Pickering balancing test instead of considering the speech as a whole, as discussed in Gardetto. He cites Khuans v. School District 110, 123 F.3d 1010, 1016-17 (7th Cir. 1997), claiming that here, as in Khuans, there is a "tidbit" of speech on matters of public concern in a "bagful of [personal] complaints." In Khuans, the Seventh Circuit found only one item of speech on a matter of public concern in a huge litany of personal complaints, and held that the plaintiff's speech was "much closer to the 'private' than the 'public' end of the spectrum, and thus not protected." Id. at 1017. In the same opinion, however, the Seventh Circuit also stated that "[i]f the facts asserted in [the] complaint establish that [plaintiff's] speech related to a matter of public concern, or involved both private and public issues, then Pickering requires a balancing of [plaintiff's] interest in the speech against the interest of her employer." Id. at 1014. We conclude that the latter statement is more consistent with Connick.
Defendant contends that the "tidbit" of plaintiff's speech touching on matters of public concern is not entitled to protection under the first step in the Pickering analysis because the personal content of plaintiff's speech dwarfs the public concern content. We disagree. In Connick, the state discharged an assistant district attorney who had distributed a multi-question questionnaire concerning office policy, morale, and employee confidence in supervisors. The Court determined that only one question touched on a matter of public concern, that being whether employees felt pressured to work in political campaigns. The plaintiff's "questionnaire touched upon matters of public concern in only a most limited sense; her survey, in our view, is most accurately characterized as an employee grievance concerning internal office policy." Connick, 461 U.S. at 154, 103 S.Ct. at 1693. Nonetheless, the Court proceeded to the second step of the Pickering analysis, i.e., the balancing of interests.
We hold that the limited portions of plaintiff's speech that touch on matters of public concern are sufficient to satisfy the first step of the Pickering analysis. Of course, our holding does not suggest that a "tidbit" of content touching on matters of public concern will entitle the body of speech, as a whole, to constitutional protection. When a body of speech contains only a "tidbit" of content touching on matters of public concern, the employee's interest in that speech is very limited. Further, the entire body of the speech is considered when evaluating the state's interest. See Johnsen, R.N., v. Independent School District No. 3 of Tulsa County, Oklahoma, 891 F.2d 1485, 1492-93 (10th Cir. 1989) ("Therefore, because the speech was a concerted, cohesive campaign on a single subject, the speech should be considered in its entirety for purposes of the Pickering balancing test."). Hence, although not excluded from protection by the first step of the Pickering analysis, a body of speech with only a "tidbit" of content touching on matters of public concern often will not be entitled to protection under the second step.
Under the second step of the Pickering analysis, we "balance the employee's interest in commenting upon matters of public concern 'against the interest of the State, as an employer, in promoting the efficiency of the public services it performs through its employees.'" Dill, 155 F.3d at 1201 (quoting Pickering v. Board of Education, 391 U.S. 563, 568, 88 S. Ct. 1731 (1968)). As noted above, plaintiff has at least a cognizable interest as his speech touches on matters of public concern. In evaluating the employer's interest, we consider "whether the statement impairs discipline by superiors or harmony among co-workers, has a detrimental impact on close working relationships for which personal loyalty and confidence are necessary, or impedes the performance of the speaker's duties or interferes with the regular operation of the enterprise." Rankin v. McPherson, 483 U.S. 378, 388, 107 S.Ct. 2891, 97 L.Ed.2d 315 (1987).
Rahn's notice of contemplated disciplinary action and notice of final disciplinary action advised Finn that his wide distribution of venomous documents had a negative impact on the working environment within the Department. Aplt.App. at 71, 76-77. Roybal also told plaintiff that he was "refusing to perform the duties properly assigned to [him]," and that plaintiff was misusing Department resources "including the use of [his] productive time." Id. at 71-72, 77. Despite these assertions, defendant has provided no evidence of actual disruptions. In fact, defendant concedes that "the only evidence in the record is appellant's undisputed evidence attesting to the disruption to the department caused by plaintiff's incendiary, scurrilous memos." Aplt. Brief, at 31-32. This is determinative under Pickering because speculative assertions of workplace disruption are insufficient to establish a governmental interest in terminating plaintiff's speech. See Wulf v. City of Wichita, 883 F.2d 842, 862 (10th Cir. 1989). See also Gardetto, 100 F.3d at 815-16 (holding that an employer cannot rely on "purely speculative allegations that certain statements caused or will cause disruption."). In fact, the employer must show "actual disruption of services which results from the employee's speech." Ramirez v. Oklahoma Dept. of Mental Health, 41 F.3d 584, 594 (10th Cir. 1994). Because defendant has failed to provide evidence of an actual workplace disruption, the state cannot establish an interest in prohibiting plaintiff's speech. We thus conclude that the district court properly denied summary judgment for defendant because plaintiff's speech is entitled to First Amendment protection.
The next issue in this appeal is whether Secretary Rahn is entitled to qualified immunity. "Under the doctrine of qualified immunity, government officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established . . . constitutional rights of which a reasonable person would have known." Prager v. LaFaver, 180 F.3d 1185, 1190 (10th Cir. 1999) (citation and internal quotation marks omitted).
We analyze the trial court's denial of defendant's request for qualified immunity using a two-part test. First, we determine whether plaintiff has met his burden of "coming forward with sufficient facts to show that the defendant's actions violated a federal constitutional or statutory right." Baptiste v. J.C. Penney Co., Inc., 147 F.3d 1252, 1255 (10th Cir. 1998). If so, we then consider whether the law clearly established the violated right at the time of the alleged conduct at issue. Id. at 1255 n. 6. For plaintiff to prevail, there must have been "a Supreme Court or other Tenth Circuit decision on point, or the clearly established weight of authority from other circuits must have found the law to be as the plaintiff maintains." Murrell v. School Dist. No. 1, Denver, 186 F.3d 1238, 1251 (10th Cir. 1999) (citations and internal quotation marks omitted). However, there need not be binding precedent on "all fours" with the current case; instead, "the contours of the right must be sufficiently clear that a reasonable official would understand that what he is doing violates that right." Anderson v. Creighton, 483 U.S. 635, 640, 107 S.Ct. 3034, 97 L.Ed.2d 523 (1987). In short, we require some, but not identical, correspondence between the cases cited and the factual situation in the case at hand. Horstkoetter v. Department of Public Safety, 159 F.3d 1265, 1278 (10th Cir. 1998).
Under the first step, we upheld the district court's denial of summary judgment for defendant on plaintiff's First Amendment claim. Therefore, we also conclude that plaintiff has presented sufficient facts to show that defendant's actions violated plaintiff's constitutional rights.
The significant date in this case is September 7, 1995, when Rahn issued plaintiff's termination notice. We agree with the district court that precedent clearly established before 1995 that an employee "may not be dismissed in retaliation for lawful exercise of first amendment freedoms." Ware v. Unified School Dist. No. 492, Butler County, State of Kan., 902 F.2d 815, 819 (10th Cir. 1990) (citing Greminger v. Seaborne, 584 F.2d 275, 279 n. 4 (8th Cir.1978)). We also conclude that existing case law clearly established that speech such as plaintiff's touched on matters of public concern and that the employee's interest in such speech would outweigh unsubstantiated assertions of workplace disruption. See Wulf, 883 F.2d at 862. Defendant's own recognition that plaintiff's speech "deal[t] with matters about which [plaintiff had] the prerogative to pursue as disputes with management," Aplt.App. at 71, further supports our conclusion. Finally, we are convinced that pre-September 1995 case law clearly established that the defendant's decision to terminate plaintiff in retaliation for his protected speech was actionable. Hence, the district judge properly rejected the qualified immunity defense and properly denied Rahn's motion for summary judgment on plaintiff's First Amendment claim. Accordingly, his order denying summary judgment in both instances is AFFIRMED.
*. The Honorable J. Thomas Marten, United States District Judge for the District of Kansas, sitting by designation.
1. Rahn does not assert that the Department would have terminated plaintiff in the absence of his speech. Thus, the third and fourth factors have no bearing on the outcome of this appeal.


Any sheriff, jailer or other person responsible for the custody of an inmate housed in a local facility who violates the provisions of T.C.A. § 41-2-148 regarding inmate labor for private purposes commits a misdemeanor and shall be punished upon a first conviction by a fine equal to the value of the services received from the inmate or inmates and imprisonment for not less than 30 days nor more than 11 months and 29 days. Upon a second or subsequent conviction for a violation of T.C.A. § 41-2-148, the sheriff, jailer or other person is guilty of a felony and is subject to a fine of not less than the value of the services received from the inmate or inmates nor more than $5,000 and imprisonment for not less than one nor more than five years. If the person violating T.C.A. § 41-2-148 for the second or subsequent time is a public official, in addition to the punishment set out above such person shall immediately forfeit his office and shall be forever barred from holding public office in this state. T.C.A. § 41-2-148(d)(1).
Any private citizen, corporation, partnership or other business knowingly and willfully using inmate labor in violation of T.C.A. § 41-2-148(b) commits a Class A misdemeanor and, upon conviction, shall be punished by a fine of $1,000 and by imprisonment for not more than 11 months and 29 days. Each day inmate labor is used in violation of T.C.A. § 41-2-148(b) constitutes a separate offense. T.C.A. § 41-2-148(d)(2).
In the case of In re Williams, 987 S.W.2d 837 (Tenn. 1998), the Tennessee Supreme Court heard the appeal of Judge Billy Wayne Williams from the Court of the Judiciary's judgment recommending that he be removed from the office of general sessions court judge of Lauderdale County. Judge Williams had, among other things, used an inmate from the county jail to help build a house for his son. “Judge Williams asserted that he was unaware that the practice of using prison labor for personal work was illegal. He believed that he had committed no impropriety because other county officials had also used prison labor as an ‘informal work release program.’ Although several other witnesses testified that private individuals in Lauderdale County had a long standing practice of using inmate labor for personal work, it was undisputed that Lauderdale County did not have a formal, approved work release program.” Id. at 838-839.
Noting that the use of an inmate for a private purpose is a criminal offense, the court found that neither assertion constituted a defense to the disciplinary charges and held that the judge's use of an inmate from the county jail to help build a house for his son violated several canons of the Code of Judicial Conduct. Id. at 841-842. The Supreme Court affirmed the Court of the Judiciary's recommendation that Judge Williams be removed from office. Id. at 844. See also Jordan v. State ex rel. Williams, 397 S.W.2d 383 (Tenn. 1965) (approving the ouster from office of a county commissioner for utilizing for his own benefit equipment and supplies of the county penal farm and labor of its inmates).


If a party is not adequately represented in a class action, the judgment in the case is not binding on that party.
An African-American man named Hansberry bought property from a person who had signed a restrictive covenant preventing property owners from selling land to African-Americans. Lee, one of its other signers, argued that the covenant should be enforced to enjoin the sale to Hansberry and that it was presumptively valid, based on an earlier case involving a class of landowners associated with the covenant. The document would be found valid only if 95 percent of the property owners signed it, and the trial court in the earlier case had made a finding of fact that the 95 percent requirement had been met. The Illinois Supreme Court found that it had not been met, but it still upheld the decision. Since the earlier case was a class action,the trial court ruled that the prior judgment would bind all members of the class, including the property owner who sold the land to Hansberry.
The general rule is that all of the members of the class are bound by a final judgment in the class action, but this is only if they are adequately represented by members of a class who have a similar interest to them. Otherwise, due process requires them to receive notice and an opportunity to be heard. The defendant in this case did not have a similar interest to the landowners such that he could be considered to be part of the same class. In fact, his interests were diametrically opposed to those of the class members, since he was trying to buy land, while they were seeking to restrict its sale. This clash of interests generally indicates that representation by the class is inadequate. The earlier judgment thus would not be binding.
Generally speaking, the party against whom preclusion based on a class action is asserted should have been a member of the class when the original litigation was filed. Otherwise, due process requirements of notice and the opportunity to be heard are probably not satisfied.
Numerous owners of lots in a particular area agreed in writing, each severally with each of the others, that their lots should not be sold to or occupied by Negroes, the effectiveness of the agreement being conditioned, however, upon signing by owners of a specified percentage of the lot frontage. In a case in a state court, tried upon an agreed statement of facts, in which it was stipulated (erroneously) that this condition had been complied with, and in which the issue litigated was whether the agreement had ceased to be enforceable in equity by reason of changes in the restricted area, an owner of one of the lots, suing in behalf of himself and of others in like situation, obtained a decree enjoining violation of the agreement by four individuals, who asserted an interest in the restricted land through another signer of the agreement, but who were not treated by the pleadings or decree as representing others or as foreclosing by their defense the rights of others, and whose interest in defeating the contract did not appear to outweigh their interest in sustaining it.
1. That others who were privy to the agreement, but not made parties to the litigation, and whose substantial interest was in resisting performance of the agreement, could not be bound by the decree upon the theory that the suit was a class suit in which they were duly represented. Pp. 311 U. S. 39, 311 U. S. 44.
2. That a decree of the state court in a second, similar suit, adjudging such other persons estopped by the former decree as res judicata from defending upon the ground that the condition precedent of the agreement had not been fulfilled, was in violation of the due process clause of the Fourteenth Amendment. Pp. 311 U. S. 40, 311 U. S. 44.
372 Ill. 369; 24 N.E.2d 37, reversed.
Certiorari, 309 U.S. 652, to review the affirmance of a decree in equity enjoining a violation of an agreement of lot owners restricting the sale and use of lots in a particular area.
The question is whether the Supreme Court of Illinois, by its adjudication that petitioners in this case are bound by a judgment rendered in an earlier litigation to which they were not parties, has deprived them of the due process of law guaranteed by the Fourteenth Amendment.
race," and provided that it should not be effective unless signed by the "owners of 95 percentum of the frontage" within the described area. The bill of complaint set up that the owners of 95 percent of the frontage had signed; that respondents are owners of land within the restricted area who have either signed the agreement or acquired their land from others who did sign, and that petitioners Hansberry, who are Negroes, have, with the alleged aid of the other petitioners and with knowledge of the agreement, acquired and are occupying land in the restricted area formerly belonging to an owner who had signed the agreement.
To the defense that the agreement had never become effective because owners of 95 percent of the frontage had not signed it, respondents pleaded that that issue was res judicata by the decree in an earlier suit. Burke v. Kleiman, 277 Ill.App. 519. To this petitioners pleaded, by way of rejoinder, that they were not parties to that suit or bound by its decree, and that denial of their right to litigate, in the present suit, the issue of performance of the condition precedent to the validity of the agreement would be a denial of due process of law guaranteed by the Fourteenth Amendment. It does not appear, nor is it contended that any of petitioners is the successor in interest to or in privity with any of the parties in the earlier suit.
The circuit court, after a trial on the merits, found that owners of only about 54 percent of the frontage had signed the agreement, and that the only support of the judgment in the Burke case was a false and fraudulent stipulation of the parties that 95 percent had signed. But it ruled that the issue of performance of the condition precedent to the validity of the agreement was res judicata as alleged, and entered a decree for respondents. The Supreme Court of Illinois affirmed. 372 Ill. 369, 24 N.E.2d 37. We granted certiorari to resolve the constitutional question. 309 U.S. 652.
The Supreme Court of Illinois, upon an examination of the record in Burke v. Kleiman, supra, found that that suit in the Superior Court of Cook County was brought by a landowner in the restricted area to enforce the agreement, which had been signed by her predecessor in title in behalf of herself and other property owners in like situation against four named individuals who had acquired or asserted an interest in a plot of land formerly owned by another signer of the agreement; that, upon stipulation of the parties in that suit that the agreement had been signed by owners of 95 percent of all the frontage, the court had adjudged that the agreement was in force, that it was a covenant running with the land and binding all the land within the described area in the hands of the parties to the agreement and those claiming under them including defendants, and had entered its decree restraining the breach of the agreement by the defendants and those claiming under them, and that the appellate court had affirmed the decree. It found that the stipulation was untrue, but held, contrary to the trial court, that it was not fraudulent or collusive. It also appears from the record in Burke v. Kleiman that the case was tried on an agreed statement of facts which raised only a single issue -- whether by reason of changes in the restricted area, the agreement had ceased to be enforceable in equity.
"where the remedy is pursued by a plaintiff who has the right to represent the class to which he belongs, other members of the class are bound by the results in the case unless it is reversed or set aside on direct proceedings;"
the issue of performance of the condition precedent to the restrictive agreement res judicata so far as petitioners are concerned. The court thought that the circumstance that the stipulation in the earlier suit that owners of 95 percent of the frontage had signed the agreement was contrary to the fact, as found in the present suit, did not militate against this conclusion, since the court in the earlier suit had jurisdiction to determine the fact as between the parties before it, and that its determination, because of the representative character of the suit, even though erroneous, was binding on petitioners until set aside by a direct attack on the first judgment.
State courts are free to attach such descriptive labels to litigations before them as they may choose, and to attribute to them such consequences as they think appropriate under state constitutions and laws, subject only to the requirements of the Constitution of the United States. But when the judgment of a state court, ascribing to the judgment of another court the binding force and effect of res judicata, is challenged for want of due process, it becomes the duty of this Court to examine the course of procedure in both litigations to ascertain whether the litigant whose rights have thus been adjudicated has been afforded such notice and opportunity to be heard as are requisite to the due process which the Constitution prescribes. Western Life Indemnity Co. v. Rupp, 235 U. S. 261, 235 U. S. 273.
Pennoyer v. Neff, supra; 59 U. S. Co. v. French, 18 How. 404; Hall v. Lanning, 91 U. S. 160; Baker v. Baker, E. & Co., 242 U. S. 394, and judicial action enforcing it against the person or property of the absent party is not that due process which the Fifth and Fourteenth Amendments requires. Postal Telegraph-Cable Co. v. Neport, 247 U. S. 464; Old Wayne Mut.L. Assn. v. McDonough, 204 U. S. 8.
To these general rules there is a recognized exception -- that, to an extent not precisely defined by judicial opinion, the judgment in a "class" or "representative" suit, to which some members of the class are parties, may bind members of the class or those represented who were not made parties to it. Smith v. Swormstedt, 16 How. 288; Royal Arcanum v. Green, 237 U. S. 531; Hartford L. Ins. Co. v. Ibs, 237 U. S. 662; Hartford Life Ins. Co. v. Barber, 245 U. S. 146; Supreme Tribe of Ben-Hur v. Cauble, 255 U. S. 356; cf. Christopher v. Brusselback, 302 U. S. 500.
proceed to a decree. Brown v. Vermuden, 1 Ch.Cas. 272; City of London v. Richmond, 2 Vern. 421; Cockburn v. Thompson, 161 Ves.Jr. 321; West v. Randall, Fed.Cas. No. 17,724, 2 Mason 181; Beatty v. Kurtz, 2 Pet. 566; Smith v. Swormstedt, supra; Supreme Tribe of Ben-Hur v. Cauble, supra; Story, Equity Pleading (2d Ed.) § 98.
It is evident that the considerations which may induce a court thus to proceed, despite a technical defect of parties, may differ from those which must be taken into account in determining whether the absent parties are bound by the decree or, if it is adjudged that they are, in ascertaining whether such an adjudication satisfies the requirements of due process and of full faith and credit. Nevertheless, there is scope within the framework of the Constitution for holding in appropriate cases that a judgment rendered in a class suit is res judicata as to members of the class who are not formal parties to the suit. Here, as elsewhere, the Fourteenth Amendment does not compel state courts or legislatures to adopt any particular rule for establishing the conclusiveness of judgments in class suits; cf. Brown v. New Jersey, 175 U. S. 172; Brown v. Mississippi, 297 U. S. 278; United Gas Public Service Co. v. Texas, 303 U. S. 123; Avery v. Alabama, 308 U. S. 444, 308 U. S. 446-447, nor does it compel the adoption of the particular rules thought by this court to be appropriate for the federal courts. With a proper regard for divergent local institutions and interests, cf. Jackson County v. United States, 308 U. S. 343, 308 U. S. 351, this Court is justified in saying that there has been a failure of due process only in those cases where it cannot be said that the procedure adopted, fairly insures the protection of the interests of absent parties who are to be bound by it. Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226, 166 U. S. 235.
may be bound by the judgment where they are in fact adequately represented by parties who are present, or where they actually participate in the conduct of the litigation in which members of the class are present as parties, Plumb v. Goodnow's Administrator, 123 U. S. 560; Confectioners' Machinery Co. v. Racine Engine & Mach. Co., 163 F. 914; 170 F. 1021; Bryant El. Co. v. Marshall, 169 F. 426, or where the interest of the members of the class, some of whom are present as parties, is joint, or where for any other reason the relationship between the parties present and those who are absent is such as legally to entitle the former to stand in judgment for the latter. Smith v. Swormstedt, supra; cf. Christopher v. Brusselback, supra, 302 U.S. at 302 U. S. 503-504, and cases cited.
In all such cases, so far as it can be said that the members of the class who are present are, by generally recognized rules of law, entitled to stand in judgment for those who are not, we may assume for present purposes that such procedure affords a protection to the parties who are represented though absent, which would satisfy the requirements of due process and full faith and credit. See Bernheimer v. Converse, 206 U. S. 516; Marin v. Augedahl, 247 U. S. 142; Chandler v. Peketz, 297 U. S. 609. Nor do we find it necessary for the decision of this case to say that, when the only circumstance defining the class is that the determination of the rights of its members turns upon a single issue of fact or law, a state could not constitutionally adopt a procedure whereby some of the members of the class could stand in judgment for all, provided that the procedure were so devised and applied as to insure that those present are of the same class as those absent and that the litigation is so conducted as to insure the full and fair consideration of the common issue. Compare New England Divisions Case, 261 U. S. 184, 261 U. S. 197; Taggart v. Bremner, 236 F. 544.
We decide only that the procedure and the course of litigation sustained here by the plea of res judicata do not satisfy these requirements.
The restrictive agreement did not purport to create a joint obligation or liability. If valid and effective, its promises were the several obligations of the signers and those claiming under them. The promises ran severally to every other signer. It is plain that, in such circumstances, all those alleged to be bound by the agreement would not constitute a single class in any litigation brought to enforce it. Those who sought to secure its benefits by enforcing it could not be said to be in the same class with or represent those whose interest was in resisting performance, for the agreement, by its terms, imposes obligations and confers rights on the owner of each plot of land who signs it. If those who thus seek to secure the benefits of the agreement were rightly regarded by the state Supreme Court as constituting a class, it is evident that those signers or their successors who are interested in challenging the validity of the agreement and resisting its performance are not of the same class in the sense that their interests are identical, so that any group who had elected to enforce rights conferred by the agreement could be said to be acting in the interest of any others who were free to deny its obligation.
Because of the dual and potentially conflicting interests of those who are putative parties to the agreement in compelling or resisting its performance, it is impossible to say, solely because they are parties to it, that any two of them are of the same class. Nor, without more, and with the due regard for the protection of the rights of absent parties which due process exacts, can some be permitted to stand in judgment for all.
asserted obligation. Smith v. Swormstedt, supra; Supreme Tribe of Ben-Hur v. Cauble, supra; Groves v. Farmers State Bank, 368 Ill. 35, 12 N.E.2d 618. It is quite another to hold that all those who are free alternatively either to assert rights or to challenge them are of a single class, so that any group merely because it is of the class so constituted, may be deemed adequately to represent any others of the class in litigating their interests in either alternative. Such a selection of representatives for purposes of litigation, whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent, does not afford that protection to absent parties which due process requires. The doctrine of representation of absent parties in a class suit has not hitherto been thought to go so far. See Terry v. Bank of Cape Fear, 20 F. 777, 781; Weidenfeld v. Northern Pac. Ry. Co., 129 F. 305, 310; McQuillen v. National Cash Register Co., 22 F.Supp. 867, 873, aff'd, 112 F.2d 877, 882; Brenner v. Title Guarantee & Trust Co., 276 N.Y. 230, 11 N.E.2d 890; cf. Wabash R. Co. v. Adelbert College, 208 U. S. 38; Coe v. Armour Fertilizer Works, 237 U. S. 413. Apart from the opportunities it would afford for the fraudulent and collusive sacrifice of the rights of absent parties, we think that the representation in this case no more satisfies the requirements of due process than a trial by a judicial officer who is in such situation that he may have an interest in the outcome of the litigation in conflict with that of the litigants. Tumey v. Ohio, 273 U. S. 510.
in that suit were not representing the petitioners here whose substantial interest is in resisting performance. The defendants in the first suit were not treated by the pleadings or decree as representing others or as foreclosing by their defense the rights of others, and, even though nominal defendants, it does not appear that their interest in defeating the contract outweighed their interest in establishing its validity. For a court in this situation to ascribe to either the plaintiffs or defendants the performance of such functions on behalf of petitioners here is to attribute to them a power that it cannot be said that they had assumed to exercise, and a responsibility which, in view of their dual interests it does not appear that they could rightly discharge.
MR. JUSTICE McREYNOLDS, MR. JUSTICE ROBERTS, and MR. JUSTICE REED concur in the result.


One of the reasons that identify theft is considered by the Treasury Inspector General for Tax Administration to be the crime of the century—and why I maintain that it cannot be stopped—is because of the IRS. The IRS makes more and more demands for more and more information about more and more aspects of people’s businesses and private lives every day. There is no such thing as personal privacy these days. That the IRS sends citizens a so-called “Privacy Act Notice” in every one of its mailings is a farce. The IRS lays more of a claim to more of your data without court authority than any other government agency. And to make matters worse, they share the data with any other federal, state or local government agency claiming an interest, including foreign governments.
This year alone, there will be about 152 million individual tax returns filed with the IRS. There will be roughly another 100 million business tax returns filed. There will be millions more miscellaneous tax returns, including trust, estate and gift tax returns. And on top of that, over 3.6 BILLION information returns (Forms W-2, 1099, etc.) will be filed with the IRS over the next couple of weeks. There is quite literally a river of data flowing into the agency every year. The flow cannot be stopped, and what’s worse, as far as the IRS is concerned, they need even more data.
Indeed, the IRS is awash in data. The 2018-2022 Strategic Plan boasts that the IRS’s volume of data was 100 times larger in 2017 than it was ten years prior. In 2018, the IRS Criminal Investigation unit alone collected 1.67 petabytes of data from various sources. A petabyte is 1,099,511,627,776 bytes, or 1,024 gigabytes of data. I’m told that approximately 900,000 plain text files can fit into a single gigabyte. The number of users in the IRS with access to that data has increased 23 times (Strategic Plan, pg 19) in the past ten years.
Advancements in how data is collected, stored, accessed and analyzed will allow us to deploy data better. We’ll standardize our data processes and protocols and encourage collaboration among all IRS business units. Increased interoperability of data systems and sources will enhance the secure and seamless flow of data to enable greater authorized access to information. We’ll invest in training to develop more advanced analytics skill sets across the IRS, and use data to improve our business processes. Strategic Plan, pg 19.
The investment in analytics was recently undertaken—in a big way.
On September 27, 2018, the IRS entered into a contract with Palantir Technologies of Palo Alto, CA, to handle the task of data assimilation. The contract calls for Palantir to provide hardware, software and training to IRS employees to “capture, curate, store, search, share, transfer, perform deconfliction, analyze and visualize large amounts of disparate structured and unstructured data.” IRS Contract Proposal, Performance Work Statement, January 11, 2017, pg 1.
search, analyze, visualize, and interact with a wide variety of disparate data sets so users will be able to leverage the platform to perform advanced analytics, such as link, pattern, statistical, behavioral, and geospatial analysis on an investigative platform that is scalable and interoperable with existing IRS equipment and systems. Ibid, pg 2.
· PCAP files (.pca, .pcap, .pcp). Ibid, pg 20.
· Allow for the rapid ingestion of massive amounts of data.
· Users should be able to immediately use the imported data in the imported format to perform queries, analysis and identify links.
· Allow users to drill down on massive amounts of disparate data to find connections.
· Provide algorithms and capabilities that identify the key players and their roles for the user.
· Allow users to visualize connections from millions of records with thousands of links by grouping data visualization by the commonalities and roles. Ibid, pg 20.
This system is intended to allow the IRS to meaningfully link tens of millions of tax returns, billions of information returns, and trillions of bank and credit card transactions, phone records, and even social media posts. For example, if a U.S. citizen moves money from a Swiss bank to some other offshore bank, then uses credit or debit cards to spend the money in the U.S., Palantir’s software can link those transactions. It could also flag a person whose tax return shows relatively low annual income but whose social medial posts indicate something entirely different. A 2015 IRS privacy report reveals that since 2013, Palantir has had access to personal information including passport numbers, text messages, criminal histories, and mothers’ maiden names. Case Lead Analysis, PIA ID No. 1120, July 28, 2015.
This is exactly the kind of data analysis it will take to establish the IRS’s so-called “up-front tax system,” which I describe at length in chapter 2 of How to Win Your Tax Audit. Under that system, the taxpayer is essentially removed from the tax preparation process because the IRS knows everything there is to know about your personal, business and financial affairs to the point where they prepare the return for you. How’s that for tax simplification?
Since 2004, Palantir provided the federal government with various software platforms for the CIA, the Department of Justice, and the Department of Defense. All of it is related directly to enhancing the government’s data analysis capabilities.
The IRS began working with Palantir in 2013. The agency spent $30.8 million on a five-year contract, and at that time granted Palantir access to files for more than 1 million people, according to a July 28, 2015 audit report. That contract provides the IRS with access to spy software for use by Special Agents (criminal investigators) “to generate leads, identify schemes, uncover tax fraud, and conduct money laundering and forfeiture investigative activities.” Case Lead Analysis, PIA ID No. 1120, July 28, 2015, pg 4.
As far as the IRS’s September 2018 deal is concerned, the federal government will pay Palantir $98,750,546.94 over seven years to fulfill the contract. My question is, why the extra 94 cents?
by Merrill Mathews, Ph. D.
What's Left After the Jobs Act?
In last month’s issue of PTT, I discussed the changes to §274(a) brought on by the Tax Cuts and Jobs Act. The law eliminated “entertainment” expenses, regardless of whether they were either “directly related to” or otherwise “associated with, the active conduct” of a business. Code §274(a) (prior to the Jobs Act amendment.) As stated in the article, no “entertainment” expenses are allowed under §274(a), period.
The key question I addressed is what is allowed as meal expenses. I answered that question and further distinguished between entertainment expenses and business meals. My conclusion is that meal expenses incurred in a clear business setting, not incidental to or associated with an entertainment activity, are still deductible. I draw my conclusion from the cases and regulations that distinguish between meals and entertainment.
But it is also important to understand that while the Jobs Act eviscerated §274(a) as to entertainment expenses, §274(e) continues to allow deductions for meals and limited entertainment expenses within the narrow scope discussed below. Thus, what was disallowed under §274(a) may be allowable under §274(e), depending on the facts.
The following is a breakdown of the provisions of §274(e).
1. §274(e)(1). 50% deduction allowed for food and beverages provided to employees by employers on employer premises.
2. §274(e)(2). 100% deduction for meals and entertainment expenses treated as employee compensation and reported on Form W-2, such as employer paid vacations. The excess expenses for the company aircraft over the amount of the compensation included in income for “specified” employees remain completely disallowed.
3. §274(e)(3). 100% deduction for reimbursed meals and entertainment expenses under an accountable plan.
4. §274(e)(4). 100% deduction for non-discriminatory social and recreational expenses for employees, such as holiday parties and company picnics.
5. §274(e)(5). 50% deduction for meals and 100% deduction for entertainment other than meals in connection with business meetings of employees, stockholders, directors, etc.
6. §274(e)(6). 100% deduction for entertainment other than meals and 50% for meals in connection with §501(c)(6) Business League meetings, such as chamber of commerce, real estate board and certain professional organizations.
7. §274(e)(7). 100% deduction for meals and entertainment for items made available to the public, such as the distribution of samples, complimentary goods, etc.
8. §274(e)(8). 100% deduction for costs of meals and entertainment sold to customers in the ordinary course of business.
9. §274(e)(9). 100% deduction for meals and entertainment included in income of non-employees, with the same limitation as for employees in item 2 above, that being expenses for the company aircraft in excess of the amount included in certain non-employees’ income, remains completely non-deductible.
Section 274(n) provides a 50% limitation for all food and beverages with the exception of those in §274(e)(2),(3),(4),(7),(8), or (9) (see list above) and for certain crew members, drivers, and other special workers. Thus, allowable meals are subject to the 50% haircut unless they fall under one of the exceptions of §274(e)(2),(3),(4),(7),(8), or (9).
And here’s yet another twist on this morass. The percentage allowed as a deduction for entertainment expenses under §274(e)(5) went from 50% to 100%. Thus, entertainment continues to be allowed, and at even a higher percentage, when incurred in the narrow fact scenario presented there.
4. The business relationship to the taxpayer of persons fed or entertained.
A detailed log or contemporaneous notes written directly on receipts are essential to carrying this burden of proof. See my book, How to Win Your Tax Audit for more on this issue.
With more review and changes to come, make sure you keep up with the latest changes by having a subscription to this newsletter, Pilla Talks Taxes.
This is a portion of an article taken from July 2018 issue of "Pilla Talks Taxes."
With the end of the year fast approaching, you’re probably wondering what you might do to cut your taxes. If you wait until April to start thinking about this, it’s just too late. Here are some ideas to get you moving in the right direction now.
1. Pay state income taxes before December 31.
Many people wait until April 15 to pay their state income taxes, since that’s when they file their state tax returns. However, if you pay your state income taxes in 2018, you can’t claim the deduction for those taxes until you file your 2018 income tax return in 2019. Thus, you have to wait an entire year before getting the tax benefit of the expense. By paying your state taxes now, you get a deduction for those taxes in 2017, one year sooner than you’d otherwise realize.
2. Review your wage withholding or estimated payments.
Eighty-five percent of all taxpayers get a tax refund when they file their tax returns. The average refund is about $3,000. If you get a tax refund, it doesn’t mean the government got religion and decided to give you free money. It means you paid more than you owe. If you got a refund in 2017, you need to examine your withholding situation going into 2018 to make sure you don’t overpay.
Whether you’re an employee or a self-employed person, sit down now and do some preliminary calculations on your tax liability. Figure out if you’ve overpaid. If so, you need to adjust Form W-4 (for wage earners) or your estimated payments (for self-employed people).
Keep in mind that no law requires you to pay more taxes than you owe. For withholding purposes, you avoid under-withholding penalties if you pay either 100 of last year’s tax (2016) or 90 percent of this year’s tax (2017), whichever is less. Use that yardstick to guide you in adjusting your withholding for 2018.
3. Count your money now.
Each year, millions of people are blindsided come April 15 with surprise tax liabilities they can’t pay. Don’t wait until March or April to start figuring your tax, especially if 2017 was a particularly good year.
It is important to sit down now and examine your 2017 financial situation. If there were substantial changes to your economic condition, that may increase your tax burden. If you don’t have the money to cover the tax, you’ll wind up as one of the millions facing enforced tax collection.
Get a good handle on what you’re going to owe. If you figure it out now, you have four and a half months to put a plan together to pay the tax. If you don’t, you could be hit over the head in April. In my experience, it’s that kind of shock that causes people to start making critical mistakes in how they handle their tax burdens. Often, it leads to years of hassle and harassment from the IRS.
4. Review your financial portfolio.
One of the biggest problems with our tax system is the unfair treatment it affords to investment gains and losses. If you win with your investment, the IRS stands next to you with its hand out to get its “share” of your success. If you lose, you are, for the most part, on your own.
The reason is that capital gains are subject to tax in their entirety in the year realized. However, capital losses are subject to a $3,000 cap in a given year. For example, if you lose $15,000 in an investment, you can only deduct $3,000 at time. At that, it takes five years to fully write off your loss.
This is true unless you have both capital gains and capital losses in the same year. In that case, you offset your gains against your losses, plus you can take an extra $3,000 of loss. Suppose you have $10,000 of capital gains and $12,000 of losses. The first $10,000 of losses are offset against the gains. Then, you get the additional $2,000 of losses as a deduction that can offset other income.
In order to best utilize this rule, you should consider selling investments that are down in 2017 so that you can offset the loss against any investments that made money during 2017. This allows you to effectively increase the allowable capital loss deduction, thereby recovering your losses much faster than you otherwise would. Talk to your investment advisor about the merits of this strategy in your case.
5. Consider making equipment purchases.
If you own a small business, now is the time to consider purchasing any equipment you might need. A special tax code section creates an advantage for such investments.
Code §179 allows you to claim a full deduction for the cost of business tools and equipment placed in service in the year purchased. Ordinarily, such cost must be depreciated over its useful life. For example, if you purchase a copier for $5,000, you would have to depreciate it over three years. In that case, you get a deduction of $1,667 for each of three years. But under §179, you can fully expense up to $510,000 of equipment in 2017.
Now is the time to take advantage of this deduction, especially if your income was unusually high in 2017. The best way to offset that income for tax purposes but still get the benefit of the money is buy equipment you need for your business.
6. Fund a Health Savings Account.
One of the best-kept secrets in tax planning is the Health Savings Account. This allows you to set aside money earmarked to pay medical expenses not covered by insurance (other than the insurance policy itself). By placing the money in a specially designated savings account, the contribution to the account is tax deductible, up to certain limits.
It works much like an IRA or 401(k), except that you don’t have to pay taxes on the money when it’s distributed, provided you use it for medical expenses that are not covered by insurance. You can fund this account right up to December 31, 2017, and get a deduction for the money you put in, even if it’s not used for medical expenses in 2017. What’s more, any amounts left in the account at the end of the year carryover to 2018 and remain in your account, under your control. You don’t lose the money. It’s always available to you.
7. Fund a retirement account.
An IRA, 401(k) or other retirement account can be funded anytime during 2017, and you get a deduction for the contribution (within limits) in 2017. In fact, for most retirement accounts, you have up to April 15 of the following year to contribute. You can get a deduction for the prior year simply by designating the contribution to apply to the prior year. That means a contribution made in 2018 can still apply to and be deductible in 2017.
8. Consider restructuring your business.
There are millions of people operating small businesses in the form of sole proprietorships. And while this is probably the best way to start a new business, it may not be the best way to continue an existing business. Various forms of business entities are available, including a small business corporation or partnership. Depending on the nature of your business and non-tax considerations, one or more of the available entities might be a better idea than continuing as a sole proprietorship. January 1 is generally the most convenient time to change the structure of an existing business.
9. Catch up on your charitable contributions.
If you make it a practice to give generously, make another contribution before December 31. This gives you further opportunity to cut taxable income and help those in need at the same time.
If you need more help with end-of-the-year tax planning, you must consult one of the professional members of my Tax Freedom Institute. Click Here for a list of the current consulting members.
This is an article taken from November December 2017 issue of "Pilla Talks Taxes."
A number of public policy research institutes have opined on how the Tax Cuts and Jobs Act will impact Americans. One side continues to insist that the law is nothing more than “tax cuts for the rich.” This is non-sense considering that the law creates cuts that cover just about the entire gamut of income brackets.
The law rewrites dozens of code sections, eliminates certain deductions, and changes the rates. There is a new deduction for small business owners and the corporate tax rate was slashed from 35% to 21%. According to the Tax Policy Center, the majority of Americans will get a tax cut in 2018 and beyond. See: http://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act.
In fact, at least four out of five taxpayers will see their taxes cut under the Jobs Act. As I have reported in the past based on analysis by the Tax Foundation, the average taxpayer will likely see their after-tax income rise by about 2.2%. Already the IRS adjusted the W-4 withholding charts for employers to account for the law changes. Because of that, people are now getting more in their paychecks every month due to the reduced tax burden.
According to the Tax Policy Center’s numbers, citizens earning between $48,600 to $86,100 annually will see their net income grow by about 1.6%. Those earning from $307,900 to $732,800 will see an increase of about 4.1%. Does that constitute “tax cuts for the rich?” The fact is higher income taxpayers pay the overwhelming bulk of taxes to begin with. They are naturally going to see a greater percentage reduction in their liabilities when there’s a cut.
Exactly how all the changes will affect you depends on where you live, your family size and what you do for a living. According to analyses done by BNA, those in high tax states with substantial itemized deductions may see a tax increase because of the reduction or elimination of certain deductions. But if you earn income from self-employment, you can expect a substantial cut because of the 20% deduction that applies to self-employed people.
For more on this, see my April - May 2018 Issue of Pilla Talks Taxes The 20% Deduction for Small Businesses.
BNA produced eight different scenarios to illustrate how the Jobs Act might affect certain people. The scenarios examine 2018 wage and self-employment business income. The examples do not address less common scenarios or the extent to which corporate shareholders will be affected because of the reduced taxes on corporate earnings.
Manhattan residents, a married couple, have adjusted gross income of $2 million. They have a jumbo mortgage (at 4% interest) and take a $40,000 deduction on mortgage interest. They pay property taxes of $96,250 and state income taxes of $135,360. They make annual charitable contributions totaling $100,000.
They will pay a bit more because they lose itemized deductions, most notably due to the cap of $10,000 in state and local taxes, plus the reduction of available interest for loans capped at $750,000. (The cap under prior law was $1 million.) Some of the loss is offset by the drop in the top marginal tax rate from 39.6% to 37%.
The effective tax rate for these people goes up slightly, from about 30.51% to 31.19%.
A married couple has AGI of $1 million. They have a primary residence in Malibu and a second home in Lake Tahoe. The property taxes on the Malibu home are $15,860, and $4,896 on the Lake Tahoe home. They deduct a total of $40,000 in mortgage interest for the two homes and they give $50,000 to charity.
While they lose almost $86,000 in deductions, the drop in the top tax rate means their effective tax rate goes up from 26.77% to 27.24%, only a slight increase.
This married couple has a small manufacturing business in Pittsburgh. Their AGI is $300,000, all from their business. They have two children under age 17. Their deductible mortgage interest is $6,000; their property taxes are $8,600; and they give 5% of their income to charity.
They will get a big benefit from the 20% deduction for business owners who pay business income taxes on their individual tax returns. That deduction will be worth $60,000. It will cut their AGI considerably, reducing their effective tax rate from 18.69% to 11.58%.
A married couple in a New York suburb has two children under age 17. They earn $275,000 and pay state income taxes of $17,290. Their mortgage interest deduction is $14,000, and they pay property taxes of $13,750. They give about the same amount to charity.
While they will lose some of their deductions and exemptions, they will benefit from the increased child tax credits. Moreover, because the law increased the income point at which the alternative minimum tax kicks in, they will avoid AMT of $5,000. Their effective tax rate goes from 17.45% to 15%.
This single New York resident has no children and rents an apartment. He pays state income taxes of $8,148 and gives about $6,500 to charity.
This citizen comes out ahead because the deduction for state and local income taxes, up to $10,000, means he doesn’t lose any of it. Plus, he gets his deduction for charitable contributions. His effective tax rate drops from 18.57% to 16.90%.
This couple rents their home and has no children. Their AGI is $100,000. They give $5,000 a year to charity.
The law eliminates the personal exemptions, which are $4,050 for each of the two taxpayers. However, that loss is offset by rate cuts and a near-doubling of the standard deduction, from $12,700 to $24,000 for married couples. Their effective tax rate goes from 11.28% to 8.74%.
This Portland couple has $58,000 of AGI, which is about the median household income for the U.S. They own their home, pay property taxes of $1,688 and mortgage interest of $3,000. Their state income taxes are about $4,744.
Like the couple in Austin, they lose their itemized deductions but benefit from both the higher standard deduction and the reduced tax brackets. They will see a reduction in their effective tax rate, going from 8.01% to 6.38%.
This married couple has $40,000 of AGI with one child under age 17. They rent and have state income taxes of $2,104.
This family ends up with a negative income tax rate. They benefit from the doubling of the standard deduction and enhanced child tax credits, which are refundable. That means that, subject to limits, low-income taxpayers are able to get more back in refunds than they paid in the first place. Their effective tax rate goes from 1.29% to -1.00%, thus leading to the refund.
* The above hypothetical scenarios were provided by BNA is its Tax Management Weekly Tax Report, December 25, 2017.
These scenarios clearly point out all that is wrong with the tax code. The rate of tax that a person or family ultimately pays is not solely dependent on their income. Rather, a vast array of social issues come into play, including whether a person is married or not, whether they have children, the age of the children, whether they own a home, and where in the U.S. they live, if they make charitable contributions or not—just name a few.
These are all factors that work to make the outcome of the tax laws, and the bottom line tax burden for a given taxpayer, a matter that is completely arbitrary. These various factors are not driven by economic considerations and they certainly are not based on Constitutional provisions or theories. Instead, they are driven by the always-moving target of the nebulous concept of “social justice.” And that itself flows from the unsound notion that it’s the government’s responsibility to achieve income equality in the U.S.
Apart from the fact that just about all of the Jobs Act tax cuts expire after 2025, this is another reason the Jobs Act is not “tax reform.” The law hasn’t reformed anything in the truest sense of the word. It just stirred the pot on what is deductible, and in what amounts, based on arbitrary ceilings (or floors), and for how long.
Until individual members of Congress wrap their heads around the idea that the legitimate taxing power of the U.S. Government does not involve the use of force to achieve equality of outcome on the income racetrack, we will never have true tax reform. In a free society, there will always be those who achieve at a higher level than others for a host of reasons the government cannot scrub out of existence.
Thus, so-called equality is achieved only through overwhelming force, and even at that, such equality is measured by the lowest common denominator, not the highest. Such is the model of socialist and totalitarian governments around the world. It has no place in a constitutional republic.
Business travel has been a fact of life since dawn of civilization. Just as an example, for centuries, caravans brought silk, spices and trade goods from Asia across the Silk Road to the Middle East, where they eventually found their way to Italy. In turn, Italian mariners based chiefly in Genoa brought those goods to the world. While the business travel of the typical small business owner is not quite as exotic as traveling the Silk Road, it is just as necessary to the life of that business.
Though your business travel might not be exotic, the IRS’s requirement to make and keep records is. That’s why so many business owners lose the benefit of their travel expenses when they are audited. But if you understand the rules, you’ll ensure that your legitimate business expenses are allowed as deductions. And by carefully planning your trips, you can get a legitimate business deduction for just about all your travel expenses. The key is to know in advance how to prove your case.
Let’s carefully examine the rules for deducting business travel.
There must be a business purpose for the trip. Code section 162(a)(2) allows a deduction for “traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business.” The first rule is that your expenses must be related to the conduct of your business. You have to prove a direct link between the travel in question and the successful operation of your business.
How do you accomplish this? Code section 274(a)(1)(A) provides guidance. This statute provides for a deduction when the trip was directly related to the “active conduct” of your trade or business. Travel to meet with existing or prospective customers, clients or patients is directly related to the active conduct of your business when your personal contact with these people is necessary to the success of your business. An example is traveling to a city to meet with a customer or supplier in his office expressly for the purpose of conducting existing business or attempting to establish new business that will have a positive economic impact on your operations.
· The business relationship to you of persons you met with during your travel.
A log of your business travel should include all of these items. In describing the business relationship of the persons you met with, a simple statement showing the nature of your relationship and the purpose of your meeting is sufficient. For example, if you met with Mr. Jones of the ABC Company, who is a re-seller of the products you manufacture (or sell), a statement indicating that he is a prospective (or current) buyer of your products, meets this requirement. See chapter (TBA when book is out) for recordkeeping details and a sample log is included in the appendix to this manual.
Your expenses cannot be lavish or extravagant. Whether a given expense is excessive is determined on a case-by-case basis. The IRS must look to the nature of your business, the type of clientele you deal with and the expectations of the market you’re in to determine this issue. What is lavish for one person may not be for another.
For example, a high-end jewelry wholesaler may arrange meetings with retailers at posh hotels, may serve elaborate lunches or dinners to his prospects, and may incur high costs for security at his functions. Given the high cost of his products, this would not be considered lavish or extravagant. On the other hand, a clothing salesman who meets with prospective customers in their own stores could not likely justify the cost of a posh hotel setting.
The expenses must be “reasonable and necessary” to the conduct of your business and the expenses must be “directly attributable” to your business. Treas. Reg. §1.162-2(a).
Here you must show a direct link between the expense incurred and the conduct of your business. This includes travel expenses to and from the city in question, overnight lodging expenses, meals, entertainment expenses (discussed below) directly related to your business, and other costs incurred in carrying out your activities on the road.
· You had more than a general expectation of deriving income or some other specific trade or business benefit. Your expectations of business activity from the travel must be specific and tangible, not merely related to “good will” or other “blue sky” expectations.
· You actively engaged in a business meeting, negotiation, discussion, or other bona fide business transaction, other than entertainment, for the purpose of obtaining income or some other specific business benefit. Merely hobnobbing with potential customers is not sufficient to meet this rule. You must have met with existing or prospective business associates in a business environment. This does not mean that you must have actually made a deal with prospective customers.
· In light of all the facts and circumstances of the case, the principle character of the meeting was the active conduct of your trade or business. It is not necessary that more time be devoted to business than to entertainment to meet this requirement. It is only necessary to prove that the overarching theme of the meeting was to carry out business. For example, suppose you travel to Los Angeles to meet with three customers who portend substantial sales for your business. You meet in a local hotel conference room for two hours, discuss your business affairs, then take the customers to a baseball game and dinner, where you spend a combined five hours. The fact that the meeting only lasted two hours does not change the character of the business meeting. The costs are deductible.
· The expenditures were for you and persons with whom you engaged in the active conduct of your trade or business. Expenditures attributable to a person not related to your business are not deductible.
Business and personal travel may be mixed. Treasury Regulation section 1.162-2(b)(1) makes it clear that where personal and business travel are mixed, travel expenses may nevertheless be deducted “if the trip is related primarily” to your trade or business. Suppose you travel to New York City for the primary purpose of meeting with prospective clients. While there, you meet with college friends, go to dinner and a Broadway show.
The fact that you engaged in personal activities while in New York does not change the character of the travel as being primarily for business. However, because the meeting with friends was purely personal in nature, you get no deduction for expenses attributable to that dinner and the show. Still, your travel expenses, hotel, cab fares, etc., are fully deductible since the primary purpose of the trip was business in nature.
Even if your trip is not primarily business-related, expenses that “are properly allocable” to your trade or business are still deducted. Suppose you’re on the same trip to New York. But instead of a business purpose, you take the family there for a family reunion. While in New York, you set aside one day to meet with prospective clients. All costs incurred in connection with that activity, such as cab fares, meals or entertainment with the clients, are deductible. This is true even though your travel expenses to and from New York and your hotel costs are not.
This is a portion of an article taken from September 2017 issue of "Pilla Talks Taxes."


T.C.A 33-6-401 (as amended by Public Acts 2000, Chapter 947, section 1) permits for emergency detention: IF AND ONLY IF (1) a person has a mental illness or serious emotional disturbance, AND (2) the person poses an immediate substantial likelihood of serious harm under § 33-6-501 because of the mental illness or serious emotional disturbance, THEN (3) the person may be detained under § 33-6-402 to obtain examination for certification of need for care and treatment.
T.C.A. 33-6-402 (as amended by Public Acts 2000, Chapter 947, Section 1) states that if an officer authorized to make arrests in the state, a licensed physician, a psychologist authorized under § 33-6-427(a), or a professional designated by the commissioner under § 33-6-427(b) has reason to believe that a person is subject to detention under § 33-6-401, then the officer, physician, psychologist, or designated professional may take the person into custody without a civil order or warrant for immediate examination under § 33-6-404 for certification of need for care and treatment.
T.C.A. 33-6-425 (as amended by Public Acts 2000, Chapter 947, Section 1) states that no defendant shall be detained at a jail or other custodial facility for the detention of persons charged with or convicted of criminal offenses, unless the defendant is under arrest for the commission of a crime.


text:
TAYLOR v. SAWYER March 28, 2002 No. 01-35103.
CITY OF SOUTH PASADENA; National Trust for Historic Preservation; Sierra Club; California Preservation Foundation; Los Angeles Conservancy; South Pasadena Preservation Foundation; South Pasadena Unified School District, Plaintiffs-Appell March 28, 2002 No. 99-56205.
BENNETT v. MEDTRONIC INC March 27, 2002 No. 01-55966.
UNITED STATES v. HERNANDEZ GARCIA March 26, 2002 No. 00-50634.
GREENE v. LAMBERT March 26, 2002 No. 01-35595.
ALMADA v. ALLSTATE INSURANCE COMPANY March 26, 2002 No. 00-16115.
REES v. HILL March 26, 2002 No. 01-70750.
GLENCORE GRAIN ROTTERDAM v. SHIVNATH RAI HARNARAIN CO March 26, 2002 No. 01-15539.
CITY OF TUCSON v. WEST COMMUNICATIONS INC March 26, 2002 No. 00-16416.
UNITED STATES v. NGUYEN March 25, 2002 Nos. 00-10353, 00-10406.
UNITED FOOD AND COMMERCIAL WORKERS UNION LOCAL 1036 951 v. NATIONAL LABO March 25, 2002 Nos. 99-71317, 99-71442, 99-71596, 00-70156 and 00-70189.
UNITED FOOD AND COMMERCIAL WORKERS UNION 1036 951 v. NATIONAL LABO March 25, 2002 Nos. 99-71317, 99-71442, 99-71596 and 00-70156.
AL HARBI v. IMMIGRATION AND NATURALIZATION SERVICE March 25, 2002 No. 98-70828.
A&M RECORDS, INC., a corporation; Geffen Records, Inc., a corporation; Interscope Records, a general partnership; Sony Music Entertainment, Inc., a corporation; MCA Records, Inc., a corporation; Atlantic Recording Corporation; Island Rec March 25, 2002 Nos. 01–15998, 01–16308, 01–16003, 01–16011.
ODEN v. NORTHERN MARIANAS COLLEGE March 22, 2002 No. 00-16594.
CHILDREN HOSPITAL MEDICAL CENTER OF NORTHERN CALIFORNIA v. CALIFORNIA NURSES ASSOCIATION March 22, 2002 No. 00-15636.
CIRCUIT CITY STORES INC v. AHMED March 22, 2002 No. 98-55896.
KERN v. UNITED STATES BUREAU OF LAND MANAGEMENT March 22, 2002 No. 99-35254.
BIODIVERSITY LEGAL FOUNDATION; Montana Native Plant Society-Flathead Chapter; Washington Native Plant Society-Northeast Chapter; Peter Lesica, an individual; Southwest Center for Biological Diversity; Bonnie Dombrowski, an individual; Ma March 21, 2002 Nos. 00-35076, 00-35089.
UNITED STATES v. HITCHCOCK March 21, 2002 No. 00-10251.
SCHNEIDER v. COUNTY OF SAN DIEGO March 21, 2002 No. 00-55709.
UNITED STATES v. PHELPS March 21, 2002 Nos. 99-10042, 01-10119.
UNITED STATES v. PATZER March 21, 2002 No. 00-30360.
GARDNER v. STATE BAR OF NEVADA March 21, 2002 No. 01-15152.
AYUYU v. TAGABUEL March 20, 2002 No. 01-15119.
David S. LIPTON, on his own behalf and on behalf of those similarly situated; Richard Baker, on his own behalf and on behalf of those similarly situated; Ray Fralovk, on his own behalf and on behalf of those similarly situated; Anne Shapiro, on h March 20, 2002 Nos. 00-35268, 00-35313, CV-99-00419-TSZ, CV-99-00439-TSZ, CV-99-00452-RSL, CV-99-00453-JCC, CV-99-00455-WLD, CV-99-00469-BJR, CV-99-00503-RSL, CV-99-00506-BJR.
RIO PROPERTIES INC v. RIO INTERNATIONAL INTERLINK March 20, 2002 Nos. 01-15466, 01-15784.
VAN BUSKIRK 1257 v. CABLE NEWS NETWORK INC March 20, 2002 No. 00-16616.
AT CORPORATION v. COEUR ALENE TRIBE March 19, 2002 No. 99-35088.
PFINGSTON v. RONAN ENGINEERING CO March 19, 2002 Nos. 00-56721, 00-57166.
KARIS v. CALDERON March 18, 2002 Nos. 98-99025, 98-99026.
UNITED STATES v. REAL PROPERTY AT 2659 ROUNDHILL DRIVE ALAMO CALIFORNIA March 18, 2002 No. 00-16772.
ESTATE OF KENNEDY v. BELL HELICOPTER TEXTRON INC March 15, 2002 No. 00-35240.
UNITED STATES v. LeVEQUE March 15, 2002 Nos. 00-30385, 00-30386.
IN RE: The VANTIVE CORPORATION SECURITIES LITIGATION. Glenn R. Fischer; Brian Fischer; Joshua Rizack March 15, 2002 No. 00-16136.
LOPEZ v. WASHINGTON MUTUAL BANK FA March 14, 2002 No. 01-15303.
IN RE: RENOVIZOR'S March 14, 2002 No. 99-15827.
KILLIAN v. POOLE March 13, 2002 No. 00-16477.
ALLEN v. IRANON March 13, 2002 No. 99-16896.
RODRIGUEZ LARIZ v. IMMIGRATION AND NATURALIZATION SERVICE March 13, 2002 No. 01-70006.
UNITED STATES v. CURRENCY 42 500 00 March 13, 2002 No. 00-55875.
UNITED STATES v. HUGHES March 13, 2002 No. 01-30089.
UNITED STATES v. GARCIA PAZ March 13, 2002 No. 01-50078.
DANIEL v. COUNTY OF SANTA BARBARA 1000 March 12, 2002 No. 99-56887.
REESE v. BALDWIN March 12, 2002 No. 01-35153.
JAMES v. PRICE STERN SLOAN INC March 12, 2002 No. 00-35321.
AGG ENTERPRISES v. WASHINGTON COUNTY March 12, 2002 Nos. 00-35449, 00-35511, 00-35509, 00-35510.
VON KENNEL GAUDIN v. REMIS March 11, 2002 No. 01-15096.
THOMPSON v. DAVIS March 8, 2002 No. 01-15091.
GREY POPLARS INC v. ONE MILLION THREE HUNDRED SEVENTY ONE THOUSAND ONE HUNDRED 371 100 ASSORTED BRANDS OF CIGARETTES March 8, 2002 No. 00-35841.
ZAMBRANO v. IMMIGRATION AND NATURALIZATION SERVICE March 7, 2002 No. 00-16191.
HARGIS v. FOSTER March 7, 2002 No. 00-35466.
SIRIPONGS v. DAVIS March 7, 2002 No. 00-15985.
COMMUNITY DENTAL SERVICES v. TANI DDS March 7, 2002 No. 00-56450.
UNITED STATES v. HOSKINS March 7, 2002 No. 00-50045.
HERNANDEZ III v. SMALL March 7, 2002 No. 00-56286.
UNITED STATES v. SMITH March 7, 2002 No. 00-30120.
IN RE: Steven KRAMER March 6, 2002 No. 01-55115.
OSBAND v. WOODFORD March 6, 2002 No. 00-99016.
MANCUSO v. OLIVAREZ March 6, 2002 Nos. 00-16188, 00-16657.
ORR v. BANK OF AMERICA NT SA March 5, 2002 No. 00-16509.
UNITED STATES v. ROMERO March 5, 2002 No. 99-30319.
DEBOER v. PENNINGTON March 5, 2002 No. 97-35363.
MIDWATER TRAWLERS CO OPERATIVE v. DEPARTMENT OF COMMERCE March 5, 2002 Nos. 00-35717, 00-35853.
UNITED STATES v. BANKS March 5, 2002 No. 00-10439.
UNITED STATES v. TSAI March 5, 2002 No. 00-10483.
UNITED STATES v. NOVAK March 4, 2002 No. 01-10346.
NGUYEN v. SOUTHWEST LEASING AND RENTAL INC USA March 4, 2002 Nos. 00-57154, 00-57218.
UNITED STATES v. THOMPSON March 4, 2002 No. 00-30382.
POWELL v. GALAZA March 4, 2002 No. 01-15195.
WENGER v. MONROE March 4, 2002 No. 00-56696.
UNITED STATES v. WILLIAMS March 4, 2002 No. 00-10629.
SCAMIHORN v. GENERAL TRUCK DRIVERS 952 March 4, 2002 No. 00-55722.
UNITED STATES v. SANCHEZ CERVANTES March 1, 2002 No. 98-35897.
NELSON v. CHASE MANHATTAN MORTGAGE CORP March 1, 2002 No. 00-15946.
BACHLER v. UNITED STATES March 1, 2002 No. 00-17239.
LEWIS v. BARNHART March 1, 2002 No. 99-35922.

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The Complainant is Algemeen Nederlands Persbureau ANP B.V. (“ANP”), Den Haag, Netherlands, represented by De�Brauw�Blackstone�Westbroek�N.V., Netherlands.
The Respondent is European Travel Network, Miami, Florida, United�States�of�America.
The disputed domain name <anpnieuws.com> is registered with Tucows.
The Complaint was filed with the WIPO Arbitration and Mediation Center (the�“Center”) on July�14,�2004. On July�15,�2004, the Center transmitted by email to Tucows a request for registrar verification in connection with the domain name at issue. On July�15,�2004, Tucows transmitted by email to the Center its verification response confirming that the Respondent is listed as the registrant and providing the contact details for the administrative and technical contact for the domain name. The Center then verified that the Complaint satisfied the formal requirements of the Uniform Domain Name Dispute Resolution Policy (the�“Policy”), the Rules for Uniform Domain Name Dispute Resolution Policy (the�“Rules”), and the WIPO Supplemental Rules for Uniform Domain Name Dispute Resolution Policy (the�“Supplemental�Rules”).
In accordance with the Rules, paragraphs�2(a) and 4(a), the Center formally notified the Respondent of the Complaint, and the proceedings commenced on July�26,�2004. In accordance with the Rules, paragraph�5(a), the due date for Response was August�15,�2004. The Respondent did not submit any response. Accordingly, the Center notified the Respondent’s default on August�17,�2004.
The Center appointed James A. Barker as the Sole Panelist in this matter on August�25,�2004. The Panel finds that it was properly constituted. The Panel has submitted the Statement of Acceptance and Declaration of Impartiality and Independence, as required by the Center to ensure compliance with the Rules, paragraph�7.
The Complainant is a well-known Dutch news agency - the main independent news supplier for major newspapers in the Netherlands. The Complainant is the owner of registered and common law marks consisting of the words ANP, ANP NIEUWSTELEFOON and ANP@YOURSITE. Respectively, the registration dates for those marks are August�1994, May�1987, and November�2000.
The Respondent has been a respondent in other proceedings under the Policy. The Complainant referred to Expedia, Inc. v. European Travel Network, WIPO Case No.�D2000-0137; Koninklijke Luchtvaart Maatschappij N.V. v. European Travel Network, WIPO Case No.�D2000-0963; Martinair Holland N.V. v. European Travel Network, WIPO Case No.�D2000-0964; Transavia Airlines C.V. v. European Travel Network, WIPO Case No.�D2000-0965. In addition, the Respondent was also the respondent in Singapore Airlines Limited v. European Travel Network, WIPO Case No.�D2000-0641. In each of those cases the Panels found in favour of the complainants.
In Koninklijke Luchtvaart Maatschappij N.V. v. European Travel Network, WIPO Case No. D2000-0963, Martinair Holland N.V. v. European Travel Network, WIPO Case No. D2000-0964, and Transavia Airlines C.V. v. European Travel Network, WIPO Case No.�D2000-0965, identical responses were submitted by Mr.�Ad�Latjes, described in those cases, and described by the Complainant in this case, as the President of the Respondent. The disputed domain name in this case has Mr.�Latjes listed as the technical and administrative contact for the disputed domain name.
For some period the disputed domain name reverted to the website of a well-known Dutch newspaper, De�Telegraaf. From the registrar’s verification response provided to the Center, it appears that the domain name was registered on May�22,�2002, (the�date�the registrar’s record of the domain name registration was created).
The Complainant’s name and trademarks are household names in the Netherlands as Complainant is the main independent news supplier for most of the major newspapers in the Netherlands.
The disputed domain name is, if not identical, at least confusingly similar to the Complainant’s registered marks.
The Respondent has no rights or legitimate interests in the disputed domain name. The Complainant gave it none. The Respondent cannot show any of the circumstances in paragraph�4(c) of the Policy, which might demonstrate rights or legitimate interests in the domain name.
The domain name was registered and is being used in bad faith. Considering the Respondent’s identity and the Complainant’s fame, the Respondent must have been aware of the Complainant’s marks when it registered the domain name.
Paragraph�14(a) of the Rules provides, in effect, that if the Respondent does not submit a response the Panel shall proceed to a decision on the Complaint. Under�14(b) of the Rules, in the absence of exceptional circumstances, if a party does not comply with any provision of the Rules, a Panel shall draw such inferences as it considers appropriate. There are no exceptional circumstances in this case. Accordingly, the Panel infers that the Respondent does not deny the facts asserted and contentions made by the Complainant.
The Complainant has rights in its registered marks, evidence of which was attached to the Complaint.
Self-evidently the disputed domain name is not identical to the Complainant’s marks. But it is confusingly similar. Distinctive elements of the Complainant’s marks, notably the acronym ANP, are reproduced entirely in the domain name.
There is no evidence that those circumstances apply in this case. There is no evidence of the circumstances described in paragraphs�4(c)(ii) and (iii) of the Policy. In relation to paragraph�4(c)(i), there is evidence that the Respondent used the domain name before notice to it of this dispute. The Complainant provided evidence that the domain name reverted to the homepage of a well-known Dutch national newspaper, De Telegraaf. The Panel finds that such use was not bona�fide for the purpose of paragraph�4(c)(i). The Respondent’s business has, in previous cases, apparently been based in the Netherlands (see Koninklijke Luchtvaart Maatschappij N.V. v. European Travel Network, WIPO Case No.�D2000-0963). Moreover, the aforementioned Mr.�Latjes appears to be a Dutch national, and with interests in Dutch commerce and media. It is almost certain that, prior to this dispute, the Respondent was aware of the Complainant’s mark and the potential confusion that might result from the use of a confusingly similar domain name. As such, it appears that the confusing use of the domain name was deliberate.
There is no other evidence that the Respondent has rights or legitimate interests in the disputed domain name. On the Complainant’s uncontested evidence, the disputed domain name is one that has a distinctive association with the Complainant. In the absence of evidence from the Respondent, it is difficult to conceive that the Respondent could have a right or legitimate interest in the disputed domain name.
As noted above, it is highly likely that the Respondent was aware of the Complainant when the Respondent registered the domain name in May�2002. The Complainant provided evidence that it is well-known in the Netherlands, as a large news service naturally would be. It is reasonable to expect that a use of the domain name would be associated with the Complainant. Other uses of the domain name would likely be deceptive. Accordingly, the Panel finds that the disputed domain name was registered, and is being used, in bad faith.
For all the foregoing reasons, in accordance with paragraphs�4(i) of the Policy and 15�of the Rules, the Panel orders that the domain name <anpnieuws.com> be transferred to the Complainant.

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