Appeal from the United States District Court for the District of Arizona. D.C. No. CV 89-1344 PHX CLH. Charles L. Hardy, District Judge, Presiding.
Arthur L. Alarcon and Pamela Ann Rymer, Circuit Judges, and Alan A. McDonald, District Judge.*fn* Opinion by Judge Rymer.
Phillip and Susan Fry brought this action against various officials of the Internal Revenue Service (IRS), a Special Assistant United States Attorney and other persons who were not federal officials, alleging violations of constitutional rights. Three IRS attorneys and one IRS revenue agent now appeal from the district court's denial of their claim of qualified immunity. We reverse and remand with instructions to dismiss the complaint against these defendants insofar as it seeks to impose damage liability.
Phillip Fry is a tax accountant and an author. He has written several publications discussing methods of minimizing one's tax liabilities,*fn1 has appeared on television and radio programs, has testified against the current gift and estate tax structure in congressional hearings and has marketed a variety of tax shelters. In 1986, Fry was charged in a seventeen-count indictment with conspiracy to defraud the government and other tax-related offenses based on selling illegal tax shelters. Fry pled guilty to one count of conspiracy and received a five-year sentence, which the Sixth Circuit affirmed. See United States v. Fry, 831 F.2d 664 (6th Cir. 1987).
While Fry was in jail, the IRS audited his and his wife Susan's income tax returns for the years 1977 to 1980. The IRS determined that the Frys owed a substantial amount of taxes and sent them notices of tax deficiencies. The Frys challenged these deficiencies in Tax Court. The Tax Court litigation was resolved adversely to Fry during the pendency of this appeal. See Fry v. Commissioner, 1991 Tax Ct. Memo LEXIS 76, 61 T.C.M. (CCH) 1812,T.C. Memo 1991-51 (1991).
In 1989, the Frys, proceeding pro se, brought this Bivens*fn2 action for damages, declaratory and injunctive relief against thirteen federal defendants and two non-federal defendants claiming violations of their first, fourth and fifth amendment rights. The 74-page complaint charges that various IRS employees, revenue agents and attorneys had acted against them in retaliation for the Frys' extensive exercise of first amendment rights.*fn3 The federal defendants moved to dismiss the action on the grounds of improper service of process, lack of personal jurisdiction, insufficient pleading specificity, failure to state a claim and qualified immunity. The district court granted the motion in part, dismissing the action, without prejudice, as to nine of the federal defendants on grounds of improper service.*fn4 The court also dismissed the fifth amendment due process claims on the grounds that a Bivens action is not available when Congress has provided a comprehensive remedial scheme. With regard to the federal defendants' claim of immunity from suit, the district court held that it was "too early to resolve this issue" and that the "complaint details the manner which various defendants violated Fry's clearly established First Amendment rights and defendants obviously have not come forward with controverting evidence."
Defendants Otto, Barnes and Pendery, the IRS attorneys who represented the Commissioner of Internal Revenue in the Frys' Tax Court case, and Melaragno, an IRS revenue agent who participated in the audit and investigation of the Frys and also testified at the Tax Court trial, remained in the case. These four defendants now appeal the district court's holding that they do not enjoy immunity from suit.
Although an order denying a motion to dismiss is not a "final decision" as that term is ordinarily used in 28 U.S.C. § 1291, the denial of a claim to qualified immunity is appealable under the collateral order doctrine recognized in Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. 541, 69 S. Ct. 1221, 93 L. Ed. 1528 (1949), notwithstanding the absence of a final judgment. Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S. Ct. 2806, 86 L. Ed. 2d 411 (1985); Todd v. United States, 849 F.2d 365, 368 (9th Cir. 1988). Whether these defendants are entitled to either absolute or qualified immunity presents a legal question which we examine de novo. Todd, 849 F.2d at 368; White by White v. Pierce County, 797 F.2d 812, 814 (9th Cir. 1986).
The government contends that the action against the four remaining defendants must be dismissed on grounds of absolute immunity. The government acknowledges that it did not make this argument in the district court, but urges us to consider the issue on appeal. As a general rule, we will not consider an issue raised for the first time on appeal, although we have the power and discretion to do so. Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir. 1985); In re Wind Power Systems, Inc., 841 F.2d 288, 290 n.1 (9th Cir. 1988). We will exercise this discretion when the "issue presented is purely one of law and either does not depend on the factual record developed [in the district court], or the pertinent record has been fully developed." Bolker, 760 F.2d at 1042. Because the issue of whether ...