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Click here for the full text of this decision FACTS:Joe Alfred Izen Jr., a Texas tax attorney, represents tax protesters and defendants in criminal tax cases. In August 1989, IRS agent Terrance Catalina received notice that Izen had not filed income tax returns for 1986 through 1987. Though Catalina found some of the other allegations contained in the referral from an informant’s tip to be unreliable, he began an investigation into the tax return allegation. Catalina recommended opening a criminal investigation, but when Izen eventually filed returns, the investigation was scuttled. Despite that failed investigation, Catalina initiated another investigation for possible money laundering. As part of the investigation, which Izen claimed was motivated by Izen’s association with tax protesters, Catalina had James Climer go undercover for two years. Climer posed as a client seeking to create a foreign trust in which to deposit proceeds from the sale of purportedly stolen oil. From the results of the investigation, Izen was able to secure a four-count indictment against Izen for conspiracy to commit money laundering and aiding or abetting attempted money laundering. For undisclosed reasons, the United States voluntarily moved to withdraw the indictment, and the charges against Izen were dismissed. Izen filed suit against Catalina and Climer for various constitutional and non-constitutional torts. The district court dismissed all of his claims, and on appeal originally, this court held that the district court had applied the wrong standard when analyzing Izen’s malicious prosecution and retaliation claims. This court said there was a genuine issue of material fact over whether Izen was investigated and prosecuted in retaliation for representing criminal tax defendants. On remand for those claims, Izen also added a Federal Tort Claims Act against the government. The district court granted summary judgment for all defendants on the malicious prosecution, retaliation and Federal Tort Claims Act claims. HOLDING:Affirmed in part; reversed and remanded in part. The court finds that in this circuit, a constitutional violation for malicious prosecution is no longer made simply when the plaintiff satisfies the state law elements of malicious prosecution alone. Because Izen’s complaint does not state a claim under the Fourth Amendment directly, the district court properly granted the agents’ motion for summary judgment. The court then affirms that the Federal Tort Claims Act because, as Izen even admits, Izen has not exhausted his administrative remedies. The court then turns to Izen’s First Amendment retaliation claims against both Catalina and Climer. The court confirms that subjecting an attorney to criminal investigation and prosecution with the substantial motivation of dissuading him from associating with and representing clients opposing the IRS would violate the First Amendment. The court adds that to prove retaliation, Izen would have to show that he was: 1. engaged in a constitutionally protected activity; 2. the agents’ actions caused him to suffer an injury that chilled his activities; and 3. the agents’ actions were substantially motivated against Izen’s exercise of constitutionally protected conduct. The court clarifies that Izen’s claim is not that Catalina violated the First Amendment by undertaking an investigation without reasonable suspicion, but rather that he violated the First Amendment when he undertook an investigation with the substantial motivation of retaliating against Izen for his advocacy on behalf of unpopular criminal tax defendants. The court then examines the record for evidence of retaliation, noting that because in its first review of Izen’s claim it ruled that there was a genuine issue of material fact as to the agents’ motivation, the court now only needs to consider whether the evidence offered in the interim has negated this holding. “Far from negating a genuine issue of material fact as to Catalina’s motivation, the evidence adduced on remand provides further support for Izen’s position. The evidence now in the record provides proof that Catalina was well aware of Izen’s representation of criminal tax defendants. A Criminal Investigation Case Analysis Guide bearing Catalina’s name and dated 10/17/89 contains the following statements: �The subject of the [money laundering] investigation is an attorney who specializes in representing tax protestors. . . . The taxpayer has represented several protestors in the Houston area and all across the country. He is very well known in the protest movement.’ . . . Catalina’s Request for Undercover Operation form also prominently notes Izen’s association with tax protestors, and mentions a case in which Izen successfully opposed the IRS.” The court also notes the existence of a report called “PROTEST GROUP AFFILIATIONS” that Catalina relied on (but did not prepare) that noticed Izen’s attenuated affiliation with Robert Chappell, an Indiana mail fraud fugitive, living in the Bahamas, who was also known to be “anti-government, anti-black and anti-Jew.” Thus, both the reports prepared by and relied upon by Catalina referred to Izen’s associations with unpopular targets of the IRS but contain scant evidence of Izen’s supposed money laundering, the purported purpose of Catalina’s investigation. A reasonable trier of fact, the court concludes, could determine that retaliation was a substantial motivation for Catalina’s investigation and prosecution. The same is not true of Climer, though, the court continues. Izen presents no evidence that Climer caused the alleged constitutional violation, nor evidence of retaliatory motive harbored by Climer in the performance of his job. As for Catalina’s argument that he’s entitled to qualified immunity, the court rules that if his actions were substantially motivated by a desire to retaliate against Izen for his representation of tax defendants, an issue to be found on remand, Catalina’s actions were not objectively reasonable.” OPINION:: Per curiam; Jones, Magill and Smith, JJ.

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