United States District Court, D. Delaware
G2A.COM SP. Z O.O. (LTD)., Petitioner,
UNITED STATES OF AMERICA, Respondent.
HONORABLE LEONARD P. STARK, UNITED STATES DISTRICT JUDGE.
is Petitioner G2A.COM Sp. Z o.o. (Ltd.)'s
("Petitioner" or "G2A") Motion for an
Injunction Pending Appeal, filed pursuant to Federal Rule of
Civil Procedure 62(c). (D.I. 38) The relevant facts are
outlined in this Court's September 5, 2018 Order granting
in part and denying in part G2A's petition to quash a
third-party summons issued by the Internal Revenue Service
("IRS" or "Respondent") to The
Corporation Trust Company ("CTC"). (D.I. 37) G2A
moved to quash the IRS subpoena on CTC, which was issued in
response to a request from Polish tax authorities pursuant to
a treaty between the U.S. and Poland. After reviewing the
briefing relating to the pending motion (D.I. 39; D.I. 45;
IS HEREBY ORDERED THAT Petitioner's Motion (D.I.
38) is DENIED.
succeed on its motion, G2A must demonstrate (1) a strong
showing that it is likely to succeed on the merits in its
appeal; (2) that absent an injunction it will be irreparably
harmed; (3) that an injunction or stay will not substantially
injure Respondent; and (4) that an injunction will not harm
the interests of the public. See Noven Pharm., Inc. v.
Mylan Techs. Inc., 2018 WL 4007848, at *1 (D. Del. Aug.
22, 2018) (citing Hilton v. Braunskill, 481 U.S.
770, 776 (1987)). G2A argues that "an injunction is
appropriate because (1) it is certain that G2A will be
irreparably harmed if an injunction is not granted; (2) G2A
has at least a plausible claim on the merits; and (3) an
injunction will in no way prejudice the interests of the
Government or the public." (D.I. 39 at ¶ 11)
posits two arguments it believes could prove successful on
appeal: "(1) under the terms of the Polish Tax Treaty,
the IRS was required to give G2A advance notice before it
contacted CTC; and (2) the notice provided to G2A should have
been served in compliance with the Hague Convention."
(Id. at ¶ 16) In its September 5 decision, the
[T]he pre-contact notice requirements of § 7602 do not
extend to investigations of tax liabilities "for any tax
imposed by any other jurisdiction." C.F.R. §
301.7602-2(c)(3)(i)(C); see also United States v.
Stuart, 489 U.S. 26353, 361-62 (1989) ("By its
terms, however, [§ 7602(c)] does not apply to the
summons challenged in this case, for [the statute] speaks
only to investigations into possible violations of United
States revenue laws."). Here, the investigation of G2A
is for potential violations of Polish tax law. Thus, G2A was
not entitled to pre-contact notice under § 7602.
(D.I. 37 at ¶ 15; see also D.I. 45 at 6-7)
Given the clear direction of Stuart and §
7602(c), Petitioner has not demonstrated a strong showing
that it is likely to succeed on appeal on this issue.
next argues that the Court mistakenly found that "to the
extent any inadequacy existed [in the government's
service of summons], G2A has failed to demonstrate it was
prejudiced by the inadequacy in the notice and has failed to
show that the government acted in bad faith in providing G2A
notice of the summons." (D.I. 37 ¶ 16) Petitioner
has not demonstrated a strong likelihood of succeeding on its
position that United States v. Powell, 379 U.S. 48,
58 (1964), means "an IRS summons is only enforceable if
the Government strictly complies with the administrative
requirements for serving notice of such summonses."
(D.I. 39 at ¶ 21) Such an interpretation is counter to
all but one circuit court which has spoken on the matter.
(See D.I. 45 at 11) (citing United States v.
Moulton, 614 F.2d 1063, 1066 (5th Cir. 1980);
Sylvestre v. United States, 978 F.2d 25, 27-28 (1st
Cir. 1992); Adamowicz v. United States, 531 F.3d
151, 161 (2d Cir. 2008); Cook v. United States, 104
F.3d 886, 889-90 (6th Cir. 1997); Azis v. United
States, 522 Fed.Appx. 770, 777 (11th Cir. 2013); but
see Jewell v. United States, 749 F.3d 1295, 1300-01
(10th Cir. 2014)) The Court agrees with Respondent: "The
question is not whether the notice violated the Hague Service
Convention; it is whether the Service acted in 'good
faith.'" (D.I. 45 at 11) Petitioner is not likely to
succeed on appeal of this issue.
seeking to show harm, G2A contends its arguments will be
rendered moot and that allowing the IRS to report to Polish
authorities will further the nefarious perception of G2A held
by Polish authorities. (D.I. 39 at ¶¶ 12-13) G2A
simultaneously argues that "[t]here is ... nothing
untoward indicated by CTC's lack of records related to
Gate Arena," but that disclosure thereof "is likely
to reinforce their [i.e., Poland's] mistaken belief that
Gate Arena is a shell company and illegitimate."
(Id. at ¶ 15) The Court agrees with Respondent
that the appeal will not become moot in the absence of the
requested relief because "a court could fashion adequate
relief," such as by "order [ing] the Service to
inform the Polish Tax Authority of the results of the appeal
and that it may not use or must destroy the reported
information." (D.I. 45 at 14) (citing Villarreal v.
United States, 524 Fed.Appx. 419, 422 n.l (10th Cir.
parties agree that the last two prongs, harm to the
Respondent and the public interest, should be considered
together. (See D.I. 39 at ¶ 22; D.I. 45 at
15-16) G2A contends that the only interests at stake are
those of Poland, yet that the relevant public interest must
not account for foreign interests. (See D.I. 39 at
¶ 22; D.I. 46 at ¶ 17) The Court agrees with
Respondent that the public interest is promoted by denying an
injunction since for "United States and its treaty
partners, prompt receipt of requested information plays a
critical role in the enforcement of tax laws." (D.I. 45
at 15-16; see also Inst. of Cetacean Research v. Sea
Shepherd Conservation Soc, 725 F.3d 940, 946 (9th Cir.
2013) ("[T]here is a public interest in maintaining
harmonious international relations."); Nw. Airlines,
Inc. v. R&S Co. S.A., 176 F.Supp.2d 935, 942-43 (D.
Minn. 2001) ("The public interest is served by promoting
stability in international contracts by enforcing bargained
for arbitration clauses.")) These are interests of the
United States and the public
in this country - even as they may
coincide with the interests of Poland as well.
G2A's motion for an injunction (D.I. 38) is
 Respondent argues at length that
"G2A's motion should be construed as a request for
stay, rather than injunction" because the Court lacks
authority to issue an injunction under the circumstances.
(See D.I. 45 at 2-3) Both parties agree that the
test is the same for an injunction and a stay (D.I. 45 at
3-4; D.I. 46 at 2-3), and the Court further finds that the
nature of the respective relief would be the same under