FRANK DAMRELL, District Judge
This matter is before the court on motion by plaintiff, United States of America ("government") for Rule 11 sanctions against defendant Walter Thompson ("defendant") for allegedly filing frivolous papers with the court.
Because oral argument will not be of material assistance, the court orders this matter submitted on the briefs. E.D. Cal. Local Rule 78-230.
Background
Defendant owns Cencal Sales Co. ("Cencal"), a company that manufactures and sells travel bags and accessories for aviators. Cencal employs approximately 25 employees. According to the government, defendant ceased withholding federal taxes from his employees' wages in July 2000 in violation of Internal Revenue Code ("IRC") §§ 3102, 3111, 3301, 3402, 6011, and 6041. The government claims that, as of June 30, 2003, defendant had caused an estimated $429,399.73 in lost revenue to the United States Treasury.
In its amended complaint, filed October 30, 2003, the government asserts that defendant may have transferred ownership of Cencal Sales, Inc. to his wife, Denise Thompson, and/or his son, Anthony Thompson. (Amended Complaint for Permanent Injunction ¶ 6.).
On July 23, 2003, the government filed a motion seeking a preliminary injunction under IRC, 26 U.S.C. § 7402(a) to enjoin defendant Thompson from (a) failing to withhold federal taxes from employee wages, (b) failing to file timely federal employment and unemployment tax returns with the IRS and timely wage and tax statements (IRS Forms W-2) with the Social Security Administration, and (c) failing to make timely federal employment and unemployment tax deposits and payments to the IRS.
Apparently in response to the government's motion, on August 25, 2003, defendant filed with the court two papers, a Plea in Abatement and Counterclaim.
In his Plea in Abatement, defendant claims that the United States' preliminary injunction motions are "irregular and unauthorized," and contain "marks of fraud." Defendant asserts inter alia that I) the proceedings violate due process because "no lawful complaint of claim has been filed by any man or woman," 2) defendant's right to privacy has been violated because there is no "legal connection or legal contract" between the defendant and the United States" and as such the motions constitute "public nuisance"; 3) plaintiff's are "foreign agents . . . attempting to use a form of money inimical to public welfare . . ."; 4) the "threatened unlawfully imposed contract is `contra bones mores'"; and 5) the United States District Court and plaintiff's counsel are "acting as foreign agents of a statutorily created, foreign defacto [sic] corporation, known as UNITED STATES OF AMERICA," (Def's Plea in Abatement at 2.)
In his Counterclaim, defendant principally asserts that because the United States has not "rendered [his] name in his full Christian appellation, using the proper rules of capitalization," the "complaint" (i.e. the motion for a preliminary injunction) is invalid and cannot be answered. He also contests the validity of the entire Internal Revenue Code based on the assertion that it is not "positive law."
On September 12, 2003 the court scheduled a hearing on the government's motion for preliminary injunction. Defendant failed to appear for the hearing, despite efforts by the court to ensure defendant's appearance. The court subsequently granted the government's motion for preliminary injunction and the courtroom clerk entered default against defendant.
The courtroom deputy contacted defendant by telephone on September 11, 2003 to remind him that the hearing was scheduled for the following day.
On September 4, 2003, the government served defendant with the instant motion for Rule 11 sanctions. After the expiration of the 21-day safe harbor, the government filed the motion with the court.
Standard
Rule 11 provides that the district court may impose sanctions upon attorneys or parties "[i]f, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated. . . ." Fed.R.Civ.P. 11(c). As an initial inquiry, the district court must determine whether a violation of Rule 11(b) has occurred. See Warren v. Guelker, 29 F.3d 1386, 1388 (9th Cir. 1994) (reversing district court denial of Rule 11 sanctions against pro se litigant for failure to make initial determination that a violation of Rule 11 occurred.) If a violation is found, the court may in its discretion decide to impose sanctions. Fed.R.Civ.P. 11(c);Guelker, 29 F.3d at 1388 N.1 (9th Cir. 1994). See also 2 Wm. J. Moore, Federal Practice § 11.23(2) (3d ed. 2003). Sanctions are limited to what is "sufficient to deter repetition of such conduct or comparable conduct by others similarly situated." Fed.R.Civ.P. 11(b)(2)(A). The court has broad discretion to choose the appropriate type of sanction to achieve the Rule's goal of deterring future violations. Link v. Wabash R.R. Co., 370 U.S. 626, 633 (1962).
In its brief in support of sanctions, the government erroneously asserts that Rule 11 sanctions are mandatory where a violation of Rule 11 is found. (Mot. at 2.) As amended in 1993, Rule 11 grants district courts discretion in determining whether to impose sanctions for violation of Rule 11. In fact, Simpson v. Lear Astronics Corp., 77 F.3d 1170, 1177 N5 (9th Cir. 1996), which is cited by the government, applies the 1993 version of Rule 11 and expressly recognizes the then-recent amendment "grants discretion to the district court.").
By its express terms, Rule 11 applies to pro se litigants. Fed.R.Civ.P. 11(b); Guelker, 29 F.3d at 1389. A court can consider the party's pro se status in determining whether to impose sanctions and the nature and severity of sanctions to be imposed. However, the court cannot exempt a party from Rule 11 sanctions merely because he appears pro se. Id.
Rule 11 requires that a party be given "notice and a reasonable opportunity to respond" prior to the imposition of sanctions. If sanctions are initiated by motion, the motion must be served 21 days prior to its filing with the court and must describe the specific conduct that is alleged to be sanctionable. Fed.R.Civ.P. (c)(1)(A). A formal hearing on the motion for sanctions is not required. See Baker v. Alderman, 158 F.3d 516, 525-526 (11th Cir. 1998); Kapco Mfg. Co. v. CO Enters., Inc., 886 F.2d 1485, 1495 (7th Cir. 1989).
When imposing sanctions, the court must describe the conduct that violated the rule and explain the basis for the court's selection of sanction. Fed.R.Civ.P. 11(c)(3).
Analysis
I. Rule 11(b) Violation
Pursuant to Rule 11, every pleading, motion, and other paper presented to the court must be signed by the attorney or an unrepresented party. By presenting to the court a pleading, motion or other paper, an attorney or party represents that "the claims, defenses and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[.]" Fed.R.Civ.P. 11(a)(b), (b)(2). The certification requirements of Rule 11 are violated "if the paper filed . . . is frivolous, legally unreasonable or without factual foundation, even though . . . not filed in subjective bad faith."Zaldivar v. City of Los Angeles, 780 F.2d 823, 831 (9th Cir. 1986), overruled on other grounds by, Cooter Gell v. Hartmarx Corp., 496 U.S. 384 (1990). See also Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362-65 (9th Cir. 1990) (en banc).
The language of 11(b) makes clear that pro se litigants are charged with a duty to make a reasonable inquiry of the facts and law before signing papers and submitting them to the court. Fed.R.Civ.P. 11(b). Courts apply an objective standard in determining whether a party or attorney's inquiry was reasonable. Unigard Security Ins. Co. v. Lakewood Ing'g Mfg. Corp., 982 F.2d 363, 370 (9th Cir. 1992). In determining the reasonableness of an investigation by a pro se litigant, the court may consider the problems associated with appearing without counsel. Committee Note to 1983 Amendment to Rule 11(b).
Plaintiff claims that defendant violated Rule 11(b) when he filed his Plea in abatement and Counterclaim, both of which plaintiff contends are "objectively frivolous" and filed "for no other reason than to harass and to cause unnecessary delay to these proceedings." (Mot. at 3.)
The principal argument raised in defendant's Plea in Abatement, described as the "U.S. Sources" or "Section 861" argument, is that domestic income earned by United States citizens is not subject to federal income taxation. Courts confronted with this "defense" have unanimously rejected it.See Rayner v. Comm'r of Internal Revenue, No. 02-60565, 2003 U.S. App. LEXIS 14173 (5th Cir. July 3, 2003) ("This absurd argument is patently frivolous."); United States v. Rosile, No. 8:02-CV-466-T-17MSS, 2002 U.S. Dist. LEXIS 17483, at *6 (M.D. Fla. June 2, 2002) ("The Sec. 861 argument is frivolous and without merit."); United States v. Bell, 238 F. Supp.2d 696, 702 (M.D. Pa. Jan. 10, 2003) ("To suggest that these regulations create an exemption for domestic wages of U.S. citizens is irresponsible and frivolous advocacy."); see also 26 U.S.C. § 61(a) ("Except as otherwise provided in this subtitle, gross income means all income from whatever source derived . . . including (but not limited to . . . compensation for services, including fees, commissions, fringe benefits, and similar items . . ."). Even a cursory review of the law would have revealed to defendant that this argument was frivolous. Accordingly, the court finds that defendant violated Rule 11(b) by signing and presenting to the court the Plea in Abatement and Counterclaim, both of which raised wholly frivolous and legally unreasonable arguments.
Defendants other arguments are equally meritless.
II. Sanctions
Where the court finds that a party violated Rule 11(b), it may, in its discretion impose sanctions sufficient to deter a repeated violation by defendant or others similarly situated. Fed.R.Civ.P. 11(c).
The government requests that this court strike the offending papers and impose a monetary sanction of $5,000 "for his abuse of the judicial process, to deter him from filing further frivolous papers, and to compensate the United States for the expense of bringing this motion." (Mot. at 4.) Defendant has not responded to the government's Rule 11 motion.
Defendant filed two papers with the court, on October 6 and October 15, 2003. In the first "writ of error," defendant asserts that a "court of record" (which appears to be a court created by defendant) has "taken judicial cognizance of" a series of legal propositions culled from a variety of state and federal sources. The second paper, a "petition for extraordinary writ of prohibition" appears to seek relief from Ninth Circuit. The court can construe neither of these documents as an opposition to plaintiff's Rule 11 motion.
The court recognizes that defendant is unrepresented by counsel and apparently lacks legal training. However, defendant's papers were entirely without merit. They do not raise a single viable or intelligible claim. Moreover, defendant refused to participate meaningfully in court proceedings and failed to appear at hearings or to respond directly to the government's motions. It is clear that defendant's improper conduct was not a negligent oversight by an untrained pro se litigant but rather a willful attempt to obstruct these proceedings. Of equal importance, defendant's baseless legal arguments simply mirror sham arguments used by other tax protesters. If such conduct was to go unpunished, it would convey to other such litigants that their nonsensical arguments will be seriously considered by this court.
It is important to note that the defendant's son, Anthony Matthew Thompson, filed with the court a "Plea in Abatement" on November 17, 2003, which parrots the same arguments made by defendant. This pleading obviously was spawned by defendant's own pleadings and only underscores the need to deter the filing of such frivolous papers.
Accordingly, the court finds plaintiff's Plea in Abatement and Counterclaim, filed August 25, 2003, to be devoid of merit and utterly frivolous. They are stricken from the record, and defendant is sanctioned in the amount of $2,000.00. While this court is reluctant to impose monetary sanctions on a pro se litigant, the court believes that this sanction is necessary to deter defendant from filing such thoroughly meritless pleadings and also to deter others from emulating litigation tactics which serve only to waste precious public resources. Should defendant persist in engaging in such tactics, the court will consider increasing the amount of monetary sanctions.
CONCLUSION
For the reasons stated above, the court makes the following orders:
1) The clerk of the court is directed to STRIKE from the record the Plea in Abatement, filed by defendant Walter Thompson on August 25, 2003.
2) The clerk of the court is directed to STRIKE from the record the Counter Claim [sic], filed by defendant Walter Thompson on August 25, 2003.
3) Defendant Walter Thompson shall pay sanctions in the amount of $2,000.00. Defendant shall submit payment to the clerk of the court not later than thirty (30) days from the filing of this Order.