Sophie A. Szopa v. United States of America

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-4788
S OPHIE A. S ZOPA ,
Plaintiff-Appellant,
v.
U NITED S TATES OF A MERICA ,
Defendant-Appellee.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 05 C 1751—William J. Hibbler, Judge.
____________
S UBMITTED J ULY 31, 2006—D ECIDED A UGUST 21, 2006
____________
Before E ASTERBROOK , W OOD , and S YKES , Circuit Judges.
E ASTERBROOK , Circuit Judge. Our first opinion, 453 F.3d
455 (7th Cir. 2006), not only affirmed the district court’s
decision but also concluded that the appeal is frivolous
and granted the United States’ motion for sanctions. We
expressed skepticism, however, about the Tax Division’s
request to set the presumptive sanction in tax-protest cases
at $8,000, which it says is $3,000 less than the average
expense of handling frivolous appeals. We asked the parties
to file additional memoranda concerning the legal services
for which the United States must pay to defend such
appeals. The government’s response is packed with data but
does not allay our concerns.

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2 No. 05-4788
Our first opinion used a back-of-the-envelope approach to
calculate that it costs the Tax Division about $1,136 per day
(or $142 per hour) for an experienced appellate lawyer,
including all support expenses. The statement that each
appeal costs $11,000 thus implied that it takes about two
working weeks to brief a frivolous appeal, a number we
found hard to believe. The response shows that our estimate
came pretty close: the Department of Justice uses $139 per
hour as the full cost (including fringe benefits and over-
head) for lawyers who staff the Tax Division’s Appellate
Section. Thus our inference—that the Appellate Section
devotes something near 10 days to each frivolous ap-
peal—turns out to be correct. The response tells us that the
average is 89 attorney hours, or 11+ work days per appeal.
Szopa’s appeal required 53 attorney hours (45 by the
attorney who wrote the brief and 8 hours for review within
the Appellate Section) plus 8 hours of paralegal time at $83
per hour, for a total of $8,031. And this for a 15-page brief.
That’s about four hours a page, or 53 words per hour at a
cost of $2.80 per word. (The brief contained about 2,800
words.)
In one respect the response is reassuring. We asked why
the cost of handling frivolous appeals had risen so fast since
1985, when the presumptive sanction of $1,500 was
adopted. It turns out that the $1,500 was based on the
average award by courts of appeals rather than the Tax
Division’s actual costs. So the proposed increase (from
$2,700 in 2005 dollars to the $11,000 average cost, and the
$8,000 per appeal sanction that the Department now wants
us to adopt) no longer looks like a rapid decline in the Tax
Division’s productivity. What is not reassuring is the fact
that productivity appears to have been low all along.
Investing 11 days (on average) of legal time per frivolous
appeal is not prudent; what makes an appeal frivolous,
after all, is that the arguments have been presented and
rejected before, and tax-protest appeals entail arguments

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No. 05-4788 3
rejected many times. Why does it take 89 hours on average
(or 53 hours in Szopa’s case) to prepare a brief pointing this
out?
A court asked to award sanctions that compensate the
prevailing party for attorneys’ fees must ensure that the
time was reasonably devoted to the litigation. See, e.g.,
Budget Rent-a-Car System, Inc. v. Consolidated Equity LLC,
428 F.3d 717 (7th Cir. 2005) (holding that 13.7 hours of
high-priced time to prepare and file a motion to dismiss a
frivolous appeal was excessive). The Tax Division’s rates are
less than those of tax partners at private firms, but the
time devoted to frivolous appeals still must be reasonable
if the other side is to be called on to pay for it.
The Department’s memorandum observes: “We have . . .
long seen it as our responsibility, even in the most frivolous
cases, to spend the time necessary to parse through [sic] the
often convoluted and unintelligible arguments of tax
protesters so that their cases might be presented to the
court in as coherent a fashion as possible. Lawyers in the
private sector, who are not held to such a high standard by
the courts, are under no similar compunction.” The point is
well taken, and the assistance is much appreciated. Still,
the lawyers of the Tax Division are specialists, and when a
given point is made and rejected over and over—often
enough to be called frivolous when advanced again—it is
not asking too much for the Tax Division to find a lawyer
who has seen it before and can prepare a response in short
order. This is why our first opinion remarked that half of
the brief must have come from a word processor’s glossary:
The relation between a District Court and the Tax Court
under 26 U.S.C. §6330(d)(1) is hardly novel. We benefited
from a compact statement of that relation in the appellee’s
brief, but this cannot have been the first time that the Tax
Division prepared such a recap.
None of Szopa’s filings was unclear. Her brief was neatly
typed (unlike the scrawled longhand that we encounter

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4 No. 05-4788
all too often) and took only 9 double-spaced pages to present
both the facts and the argument. Szopa’s brief made it
pellucid that everything depends on her assertion that the
federal income tax is not, after all, on “income” but is on
“employment” and that non-corporate citizens of the United
States need not pay “income taxes.” If that proposition is
wrong—as it is—then affirmance follows directly. The
district judge required less than one page to dispose of the
litigation. No explication was necessary. Yet the Tax
Division tells us that it still took 53 hours of tax specialists’
time to prepare and review a 15-page brief. That cannot be
understood as an investment necessary to translate a tax
protester’s gibberish into legal English.
The Tax Division has explained why the amounts chosen
as presumptive sanctions in 1986 and 1996 should not be
used as the basis for sanctions today. It has not adequately
justified a sanction that rests on an average of 89 hours
of legal time (the $11,000 figure) or even 57.5 hours (which
is what the requested $8,000 sanction works out to). Thirty
hours is more plausible, and even this strikes us as gener-
ous to the Tax Division. So we adopt a presumptive sanction
of $4,000 for a frivolous tax appeal. The choice
is necessarily arbitrary; and to the extent there is doubt
about whether this represents a reasonable average
investment in legal time we resolve it in favor of the victim
rather than the perpetrator of frivolous litigation. Consis-
tent with our first opinion the presumptive award will
be doubled for a recidivist litigator. The Department is
free to request more when the case is especially complex
or the tax protester’s argument especially long and opaque.
Szopa is a recidivist, so her final sanction is $8,000,
payable immediately. We told Szopa in the first opinion
that if the interim award ($5,400) was not paid within 10
days, she would be barred from filing further civil suits
in the courts of this circuit under the terms of Support
Systems International, Inc. v. Mack, 45 F.3d 185 (7th Cir.

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No. 05-4788 5
1995). She has not paid one cent, so the Mack order takes
effect today and will remain in force until the sanction
has been satisfied, though as Mack provides a motion for
modification may be filed after two years.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-21-06

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