General Discussion

Movants’ theory about the legal validity of the settlement under 28 U.S.C. § 2414 and 31
U.S.C. § 1304 is beyond the scope of the Rule 60 motion before this Court. Whether the settlement
satisfies the statutory requirements for use of the Judgment Fund is a question for the Executive
Branch, or, potentially, for a court with proper jurisdiction over a challenge to the settlement
itself—not for this Court in the context of a Rule 60 motion filed by non-parties who lack standing.
Tellingly, Movants acknowledge that “the Court need not decide that ultimate issue now,” thereby
conceding that the merits of the settlement’s validity are not properly before the Court at this stage.
See, e.g., DE 63 at 4.

The existence of a genuine case or controversy at the time of filing is a separate question
from whether the government’s decisions were sound. The IRS was named as a defendant,
Plaintiffs alleged concrete injuries from the disclosure of their tax return information (the
unauthorized disclosure of return information is independently actionable, see 26 U.S.C. §§ 6103,
7431), and the Government’s decision to settle rather than litigate does not by itself render the
underlying claims fraudulent or the litigation collusive. Movants’ characterization of the
commission as “effectively controlled by the President,” DE 63 at 2, is a contested
characterization, not an established legal finding, and cannot support the extraordinary remedy of
voiding a final judgment.

Stripped of rhetoric, Movants’ allegations of collusion rest entirely on inference and
speculation. They point to the government’s litigation posture: the absence of filed appearances,
the scope of the settlement, and the decision not to assert defenses that were available in parallel
litigation. Based on these bare-bones assertions, they ask the Court to wrongly conclude that the
entire case was a sham. But none of these facts, individually or collectively, constitute evidence of
collusion, much less the clear and convincing evidence required to establish fraud on the court.
See, e.g., Booker v. Dugger, 825 F.2d 281, 283–84 (11th Cir. 1987) (fraud on the court “must be
established by clear and convincing evidence” and “conclusory averments” do not suffice).

The Government’s decision not to raise every available defense is a litigation judgment,
not a badge of fraud. Defendants in civil cases routinely elect not to contest certain claims for
strategic, economic, or institutional reasons, including the entirely rational conclusion that the cost
of defense exceeds the cost of settlement. The fact that the IRS may have identified viable defenses
in internal memoranda does not mean it was obligated to assert them, and the decision not to do
so does not give rise to an inference of collusion. Movants cite no authority whatsoever, and
Plaintiffs are aware of none, holding that a defendant’s decision to settle rather than litigate
available defenses constitutes fraud on the court.

In sum, the Movants’ position amounts to the assertion that because they disagree with the
government’s decision to settle, the settlement must have been collusive. That is not a legal
standard. It is a policy objection dressed as a fraud claim, and it does not warrant the extraordinary
remedy of reopening a closed case, which, in any event, this Court does not have the power to do.