And the Court enjoins many of these plaintiffs from filing
anything further in this Court until they have paid these and
all previous sanctions.
This is the second tax protest lawsuit Clyde W. LaRue and his
colleagues have filed in this Court within two years. The Court
dismissed the first lawsuit as frivolous and imposed sanctions
on the Plaintiffs under Federal Rule of Civil Procedure 11.
Clyde W. LaRue appealed and the United States Court of Appeals
sanctioned him for filing a frivolous appeal.
This lawsuit is brought by 29 individuals: Clyde W. LaRue,
Mark Hilvety, Beverly Hilvety, Brian L. Hilvety, Tammy A.
Hilvety, Thomas Magro, Vicky Magro, Debra L. LaRue, Dale T.
Hedberg, Patricia A. Hedberg, Neil Hilvety, Ruth Hilvety,
Jeffrey S. Thorpe, Ronald E. Ekis, Delmar Volentine, Andrew J.
Hortenstine, Pamela S. Hortenstine, Jeffrey T. Gibbs, Kimberly
Kelly, and Jeffrey H. White. Only Lori Damhorst, Mark Damhorst,
Debra I. Damhorst, John E. Koester, Marcella K. Koester, Rich
McAdams, Russell W. Corrigan, Kimberly Corrigan, David Gibbs did
not participate in the first suit.
Plaintiffs make essentially the same claims in this lawsuit as
they did in the lawsuit they filed in 1995. Specifically,
Plaintiffs claim that they are exempt from federal income tax
because the State of Illinois is not a "state" as defined by
Congress in the Internal Revenue Code. Rather, they argue that
Illinois is a member of the "union." Thus, according to their
convoluted reasoning, since Illinois is not a state for federal
income tax purposes, then they are "non-resident aliens" and
exempt from federal income taxes. In a new twist, Plaintiffs
also claim that they are the victims of involuntary servitude
imposed in violation of the Thirteenth Amendment to the United
The United States filed a motion to dismiss this action. In
its motion, the Government argued, on behalf of all Defendants,
that this action is frivolous. The Government also asked the
Court to sanction Plaintiffs and to enjoin them from filing
further lawsuits in this Court until they have fully complied
with all sanctions orders.
On the Government's motion, the Court dismissed this lawsuit
because it is frivolous. The Court then ordered Plaintiffs to
show cause why the Court should not sanction them for filing a
frivolous lawsuit. The Court also reserved ruling on the
Government's request for an injunction prohibiting Plaintiffs
from filing further lawsuits in this Court.
Plaintiffs have now responded to the Court's show cause order.
In their response, Plaintiffs argue that this suit is not
frivolous because they have tried to comply with all the
procedural prerequisites for bringing suit. Plaintiffs place
great emphasis on the fact that their prior lawsuits were
dismissed for procedural reasons and they believe they have
remedied all procedural deficiencies. Plaintiffs, however,
ignore the crucial fact that, procedural matters aside, their
claim is that they are not subject to the federal income tax. In
their previous case in this Court, both this Court and the Court
of Appeals stated plainly that Plaintiffs claims that they were
not subject to the income tax were frivolous. LaRue v.
Collector of Internal Revenue, No. 95-2768, 96 F.3d 1450, 1996
WL 508567 (7th Cir. Sept. 3, 1996) ("LaRue's argument that he
should be treated as a nonresident alien — one that is offered
occasionally by tax protesters — is patently frivolous.");
LaRue v. Collector of Internal Revenue, No. 95-3036, 1995 WL
479521 (C.D.Ill. June 21, 1995) (sanctioning Plaintiffs for
filing a frivolous lawsuit). Faced with a second lawsuit within
two years by the same group of tax protesters, the Court decided
to dismiss this case on the ground that it was, at its core, a
frivolous lawsuit. Plaintiffs do not address that issue in their
response to the Court's Order to Show Cause.
II. RULE 11
Rule 11 of the Federal Rules of Civil Procedure provides that:
(b) By presenting to the court (whether by signing,
filing, submitting, or later advocating) a pleading,
written motion, or other paper, an attorney or
is certifying that to the best of the person's
knowledge, information, and belief, formed after an
inquiry reasonable under the circumstances, —
(1) it is not being presented for any improper
purpose, such as to harass or to cause unnecessary
delay or needless increase in the cost of
(2) 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,
(3) the allegations and other factual
contentions have evidentiary support or, if
specifically so identified, are likely to have
evidentiary support after a reasonable opportunity
for further investigation or discovery; and
(4) the denials of factual contentions are
warranted on the evidence or, if specifically so
identified, are reasonably based on a lack of
information or belief.
(c) If, after notice and a reasonable opportunity to
respond, the court determines that subdivision (b)
has been violated, the court may, subject to the
conditions stated below, impose an appropriate
sanction upon the attorneys, law firms, or parties
that have violated subdivision (b) or are responsible
for the violation.
Fed.R.Civ.P. 11(b)-(c). Sanctions for violations of Rule 11 are
limited as follows: