A federal appeals court has upheld a lower court ruling that found a lawsuit brought by President Donald Trump against the Internal Revenue Service (IRS) was collusive and that the litigation was used to facilitate a settlement involving federal funds.
A three-judge panel of the 11th US Circuit Court of Appeals ruled that Trump and other appellants had not provided sufficient evidence to show that the lawsuit and subsequent settlement were not collusive. The panel also upheld sanctions imposed on two Trump attorneys.
The case began after Trump sued the IRS over the disclosure of his tax returns. Trump reached an agreement with the IRS in May to dismiss the lawsuit. The Department of Justice later established an “anti-weaponisation” fund that was intended to compensate people who claimed they had been improperly targeted by the government.
US District Judge Kathleen Williams ruled in July that the parties had not been genuinely adverse and that the lawsuit had been used to obtain judicial legitimacy for the arrangement.
In its ruling, the 11th Circuit said the appellants had not explained their litigation conduct or demonstrated that the district court had clearly erred in its findings of collusion and bad faith.
Williams had also sanctioned two attorneys representing Trump in the case. The appeals court agreed that the district court had the authority to impose the sanctions.
The appeals panel also rejected challenges to restrictions imposed as part of the sanctions, saying the appellants had not shown that they were likely to prevail on their First Amendment arguments.
Williams, who was appointed to the federal bench by former President Barack Obama, had previously criticised the lawsuit as an attempt to use the judicial process to support an agreement that lacked a viable legal or factual basis.
The district court also prohibited the Trump administration from describing the litigation as having resulted in a conventional “settlement”. The judge’s ruling said the arrangement had been pursued to provide access to taxpayer funds and avoid certain government investigations.
The appeals court’s decision leaves the lower court’s findings and sanctions in place.
The ruling is the latest development in a legal dispute involving Trump’s claims against the IRS and the subsequent creation of the anti-weaponisation compensation programme.
