Trump sued his own administration for $10 billion. A judge found the case was collusive, and an appeals court has now agreed

President Trump filed a lawsuit in January against his own administration, seeking $10 billion from the IRS over the leak of his tax returns, according to The Hill. He brought the case years after the leak, at a time when he was back in office and had the power to fire the officials on the other side.

In late May, Trump reached an agreement with the IRS to drop the case. The Justice Department then set up an “anti-weaponization” fund worth $1.776 billion to pay people who claim the government wronged them. That fund is now defunct. It was created outside the court process, even though deals of this kind often need a judge’s approval.

In July, Florida-based U.S. District Judge Kathleen Williams found that the lawsuit was the hook for that fund and that the two sides were never truly adverse. She described the arrangement as collusion, sanctioned two of Trump’s attorneys, and barred the administration from calling the outcome a settlement.

A three-judge panel declined to undo the lower court findings

On Tuesday, a three-judge panel of the 11th Circuit sided with Williams. The panel wrote that the appellants “did not submit or offer any evidence to explain their litigation conduct or demonstrate that the lawsuit and the settlement were not collusive.” It added, “Given the record before us, the appellants have not made a strong showing that the district court committed clear error in its collusion and bad faith findings.”

Williams set out her view in a 56-page filing. “In sum, the facts before this Court demonstrate there was never adverseness between the Parties; there was never a case or controversy; and there was never a question as to who would prevail,” she wrote.

She later wrote that the plaintiffs “improperly employed this lawsuit to justify a particular award in this matter – access to taxpayer funds and exemption from audits and other investigations – which was accomplished by leveraging control over Defendants.” She also wrote that the suit was “brought to manipulate the judicial process.”

Williams found that the $10 billion IRS case was “brought for an improper purpose – to gain the imprimatur of judicial legitimacy for a ‘settlement’ that had no viable basis in law or fact.” The ruling cast doubt on the deal’s legal footing, as a judge struck down Trump’s $1.8 billion IRS settlement, stripping away his tax audit immunity. Obama appointed her to the bench.

The appeals panel also left the attorney sanctions in place and wrote that Williams had the power to impose them. 

On a related challenge, the panel wrote, “The appellants have not persuaded us to construe the sanction more broadly and have not made a strong showing that they will prevail on their First Amendment challenges.” It added, “They do not cite any authorities suggesting that a speech-related prohibition imposed as a penalty for conduct determined to be sanctionable violates the First Amendment.”