United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO
COMPEL THE PRODUCTION OF THE PLAINTIFF'S INCOME TAX
RETURNS (DKT. NO. 123)
DONALD
L. CABELL, U.S.M.J.
The
defendant, Wing Enterprises, Inc., has moved to compel the
production of the plaintiff Robert Elliston's income tax
returns. (Dkt. No. 123). For the reasons discussed briefly
below, the motion to compel is denied.
Relevant
Background
The
plaintiff has brought suit against the defendant in
connection with injuries he suffered in April 2012 when he
fell from a ladder the defendant manufactured. The plaintiff
contends among other things that he sustained approximately
$55, 000 in lost earnings and loss of earning capacity as a
result of the incident. During discovery, the defendant
requested copies of all documentation of earned income by the
plaintiff for the five years preceding the incident at issue.
The plaintiff responded in June and July of 2016 that he
would not produce any documents responsive to the request. In
particular, the plaintiff asserted that he would not submit
joint tax returns (with his spouse) because they were not
relevant. Subsequently, though, the plaintiff did produce
some tax documents at his deposition, including his federal
corporate tax returns from 2007 to 2015 for each of the three
enterprises he owns and operates, as well as invoices to
clients for services rendered by his construction company.
The defendant did not thereafter take any steps to compel the
plaintiff's personal income tax returns before the close
of discovery on October 31, 2016.
Several
months later, and following the defendant's unsuccessful
motion for summary judgement, the court on September 8, 2017,
scheduled the case for trial in May 2018. Following these
developments, the defendant asked the plaintiff whether he
was still unwilling to produce his tax returns. The plaintiff
responded that he still would not produce his own tax records
but he did subsequently disclose additional invoices and
profit loss statements for one of his businesses, Roaring
Brook Construction.
On
October 3, 2017, the defendant filed the instant motion to
compel.
Discussion
There
is no absolute privilege protecting tax returns and related
documents from discovery, although, “due to the
sensitive information contained therein and the public
interest to encourage the filing by taxpayers of complete and
accurate returns, their production should not be routinely
required.” Mitsui & Co. v. Puerto Rico Water
Resources Authority, 79 F.R.D. 72, 80 (D.P.R. 1978). A
court may order the production of tax returns where they are
relevant and the information contained in the returns is not
readily available from another source. See Buntzman v.
Springfield Redevelopment Authority, 146 F.R.D. 30, 32
(D. Mass. 1993).
In this
case, there is at least a basis to argue that the court
should not deign to apply these considerations and should
instead summarily deny the motion on the ground that it is
patently untimely. Indeed, discovery ended a full year ago
and the defendant has known since before then, July 2016,
that the plaintiff declined to produce his personal tax
records. Regardless, the court finds that the defendant has
not demonstrated that the tax returns it seeks are relevant,
or that it cannot obtain the information from another source
(assuming it has not already obtained the information from
the materials it has received).
Specifically,
the defendant asserts that any income the plaintiff has
earned in connection with his various enterprises, which has
allegedly been negatively impacted as a result of the
underlying incident, would be documented in the
plaintiff's tax returns. Thus, the defendant argues, the
plaintiff's personal tax records are necessary in order
to assess the credibility of his claim regarding his alleged
loss of earning capacity. I do not find this argument
compelling.
As the
plaintiff explains, he filed joint rather than individual tax
returns during the relevant period, meaning that the records
themselves would necessarily contain both irrelevant but
nonetheless sensitive records relating to the plaintiff's
spouse. Moreover, it appears that the sort of information
that would be relevant to assess the plaintiff's reported
loss of earning capacity has already been provided to the
defendant. The plaintiff avers in his opposition that he
previously provided the defendant with federal corporate tax
returns for each of his three companies from 2007 to 2015,
Roaring Brook Construction invoices for services rendered
from 2013 to the present, and copies of Roaring Brook
Construction profit/loss statements with the supporting forms
and other federal worksheets. At no point does the defendant
challenge the proposition that these materials are adequate
and sufficient to allow it to assess the plaintiff's
claimed loss of earning capacity.
In
short, then, the defendant has filed a grossly untimely
motion which seeks to compel the production of sensitive tax
records of questionable relevance, in an effort to collect
information which the defendant has not demonstrated it
cannot obtain (or has not already obtained) from other
sources. It follows that the defendant has not met the
weighty burden required to obtain such personal information.
Conclusion
For the
foregoing reasons, the defendant's motion to compel the
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