In Uncategorized on 05/05/2016 at 15:25

Judge Laro’s seemingly unending seminar in advanced Tax Court discovery law and practice looks at the reverse of my earlier blogposts.

This CLE course is the Guidant LLC, f.k.a. Guidant Corporation, and Subsidiaries, Docket No. 5989-11, filed 5/5/16, discovery joust, taking up nine (count ‘em, nine) pages on the Tax Court Docket Search, with no end in sight.

And I’m sure the Tax Court discovery junkies (both of ‘em) are hanging on every word.

IRS wants to depose Dr. John, formerly Boss Vascular Intervenor at Guidant Corp in its pre-LLC iteration.

Dr. John’s current employer, the outfit to which Guidant sold the Intervention squad, objects.

Not for nuthin’, here’s what’s on the table. “These consolidated cases involve proposed adjustments under section 482 for the taxable years 2001 through 2007 totaling over $3 billion, alternative adjustments under sections 367(a) and 367(d), adjustments pertaining to the sale of certain business units to [A], an accuracy-related penalty for substantial understatement of tax under section 6662(b)(2), and other adjustments.” Order, at p. 2. (Name omitted.)

Hey, my fellow counsellors-at-law, if you’re gonna fight about discovery, make sure you get paid.

Even though it’s not A’s party, A is definitely crying if it wants to. Note the Guidant dust-up involves correct valuation of onshore vs offshore assets in the sale of the Vascular Intervenors, and other stuff. Maybe so if Guidant’s valuation goes down, so does A’s, and then A has beaucoup to cry about.

Dr. John’s present boss claims as follows: “One, respondent previously received sufficient information from petitioners and non-party [A]. Two, respondent has interviewed enough former and current employees of Guidant and non-party [A]. Three, non-party [A] agreed to make [Dr. John] available for a three-hour informal interview, which the Commissioner refused.” Order, at p. 3. (Names omitted.)

IRS’ counsel sat down with A’s and asked for an informal, transcribed chat with Dr. John. A’s counsel responded with an offer of a three-hour, untranscribed chat.

No good, says Judge Laro. “We think that the time constraints petitioners and non-party witness imposed on respondent with respect to the informal interview were unreasonable. It is therefore not surprising that respondent now wants to revisit the same witness under the formal framework of a deposition. Had [Dr. John] been available to respondent on a less restricted basis, it is possible that this deposition request could have been avoided.” Order, at p. 5. (Name omitted.)

True, IRS grilled other former Guidant types. But there may be other information that the lower-down exes didn’t have. There’s tons of paper and multifarious transactions. In fact, in another order in this case of even date herewith (as my already-booked-their-winter-cruises colleagues would say), the parties are scuffling over something called “Hybrid Mfg in Clonmel.”

My spies tell me that the town of Clonmel (“honey vale” in old Gaelic) is noted in Irish history for its resistance to the  Cromwellian army which sacked both Drogheda and Wexford. It is in the former barony of Iffa and East Offa. Great place for Vascular Intervenors if they could beat Ollie Cromwell.

Besides, a fireside chat isn’t the same as an examination under oath, with a demi-brigade of lawyers glaring at the witness.

Anyway, Guidant has one more arrow in its cliché, but it too goes astray.

“Further, petitioners argue that denial of the deposition would not prejudice the respondent, suggesting in their response that petitioner’s access to [Dr. John] is neither greater or less than respondent’s. The Court will not block the deposition of a witness by one party on the basis that the opposing party may or may not have greater, lesser or equal access to the same witness.

“The information sought is reasonably calculated to lead to the discovery of admissible evidence and/or is relevant. See Tax Court Rule 70(b).” Order, at p. 5. (Name omitted.)

Judge Laro meant that petitioner’s access to Dr. John “is neither greater nor less than respondent’s.”

IRS tried a similar gambit with James (“Little Jim”) Haber; see my blogpost “Getting Shifty,” 9/20/13.

So Dr. John must sit and talk. Under oath.


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