In Uncategorized on 12/21/2016 at 15:30

Once again, this is a non-political blog, so the title hereof has nothing to do with a certain Cabinet Secretary-designate. Rather, it concerns some documents disclosed in an ongoing discovery melee that petitioner claims were privileged when revealed by IRS, but privilege was later waived, and IRS claims their experts didn’t rely on the documents in their reports, and anyway petitioners’ main objection was relevance, and that’s admissibility, not confidentiality.

Judge Buch has the Beekman Vista – Dynamo Holdings dynamic duo, in Dynamo Holdings Limited Partnership, Dynamo, GP, Inc., Tax Matters Partner, et al., Docket No. 8393-12, filed 12/21/16.

The duo want IRS’s experts precluded. No, says Judge Buch, in a designated hitter.

Eleven documents from the “Quick Peek” and predictive coding muddle slipped through the cracks and IRS’ experts got a look.

The duo want preclusion of reports and experts. IRS says the punishment is excessive.

Judge Buch engages in the usual “somber reasoning and copious citation of precedent.”

And in the end, the sanction must be proportionate to the offense.

“Striking or excluding respondent’s experts is not warranted. Petitioners strain to identify any harm they suffered. The only harm they claim to have suffered is an effect on their ability to cross-examine the experts, but even that description is vague and unconvincing. This is particularly true when privilege claims as to most of the documents were withdrawn; the claimed reason for the clawback of most of the documents was a lack of relevance. It is unclear how the production of irrelevant documents to respondent’s experts could adversely affect the cross-examination of those experts. Any exploration of the extent to which the experts might have considered the improperly produced documents can be (or could have been) explored during the depositions of the experts. And, if necessary, the Court can give latitude to petitioners when cross-examining experts during trial. In short, it is not clear that any harm has been suffered by petitioners, and to the extent they may have been harmed, the remedy sought is grossly out of proportion to the hypothetical harm they might have suffered.” Order, at p. 7. (Footnote omitted, but read it; IRS’ counsel promptly gave notice to the duo and destroyed the documents).

But the duo claim that if the Court doesn’t slam such conduct, who will comply with discovery orders? And that goes to the integrity of the whole process.

True, says Judge Buch. It’s not only the duo, but the system that needs protection.


“When a party fails to comply with the Court’s orders, the integrity of the judicial system is implicated even when the opposing party is not prejudiced by the conduct. The Court expects parties and their counsel to abide by its orders. When a party fails to abide by the Court’s orders, several questions arise. Did the party violate the order intentionally or mistakenly? If mistakenly, was the party careless or reckless? And is there a pattern of noncompliance beyond the specific case in which the current violation occurred? These types of questions relate to how serious the party is about complying with the Court’s orders. And they relate to the professional responsibility of the lawyers involved, either in their own actions or in their supervision of staff working for them. Troubling answers to these questions might justify the Court imposing a sanction on a party or on a specific counsel appearing on behalf of a party.” Order, at pp. 7-8.

But IRS played fair, and there’s no showing a pattern of noncompliance.

So no sanctions.


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