In Uncategorized on 09/30/2020 at 16:00

Years ago I proposed that Tax Court adopt the old NY State Court practice known as “settle order on notice.” For the backstory, see my blogpost so entitled. I note that blogpost is the most-read of all my blogposts.

Judge Albert G (“Scholar Al”) has picked up on the idea in six (count ’em, six) designated hitters, all of like tenor. I’ll choose Edward J. Tangel & Beatrice C. Tangel, et al., Docket No. 27268-13, filed 9/30/20.

The fight is over a Rule 103 protective order in a Section 41 research and experimentation fight over $872K in credits.

“Petitioners supplied thousands of documents to respondent during discovery, and they seek an order that would protect a large subset of these documents from public disclosure at trial. Were we to grant such an order, the protected documents would be included in one or more stipulations of fact that would be sealed and made non-viewable by the public. Trial testimony addressing the sealed exhibits would be taken in a closed courtroom, and the transcript of such testimony would be contained in separate volumes of the transcript that would also be sealed.

“Petitioners appear to seek protection for 2,472 trial exhibits. Of these, 2,417 seem to relate to a single project, ‘Terminal High Altitude Area Defense’ (THAAD), which petitioners describe as a ‘national defense system.’ The other 55 documents relate to a project described as ‘Capstone.’ About 75% of the THAAD-related exhibits appear to have stamped upon them a warning stating that the items contain technical data or software whose export is restricted by Federal law.” Order, at pp. 1-2.

Ed & Bea and the als also claim disclosing this stuff would reveal proprietary information, breach non-disclosures, and jeopardize national security. But Ed & Bea and the als don’t claim that non-exportation language equals non-disclosure.

“Rather, petitioners make the generalized assertion that all of the documents in question contain ‘information which is proprietary and subject to trade secret protection.’ But this is simply an assertion by petitioners’ counsel. The motion for protective order is only two pages long, and it is supported by no affidavits from Enercon officers or technicians having first-hand knowledge of the relevant facts. Respondent notes that some of the exhibits appear to relate to such everyday items as gaskets, steel plates, a fire extinguisher, a fan, a thermostat panel, and various forms of correspondence. Petitioners have supplied no detail from which the Court could conclude that all 2,472 documents (or any of them) contain protectable trade secret (or other confidential) information. Order, at pp. 2-3.

And don’t forget dear old Section 7461; in Tax Court, ya gotta go tell it on the mountain, over the hills and everywhere.

Ya gotta be more specific than that naked two-pager. Even though Ed & Bea have a bunch of high-priced lawyers, they didn’t do much of a job. If they expected Judge Scholar Al to unbake their Alaska and put the ice cream back in the cow, their expectations are thwarted.

Judge Scholar Al notes the years at issue are not less than ten years ago. A lot of secrets become public in ten years. See Order at p. 3, where he goes into Rule 103 orders in cases I’ve blogged, where protection is limited to new stuff.

Finally, we reach the point of this blogpost (and my readers will say, “There is one? How novel.”).

“The Court is inclined to believe that some form of protective order may be needed to govern the trial and post-trial proceedings in this case. But petitioners have not made a persuasive case–at least not yet–for protecting all 2,472 of these documents. We will direct the parties to work together to produce a protective order, modeled on those previously issued by the undersigned, that is targeted to protect genuine trade secrets and national security (or other confidential) information. If the parties cannot agree on a jointly-proposed protective order, we will direct each party to submit its own proposed protective order, and the Court will select one or the other.” Order, at p. 3.

Settle (protective) order on notice.







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