In Uncategorized on 03/18/2022 at 16:39

Discovery geeks and ethics wags have a goody from Judge Albert G (“Scholar Al”) Lauber. Can IRS ask members of a petitioner LLC if they’d like to talk? The answer Judge Scholar Al gives is there’s no harm in asking, provided (1) if any member is represented by counsel, IRS terminates the conversation and addresses the member’s counsel only, and (2) if any privileged matter is revealed, IRS agrees to a FRE 502(b) notice and nonwaiver.

IRS did this in Oconee Landing Property, LLC, Oconee Landing Investors, LLC,  Tax Matters Partner, Docket No. 11814-19, filed 3/18/22. But the Oconees want a Rule 103 protective order, claiming ABA Model Rule 4.2, comment 7 says that members are “constituents” of Oconee, therefore are shielded from IRS’ come-hithers.

Cf. my blogpost “The Stealth Sequester,” 2/16/22, where Judge Christian N. (“Speedy”) Weiler goes over the same issues with ABA Model Rule 4.2.

Judge Scholar Al: “At first blush, Model Rule 4.2 would seem to have no application here. As petitioner’s counsel has repeatedly asserted, none of the individual investors is ‘represented by [petitioner’s counsel] in th[is] matter.’ Some of these investors may be represented by their own counsel. But petitioner does not challenge respondent’s representation that, as soon as he learns that an investor is ‘represented by another lawyer in the matter,’ …, he will immediately cease communication with that person and direct any future communication to that person’s lawyer.” Order, at pp. 4-5.

But are the investors “constituents” of the Oconees, hence within the penumbra of ABA Model Rule 4.2? Nope; “Petitioner has failed to establish–indeed, it has not attempted to show–that the individual investors ‘supervise, direct, or regularly consult with’ petitioner’s counsel regarding this case. Petitioner has not alleged, for example, that any of the investors regularly reviews draft stipulations, motions, or Court orders, or that they discuss or influence litigation strategies. There is no indication that they have the authority to fire petitioner’s lawyers and hire new ones.” Order, at p. 5.

A constituent is on the sidelines kibitzing with the coaching staff, wearing the team jacket and baseball cap, not sitting in a luxury box watching the game.

No protective order, despite the Oconees presenting Judge Scholar Al with an unsworn screed from an ethics professor reiterating the Oconees’ argument. IRS moves to strike, but it’s really not necessary.

“Respondent has moved to strike this declaration for noncompliance with Rule 143(g), which requires (among other things) that expert witness testimony take the form of a report, exchanged in advance with the opposing party, and that the expert be available for cross-examination. We need not decide that question because we agree with respondent that the declaration should be disregarded as impermissible advocacy in contravention of Federal Rule of Evidence 702. The declaration offers no help to the Court in understanding any evidence, grasping the inner workings of any industry, or determining any fact in issue. It simply expresses the declarant’s personal opinion–aligning precisely with petitioner’s argument–about how the legal question currently before the Court should be decided. That is the province of the Court, not of an expert.” Order, at p. 7.

Practice tip: If you want to get a Judge mad at you, suggest he doesn’t understand the law. Remember Alex Pope: “Men must be taught as if you taught them not;/And things unknown proposed as things forgot.”

Btw, Judge Scholar Al notes the promoters of this raid on the Treasury are playing D in a class action in USDCNDGA, Order, at p. 2.


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