Opinion
10703-19 10704-19
05-20-2022
CFM INSURANCE, INC., ET AL., Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Mark V. Holmes, Judge
These cases have been assigned to this division of the Court and are headed for a trial starting later this month. One of petitioners' expert witnesses, Al Rhodes, submitted a report in which he relied in part on proprietary data. (Following petitioners, we shall call this "Mr. Rhodes's Excel spreadsheet database," or the Protected Information). This attracted a motion to strike from respondent, because Rule 143(g)(1)(B) requires data on which an expert relies to be shared with the opposing party. Petitioners object on the ground that the data is entitled to protection as proprietary. The obvious solution -- a negotiated protective order limiting the use of any proprietary information -- is a problem because respondent's counsel doesn't have delegated authority to sign one on behalf of the Commissioner. (The IRS takes the position that any such information should instead be protected under Code section 6103.)
We spoke with the parties on May 18. The solution was for petitioners' counsel to move for a protective order with suggested language. She has now combed through our court's own newly-accessible database of orders to do so. Although respondent's counsel had to object, he has at least been consulted on the proposed language.
Because the requested motion and suggested language balance the need of respondent to be able to understand and rebut petitioner's expert-witness report and the legitimate request of petitioners' expert to keep his proprietary database confidential the Court will grant petitioners' motion.
It is therefore
ORDERED that petitioners' May 19, 2022 motion for a protective order is granted. It is also
ORDERED that
a. Prior to being produced by petitioners to respondent in this case, the file containing the Protected Information will be electronically labeled "Non Traditional Risks Benchmarks - Confidential." The excel spreadsheet also has "Confidential" watermarked on the body of the document.
b. The prohibitions of I.R.C. § 6103 shall continue to govern the treatment of the Protected Information, in addition to the following terms and conditions.
c. Any reproductions of, extracts of, and summaries of the Protected Information shall also be subject to the same protections as those that apply to the Protected Information.
d. A party choosing to file a document containing any Protected Information must file the document under seal an unredacted version of the document and within 3 business days after the filing seek to reach an agreement with the other party on whether a redacted version of the document would not constitute Protected Information, and if so, on the appropriate redaction. If the parties cannot reach an agreement on the redactions the parties shall notify the Court.
e. When the final redactions have been determined by the parties or the Court, the document as finally redacted shall be provided to the Court.
f. The parties shall notify the Court prior to examining or cross-examining any fact witness if the parties reasonably believe that such examination could require the use of Protected Information or could result in testimony disclosing Protected Information.
g. The parties will coordinate with the Court regarding the most efficient method of protecting the confidentiality of the Protected Information during the examination or cross examination of experts or any other witnesses at trial.
h. In any event that the courtroom closes during expert witness testimony to persons other than those affiliated with the Court or the parties' courtroom inclusion list, within 5 business days following the receipt of the transcript of such expert witness testimony, petitioners shall submit to respondent and the Court a version of the transcript of such expert testimony that is redacted to exclude Protected Information.
i. Within 5 business days of receipt of the transcripts with petitioners' proposed redactions, respondent may challenge petitioners' redactions under paragraph h, with the appropriate filing with the Court. Any redacted information thereafter held to be non-confidential by the Court, after hearing arguments of the parties, shall become part of the publicly available record of the trial. If respondent does not timely challenge petitioners' version of the redacted transcript, then petitioners' version of the redacted transcript shall become part of the publicly available record.
j. Without prior leave of the Court, neither party may share Protected Information (including unredacted trial transcripts and sealed exhibits) with any persons who are
not current employees of respondent and petitioners, their attorneys and their staff members, and the expert witnesses identified in the parties' pre-trial memorandums.
k. At the close of trial, the Court will consider appropriate procedures to provide for the continued protection of Protected Information during post-trial briefing and until the case is finally resolved.
l. Unless otherwise ordered by the Court, Protected Information shall remain under seal and shall not become part of the record of this case available to the public.
m. Nothing in the Court's protective order, or anything done in compliance with the protective order, will constitute a waiver by either party of the confidentiality of any information or document subject thereto.
n. Within 90 days after the final termination of this action pursuant to I.R.C. § 7481, all documents designated as Protected Information, including reproductions, extracts or copies thereof, shall be returned to Petitioners or shall be destroyed, with the following exceptions: copies of papers submitted to the Court and unredacted portions of hearing or trial transcripts which may be retained by the parties' trial counsel. If materials are destroyed, trial counsel shall, within 120 days after the final termination of this action, certify to opposing trial counsel that destruction has taken place.
o. Except as specifically provided herein, the terms, conditions, and limitations of this Protective Order shall survive the termination of this action, provided that either party or an interested person may seek to modify or terminate this Protective Order at any time, including after the decision in this case becomes final. The Court retains jurisdiction over the parties and other persons governed by this Protective Order for the purposes of modifying this Protective Order or adjudicating any dispute regarding the improper use or disclosure of Protected Information disclosed under the protections of this Protected Order.
p. Nothing contained herein shall preclude the parties or Mr. Rhodes from bringing a proceeding in another administrative or judicial forum seeking redress for the unwarranted disclosure of Protected Information, or deprive such administrative or judicial forum of jurisdiction over such proceeding.
The parties shall confer prior to the first day of trial and attempt to reach an agreement on the courtroom inclusion list. The parties shall provide to the Court the agreed upon inclusion list on the first day of trial.
It is also
ORDERED that respondent's May 13, 2022 motion to strike is denied.