Opinion
16284-21
06-13-2024
ALBERO HOLDINGS, LLC, ALBERO INVESTORS, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Elizabeth Crewson Paris, Judge
This case is calendared for trial at a one-week in-person Special Trial Session of the Court on May 12, 2025, in Atlanta, Georgia.
On October 31, 2023, docket entry 36, respondent filed a Motion for Document Subpoena Hearing requesting that the Court issue an order scheduling a remote hearing to address and provide a return date for subpoenas that respondent intended to issue in this case. Respondent indicated that he intended to issue several third-party subpoenas to potential witnesses. It appears that as of the date of this Order respondent has noticed over ninety third-party subpoenas.
On March 15, 2024, docket entry 52, petitioner filed an Objection to Motion for Document Subpoena Hearing.
On March 27, 2024, docket entry 58, after a hearing was held on March 25, 2024, the Court granted respondent's Motion for Document Subpoena Hearing filed October 31, 2023, docket entry 36, and scheduled this case for a hearing on Wednesday, June 26, 2024, Washington DC, special hearing session to be conducted remotely at which any third-party subpoenas may be returnable. Additionally, the Court ordered respondent, on or before June 20, 2024, to file a status report advising the Court whether the third parties have complied with the subpoenas and a hearing is no longer necessary. Subsequently, on June 7, 2024, the Court ordered respondent to provide a preliminary report on the current status of the issued third-party subpoenas on or before June 14, 2024.
On May 7, 2024, docket entry 66, petitioner filed a Motion for Protective Order Pursuant to Rule 103. On May 17, 2024, docket entry 67, petitioner filed a First Supplement to Motion for Protective Order. By Order dated May 24, 2024, docket entry 76, the Court directed respondent, on or before May 31, 2024, to file a response to petitioner's Motion for Protective Order, filed May 7, 2024, docket entry 66, and petitioner's First Supplement to Motion for Protective Order Pursuant to Rule 103, filed May 17, 2024, docket entry 67.
Unless otherwise indicated Rule references are to the Tax Court Rules of Practice and Procedure.
On May 31, 2024, docket entry 78, respondent filed a Response to Motion for Protective Order Pursuant to Rule 103. On June 5, 2024, docket entry 79, petitioner filed a Second Supplement to Motion for Protective Order Pursuant to Rule 103.
Petitioner moves the Court under Rules 50, 70, 103, and 147 to enter an order protecting petitioner and recipients of subpoenas issued by respondent. Petitioner specifically requests that the Court enter an order (1) prohibiting respondent from any future contact with indirect members of Albero Holdings, LLC (Members), (2) prohibiting respondent from serving additional subpoenas to Members, and (3) quashing any and all of respondent's subpoenas. For the reasons discussed below, the Court will deny petitioner's Motion.
I. Protective Order Under Rule 103
According to petitioner, respondent has inappropriately informally contacted seventy-five Members by letter or telephone. Petitioner asserts that "respondent's phone call and letter campaign needlessly caused confusion, stress, and anxiety among Members." Petitioner argues respondent failed to identify his role in this proceeding, threatened to issue subpoenas for trial or depositions should Members not comply with respondent's requests, and requested information that was not relevant to this case or might be privileged.
Petitioner does not explain why the documents and information respondent seeks are not relevant to this case, but merely makes this conclusory statement. Yet, petitioner also states that respondent's requests "overlap significantly with data already provided by petitioner or additional data to be provided by petitioner." Assuming petitioner is not providing or planning to provide respondent with irrelevant information, this would suggest that the documents and information respondent seeks are relevant. In any case, petitioner provides no specific explanation as to why the documents and information respondent seeks are not relevant to this case.
Similarly, petitioner does not further elaborate on its conclusory assertion that respondent requested information that "might be privileged." Other than two conclusory statements suggesting that respondent's requests might seek privileged information, the only other references to privilege are in the law petitioner cites. Petitioner provides no facts or other evidence suggesting that the documents and information respondent seeks are privileged.
Petitioner states that information from third parties should be sought first through informal means with petitioner, petitioner has previously expressed a willingness to assist in obtaining information from third parties, and "[p]etitioner merely asks that it also receive the benefit of that information, whether it be in the form of documents or being presented (sic) at informal interviews."
Rule 103 provides that "[o]n motion by a party or any other affected person, or on the Court's own, and for good cause, the Court may make any order that justice requires to protect a party or other person from annoyance, embarrassment, oppression, or undue burden or expense." Petitioner, as the moving party, must establish the good cause required for a protective order. Estate of Yaeger v. Commissioner, 92 T.C. 180, 189 (1989) (citing Am. Tel. & Tel. Co. v. Grady, 594 F.2d 594, 596 (7th Cir. 1978)). To establish good cause, petitioner must provide evidence "to establish that harm would flow from disclosure," and the evidence "must consist of more than merely conclusory or unsupported statements." Estate of Yaeger, 92 T.C. at 189 (first citing Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982) and then In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust, 101 F.R.D. 34, 44 (C.D. Cal. 1984)).
Petitioner has not met its burden to establish good cause for a protective order. Petitioner has not provided any evidence, other than "conclusory and unsupported statements" to support its assertion that respondent requests irrelevant or privileged information. Petitioner argues that it is inappropriate for respondent to contact third parties, including Members, and that respondent must send all requests for information from third parties through petitioner. Petitioner provides no authority for its position. Additionally, it is not clear to the Court why it would be any less burdensome for the third parties should petitioner's counsel be the one to set up the informal meetings or gather information rather than respondent's counsel. Petitioner's counsel does not represent the third-party Members, and respondent has indicated that petitioner's counsel is also likely adverse to the Members because certain Members have filed a class action lawsuit against petitioner. Thus, it seems that petitioner's solution would not be any less burdensome to third parties, including Members.
Petitioner has provided no specific facts which would suggest that justice requires the Court to order respondent to refrain from contacting the Members in order to protect either petitioner or the Members from annoyance, embarrassment, oppression, or undue burden. Therefore, the Court will deny petitioner's motion for a protective order.
II. Request to Quash Respondent's Subpoenas
Petitioner requests that the Court quash "any and all of respondent's subpoenas." Petitioner argues that respondent's notices of subpoena are overly broad and unduly burdensome to both the subpoena recipients and to petitioner.
Rule 147(d)(3) provides:
(A) When Required: On timely motion, the Court must quash or modify a subpoena that:
(i) fails to allow a reasonable time to comply;
(ii) requires disclosure of privileged or other protected matter, if no exception or waiver applies; or
(iii) subjects a person to undue burden.
(B) When Permitted: To protect a person subject to or affected by a subpoena, the Court may, on motion, quash or modify the subpoena if it requires:
(i) disclosing a trade secret or other confidential research, development, or commercial information; or
(ii) disclosing an unretained expert's opinion or information that does not describe specific occurrences in dispute and results from the expert's study that was not requested by a party.
In evaluating petitioner's Motion under Rule 147(d)(3) the Court may consider cases which concern motions to quash subpoenas under Rule 45(d)(3), Federal Rules of Civil Procedure, because Rule 147(d)(3) was derived from Rule 45(d)(3). See Estate of Yaeger, 92 T.C. at 189. Under Rule 45(d)(3), Federal Rules of Civil Procedure, a party generally does not have standing to move to quash a subpoena served on a third party unless the party claims a privilege or personal right in the information sought by the subpoena. See Jacobs v. Conn. Cmty. Tech. Colls., 258 F.R.D. 192, 194-95 (D. Conn. 2009); Oliver B. Cannon and Son, Inc. v. Fid. and Cas. Co. of N.Y., 519 F.Supp. 668, 680 (D. Del. 1981).
Petitioner has not claimed a privilege or personal right in the information sought by respondent's third-party subpoenas. Therefore, petitioner does not have standing to quash respondent's subpoenas. Accordingly, the Court will deny petitioner's motion to quash the subpoenas respondent has issued to third parties.
After due consideration, it is
ORDERED that petitioner's Motion for Protective Order, filed May 7, 2024, docket entry 66, as supplemented on May 17, 2024, docket entry 67, and as supplemented on June 5, 2024, docket entry 79, is denied without prejudice.