Opinion
11832-20
06-06-2024
AVENTIS, INC. AND SUBSIDIARIES, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge
This case is set for trial to begin February 3, 2025, in Washington, D.C. A motion (Doc. 37) for summary judgment filed by petitioner ("Aventis") is in the process of being briefed by the parties, with the last brief (a supplemental objection) currently due to be filed by the Commissioner on June 20, 2024 (see Doc. 67). The Commissioner has now filed a "Motion and Application to Depose Aventis Inc. Pursuant to U.S. Tax Court Rules 50, 74(c)(3), and 81(c)" (Doc. 66), seeking to depose Aventis on July 10, 2024. Aventis does not consent, and we will deny the motion.
Background
The motion states, as the proposed subject matter of the corporate deposition, five topics that are plainly relevant to this case, and explains the parties' counter-contentions in a manner that shows why the Commissioner reasonably seeks the information. The motion concludes:
The matters set forth above are specific, discrete, and relate directly to debt versus equity and alleged FASIT Arrangement issues and are material to those issues. The parties' differences with regard to these issues came to the fore in this litigation while addressing the factual and legal matters at issue in the Motion. Moreover, from respondent's perspective, they were not resolved by informal interviews conducted by respondent of one current and three former Aventis employees, two bank witnesses (Chase and its successor), and two witness associated with the firm that created Dynamo (Babcock & Brown). An organizational deposition regarding these issues will help resolve the factual differences, clarify facts, and facilitate the stipulation process. Moreover, it will ensure that respondent and his experts are on an even footing with Aventis and its expert(s) on critical factual issues.
Discussion
Under Rule 30(b)(6) of the Federal Rules of Civil Procedure, the Commissioner would be entitled to conduct such a deposition as a matter of course. However, the deposition requested here would, of course, be conducted not under FRCP 30(b)(6) but rather under Rule 74 of the Rules of the U.S. Tax Court--in particular, Rule 74(c) ("Depositions Without Consent of the Parties"), subparagraph (c)(1)(B) of which provides:
The taking of a deposition of a party ... under this paragraph is an extraordinary method of discovery and may be used only if a party can give testimony ... and if the testimony ... cannot be obtained through informal consultation or communication (Rule 70(a)(1)), [or] interrogatories (Rule 71).
I. "[E]xtraordinary method"
As far as we can tell, the Commissioner's motion does not undertake to explain why this is a case in which "extraordinary" means of discovery are warranted. The fact that a deposition is requested in order to obtain information that would be relevant and helpful does not support the proposition that "extraordinary" discovery is warranted.
II. "[C]annot be obtained"
The Commissioner's motion does explain that the information to be sought by deposition could not be obtained "by informal interviews" that it conducted with Aventis personnel. However, Rule 74(c)(1)(B) provides also that a deposition should be allowed only where the information cannot be obtained (inter alia) "through ... interrogatories (Rule 71)". The five topics (and their elaborations) that the Commissioner provided suggest interrogatories that could be served (but evidently have not yet been).
No litigator would accept that interrogatories could be a fully adequate substitute for a deposition (with its unrehearsed Q&A and its opportunity for follow-up questions, among other tactical advantages). However, the corporate deposition (under FRCP 30(b)(6) or Tax Court Rule 81(c)) does require a list of topics that make the deposition less spontaneous; and the corporate deposition sometimes involves disputes about the scope and meaning of the topics that may impede the questioning and may require delay for designation of different witnesses. That is, the corporate deposition (such as the Commissioner seeks here) may be the sort of deposition most nearly substituted with interrogatories.
Of course, if a party fails to give fair responses to interrogatories, then the requesting party does have remedies (follow-up interrogatories, a motion to compel, and preclusive sanctions under Rule 104(c)). If the Commissioner does serve interrogatories on the topics for which deposition was sought, then Aventis, in composing its responses, should assume that, at trial, it would be bound to those responses and would be precluded from contradicting them.
It is
ORDERED that the motion (Doc. 66) is denied.