Opinion
13967-22
01-03-2024
MARC FORSCHINO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge
Now pending are three discovery motions and two orders to show cause. We will now rule on these matters.
Motion to depose (Doc. 16)
On January 26, 2023, petitioner filed a motion (Doc. 16) for leave to take the deposition of a revenue agent. Respondent opposed the motion (see Doc. 20), and petitioner's reply suggested that consideration of the motion be stayed, pending further developments. (Doc. 25, ¶ 16(a).) The motion has been pending for almost a year, and no visible developments have arisen to warrant the granting of this "extraordinary method of discovery". Rule 74(c)(1)(B). We will deny the motion without prejudice.
Motion to compel interrogatory response (Doc. 35)
Respondent filed a motion (Doc. 35) to compel response to an interrogatory and to impose a sanction for noncompliance. As to the interrogatory, we granted the motion and by order (Doc. 72) required petitioner to serve a response by November 3, 2023. Petitioner did so. (See Doc. 85.) In the subsequent two months respondent has made no filing alleging noncompliance. To the extent the motion to compel remains pending in part by reason of the request for a sanction, we will deny the motion without prejudice.
Order to Show Cause issued to respondent (Doc. 83)
Granting petitioner's motion (Doc. 82), we previously issued to respondent an Order to Show Cause ("OSC"; Doc. 83) concerning proposed stipulations, under Rule 91(f)(2). Respondent filed a response to the OSC (Doc. 109). As far as we can tell, petitioner filed no reply to those responses by the deadline of December 22, 2023 (see Doc. 83), and respondent filed a further response (Doc. 109), asserting (at 9-10, para. 8) that the matters subject to the OSC were or would be stipulated. The parties have indeed agreed to various stipulations (see Docs. 101, 112, 116). We will therefore discharge the OSC (Doc. 83).
Order to Show Cause issued to petitioner (Doc. 78)
Granting respondent's motion (Doc. 77), we previously issued to petitioner an OSC (Doc. 78) concerning proposed stipulations. We amended the OSC (see Doc. 80) in response to respondent's request (Doc. 79), and we amended the briefing schedule (see Doc. 83). As we noted above, the parties agreed to various stipulations (see Docs. 101, 112, 116). Petitioner filed a series of responses to the OSC (Docs. 105, 106, and 107). Respondent replied (Doc. 145), insisting (at 1-2) that "petitioner has not shown just cause why the facts and evidence contained in [certain] paragraphs ... should not be deemed admitted for purposes of this case." These still-pending matters are presented as a list of six propositions at pages 28-30 of respondent's supplemental reply (Doc. 145). (The first two of the six concern data from Captira Analytical LLC in a spreadsheet (Exhibit 103-R), authenticated by a Captira officer's statement (Exhibit 104-R). Respondent proposes that "Stipulated Exhibit 103-R, is PDF spreadsheet from Captira, covering petitioner's business entries into the platform for the taxable years 2015 and 2016 (also including December 2014 and January 2017)", which petitioner declines to stipulate. These two matters are also pertinent to the motion to compel documents discussed below.)
Respondent makes a plausible showing that petitioner is unreasonably refusing to stipulate to certain matters that he ought to be willing and able to stipulate. A party (in this instance, respondent) should not have to bear the expense and trouble of proving at trial facts that the other party does not really dispute, nor of preparing such proof only to have the other party admit the facts at the last minute; and we have sympathy for respondent's complaints. However, we will discharge the order to show cause and will not deem these matters stipulated, because to act as respondent requests would more or less require us to adjudicate factual disputes in the pretrial context, which is not the proper function of Rule 91(f). That rule is ordinarily applied in the instance of a party's wholesale failure to cooperate in the stipulation process, but the parties' very substantial stipulations filed to date show that this is not such an instance.
The better remedy for the abuse that respondent here anticipates is achieved by requests for admission under Rule 90, which provides: "If any party unjustifiably fails to admit the genuineness of any document or the truth of any matter as requested in accordance with this Rule, the party requesting the admission may apply to the Court for an order imposing any sanction ... provided in Title X." Title X includes Rule 104(c)(4), which permits the Court to "require the party ... to pay the reasonable expenses, including counsel's fees, caused by the failure" to admit. (See, to the same effect, Fed.R.Civ.P. 37(c)(2) ("If a party fails to admit what is requested under Rule 36 and if the requesting party later proves a document to be genuine or the matter true, the requesting party may move that the party who failed to admit pay the reasonable expenses, including attorney's fees, incurred in making that proof").) We will order that the matters that are the subject of respondent's request for relief shall be deemed requests for admissions. We advise petitioner that, at this late date, we would expect to scrutinize closely any assertion that the matter "cannot be truthfully admitted or denied" or that he "lack[s] information or knowledge" under Rule 90(c)(1)-(2).
Motion to compel production of documents (Doc. 73)
Respondent filed a motion to compel production of documents (Doc. 73); petitioner filed a response (Doc. 84); and respondent filed a reply (Doc. 108). However, the parties have filed substantial stipulations (Docs. 101, 112, 116); and we ordered respondent to "file a status report (or a supplemental reply) stating whether and to what extent its motion to compel (Doc. 73) has become moot." He filed that supplemental reply (Doc. 143), and petitioner filed a supplemental response (Doc. 145). The supplemental filings show that the still unresolved dispute concerns data from the so-called "Captira records", mentioned briefly above.
These third-party records contain information about premium income that petitioner received from the bail bond business. The IRS requested the Captira records from petitioner in April 2018 (during the audit), and at various times since then petitioner has provided a substantial amount of this data, but it has not been complete, and evidently it was not easy to correlate this data to other information about the premium income. Respondent informally requested all this data in December 2022, and by document requests in February 2023. Petitioner preferred that the Commissioner obtain the data directly from the Captira, which maintained it, and his counsel stated the expectation that he would then be able to stipulate the authenticity of the data that Captira produced. As we explained in our order of July 26, 2023 (Doc. 65), "The Commissioner was willing to do so, provided that petitioner confirmed the authenticity of the information obtained from Captira. The Commissioner received information from Captira in two forms (Excel spreadsheet and PDF), but an apparent discrepancy in the data presented on those two forms prompted petitioner to decline, without more information, to stipulate authenticity. The Commissioner believes he has provided assurances that should enable the authentication." We therefore ordered that "No later than August 25, 2023-- ... Petitioner shall provide the requested Captira information, unless before that date the parties have stipulated the authenticity of the data provided to the Commissioner by Captira." Petitioner has declined to stipulate authenticity and (we assume) has provided all the Captira data. But this leaves unresolved the question of just what that voluminous data actually shows.
The case appears thus: To confirm or correct his reconstruction of petitioner's bail bond premium income, respondent asked petitioner--more than a year ago--to produce his Captira information. Petitioner demurred to obtain and analyze that information, so respondent took eminently reasonable steps to do so. He obtained petitioner's information directly from Captira, which produced a spreadsheet presenting that information in an apparently very useful form. Respondent then asked petitioner to stipulate that the Captira information is indeed reflected on the spreadsheet that Captira generated, but petitioner declined, without counter-proposing any correction. Consequently, in October 2023 respondent asked the Court to compel petitioner to produce "the data from his account at Captira, a transaction management and tracking software company. Specifically, respondent is seeking to compel the production of data from [certain] data fields associated with each transaction/payment recorded in petitioner's account at Captira". (Doc. 73.)
Such a spreadsheet may eventually be offered into evidence at trial as a "summary" under Federal Rule of Evidence 1006, and when that occurs it would be incumbent on the responding party to impeach the summary by showing any discrepancy between the summary and the underlying data. Gross errors might keep the spreadsheet out of evidence entirely; lesser errors might undermine its probative value. For the responding party to remain silent about allegations of error during the pretrial phase and then to surprise the proponent with those allegations at trial would be unfair and, more to the point, would not be conducive to the purpose of determining the truth. Therefore, the proponent ought to be entitled to learn, through discovery, any disputes that the responding party has about the spreadsheet. Errors could be corrected, and the parties might eventually be able to stipulate the actual facts, eliminating the need for any trial on that point.
Petitioner complains, however, that it would not be reasonable for the Court to require petitioner (or Captira) not simply to produce the raw data (which apparently has already been produced) but also to create another spreadsheet on which alternative data would be presented. Petitioner may be (and for purposes of this order we assume that he is) correct in contending that a party cannot properly request under Rule 72 that the other party create a document (such as an alternative spreadsheet). However, the proponent of a spreadsheet may certainly request under Rule 90 the other party's admission that the spreadsheet correctly reflects data; and if the responding party denies, then the "denial must meet the substance of the requested admission, and, if good faith requires that a party qualify an answer or deny only a part of a matter, that party must specify so much of it as is true and deny or qualify the remainder." Or the proponent may serve an interrogatory that requests admission or correction of the data.
Consequently, we will sustain petitioner's objection to the motion to compel documents as such, but we will require that petitioner, if he does not admit the first and second deemed requests for admissions concerning Exhibits 103-R and 104-R, to provide corrective information in his response to the deemed requests.
To give effect to the foregoing, it is ORDERED that petitioner's motion to depose (Doc. 16) is denied without prejudice. It is further
ORDERED that, to the extent respondent's motion to compel (Doc. 35, previously granted in part) remains pending in part by reason of the request for a sanction, we hereby deny without prejudice the motion in remaining part. It is further
ORDERED that our Order to Show Cause issued to respondent (Doc. 83) is hereby discharged. It is further
ORDERED that our Order to Show Cause issued to petitioner (Doc. 78) is hereby discharged; and it is further
ORDERED that respondent's motion to compel production of documents (Doc. 73) is denied; but it is further
ORDERED that the six numbered propositions at pages 28-30 of respondent's supplemental reply (Doc. 145) in support of his motion to compel shall be deemed to be requests for admissions served properly under Rule 90, for which petitioner's response shall be due to be filed 30 days after service of this order. That response shall comply meticulously with Rule 90(c). In particular, unless petitioner files responses to the first and second such deemed requests (concerning Exhibits 103-R and 104-R) that are unqualified admissions, then his response to the request shall--in "meet[ing] the substance of the requested admission, and, if good faith requires that a party qualify an answer or deny only a part of a matter, ... specify[ing] so much of it as is true and deny or qualify the remainder" (Rule 90(c))--point out with particularity the specific errors in the spreadsheet and provide the corrective information, and articulate any objection he might have to the admission of Exhibit 103-R under FRE 1006.