Opinion
7246 7247 7248 7249N Index 651695/15
10-04-2018
NORDDEUTSCHE LANDESBANK GIROZENTRALE, et al., Plaintiffs–Respondents, v. Lynn TILTON, et al., Defendants–Appellants.
Gibson, Dunn & Crutcher LLP, New York (Randy M. Mastro of counsel), for appellants. Berg & Androphy, New York (Michael M. Fay and Chris L. Sprengle of counsel), for respondents.
Gibson, Dunn & Crutcher LLP, New York (Randy M. Mastro of counsel), for appellants.
Berg & Androphy, New York (Michael M. Fay and Chris L. Sprengle of counsel), for respondents.
Friedman, J.P., Sweeny, Kapnick, Gesmer, Singh, JJ.
Orders, Supreme Court, New York County (Eileen Bransten, J.), entered January 12, 2018, which, in motion sequence number 5, denied defendants' motion to seal portions of plaintiffs' amended pleading and motion to amend that summarize or quote tax-related financial information contained in documents other than tax returns, and in motion sequence number 6, denied defendants' first motion for a protective order barring the use of any tax-related discovery and the further discovery of any such tax-related financial information, and orders, same court and Justice, entered May 25, 2018 and May 29, 2018, which, in motion sequence number 10, denied defendants' second motion for a protective order barring discovery of any tax-related information post-dating April 2012, and, in motion sequence number 12, inter alia, granted plaintiffs' motion to compel certain tax-focused depositions, unanimously affirmed, without costs.
The court properly denied defendants' motions for protective orders barring the use of all tax-related discovery and tax-related discovery post-dating April 2012, because the produced and requested tax-related discovery satisfies the liberally interpreted standard for disclosure (see CPLR 3101[a] ; Allen v. Crowell–Collier Publ. Co. , 21 N.Y.2d 403, 406, 288 N.Y.S.2d 449, 235 N.E.2d 430 [1968] ). It is material to plaintiff's fraudulent inducement claim. While a party seeking disclosure of tax returns must make a strong showing that the information contained in the returns is necessary and unavailable from other sources (see Weingarten v. Braun , 158 A.D.3d 519, 68 N.Y.S.3d 707 [1st Dept. 2018] ; Williams v. New York City Hous. Auth. , 22 A.D.3d 315, 802 N.Y.S.2d 55 [1st Dept. 2005] ), the underlying financial information, when contained in documents other than tax returns, such as in Form K–1s, is typically discoverable if material and necessary (see Shabasson v. Greenberg, Trager, Toplitz & Herbst , 284 A.D.2d 230, 726 N.Y.S.2d 552 [1st Dept. 2001] ). This Court's decisions in MBIA Ins. Corp. v. Credit Suisse Sec. [USA] LLC, 103 A.D.3d 486, 960 N.Y.S.2d 25 [1st Dept. 2013] and Haenel v. November & November, 172 A.D.2d 182, 567 N.Y.S.2d 713 [1st Dept. 1991] should not be read to hold otherwise.
The court properly denied defendants' motion to seal portions of the amended complaint and motion to amend that summarize or quote tax and financial information, since defendants failed to overcome the broad presumption of public entitlement to judicial proceedings and court records (see Mosallem v. Berenson , 76 A.D.3d 345, 350, 905 N.Y.S.2d 575 [1st Dept. 2010] ; see also Applehead Pictures LLC v. Perelman , 80 A.D.3d 181, 191–192, 913 N.Y.S.2d 165 [1st Dept. 2010] ). The disclosures they seek to seal are not tax returns, and do not involve trade secrets or information that could result in a competitive disadvantage. Although the disclosures involve sensitive financial information that relates to information contained in tax returns, the court properly found that the privacy interest in such information, unlike the privacy interest in tax returns, is not a sufficient basis for an order sealing that information so that it is not accessible to the public (see Mosallem , 76 A.D.3d at 351, 905 N.Y.S.2d 575 ).
Defendants have failed to show that the court erred in granting plaintiffs' motion to compel certain tax-focused depositions. Contrary to their contention, the court did not order the parties to violate the rules that protect against disclosing materials subject to the attorney-client privilege.