Opinion
17076-21
02-27-2023
JL MINERALS, LLC, BEASLEY TIMBER MANAGEMENT, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Patrick J. Urda Judge
This case is calendared for trial at the Court's special session in Atlanta, Georgia, beginning February 27, 2023. Petitioner, J L Minerals, LLC, Beasley Timber Management, LLC, Tax Matters Partner (JL Minerals), challenges a Notice of Final Partnership Administrative Adjustment that (1) disallowed a charitable contribution deduction with respect to JL Minerals' donation of a conservation easement and (2) determined penalties under sections 6662 and 6662A. [Doc. 1.]
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C, in effect at all relevant times. "Doc." references are to the docket record in Docket No. 17076-21, as numbered by the Clerk of this Court.
This Court previously denied motions to quash subpoenae issued to four nonparties to this case-Thiele Kaolin Co. (Thiele), KaMin, LLC (KaMin), Imerys USA, Inc. and Imerys Minerals USA, Inc. (together, Imerys), and Arcilla Mining and Land Co., LLC (Arcilla). [Docs. 74, 77, 83, 92]. The nonparties have satisfied the high standard to justify the entry of a protective order, and after conferring with the parties and nonparties, we will enter such an order to safeguard the confidential information that the nonparties are required to produce and to restrict the use of such information for purposes of this case alone.
After due consideration, it is
ORDERED that the following Protective Order shall govern the handling of information or documents produced or disclosed in this action by Thiele, KaMin, Imerys, and Arcilla:
I. Scope
1. This Order shall govern the production and disclosure of any information or documents produced or disclosed in this action by Thiele, KaMin, Imerys, and Arcilla (collectively, nonparties).
2. All information produced, provided, or discovered in this action by the nonparties, regardless of whether it is designated as Confidential Information, shall be used solely for the presentation, prosecution, or defense of the claims, positions, and contentions in this case. All information produced or disclosed shall be used for no other purpose and shall not be used or disclosed other than as provided herein.
3. This Order is made without prejudice to the rights of the parties and nonparties to request that the Court amend or modify this Order upon good cause shown.
4. Nothing herein shall be construed as a waiver of any objection that any party may raise to the admissibility of any Confidential Information governed by this Order.
II. Designation of Confidential Information
5. This Order governs the disclosure of the following information, as well as any documents produced in response to the Commissioner's previously-issued subpoenae to the nonparties (hereinafter "Nonparty Confidential Information"):
Any information, document, or portion of any document produced or disclosed in this case by the nonparties that contains trade secrets, or proprietary technical, personal, or commercially sensitive information, including but not limited to non-public kaolin pricing information, product-design information, mining techniques (or associated costs), mining techniques or kaolin processing information, formulas, research-and-development information, business plans, customer lists, sales information, price information, and cost information, production schedules, contracts, and business analyses.In addition, via notice to the parties and the Court, and consistent with the Court's orders in this matter including the Order served February 2, 2023 [Doc. 204], the nonparties may designate additional information and documents to be produced as Nonparty Confidential Information.
III. Designations of Testimony
6. The testimony of any witness in the above-captioned litigation is Nonparty Confidential Information to the extent the witness identifies or discusses any Nonparty Confidential Information described in Paragraph 5 above. Upon entry of this Order, the Commissioner shall provide a copy of this Order to the court reporter(s) who transcribes the testimony of any witness in the above-captioned matter. Any such court reporter shall disclose no Nonparty Confidential Information except as provided in this Order. Any such court reporter shall keep copies of all transcripts, reporter's notes, and all other records of any such testimony in confidence and safekeeping, except for delivery to attorneys of record in this proceeding or filing with the Court in accordance with the provisions of this Order.
IV. Access to Nonparty Confidential Information
7. Nonparty Confidential Information as defined in Paragraph 5 above shall be available to the Court, Court personnel, court reporters, the nonparties, the nonparties' counsel, counsel for JL Minerals and the Commissioner, and such counsel's paralegals, secretarial and clerical personnel assigned to this matter, provided that (as to all such persons other than Court personnel) they shall be informed by counsel of the provisions of this Protective Order, and shall agree to be bound by it.
8. Other than the individuals described in Paragraph 7, Nonparty Confidential Information as defined in Paragraph 5 above shall only be available to individuals who have executed a Non-Disclosure Agreement pursuant to Paragraph 10 below prior to such disclosure. Any experts retained by the parties in this action who receive Nonparty Confidential Information shall execute the Non-Disclosure Agreement pursuant to Paragraph 10 and comply with the restrictions set forth in Paragraph 2 of this Order restricting the use of Nonparty Confidential Information to this case.
9. Notwithstanding the foregoing, Nonparty Confidential Information shall not be made available to the general public or in open court, whether through the testimony of a corporate representative of the nonparties, through the report or testimony of an expert retained by the parties to this matter, or otherwise. Specifically, each of the nonparties (including counsel and representatives for each) shall not be permitted access to any Nonparty Confidential Information except its own.
V. Non-Disclosure Agreements
10. Each person (other than the individuals described in Paragraph 7) to whom Nonparty Confidential Information is made available must, prior to such disclosure, sign an agreement in the form attached hereto as Exhibit A.
VI. Disclosures in Court Filings and Hearings
11. Pleadings or other filings with the Court that contain Nonparty Confidential Information as defined in Paragraph 5 shall be filed under seal or with redaction of Nonparty Confidential Information.
VII. Other Disclosures
12. In the event that any Nonparty Confidential Information is disclosed through inadvertence or otherwise to any person or party not authorized under this Order, the party who disclosed such Nonparty Confidential Information through inadvertence or otherwise shall use their best efforts to bind such person to the terms of this Order. Moreover, the disclosing party shall (a) promptly inform such person of all the provisions of this Order; (b) identify such person immediately to the party or nonparty that designated the document as Confidential; and (c) request such person to sign the agreement in the form attached hereto as Exhibit A. The executed agreement shall promptly be served upon the disclosing party. Upon discovery that information has been incorrectly designated, the party who disclosed such Nonparty Confidential Information may provide notice in writing to the receiving party that the information was inappropriately designated, and within thirty (30) days, the recipients of the notice shall re-designate the information. Until the information is re-designated, all parties and nonparties involved in this matter shall treat the information as Nonparty Confidential Information.
13. In the event any person or party having possession, custody or control of any Nonparty Confidential Information receives a subpoena or other process or order to produce such information, such person or party shall promptly notify the nonparty in writing of the material sought by such subpoena or other process or order and shall reasonably cooperate with respect to any procedure sought to be pursued by the nonparty. The nonparty shall have the burden of defending against such subpoena, process or order. Subject to the foregoing, the person or party receiving the subpoena or other process or order shall be entitled to comply with it except to the extent the nonparty is successful in obtaining an order modifying or quashing it.
14. This Order does not prohibit or otherwise restrict a party from disclosing information protected by this Order that is relevant to any criminal action to any Federal or State agency with authority to enforce laws regulating any activity relating to the requested information. Any such Federal or State agency shall keep the information confidential to the extent provided by law and shall not be subject to this Order.
VIII. Modifications of Designations
15. The parties to the above-captioned matter can request in writing that the nonparties modify, limit or remove their designation of Nonparty Confidential Information. If a nonparty refuses to agree, then the receiving party may file a motion with the Court for an order changing or removing the designation. The moving party shall have the burden of showing good cause for such change. Good cause shall include, but is not limited to, a showing that the document is publicly available. If such motion is made, the parties shall treat the document as designated until the application is decided by the Court or by any appellate court, should appellate review be sought.
IX. Return of Confidential Information
16. Within 90 days after the conclusion of these proceedings and the exhaustion of all appeals and other remedies, copies of all documents containing Nonparty Confidential Information shall be (a) returned to counsel for the nonparty, or (b) destroyed. Notwithstanding the foregoing, the parties' counsel may retain copies of all work product, court filings, transcripts, exhibits, and other documents required to be maintained by written Internal Revenue Service record retention policy as necessary for an understanding of the outcome of the case, provided that all Nonparty Confidential Information is maintained in accordance with this Order, including Paragraph 2 limiting use of the Nonparty Confidential Information to the above-captioned litigation only.
It is further
ORDERED that, in addition to regular service on the parties, the Clerk of the Court shall serve a copy of this Order the following nonparties:
(a) Thiele Kaolin Co. at the address listed on page 15 of Doc. 74
(b) KaMin, LLC at the address listed on page 4 of Doc. 77.
(c) Imerys USA Inc. and Imerys Minerals USA, Inc. at the address(es) listed on page 16 of Doc. 83.
(d) Arcilla Mining and Land Co., LLC at the address listed on page 21 of Doc. 92.
EXHIBIT A
ACKNOWLEDGMENT AND AGREEMENT TO BE BOUND
J L Minerals, LLC, Beasley Timber Management, LLC, Tax Matters Partner, Petitioner v. Commissioner of Internal Revenue, Respondent.
Docket No. 17076-21
I, [print or type full name], of [print or type full address], declare under penalty of perjury that I have read, and I understand and agree to comply with and be bound by the Protective Order entered by the United States Tax Court in the above captioned case entered on February 27, 2023. I understand and acknowledge that failure to so comply could expose me to sanctions and punishment in the nature of contempt, and I further agree to submit to the jurisdiction of the United States Tax Court for the purpose of enforcing the terms of the Order, even if such enforcement proceedings occur after termination of this action.