Opinion
3823-19 4421-19
02-21-2023
ROYALTY MANAGEMENT INSURANCE COMPANY, LTD., ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Albert G. Lauber Judge
Trial of these consolidated cases commenced in Oklahoma City, Oklahoma, on February 14, 2023. Petitioner in No. 3823-19 is Royalty Management Insurance Co., Ltd. (RMI), a "micro-captive" insurance company, and petitioners in No. 4421-19 are John and Andrea Sheperd. These cases involve purported insurance premiums paid by Mr. Sheperd's business, Sheperd Royalty, LLC (Sheperd Royalty), to CCFC Insurance Company, Ltd. (CCFCIC), and then paid in large part to RMI, Mr. Sheperd's captive insurance company, as alleged reinsurance premiums.
On February 14, 2023, the parties filed, at docket entry # 231, a Fourth Supplemental Stipulation of Facts. Concurrently the parties filed, at docket entries ## 232 through 278, documents containing Exhibits intended as attachments to the Fourth Supplemental Stipulation of Facts. These documents consist of insurance contracts allegedly issued by CCFCIC to third-party customers not involved in this case. The documents include a substantial amount of unredacted personal identifying information and (possibly) confidential propriety information.
All references to docket entries in this Order are to docket entries in the lead case, Royalty Management Insurance Company, Ltd., v. Commissioner, No. 3823-19.
Rule 27(a), Tax Court Rules of Practice and Procedure, generally provides that parties should refrain from including (or should take appropriate steps to redact) certain confidential information, such as taxpayer identification numbers, social security numbers, and financial account numbers. Accordingly, the Court has temporarily sealed the parties' Fourth Supplemental Stipulation of Facts and attached Exhibits, filed at docket entries ## 231 through 278, to protect the confidential information appearing therein.
On February 14, 2023, petitioners filed a Motion for Protective Order Pursuant to Rule 103, requesting that the Court permanently seal these documents. Petitioners assert that confidential information appears in numerous places in these documents and that properly redacting the Exhibits "will potentially take months." They urge permanent sealing of the documents as a less troublesome alternative. We will deny the Motion.
As a general rule, the official records of this Court, including trial records, are to be open and available for public inspection. See § 7461(a); Willie Nelson Music Co. v. Commissioner, 85 T.C. 914, 917 (1985). This presumptive right to access may be rebutted only "by a showing that there are countervailing interests sufficient to outweigh the public interest in access." Willie Nelson Music, 85 T.C. at 919. Tax Court Rule 103 provides that the Court has the discretionary authority to order all or part of a record to be sealed where such action is necessary to protect trade secrets and confidential information or to avoid embarrassment, oppression, or undue burden or expense. See id. at 918-19. In exercising such discretion the Court "must weigh the interests of the public, which are presumptively paramount, against those advanced by the parties." Id. at 919.
Petitioners seek to justify a protective order on the theory that proper redaction of confidential information in each Exhibit to the proposed Fourth Supplemental Stipulation of Facts would be burdensome and time-consuming. But we have previously held that asserting annoyance or inconvenience, without more, "is generally insufficient to demonstrate good cause and overcome the strong common law presumption in favor of access to court records." Anonymous v. Commissioner, 127 T.C. 89, 92 (2006). Sealing a document may be justified if proper redaction would be so all-encompassing as to render the redacted document unintelligible. But petitioners have made no showing that this would be the result here. They have failed to demonstrate that properly redacting confidential information in accordance with our Rules, though perhaps time-consuming, would be so burdensome as justify permanent sealing of 45 docket entries from the public record.
The Court is hopeful that the parties will be able to submit a more condensed version of the Fourth Supplemental Stipulation of Facts, with fewer Exhibits attached, which would eliminate much of the necessary redaction. In the meantime, the temporary seal of docket entries ## 231 through 278 will remain in place until a properly redacted Fourth Supplemental Stipulation of Facts has been filed. Upon the Court's receipt of a revised Fourth Supplemental Stipulation of Facts, we will issue an Order striking docket entries ## 231 through 278 from the record.
Upon due consideration, it is
ORDERED that petitioners' Motion for Protective Order Pursuant to Rule 103, filed February 14, 2023, is denied.