Opinion
13492-20
07-17-2024
RICHARD B. STILLAHN & LISA R. LANG STILLAHN, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
L. Paige Marvel Judge
On June 13, 2024, nonparties Steven Vaught (Mr. Vaught), Alpha Holding Company, LLC (Alpha Holding), and Alpha Lending Company, LLC (Alpha Lending) filed a Motion to Quash Third-Party Subpoena Or, in the Alternative, for a Protective Order (motion to quash). The motion to quash concerns a subpoena issued by respondent on May 13, 2024, to "Steven Vaught, President of Alpha Holding, LLC and Alpha Lending,LLC [sic]." On June 17, 2024, we ordered respondent to file a response to the motion to quash on or before July 9, 2024. On July 9, 2024, respondent filed a Response to Motion to Quash Third-Party Subpoena Or, in the Alternative, for a Protective Order. We will quash the subpoena at issue.
Mr. Vaught, Alpha Holding, and Alpha Lending have advanced several arguments, but we need only address one of them here. Rule 74(f) provides that Rule 81(e) is applicable to depositions for discovery purposes. Rule 81(e)(3) provides that "[n]o deposition may be taken before a person who is a relative or employee or counsel of any party, or is a relative or employee or associate of such counsel, or is financially interested in the action," except "with the consent of all the parties or their counsel." Rule 81(e)(3) is similar to Federal Rules of Civil Procedure 28(c), 29(a), and 30(b)(5)(A). "[T]he policy informing" Federal Rule of Civil Procedure 28(c) is "to assure impartiality in the creation of the record of the deposition." Sheppard v. Beerman, 822 F.Supp. 931, 941 (E.D.N.Y. 1993). It is appropriate to quash a subpoena that purports to subject a deponent to a deposition taken by an interested person absent the parties' consent. See Hudson v. Spencer, Civil Action No. 11-12173-NMG, 2014 WL 11015484, at *8-9 (D. Mass. Nov. 4, 2014) (quashing notices of deposition designating a party's employee as the officer before whom a deposition was to be taken, stating that "it is incumbent upon . . . the party noticing the deposition[] to procure another officer to administer the oath and record the deposition," and stating that opposing counsel was not required to "stipulate to using an . . . employee to conduct the deposition").
Unless otherwise provided, Rule references are to the Tax Court Rules of Practice and Procedure.
The subpoena issued by respondent identifies respondent's counsel as the "officer or recording company" by whom "[t]he deposition will be recorded." This runs afoul of Rule 81(e)(3) and is not a mere oversight: The notice of deposition states expressly that "[t]he officer(s) before whom the deposition will be taken" are "Kris H. An, Senior Counsel, Justine Coleman, attorney, and/or Vincent Gonzalez, attorney of the IRS office of Chief Counsel." In addition, the parties' Stipulation to Take Deposition of Stanley Crow and Steven Vaught does not evidence petitioners' consent for the deposition to be recorded by respondent's counsel. To the contrary, petitioners agreed that a named court reporting company would transcribe the deposition, not respondent's counsel.
Although respondent's argument is not entirely clear, respondent appears to argue that the defect may be cured by informal communications between respondent and Mr. Vaught about the officer before whom the deposition will be taken. This argument is without merit because the subpoena purports to subject Mr. Vaught to our contempt power, see Rule 147(f), if he fails to appear for a deposition to be transcribed by respondent's counsel, regardless of whether (1) respondent and Mr. Vaught communicate at all beforehand, (2) Mr. Vaught has enough time to object if and when respondent provides him with the pertinent information (or it becomes apparent that respondent's counsel intends to transcribe the deposition), or (3) petitioners and their counsel consent to the arrangement. Respondent's argument also implies that the face of the subpoena is inaccurate. This state of affairs constitutes an undue burden on Mr. Vaught. Cf. Rule 147(d)(3)(A)(iii). We will therefore quash the subpoena. Nonetheless, we emphasize that we expect the parties and their counsel to cooperate in making nonparty witnesses available in this case. In addition, this Order does not prohibit respondent from serving a new subpoena on Mr. Vaught, Alpha Holding, or Alpha Lending that properly identifies the officer or reporting company before whom the deposition is to be taken and otherwise meets the requirements of a valid subpoena. Therefore, it is
ORDERED that Steven Vaught, Alpha Holding Company, LLC, and Alpha Lending Company, LLC's Motion to Quash Third-Party Subpoena Or, in the Alternative, for a Protective Order, filed June 13, 2024, is granted. It is further
ORDERED that the subpoena issued by respondent to "Steven Vaught, President of Alpha Holding, LLC and Alpha Lending,LLC [sic]," on May 13, 2024, is quashed. It is further
ORDERED that in addition to regular service, the Clerk of the Court is directed to serve a copy of this Order on Tim A. Tarter, counsel for Steven Vaught, Alpha Holding Company, LLC, and Alpha Lending Company, LLC, at Woolston & Tarter, P.C., Suite B-218, 2525 E. Arizona Biltmore Circle, Phoenix, Arizona 85016.