United States of America v. Real Property and Improvements Located at 2366 San Pablo Avenue, Berkeley, California

Filing 75

DISCOVERY ORDER by Judge Maria-Elena James re December 13, 2013 Joint Letter 69 . (mejlc2, COURT STAFF) (Filed on 1/13/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA,

Case No. 13-cv-02027-JST (MEJ)

Plaintiff,
DISCOVERY ORDER

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v.

Re: Dkt. No. 69

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REAL PROPERTY AND
IMPROVEMENTS LOCATED AT 2366
SAN PABLO AVENUE, BERKELEY,
CALIFORNIA,

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Defendant.

United States District Court
Northern District of California

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On December 13, 2013, Plaintiff United States of America (the "Government") and

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Claimant Berkeley Patients Group ("BPG") filed a joint discovery letter regarding a dispute over a

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subpoena served by the Government on the California State Board of Equalization ("BOE")

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seeking production of "all records" pertaining to BPG. Jt. Ltr, Dkt. No. 69. In particular, the

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Government is seeking production of BPG's sales tax records, tax returns, sales tax permits,

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Officer in Compromise ("OIC") and other correspondence from the BOE relating to BPG. Id. at 4.

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On November 22, 2013, the BOE responded to the Government asserting objections to production

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of BPG's records relating to the OIC program, and indicating that, absent a motion for protective

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order by BPG or a motion to compel by the Government, it would produce "copies of the

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responsive and non-privileged documents from its files pursuant to Revenue and Taxation Code

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section 7056, subdivision (a)(3), and the Governor's Order, to the extent that such materials are not

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related to the OIC program (except for any otherwise public records maintained by the OIC

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program referred to above)." Id, Ex. D.

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As an initial matter, the Court notes that there is a disconnect between the Government and

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BPG as to the scope of documents that are at issue in their joint letter. The Government appears to

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take the position that the BOE has only objected to production of the OIC documents; BPG's

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argument, however, challenges BOE's production of any tax documents sought in the subpoena.

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Although the Court agrees with the Government's reading of the BOE's letter as indicating that it

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only objects to production of the OIC documents, BPG's challenge and requested relief relate to

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any and all documents sought by the subpoena. As that is the issue raised in the joint letter, that is

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the issue the Court addresses here.

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Generally, a party seeking production of tax returns must show: (1) they are relevant to the

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action; and (2) there is a compelling need for the documents because the information sought is not

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readily available from another source. Advante Int'l Corp. v. Mintel Learning Tech., 2006 WL

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3511956, at *1 (N.D. Cal. Dec. 6, 2006) (citing Aliotti v. Senora, 217 F.R.D. 496, 497-98 (N.D.
Cal. 2003). Considering the parties' arguments against this standard, the Court finds that even

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United States District Court
Northern District of California

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assuming the Government has made a sufficient showing that the documents are relevant, it has

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failed to demonstrate that there is a compelling need for production of the documents because the

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information sought is not readily available from another source. According to BPG, at the time of

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the joint letter, the Government had not propounded any other written discovery in the case. Jt.

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Ltr. at 6. Thus, it is seeking tax documents relating to BPG without first exhausting other

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available discovery mechanisms to obtain the information it seeks in the tax records. While this

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may be the most objectively efficient approach, the established public policy protecting tax

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records from unnecessary public disclosure requires the Government to utilize and exhaust other

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less intrusive discovery avenues before it is entitled to overcome the privilege and obtain the

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documents.

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Accordingly, the Court GRANTS BPG's request to quash the subpoena served on the BOE

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at this juncture. As indicated above, the Court makes no finding as to whether the materials

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sought in the subpoena are relevant and this ruling does not preclude the Government from re-

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serving the subpoena at a later time.

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IT IS SO ORDERED.
Dated: January 13, 2014
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MARIA-ELENA JAMES
United States Magistrate Judge
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