Marsteller v. Butterfield 8 Stamford LLC et al

Filing 100

ORDER granting in part and denying in part 94 Motion to Compel. See attached order for details. Signed by Judge Sarah A. L. Merriam on 11/28/2017. (Gust, L.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
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:
LAUREN E. MARSTELLER
:
:
v.
:
:
BUTTERFIELD 8 STAMFORD LLC,
:
et al.
:
:
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Civil No. 3:14CV01371(AWT)

November 28, 2017

ORDER ON MOTION TO COMPEL [Doc. #94]
Plaintiff Lauren E. Marsteller (“plaintiff”) has filed a
motion seeking to compel defendants Butterfield 8 Stamford LLC,
Public House Investments LLC, Lolas Stamford LLC, and John
Gazzola (“defendants”)1 to provide tax returns or other financial
and corporate documents responsive to her Document Requests Nos.
8, 9, 10, 11, and 17. See Doc. #94-1 at 1. Defendants have filed
a memorandum in opposition to plaintiff’s motion. [Doc. #96].
For the reasons set forth below, the Court GRANTS, in part, and
DENIES, in part, plaintiff’s Motion to Compel.
I.

BACKGROUND
Plaintiff brings this action asserting claims of sexual

harassment and retaliation under Title VII and Connecticut law;

1

The motion does not indicate that it is being brought against
defendants Douglas Newhook or Ryan Slavin. See Doc. #94 at 1.

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violation of the Fair Labor Standards Act and Connecticut Wage
and Hour Act; intentional infliction of emotional distress; and
common law privacy claims. See generally Doc. #7. Plaintiff
alleges that “the Defendants shared a common management and were
centrally controlled and/or owned by Defendants.” Id. at 2.
Plaintiff further alleges that defendants “are part of a single
integrated enterprise that jointly employed Plaintiff and
similarly situated employees at all times relevant to this
action.” Id.
On October 10, 2017, Judge Alvin W. Thompson referred this
matter to the undersigned to address discovery issues. See Doc.
#78. On October 20, 2017, the Court held a telephonic status
conference. See Doc. #89. Following that conference, the Court
set a deadline of November 14, 2017, for the filing of any
motions to compel. See Doc. #91. Plaintiff timely filed a motion
to compel, and defendants filed an objection. See Docs.
#94, #96.
II.

DISCUSSION

A.

Legal Standard
Rule 26(b)(1) of the Federal Rules of Civil Procedure sets

forth the scope and limitations of permissible discovery:
Parties may obtain discovery regarding any nonprivileged
matter that is relevant to any party’s claim or defense
and proportional to the needs of the case, considering
the importance of the issues at stake in the action, the
amount in controversy, the parties’ relative access to
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relevant information, the parties’ resources, the
importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit. Information within this
scope of discovery need not be admissible in evidence to
be discoverable.
Fed. R. Civ. P. 26(b)(1). The advisory committee’s notes to the
recent amendment of Rule 26 further explain that
[a] party claiming that a request is important to resolve
the issues should be able to explain the ways in which
the underlying information bears on the issues as that
party understands them. The court’s responsibility,
using all the information provided by the parties, is to
consider these and all the other factors in reaching a
case-specific determination of the appropriate scope of
discovery.
Fed. R. Civ. P. 26 advisory committee’s note to 2015 amendment.
Nevertheless, “[t]he party resisting discovery bears the burden
of showing why discovery should be denied.” Cole v. Towers
Perrin Forster & Crosby, 256 F.R.D. 79, 80 (D. Conn. 2009).
B.

Motion to Compel Tax Returns
Plaintiff seeks to compel defendants to provide “tax

returns or other financial and corporate documents in order to
demonstrate the complete ownership and control of those
corporate entities and the businesses they operate[.]” Doc. #94
at 2. Plaintiff’s request for production sought, as relevant
here:
8. All documents evidencing the complete ownership,
control, membership or management of the Corporate
Defendants, including specifically Brother Jimmy’s
Stamford and Brother Jimmy’s WP.

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9. All documents evidencing any transfer or change in
ownership, control, membership, management, licensing,
property leasing (or lack thereof) from Butterfield 8
(sic) and Butterfield 8 WP to Brother Jimmy’s Stamford
and Brother Jimmy’s WP, respectively.
10. All documents sufficient to show all assets,
holdings, property and ownership, interests of the
Corporate Defendants including, but not limited to,
corporate
ownership,
partnership,
membership
or
investment interests, bank accounts, letters of credit,
leases,
licenses,
real
property
and
investments
(including any changes in the foregoing since the
inception of the claims asserted by Plaintiff against
Defendants with the Connecticut Commission of Human
Rights
and
Opportunities,
the
Equal
Employment
Opportunities Commission and this Action).
11. All documents sufficient to show all assets,
holdings, property and ownership interests of the
Individual Defendants including, but not limited to,
corporate
ownership,
partnership,
membership
or
investment interests, bank accounts, letters of credit,
leases,
licenses,
real
property
and
investments
(including any changes in the foregoing since the
inception of the claims asserted by Plaintiff against
Defendants with the Connecticut Commission of Human
Rights
and
Opportunities,
the
Equal
Employment
Opportunities Commission and this Action).
17. Documents evidencing any ownership interests in,
control management or operation of the Corporate
Defendants, including, but not limited to, all
principals, owners, members or shareholders of the
Corporate Defendants.
Doc. #94-2 at 4-7. Plaintiff argues that defendants’ tax returns
are relevant to her allegations that defendants are part of a
single integrated enterprise. See Doc. #94-1 at 2. She further
contends that the documents provided by defendants and the
testimony of defendant John Gazzola, and of terminated defendant
Ralph Battista, Jr., provide contradictory information about
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whether the corporate defendants are interconnected. See id. at
5. Defendants object, asserting that their tax returns are not
relevant, that they have already provided sufficient
documentation about the structure of the corporate defendants,
and that there were other avenues of discovery through which the
information plaintiff seeks could have been obtained.2 See
generally Doc. #96. Defendants also argue that any disclosure of
tax returns should be limited in time and scope, allow for
redaction of sensitive information, and be subject to an
appropriate protective order. See id. at 4.
Although income tax returns are not inherently
privileged, courts are typically reluctant to compel
their disclosure because of both the private nature of
the sensitive information contained therein and the
public interest in encouraging the filing by taxpayers
of complete and accurate returns. To compel the
disclosure of income tax returns, a two-part test must
be satisfied: (1) the returns must be relevant to the
subject matter of the action and (2) there must be a
compelling need for the returns because the information
is not otherwise readily available.
Uto v. Job Site Servs., Inc., 269 F.R.D. 209, 212 (E.D.N.Y.
2010) (internal citation and quotation marks omitted). When
other avenues of discovery fail to clarify ownership interests
in business entities, a court may order the disclosure of tax
returns. See, e.g., Dunkin’ Donuts Franchised Restaurants LLC v.

2

Discovery is now closed. Accordingly, plaintiff’s decision to
forgo deposition of defendant Public House Investments LLC or
seek other discovery may not now be revisited.
5

Grand Cent. Donuts, Inc., No. 1:07CV04027(ENV)(MDG), 2009 WL
973363, at *2 (E.D.N.Y. Apr. 9, 2009) (granting limited
production of tax returns where the individuals served with
subpoenas had “denied having any interest in any [of the
corporate defendants] and ... refused to provide any other
potentially relevant documentation”); Molfese v. Fairfaxx Corp.,
No. 3:05CV00317(JBA), 2006 WL 798928, at *3 (D. Conn. Mar. 29,
2006) (“Plaintiff is entitled to receive limited portions of [a
business entity’s] federal and state tax returns, W–2s and 1099s
from 2004–2005 reflecting the existence of such [entity].”).
The Court addresses relevance first. The gravamen of
plaintiff’s complaint against the corporate defendants in this
case is that they were operating an integrated enterprise, and
are therefore jointly liable for the actions of the individual
defendants. See generally Doc. #7. The specific figures in
defendants’ tax returns may not be relevant to the issue of
whether defendants operated an integrated enterprise; however,
tax returns showing whether or not defendants are financially
interconnected in some way are potentially relevant to
plaintiff’s claims against the corporate defendants.
Defendants argue that any disclosure of tax returns should
be limited in time, but they make no specific request for a
particular time limitation. See Doc. #96 at 4. Plaintiff does
not provide for any time limitation in her requests or in her
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motion, or give any indication as to which years’ tax returns
plaintiff believes are relevant. See generally Doc. #94-1.
Plaintiff only worked for defendants for a period of months in
2012. See Doc. #7 at 5, 9. She filed a complaint with the
Connecticut State Commission on Human Rights and Opportunities
and the Equal Employment Opportunity Commission in 2013, and
filed this lawsuit in 2014. See id. at 5. The Court finds, in
the absence of any guidance from the parties, that tax returns
for the time period plaintiff worked for the defendants up to
the time she filed this case are most likely to provide relevant
information about the structure of the corporate defendants.
Accordingly, redacted tax returns for the years 2012, 2013, and
2014, are discoverable.
The Court next considers whether this information was
otherwise available. Plaintiff has sought to clarify the
corporate structure and relationships among the defendants
through both depositions and requests for production. The
disclosures defendants have made and the depositions of
defendants have not provided a clear picture of defendants’
corporate structure. See Doc. #94-1 at 4-5. Defendants assert
that each corporate defendant is solely owned and operated, but
“[p]laintiff is not required to rely on defendant[s’]
representations” regarding these matters. Molfese, 2006 WL
798928, at *3.
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Plaintiff has satisfied the two-part test to compel
disclosure of defendants’ federal and state tax returns to the
extent they reveal relationships among the defendants. See Uto,
269 F.R.D. at 212.
Plaintiff further argues that financial information in the
tax returns is relevant to her request for punitive damages.
“[C]ourts in this circuit are split on the issue of allowing
pretrial disclosure of financial information relevant to a
determination of punitive damages.” Pasternak v. Dow Kim, 275
F.R.D. 461, 463 (S.D.N.Y. 2011) (internal citation and quotation
marks omitted). Compare Hazeldine v. Beverage Media, Ltd., No.
94CV03466(CSH), 1997 WL 362229, at *3 (S.D.N.Y. June 27, 1997)
(finding “that pre-trial financial discovery and a bifurcated
trial is the more efficient method of managing a trial involving
a punitive damages claim[]”), with Willey v. Kirkpatrick, No.
07CV06484(CJS), 2011 WL 4368692, at *5 n.2 (W.D.N.Y. Sept. 19,
2011) (“Should the question of punitive damages be presented to
the jury, plaintiff is free to renew his request for information
concerning defendants’ financial status.”).
This case is being scheduled for trial in 2018, and the
Joint Trial Memorandum is due to be filed by December 11, 2017.
See Doc. #98. The question of how to handle discovery directed
solely to punitive damages is better decided in conjunction with
the planning of the trial. Accordingly the parties should raise
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this issue in their Joint Trial Memorandum so that it may be
addressed by the trial judge. The Court denies plaintiff’s
motion, without prejudice, to the extent it requests specific
financial information in the defendants’ tax returns.
C.

Motion to Compel Custodial Affidavit
In a brief footnote, plaintiff requests that the Court

compel defendants to provide a “sworn statement by a custodian
of record attesting to the existence” of certain deleted e-mail
accounts and defendants’ failure to preserve them. Doc. #94-1 at
9-10 n.4. This request is not further addressed in plaintiff’s
motion or the body of her memorandum, and it is therefore
waived. Cf. City of Syracuse v. Onondaga Cty., 464 F.3d 297, 308
(2d Cir. 2006).
III. CONCLUSION
For the reasons set forth herein, plaintiff’s Motion to
Compel is GRANTED, in part, and DENIED, in part. Defendants
shall produce federal and state tax returns for the years 2012,
2013, and 2014, that contain any reference to relationships or
payments between or among any of the defendants in this matter,
including Douglas Newhook and Ryan Slavin. Defendants may redact
financial details and figures from the tax returns, as well as
sensitive information such as social security numbers, and tax
identification numbers. The parties shall confer and propose an
appropriate protective order. Defendants shall provide plaintiff
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with copies of the redacted tax returns on or before December
19, 2017.
This is not a Recommended Ruling. This is an order
regarding discovery which is reviewable pursuant to the “clearly
erroneous” statutory standard of review. 28 U.S.C.
§636(b)(1)(A); Fed. R. Civ. P. 72(a); and D. Conn. L. Civ. R.
72.2. As such, it is an order of the Court unless reversed or
modified by the district judge upon motion timely made.
SO ORDERED at New Haven, Connecticut, this 28th day of
November, 2017.

/s/
HON. SARAH A. L. MERRIAM
UNITED STATES MAGISTRATE JUDGE

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