Frey v. Board of Supervisors of Louisiana State University and A&M College et al

Filing 48

RULING denying 22 Motion to Compel Production of Income Tax Returns for Years 2015 and 2016. Movant's request for fees and costs is DENIED AS MOOT. Signed by Magistrate Judge Erin Wilder-Doomes on 11/14/2017. (NLT)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
DANIEL J. FREY

CIVIL ACTION

VERSUS

16-489-JJB-EWD

BOARD OF SUPERVISORS
OF LOUISIANA STATE
UNIVERSITY AND A & M
COLLEGE

RULING ON MOTION TO COMPEL
Before the court is a Motion to Compel Production of Income Tax Returns for Years 2015
and 2016 (the “Motion to Compel”) filed by Board of Supervisors of Louisiana State University
and A&M College and Louisiana State University Health Sciences Center – New Orleans
(“LSU”).1 Plaintiff, Daniel J. Frey (“Plaintiff”), has filed an opposition2 and LSU has filed a
Reply.3 On November 11, 2017, a telephone conference with the parties was held and counsel
were given the opportunity to discuss the Motion to Compel. Following that conference, the court
instructed that it would issue a written ruling on the Motion to Compel. For the reasons set forth
herein, the Motion to Compel is DENIED.4

1

R. Doc. 22.

2

R. Doc. 25.

3

R. Doc. 28.

A motion to compel is a nondispositive, pretrial discovery motion.” State Farm Mut. Auto. Ins. Co. v. Friedman, 98cv-2918, 2002 WL 649417, at *1 (N.D. Tex. Jan. 14, 2002) (citing Castillo v. Frank, 70 F.3d 382, 385 (5th Cir. 1995)).
See, Turner v. Hayden, Civil Action No. 15-2282, 2016 WL 6993864, at *1 (W.D. La. Nov. 29, 2016) (“The decision
by Magistrate Hornsby to deny Turner’s Motion to Compel Discovery is a non-dispositive matter.”).
4

1

I.

Background
Plaintiff alleges that his employment was unlawfully terminated by LSU on February 15,

2016.5 Prior to his termination, Plaintiff alleges that he was employed by Louisiana State
University Health Sciences Center (“LSUHSC”) in the Department of Surgery and that for much
of his employment with LSUHSC, he worked at the University Medical Center (“UMC”)Lafayette/University Hospital and Clinic (“UHC”)-Lafayette.6
Per his Petition,7 Plaintiff asserts that in April 2015 he was told that UHC-Lafayette “had
received complaints regarding his communication skills from some members of the UHCLafayette medical staff” and that, in response, Plaintiff “informed UHC-Lafayette that he had not
been satisfied with the work environment at the hospital for some time and intended to resign from
the hospital staff at UHC-Lafayette.”8 Plaintiff alleges that on May 1, 2015, he “submitted a letter
to LSUHSC’s Associate Dean for Lafayette Affairs resigning from the hospital staff at UHCLafayette”9 and that he was subsequently informed that his resignation from the hospital at UHCLafayette would be treated as a resignation from the faculty of LSU’s School of Medicine as well.10
Plaintiff contends that he did not intend to resign from his faculty position and, “in an attempt to
clear up the confusion and retain his position on the faculty of the School of Medicine,” he
rescinded his May 1, 2015 letter of resignation.11 Plaintiff contends that he was placed on

5

R. Doc. 1-1, ¶ 3.

6

R. Doc. 1-1, ¶¶ 3-4.

7

Plaintiff originally filed suit in state court. R. Doc. 1-1. On July 21, 2016, LSU removed the suit to this court
pursuant to 28 U.S.C. § 1331.
8

R. Doc. 1-1, ¶ 8.

9

R. Doc. 1-1, ¶ 8.

10

R. Doc. 1-1, ¶ 9.

11

R. Doc. 1-1, ¶ 10.

2

administrative leave until the details of his reassignment could be worked out12 and, “[i]n order to
serve his patients and earn an income to provide for himself and his family, Plaintiff immediately
established a private medical corporation, obtained his own malpractice insurance, and began
practicing independently of LSUHSC in Lafayette.”13 Plaintiff further alleges that by the terms of
an October 2015 letter of reassignment, Plaintiff’s salary was significantly reduced, he was
required to discontinue his clinical practice at Our Lady of Lourdes Medical Center and his private
medical practice in Lafayette, and was required to turn over all monies from his outside
employment with the Louisiana Organ Procurement Agency (“LOPA”).14
Plaintiff alleges that the terms of the October 2015 reassignment letter were not the terms
he had negotiated and “[b]ecause Plaintiff could not accept these unfair and unjust terms…he
declined the reassignment” and was subsequently terminated “for cause” based on his refusal to
accept the terms of the reassignment.15 Per his Petition, Plaintiff seeks, inter alia, an “award of
actual damages to compensate Plaintiff for all losses he has sustained as a result of the unlawful
actions of Defendants.”16 In response to interrogatories, Plaintiff asserted that he is claiming the
following losses and expenses: (a) 2015: $90,000 in lost income; $8,600 in self-employment;
$5,000 in loss of retirement; and $15,000 in health insurance premiums; (b) 2016: $155,000 in lost
income; $25,000 in self-employment; $7,000 in loss of retirement; and $18,000 in health insurance
premium; and (c) one time losses of 3988 hours of sick leave and 2962 hours of annual leave.17
12

R. Doc. 1-1, ¶ 12.

13

R. Doc. 1-1, ¶ 14.

14

R. Doc. 1-1, ¶¶ 22-23.

15

R. Doc. 1-1, ¶¶ 24 & 26.

16

R. Doc. 1-1, ¶ 37(b)

R. Doc. 22-3, Plaintiff’s response to Interrogatory No. 4. Based on the arguments presented by the parties on the
Motion to Compel it appears that “self-employment” refers to additional self-employment taxes incurred by Dr. Frey.
See, R. Doc. 28, p. 1 (“While the information provided reflects money paid for the services that Dr. Frey rendered, he
did not produce information supporting alleged additional expenses which he deducts from this income. For example,
Plaintiff claims that he has been damaged by the need to now pay $25,000 in self-employment taxes.”).
17

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II.

Law and Analysis
LSU seeks to compel production of Plaintiff’s 2015 and 2016 income tax returns, and also

seeks an award of costs and expenses incurred related to the Motion to Compel. In opposition to
the Motion, Plaintiff does not dispute that the tax returns contain relevant information; instead,
Plaintiff contends that he has produced more than sufficient information to allow LSU to determine
Plaintiff’s financial losses and/or Defendant’s alleged set-off without additional production of the
tax returns.18
The Fifth Circuit has explained that “[i]ncome tax returns are highly sensitive documents;
courts are reluctant to order their routine disclosure as a part of discovery.” Natural Gas Pipeline
Co. of America v. Energy Gathering, Inc., 2 F.3d 1397, 1411 (5th Cir. 1993) (citing SEC v.
Cymaticolor, 84 Civ. 4508, 106 FRD 545, 547 (S.D.N.Y. July 8, 1985) (disclosure of tax returns
for purposes of discovery ordinarily demands that the requesting party demonstrate relevancy and
compelling need)). There appears to be some disagreement within the jurisprudence regarding
whether the party moving to compel production of tax returns has the burden to show both
relevancy and a compelling need, or whether, once the movant shows relevancy, the burden shifts
to the party resisting discovery to establish that the information sought is otherwise readily
obtainable. Compare Southern Filter Media, LLC v. Halter, Civil Action No. 13-116, 2014 WL
3824023, at * 3 (M.D. La. Aug. 4, 2014) (citing Butler v. Exxon Mobil Refining and Supply Co.,
Civil Action No. 07-386, 2008 WL 4059867, at * 2 (M.D. La. Aug. 28, 2008) (Because tax returns

R. Doc. 25, p. 7 (“Plaintiff acknowledges the relevance of the information and documents that pertain to his claim
for lost income from his medical practice as a result of the unlawful termination of his employment by Defendant.
However, Defendant has been provided ample information and documents from which it can determine Plaintiff’s
income for 2015 and 2016 and the amount of any setoff it will presumably assert.”). Defendant asserted in its original
answer and affirmative defenses that “to the extent plaintiff was paid by LSU during a time period in which he
performed no work, LSU is entitled to reimbursement and/or credit for such payment.” R. Doc. 8, p. 2. See also,
Joint Status Report, R. Doc. 9, p. 2 (same).
18

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are highly sensitive, this court “will only compel production where the requesting party
‘demonstrates both: (1) that the tax information is ‘relevant’ to the subject matter of the action;
and that there is a ‘compelling need’ for the information because the information contained in the
tax returns is not ‘otherwise readily obtainable’ through alternative forms of discovery, such as
depositions or sworn interrogatory answers.’”) and Landry v. Haye, 12-cv-2766, 2013 WL
6157920, at * 3 (W.D. La. Nov. 21, 2013) (granting motion to compel production of tax returns
based on defendants’ need for the documents to explore plaintiff’s claim of economic loss and
defendants’ uncontroverted assertion that the information containing in the tax returns was not
obtainable through alternate forms) with FDIC v. LeGrand, 43 F.3d 163, 172 (5th Cir. 1995)
(explaining in the context of post-judgment discovery of income tax returns that “[s]ome courts
have applied a two-part test in determining whether returns should be produced. The party seeking
production of the documents must show their relevance to the inquiry. Then, the burden shifts to
the party opposing production to show that other sources exist from which the information
contained in the income tax returns may be readily obtained.”) (internal citation omitted).
Citing LeGrand, LSU argues that “once tax returns are established by the mover as
relevant, the burden then shifts to the objecting party…to show that the information on the tax
returns is readily obtainable by other sources.”19 See also, Rafeedie v. LLC, Inc., 10-CA-743, 2011
WL 5352826, at * 2 (W.D. Tex. Nov. 7, 2011) (“The Fifth Circuit has suggested that the party
seeking to discover tax returns must show the relevance of the tax returns, and then the burden
shifts to the party opposing production to show other sources exist from which the information
contained in the returns may be readily obtained.”). Regardless of which approach is adopted,

19

R. Doc. 22-9, p. 3.

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sufficient information has been provided to establish that the information sought via Plaintiff’s tax
returns has been provided to LSU through other sources.
LSU argues that Plaintiff “has only produced vague responses and incomplete document
production.”20 LSU further argues that “Dr. Frey has produced little information regarding his
compensation from 2015 to present date, consisting of some 1099 forms, but no payroll check
stubs, W-2 or Schedule K-1 forms.”21 With respect to 2016, LSU complains that “neither the
affidavit nor Schedule C reflect all possible sources of income claimed by Dr. Frey on his tax
returns.”22
Plaintiff has stated in response to interrogatories that for the time period of May 1, 2015
through the present date, he was employed only by his own company, Frey Surgical, LLC (“Frey
Surgical”).23 Plaintiff has produced Schedule C “Profit and Loss From Business” forms for Frey
Surgical for both 201524 and 2016 years.25 It appears that LSU issued follow up questions
regarding the 2016 Schedule C to obtain additional information regarding certain expenses claimed
on that form.26 Plaintiff also submitted an affidavit from a CPA, Elizabeth Moreau, who prepared
the 2016 federal income tax return for Frey Surgical.27 Per Ms. Moreau’s affidavit, the 2016
Schedule C “accurately reflects the 2016 income of Frey Surgical” based on the records provided
by Frey Surgical for the purpose of preparing the 2016 return, and the records provided to Ms.

20

R. Doc. 22-9, p. 7.

21

R. Doc. 22-9, p. 7.

22

R. Doc. 22-9, p. 7.

23

R. Doc. 22-2, Plaintiff’s response to Interrogatory No. 6.

24

R. Doc. 25-2.

25

R. Doc. 22-5.

See, R. Doc. 22-5, Plaintiff’s responses to Interrogatories 11-16. LSU additionally complains that “Dr. Frey’s
responses to other interrogatories regarding expenses and income have been limited to single sentence responses.” R.
Doc. 22-9, p. 7. Presumably, Defendant is referring to Plaintiff’s responses to Interrogatories 11-16. Plaintiff’s
responses to those interrogatories, while short, were sufficient.
26

27

R. Doc. 22-5.

6

Moreau “reflected that the income earned by Frey Surgical, LLC was earned by Daniel J. Frey,
M.D. only.”28 In addition to these documents, Plaintiff produced multiple Form 1099s reflecting
miscellaneous income for 201529 and 2016.30 Plaintiff has also produced his W-2 Wage and Tax
Statements from LSUHSC and notes that “for much of 2015, Plaintiff was still employed by LSU
and LSU would, therefore, have any and all records reflecting what Plaintiff earned through LSU
for that year.”31 With respect to Defendant’s complaint regarding additional information from
2016, Plaintiff explains that because he was self-employed with Frey Surgical, no payroll stubs,
W-2s, or Schedule K-1 forms were issued.32 Regarding Plaintiff’s additional sources of income,
Plaintiff explains that he has a few rental homes and some investments, which he contends are not
relevant to his claimed damages and finally points out that he and his spouse file jointly and there
is no basis for Defendant to obtain information regarding what his wife earns.33
In reply, LSU does not respond to any of the specific assertions set forth in Plaintiff’s
opposition. LSU provides no explanation regarding why income derived from Plaintiff’s rental

R. Doc. 22-5, ¶¶ 4-5. Plaintiff asserts that he submitted this affidavit to Defendant based on “an agreement pursuant
to which Defendant agreed that in lieu of Plaintiff’s producing his 2016 tax return, it would accept an affidavit from
Plaintiff’s CPA. R. Doc. 25, p. 4. In a June 12, 2017 letter, counsel for Defendant stated that “[b]ecause we are
seeking evidence of all of Dr. Frey’s earnings as a result of work that he provides, regardless of the type, we will
accept an affidavit from the CPA stating: 1. his qualifications to make this affidavit; 2. the 2016 Schedule C of Frey
Surgical LLC...represents all compensation paid in the calendar year 2016 on account of the work or services
performed by Dr. Daniel J. Frey; and 3. all compensation paid to Frey Surgical LLC was paid on account of work
performed by Daniel J. Frey and no other person.” R. Doc. 25-4.
28

29

R. Doc. 25-1 (2015 Form 1099 from LOPA).

30

R. Doc. 22-8 (2016 Form 1099s from, inter alia, various law firms and insurers).

31

R. Doc. 25, p. 5.

R. Doc. 25, p. 6 (“Plaintiff has not produced any payroll stubs because Plaintiff is self-employed through Frey
Surgical, LLC….For the same reason, Plaintiff received no W-2s and, therefore, has none to produce to LSU for
2016….Finally, Plaintiff has not provided any Schedule K-1 forms because…such forms are reserved for income
earned by the taxpayer from partnerships. Plaintiff does not – and did not at any time in the past – practice medicine
as a partner in or an employee of any partnership.”).
32

R. Doc. 25, p. 7 (“LSU is only entitled to information and documents regarding the income Plaintiff has earned
through his medical practice since his unlawful termination, nothing more.”); (“LSU has cited no authority that would
even arguably allow it to obtain information regarding what Plaintiff’s wife earns, what their total combined income
is, and, as noted above, the amount of any additional income they may earn from sources unrelated to his medical
practice.”).
33

7

homes or investments would be relevant, or why it is entitled to information regarding Plaintiff’s
wife’s income. Instead, Defendant explains that “[w]hile the information provided reflects money
paid for the services that Dr. Frey rendered, he did not produce information supporting alleged
additional expenses which he deducts from this income.”34 Specifically, LSU contends that while
Plaintiff has itemized his damages to include $25,000 in self-employment taxes, “[t]he only place
to obtain information on whether Dr. Frey paid more self-employment taxes as a result of his
termination is from a tax return as his own forensic accounting expert, John Levendis, testified to
at his deposition….”35 LSU contends that “[w]hile Plaintiff asserts that he has provided evidence
of income from other sources, he has not – and cannot – provide evidence of lost taxes without tax
returns.”36
First, LSU has not explained why an order should be issued compelling production of
Plaintiff’s tax returns in light of the fact it appears that the parties reached an agreement that
Plaintiff’s accountant would provide an affidavit in lieu of producing the tax returns.
Further, in support of its position that Plaintiff’s tax returns are the only source of the
information regarding Plaintiff’s self-employment taxes, LSU relies on the deposition testimony
of Plaintiff’s economic expert, Dr. John Levendis.37 During his August 23, 2017 deposition, Dr.
Levendis was asked where he would “typically expect to find” information regarding the extra
taxes Plaintiff purportedly had to pay following his termination.38 In response to that question,
Dr. Levendis stated that “[e]xtra taxes I could get from his income tax returns or his filings.”39

34

R. Doc. 28, p. 1.

35

R. Doc. 28, pp. 1-2.

36

R. Doc. 28, p. 2.

37

R. Doc. 28-1.

38

R. Doc. 28-1, pp. 98:20-99:3.

39

R. Doc. 28-1, p. 99:2-3.

8

Thus, contrary to Defendant’s suggestion, Dr. Levendis’ testimony does not appear to support the
position that Plaintiff’s tax returns are the only source of the information sought. Moreover, if this
is truly the only information Defendant purports to need, such information could have been
provided by some other method (for example, in the sworn affidavit from Plaintiff’s accountant).40
See, Southern Filter Media, 2014 WL 3824023, at * 4 (“SFM has not demonstrated that it cannot
readily obtain the information sought—Halter’s relationship to the SBE Defendants—through
other methods of discovery, such as interrogatories and deposition questions.”); Gondola v. USMD
PPM, LLC, 15-cv-411, 223 F.Supp.3d 575, 589 (N.D. Tex. May 27, 2009) (sustaining plaintiffs’
objection to producing tax returns in part and requiring plaintiffs to either sign an IRS authorization
form or provide copies of “any 1099s for income after their termination by Defendant and a copy
of any documents reflecting any rental income, income from any self-employment, or distributions
from any 401(k) or other retirement or investment account after their termination by Defendant”
in response to defendant’s position that income from any source related to plaintiffs’ claim for
back and front pay and plaintiffs’ duty to mitigate their damages and noting that as a general
matter, information regarding plaintiffs’ additional employment or non-wage income could be
gleaned from other sources such as 1099s) (citing Jackson v. Unisys, Inc., No. 08-3298, 2010 WL
10018, at *2-3 (E.D. Pa. Jan. 4, 2010) (“As W–2s do not contain ‘substantial irrelevant’
confidential information such as investment income, spousal income, etc., they are a preferable

40

The only item of information LSU definitively points to in its briefing as not having received is information
regarding Plaintiff’s claim to have incurred additional self-employment taxes. The focus of LSU’s contemporaneous
correspondence regarding Plaintiff’s financial information appears to have been related to insuring that all income Dr.
Frey received from work was accounted for. R. Doc. 25-4 (“Because we are seeking evidence of all of Dr. Frey’s
earnings as a result of work that he provides, regardless of the type, we will accept an affidavit from the CPA ….”).
The undersigned notes that Plaintiff’s discovery responses wherein the self-employment taxes are claimed as an item
of damages are dated March 3, 2017. R. Doc. 22-3, p. 11. The correspondence from LSU’s counsel referencing an
agreement to have Plaintiff’s CPA provide certain information is dated June 12, 2017. R. Doc. 25-4. Thus, LSU was
aware of Plaintiff’s claims regarding additional self-employment taxes well before the affidavit was provided. If that
issue was of the critical importance that LSU now claims it to be, it seems that it would (or could) have been included
in the information sought via affidavit.

9

form of discovery.’ In the interest of balancing Plaintiff’s privacy interests against the Federal
Rules’ call for broad discovery, the Court finds that Plaintiff’s W–2s will suffice for the
information sought ... in the income tax returns.”)).
In any event, and more generally speaking, Plaintiff has provided a large amount of
financial/income related information via responses to LSU’s discovery requests including, inter
alia, a sworn affidavit from Plaintiff’s CPA in accordance with an agreement between the parties.
While the parties agree that information contained on Plaintiff’s tax returns is relevant, Plaintiff
has provided extensive financial information to LSU already. Without some sort of specific
showing that something more is needed, and in light of the information provided already, the
undersigned is unable to find that there is a compelling need for production of Plaintiff’s 2015 and
2016 tax returns. See, Southern Filter, 2014 WL 3824023, at 3.
III.

Conclusion
For the reasons set forth herein, the Motion to Compel Production of Income Tax Returns

for Years 2015 and 2016 filed by Board of Supervisors of Louisiana State University and A&M
College and Louisiana State University Health Sciences Center – New Orleans41 is DENIED.
Movant’s request for fees and costs is DENIED AS MOOT. See, Fed. R. Civ. P. 37(a)(5)(A).
Signed in Baton Rouge, Louisiana, on November 14, 2017.

S
ERIN WILDER-DOOMES
UNITED STATES MAGISTRATE JUDGE

41

R. Doc. 22.

10