SKAT v. The Stor Capital Consulting LLC 401K Plan et al

Filing 314

MEMO ENDORSED ORDER in case 1:18-cv-04434-LAK; granting (1135) Motion in Limine in case 1:18-md-02865-LAK. ENDORSEMENT: The Court holds that even if the evidence were to have probative value, that value would be outweighed substantially by the Rule 403 considerations. Plaintiff's motion (Dkt 1135) is granted. SO ORDERED. (Signed by Judge Lewis A. Kaplan on 9/23/24) Filed In Associated Cases: 1:18-md-02865-LAK et al. (yv)

Case 1:18-md-02865-LAK

Document 1135

Filed 08/15/24

Page 1 of 2

MEMO ENDORSED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
In re
CUSTOMS AND TAX ADMINISTRATION
OF THE KINGDOM OF DENMARK
(SKATTEFORVALTNINGEN) TAX REFUND
SCHEME LITIGATION

9/23/24
MASTER DOCKET
18-md-2865 (LAK)

This document relates to case nos:
18-cv-07828; 19-cv-01785; 19-cv-01867; 19-cv01893; 19-cv-01781; 19-cv-01783; 19-cv-01866;
19-cv-01895; 19-cv-01794; 19-cv-01865; 19-cv01904; 19-cv-01798; 19-cv-01869; 19-cv-01922;
19-cv-01800; 19-cv-01788; 19-cv-01870; 18-cv07827; 19-cv-01791; 19-cv-01792; 19-cv-01928;
19-cv-01926; 19-cv-01868; 18-cv-07824; 19-cv01929; 19-cv-01803; 19-cv-01806; 19-cv-01906;
19-cv-01801; 19-cv-01894; 19-cv-01808; 19-cv01810; 19-cv-01809; 18-cv-04833; 19-cv-01911;
19-cv-01898; 19-cv-01812; 19-cv-01896; 19-cv01871; 19-cv-01813; 19-cv-01930; 18-cv-07829;
18-cv-04434; 19-cv-01815; 19-cv-01818; 19-cv01931; 19-cv-01918; 19-cv-01873; 19-cv-01924;
19-cv-10713; 21-cv-05339.

NOTICE OF PLAINTIFF SKATTEFORVALTNINGEN’S
MOTION IN LIMINE TO PRECLUDE THE IRS
EXAMINATION OF THE RJM CAPITAL PENSION PLAN
PLEASE TAKE NOTICE that, upon the accompanying Memorandum of Law, dated
August 15, 2024, and the Declaration of Marc A. Weinstein, dated August 15, 2024, with all
exhibits thereto, plaintiff Skatteforvaltningen, by its undersigned attorneys, will move the Court
before the Honorable Lewis A. Kaplan at the Daniel Patrick Moynihan United States
Courthouse, 500 Pearl Street, New York, New York, Courtroom 21B, at a date and time to be
determined by the Court, for an order pursuant to Rules 402 and 403 of the Federal Rules of

Memorandum Endorsement In re Customs and Tax Admin., Master Docket 18-md-2865 (LAK)
Plaintiff moves in limine to exclude evidence relating to an IRS audit of defendant
RJM Capital Pension Plan (“RJM”).1 The motion is granted because the evidence would be
irrelevant and, in the alternative, because its probative value, if any, would be substantially
outweighed by the danger of unfair prejudice, misleading the jury, and prolonging unnecessarily
Trial One.2
The evidence in question pertains to an IRS examination of RJM’s 2016 Form
5500-EZ, “the annual return that single participant plans are required to file in certain
circumstances.”3 Among the evidence plaintiff seeks to exclude is a letter dated February 3, 2020
in which the IRS informed RJM in just two substantive sentences that “[o]ur recent examination of
your return(s) for the above year(s) shows no change is necessary in the information reported. We
are pleased to inform you that we have accepted the return(s) as filed.”4 The letter identified 2016
as the year in question.5
Defendants argue that the evidence would be relevant because, by approving the
return, the IRS implicitly was “approving the description of the plan as a ‘qualified defined
contribution plan.’”6 Assuming arguendo that this interpretation of the letter is correct, the evidence
still would lack relevance because the return in question was for 2016. Both the audit and letter,
therefore, “post-date[] the time period relevant to SKAT’s allegations,” which arise from tax refund
claims filed by defendants during the period 2012–2015.7 Thus, the IRS’s purported determination
that RJM was qualified in 2016 would be irrelevant to whether it was qualified in prior years. For
the same reason, the Court rejects defendants’ argument that “[t]he IRS’s determination is directly
1

Dkt 1135.
2

Plaintiff does not contest the admissibility of the evidence on the ground that it is hearsay.
Cf. Federal Rule of Evidence 803(8).
3

Dkt 1136 (Pl. Mem.) at 2.
4

Dkt 1138-10 (IRS Letter).
5

Id.
6

Dkt 1169 (Def. Mem.) at 6.
7

Dkt 1136 (Pl. Mem.) at 4–5.
While defendants state that “the scope of the IRS’s inquiry was [not] limited to . . . a single
year,” Dkt 1169 (Def. Mem) at 2, they elide the fact that the IRS letter’s arguable
conclusion as to RJM’s qualification pertained only to 2016, Dkt 1138-10 (IRS Letter).

2
relevant . . . [to] the jury’s assessment of” whether defendants’ alleged misrepresentations of plan
qualification were made knowingly or recklessly.8 The IRS’s 2020 determination as to RJM’s
qualification in 2016 could not bear on defendants’ state of mind years before. Accordingly, the
evidence in question is excluded because it would be irrelevant.9
In the alternative, the Court excludes the evidence pursuant to Federal Rule of
Evidence 403. The Court of Appeals has cautioned that agency determinations “vary greatly in
quality and factual detail,” and that “[t]he party against whom such a determination is admitted must
attempt to expose the weaknesses of the report, an effort that may well confuse or mislead the jury
and result in an undue waste of time.”10 Thus, a district court weighing the admissibility of such a
report must “consider the quality of the report, its potential impact on the jury, and the likelihood
that the trial will deteriorate into a protracted and unproductive struggle over how the evidence
admitted at trial compared to the evidence considered by the agency.”11
The IRS letter at issue here is of poor quality. It contains just two substantive
sentences, its findings are conclusory, and it does not explain its rationale or the evidence on which
its conclusion rests. Where, as here, a “letter — though based on factual findings . . . — offers a
legal conclusion on [an] ultimate issue[] in the case” but “does not relate the factual findings in
detail . . . its sole value would be to suggest to the jury that it should reach the same conclusion as
[it] did.”12 Such a suggestion would risk unfair prejudice and misleading or confusing the jury.13
On the other hand, defendants would be prejudiced minimally, if at all, by the exclusion of the
evidence because they would have “a full opportunity to present to the jury all the evidence [they]

8

Dkt 1169 (Def. Mem.) at 7.
9

The Court finds less persuasive plaintiff’s argument that the IRS’s letter does not suggest
“that the IRS had . . . determined that the plan was operated in accordance with the [Internal
Revenue] Code.” Dkt 1136 (Pl. Mem.) at 1. As defendants note, the letter was issued at
the conclusion of an examination intended “to determine if a retirement plan is qualified.”
Dkt 1169 (Def. Mem.) at 4 (quoting Internal Revenue Manual § 4.71.1.1.1).
10

Paolitto v. John Brown E. & C., Inc., 151 F.3d 60, 65 (2d Cir. 1998) (internal quotation
marks and citations omitted).
11

Id.
12

U.S. Bank Nat. Ass’n v. PHL Variable Life Ins. Co., 112 F. Supp. 3d 122, 145 (S.D.N.Y.
2015).
13

See Casmento v. Volmar Constr., Inc., No. 20-cv-0944 (LJL), 2022 WL 1094529, at *2
(S.D.N.Y. Apr. 12, 2022).