CRA Holdings US, Inc. and Subsidiaries v. United States Government
Filing
130
ORDER DISMISSING as moot 124 Plaintiffs' Motion to Stay this court's Decision and Order filed August 22, 2018 (Dkt. 121), granting Defendant's motion to compel discovery. Signed by Hon. Leslie G. Foschio on 09/25/2018. (TAH)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
CRA HOLDINGS US, INC. AND SUBSIDIARIES,
Plaintiffs,
DECISION
and
ORDER
v.
15-CV-239W(F)
UNITED STATES OF AMERICA,
Defendant.
________________________________________
APPEARANCES:
ZERBE FINGERET FRANK & JADAV
Attorneys for Plaintiffs
JOHN H. DIES,
JEFFERSON H. READ,
ROBERT G. WONISH, II, of Counsel
3009 Post Oak Boulevard, Suite 1700
Houston, Texas 77056
RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General
Tax Division, U.S. Department of Justice
Attorney for Defendant
JAMES M. STRANDJORD,
Trial Attorney, of Counsel
PO Box 55
Ben Franklin Station
Washington, DC 20044
In this action seeking a tax refund based on Plaintiffs’ asserted R&D tax
credits available under 26 U.S.C. § 41 (“§ 41”), Plaintiffs, by papers filed September
19, 2018 (Dkt. 124), request a stay of this court’s Decision and Order, filed August
22, 2018 (Dkt. 121) (“the D&O”), granting Defendant’s motion to compel answers to
two of Defendant’s Fourth Set of Interrogatories Nos. 10 and 11, and directing
Plaintiffs provide complete answers within 30 days (“Plaintiffs’ motion”). Plaintiffs
filed objections to the D&O on September 6, 2018 (Dkt. 122), one day past the 14day period provided by Fed.R.Civ.P. 72(a). Defendant’s opposition to Plaintiffs’
motion also was filed September 19, 2018 (Dkt. 1125); Plaintiffs’ Reply was filed
September 20, 2018 (Dkt. 126). Oral argument was deemed unnecessary.
Granting a stay is within the discretion of the court based upon consideration
of the competing interests of and prejudice to the parties and the court. Travelers
Cas. & Sur. Co. of Am. v. DiPizio Const. Co., 103 F.Supp.3d 366, 369 (W.D.N.Y.
2015) (quoting Volmar Distributors, Inc. v. New York Post Co., 152 F.R.D. 36, 39
(S.D.N.Y. 1993). However, where the date by which the event or action ordered to
occur or be taken has passed, the request is moot and may be dismissed as such.
American Rock Salt Co., LLC v. Norfolk Southern Corp., 371 F.Supp.2d 358, 36061 (W.D.N.Y. 2005) (denying as moot defendants’ motion to stay magistrate judge’s
order compelling discovery pending resolution of objections to such order where 30day period for compliance with order had expired). Here, Plaintiffs’ delayed in
requesting the stay of Plaintiffs’ compliance with the D&O until two days before
expiration of the thirty-day period Plaintiff’s amended answers to Defendants’
Interrogatories Nos. 10 and 11 were to be served, i.e., September 21, 2018.
Plaintiffs’ Reply was, as noted, filed September 20, 2018. Accordingly, as any stay
at this time cannot cure Plaintiffs’ apparent failure to comply with the D&O or a
timelier request for a stay, Plaintiffs’ request is now futile and Plaintiff’s motion
should be dismissed as moot.
Alternatively, as Defendant explained with compelling detail, see Dkt. 125 at
2-4, the underlying rationale for Plaintiffs’ motion that Plaintiffs should be spared the
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potentially unnecessary “herculean effort,” Dkt. 125 at 2 (quoting Dkt. 124-1 at 2), of
reviewing Plaintiffs’ voluminous documents to facilitate Plaintiffs’ compliance is
wholly specious as it is patently inconsistent with Plaintiffs’ prior representations to
Defendant and the court that the myriad documents Plaintiffs claimed to contain the
information responsive to Defendant’s interrogatories had been reviewed by
Plaintiffs, enabling Plaintiffs to assert Defendant could scrutinize the documents to
discern for itself reasonable answers to Defendants’ interrogatories (Nos. 10 and
11), at issue in the D&O, which requested that Plaintiffs state which of Plaintiffs’
employees involved in the 12 sample projects engaged in qualified research
services to qualify for the R&D tax credit and the substantial refunds Plaintiffs seek,
and describe the nature of such services. Plaintiffs refusal to do so is nothing more
than a thinly disguised effort to foist onto Defendant the burden of proof and
production of evidence to support Plaintiffs’ claim instead of coming forward with
unambiguous factually-based answers to Defendant’s interrogatories as is Plaintiffs’
burden under well-established law applicate to R&D tax refunds pursuant to § 41.
Additionally, this action has been pending for over three years and has required an
inordinate amount of judicial intervention to keep the case on-track and moving
toward a reasonably speedy conclusion. Further delay, especially in light of
Plaintiffs’ inconsistent representations as to the evidentiary content of Plaintiffs’
records, relevant to Defendant’s interrogatories at issue, arising from a stay of the
D&O is therefore not in the court’s nor the parties’ interests. Given Plaintiffs’
repeated vouching that the voluminous documents provided to Defendant related to
the 12 projects are flush with readily discernible facts fully responsive to
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Defendant’s Interrogatories Nos. 10 and 11, Plaintiffs’ assertion that the effort
needed to comply with the D&O would involve Plaintiffs in a “herculean effort,” Dkt.
125 at 2, rings hollow. If, on the other hand, such extensive efforts are in fact now
required, it presents a self-inflicted problem that fails to warrant the exercise of the
court’s discretion in Plaintiffs’ favor. Thus, even if Plaintiffs’ motion was not moot
based on futility, the motion should be denied based on its lack of merit.
CONCLUSION
Based on the foregoing, Plaintiffs’ motion (Dkt. 124) is DISMISSED as moot.
SO ORDERED.
/s/ Leslie G. Foschio
________________________________
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
Dated: September 25th, 2018
Buffalo, New York
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