Williamson et al v. Recovery Limited Partnership et al

Filing 1083

ORDER - The subpoena issued to CBIZ Accounting, Tax & Advisoryof Florida, LLC on October 26, 2015, is enforced. The subpoena issued to Ira L. Zuckerman and Zuckerman & Mata, LLC, is enforced. The subpoena issued to F. Michael Lorz and Lorz Communica tions on January 6, 2016, is enforced as modified in this order. All requested records shall be produced within 21 days. This order resolves the following motions: Docs. 993 , 1002 , 1003 , 1022 , 1025 , 1027 , and 1033 . Signed by Magistrate Judge Terence P. Kemp on 9/15/2016. (agm)(This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Michael Williamson, et al.,

:

Plaintiffs,
v.

:

Recovery Limited Partnership,
et al.,
:

Case No. 2:06-cv-292
JUDGE ALGENON L. MARBLEY
Magistrate Judge Kemp

Defendants.

:
OPINION AND ORDER
I.

Introduction

This case has a long and interesting history.

Much of it is

recounted in prior orders from this Court and will not be
repeated here.

The three-minute version of events is that

Defendant Thomas G. Thompson discovered a shipwrecked steamer,
the S.S. Central America, in the Atlantic Ocean off the coast of
North Carolina; raised funds to finance a salvage operation (the
ship was transporting gold to New York); actually salvaged some
of the gold; did not pay his crew or his investors; disappeared
with substantial assets; was located after a long search; has
been held in criminal and civil contempt of this Court; and has
not provided complete information as to the whereabouts of some
or all of the misappropriated assets.
The Dispatch Printing Company, one of Mr. Thompson’s larger
investors, has, since Mr. Thompson’s apprehension, been pursuing
discovery designed to fill in some of the missing information and
to locate some or all of the missing assets, including a trove of
gold coins purportedly worth some $2.5 million.

It has issued

document subpoenas to a number of non-parties as part of this
effort.

Some of the subpoenas have drawn objections and produced

competing motions to quash and to enforce.

The Court will

address three of the subpoenas in this order.
II.

The CBIZ Subpoena

On October 26, 2015, the Dispatch filed a notice in this
Court that it intended to serve a subpoena on CBIZ Accounting,
Tax & Advisory of Florida, LLC, formerly known as
Goldstein, Lewin & Company, P.A.
located in Florida.

CBIZ is an accounting firm

The subpoena, attached to Doc. 982 as

Exhibit 1, commanded production of twenty-two categories of
documents.

Grouped broadly, they relate to documents and

communications with The CA Archeological Protection Trust, The
Cromwell Trust, Columbus Exploration, LLC, the Hiassen Trust,
Thomas G. Thompson, Alison Antekeier, Recovery Limited
Partnership, certain other individuals whom may have been
involved with the establishment of trusts for Mr. Thompson, and
any information about “the five hundred (500) S.S. Central
America restrike/commemorative gold coins.”
successfully served on October 27, 2015.
moved to quash it,

The subpoena was

(Doc. 988).

CBIZ has

(Doc. 1002), and the Dispatch has countered

that with a motion of its own (Doc. 1033).
Because the subpoena was served in Florida, the United
States District Court for the Southern District of Florida
initially had jurisdiction to resolve any issues concerning the
propriety of the subpoena.

See Fed.R.Civ.P. 45(d)(3)(A).

That

court transferred the motion to this Court, however, based upon
the pendency of the case here and this Court’s greater
familiarity with it.
The parties appear to agree on some basic facts.
(including

CBIZ

its predecessor entity, Goldstein, Lewin & Company)

is a Florida-based accounting firm.

It was retained by attorneys

representing Mr. Thompson to assist with certain legal matters
requiring accounting expertise.

Any documents in CBIZ’s

possession that are responsive to the subpoena were prepared at
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the attorneys’ request.
In its filings on this issue, the Dispatch argues that none
of the subpoenaed documents are privileged.

It asserts that CBIZ

(which the Court will use to refer both to CBIZ and its
predecessor) was retained to do a valuation of Mr. Thompson’s
assets (or at least his claimed assets) and also worked with Mr.
Thompson’s lawyers to create a trust (the Cromwell II Trust) out
of which more than a million dollars was ultimately transferred
to another account.

The Dispatch’s response raises these points:

that CBIZ has made only conclusory statements, rather than an
actual showing, that the attorney-client privilege applies to the
subpoenaed documents; that CBIZ has also not demonstrated that
the documents at issue were actually prepared for the purpose of
assisting Mr. Thompson’s attorneys in providing him with legal
advice (and, in fact, the valuations at issue were disclosed to
third parties); and that there is no evidence that CBIZ was
fulfilling the role of a “translator” of complex accounting
information to Mr. Thompson’s attorneys, which, under the case
law relied upon by CBIZ - specifically, United States v. Kovel,
296 F.2d 918 (2d Cir. 1961) - is one of the essential elements of
a claim of attorney-client privilege advanced by an accounting
firm.

The Dispatch has provided a lengthy affidavit (filed under

seal as part of Doc. 1033) in support of its motion which
includes language from the letter through which Mr. Thompson’s
attorneys engaged CBIZ and which describes the scope of the
services to be rendered.

CBIZ has elected not to file a reply

memorandum in support of its motion to quash.
The attorney-client privilege generally protects only
confidential communications given for the purpose of obtaining
legal advice, and one of the parties to such a communication must
be an attorney.

See generally Fisher v. United States, 425 U.S.

391, 403 (1976)(“Confidential disclosures by a client to an
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attorney made in order to obtain legal assistance are
privileged”).

CBIZ is correct that decisions like Kovel have

extended the privilege to accountants and other consultants whose
services are necessary in order for the attorney to provide sound
advice to the client.

As Kovel noted, 296 F.2d at 922, “ if the

lawyer has directed the client, either in the specific case or
generally, to tell his story in the first instance to an
accountant engaged by the lawyer, who is then to interpret it so
that the lawyer may better give legal advice, communications by
the client reasonably related to that purpose ought fall within
the privilege ....”

However, the court stressed that “[w]hat is

vital to the privilege is that the communication be made in
confidence for the purpose of obtaining legal advice from the
lawyer.”

Id; see also Toler v. United States, 2003 WL 21255039,

*5 (S.D. Ohio Apr. 29, 2003)(“The attorney-client privilege
extends to memoranda and working papers prepared by an accountant
at an attorney's request to assist the attorney in giving legal
advice to the taxpayer”).
The question of why someone communicates with his or her
accountant is a factual one.

Was it to assist a lawyer in

providing legal advice, or was it for other reasons?

CBIZ’s

filings with the Court shed no light on this question.

As this

Court has said, “[t]he party asserting the privilege has the
burden of proving each element of the claim.”

Williams v. Duke

Energy Group, 2014 WL 3895227, *4 (S.D. Ohio Aug. 8, 2014).
Further, Fed.R.Civ.P. 45(e)(2)(A)(ii), places the burden on a
person who, in responding to a subpoena, claims privilege, to
“describe the nature of the withheld documents, communications,
or tangible things in a manner that, without revealing
information itself privileged or protected, will enable the
parties to assess the claim.”

CBIZ has not done so.

Under these

circumstances, the Court cannot sustain its claim of privilege,
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and it will enforce the subpoena.
III.

The Zuckerman Subpoena

On the same day as it issued the CBIZ subpoena, the
Distpatch filed another notice of subpoena, this one relating to
Ira Zuckerman and the law firm of Zuckerman & Mata, LLC (also
located in Florida).

(Doc. 987).

That subpoena commanded

production of the same 22 categories of documents as the CBIZ
subpoena.

It was also served on October 27, 2015.

(Doc. 991).

On November 16, 2015, the recipients moved to quash.

(Doc. 993).

The Dispatch responded and filed a counter-motion to compel
compliance on January 8, 2016.

Again, although the original

motions were filed in the Southern District of Florida, they have
been transferred here under Rule 45(f).
In his motion to quash, Mr. Zuckerman stated that he does
not have documents responsive to most of the requests, but argues
that the ones he does have are protected by the attorney-client
privilege or their disclosure is prohibited by both federal tax
law and the Florida Constitution.

In its memorandum (Doc. 1003),

the Dispatch argues that each of these contentions is incorrect
and that the subpoena should be enforced as issued.
As was the case with CBIZ, Mr. Zuckerman has not supplied
the information required by Rule 45(e)(2)(A)(ii), nor has he
submitted an affidavit, declaration, or other item of evidence
substantiating his claim of privilege.

For that reason alone,

the Court would be justified in concluding that he did not meet
his burden of establishing a factual basis for the claim of
privilege and that the subpoena should therefore be enforced.
Beyond that, the Dispatch makes a persuasive case that the
legal arguments advanced by Mr. Zuckerman are unfounded.

For

example, although the parties appear to agree that some of the
documents in question are either tax returns or tax preparation
materials, this Court has held that if such matters are relevant
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to an issue before the court, there is no legal obstacle to their
production as part of discovery.

As the Court said in Bricker v.

R & A Pizza, Inc., 2011 WL 1990558, *2 (S.D. Ohio May 23, 2011),
It is well-settled in the Sixth Circuit that tax
returns are not privileged from disclosure. DeMarco v.
C & L Masonry, Inc., 891 F.2d 1236 (6th Cir.1989); see
also Credit Life Ins. Co. v. Uniworld Ins. Co., 94
F.R.D. 113 (S.D.Ohio 1982). Some courts, in recognizing
the sensitive nature of the information contained in
tax returns, have adopted a qualified privilege or
stricter relevancy standard. See, e.g., Terwilliger v.
York International Corp., 176 F.R.D. 214 (W.D. Va.
1997). This standard applies a two-pronged test which
analyzes whether the returns are relevant to the issues
raised and, if so, whether the information is not
otherwise available. Id. Some district courts within
the Sixth Circuit have endorsed this two-part test for
determining when discovery of a party's tax returns is
permissible. See, e.g., Smith v. Mpire Holdings, LLC,
2010 WL 711797 (M.D. Tenn. Feb.22, 2010); BM
Investments v. Hamilton Family, L.P., 2008 WL 1995101
(E.D. Mich. May 6, 2008). At the same time, other
district courts have held that the appropriate analysis
simply “is whether the tax returns are relevant to the
claim or defense of any party. Fed.R.Civ.P. 26(b)(1).”
Westbrook v. Charlie Sciara & Son Produce Co., Inc.,
2008 WL 839745, at *3 (W.D. Tenn. March 27, 2008); see
also Kumar v. Hilton Hotels Corp., 2009 WL 3681837
(W.D. Tenn. Oct.30, 2009); LaPorte v. B.L. Harbert
International, LLC, 2010 WL 4323077 (W.D. Ky. Oct.26,
2010). The Sixth Circuit has not adopted the two-part
test or heightened relevancy standard.
Here, the relevance of this information is clear, and there is no
suggestion that it is available from some other source.
the tax information is not protected from disclosure.

Thus,

The same

would appear to be true for the trust instrument in question,
which, as the Dispatch points out, was necessarily shared with
persons not part of the attorney-client relationship, and for
what Mr. Zuckerman has described as ministerial communications
with the trustee.

In short, there do not appear to be any legal
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obstacles to the production of the requested materials.
IV.

The Lorz/Lorz Communications Subpoena

The Dispatch filed a similar notice of subpoena to Michael
Lorz and Lorz Communications on January 6, 2016.

That subpoena

called for the production of communications with some nineteen
individuals or entities including Mr. Thompson, Ms. Antekeier,
and a number of lawyers or law firms.
successfully served that day.
followed in short order,

(Doc. 1014).

(Doc. 1018).

It was

A motion to quash

(Doc. 1025), followed by a motion to

enforce compliance (Doc. 1027).

The motion to quash asserts

three grounds for relief: that the subpoena is overly broad, that
it calls for the production of irrelevant information, and that
some of the documents are subject to attorney-client privilege.
In response, the Dispatch identifies Mr. Lorz as Mr.
Thompson’s former publicist.

It also argues that the individuals

listed in the subpoena are all persons who may know something
about Mr. Thompson’s misappropriation of assets, and that Mr.
Lorz, as “one of Thompson’s closest confidants over the last
decade, and especially since Thompson was arrested in 2015" (Doc.
1027, at 1), may well have documents which would shed light on
where those assets are.

It further notes in its memorandum that

Mr. Lorz and Mr. Thompson have spoken by phone on many occasions
(about seven phone calls per day) since Mr. Thompson’s arrest and
that Mr. Lorz has visited Mr. Thompson in jail on a regular
basis.

Finally, the Dispatch notes that Mr. Lorz has not

substantiated his claim that any communications called for by the
subpoena are privileged.
The reply memorandum does not dispute these basic facts.

It

does, however, raise issues about the Dispatch’s representation
about when the response was served (the service issue is
addressed in Doc. 1032) and takes issue with a statement made by
the Dispatch that Mr. Lorz misrepresented himself as an attorney
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when visiting Mr. Thompson.

The long and short of the service

issue is that regular mail service of the response was made one
day after the date listed in the certificate of service.

The

Court also accepts Mr. Lorz’s representation that the log system
at the Delaware County Jail, rather than any attempt at deception
on his part, caused the Dispatch to believe that he had falsely
signed himself in as an attorney when visiting Mr. Thompson.
These matters are not material to the resolution of the motion to
quash and will not be further discussed.
According to the reply, Mr. Lorz and his firm did serve as
publicists for Mr. Thompson and his companies during the 1990s.
Their activities included the design, organization, and
installation of an exhibit at the Columbus Museum of Art relating
to the gold salvage operation, and a similar exhibit at the
Columbus Zoo.

Mr. Lorz states that after 1995, he heard from Mr.

Thompson only once - that being a telephone call in 2011 - until
the date of Mr. Thompson’s arrest in 2015.

He does not dispute

the Dispatch’s representations about his visits and telephone
calls to Mr. Thompson after that date.

He does note that the

subpoena, as written, calls for the production of all
communications between himself and his company as well as between
himself, his company, and the other names on the list, and argues
that the Dispatch, in its response, simply ignored the fact that
such a request is grossly overbroad.
Under Fed.R.Civ.P. 45(d)(3), the Court has the power to
modify a subpoena if, among other things, compliance would
subject the responding person to undue burden.

The Court agrees

with Mr. Lorz that requiring him to produce all communications
between himself and his company on any subject from August 1,
2012 forward (the date in the subpoena) would be burdensome and
would not likely lead to the discovery of relevant evidence.
the other hand, Mr. Lorz has made no argument that it would
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On

burden him to produce any communications with the other seventeen
persons or entities named in the subpoena, nor has he argued that
such communications are irrelevant.

The Dispatch has made a

cogent argument that these communications could lead to evidence
about Mr. Thompson’s efforts to conceal assets, which is a key
issue in this case, and a subject about which the Dispatch has a
right to conduct discovery.

See Fed.R.Civ.P. 26(b)(1)(“Parties

may obtain discovery regarding any nonprivileged matter that is
relevant to any party’s claim or defense ...”).

Further, the

Dispatch represents in its reply memorandum (Doc. 1039, at 4)
that it is asking only for “communications relating to Thompson,
his assets, or assets of companies with which he had been
affiliated ....”

Those are relevant documents.

It might be inferred from Mr. Lorz’s response that he does
not have many, or any, responsive documents.

But he will be

required to produce those that he does have.

Consequently, the

subpoena will be enforced to the extent that it asks for
production of documents reflecting communications between Francis
Michael Lorz and/or Lorz Communications, LLC and anyone listed in
paragraphs 1(c) through 1(s) of Exhibit A to the subpoena from
August 1, 2012 to the present that relate to Mr. Thompson, his
assets, or assets of companies with which he has been affiliated,
and, in the event that there is some communication between Mr.
Lorz and his own company on that subject, he must produce those
as well.
V.

Order

Based on the foregoing, the Court makes the following
orders:
1.

The subpoena issued to CBIZ Accounting, Tax & Advisory

of Florida, LLC on October 26, 2015, is enforced.

CBIZ shall

provide the requested records within 21 days of the date of this
order.
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2.

The subpoena issued to Ira L. Zuckerman and Zuckerman &

Mata, LLC, is enforced.

The requested records shall be produced

within 21 days of the date of this order.
3.

The subpoena issued to F. Michael Lorz and Lorz

Communications on January 6, 2016, is enforced as modified in
this order.

Those parties shall provide the requested records

within 21 days of the date of this order.
4.

This order resolves, and the Clerk shall remove from the

Court’s pending motions list, the following motions: Docs. 993,
1002, 1003, 1022, 1025, 1027, and 1033.
VI.

Motion for Reconsideration

Any party may, within fourteen days after this Order is
filed, file and serve on the opposing party a motion for
reconsideration by a District Judge.

28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 14-01,
pt. IV(C)(3)(a).

The motion must specifically designate the

order or part in question and the basis for any objection.
Responses to objections are due fourteen days after objections
are filed and replies by the objecting party are due seven days
thereafter.

The District Judge, upon consideration of the

motion, shall set aside any part of this Order found to be
clearly erroneous or contrary to law.
This order is in full force and effect even if a motion for
reconsideration has been filed unless it is stayed by either the
Magistrate Judge or District Judge.

S.D. Ohio L.R. 72.3.
/s/ Terence P. Kemp
United States Magistrate Judge

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