NetJets Large Aircraft, Inc. et al v. United States of America

Filing 155

OPINION AND ORDER denying as moot 84 Motion to Enlarge Time to Conduct Limited Discovery of Similarly Situated Taxpayers, Pending Resolution of United States' Motion for Reconsideration of Magistrate Judge's April 28, 2014 Opinion and O rder; granting in part and denying in part 85 Motion to Compel. The Court withholds a ruling as to 141 RESPONSE TO ORDER TO SHOW CAUSE and SUPPLEMENTAL MOTION to Compel, 115 MOTION for Sanctions for Spoliation of Evidence, and 119 Supplemental MOTION for Sanctions for Spoliation of Evidence. Signed by Magistrate Judge Terence P Kemp on 4/3/2015. (agm1)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
NetJets Large Aircraft, Inc.,
et al.,

:
:

Plaintiffs,
:
v.

Case No. 2:11-cv-1023
:

United States of America,
Defendant.

:

JUDGE EDMUND A. SARGUS, JR.
Magistrate Judge Kemp

:
OPINION AND ORDER

Companies providing aircraft management and aviation support
services to aircraft owners and leaseholders have filed this
action against the United States under the Internal Revenue Code,
26 U.S.C. §4261, for refund and abatement of excise taxes,
interest and penalties.

Before the Court are several motions

relating to discovery:
•

United States’ Motion for Enlargement of Time to Conduct
Limited Discovery of Allegedly Similarly Situated Taxpayers,
Pending Resolution of United States’ Motion for
Reconsideration of Magistrate Judge’s April 28, 2014 Opinion
and Order (Doc. 84);

•

Plaintiffs’ Motion to Compel the Production of Documents, or
Alternatively, to Preclude Defendant from Offering Any
Evidence or Argument Relating to Plaintiffs’ Claim that the
IRS Failed to Provide Clear Guidance Regarding Application
of the Section 4261 Ticket Tax to Monthly Management and
Fuel Variable Surcharge Fees (Doc. 85);

•

Plaintiff Executive Jet Management, Inc.’s Supplemental
Motion to Compel Defendant to Produce Documents Withheld on
the Basis of the Deliberative Process Privilege, or,
Alternatively, to Preclude Defendant from Offering Any
Evidence or Argument Relating to EJM’s Duty of Clarity Claim
(Doc. 141);

•

Plaintiffs’ Motion to Sanction Defendant for Spoliation of
Evidence (Doc. 115); and

•

Plaintiffs’ Supplemental Motion to Sanction Defendant for
Spoliation of Evidence (Doc. 119).

All but one of these motions were filed before the Court issued
its January 26, 2015 Opinion and Order (Doc. 136), which resolved
certain motions for summary judgment and altered the scope of the
pending discovery motions.
Accordingly, on February 3, 2015, the Court issued an order
to show cause regarding the motion for extensions of time and the
motions for sanctions, and the court ordered a supplemental
declaration regarding the scope of the remaining pending
discovery motion.

(Doc. 139).

The parties have completed their

supplemental briefing and filed one related, supplemental motion.
The motions are considered by the Court below.
I.

Background

The facts of this case are set forth more fully in this
Court’s previous Orders.

By way of background for this Order,

Plaintiffs are companies which provide management services to
people and companies that own or lease either whole aircrafts or
fractional interests in aircrafts.

The owners and fractional

owners pay monthly management fees in a fixed amount that does
not vary based on the owner’s aircraft use and also pay certain
variable fees or hourly fees that depend on usage.
The Court’s January 26, 2015 Opinion and Order (Doc. 136)
granted the motion for summary judgment brought by three of the
four Plaintiffs as to one of their claims.

That ruling rendered

discovery relating to those parties’ alternative claims for
relief unnecessary.

However, the Court did not grant the summary

judgment motion filed by the remaining plaintiff, Executive Jet
Management, Inc. (“EJM”) or the summary judgment motion filed by
the United States against EJM.

Accordingly, there is no judgment

as to any of EJM’s claims, and it is still entitled to discovery
regarding all of its claims.
2

EJM is a wholly owned subsidiary of Plaintiff NetJets, Inc.
(Doc. 136 at 26).

Unlike the three NetJets Plaintiffs, EJM

provides aviation services to owners of whole aircrafts (rather
than owners of fractional interests in aircrafts) and also
operates a commercial air charter business that sells charter
flights to the general public. (Doc. 136 at 26).

Clients pay a

monthly management fee and “pass-through costs.”

(Doc. 136 at

28).
In January 2010, the IRS assessed a tax pursuant to 26
U.S.C. §4261 against the monthly management fees and pass-through
costs that clients who entered their planes into EJM’s charter
business paid to EJM for a period of just over four years.
136 at 28).

(Doc.

EJM and the other Plaintiffs filed protests with the

IRS, which were denied, and refund claims with the IRS, which
were also denied.

Plaintiffs then brought this action seeking a

refund and abatement of all section 4261(a) taxes paid on
occupied hourly fees, monthly management fees, fuel variable
surcharges, and pass through costs.
EJM has sought relief in this case on several grounds, but
only the second ground is at issue in the discussion of the
motions below.

That ground asserts:

(2) The IRS failed to provide clear guidance to
Plaintiffs that they were required to collect and remit
the section 4261 excise tax on the monthly management
and fuel variable surcharge fees they received from
aircraft owners;
(Doc. 55 at 8-9; see also Doc. 45 at 2).

In relation to this

request, Plaintiffs sought internal IRS communications relating
to the §4261 tax.

In the course of discovery, Plaintiffs learned

that the United States had erased the computer hard drives of
certain former IRS employees and had not been able to locate a
box of records relating to a particular lawsuit.

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II.
A.

Analysis

Motion to Enlarge Time (Doc. 84)

The first motion addressed by the Court’s February 3, 2015
Opinion and Order was the United States’ Motion for Enlargement
of Time to Conduct Limited Discovery of Allegedly Similarly
Situated Taxpayers, Pending Resolution of United States’ Motion
for Reconsideration of Magistrate Judge’s April 28, 2014 Opinion
and Order (Doc. 84).
is moot.

(Doc. 140).

The United States concedes that this motion
Accordingly, that motion will be denied as

moot.
B.

Motion to Compel (Doc. 85)

The next motion at issue is Plaintiffs’ Motion to Compel the
Production of Documents, or Alternatively, to Preclude Defendant
from Offering Any Evidence or Argument Relating to Plaintiffs’
Claim that the IRS Failed to Provide Clear Guidance Regarding
Application of the Section 4261 Ticket Tax to Monthly Management
and Fuel Variable Surcharge Fees (Doc. 85).

That motion sought

to compel production of unredacted copies of documents that were
redacted or withheld because the United States asserted the
deliberative process privilege.

The documents at issue are

responsive to Plaintiffs’ requests for internal IRS
communications relating to the §4261 tax; such communications are
relevant to Plaintiffs’ claim that the IRS failed to provide
clear guidance to Plaintiffs that they were required to collect
and remit the section 4261 excise tax on the monthly management
and fuel variable surcharge fees they received from aircraft
owners.
In light of the Court’s January 26, 2015 ruling, the Court
ordered the United States to provide a supplemental declaration
identifying the documents that remained relevant to EJM’s claims.
In response, the United States filed a supplemental declaration
by attorney Carina C. Federico (Doc. 140-1), which identified the
4

documents within the first declaration by Richard G. Goldman
(Doc. 101-1) that “relate to the claims of Executive Jet
Management, Inc., the application of the tax imposed by 26 U.S.C.
§4261 to managers of whole aircraft, or a general application of
the §4261 tax.”

(Doc. 140-1 at ¶B).

On the same day, Plaintiffs filed a response to the Court’s
February 3, 2015 Opinion and Order.

Plaintiffs incorrectly read

the Order as directing the parties to inform the Court whether
the motion to compel was moot when it had really directed the
United States to address the scope of the motion to compel by
filing a supplemental declaration.

However, in their filing,

Plaintiffs identified certain documents from the Goldman
Declaration that they believed were relevant to EJM’s claims.
(Doc. 141-2).

Most of those documents were included in the list

of documents that the United States identified as relevant to
EJM’s claims.

The Court counts only five documents that

Plaintiffs contend are still relevant that were not identified in
the United States’ Federico Declaration.

The Court will consider

those documents along with the ones identified in the Federico
declaration.
The issue raised by this motion is whether Defendants
properly invoked the deliberative process privilege to withhold
or redact a subset of responsive documents.

The United States

Supreme Court has recognized a deliberative process privilege
covering “documents reflecting advisory opinions, recommendations
and deliberations comprising part of a process by which
governmental decisions and policies are formulated.”

Dep't of

Interior v. Klamath Water Users Protective Ass'n, 532 U.S. 1, 8–9
(2001) (quoting NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150
(1975)) (internal quotation marks omitted).

In order to be

protected by the deliberative process privilege, “a document must
be both ‘predecisional,’ meaning it is ‘received by the
5

decisionmaker on the subject of the decision prior to the time
the decision is made,’ and ‘deliberative,’ the result of a
consultative process.”

Rugiero v. U.S. Dep't of Justice, 257

F.3d 534, 550 (6th Cir. 2001) (quoting Schell v. U.S. Dept. of
Health & Human Services, 843 F.2d 933, 940 (6th Cir. 1988)
(citations omitted)).

“Although this privilege covers

recommendations, draft documents, proposals, suggestions, and
other subjective documents that reflect the opinions of the
writer rather than the policy of an agency, the key issue in
applying this exception is whether disclosure of the materials
would ‘expose an agency's decisionmaking process in such a way as
to discourage discussion within the agency and thereby undermine
the agency's ability to perform its functions.’” Id. (citations
omitted).
“The deliberative process privilege does not shield
documents that simply state or explain a decision the government
has already made or protect material that is purely factual,
unless the material is so inextricably intertwined with the
deliberative sections of documents that its disclosure would
inevitably reveal the government's deliberations.”

In re Sealed

Case, 121 F.3d 729, 737 (D.C. Cir. 1997) (citations omitted); see
also Norwood v. F.A.A., 993 F.2d 570, 577 (6th Cir. 1993)
(“purely factual, investigative matters” that are “severable
without compromising the private remainder of the documents” do
not enjoy the protection of the exemption) (citation omitted).
In addition, “[t]he deliberative process privilege is a qualified
privilege and can be overcome by a sufficient showing of need.”
In re Sealed Case, 121 F.3d at 737 (footnote omitted).
The parties are generally in agreement about these legal
standards.

However, they dispute whether whether the privilege

has been asserted properly, whether certain communications are
pre-decisional and deliberative, and whether the qualified nature
6

of the privilege can be overcome in this instance.

EJM also

raises an argument that if the deliberative process privilege
applies, Defendant should be precluded from offering any evidence
or argument relating to its duty-of-clear-guidance claim.
1. Whether Defendant Waived or Forfeited the Privilege
First, EJM argues that the United States has not properly
asserted the deliberative process privilege because the initial
assertion of privilege was made by trial counsel without an
affidavit or declaration from the IRS’s highest ranking official
or an authorized delegate providing specific, document-specific
facts to support the assertion of deliberative process privilege.
(Doc. 85 at 13).

The United States counters that EJM cites to

cases from outside of this Circuit, and that this Circuit has not
imposed that burden on the Government.

(Doc. 88 at 16-18).

The United States provided a document-specific privilege log
along with one of its production of documents, but it did not
provide an affidavit at that time.

(Doc. 85 at 8; Doc. 85-1).

Both parties agree that an affidavit or declaration is required
from the authorized delegate of the Commissioner of the IRS.
See, e.g., Proctor & Gamble Co. v. United States, 2009 WL
5219726, *8 (S.D. Ohio Dec. 31, 2009) (noting that claims of
privilege by litigation counsel for the government are not
sufficient, but require that privilege be asserted by the head of
agency or that person’s authorized delegate who is another
“high-ranking agency official”) (citations omitted).

The United

States has now submitted a declaration from Richard Goldman,
Acting Deputy Associate Chief Counsel (Procedure and
Administration) in the Office of Chief Counsel, Internal Revenue
Service, with respect to the documents at issue in the first
motion to compel.

(Doc. 101-1).

Delegation order 30-4, set

forth in the Internal Revenue Manual (IRM) pt. 1.2.53.5 (October
1, 2009), delegates the authority to claim the deliberative
7

process privilege on behalf of the IRS to the Deputy Associate
Chief Counsel (Procedure & Administration).

(IRM available at

http://www.irs.gov/irm/part1/irm_01-002-053.html; see also Doc.
101-1 at ¶2 & Doc. 101-4).

Accordingly, the question before the

Court is whether this declaration came too late.
This Court is not aware of Sixth Circuit Court of Appeals
decisions addressing this question directly.
courts in this district have done so.

However, some

For example, the Court in

Proctor & Gamble Co. v. U.S. noted that “ordinarily, the
assertion of the deliberative process privilege calls for support
by an affidavit from the agency head at the time the privilege is
first asserted.”

In that case, however, the Court declined to

find that the Defendant waived the privilege by failing to do so.
2009 WL 5219726, at *8-9.

Rather, the court “engaged in a

comprehensive in camera review of the documents and [found] in
large part that the Government has not overreached.”

Id. at *9.

Therefore, although the initial assertion of privilege was made
by a member of the litigation team whose credibility might be
suspect because of his role in the litigation, “the in camera
review has obviated that concern in large part.”

Id.

The Court

then required the IRS to present an affidavit of an appropriately
high-ranking non-litigation team member within 30 days “affirming
under oath, inter alia, that s/he has undertaken a full review of
the allegedly privileged documents and affirms that the assertion
of the deliberative process privilege is narrowly tailored and
proper.”

Id.

Defendant has also pointed to Trevino v. Jones,

S.D. Ohio Case 1:08-cv-339, docket entries 44, 46, and 47, a case
in which the Court upheld the deliberative process privilege even
though Defendants did not provide a declaration of a high-ranking
official until after the initial assertion of the privilege.
In addition to the absence of controlling precedent for
deeming the deliberative process privilege waived unless all of
8

the procedural requirements are met when it is initially
asserted, there is no compelling reason for imposing that harsh
result here.

The procedural requirements for assertion of the

privilege have been established in order “[t]o ensure that the
privilege is not abused.”

Proctor & Gamble Co. v. United States,

No. 1:08-CV-608, 2009 WL 5219726, at *8 (S.D. Ohio Dec. 31, 2009)
(citations omitted).

Here, the United States has now cured any

initial procedural deficiency, so there is no need to find a
waiver in order to ensure that the privilege is not abused.
Accordingly, the Court will turn to the merits of the assertion
of the deliberative process privilege.
2.

Whether the Deliberative Process Privilege Applies

Turning to the question of whether the deliberative process
privilege applies to the documents as to which it has been
asserted, the first question is whether all of the documents at
issue were pre-decisional.

EJM asserts that the relevant

decision was made on April 1, 2008, and that communications after
that date may not be predecisional.

In support of this argument,

EJM points to the deposition of Annette Schirtzinger, the IRS
revenue agent who conducted the tax audit that is the subject of
this case.

(Doc. 85 at 17 & Doc. 85-3).

To counter this, the

United States argues that the April 1, 2008 decision she referred
to was part of a continuing process of examining IRS policies.
(Doc. 88 at 9).
In the context of the executive privilege, the Supreme Court
has noted the difficulty of drawing a line between pre-decisional
documents and postdecisional ones.

N.L.R.B. v. Sears, Roebuck &

Co., 421 U.S. 132, 151-52 n.18 & n.19 (1975) (“We are aware that
the line between pre-decisional documents and postdecisional
documents may not always be a bright one.”)

The Court stated,

“[o]ur emphasis on the need to protect pre-decisional documents
does not mean that the existence of the privilege turns on the
9

ability of an agency to identify a specific decision in
connection with which a memorandum is prepared.

Agencies are,

and properly should be, engaged in a continuing process of
examining their policies; this process will generate memoranda
containing recommendations which do not ripen into agency
decisions; and the lower courts should be wary of interfering
with this process.”

Id. at 151 n.18.

However, notwithstanding

these challenges, the Court upheld the importance of drawing such
a distinction:
This distinction is supported not only by the lesser
injury to the decisionmaking process flowing from
disclosure of post-decisional communications, but also,
in the case of those communications which explain the
decision, by the increased public interest in knowing
the basis for agency policy already adopted. The
public is only marginally concerned with reasons
supporting a policy which an agency has rejected, or
with reasons which might have supplied, but did not
supply, the basis for a policy which was actually
adopted on a different ground. In contrast, the public
is vitally concerned with the reasons which did supply
the basis for an agency policy actually adopted.
N.L.R.B. v. Sears, Roebuck & Co., 421 U.S. 132, 152 (1975).
While there is some case law guidance as to specific types of IRS
documents that may fit within the deliberative process privilege,
the purpose of the privilege makes it difficult to reach a
decision as to whether a communication is pre-decisional and
deliberative without an in camera review.
3.

Whether the Privilege Can Be Overcome Here

Many courts have held that the deliberative process
privilege is a qualified privilege.

See, e.g., In re Sealed

Case, 121 F.3d 729, 737 (D.C. Cir. 1997); Marriott Int'l Resorts,
L.P. v. United States, 437 F.3d 1302, 1307 (Fed. Cir. 2006);
F.T.C. v. Warner Commc'ns Inc., 742 F.2d 1156, 1161 (9th Cir.
1984); E.E.O.C. v. Burlington N., 615 F. Supp. 2d 717, 720 (W.D.

10

Tenn. 2009), objections overruled sub nom. E.E.O.C. v. Burlington
N. & Santa Fe Ry. Co., 621 F.Supp.2d 603 (W.D. Tenn. 2009).
There are several factors to consider in determining whether the
deliberative process privilege should be overcome, including (1)
the relevance of the evidence sought, (2) the availability of
other evidence, (3) the role of the government in the litigation,
and (4) the potential consequences of disclosure of the
information.

See, e.g., F.T.C. v. Warner Commc'ns Inc., supra at

1161 (9th Cir. 1984) (“Among the factors to be considered in
making this determination are: 1) the relevance of the evidence;
2) the availability of other evidence; 3) the government's role
in the litigation; and 4) the extent to which disclosure would
hinder frank and independent discussion regarding contemplated
policies and decisions”) (citations omitted); see also E.E.O.C.
v. Burlington N., supra at 720–21 (“In balancing these competing
interests, the court should consider several factors, including
(1) the relevance of the evidence sought to be protected; (2) the
availability of other evidence; (3) the seriousness of the
litigation and the issues involved; (4) the role of the
government in the litigation; and (5) the possibility of future
timidity by government employees who will be forced to recognize
that their secrets are violable”) (citations omitted); see also
United States v. Farley, 11 F.3d 1385, 1389 (7th Cir. 1993)
(deliberative process privilege can be overcome if the party
requesting the documents can make “a showing that his need for
the documents outweighed the government's interest in not
disclosing them” (citation omitted)).
In this case, the United States argues that internal agency
documents do not really inform the question at issue, but rather
the publicly-available documents do.

The claim at issue is

whether the IRS failed to provide clear guidance to EJM that it
was required to collect and remit the section 4261 excise tax on
11

the monthly management and pass-through cost fees it received.
The United States argues that the documents protected by the
deliberative process privilege are not relevant and that there is
other evidence available that is more relevant to this claim
(specifically the public statements by the IRS).

The United

States also argues that the other factors weigh against
overcoming the deliberative process privilege.
The Court cannot conclude that the factors weigh
dispositively in one direction without reviewing the documents at
issue.

If there are deliberations that specifically discuss

whether public notice was given and whether Plaintiffs or other
similarly situated companies had sufficient guidance, such
deliberations would be highly relevant to the question before the
Court notwithstanding the fact that the communications were
internal to the IRS.

After the other factors are weighed, that

factor may warrant overcoming the deliberative process privilege.
This type of determination requires an in camera review.
4. Whether Defendant Should Be Precluded from Defending Claim
EJM argues that if the United States is permitted to
withhold documents under the deliberative process privilege, it
should be precluded from offering any evidence or argument
regarding EJM’s duty-of-clear-guidance claim.

EJM appeara to

argue that the successful assertion of the deliberative process
privilege is effectively an admission of a failure to make a
decision and, therefore, an admission that it could not have
provided clear guidance as to its decision.

However, in light of

the Supreme Court’s discussion of the difficulty of drawing lines
between pre-decisional and postdecisional communications in
N.L.R.B. v. Sears, Roebuck & Co., 421 U.S. 132, 151-52 n.18 &
n.19 (1975), the Court cannot conclude that the assertion of the
privilege here constitutes such an admission.

Furthermore, to

the extent that certain pre-decisional deliberations are crucial
12

to EJM’s case, the qualified nature of the deliberative process
privilege should protect EJM’s interests.
C.

Supplemental Motion to Compel (Doc. 141)

In their response to the Court’s February 3, 2015 Order,
Plaintiffs filed a supplemental motion to compel the production
of unredacted copies of additional documents relating to EJM and
whole aircraft management that were identified on a privilege log
produced on January 27, 2015 as being withheld on the basis of
the deliberative process privilege.

(Doc. 141).

With respect to

the documents at issue in the supplemental motion to compel, the
United States provided a document-specific privilege log but has
not provided an affidavit or declaration from the authorized
delegate of the Commissioner of the IRS.

(Doc. 141-7).

The

United States has represented that it will provide such a
declaration “within the coming weeks.”

(Doc. 146 at 18).

For

the reasons discussed above, the Court declines to find that the
United States has waived its right to assert the deliberative
process privilege.

However, for the reasons discussed above, an

affidavit or declaration from the authorized delegate of the
Commissioner of the IRS is required.

Accordingly, this motion is

not ripe for decision, and the Court will order the United States
to provide an appropriate declaration within 14 days of the date
of this Order.
D.

Motions for Sanctions (Docs. 115 & 119)

The Court also ordered the parties to show cause as to why
the Court should not deny Plaintiffs’ motion and supplemental
motion for sanctions (Docs. 115 and 119) without prejudice to
their refiling, if appropriate, in a way that would be limited to
the documents that are relevant to the remaining claims in the
case.

The United States does not oppose the dismissal without

prejudice of those motions and, in fact, argues that doing so is
the better approach.

(Docs. 140 & 145).
13

The United States noted

that the Court’s January 26, 2015 Opinion and Order resulted in a
narrowed scope for the motions for sanctions in that it
eliminated the relevance of the box of Justice Department
materials from the Executive Jet Aviation case and the emails of
former IRS employee, Jim Mann.

(Doc. 140 at 2-3).

The United

States also noted that the remaining issue in the motions for
sanctions related to the emails of two former IRS employees,
Frank Boland and Frank Falvo, and that the depositions of those
two individuals have yet to occur.

(Doc. 140 at 3).

Finally,

the United States notes that emails to and from those individuals
have been produced from other individuals’ hard drives, and that
the deponents for the other upcoming depositions include
individuals with knowledge of the application of the §4261 tax to
managers of the whole ownership aircraft program, and that the
evidence from these sources may mitigate the failure to preserve.
EJM admits that the Court’s January 26, 2015 Opinion and
Order “narrowed the scope of Plaintiffs’ spoliation motion to the
Government’s destruction of evidence relating to EJM’s duty of
clarity claim.”

(Doc. 142 at 2).

EJM further restates its claim

as being limited to the computer hard drives of Frank Falvo and
Frank Boland.

(Doc. 142 at 2-3).

EJM states that the

depositions of six IRS witnesses, including Frank Falvo and Frank
Boland, were deferred until after the Government completed its
production of documents and privilege disputes were resolved.
(Doc. 142 at 4).

EJM contends that, because the additional

sources of evidence cannot cure any spoliation, the motion is
ripe for decision.
The Court concludes that the United States has the better
argument as to the timing of the resolution of the motion for
sanctions.

The depositions of Frank Falvo and Frank Boland and

other deponents may shed light on the scope of unpreserved
evidence.

EJM argues that if the Court decides to have the IRS
14

depositions occur prior to adjudicating the issue of spoliation,
it would be most expeditious to order the parties to supplement
their current spoliation briefs with contemtporaneous filings
within seven days after the last IRS deposition is completed
rather than requiring EJM to file a new spoliation motion.

The

Court agrees that ordering contemporaneous supplemental briefs
following the last IRS deposition is a reasonable approach.
III.

Conclusion

For the foregoing reasons, the United States’ Motion for
Enlargement of Time to Conduct Limited Discovery of Allegedly
Similarly Situated Taxpayers, Pending Resolution of United
States’ Motion for Reconsideration of Magistrate Judge’s April
28, 2014 Opinion and Order (Doc. 84) is denied as moot.
Plaintiffs’ Motion to Compel the Production of Documents, or
Alternatively, to Preclude Defendant from Offering Any Evidence
or Argument Relating to Plaintiffs’ Claim that the IRS Failed to
Provide Clear Guidance Regarding Application of the Section 4261
Ticket Tax to Monthly Management and Fuel Variable Surcharge Fees
(Doc. 85) is granted in part and denied in part.

It is granted

in that the Court Orders Defendant to deliver the unredacted
versions of the documents identified in the Federico Declaration
(Doc. 140-1) as well as any additional documents highlighted by
Plaintiffs in Exhibit 2 to their response to the Court’s February
3, 2015 Opinion and Order (Doc. 101-2) to the Court for an in
camera inspection within seven days of the date of this Order for
purposes of determining which documents, if any, must be produced
in unredacted form to Plaintiffs.

After the in camera review is

completed, the Court will issue a further order concerning
whether any of the documents in question must be disclosed to
Plaintiffs.

The remainder of the motion is denied at this time.

The Court withholds a ruling as to Plaintiff Executive Jet
Management, Inc.’s Supplemental Motion to Compel Defendant to
15

Produce Documents withheld on the Basis of the Deliberative
Process Privilege, or, Alternatively, to Preclude Defendant from
Offering Any Evidence or Argument Relating to EJM’s Duty of
Clarity Claim (Doc. 141).

The Court further orders the United

States to provide, within 14 days of the date of this Order, an
appropriate declaration in support of its assertion of the
deliberative process privilege for documents relating to the
claims of Executive Jet Management, Inc., the application of the
tax imposed by 26 U.S.C. §4261 to managers of whole aircraft, or
a general application of the §4261 tax, to the extent that it has
not already done so in its Goldman Declaration (Doc. 101-1).
The Court withholds a ruling as to Plaintiffs’ motion and
supplemental motion for sanctions (Docs. 115 and 119).

The Court

further orders the parties to file any supplement to their
current spoliation briefs within seven days after the last IRS
deposition is completed.
IV.

Procedure 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. 91-3, pt.
I., F., 5.

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, notwithstanding the
filing of any objections, unless stayed by the Magistrate Judge
or District Judge.

S.D. Ohio L.R. 72.4.

16

/s/ Terence P. Kemp
United States Magistrate Judge

17