United States District Court, N.D. Ohio, Eastern Division
MEMORANDUM OPINION AND ORDER
HONORABLE SARA LIOI, UNITED STATES DISTRICT JUDGE
matter is before the Court on plaintiffs' motion to
compel production of documents in response to subpoena issued
to non-party JL Associates, filed on July 2, 2019. (Doc. No.
4 (“Mot.”).) JL Associates, Inc.
(“JL”) filed an opposition brief (Doc. No. 9
(“Opp'n”)) and plaintiffs replied (Doc. No.
12 (“Reply”)). For the reasons set forth herein, the
motion is GRANTED in part and DENIED in part.
October 25, 2018, Primrose Retirement Communities LLC and
Jefferson City Retirement, LLC (collectively
“Primrose”) obtained a judgment confirming an
arbitration award against Omni Construction Company, Inc.
(“Omni”). See Primrose Ret. Cmtys., LLC, v.
Omni Constr. Co., Inc., No. 1:18-CV-1021, 2018 WL
5294569 (D.S.D. 2018). The judgment was later registered in
the Northern District of Ohio. (See Doc. No. 1.)
ceased doing business after Primrose obtained the judgment
against them. (Mot. at 33.) Primrose served a subpoena on JL (the
“Subpoena”), Omni's former accounting firm,
in an effort to ascertain information related to Omni's
assets available to satisfy its judgment. (See Doc.
No. 3-1 (“Subpoena”).) In addition to seeking
Omni's tax and financial information, the Subpoena sought
financial information related to Omni's president and
sole shareholder, Richard Stone, and his wife, Suzanne Stone
(collectively “the Stones”). (Subpoena at 26.)
to the Subpoena, JL has produced Omni's tax returns for
years 2015-2018. (Reply at 66.) But when Primrose inquired as
to the other documents requested in the Subpoena, JL
indicated that it turned over “all of the documentation
in [its] … possession concerning Omni….”
(Reply at 67.) Further, JL refuses to produce records related
to the Stones “on relevancy grounds.” (Opp'n
at 53.) Primrose now seeks post-judgment discovery to
identify assets available to satisfy its judgment.
scope of post-judgment discovery under the Federal Rules is
broad. United States v. Conces, 507 F.3d 1028, 1040
(6th Cir. 2007) (citations omitted). Rule 69 governs the
procedure for enforcing a judgment and permits a
“judgment creditor … [to] obtain discovery from
any person-including the judgment debtor-as provided in [the
federal] rules….” Fed.R.Civ.P. 69(a)(2). Under
the Rules, a party is permitted to “obtain discovery
regarding any nonprivileged matter that is relevant to any
party's claim or defense” even if the information
would otherwise “not be admissible in
evidence….” Fed.R.Civ.P. 26(b)(1)
“Information regarding a debtor's assets is
particularly relevant to post-judgment discovery.”
United States v. Schultz, No. 2:07-mc-39, 2014 WL
1382409, at *6 (S.D. Ohio Apr. 8, 2014) (citing FTC v.
Trudeau, No. 5:12MC35, 2012 WL 5463829 (N.D. Ohio Nov.
judgment “creditor is entitled to ‘utilize the
full panoply of federal discovery measures' provided for
under federal and state law to obtain information from
parties and non-parties alike….” Andrews v.
Raphaelson, No. 5:09-CV-077-JBC, 2009 WL 1211136, at *3
(E.D. Ky. Apr. 30, 2009) (quoting Magnaleasing, Inc. v.
Staten Island Mall, 76 F.R.D. 559 (S.D.N.Y. 1977)).
However, district courts have discretion to limit the scope
of discovery where the information sought “can be
obtained from some other source that is more convenient, less
burdensome, or less expensive.” Fed.R.Civ.P.
26(b)(2)(C)(i). “The Court has ‘wide
discretion' to limit discovery, and must balance the
relative benefits and burdens.” Price v. Hartford
Life & Acc. Ins. Co., 746 F.Supp. 2d, 860, 867 (E.D.
Mich. 2010) (quoting Scales v. J.C. Bradford &
Co., 925 F.2d 901, 906 (6th Cir. 1991). Here, the most
convenient and least burdensome source for obtaining the
Stones' tax records is the Stones, not their accountant.
tax returns are not privileged from civil discovery, a
“judicial consensus exists that, as a matter of policy,
great caution should be exercised in ordering the disclosure
of tax returns. Unnecessary disclosure of tax returns is to
be avoided.” Ruth v. Superior Consultant Holdings
Corp., No. 99-CV-71190-DT, 2000 WL 1769576 at *2 (E.D.
Mich. Oct. 16, 2000) (quoting Terwilliger v. York Intern.
Corp., 176 F.R.D. 214, 216 (W.D. Va 1997)). In addition,
professional tax preparers are not permitted to knowingly
disclose any information furnished for the purpose of
preparing of a federal tax return. 26 U.S.C. § 7216(a).
Improper disclosure can result in fines and/or imprisonment.
Id. Accountants may, however, disclose tax
information “pursuant to an order of a court.”
Id. § 7216(b)(1)(B).
the sensitive nature of tax records, some courts have even
afforded tax records a quasi-privileged status. See
Terwilliger, 176 F.R.D. at 216-17. However, “[t]he
Sixth Circuit has not decided whether or not to adopt”
the qualified privilege approach and “[d]istrict courts
within the Sixth Circuit have both adopted and chose not to
adopt the [approach].” Nat'l Credit Union
Admin. Bd. v. Zovko, No. 1:13CV1430, 2015 WL
13621463 at *3 (N.D. Ohio March 9, 2015). While not expressly
adopting the qualified privilege approach, the Court is
mindful of the cautionary approach other courts have taken to
prevent unnecessary disclosure of tax returns. See
Shelbyville Hosp. Corp., v. Mosley, No. 4:13-CV-88, 2017
WL 1155046 at *4 (E.D. Tenn. Mar. 27, 2017) (declining to
adopt the qualified-privilege approach “without direct
guidance from the Sixth Circuit” while being mindful
“of the emphasis that its sister courts” have
placed on unnecessary disclosure of tax records).
Production of the Stones' Tax Records
Court finds that the Stones' tax information is relevant
to determine whether Omni attempted to shield assets in
response to the judgment order. Nonetheless, the information
Primrose seeks is obtainable from a more appropriate
source-the Stones. Primrose admits that “[a]s the
President and sole shareholder of Omni Construction, Mr.
Stone … is in the best position to know about Omni
Construction's assets and transfer of assets.”
(Reply at 70). Yet there is no evidence that Primrose
attempted to subpoena tax records from the Stones. Primrose
sent notice of the Subpoena to Omni, not the Stones.
(See Doc. No. 12-3 at 81.) In fact, there is no
evidence that the Stones are even aware that Primrose is
seeking their personal tax records.
circuitous means of discovery has placed JL in a difficult
position. Faced with the possibility of running afoul of 26
U.S.C. § 7216(a), JL was compelled to retain counsel to
dispute a subpoena that would have been more appropriately
served on the Stones. In addition, the party issuing a
subpoena must “take reasonable steps to avoid imposing
undue burden or expense on a person subject to the
subpoena” and “[t]he court for the district where
compliance is required must enforce this
duty….” Fed. R. Civ. P 45(d)(1) (emphasis
added). By serving a subpoena on JL, rather ...