104 T.C. 408 (T.C. 1995), 12983-94, Fu Investment Co., Ltd. v. Commissioner of Internal Revenue
|Docket Nº:||12983-94, 12984-94|
|Citation:||104 T.C. 408, 104 T.C. No. 20|
|Opinion Judge:||DAWSON, Judge:|
|Party Name:||Fu Investment Co., Ltd., Petitioner v. Commissioner of Internal Revenue, Respondent; Coco Palms Investment, Inc., Petitioner v. Commissioner of Internal Revenue, Respondent|
|Attorney:||Paul J. Sax, Lisa A. Wilcox, and William L. Riley, for petitioners. Bryce A. Kranzthor, Debra K. Estrem, and Jordan Musen, for respondent.|
|Judge Panel:||Dawson, Panuthos PANUTHOS, Chief Special Trial Judge:|
|Case Date:||April 03, 1995|
|Court:||United States Tax Court|
As Corrected April 13, 1995
Orders denying petitioners' motions for protective order will be issued.
Ps each filed a motion for protective order seeking to preclude R from engaging in ex parte communications with Ps' former employees regarding the matters in dispute in these cases. Held, Model Rules of Professional Conduct rule 4.2 (1992), which prohibits an attorney from engaging in ex parte communications with a party that he knows to be represented by counsel, does not apply to preclude R from engaging in ex parte communications with Ps' former employees. Held, further, Ps' general assertions that the former employees in question were privy to communications protected by the attorney-client privilege are insufficient to satisfy Ps' burden of proof that a protective order is warranted under the circumstances presented.
These consolidated cases were assigned to Chief Special Trial Judge Peter J. Panuthos pursuant to the provisions of section 7443A(b)(4) and Rules 180, 181, and 183.  The Court agrees with and adopts the opinion of the Chief Special Trial Judge, which is set forth below.
OPINION OF THE CHIEF SPECIAL TRIAL JUDGE
This matter is before the Court on petitioners' separate motions for protective order filed December 12, 1994. Petitioners each seek a protective order from the Court precluding respondent from engaging in ex parte communications with petitioners' former employees.
Respondent determined that petitioners Fu Investment Co., Ltd., and Coco Palms Investment, Inc., are liable for withholding of income tax at source as follows:
Fu Investment Co., Ltd. Coco Palms Investment, Inc. Year Amount Year Amount 1990 $ 1,287,375 1990 $ 483,272 1991 635,642 1991 238,865
Petitioners, whose principal place of business was in California, invoked the jurisdiction of this Court by filing separate petitions for redetermination. After filing an answer to each of the petitions, respondent mailed letters to three of petitioners' former employees (a former secretary and two accounting supervisors) requesting interviews regarding the matters in dispute in these cases. After being notified of respondent's intentions by one of the former employees, petitioners filed the motions for protective order pending before the Court. Specifically, petitioners request that we preclude respondent from engaging in ex parte contacts with their former employees. Petitioners' counsel requests reasonable advance notice of the name of the former employee, the time and place for the interview, and an opportunity to be present at the interview for the purpose of objecting to questions that might elicit privileged information. Respondent filed objections to petitioners' motions, indicating therein that she would suspend her efforts to interview the individuals in question pending the disposition of petitioners' motions. Petitioners' motions were calendared for hearing in Washington, D.C. Counsel for respondent appeared at the hearing and presented argument in opposition to the motions. Petitioners filed statements with the Court pursuant to Rule 50(c) in lieu of attending the hearing. Petitioners' Rule 50(c) statements include declarations submitted by James Murad, a partner with Cooper, White & Cooper, petitioners' general counsel, stating that, while employed by petitioners, each of the former employees in question was Page 410 privy to confidential attorney-client communications regarding the substantive issues in dispute in these cases. During the hearing of this matter, counsel for respondent argued that respondent is not obligated to provide advance notice of her intention to interview petitioners' former employees. Counsel for respondent also assured the Court that respondent would attempt to avoid eliciting privileged information from the former employees and, further, would provide petitioners with copies of any notes taken during the interviews. There is no indication in the record that petitioners' former employees are presently represented by counsel. Discussion Petitioners' motions for protective order raise the issue of whether respondent may engage in ex parte communications with the former employees of a taxpayer after the taxpayer has filed a petition for redetermination with this Court. In addition, we must address petitioners' concerns that the former employees in question may disclose matters to respondent that are...
To continue readingFREE SIGN UP