The Hershey Co. v. State Tax Assessor

• Decision Date: 29 July 2022
• Docket Number: BCD-AP-2020-00003
• Parties: THE HERSHEY COMPANY, et al Petitioners, v. STATE TAX ASSESSOR, Respondent.
• Court: Maine Superior Court

THE HERSHEY COMPANY, et al Petitioners, v. STATE TAX ASSESSOR, Respondent.

No. BCD-AP-2020-00003

Superior Court of Maine, Cumberland

July 29, 2022

ORDER RESOLVING RULE 26(g) DISCOVERY DISPUTE INVOLVING REDACTION OF CORPORATE TAX INFORMATION

MICHAEL A. DUDDY, JUDGE

The redaction issue in dispute arises from the tension between the confidentiality provision of 36 M.R.S. § 191, which provides for the broad confidentiality of tax records (albeit with numerous exemptions), and the Maine Rules of Electronic Court Systems ("MRECS"), which seek to maximize public access to court records (albeit with certain exceptions). Likewise, there is tension between a public policy of confidentiality in tax records and the common law presumption in favor of public access to judicial records. Petitioner The Hershey Company ("Hershey") seeks to redact certain financial information from five key documents (the Assessor's brief, several statements of material facts, and a 30(b)(6) transcript) which are part of its appeal against Respondent the State Tax Assessor (the "Assessor").

ANALYSIS

36 M.R.S. § 191: Confidentiality of Tax Records

The Court begins its analysis with the statute. Under Title 36 M.R.S. § 191(1), certain tax information is confidential and it is unlawful "for any person who, pursuant to this Title, has been permitted to receive or view any portion of the original or a copy of any report, return or other information provided pursuant to this Title to divulge or make known in any manner any information set forth in any of those documents or obtained from examination or inspection under this Title of the premises or property of any taxpayer. This prohibition applies to both state tax information and federal tax information filed as part of a state tax return." This language "creates a broad sweep that protects all information, from whatever source, provided pursuant to Title 36." Preti Flaherty Beliveau &Pachios LLP v. State Tax Assessor, 2014 ME 6 ¶ 14, 86 A.3d 30.

The broad protection of Section 191(1), however, is subject to numerous exemptions. One of the exemptions set forth is 36 M.R.S. § 191(2)(C), which provides that the section does not prohibit "the production in court or to the board on behalf of the State Tax Assessor. . . of so much and no more of the information as is pertinent or to the action or proceeding." Hershey acknowledges that its tax returns (and information contained therein) are pertinent to the proceeding, and so Section 191(2)(C) applies. Moreover Section 191(2)(C) "does not compel the sealing of such information and material if filed in court." Apple Inc. v. State Tax Assessor, 2021 ME 8, ¶ 39 n.4 254 A.3d 405. Section 191 recognizes that court records are "presumptively public" via the exemption in Section 2(C), and thus "the proponent of sealing such material has the burden to justify the request through a showing of need for confidentiality, typically through affidavits if the sealing request is opposed by another party or questioned by the court." Id. The Hershey Company has not submitted affidavits in support of its requested redactions, but contends affidavits are unnecessary by operation of MRECS. The Court thus turns its attention to the MRECS.

Maine Rules of Electronic Court Systems

The Maine Supreme Judicial Court adopted the MRECS on August 21 2020. The MRECS are instructive and controlling on issues of sealing court records and they apply to how the Court determines what information is available to non-parties. See Order on Bloomberg L.P.'s Motion to Intervene and to Unseal Records, Templet v. Cartwright, No. BCD-CV-2020-06 (Bus. &

Consumer Ct. Dec. 7, 2020, Murphy, J.). The preamble to the MRECS reads as follows:

These Rules of Electronic Court Systems are intended to facilitate public access to and use of the courts in the electronic environment, while providing maximum reasonable public access to court records and minimizing the risk of harm to individuals and entities involved in court proceedings. In developing these rules, the Maine Judicial Branch has carefully considered and weighed the importance of both public access and protection of privacy in court records in the context of an electronic case management and filing system.

(emphasis added). MRECS Rule 1 describes the principles upon which the rules are based:

Public access to court records is restricted in certain instances by law. When public access to court records is not controlled by law, these rules will control public access, and every judge, justice, and magistrate applying these rules shall consider the principles listed below in doing so:

(1) Public access to records can inform and educate the public about the workings of government, support accountability, and advance public safety;

(2) Persons who use the courts have a legitimate expectation of privacy. Providing access to personal details in court records can put the parties at risk and create a disincentive to use the courts;

(3) The public can be informed of court activity without having access to all of the personal details in a court record; and

(4) When digital information or data are made accessible by the public remotely, neither the Maine Judicial Branch nor any other entity or person has the practical ability to control its dissemination or use.

The definition of "court record" under MRECS Rule 2(17)(A)(i) includes "[p]leadings, motions, briefs and their respective attachments, correspondence, and documentary evidentiary exhibits submitted with court filings." The information which Hershey seeks to redact is thus part of a "court record" and subject to MRECS.

MRECS Rule 3(A)'s "General...