Ross Holding and Management Company v. Advance Realty Group LLC, C.A. No. 4113-VCN (Del. Ch. Sept. 29, 2011). Read opinion here.
Issue Addressed: This short letter ruling granted in part a motion to compel unredacted tax returns and related documents. The requested documents related to a claim by the plaintiff that the defendants liquidated, or will liquidate, certain interests that may cause negative tax consequences, although the Court described it as a “not-well defined claim” for increased tax liability allegedly attributable to the conduct of defendants.
Background: The defendants sought the tax returns of the plaintiffs, partners and shareholders, in unredacted format, and various additional related documents for the period 2001 through 2010. The parties previously entered into a confidentiality stipulation.
Discussion and Holding: The challenge presented to the Court was how to define or describe the information which was necessary and relevant as compared to information in the tax returns that was not related to the claims and defenses in the case (in the absence of clarity from the parties on that point). The Court regarded it as unfortunate that the parties did not provide a workable standard to limit the information or to allow for redaction of the tax returns. The Court resolved the issue by limiting the grant of the motion to tax returns, subject to the confidentiality stipulation. After those returns were produced, the Court acknowledged the possibility that additional information would be sought.
Practical Postscript: This motion to compel was adjudicated in a balanced, businesslike and benign manner. Motions to compel in corporate or commercial litigation are one of the least enjoyable parts of the job for the bench and bar. Some jurists approach them with a view akin to “a pox on both your houses”, while others “choose sides” and impose fees against the party losing the motion–though it is often not clear which party is responsible for the impasse. In this decision, neither party appears to have suffered an unhappy fate (beyond the merits of the motion), and the Court appears to have calmly dispatched justice in this discovery dustup.