Title: Ex parte Edward Wrenn & David Wrenn.

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: April 30, 2021
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern
Reporter.  Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300
Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other
errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2020-2021
_________________________
1190567
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Ex parte Edward Wrenn and David Wrenn
PETITION FOR WRIT OF MANDAMUS
(In re:  Jeffrey E. Wright
v.
A-1 Exterminating Company, Inc., et al.)
(Etowah Circuit Court, CV-12-900782)
SELLERS, Justice.1
1This case was originally assigned to another Justice on this Court;
it was reassigned to Justice Sellers on March 17, 2021.
1190567
Edward Wrenn ("Edward") and David Wrenn ("David") petition this
Court for a writ of mandamus directing the Etowah Circuit Court to
vacate an order requiring Edward and David to disclose their personal
income-tax returns to plaintiff Jeffrey E. Wright and to enter a protective
order shielding the tax returns from production.  We grant the petition
and issue the writ. 
Wright alleges that he contracted with A-1 Exterminating Company,
Inc. ("A-1 Exterminating"), for periodic termite treatments of his house. 
Over the course of several decades of treatments, Wright says, A-1
Exterminating used a "watered-down pesticide so weak that it may only
kill ants and 'maybe' spiders."  A-1 Exterminating allegedly concealed this
practice from him until recently.  As a result, Wright contends that his
house is infected by termites and has been damaged by termites.  Wright
sued Edward, David, A-1 Exterminating, A-1 Insulating Company, Inc.,
and Wrenn Enterprises, Inc., alleging breach of warranty, breach of
contract, negligence, and wantonness.2  
2Edward and David each own 50% of Wrenn Enterprises, Inc., which
in turn owns A-1 Exterminating.  Wright alleged in his complaint that A-1
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Wright sought to represent a class consisting of himself and other A-
1 Exterminating customers allegedly harmed by the defendants' actions. 
In support of his request to certify a class, Wright alleged that a "limited
fund" existed that would support a class action under Rule 23(b)(1)(B),
Ala. R. Civ. P.  That rule provides that a class action is appropriate when
"adjudications with respect to individual members of the class ... would as
a practical matter be dispositive of the interests of the other members not
parties to the adjudications or substantially impair or impede their ability
to protect their interests."  According to Wright, the class he proposes fits
within the limited-fund framework because the total amount of potential
judgments against the defendants exceeds their ability to pay. 
Accordingly, Wright says, adjudications in favor of individual members of
the proposed class would impair the other potential members' ability to
recover.
Insulating Company, Inc., "controls A-1 Exterminating."   Wright also
sued Terry Buchanan, who apparently was an employee of A-1
Exterminating.  The materials before the Court indicate that, after this
action was commenced, Buchanan died and all claims against him were
dismissed.
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Wright sought production of several years' worth of Edward's and
David's personal income-tax returns, which Edward and David say they
filed jointly with their spouses.  Wright sought the tax returns because,
he claims, they will help establish that the defendants' assets are
insufficient to satisfy the proposed class members' potential judgments
and will therefore support his assertion that a limited-fund class should
be certified.  
The trial court initially entered an order ruling that Edward and
David would not be required to produce their tax returns.  Later, however,
the trial court granted a motion to compel filed by Wright, which sought
production of tax returns and other materials.  Edward and David moved
the trial court to enter a protective order.  The trial court, however, denied
that motion, and Edward and David filed the instant mandamus petition.
"[M]andamus is a drastic and extraordinary writ" that will issue only
when there is "(1) a clear legal right in the petitioner to the order sought;
(2) an imperative duty upon the respondent to perform, accompanied by
a refusal to do so; (3) the lack of another adequate remedy; and (4)
properly invoked jurisdiction of the court."  Ex parte Edgar, 543 So. 2d
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682, 684 (Ala. 1989).  This Court will review by mandamus petition a trial
court's discovery order that allegedly disregards a privilege.  Ex parte
Action Auto Sales, Inc., 250 So. 3d 536, 539 (Ala. 2017).
In Action Auto Sales, this Court stated as follows regarding the
"qualified privilege" from discovery that tax returns enjoy:
"The Court in [Ex parte Morris, 530 So. 2d 785 (Ala.
1988),] noted that some federal courts had recognized a
'qualified privilege' for tax records, which 'impos[ed] high
standards of relevancy before parties will be ordered to reveal
such records.' 530 So. 2d at 788. Such a qualified privilege was,
according to those courts, justified by ' "the sensitive
information contained [in tax records] and the public interest
to encourage the filing by taxpayers of complete and accurate
returns." ' Id. (quoting Mitsui & Co. v. Puerto Rico Water Res.
Auth., 79 F.R.D. 72, 80 (D.P.R. 1978)). The Court also noted
that the United States Court of Appeals for the Third Circuit,
in reviewing an order compelling nonparties to disclose their
gross incomes, had observed:
" ' "It can scarcely be denied that public
exposure of one's wallet or purse is, in the abstract,
an invasion of privacy. Nor can it be denied that
private individuals have legitimate expectations of
privacy regarding the precise amount of their
incomes. Unless placed in issue, as in litigation, in
a loan application, or when a federal statute or
regulation may require publication of annual
compensation, for instance, individuals employed
in the private sector expect that the amount of
their income need be divulged only to the taxing
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authorities, and to them with an expectation of
confidentiality." '
"530 So. 2d at 788 (quoting DeMasi v. Weiss, 669 F.2d 114, 119
(3d Cir. 1982))."
250 So. 3d at 539.  Although the records sought in Action Auto Sales and
Ex parte Morris, 530 So. 2d 785 (Ala. 1988), were those of a nonparty to
the litigation, "the qualified privilege may extend, in appropriate cases,
to parties to a suit."  Ex parte Alabama State Univ., 553 So. 2d 561, 562
(Ala. 1989).3  
In Morris, the Court quoted Tele-Radio Systems Ltd. v. De Forest
Electronics, Inc., 92 F.R.D. 371, 375 (D. N.J. 1981), for the proposition
that, " '[u]nless "clearly required in the interests of justice, litigants ought
not to be required to submit [tax] returns as the price for bringing or
3It is certainly worth noting that the tax returns at issue in this case
do indeed affect the privacy interests of nonparties to the litigation,
namely, the wives of Edward and David, who filed tax returns jointly with
their spouses.  See Van Westrienen v. Americontinental Collection Corp.,
189 F.R.D. 440, 441 (D. Or. 1999)  (indicating that the production of joint
tax returns is particularly disfavored). Tax returns may also contain
information about other nonparties, such as minor children or employees
of the taxpayer.
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defending a lawsuit." ' " 530 So. 2d at 788.  The Court in Morris, again
quoting Tele-Radio Systems, 92 F.R.D. at 375, observed that, " '[w]here ...
the information sought is otherwise available, and [litigants] have not
made their income an issue in the case, the income tax returns are not
properly discoverable.' "  Id.  See also Ex parte Alabama State Univ., 553
So. 2d at 562 (noting that a litigant must "show a compelling need" for
income-tax records).
As Edward and David point out, income-tax returns identify the
source and amount of income for a particular tax year, as opposed to
assets and liabilities.  They also contain significant personal and
confidential information wholly unrelated to assets and liabilities.  Thus,
Edward's and David's tax returns are not "highly" relevant to Wright's
theory that a class should be certified because the defendants have limited
assets available to satisfy potential judgments.  See generally Van
Westrienen v. Americontinental Collection Corp., 189 F.R.D. 440, 441 (D.
Or. 1999)  (indicating that tax returns contain confidential information
and suggesting that a litigant's ability to satisfy a judgment is better
demonstrated by financial statements).
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Before directing the disclosure of tax returns, trial courts should
carefully consider the private nature of the information contained in the
returns, the specific information sought by a litigant, and whether that
information can be obtained from a different source.  For tax returns to be
discoverable, they must be highly relevant, the litigant seeking their
disclosure must show a compelling need for them, and their disclosure
must be clearly required in the interests of justice.  Action Auto Sales, 250
So. 3d at 539; Morris, 530 So. 2d at 788; Alabama State Univ., 553 So. 2d
at 562.  Those standards have not been met in this case.  Accordingly, we
grant the petition and issue a writ of mandamus directing the trial court
to vacate its order requiring disclosure of Edward's and David's tax
returns and to enter a protective order shielding those returns from
production.4
4The Court notes that Edward and David question the
appropriateness of using a limited-fund theory to certify a class in an
action alleging "unliquidated" tort claims.  Thus, they say, Wright is not
entitled to the tax returns even if the returns could possibly be deemed
sufficiently relevant to, and necessary to support, a theory alleging that
there are limited funds available to satisfy potential judgments in favor
of class members.  Because we conclude that Wright did not overcome the
qualified privilege applicable to tax returns and is therefore not entitled
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PETITION GRANTED; WRIT ISSUED.
Parker, C.J., and Bolin, Wise, Bryan, and Stewart, JJ., concur.
Shaw, Mendheim, and Mitchell, JJ., dissent.
to their disclosure, we pretermit any discussion of the appropriateness of
certifying a class based on a limited-fund theory in this case.
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MITCHELL, Justice (dissenting).
I respectfully dissent on two grounds.
A.  The Majority Opinion Does Not Adhere to Our Court's
Mandamus Framework for Deciding Discovery Issues
A writ of mandamus is a "drastic and extraordinary remedy" to be
issued only when the petitioner has established a "clear legal right" to the
order it seeks.  Ex parte Sanderson, 263 So. 3d 681, 688 (Ala. 2018)
(emphasis omitted).  And it's especially tough to obtain a writ of
mandamus for a discovery order -- because trial courts have wide latitude
in overseeing discovery.  See Ex parte Carlisle, 26 So. 3d 1202, 1205 (Ala.
2009) (" 'The utilization of a writ of mandamus to compel or prohibit
discovery is restricted because of the discretionary nature of a discovery
order.  The right sought to be enforced by mandamus must be clear and
certain with no reasonable basis for controversy about the right to relief.' "
(citation omitted)); see also Ex parte Maple Chase Co., 840 So. 2d 147, 149
(Ala. 2002) (recognizing that trial courts have "broad discretion in ruling
on discovery matters").  Thus, mandamus relief is appropriate for a
discovery order only when the trial court " 'clearly exceed[s] its
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discretion' " and the petitioner has no adequate remedy by appeal.  Ex
parte Guaranty Pest Control, Inc., 21 So. 3d 1222, 1225 (Ala. 2009)
(citation omitted; emphasis added).  That means we will consider whether
a trial court has clearly exceeded its discretion only in limited
circumstances, including when, as alleged here, the trial court has
disregarded a privilege or compelled the production of "patently
irrelevant" documents.  See id. at 1226.
Given these principles, we should give a trial court a high degree of
deference when examining a discovery ruling on mandamus.  And for good
reason -- " 'our judicial system cannot afford immediate mandamus review
of every discovery order.' "  Id. (citation omitted).  As an appellate court,
we are poorly positioned to micromanage discovery skirmishes.  Here, for
example, Edward Wrenn and David Wrenn say they have produced
"thousands of pages" of asset-related discovery.  Yet we are not privy to
that discovery -- we have only what was submitted to us with the
mandamus petition.  Trial judges, on the other hand, are much closer to
the facts, parties, and discovery in each case.  That's why " 'the trial court
is in a better position to make discovery determinations than we are.' "  Ex
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parte Alabama Dep't of Mental Health, 819 So. 2d 591, 594 (Ala. 2001)
(citation omitted).
The majority opinion gives little to no deference to the trial court. 
Although it recites the general mandamus standard, it ignores the
principles that caution against issuing a writ of mandamus to override
discovery orders.  Instead, the majority opinion puts this Court in the trial
court's shoes and considers the discovery request anew, giving no
consideration to whether the Wrenns have carried their heavy burden of
demonstrating that the trial court clearly exceeded its "very broad"
discretion in denying their proposed protective order.  This encourages
litigants to view this Court not as a guardian against clear abuses of the
discovery process, but as a second bite at the apple.  Our judicial system
should not have to bear that burden.
B.  The Majority Opinion Holds that the Wrenns' Tax Returns Are
Irrelevant Without Fully Grappling With Why the Returns Were
Sought and How Confidentiality Concerns Could Be Addressed 
For the tax returns to be discoverable, the majority opinion holds,
"they must be highly relevant, the litigant seeking their disclosure must
show a compelling need for them, and their disclosure must be clearly
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required in the interests of justice." ___ So. 3d at ___.  Additionally, the
majority opinion holds that trial courts must consider whether the
information sought in the tax returns "can be obtained from a different
source." ___ So. 3d at ___.
The majority opinion concludes that Jeffrey Wright's request for the
Wrenns' tax returns fails this test.  It cites two reasons: (1) "income-tax
returns identify the source and amount of income for a particular tax year,
as opposed to assets and liabilities," ___ So. 3d at ___, and (2) the tax
returns potentially contain confidential and irrelevant information,
including potential information about the Wrenns' spouses and children. 
Neither of these reasons is sufficient to issue a writ of mandamus.
First, Wright is not seeking the Wrenns' tax returns solely to
identify assets.  Rather, he says he is seeking them because he believes
they could help "determine the veracity of the other financial information
produced in the case and could reveal the disposal of assets in anticipation
of litigation" (Wright's brief at 23) and that they can show "how much
money was diverted from [A-1 Exterminating Company, Inc.,] into the
individuals' pockets" (Wrenns' petition at exhibit 29).  The majority
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opinion does not explain how or where this information would otherwise
be discoverable or why the trial court clearly exceeded its discretion in
light of Wright's stated reasons. 
Second, discovery material often contains irrelevant personal,
financial, and confidential information in documents that otherwise
contain relevant information.  But that is no objection to the production
of that material.  Litigators routinely balance relevancy and
confidentiality considerations by entering into agreements or by seeking
tailored discovery orders.  These solutions can, for example, impose
penalties for disclosure of confidential information outside the case, limit
review of information to attorneys only (as opposed to the parties they
represent), provide for relevancy redactions, or incorporate in camera
review when necessary.  There is no indication that the Wrenns sought
any of those protections for their tax returns, and they (along with the
majority opinion) fail to explain why those protections would be
insufficient here.  See Hunt v. Windom, 604 So. 2d 395, 398 (Ala. 1992)
(holding that trial court, in entering protective order, "exercised its
discretion in a balanced way in permitting some discovery by the plaintiff"
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of tax returns while "severely limiting access to them" to protect their
confidentiality); see also Ex parte Morris, 530 So. 2d 785, 793 (Ala. 1988)
(Beatty, J., dissenting) (noting that petitioner failed to seek any order
limiting use of the tax returns and that, if trial court believed production
of the tax returns would be prejudicial or burdensome, it could have
exercised its discretion to limit their use as necessary).
C.  Conclusion
In sum, there is no basis to conclude that the trial court clearly
exceeded its discretion.  Wright sought the Wrenns' tax returns for the
purpose of establishing a "limited fund" class action.5  He says that the tax
returns could help determine the veracity of other financial information
produced in discovery thus far, reveal the possible disposal of A-1
Exterminating's assets in anticipation of litigation, and show whether and
5The Wrenns argue that Wright's limited-fund theory, based on Ortiz
v. Fibreboard, 527 U.S. 815 (1999), is inapplicable because this case
involves unliquidated claims.  But Ortiz did not resolve that issue, and
neither has this Court.  Because it is neither necessary nor appropriate to
address that issue of first impression to resolve a discovery dispute --
especially when the trial court has not yet ruled on it -- I would not reach
that issue here.
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how much money was diverted from A-1 Exterminating to the Wrenns. 
Given the trial court's proximity to the facts, the parties, and the
"thousands of pages" of asset-related discovery in this case, it is in a far
better position than this Court to determine whether there is a compelling
need for the tax returns and whether their probative value outweighs any
prejudice or burden to the Wrenns.  And given the materials before us and
the deference due to a trial court in a discovery dispute, I see no reason to
conclude that the trial court clearly exceeded its discretion.6  I would
therefore deny the petition for the writ of mandamus.
6Thus, I would also reject the Wrenns' argument that the trial court
erred because their tax returns are "patently irrelevant."  
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