Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-04518/USCOURTS-cand-5_03-cv-04518-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:6532 IRS: Refund of Tax Penalty

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Stipulated Request to Continue Dates

and [Proposed] Order

Case No. C-03-4518 JW EAI 1

KEVIN V. RYAN (CSBN 118321)

United States Attorney

JAY R. WEILL (CSBN 75434)

Assistant United States Attorney

Chief, Tax Division

EMILY J. KINGSTON (CSBN 185752)

Assistant United States Attorney

 450 Golden Gate Avenue, Box 36055

 San Francisco, California 94102

 Telephone: (415) 436-7000

 Facsimile: (415) 436-6748

 E-mail: emily.kingston@usdoj.gov

W. CARL HANKLA (D.C. Bar No. 411665)

GOUD P. MARAGANI

Trial Attorneys, Tax Division

U.S. Department of Justice

 P.O. Box 683, Washington, D.C. 20044

 Telephone: (202) 307-6448

 Facsimile : (202) 307-0054

 E-mail: w.carl.hankla@usdoj.gov; goud.p.maragani@usdoj.gov

Attorneys for Defendant and Plaintiff on 

Counterclaim United States of America

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

NEAL M. DOUGLAS and CHRISTINE R. )

DOUGLAS, )

) Case No. C-03-4518 JW EAI

Plaintiffs, )

)

v. )

)

UNITED STATES OF AMERICA, )

)

Defendant and )

Plaintiff on Counterclaim, ) STIPULATED REQUEST

v. ) FOR CONTINUANCE OF VARIOUS

) DATES AND [Proposed] ORDER

NEAL M. DOUGLAS and CHRISTINE R. )

DOUGLAS, )

)

Defendants on )

Counterclaim. )

 )

IT IS HEREBY STIPULATED, AGREED AND REQUESTED by and between the

parties to this federal tax refund action, as reflected by the signatures of their respective counsel

appearing below, that the dates currently set for the following events be continued as follows:

U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IT IS SO ORDERED

Judge James Ware

Case 5:03-cv-04518-JW Document 45 Filed 08/02/05 Page 1 of 5
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Stipulated Request to Continue Dates

and [Proposed] Order

Case No. C-03-4518 JW EAI 2

Event Current Deadline Requested Deadline

Identification of Experts,

Written Expert Reports

September 9, 2005 March 10, 2006

Rebuttal Expert Reports September 20, 2005 March 21, 2006

Hearing on Objections re

Experts

November 7, 2005, at 9:00

a.m.

May 8, 2006, at 9:00 a.m.

Discovery Cutoff November 14, 2005 May 15, 2006

Hearing on Dispositive

Motions

November 28, 2005, at 9:00

a.m.

June 5, 2006, at 9:00 a.m.

Mediation Deadline December 16, 2005 June 23, 2006

Pretrial Papers and

Motions in Limine Due 

April 7, 2006 October 9, 2006

Initial Pretrial Conference April 17, 2006, at 10:00 a.m. October 16, 2006

Oppositions to Motions in

Limine

April 28, 2006 October 27, 2006

Final Pretrial Conference May 8, 2006, at 3:00 p.m. November 6, 2006, at 3:00 p.m.

Trial Date May 23, 2006, at 9:00 a.m. December 5, 2006, at 9:00 a.m.

(10 trial days estimated)

The grounds for this stipulated request are as follows:

1. As described in the Joint Case Management Statement, this is a federal income

tax refund suit regarding the deductibility of a $68 million capital loss the plaintiffs claimed on

their 2000 return. The loss is attributable to a Custom Adjustable Rate Debt Structure

(“CARDS”) transaction. The government contends that CARDS is an abusive tax shelter and

that the loss deduction is improper. The plaintiffs seek a refund of $14,454,664, and the

government has counterclaimed for a $5.7 million accuracy-related penalty.

2. The facts of this case are complicated, and discovery is expected to be timeconsuming.

3. No CARDS tax shelter case has yet been litigated to resolution. The outcome of

this case may reduce or avoid similar litigation. Accordingly, it would be in the interest of

judicial economy to thoroughly develop the facts in this case.

Case 5:03-cv-04518-JW Document 45 Filed 08/02/05 Page 2 of 5
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Stipulated Request to Continue Dates

and [Proposed] Order

Case No. C-03-4518 JW EAI 3

4. Pursuant to 26 U.S.C. § 7422(e), discovery was stayed for approximately five

months beginning August 3, 2004, when the Internal Revenue Service issued the plaintiffs a

Statutory Notice of Deficiency pursuant to 26 U.S.C. § 6212. Under Section 7422(e), all

proceedings in this action were stayed during the period within which the plaintiffs could have

filed a petition with the United States Tax Court for a redetermination of the asserted deficiency,

plus an additional 60 days. (If the plaintiffs had filed such a petition, this Court would have been

divested of jurisdiction over the subject matter of the case.)

5. In February 2005, after the statutory stay was lifted, the parties filed their first

Stipulated Request for Continuance of Various Dates.

6. In March 2005, the parties met and conferred in an attempt to resolve the $5.7

million penalty. The plaintiffs contend that the penalty should be waived because of their alleged

compliance with an IRS tax shelter disclosure initiative (Announcement 2002-2). The Justice

Department requested the Service to revisit the penalty issue. On July 15, 2005, the Service

provided its views, which the Justice Department is currently reviewing.

7. In April 2005, the plaintiff in a CARDS-related RICO case, Reese M. Jones v.

Deutsche Bank, et al., Case No. 04-5357 JW, filed a motion to consolidate his case with the

instant case for discovery purposes. The government and the defendants in Jones opposed the

motion, which was argued on June 6, 2006. The Court’s decision, which may have an effect on

how future discovery in this case is conducted, is pending.

8. Experts have been or will be retained by the parties to offer opinions based in part

on the facts as developed in discovery.

9. The government intends to gather evidence from witnesses in the United

Kingdom who were involved in the CARDS transaction at issue. International evidence

gathering often takes several months to complete due, to a large extent, to limits placed on such

discovery by treaties and other agreements. Arrangements are being made to retain a solicitor to

assist in this process.

Case 5:03-cv-04518-JW Document 45 Filed 08/02/05 Page 3 of 5
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Stipulated Request to Continue Dates

and [Proposed] Order

Case No. C-03-4518 JW EAI 4

10. Subpoenas duces tecum served by the government on third parties recently have

produced thousands of documents, and thousands more are expected. Litigation may be

necessary regarding anticipated privilege claims.

11. The continuance of the deadlines for the above-referenced events as requested

herein will conserve the parties’ and the Court’s resources by allowing the parties sufficient time

in which to conduct the discovery needed before this complicated action will be ready for

resolution through either settlement or trial. Accordingly, the parties respectfully request that the

Court continue the dates in this case as set forth above.

McDERMOTT, WILL & EMERY

Dated: July 27, 2005 /s/ Mark H. Churchill

CHRISTOPHER KLIEFOTH

MARK H. CHURCHILL

600 13 Street, N.W. th

Washington, D.C. 20005-3096

Telephone: 202.756.8000

Facsimile: 202.756.8087

Ckliefoth@mwe.com

Mchurchill@mwe.com

Attorneys for NEAL M. DOUGLAS AND

CHRISTINE R. DOUGLAS

KEVIN V. RYAN

United States Attorney

JAY R. WEILL

Assistant U.S. Attorney, Chief, Tax Division

EMILY J. KINGSTON

Assistant U.S. Attorney

Dated: July 28, 2005 /s/ W. Carl Hankla

W. CARL HANKLA

GOUD P. MARAGANI

Trial Attorneys, Tax Division

U.S. Department of Justice

P.O. Box 683, Ben Franklin Station

Washington, D.C. 20044

 Telephone: (202) 307-6448

 Facsimile : (202) 307-0054

 w.carl.hankla@usdoj.gov;

goud.p.maragani@usdoj.gov

Attorneys for Defendant and Plaintiff on

Counterclaim UNITED STATES OF AMERICA

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Stipulated Request to Continue Dates

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Case No. C-03-4518 JW EAI 5

ORDER

Pursuant to the Stipulation of the parties as set forth above, and for good cause shown,

IT IS HEREBY ORDERED that the dates set for the above-listed events are continued

as listed above.

Dated:

THE HONORABLE JAMES WARE

United States District Judge

8/2/05 /s/ James Ware

Case 5:03-cv-04518-JW Document 45 Filed 08/02/05 Page 5 of 5