Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_08-cv-00227/USCOURTS-almd-2_08-cv-00227-3/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:1983 Civil Rights Act

---

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

DR. LARRY CAMP and SABRINA )

MARTINDALE, )

)

Plaintiffs, )

)

v. ) CIVIL ACT. NO. 2:08cv227-WKW

) (WO)

CORRECTIONAL MEDICAL )

SERVICES, et al., )

)

Defendants. )

MEMORANDUM OPINION and ORDER

Now pending before the court is defendant CMS’ motion to compel (doc. # 65) filed

on January 13, 2009. CMS seeks production of the plaintiffs’ income tax returns from 2003

to 2006 asserting that the information contained in the returns is relevant to the plaintiffs’

claims for damages. In response to the motion to compel, the plaintiffs argue that the tax

returns are sensitive records that are not relevant to their damage claims and that they should

not be required to produce them. (Doc. # 67). The court heard oral argument on the motion

on February 11, 2009. After careful review of the motion to compel, the briefs filed in

support of and in opposition to the motions, and the argument of counsel, the court concludes

that the motion to compel is due to be denied.

In this § 1983 action, the plaintiffs contend that they were not hired by CMS in

retaliation for exercising their First Amendment constitutional right to free speech on matters

of public concern. See Am. Compl., Doc. # 37. The plaintiffs also allege state law claims

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 1 of 6
1

 The plaintiffs assert other state law claims against the individual DOC defendants which are not

relevant to this discovery dispute.

2

of fraud, outrage, negligent and wanton supervision and retention, and conspiracy.1

FED.R.CIV.P. 26(b)(1) provides that “[p]arties may obtain discovery regarding any

nonprivileged matter that is relevant to any party’s claim or defense . . . ” The Committee

Comments to FED.R.CIV.P. 26 confirm that the Rule’s requirement of relevance to a claim

or defense “signals to the court that it has the authority to confine discovery to the claims and

defenses asserted in the pleadings, and signals to the parties that they have no entitlement to

discovery to develop new claims or defenses that are not already identified in the pleadings.”

GAP Report of Advisory Committee to 2000 amendments to Rule 26. 

In determining what discovery to allow, the court is likewise guided by some other

fundamental principles. “Relevant information need not be admissible at the trial if the

discovery appears reasonably calculated to lead to the discovery of admissible evidence.”

FED.R.CIV.P. 26(b)(1). “Rule 26 . . . [(b)(1)] is highly flexible, having been designed to

accommodate all relevant interests as they arise . . . ” U. S. v. Microsoft Corp., 165 F.3d

952, 959-60 (D.C. Cir. 1999). In particular, considerations of the public interest, the need

for confidentiality, and privacy interests are relevant factors to be balanced. See, e.g., Seattle

Times Co. v. Rhinehart, 467 U.S. 20, 35 n. 21 (1984) (“Although ... Rule [26(c)] contains no

specific reference to privacy or to other rights or interests that may be implicated, such

matters are implicit in the broad purpose and language of the Rule.”).

At issue in this discovery dispute are the plaintiffs’ income tax returns for the years

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 2 of 6
3

2003 to 2006. Defendant CMS contends that this financial information is relevant to the

plaintiffs’ damage calculations and whether they mitigated their damages in good faith. The

plaintiffs, however, are seeking back pay from the date they were not hired in 2007. They

have provided their income tax returns for 2007 and advised the court that they will provide

to CMS their 2008 income tax returns when completed. After careful consideration, the

court concludes that historical wage and other information contained in the tax returns for

the years 2003 to 2006 is simply too tenuous to the damage claims to be relevant. 

The defendant concedes that the income tax return information does not relate to a

defense but argues that the information is supportive of a jury argument that the plaintiffs

orchestrated this litigation. CMS wants to argue that because the plaintiffs made more

money before they applied for employment with CMS, the only reason for seeking

employment with CMS was to instigate this lawsuit. The problem with this argument is

manifest – it is based on the assumption that a person would not accept employment at a

lower salary except for improper motive. There are a number of reasons the court could

conceive of that would induce an individual to accept a position with a lower salary that do

not include the possibility of mounting future litigation. Aside from speculation, the

defendant has presented to the court no evidence to suggest that the plaintiffs “orchestrated”

this litigation, and more to the point, whether they did is immaterial to whether the

defendants retaliated against them in violation of the First Amendment. 

FED.R.CIV. P. 26(b)(1) permits the discovery of any non-privileged matter which is

relevant to a claim or defense. The plaintiffs argue that their tax returns are “sensitive” and

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 3 of 6
2

26 U.S.C. § 6103 provides that tax returns and return information “shall be confidential . . .” This

code section prohibits officers or employees of the United States from disclosing the information except under

certain circumstances. While not determinative of this discovery issue, Congress’ recognition of the privacy

interest associated with returns is informative.

4

confidential and should be protected from disclosure. While there “is a split of authority with

the federal courts . . . as to whether tax returns are entitled to enhanced protection from

discovery, . . . “[i]ncome tax returns are highly sensitive documents” that courts should be

reluctant to order disclosed during discovery.” Pendlebury v. Starbucks Coffee Co., 2005

WL 2105024, *1-2 (S.D. Fla. Aug. 29, 2005) (No. 04-80521-CIV) (collecting cases).2

 “In

general, most courts have noted that public policy concerns favor keeping tax returns

confidential when possible, and have ordered production only when the relevance of the

information is clear and there is a compelling need.” Columbus Drywall & Indus., Inc. v.

Masco Corp., 2006 WL 5157686, * 7 (N.D. Ga. 2006). A party should not be required to

produce income tax returns absent a showing of compelling need. See Dunkin’ Donuts Inc.,

v. Mary’s Donuts, Inc., 2001 WL 34079319, *2 (S.D. Fla. 2001). The court finds persuasive

the reasoning of the courts that require

a two-prong test to assure a balance between the liberal scope of discovery and

the policy favoring the confidentiality of tax returns. “First, the court must

find that the returns are relevant to the subject matter of the action. Second,

the court must find that there is a compelling need for the returns because the

information contained therein is not otherwise readily obtainable.”

A. Farber & Partners, Inc. v. Garber, 234 F.R.D. 186, 191(C.D. Cal. 2006). See

alsoLemanik v. McKinley Allsopp, Inc., 125 F.R.D. 602 (S.D. N.Y. 1898).

During oral argument, counsel for CMS conceded that he has received the plaintiffs’

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 4 of 6
3

Several courts, relying on Maddow v. Proctor & Gamble Co., Inc., 107 F.3d 846 (11th Cir. 1997),

have concluded that the Eleventh Circuit does not require a party to demonstrate compelling need, only

relevance, prior to compelling the production of income tax returns. See United States v. Certain Real

Property known as and located at 6469 Polo Pointe Way, Delray Beach, Fla., 444 F.Supp.2d 1258 (S.D. Fla.

2006) and Bellosa v. Universal Tile Restoration, Inc., 2008 WL 2620735 (S.D. Fla. 2008). These courts read

too much in to Maddox which did not hold that relevance is the sole test for production of income tax records.

 There is nothing in Maddow which suggests that the issue of compelling need was raised; it certainly was

not decided. 

5

W2 and 1099 forms for the years in question. He has propounded interrogatories and

requests for production of documents to which the plaintiffs have responded. He has also

deposed the plaintiffs and asked about their prior income and employment histories as well

as whether they had threatened suit or settled other lawsuits. CMS argues that it needs the

income tax returns to confirm the “full picture” of the plaintiffs’ incomes. This argument is

pure speculation and conjecture by the defendant. To be blunt, CMS seeks the plaintiffs’

income tax returns to test the truthfulness of the plaintiffs’ responses to its discovery requests

and deposition questions but has no evidence suggesting that the plaintiffs’ are not credible.

The relevancy of the plaintiffs’ income tax returns to their claims for damages is

tenuous at best. However, even if the court were to conclude that the plaintiffs’ income tax

returns were relevant, the defendant has not demonstrated a compelling need for the returns

because the information contained in the returns is readily obtainable from other sources.3

Through other discovery methods, the defendant has access to and the ability to obtain the

information it seeks from the plaintiffs’ income tax returns. Accordingly, the court concludes

that CMS has failed to demonstrate a compelling need for the plaintiffs’ tax returns. 

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 5 of 6
6

Accordingly, for the reasons as stated, it is

ORDERED that the defendant’s motion to compel be and is hereby DENIED. 

Done this 17th day of February, 2009.

 /s/Charles S. Coody 

CHARLES S. COODY

UNITED STATES MAGISTRATE JUDGE

Case 2:08-cv-00227-WKW-CSC Document 77 Filed 02/17/09 Page 6 of 6