Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-04518/USCOURTS-cand-5_03-cv-04518-1/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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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

NEAL M. DOUGLAS, et al.,

Plaintiff(s),

 v.

UNITED STATES OF AMERICA,

Defendant(s).

 /

NO. C 03-04518 JW 

ORDER GRANTING IN PART

AND DENYING IN PART REESE

M. JONES’ MOTION TO

CONSOLIDATE

Presently before the Court is Reese M. Jones’ Motion to Consolidate. Mr. Jones is the

plaintiff in the case of Reese M. Jones v. Deutsche Bank, et al., Case No. C-04-5357 JW (“the Jones

action”), a case determined by this Court to be related to the present action (“the Douglas action”)

pursuant to Civil L.R. 3-12(b). Mr. Jones claims that since both the Jones action and the Douglas

action arise from the Plaintiffs’ participation in a tax shelter known as “CARDS,” and both cases will

involve discovery from the alleged promoters of CARDS, consolidation would be in the interests of

judicial economy. The parties of the present action, as well as the Defendants in the Jones action, all

oppose Mr. Jones’ motion. 

The Court held a hearing on the matter on June 6, 2005. Based on all of the arguments made at

the hearing and in the parties’ briefs, the Court grants in part and denies in part Reese M. Jones’

Motion to Consolidate.

Federal Rule of Civil Procedure 42(a) provides for consolidation “[w]hen actions involving a

common question of law or fact are pending before the court....” FED. R. CIV. P. 42(a). To determine

whether to consolidate, a court weighs the interest of judicial convenience against the potential for

Case 5:03-cv-04518-JW Document 46 Filed 08/12/05 Page 1 of 3
United States District Court

For the Northern District of California

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delay, confusion and prejudice caused by consolidation.” Southwest Marine, Inc. v. Triple A Mach.

Shop, Inc., 720 F. Supp. 805, 807 (N.D. Cal. 1989). 

Here, the Court finds that the significant potential for confusion, inefficiency and prejudice far

outweigh the minimal convenience that may result from the consolidation of the Jones and Douglas

actions. The law firm of McDermott Will & Emery LLP (“McDermott”) represents Plaintiffs Neal

and Christine Douglas in the Douglas action and the Chenery Defendants in the Jones action. If the

two actions were consolidated for all pre-trial purposes, McDermott would be in the precarious

position of having to represent two clients in the same action with unique, and possibly competing,

legal interests. The Court declines to put McDermott, and its clients, in this potentially prejudicial

position. 

The Court, however, is persuaded that the interest of judicial economy would be best served

by consolidating the pretrial proceedings of the two actions with respect to third party witnesses who

would otherwise be called upon for discovery in both actions. Thus, Reese M. Jones’ motion to

consolidate is denied for all purposes, with the limited exception of mutual third party witnesses. 

Should the parties find a need for suitable protective orders with respect to third party witnesses, the

parties are referred to Magistrate Judge Seeborg for further proceedings. 

Dated: August 12, 2005

03cv4518consol

 /s/ James Ware 

JAMES WARE

United States District Judge

Case 5:03-cv-04518-JW Document 46 Filed 08/12/05 Page 2 of 3
United States District Court

For the Northern District of California

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THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO:

Christopher Kliefoth ckliefoth@mwe.com

Daniel E. Alberti dalberti@mwe.com

Emily J. Kingston Emily.Kingston@usdoj.gov

Goud Maragani Goud.P.Maragani@usdoj.gov

Jay R. Weill jay.weill@usdoj.gov

Marika Lancaster Marika.E.Lancaster@usdoj.gov

Mark Hunter Churchill mchurchill@mwe.com

William Carl Hankla w.carl.hankla@usdoj.gov

William M. Lukens wlukens@lukenslaw.com

Dated: August 12, 2005 Richard W. Wieking, Clerk

By: /jwchambers/ 

Ronald L. Davis

Courtroom Deputy

Case 5:03-cv-04518-JW Document 46 Filed 08/12/05 Page 3 of 3